Poor Man's Savings Scheme

Most discussed war-financing nostrum in Britain today is John Maynard Keynes's plan for forcing all Britons above the subsistence line to invest fixed percentages of their income in blocked savings accounts. Last week financial men could remind themselves that the Keynes plan has a faint parallel in the U. S. Released were current figures on Henry Morgenthau Jr.'s own public thrift campaign: U. S. Savings Bonds. Voluntary and not for war, the Morgenthau "baby bonds" nevertheless permit the "ill-housed, ill-clad, ill-nourished" third of the U. S. population to share a nation's deficit financing.

First U. S. Savings Bonds were sold by Secretary Morgenthau to Franklin D. Roosevelt in 1935 for $18.75 apiece, before floodlights and newsreel cameras. They will be worth $25 each ten years from purchase date (which amounts to principal plus interest at 2.9% semiannually). With a popularity like that of annuities, baby bonds (units: $25 to $1,000 maturity value) in less than three years became the most widely held security in the world. Their owners: more than 2,300,000 U. S. citizens, corporations, trusts, etc., who have lent the U. S. Government $2,982,209,976.

Dealing with a mass market, Salesman Morgenthau has used advertising as his chief weapon. Until March 1938, about $450,000 a year was spent for magazine advertising, about $200,000 for posters and chasing prospects by direct mail. Since then direct mail has been used alone on a mailing list of 9,000,000 names. Cost: some $260,000 a year. Results: $1,000 of bond sales for every dollar of expense.

Today baby bonds sell at a rate of around $1,800,000 a day (record day Jan. 3, $23.000,000). Some 200,000 U. S. citizens are buying at least one a month. More than 75% of buyers are repeaters; some have been caught exceeding the legal limit of purchases ($10,000 maturity value per year) by using different names or addresses. Last month, with the public debt approaching its statutory limit, Henry Morgenthau cut off one of his best markets: corporations, trusts, other institutions, who were glad to put $7,500 a year into bonds with a better yield than any other Government security on the market today. To individuals, rich or poor, Henry Morgenthau hopes to go on selling bonds indefinitely.

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