Soon after the entrance of the United States into World War II, Secretary of the Treasury Henry Morgenthau, Jr., announced that war bonds would be available for purchase by the American public. The bonds, redeemable for a higher price after being held for a fixed period of time, were sold for the multiple purposes of providing funds for the government, involving the public in the war effort, and combating inflation by providing a savings outlet for the higher incomes and greater spending power of the war years.
Bond purchases by the public accounted for a far smaller part of government borrowing (which paid for more than half the costs of the war) than by such commercial enterprises as banks and corporations. However, Morgenthau and President Franklin D. Roosevelt felt that it was important that Americans feel connected to the war effort. Morgenthau saw selling bonds as an opportunity to “sell the war,” and war bond campaigns became in part a form of propaganda, encouraging Americans to buy bonds as part of their patriotic duty. Morgenthau and Roosevelt also preferred a voluntary savings program provided by bonds to a compulsory one and hoped for heavy public purchases. Stars of movies and sports, as well as other celebrities, traveled the nation and performed for free at events at which war bonds were promoted and sold, and advertising agencies contributed their expertise to the bond campaigns.
Poster advocating for war stamps and bonds (Library of Congress)
Americans of all income levels bought war bonds, thanks to the small-denomination Series E bonds, and to the war stamps that could be bought for pennies and then collected and redeemed for bonds. Many people had money regularly taken out of their paychecks for the purchase of bonds, and in 1944 sales of E bonds absorbed about 7 percent of after-tax personal income. Although sales to the public were not as high as the administration had hoped, estimates of individual bond sales range as high as $50 billion, or up to one-sixth of the costs of fighting the war.
—Joanna Smith
World History
