Seventy-five years ago this week, the United States held its first War Loan Drive. The Second World War cost the United States $300 billion dollars, with the federal budget rising from $9 billion in 1939 to $98 billion in 1945. How was the nation to pay for that?
Taxes were increased with an additional 5 percent Victory Tax. To assure payment, on June 10, 1943 the government approved the first automatic deduction of taxes from paychecks. But more was needed, and the government turned to bonds, which had been effective in World War I. War bonds were sold at 75 percent of face value (a $25 bond sold for $18.75) and matured over ten years. While the rate of return was below market value, bonds were a stable investment with the bonus of aiding the war effort. Channeling cash into bond purchases helped prevent inflation in the robust wartime economy as well.
How Bonds Were Purchased
Defense Bonds first went on the market on May 1, 1941, and they were renamed War Bonds after the US entered the war in December 1941. Bonds were available in denominations of $25 through $1000, designed to be affordable for everyone. For 10 cents, people could purchase stamps, which were placed in special albums. When full, the albums were redeemed for a bond. War stamps were especially popular with children.
Employers set up automatic payroll deduction systems, so employees could set aside a certain amount for War Bonds with each paycheck. A robust advertising campaign, rallies and other promotions, and a series of War Loan Drives brought in even more needed money.
Advertising War Bonds
As part of the war effort, many newspapers, magazines, and radio stations donated advertising space and time. Posters sprang up in store fronts. Even comic books got in the act as superheroes promoted bond sales. Popular songs also encouraged sales, such as Bing Crosby’s recording of “The Road to Victory” for the Sixth War Loan Drive.
Promotions for War Bonds
Bond rallies were extremely popular, featuring Hollywood stars and popular musicians. Celebrities conducted auctions – a kiss from Hedy Lamarr, Betty Grable’s stockings, Jack Benny’s violin, and the horseshoes of Triple Crown winner Man O’ War. Movie theaters and baseball stadiums sometimes offered free admission with the purchase of a War Bond. At the UCLA-USC game on 12 December 1942, a student-led war bond drive raised $2 million.
War Loan Drives
Eight War Loan Drives were conducted in the US from 1942 to 1945. Each was meant to raise an additional $9-$15 billion in sales. Towns received quotas, with the aim of promoting competition between towns. Volunteers went door-to-door, pleading for sales and rewarding purchasers with stickers to display on their window or door. The drives were conducted on the following dates:
- First War Loan Drive: Nov. 30 to Dec. 23, 1942
- Second War Loan Drive: Apr. 12 to May 1, 1943
- Third War Loan Drive: Sep. 9 to Oct. 1, 1943
- Fourth War Loan Drive: Jan. 18 to Feb. 15, 1944
- Fifth War Loan Drive: June 12 to July 8, 1944
- Sixth War Loan Drive: Nov. 20 to Dec. 16, 1944
- Seventh War Loan Drive: May 14 to June 30, 1945
- Victory Loan Drive: Oct. 29 to Dec. 8, 1945
By the end of the war, 85 million Americans (out of a population of 131 million) had purchased $185.7 billion dollars of bonds – over $2000 per person, at a time when the average income was $2000 per year.