The US government agreed to repay the money plus interest in a specified number of years. Victory Bonds were issued after the war ended. To ensure the banking system was not harmed the interest rates paid on Liberty and Victory Bonds were lower than those paid by the banking institutions. By the end of the Great War, the US Government debt was more than $25 billion.
WW1 Liberty Bonds Facts for kids: Fast Fact Sheet
What were Liberty Bonds? The US government Liberty Bonds were a special issue of WW1 US government bonds. Bonds are official notes that are sold with the promise to pay the money back, with interest, on a certain date.
What was the purpose of Liberty Bonds? The main purpose of the Liberty Bonds was to raise money for WW1, they also encouraged Americans to save rather than spend controlling inflation during the wartime economy.
How did Liberty Bonds work? The Liberty Bonds were a direct and unconditional promise of the United States to pay upon a certain date a specified sum of money in gold, together with interest at a specific rate, payable at specific dates until the bond matures, or was called for redemption.
How did Liberty Bonds help the war effort?: The Liberty Bonds inspired patriotism and allowed Americans on the home front to feel they were making a valuable contribution to the war effort. Advertising Liberty Bonds were used extensively in WW1 propaganda campaigns
Facts about WW1 Liberty Bonds
Liberty Bonds were sold in denominations of $50 to $100,000.
The smaller denominations of $50 and $100 enabled lower income Americans to participate in the scheme. The higher denominations were purchased by wealthy individuals, banks and by U.S. corporations
There were a total of four Liberty Loan Bond issues and one Victory Loan Bond issue.
The 3.5% interest was tax exempt except for estate and inheritance taxes.
In 1917 alone U.S. citizens bought $18.7 billion worth of the bonds
The Liberty Bonds introduced the idea of financial securities to many American citizens and encouraged the concept of investment by people from all walks of life.
In December 1917, the Treasury Department offered War Savings Certificates and Saving Stamps to enable children and low-income Americans to invest in the war effort. The 25 cent stamps were collected in books and exchanged for $5 savings certificates.
A variety of methods were used to promote the sale of Liberty Bonds. Newspapers, pamphlets and magazines all carried adverts.
Famous Hollywood movie stars played their part in publicity campaigns. Al Jolson, Mary Pickford, Douglas Fairbanks, Claudette Colbert and Charlie Chaplin were among the celebrities that made public appearances promoting the patriotic element of purchasing Liberty Bonds. Hollywood in the 1920s
Charlie Chaplin also made a short propaganda movie called 'The Bond', at his own expense, for the drive. The movie was released on 29 September 1918 and featured a short series of humorous sketches and ended with Charlie Chaplin using a Liberty Bond to literally K.O. the German Kaiser.
"Four Minute Men" delivered speeches to encourage sales and driving home patriotic duty to American citizens.
For the third Liberty Bond issue, there were approximately 9 million posters and 10 million button badges produced.
About 50% of all American families bought Liberty war bonds, most between $5 and $100 worth. The other 50% of the total number sold were purchased by financial institutions in $10,000 increments
The US government again sold war bonds during World War II (1939–45) to help raise funds for the fight for freedom.
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