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Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s

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  • Hilt, Eric
  • Rahn, Wendy

Abstract

We analyze the effects of ownership of liberty bonds on election outcomes in the 1920s. We find that counties with higher liberty bond ownership rates turned against the Democratic Party in the presidential elections of 1920 and 1924. This was a reaction to the depreciation of the bonds prior to the 1920 election (when the Democrats held the presidency) and the appreciation of the bonds in the early 1920s (under a Republican president), as the Federal Reserve raised and then subsequently lowered interest rates. Our analysis suggests that the liberty bond campaigns had unintended political consequences.

Suggested Citation

  • Hilt, Eric & Rahn, Wendy, 2020. "Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s," The Journal of Economic History, Cambridge University Press, vol. 80(3), pages 746-781, September.
    • Handle: RePEc:cup:jechis:v:80:y:2020:i:3:p:746-781_4
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    Cited by:

    1. Correia, Sergio & Luck, Stephan & Verner, Emil, 2022. "Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu," The Journal of Economic History, Cambridge University Press, vol. 82(4), pages 917-957, December.
    2. Hilt, Eric & Jaremski, Matthew & Rahn, Wendy, 2022. "When Uncle Sam introduced Main Street to Wall Street: Liberty Bonds and the transformation of American finance," Journal of Financial Economics, Elsevier, vol. 145(1), pages 194-216.
    3. Velde, François R., 2022. "What Happened to the U.S. Economy during the 1918 Influenza Pandemic? A View Through High-Frequency Data," The Journal of Economic History, Cambridge University Press, vol. 82(1), pages 284-326, March.
    4. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2020. "Dynamic tax externalities and the U.S. fiscal transformation," Journal of Monetary Economics, Elsevier, vol. 114(C), pages 144-158.
    5. Arroyo Abad, Leticia & Maurer, Noel, 2021. "Do Pandemics Shape Elections? Retrospective voting in the 1918 Spanish Flu Pandemic in the United States," CEPR Discussion Papers 15678, C.E.P.R. Discussion Papers.
    6. Lin, Peter Z. & Meissner, Christopher M., 2021. "Persistent Pandemics," Economics & Human Biology, Elsevier, vol. 43(C).
    7. George J. Hall & Thomas J. Sargent, 2020. "Debt and Taxes in Eight U.S. Wars and Two Insurrections," NBER Working Papers 27115, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N2 - Economic History - - Financial Markets and Institutions
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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