Interest-bearing currency and legal restrictions theory: lessons from the Southern Confederacy.

Instances of interest-bearing general reception are relatively rare. The Southern Confederacy issued the two interest-bearing and non-interest-beating notes during the Civil War. The sum of two units types of notes apparently circulated alongside individual another with the interest-bearing general reception generally commanding the premium implied by the agency of legal restrictions theory. Government-imposed restrictions upon banks prevented the non-interest-bearing notes from being driven without of circulation. The Southern experience appears to be consistent with the legal restrictions theory of circulating medium and suggests a potential part for interest-bearing currency as a circulating medium.

The character of Interest-Bearing Currency

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