Seventy years ago this week, the United States held its first War Loan Drive. 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.
set up automatic payroll deduction systems, so employees could set aside a
certain amount for War Bonds with each paycheck. A robust advertising campaign,
rallies and other promotions, and a series of War Loan Drives brought in even
more needed money.
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 also encouraged
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
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.
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
- 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
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.
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