Bonds for the Masses

Treasury Secretary Morgenthau left Washington on a ten-day fishing trip last week with a light heart. He had at last found an effective way to sell large amounts of defense bonds to the general public, thus straighten the worst kink in his three-month-old savings-bond drive.

Morgenthau found his answer in Michigan, where a mass-merchandising plan has the public grabbing bonds as though they were ball-game passes. Officially, the

Michigan drive began July 10 when it was set up as a Treasury "experiment." Actually it began May 19 when bright-eyed, grinning Frank Norman Isbey, State Defense Savings Committee executive chairman, put a defense-bond booth in every Detroit school, handed out mimeographed leaflets entitled: "What Every School Child Should Know About Defense Saving."

Soon many of Detroit's 400,000 school kids were running about with defense-stamp albums. Next the large chain stores--A. & P., Kroger, Woolworth, Penney, etc.--hung out red, white & blue signs, began selling stamps like cigarets. The Cunningham Drug chain spent $1,600 on newspaper ads, nearly burst with patriotism when daily bond sales in its 125 Michigan stores hit $750. Kroger's eight Lansing stores rang up $80 daily. Last week 12,500 Michigan stores were selling bonds; by mid-September there may be 45,000.

Dairy companies advertised bonds on 28,000,000 milk-bottle caps; Chrysler and G.M. instituted payroll deduction schemes; C.I.O. and A.F. of L. egged members into buying with literature and posters; the State tax department sent out a plug for the bonds with 108,000 sales-tax blanks. Results: sales of more than $17,000,000 monthly--all to the general public.

To Morgenthau this is wonderful. Three months ago, he piously announced that high-pressure ballyhoo would play no part in his campaign; but he had to change his mind. For the first time, and only in Michigan, the right people are buying his defense bonds. Main objective of defense bonds was to sell huge amounts of Series E bonds and defense stamps (face value: 10-c- to $1,000) to individuals, thus siphon off excess buying power and postpone inflation. Through June 30 (latest available figures), national bond sales were $713,668,000, a satisfactory total. But of this total, banks & trust companies bought about $460,000,000 in Series F & G bonds (face value: $100 to $10,000), because the 2 1/2% return was higher than on regular "Governments." Average citizens spent a disappointing $250,000,000 on the cheaper bonds, bought automobiles and refrigerators instead.

For this sorry record, the Treasury's corny sales promotion was in part to blame. But now the corn is being weeded out. Dull posters and literature will be pepped up or ditched. The radio campaign (most successful Treasury promotion so far) is using better talent, shorter commercials. By Sept. 15 the Michigan plan will be working in every State. If it works as well nationally as in Michigan, Washington talk of compulsory savings will prove at least premature.

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