Liberty Loan Committee

The Liberty Loan Committee coordinated campaigns to sell U.S. Treasury bonds to the American public from 1917 to 1919 in order to fund United States involvement in World War I. The Committee was managed by the Federal Reserve. Campaigns to promote the sale of the bonds were conducted by Federal Reserve District and emphasized the patriotic duty of citizens to aid the war effort through the purchase of the bonds.

United States entry into World War I necessitated a huge increase in government spending, both for the U.S. military and in aid for the Allies. One of the main fundraising efforts for the government were four Liberty Loans and a fifth Victory Loan, which sold U.S. Treasury bonds to the American public. The sale of the loans were managed by the Federal Reserve, which had been established only a few years earlier. The Federal Reserve Banks, and therefore the bond sale campaigns, were organized by twelve Federal Reserve Districts: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Federal Reserve was also responsible for managing the distribution of the funds in the nation's banks and withdrawing funds as they were needed by the government.

The Liberty Loan committees organized highly successful advertising campaigns based on patriotism to inspire the American public to buy the bonds, allowing the Treasury to sell them at a lower interest rate than the market would have set. The advertising campaigns took many forms. The Committee distributed posters and pamphlets, buttons and stickers, and many businesses decorated their store front windows with the ads. Prominent politicians, sports figures, and artists publicly bought bonds, inspiring their fans and supporters to do the same. "Four Minute Men" spoke after movies and plays about the importance of buying bonds. Parades were held featuring wounded veterans, and there were war-exhibit trains and aerial demonstrations by skilled fighter pilots that traveled across the country. More than 100,000 clergymen of many denominations delivered Liberty Loan sermons, and in May 1917 the National Women's Liberty Loan Committee was organized under the premise that women would provide a moral force in war finance. The Liberty Loan Committee became one of the largest committees in American history.

The First Liberty Loan of $2 billion was offered to the public in May and June 1917 and quickly oversubscribed by an estimated 4 million Americans. All four subsequent loans were also oversubscribed, in the first three by an increasing number of individuals. The Second Liberty Loan was offered in October 1917, the third was offered April to May 1918, the fourth, the largest of the loans, was offered September to October 1918, and the Victory Loan was offered from April to May 1919. All together, the Liberty Loans raised over 21 billion dollars for the United States war effort. Given the huge sums of money involved, the government needed to balance the movement of the money to avoid disturbing money markets, and the government also required the funds sooner than the Liberty Loan campaigns could provide. One of the most significant tools used to resolve this was through issuing certificates of indebtedness, which were also coordinated by the Federal Reserve. These certificates were short term government loans with low interest rates. Eighty-four series were issued up to June 1921, mostly in anticipation of liberty loans or receipts from taxes, spreading out the payment of funds to the government.

The Liberty Loan campaigns were successful in achieving the Treasury Department's object to market a huge increase in debt at a relatively low direct cost to the Treasury. The public bought most of the debt, and commercial banks bought approximately 20% of the total issue of the loans. The Loans also marked a significant shift in American credit, moving lending and borrowing into the social mainstream, where before it had been the province of skilled investors only.