For times like these, why doesn't someone invent a risk-free investment for small investors who can't afford to speculate?
Someone already did -- half a century ago. Today it's the most widely held investment instrument in the world, and still going, stronger than ever. You know it as the U.S. Savings Bond.
Last month Americans purchased $815 million worth of U.S. Savings Bonds, setting a 50-year record for the month. You also made the first quarter of 1991 a record, putting away $2.57 billion in the quarter and prompting Catalina V. Villalpando, treasurer of the United States, to see it as a tribute to "the returning savings ethic of Americans." Total holdings of Savings Bonds reached $129.70 billion at the end of the quarter.
It began when President Franklin D. Roosevelt in a radio broadcast April 30, 1941, invited the American people to join him in "one great partnership to help finance the nation's defense effort." Six months later the United States entered World War II.
The day after the speech, May 1, 1941, Roosevelt began the "great partnership" by purchasing the first United States Savings Bond, Series E from Secretary of the Treasury Henry Morgenthau.
Nothing in my long career has given me more satisfaction than the success of this program, and there's a special reason. If I was not the mother, or even the midwife, of the Savings Bond, I was there for the birth. In early 1941 Morgenthau summoned me to Washington to discuss his plan to revive the Liberty Bonds of World War I. Young and brash, I told him I would not support a bond of that type. The Liberty Bond was not a great investment. It had no fixed value, and many people, including my parents, lost money on them.
Out of this exchange came the idea of a bond in small denominations with a fixed value. It would be registered and non-negotiable. The yield would be guaranteed by the full faith and credit of the U.S. Treasury. The investment was secure -- as secure, in fact, as any investment could be. The program continues to have my full support.
A remarkable aspect of the U.S. Savings Bond program is that it is one of the nation's great volunteer undertakings. Morgenthau consulted many advisers in those early formative days, members of the government and private citizens. Over the years, the
marketing of U.S. Savings Bonds has been supported by thousands of volunteers from business, education, financial institutions and other organizations.
The 1991 national chairman is Edward L. Hennessy Jr., chairman and chief executive officer of Allied-Signal Inc. The sales drives have been made memorable by the support of famous entertainers, like Kate Smith, and the donation of their talent by people like Irving Berlin, who wrote "Any Bonds Today?", a song that saturated radio in the early '40s.
With the Japanese bombing of Pearl Harbor, sales of "war bonds" took off. They were successful partly because it was easy to invest in them. (It still is.) All Rosie the Riveter had to do was fill out a form that authorized her employer to deduct a small amount from her wages each week for the purchase of bonds, which she would then receive with her paycheck or by mail. The money would never be in her hands, so there was no temptation to spend it. Wartime shortages that reduced the range of consumer products, too, made saving simple.
You can buy and redeem U.S. Savings Bonds at most financial institutions, but millions of people -- one-fourth of the population -- still buy them through payroll savings plans where they work.
The 50th anniversary of the issuance of the first bond will be marked at the end of this month by a new commemorative postage stamp and a new Savings Bond slogan: "Celebrate an America Tradition - 50 Years of U.S. SavingsBonds."
It's not quite as cathy as "Buy War Bonds," but it gets the point across. And just as the bonds of a half-century ago were excellent ways to save money with complete security, today's Savings Bonds are an investment that could be the beginning of your financial security.