How the US financed World War I using Charlie Chaplin and Girl Scouts

Gillian Tett (0:00)

Today on The Story of Money, how the First World War transformed the United States into a nation of investors.

Robin Wigglesworth (0:06)

The Liberty Loan Programme was basically the Genesis moment for the mightiest, biggest, baddest financial market on the planet.

Gillian Tett (0:15)

We have to go back to the horror and hell of World War I.

Robin Wigglesworth (0:18)

It was apocalyptic. They even got celebrities involved in the silent campaign. Charlie Chaplin, Douglas Fairbanks, Mary Pickford, lots of the biggest movie stars of the era. They got girl scouts to go around and sell bonds door to door. They even used a captured German submarine. They turned it into a bond selling booth in Central Park called You Buy a Bond. Our story begins at the depths of World War I, one of the deadliest, most destructive conflicts in human history when America rode to the Allies' defence.

Gillian Tett (0:53)

And thanks to a creative Treasury Secretary, the country became hooked on a branding campaign unlike anything that anyone had ever seen before.

Robin Wigglesworth (1:01)

He hatched a plan to make Americans part with their hard-earned cash and created something called the Liberty Loan Programme to finance it all.

Gillian Tett (1:10)

Now we all know who won the First World War, but what you probably don't know is how America funded it.

Robin Wigglesworth (1:17)

The Liberty Loan Programme was basically the genesis moment for the mightiest, biggest, baddest financial market on the planet, the US Treasury Market. And it also laid the groundwork for how investing became such a central part of the American culture.

Gillian Tett (1:35)

So to illustrate this, we're going to be talking about a book that Robin has written called A Fabulous Debt. I'm Gillian Tett.

Robin Wigglesworth (1:45)

And I'm Robin Wigglesworth. It's fabulous to be talking about the Liberty Loan Programme and this is the story of money.

Gillian Tett (1:51)

So Robin, today we're going to be talking about these World War I bonds. And I gather that you've been out on a sleuthing campaign to actually find a physical one, haven't you? Did you get one?

Robin Wigglesworth (2:03)

No, not yet.

You know, I always thought I'd use some of my book advance to buy myself a little bit of a certificate from the Liberty Loan Programme because it's such an important market in the history of the bond market. They look pretty. It's full of eagles and American flags and heavily ornate borders and all sort of iconography. And I thought I'll buy it. I'll frame it when I finally saw the book is out.

Gillian Tett (2:29)

Yeah. Most people go off and get a holiday or a nice bottle of wine, but you want a certificate of a bond. Go for it.

Robin Wigglesworth (2:33)

I'm a very sad person or a heroic one, depending on your perspective.

Gillian Tett (2:36)

Well, that's officially very geeky. But we're going to talk today about what drove that whole propaganda campaign with the Liberty Bonds. And to understand that, we have to go back to the horror and hell of World War I, don't we?

Robin Wigglesworth (2:50)

Yes. Well, it started in 1914 We're not going to dive all the way into it, but obviously it was enormously destructive. I mean, entire generations were almost wiped out, one of the deadliest conflicts in the world up until then.

Over 20 million people died. I mean, we've all seen pictures of the trench warfare. It was apocalyptic almost.

Gillian Tett (3:11)

And all of which has a horrible sense of deja vu today. I mean, I've just come back recently from the front lines of the war in Ukraine, which is once again trench warfare, but with a drone related twist. It was hell.

But what we're talking about today is a moment in 1917 when America joined the war. Tell us why that really mattered.

Robin Wigglesworth (3:31)

Well, the US at first didn't want to join the war. It did so belatedly. There was an overwhelming sense that we should stay out of this. Woodrow Wilson, the US president, actually won re-election in 1916 on a platform of I Kept Us Out of the War.

But then by 1917, things had started to change.

Gillian Tett (3:50)

What made America in 1917 change its mind and decide to jump in?

Robin Wigglesworth (3:55)

Well, there was a lot of things because there was a huge shift in public opinion. It was public opinion that changed rather than the politicians driving this. German atrocities in Belgium started changing the view of who were the baddies essentially in this conflict. German U-Boats sank the American passenger ship for Lusitania in 1915