Fiscal Discriminations in Three Wars

40 Pages Posted: 26 Apr 2013

See all articles by George J. Hall

George J. Hall

Brandeis University - Department of Economics and International Business School; Brandeis University - Department of Economics

Thomas J. Sargent

New York University (NYU) - Department of Economics, Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

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Date Written: April 23, 2013

Abstract

In 1790, a U.S. paper dollar was widely held in disrepute (something shoddy was not `worth a Continental'). By 1879, a U.S. paper dollar had become 'as good as gold.' These outcomes emerged from how the U.S. federal government financed three wars: the American Revolution, the War of 1812, and the Civil War. In the beginning, the U.S. government discriminated greatly in the returns it paid to different classes of creditors; but that pattern of discrimination diminished over time in ways that eventually rehabilitated the reputation of federal paper money as a store of value.

Keywords: repudiation, reputation, discrimination, legal tender, greenbacks, Alexander Hamilton, Albert Gallatin, Ulysses S. Grant

JEL Classification: E42, H21, H5, H6, N11, N41

Suggested Citation

Hall, George J. and Sargent, Thomas J., Fiscal Discriminations in Three Wars (April 23, 2013). Available at SSRN: https://ssrn.com/abstract=2255986 or http://dx.doi.org/10.2139/ssrn.2255986

George J. Hall (Contact Author)

Brandeis University - Department of Economics and International Business School ( email )

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HOME PAGE: http://people.brandeis.edu/~ghall

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States

Thomas J. Sargent

New York University (NYU) - Department of Economics, Leonard N. Stern School of Business ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-3548 (Phone)

National Bureau of Economic Research (NBER)

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