Abstract
Increasing savings rates among households of modest incomes would strengthen their balance sheets and reduce wealth inequality. This paper analyzes one of the largest and most successful efforts to increase the savings of ordinary households in American history. The Liberty Bond drives of World War I persuaded tens of millions of Americans to buy government bonds, which were sold in denominations as low as $50, and could be purchased in installment plans. Using newly collected data on the sales of Liberty Bonds at the county level, we analyze the factors that influenced the degree to which the bond drives were successful. The results highlight the importance of the participation of civil society organizations and local banks in marketing the bonds. We discuss the implications of these findings for the design of modern programs to increase savings.
- Copyright © 2016 by Russell Sage Foundation. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Reproduction by the United States Government in whole or in part is permitted for any purpose. We would like to thank Price Fishback and Paul Rhode for sharing their data on early taxpayers, and Richard Sutch and two anonymous referees for helpful comments. Christina Ferlauto, Polina Soshnin, Ryan Halen, and Lauren Carr provided research assistance. Direct correspondence to: Eric Hilt at ehilt{at}wellesley.edu, Department of Economics, Wellesley College, Wellesley MA 02481; and Wendy M. Rahn at rahnx003{at}umn.edu, University of Minnesota, 1414 Social Sciences Building, 267 19th Ave S., Minneapolis MN 55455.
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