Now a couple of bright guys (with an interest in the Civil War and the ability to discount cashflows) have plotted Confederate gold bond trading in Amsterdam. They use these prices as indications of foreign confidence in Confederate victory.
This is a fun paper, so forgive me a few quibbles. First, trading volume data was not available. Not only is that a challenge in itself, it puts our authors in hot water when they reach for conclusions like "The probability of a [perceived] Confederate victory would have been even higher if the bonds did not actively trade at this point of the war and there was a liquidity premium built in the price of the debt security." I don't see how you can classify trading as active or not without volume data; nor do I see how you detect a liquidity premium without volume data to set against sales data.
And so, I don't quite understand why the $60 bond trading point is pegged to a 42% victory probability - the high point of Confederate chances on the Amsterdam market. It's also disconcerting to see headline writers confusing the issue of whether the Confederacy could win with the issue of what Amsterdam traders thought about the Confederacy winning (see here).
There are bright spots in the study, including indications that foreign bond traders then were better informed than many of today's Civil War history writers on the election of 1864:
The analysis provides little empirical evidence to support the hypothesis that European investors believed that George McClellan might be elected President of the United States on a peace party platform in 1864.If you think you would enjoy seeing news events (Gettysburg, Spotsylvania) linked to overall victory probability ratings incident-by-incident, this is the study for you.
p.s. Don't fear the formulas.