To read the propaganda promoting Liberty Loans between 1917 – 1919, you would think that if you didn’t buy one of these loans — also known as bonds and as securities — you were not only un-American, you were actively aiding the Central Powers in killing our soldiers and welcoming Huns into the United States.
Even today’s brief article, announcing that Governor Shoup wants Coloradoans to buy Liberty Loans, mentions the word obligation in reference to people’s responsibility to buy these bonds.
So what were these Liberty Loans? Why was this one called the Victory Loan? And why was the government pushing so hard for people to buy these Loans?
The first of five WWI-era Liberty Loans was issued on April 24, 1917, under the Emergency Loan Act. This was immediately after the U.S. joined WWI, and the Loan was intended to fund the country’s initial war efforts. U.S. citizens were told to buy the bond, hold onto it for a set minimum number of years, and then be paid back plus a fixed interest rate by the government.
Each of these five Loan periods was given a target dollar amount, an end date in the event the target was not reached, an interest rate at which the loan would be paid back, and an early cash out date and late cash out date. For example, the fifth Liberty Loan, known as the Victory Liberty Loan because the war was over, had a $4.5 billion target. Prospective buyers had from Apr 21, 1919 until May 10, 1919 to buy bonds, in $50 increments, at a 4.75% interest rate, and they could cash out after 3 years, but the interest would stop accruing after 4 years.
Backing up a bit to the question of why the government was pushing so hard for these bonds, the first two Liberty Loans were not selling as well as hoped. Rumors were swirling that notes were being sold under their value just to make more sales. Treasury Secretary, William McAdoo, created a propaganda machine under the Committee on Public Information in order to push people to buy more bonds.
This committee helped make and distribute thousands of persuasive posters, enlisted celebrities like Charlie Chaplin and Douglas Fairbanks to make speeches promoting sales, urged communities to meet bond-buying quotas, promised prizes to volunteer promoters like custom buttons and German helmets, and spread rhetoric built upon the idea that buying these bonds was American, and anyone who didn’t buy them was un-American.
By the end of 1919, the U.S. had accrued debt in the ballpark of $25 billion as a result of Liberty Bond and other securities sales.
Timeline for Liberty Loans: The second Liberty Loan was issued on Oct 1, 1917, the third Liberty Loan was issued on Apr 5, 1918, the fourth on Sep 28, 1918, and the fifth and last called the Victory Loan was issued on Apr 21, 1919.