Wars are expensive. The Second World War cost the United States $300 billion dollars, with the federal budget rising from $9 billion in 1939 to $98 billion in 1945. How was the nation to pay for that?
Taxes were increased with an additional 5 percent Victory Tax. To assure payment, on June 10, 1943 the government approved the first automatic deduction of taxes from paychecks. But more was needed, and the government turned to bonds, which had been effective in World War I. War bonds were sold at 75 percent of face value (a $25 bond sold for $18.75) and matured over ten years. While the rate of return was below market value, bonds were a stable investment with the bonus of aiding the war effort. Channeling cash into bond purchases helped prevent inflation in the robust wartime economy as well.
Defense Bonds first went on the market on May 1, 1941, and they were renamed War Bonds after the US entered the war in December 1941. Bonds were available in denominations of $25 through $1000, designed to be affordable for everyone. People could also purchase stamps for 10 cents, which were placed in special albums. When full, the albums were redeemed for a bond. War stamps were especially popular with children.
Employers set up automatic payroll deduction systems, in which employees could set aside a certain amount for War Bonds with each purchase. A robust advertising campaign, rallies and other promotions, and a series of War Loan Drives brought in even more needed money.
As part of the war effort, many newspapers, magazines, and radio stations donated advertising space and time. Posters sprang up in store fronts. Even comic books got in the act as superheroes promoted bond sales. Popular songs alos encourage sales, such as Bing Crosby's recording of "The Road to Victory" for the Sixth War Loan Drive.
Bond rallies were extremely popular, featuring Hollywood stars and popular musicians. Celebrities also conducted auctions - a kiss from Hedy Lamarr, Betty Grable's stockings, Jack Benny's violin, and the horseshoes of Triple Crown winner Man O' War. Movie theaters and baseball stadiums sometimes offered free admission with the purchase of a War Bond.
War Loan Drives
Eight War Loan Drives were conducted from 1942 to 1945. Each was meant to raise an additional $9-$15 billion in sales. Towns received quotas, with the aim of promoting competition between towns. Volunteers went door-to-door, pleading for sales, and rewarding purchasers with stickers to display on their window or door. The drives were conducted on the following dates:
- First War Loan Drive: Nov. 30 to Dec. 23, 1942
- Second War Loan Drive: Apr. 12 to May 1, 1943
- Third War Loan Drive: Sep. 9 to Oct. 1, 1943
- Fourth War Loan Drive: Jan. 18 to Feb. 15, 1944
- Fifth War Loan Drive: June 12 to July 8, 1944
- Sixth War Loan Drive: Nov. 20 to Dec. 16, 1944
- Seventh War Loan Drive: May 14 to June 30, 1945
- Victory Loan Drive: Oct. 29 to Dec. 8, 1945
By the end of the war, 85 million Americans had purchased $185.7 billion dollars of bonds - over $2000 per person, when the average income was $2000 per year.
The patriotism and personal sacrifice of the average citizen played a significant part in the Allied war effort.
Labels: war bonds, war loan drives, World War II