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

Published online by Cambridge University Press:  23 June 2020

Eric Hilt  and
Wendy Rahn
Eric Hilt
Affiliation:
Professor, Economics, Wellesley College, 106 Central St., Wellesley, MA02481. E-mail: ehilt@wellesley.edu.
Wendy Rahn
Affiliation:
Professor, Political Science, University of Minnesota, 215 Johnston Hall, 101 Pleasant St. SE, Minneapolis, MN55455. E-mail: rahnx003@umn.edu.
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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.

Type
Article
Information
The Journal of Economic History , Volume 80 , Issue 3 , September 2020 , pp. 746 - 781
Copyright
© The Economic History Association 2020

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