Financial History Issue 114 (Summer 2015) | Page 28

Joe I. Herbstman Memorial Collection war profit tax as well. Approximately onequarter of the cost of the war was paid for by the changes made to the tax code. The remaining revenue would come from the sale of government debt. All told, more than $20 billion would need to be generated by the sale of war bonds over a two-year period. Such debt issuance had never been attempted before in American history. Indeed, the national debt stood at only some $3.6 billion in the summer of 1916. Previous Treasury bond sales were usually targeted at banks and large investors, but the Liberty Loan program was to be different. McAdoo knew that financial institutions alone could not buy up all of the needed debt, so the Liberty Loans had to be sold to individual American families as well. The Liberty Loans (also known as Liberty Bonds) were sold throughout five different issues: a First Liberty Loan (30-year bond), a Second (25-year bond), a Third (10-year bond), a Fourth (20-year bond) and a Victory Loan (four-year note). Issued from June 1917 through May 1919, the program raised some $21 billion through the sale of about 66 million securities. McAdo