Liberty bond

The Board of Governors of the New York Stock Exchange conducted an investigation of brokerage firms who sold below par to determine if "pro-German influences" were at work.

The poor reception of the first issue resulted in a convertible re-issue five months later at the higher interest rate of 4% and with more favorable tax terms.

[5] Secretary of the Treasury William Gibbs McAdoo reacted to the sales problems by creating an aggressive campaign to popularize the bonds.

[6] The government used a division of the Committee on Public Information called the Four Minute Men to help sell Liberty Bonds and Thrift Stamps.

Harry Lauder, Al Jolson, Elsie Janis, Mary Pickford, Theda Bara, Ethel Barrymore, Marie Dressler, Lillian Gish, Fatty Arbuckle, Mabel Normand, Douglas Fairbanks, and Charlie Chaplin were among the celebrities that made public appearances promoting the idea that purchasing a liberty bond was "the patriotic thing to do" during the era.

Routinely each pilot stood in the rear cockpit of his craft and told the assemblage that every person who purchased a Liberty Bond would be taken for a ride in one of the airplanes.

The inch-and-a-quarter wide medallions suspended from a red, white, and blue ribbon were awarded by the Department to Victory Liberty Loan campaign volunteers in appreciation of their service in the drive.

Despite all these measures, recent research[14] has shown that patriotic motives played only a minor role in investors' decisions to buy these bonds.

[15] Peak US indebtedness was in August 1919 at a value of $25,596,000,000 for Liberty Bonds, Victory Notes, War Savings Certificates, and other government securities.

In 1921 the Treasury Department began issuing short term notes maturing in three to five years to repay the Victory Loan.

"[20] This type of "gold clause" was common in both public and private contracts of the time, and was intended to guarantee that bond-holders would not be harmed by a devaluation of the currency.

[21] The Supreme Court later held the gold clause resolution to be unconstitutional under section 4 of the Fourteenth Amendment:[22] We conclude that the Joint Resolution of June 5, 1933, insofar as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.However, due to President Franklin D. Roosevelt's elimination of the open gold market with the signing of Executive Order 6102 on April 5, 1933, the Court ruled that the bond-holders' loss was unquantifiable, and that to repay them in dollars according to the 1918 standard of value would be an "unjustified enrichment".

According to a 2020 study, "counties with higher liberty bond ownership rates turned against the Democratic Party in the presidential elections of 1920 and 1924.