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Tag: Second Liberty Bond Act

Patriotic posters and the debt ceiling

World War I Liberty Loan poster, ARC 512633

As the calendar turns to August and the summer heat sets in, no topic is hotter than the debt ceiling.

Congress has voted to increase the debt limit more than 100 times since it was first established. How did this get started? Part of the answer is in these nearly century-old posters.

To raise money for the costs of World War I, the Federal Government began issuing war bonds. When the first round was not as successful as hoped, artists were commissioned to make more compelling posters, and famous actors encouraged citizens to buy them. Purchasing war bonds came to be seen as a patriotic duty, and several more sets were issued during the war.

With the passage of the Second Liberty Bond Act in 1917, the Department of the Treasury began issuing long-term bonds in order to minimize the government’s interest costs. As a means of managing these new obligations, the legislation enacted a statutory limit on federal debt.

Liberty Loan poster, ARC 512718

Legislation passed over the next two decades created similar limits for other types of government-issued debt, including the bills and the notes issued by the Treasury.

By 1939, Congress eliminated these separate limits and established one aggregate debt limit. The nation’s cumulative debt at the time was $40.4 billion, approximately 10% below the … [ Read all ]