‘Invest!’: Liberty Bonds and Stock Ownership over the Twentieth Century

The Liberty Bond drives of World War I were nation-wide interventions aimed at increasing financial literacy and associating bond ownership with patriotism. Using data from the first year of the Survey of Consumer Finances, 1947, through 1971, we investigate whether exposure to the drives shaped investing behavior over the long run. We find that households residing in counties that had high Liberty Bond participation had greater stock and bond ownership rates in later decades, and held more favorable opinions towards retirement saving and stock investment. These effects are present only among cohorts actually exposed to the bond drives, and not among younger cohorts in the same counties, and are robust to an instrumental variables specification that takes advantage of differences in the way the bond drives were conducted. Our estimates imply that household stock ownership rates would have been about 20% lower in the late 1960s if the bond drives had not been conducted.