A Liberty bond (or liberty loan) was a World War I war bond marketed in the United States to support the Allies. Subscribing to the bonds became a sign of patriotism in the United States, and many Americans were introduced to the concept of financial instruments for the first time.
Why did the United States issue war bonds?
When full employment collided with rationing during World War II, war bonds were considered as a mechanism to remove money from circulation while also reducing inflation.
They were originally known as Defense Bonds and were issued by the United States government.
After the Japanese attack on Pearl Harbor on December 7, 1941, the name was changed to War Bonds.
The bonds, known as debt instruments, were issued to fund military operations during wartime and yielded only 2.9 percent after a 10-year maturity.
During World War II, living in the United States on a median income meant earning around $2,000 per year.
Despite the difficulties of the war, 134 million Americans were invited to buy war bonds to help pay it.
Stamps, which start at ten cents each, can also be purchased to contribute to the bond.
Treasury Secretary Henry Morgenthau sold President Franklin D. Roosevelt the first Series ‘E’ US Savings Bond.
The bonds were sold for 75% of their face value in denominations ranging from $25 to $10,000, with some restrictions.
The war bonds were essentially a loan to the government to aid in the financing of the war effort.
The War Finance Committee was in charge of overseeing the sale of all bonds, while the War Advertising Council encouraged people to acquire bonds voluntarily.
The combined efforts of the two groups resulted in the most advertising ever created in the United States.
The public was constantly exhorted to acquire bonds in the sake of defending American liberty and democracy, as well as as safe havens for investment.
Advertising was used to make an emotional appeal to the population.
Despite the fact that the bonds paid a lower rate of return than the market, they constituted a moral and financial investment in the war effort.
The commercials began on the radio and in newspapers, and then expanded to include magazines in order to reach a wider audience.
The bond campaign was unique in that commercials were made by both the government and private enterprises.
Those that donated advertising space believed they were contributing even more to the war effort; others created their own war bond advertisements to show their patriotism.
To improve its appeal to Americans, the government enlisted the help of New York’s greatest advertising agencies, well-known entertainers, and even recognizable comic strip characters.
The New York Stock Exchange advised buyers not to cash in their bonds in their marketing.
During the first three years of the National Defense Savings Program, more than a quarter of a billion dollars in advertising was contributed.
Massive advertising campaigns made advantage of every available medium, and the campaign was a big success.
The word traveled swiftly; within only one month, polls showed that 90% of individuals polled were aware of war bonds.
Bonds became the ideal way for citizens at home to contribute to the nation’s defense.
To boost the advertising’s impact, Bond rallies were hosted across the country with well-known celebrities, generally Hollywood movie stars.
Free movie days were conducted in theaters across the country, with the purchase of a bond serving as entry.
Greer Garson, Bette Davis, and Rita Hayworth, among others, undertook seven tours in more than 300 cities and villages to support war bonds.
The “Stars Over America” bond blitz, which included 337 celebrities, exceeded its quota and collected $838,540,000 in bonds.
One promotional cardboard featured 75 quarter slots, totaling $18.75.
When it was full, it could be returned to the post office for a $25 war bond with a 10-year maturity.
With their own advertisements, local clubs, organizations, movie theaters, and hotels contributed as well.
Then there was the Civilian D-Day on June 6th, 1944, when tens of thousands of advertisements were dropped from the sky over Chicago in an attempt to catch the attention and hearts of potential donors.
Girl Scouts got engaged as well, with each scout providing one stamp.
These stamps, which cost 10 cents each, were then exchanged for war bonds through a nationwide organization.
In 1941, Norman Rockwell designed a series of pictures that became the focal point of war bond marketing. The Saturday Evening Post reprinted and distributed them, much to the delight of the public. While Norman Rockwell was the most well-known war bond artist, Irving Berlin was the most well-known composer. He wrote a song called “Any Bonds Today?” that became the theme song for the Treasury Department’s National Defense Savings Program. He is best known for his song “God Bless America.” The Andrew Sisters were one of the most well-known performers of this classic song.
A 16-hour marathon radio broadcast on CBS, during which approximately $40 million in bonds were sold, was one of the most successful single events.
Kate Smith, known for her rendition of “God Bless America,” performed during the marathon.
Purchases of war bonds could demonstrate patriotism and the spirit of sacrifice.
The war bond endeavor drew in millions of people.
The sports world contributed as well, with special football and baseball games featuring a war bond as the ticket fee.
The New York Yankees, New York Giants, and Brooklyn Dodgers played an odd baseball game in New York City.
In the same nine-inning contest, each side came to bat six times.
The Dodgers won 5 to 1 against the Yankees and 0 to 0 against the Giants, giving the US government $56,500,000 in war bond sales.
The last earnings from the Victory War Bond campaign were transferred into the US Treasury on January 3, 1946, at the end of World War II.
More than 85 million Americans, or half the population, bought $185.7 billion in bonds.
Those astounding achievements, thanks to mass selling initiatives that helped fund the war, have never been equaled since.
The Series E bond was phased out on June 30, 1980, and the Series EE bond took its place, making the War Bond a thing of the past.
What was the objective of Liberty Bonds in the United States at the height of World War One?
During World War I, the US government issued Liberty Bonds to help pay for the high expenditures of the war. The issuing of the Liberty Bonds was accompanied by a significant investment in propaganda to arouse patriotism among Americans. Banks and other financial organizations, on the other hand, bought the majority of the bonds because they perceived them as tempting investment prospects.
Governments employ bonds to combat inflation in modern times. The government is actually lowering the debt by issuing bonds.
How did Liberty Bonds function during WWI?
Summary and Definition: In 1917 and 1918, the United States government generated funds for the war effort by selling Liberty Bonds, which were named to appeal to Americans’ patriotism. The Secretary of the Treasury, William Gibbs McAdoo, came up with the idea for Liberty Bonds. Americans were lending the government money by purchasing Liberty Bonds. The US government promised to pay back the money plus interest over a set period of time. After the war, Victory Bonds were released. The interest rates paid on Liberty and Victory Bonds were lower than those paid by banks to guarantee that the banking sector was not affected. The US government’s debt had grown to more than $25 billion by the end of WWI.
What was the total amount of money raised by Liberty Bonds during WW1?
The United States needed money to finance the war effort when it declared war on Germany in April 1917. The Civil War had shown that just printing more money will result in inflation and economic problems. William G. McAdoo, Secretary of the Treasury and Chairman of the Federal Reserve, did not want to risk weakening the new US paper currency, which had just been in use since 1914, during World War I. As a result, McAdoo chose to raise one-third of the required funds from taxes and the remaining funds through fundraisers.
McAdoo announced the Liberty Loan Plan to sell Liberty Bonds to support the war on April 28, 1917, barely twenty-two days after the United States entered the war. The strategy was divided into three parts:
Appeal to patriotism in the United States, asking everyone from children to millionaires to cut back on personal spending in order to purchase bonds.
According to McAdoo, “To support our Noble sons who go out to die for us, we must be willing to give up something of personal convenience, something of personal comfort, something of our treasure—all, if necessary, and our lives in the bargain.”
The smallest Liberty Bond denomination was $50, which was equal to two weeks’ pay for industrial workers. To make the bonds more accessible to the general public, a savings system was established, allowing anyone to purchase Thrift Stamps for 25 cents each and paste them onto a collection card. The card was traded for a $5 War Savings Stamp, which was fastened to a War Savings Certificate after it had sixteen stamps. A $50 Liberty Bond could be exchanged for ten certificates.
After the armistice, there were four Liberty Loan drives and one Victory Loan drive. Liberty Bonds were acquired by 20 million people by the end of the war. A total of $17 billion was raised through the issuance of Liberty Bonds, with an additional $8.8 billion raised through taxation.
The sale of Liberty Bonds necessitated the use of propaganda posters to promote the sale of the bonds. They instilled in Americans a sense of patriotism by informing them about the causes and probable costs of the conflict. The posters below show a variety of propaganda used by the government to persuade Americans to support the war effort. They’re the outcome of McAdoo’s conviction that “Any major conflict must be accompanied by a public uprising. It’s a crusade, and like all crusades, it’s carried along by a strong current of romanticism.”
What were Liberty Bonds used for?
Americans essentially gave the government money to help pay for the costs of wartime military operations under this program. Those who invested in these bonds would get their money back, plus interest, after a predetermined number of years. The government issued these bonds as part of the “Liberty Loan” program, which was a collaboration between the US Treasury and the Federal Reserve System, which had been established just three years prior, in 1914.
Quizlet: What was the primary goal of the United States government issuing war bonds during World War I?
During World War I, the United States sold bonds to raise funds for loans to the Allies. a government’s or people’s conviction or desire that a country should keep strong military compatibility and be ready to use it aggressively to defend or promote national interests. You’ve just completed 18 terms of study!
Who would be urged to purchase a Liberty Bond?
The United States government issued a series of loans known as Liberty Bonds to fund the American military effort during World War I. During the conflict, the federal government provided a total of five distinct liberty loans. The Victory Bond was the name given to the fifth and final loan. By acquiring these bonds, private persons lent money to the government. If they couldn’t afford a bond, they could buy war stamps and savings certificates for less money. The government would repay the loans with interest at a later date, once the war was done.
Americans in Ohio, like the rest of the country, were encouraged to purchase these Liberty Bonds. Citizens were informed that it was their patriotic duty to buy bonds to support their military. To encourage residents to participate, many localities held special bond drives and tournaments. Ohioans bought 106 million dollars in Liberty Bonds in 1918, out of a total of two billion dollars sold nationwide.
What effect did the wartime Liberty Bonds have on people’s perceptions toward securities investing?
What effect did the wartime Liberty Bonds have on people’s attitudes toward investing in stocks and bonds? Liberty bonds permitted you to borrow money from the general public, which led to many people becoming securities investors and desiring the investment culture. It gave them a sense of security knowing that they could get money.
Key Points
- Despite President Franklin D. Roosevelt’s preference for higher taxes and mandatory savings programs to fund World War II, Secretary of the Treasury Henry Morgenthau, Jr.’s notion of establishing a national defense bond program won out in the fall of 1940. Three series of bond notes would be introduced, with Series E serving as “defense bonds” for individuals. The War Finance Committee was put in charge of overseeing all bond sales.
- The government paid for a large advertising campaign to urge people to buy military bonds.
- Over the course of the war, 85 million Americans bought bonds, raising $185.7 billion, which paid between 50 and 60 percent of the war costs.
Key Terms
- During World War II, the War Finance Committee was in charge of overseeing the sale of all war bonds.
- In times of war, a government may issue debt securities to fund military operations and other expenses. They are either retail bonds sold directly to the public or wholesale bonds traded on a stock exchange, and they remove money from circulation to help control inflation.
- Henry Morgenthau, Jr. was the United States Secretary of the Treasury during Franklin D. Roosevelt’s presidency. He was a key figure in the creation and financing of the New Deal. He devised a complex system of selling war bonds to fund World War II.
What function did the Liberty Bonds poster serve?
The poster was designed to be dramatic in order to persuade the American public to continue to financially support the war by purchasing liberty bonds. It implies that purchasing liberty bonds will prevent the Germans from invading America. In actuality, the Germans had a slim possibility of invading the United States. They were preoccupied with fighting in Europe, and their ships were unable to pass through the English Channel. The poster’s power, like that of much war propaganda, was partly due to how well it touched into the public’s deepest fears–an enemy on one’s doorstep is undoubtedly a more tangible menace than one across the ocean. Looking at the red pattern on the boots, my colleague wondered if it was supposed to imitate a map, possibly implying territorial conquest. What are your thoughts?
John Warner Norton, the artist who designed the poster, had some military experience, having served with Theodore Roosevelt’s Rough Riders during the Spanish-American War a few decades before.
During World War I, Norton’s design was one of many that advertised Liberty Bonds. Here are two examples of persuasion that took a very different approach.