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

Eric Hilt, Matthew Jaremski and Wendy Rahn

No 27703, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: N12 N22 N42 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-his
Note: CF DAE ME PE POL
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Published as Eric Hilt & Matthew Jaremski & Wendy Rahn, 2021. "When Uncle Sam introduced Main Street to Wall Street: Liberty Bonds and the transformation of American finance," Journal of Financial Economics, .

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