NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Gunboats, Reputation, and Sovereign Repayment: Lessons from the Southern Confederacy

Marc Weidenmier

NBER Working Paper No. 10960
Issued in December 2004
NBER Program(s):   DAE

Many states that formed the Southern Confederacy defaulted on sovereign debt sold in international capital markets during the 1840s. The Confederacy also elected President Jefferson Davis, who openly advocated the repudiation of U.S. states' debts while a member of Congress. Despite its poor credit record, the Confederate government managed to float cotton bonds in England that constituted under two percent of its expenditures. The bonds were largely issued to settle overdue debts with gun contractors who had cut off trade credit. The South serviced the bonds as late as March 1865, a time of domestic hyperinflation and weeks before the fall of Richmond. Although the Confederate experience shows that trade sanctions can promote debt repayment, the gunboat model can only account for a small amount of lending. A reputation or another type of sanction would be necessary to support higher levels of lending in international capital markets.

download in pdf format
   (322 K)

email paper

This paper is available as PDF (322 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10960

Published: Weidenmier, Marc D. "Gunboats, Reputation, And Sovereign Repayment: Lessons From The Southern Confederacy," Journal of International Economics, 2005, v66(2,Jul), 407-422.

Users who downloaded this paper also downloaded these:
III, Wallis, and Sylla h0097 Debt, Default, and Revenue Structure: The American State Debt Crisis in the Early 1840s
Eaton w3424 Sovereign Debt, Reputation, and Credit Terms
Wallis, Sylla, and III w10753 Sovereign Debt and Repudiation: The Emerging-Market Debt Crisis in the U.S. States, 1839-1843
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us