Capitalizing patriotism: The Liberty loans of World War I

Sung Won Kang, Hugh Rockoff

Research output: Contribution to journalReview article

3 Citations (Scopus)

Abstract

Although taxes were raised substantially in the United States during World War I, recourse was had to five bond issues, the famous Liberty loans, to finance the bulk of war expenditures. The Secretary of the Treasury, William Gibbs McAdoo, hoped to create a broad market for the Liberty bonds and to limit their yields by following an aggressive policy of 'capitalizing patriotism'. He called on everyone from Wall Street bankers to the Boy Scouts to volunteer for campaigns to sell the bonds. The campaigns have become legendary. Some of the nation's best-known artists were recruited to draw posters depicting the contribution to the war effort to be made by buying bonds, and giant bond rallies featuring Hollywood stars were organized. These efforts, however, enjoyed limited success. The yields on the Liberty bonds were kept low mainly by making the bonds tax exempt and by making sure that a large proportion of them were purchased directly or indirectly by the Federal Reserve, turning the Federal Reserve into an engine of inflation. Patriotism proved to be a weak, although not powerless, offset to normal market forces.

Original languageEnglish (US)
Pages (from-to)45-78
Number of pages34
JournalFinancial History Review
Volume22
Issue number1
DOIs
StatePublished - Jun 9 2015

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Loans
Liberty
Patriotism
World War I
Tax
Federal Reserve
Treasury
War Effort
Proportion
Bulk
Artist
Wall Street
Giant
Expenditure
Volunteers
Inflation
Hollywood Stars
Finance
Boys
Bankers

All Science Journal Classification (ASJC) codes

  • History
  • Finance

Keywords

  • Liberty bonds
  • World War I
  • war finance

Cite this

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Capitalizing patriotism : The Liberty loans of World War I. / Kang, Sung Won; Rockoff, Hugh.

In: Financial History Review, Vol. 22, No. 1, 09.06.2015, p. 45-78.

Research output: Contribution to journalReview article

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