NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Wendy Rahn

University of Minnesota
1414 Social Science
267 19th Ave. South,
Minneapolis, MN 55455

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Minnesota

NBER Working Papers and Publications

August 2020When Uncle Sam Introduced Main Street to Wall Street: Liberty Bonds and the Transformation of American Finance
with Eric Hilt, Matthew S. Jaremski: w27703
We study the effects of the liberty bond drives of World War I on financial intermediation in the 1920s and beyond. Using panel data on U.S. counties we find that higher liberty bond subscription rates led to an increase in the number of investment banks, stronger local competition between investment banks and commercial banks, and a relative contraction in commercial bank assets. We also find that individuals residing in states with higher liberty bond subscription rates were more likely to report owning stocks or bonds in the late 1930s. Finally, we find that this shift in financial intermediation away from commercial banks was correlated with slower growth in the number of manufacturing enterprises and farms at the county level. Although they were conducted to support the American effor...
June 2018Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s
with Eric Hilt: w24719
We analyze the effects of ownership of liberty bonds, which were marketed to households during World War I, on election outcomes in the 1920s. In order to address the endogeneity of liberty bond subscriptions, we utilize the local severity of the fall 1918 influenza epidemic, which disrupted the largest liberty bond campaign, as an instrument. 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 Fed raised and then subsequently lowered interest rates. Our results suggest the liberty bo...

Published: Eric Hilt & Wendy Rahn, 2020. "Financial Asset Ownership and Political Partisanship: Liberty Bonds and Republican Electoral Success in the 1920s," The Journal of Economic History, vol 80(3), pages 746-781.

 
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