Figure 1.--This Boys Brotherhood Republic (BBR) Bank here is selling Defense Saving Stamps. When the boys filled up their book, they got a bond. Albert Spirvak casiers at the BBR Defense Savings Stamps booth (January 30, 1942), shortly afgter Pearl Harbor. It is not the Ten Commandments from the Bible that is hanging on the wall of the gym at The Boys and Girls Republic on E. Sixth St. and Avenue D, but rather an upbeat Ten Commandments of Good Sportsmanship, hopefully to set a positive tone for hundreds of games played there throughout the year. "Thou shall not gloat if you win. . . Thou shall not quit. Thou shall not take unfair advantage of an opponent ...."

The War Advertising Council and the War Finance Committee sought to promote bond sales to finance the War and build civilian morale. The work of these World War II organizations produced "the greatest volume of advertising and publicity ever given to any product or agency" in American history. Secretary of the Treasury Henry Morgenthau sold the first Series E U.S. Savings Bond to President Franklin D. Roosevelt on May 1, 1941. Congress chose to finance the war primarily by borrowing from financial institutions and individuals. The Federal Government launched well publicized drives to sell war bonds on a voluntary basis. The drives were supported by Hollywood celberties and decorated service men. Even children participated in these drives. Boy Scouts helped to destribute fliers. Children bought the stamps every week in their schools. This process began even before the Japanese Pearl Harbor attack brought America into the War (1941). There were several drives. We note a Sherman tank being used in the Third War Bond Drive (1943). The Government's financial policy also included measures to control inflation because the increased employment increased incomes at a time when the supply of consumer goods was limited. The War Bond drives not only help finance the war, but took money out of the cosumer economy and thus limited both inflation and consumer demand competing with war production. The War Finance Committees sold over $185 billion of securities. By the end of World War II, over 85 million Americans had invested in War Bonds, a number unmatched by any other country. Even American children participated in the effort.

World War I

World War I was fought by the richest countries in the World at the height of their power. World War I histories usually focus on the militaries and the battle. One often not recognized issue is finances. This is often not important in short wars, but when the French stopped the Germans on the Marne (Sptember 1914), the War tuned into a long, extended and very expensive conflict. Thus financing the War became vital. And while the Germans had the strongest army, the British had the strongest navy and by far the strongest financial position. The British with their empire were by far the beligerant country with the strongest financial situation capanle of financing an extended war effort. The British not only finded their own war effort, but also that of allies like France, Italy and others. The Germans were in a much weaker financial position which weakened as the war contunued. Britain and France not only had their own resources, but access to the American capitl markets. The United States was for bearly 3 years the only major economic and financial power not involved in the War. Theoretically, the Germans could have also borrowed in America. The U.S. Government placed no restructions on foreign borrowing or issued any directives. These were entirely private loans, there was no Government involvement. As the War developed it was only the allies that borrowed in America. There were two reasons for this. First it was the British and French who had strong links with American banks. Second, dollars were of only limited value to the Germans because of the Royal Navy bloclade of Germany. As the War continued, access to American capital markers played an invreasingly important role in financing the Allied war effort. After the War we begin to hear Marxist arguments that merica declared war because so much money had been loaned to the Allies by New York banks. And an Allied loss would have disrupted the American economy. This simply is not the case and there is no evidence to suggest that the war loans influenced President Wilson's decesion to go to war. In fact after the relection (November 1916), Wilson began to intervene to force the waribg powers to end the War. And while he has little influence on Germany, he did have influence on Britain and France and threaten Feeral Rserve intervetion with American banks to stop further private war loans. [Tooze, p.51.] This occurred just as the Allies were planning their 1917 campaign and the financing required. Germany ignored this initative. The German Government ignored cables from their Washingtom Embassy and decided to pursue a military victory with actions like unrestricted submarine warfare. Once in the War, American Government financial support would play an important role in the Allied war effort.

Government Policy

The U.S. Government once in World War I, financed the War through the sale of war bonds, called Liberty Bonds. It was clear to Secretary of the Treasury Henry Morgenthau, Jr. by 1940, esecially after the fall of France (June 1940) that America would eventually be involved in the World War II and began to descretely prepare for financing the War. This was a sensitive issue as the Isolationists bitterly opposed invokvemnt and accused President Roosevelt of trying to involve Amreria in the War. It was a major issue in the 1940 presidential election. Many of the President advisers advocated a system of tax increases and enforced savings program that British economist John Maynard Keynes had devised. His program was to permit increased spending while slowing any increase in inflation. Secretary Morgenthau had different ideas. He favored a voluntary system. He began planning a national defense bond program (fall 1940). He wanted to use a system like the baby bonds that had been sold in the the interwar period, but give them a patriotic image like the Liberty Bonds sold in Workd War I. Morgenthau consulted with Peter Odegard, an academic specializung in propaganda. The Treasury began marketing the baby bonds as Defense Bonds. They could not be called War Bonds because of the sebsutivity of the public and at any rate, Amruca was not yet at war. Three new series of bonds (Series E, F and G) were introduced. Series E bonds were targeted at the heneral public as Defense Bonds". They were sold for as little as $18.75 and matured in 10 years at $25. This time unlike the Liberty Bonds there was not promise to pay in gold. Larger denominations ($50 - $1,000 were available), but unlike the World War I Liberty Bonds were non-negotiable. To emphasize the defensive nature of the bonds, they were printed with a Minute Man which became their symbol. And the effort also involve children who could purchase Defense Savings Stamps at school or other plces.

Advertising

The War Advertising Council and the War Finance Committee sought to promote bond sales to finance the War and build civilian morale. The work of these World War II organizations produced "the greatest volume of advertising and publicity ever given to any product or agency" in American history.

War Bonds

Congress pproved the effort to finance the war primarily by borrowing from financial institutions and individuals. Secretary Morgenthau sold the first Series E U.S. Savings Bond to President Franklin D. Roosevelt (May 1, 1941). After the Japanese attackm on Pearl Harbor (December 1941) the bonds were marketed as war bonds.

Drives

The Federal Government launched well publicized drives to sell war bonds on a voluntary basis. The drives were supported by Hollywood celberties and decorated service men. This process began even before the Japanese Pearl Harbor attack brought America into the War (1941). There were several drives. We note a Sherman tank being used in the Third War Bond Drive (1943).

Children

Children participated in the war effort innvarious ways. And this included financing the War. Kidscwanted to support the war effort. Many had brothers and fathers in the servuces. Boy Scouts helped in various with the Bond Drives such as distributing fliers advertising the effort. And children could buy Defense Saving Stamps for as little as 10c. That doesn't sound like much today, but in 1940, a dime had real value for a kid. You could buy a candy bar or a soda for 5c. A comic book cost 10c. The children purchased the stamps every week in their schools. And when they filled up their book a $25 bond would be issued to them. The stamps were early in the War sometimes referred to a Liberty Stamps because this was the term used in World War I. The stamps with the Minute Man were issued in denominations from 10c to $5.00. The children of course mostly purchased the 10c stamps.

Civilian Bonds

The National Service Board for Religious Objectors also offered civilian bonds to members of the historic churches cimmited to pacifism. As these Americans could not conscientiously buy anything meant to foster war they could not buy ar bonds, but wanted to support America. These were U.S. Government Bonds, not labelled as defense/war bonds. Some , 33,006 subscriptions were sold for a value of $6.74 million. The purchasers were mostly Mennonites, Brethren, and Quakers.

Inflation Control

The Government's financial policy also included measures to control inflation because the increased employment increased incomes at a time when the supply of consumer goods was limited. The War Bond drives not only help finance the war, but took money out of the cosumer economy and thus limited both inflation and consumer demand competing with war production.

Achievement

The War Finance Committees sold over $185 billion of securities. By the end of World War II, over 85 million Americans had invested in War Bonds, a number unmatched by any other country. Even American children participated in the effort.

Source

Tooze, Adam. The Wages of Destruction: The Making and Breaking of th Nazi Economy (Penguin Group: New York, 2007), 800p.

Created: 12:52 AM 7/24/2010
Last updated: 12:05 PM 7/29/2017