A USE FOR CONFEDERATE BONDS.

A USE FOR CONFEDERATE BONDS. People are still arguing whether the South could have won the Civil War. The Wall Street Journal this week reported that two economists, Kim Oosterlinck and Marc Weidenmier, have found a way to use the prices of Confederate bonds on an Amsterdam market to measure what European investors (presumably somewhat neutral) thought about the chances of the Confederacy winning the war. In effect, in this paper they convert the market for Confederate bonds into the kind of political futures market that you can find here. Their results indicate that European investors gave the South a 42% chance of winning before the battles of Gettysburg and Vicksburg at the beginning of July, 1863. Six months later, the investors gave the South only a 15% chance of winning. Since one of the things that the South was hoping for was favorable intervention from Europe, the lower appraisal of its chances reduced its chances of winning. Conclusions would be that observers who were willing to risk money on the wager thought at one point that the South had a good chance (almost 50/50) of winning and that the battles of Gettysburg/Vicksburg were a turning point.