Sales of Renamed War Bonds Increase
%mlink(STRY:; PHOTO:; AUDIO:%)
WASHINGTON (AP) _ The government is reporting a 36 percent boost in sales of an ordinary savings bond that was transformed into a war bond after Sept. 11. Whether that can be attributed to patriotism remains unclear.
The Treasury Department, under pressure from Congress after the terror attacks, brought back war bonds, a popular way during World War II for Americans to help the war effort. Lawmakers who urged the change said they were responding to constituents who wanted to help pay for the war against terror and relief efforts for the victims.
As in the past, war bonds investments were not earmarked for a specific purpose but went into the government’s general fund.
The Treasury Department reported $1.57 billion in sales of ``Patriot Bonds″ between December, when the Series EE savings bonds were renamed, and July. That is $419 million more than were sold during the corresponding period a year earlier.
Pete Hollenbach, a spokesman for the department’s Bureau of Public Debt, said the agency experienced a jump in sales immediately after the bonds were renamed.
Sen. Mitch McConnell, R-Ky., who pushed for the bonds, said he believed patriotism was at work. ``It’s inspiring how our country has reacted to these bonds, which once again proves that when Americans are called to action, they respond,″ McConnell said.
Some financial analysts think other factors may have been responsible.
Interest rates on the bonds have hovered around 4 percent, which is relatively attractive compared to about 1 percent for traditional savings accounts, according to David Wyss, chief economist for Standard & Poor’s in New York.
``A bank account gives you zip. The stock market is going down, so Patriot Bonds look good,″ Wyss said.
Alex Eucare, a marketing executive from Vienna, Va., said he bought $500 in Patriot Bonds for his grandchildren to show his support for the government, but he also thought the investment was safer than stocks.
``You get a twofer,″ he said. ``You get a little more security, and you get to help the country _ not a bad deal.″
The government has issued bonds to help pay for war efforts since the Revolutionary War. During World War II, they were initially offered in May 1941 as Defense Savings Bonds and renamed War Bonds after the Japanese attack on Pearl Harbor.
The government raised billions of dollars through bond drives between 1941 and 1946, including $50 billion in war bonds, according to the Congressional Research Service.
Treasury officials initially were lukewarm to the idea this time, saying the best way for citizens to help the country would be to donate to charity or spend money to energize the economy.
The situation was different during World War II, when the government wanted people to save money rather than buy goods in an effort to keep rampant inflation in check.
On the Net: Bureau of the Public Debt: http://www.savingsbonds.gov/
Bank rates: http://www.bankrate.com/brm/default.asp