Working Paper: NBER ID: w11919
Authors: Sung Won Kang; Hugh Rockoff
Abstract: In World War I the Secretary of the Treasury, William Gibbs McAdoo, hoped to create a broad market for government bonds, the famous Liberty Loans, by following an aggressive policy of "capitalizing patriotism." He called on everyone from Wall Street bankers to the Boy Scouts to volunteer for the campaigns to sell the bonds. He helped recruit the nation's best known artists to draw posters depicting the contribution to the war effort to be made by buying bonds, and he organized giant bond rallies featuring Hollywood stars such as Douglas Fairbanks, Mary Pickford, and Charlie Chaplin. These efforts, however, enjoyed little 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 was purchased directly or indirectly by the Federal Reserve. Patriotism proved to be a weak offset to normal market forces.
Keywords: Liberty Bonds; World War I; Patriotism; Public Finance
JEL Codes: N2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Patriotic sentiment (F52) | Bond purchasing decisions (G12) |
| Bond purchasing decisions (G12) | Bond yields (G12) |
| Armistice (D74) | Bond yields (G12) |
| Armistice (D74) | Patriotic motivations for holding bonds (H63) |
| Government marketing strategies (M38) | Bond purchasing decisions (G12) |
| Patriotism (F52) | Financing of the war (H56) |