The Extent of the Market for Early American Bank Notes

How far did antebellum bank notes travel? Up to now, we did not know. Using previously overlooked data on interbank holdings of bank notes and the records of a small-time note broker, I find that most bank notes circulated within about 50 miles of the issuing banks. Few notes were observed from as far as 200 miles away. Several studies of secondary markets for privately issued currencies assume that notes moved across vast geographic space, but these new findings suggest that we may need new models of bank note pricing and the efficiency of relatively unfettered markets in private currencies.