Liberty Bonds

Liberty Bonds are bonds issued by the US Department of the Treasury in conjunction with the Federal Reserve System to fund the US participation in World War I. 

The war bonds were issued in four parts in 1917-1918. Also, in 1919, the fifth post-war issue was issued, called "Victory Bonds".

By issuing this type of bonds, the government borrowed money from the population to pay military expenses. Although the bonds were touted as a way for US citizens to show patriotism and support for the military, the first issue in 1917 didn’t have much success. In this regard, the second and subsequent issues were accompanied by larger advertising campaigns. 

The interest rate varied from 3.5% for the first issue to 4.25% for the latter, which was lower than the savings account rate and reflected the main purpose of the issue of securities - not financial gain, but support for the military operation, and by this rate it was also protected from speculators. In addition to all of the above, interest on them was not a subject to most types of taxes. 

The par value of the bonds was $50. They could also be purchased in installments using 25-cent War Thrift Stamps and $5 military savings certificates that could be redeemed for an entire bond. For many US citizens, this was the first experience of investing, which was previously considered accessible only to rich people. 

The maturity period of the bonds was 25-30 years, however, most of the first issues were cashed out or converted into bonds with higher yields maturing in 10-15 years, which made the certificates of these bonds a separate value. 

In total, 17 billion USD were collected from the sale of the Liberty Bonds during the First World War. 

The Liberty Bonds were issued again in the early 2000s as New York municipal bonds and were intended to help rebuild the World Trade Center and parts of lower Manhattan, which had been hit on the September 11, 2001 terrorist attack. 

TThe $8 billion new issuance has been criticized for bailing out large corporations, by exempting bonds from the triple tax, and for extending the bonds to projects not even located in the affected area.