When Uncle Sam Introduced Main Street to Wall Street: Liberty Bonds and the Transformation of American Finance

49 Pages Posted: 17 Aug 2020 Last revised: 22 Jul 2022

See all articles by Eric Hilt

Eric Hilt

National Bureau of Economic Research (NBER); Wellesley College

Matthew Jaremski

Utah State University - Huntsman School of Business; National Bureau of Economic Research (NBER)

Wendy Rahn

University of Minnesota - Minneapolis

Date Written: August 2020

Abstract

We study the effects of the liberty bond drives of World War I on financial intermediation in the 1920s and beyond. Using panel data on U.S. counties, and an instrument that captures differences in the approaches used to market the bonds, we find that higher liberty bond subscription rates led to an increase in investment banks and a contraction in commercial bank assets. We also find that in the late 1930s, individuals residing in states where liberty bond subscription rates had been higher were more likely to report owning stocks or bonds. Although they were conducted to support the American effort in World War I, the liberty loan drives reshaped American finance.

Suggested Citation

Hilt, Eric and Jaremski, Matthew and Rahn, Wendy, When Uncle Sam Introduced Main Street to Wall Street: Liberty Bonds and the Transformation of American Finance (August 2020). NBER Working Paper No. w27703, Available at SSRN: https://ssrn.com/abstract=3675255

Eric Hilt (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Wellesley College ( email )

106 Central St.
Wellesley, MA 02181
United States

HOME PAGE: http://www.erichilt.net

Matthew Jaremski

Utah State University - Huntsman School of Business ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Wendy Rahn

University of Minnesota - Minneapolis ( email )

3-122 Carlson School of Management
321-19th Avenue South
Minneapolis, MN 55455
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
4
Abstract Views
181
PlumX Metrics