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Birth of a MarketThe U.S. Treasury Securities Market from the Great War to the Great Depression$
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Kenneth D. Garbade

Print publication date: 2012

Print ISBN-13: 9780262016377

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262016377.001.0001

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Designing the Liberty Loans

Designing the Liberty Loans

(p.69) 5 Designing the Liberty Loans
Birth of a Market

Kenneth D. Garbade

The MIT Press

This chapter examines the five Liberty Loans which financed two-thirds of the cost of American participation in World War I. The contract terms for the five Liberty Loans exhibited a level of ingenuity and a willingness to experiment not typically associated with a sovereign issuer. Interest income ranged from fully tax exempt on the First Liberties to varying degrees of partial exemption on subsequent issues. The Treasury also offered debt convertible into debt with higher coupon rates (the First and Second Liberty bonds) and interconvertible debt with different tax provisions and coupon rates (the Victory Liberty notes).

Keywords:   Liberty Loans, Liberty bonds, Treasury bonds, Treasury financing, World War I, interest income, convertible debt, Victory Liberty notes

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