Tomorrow, Americans get their first chance in 56 years to buy “war bonds.”
But the new “Patriot Bonds” issued by the Treasury Department aren't quite the same as the World War II variety.
While they may appeal to our patriotic instincts, they aren't likely to raise anywhere near the $54.4 billion sold in World War II (the equivalent of nearly $539 billion in today's dollars). And from a pure investment standpoint, they're not for everybody.
But it's still a gesture that many Americans will appreciate after the Sept. 11 terrorist attacks and the war in Afghanistan.
The Treasury Department announced last month that it would sell the Patriot Bonds, resolving a bit of a disagreement in Congress. The House had voted for “Freedom Bonds,” but two Senate riders to other bills died in conference committees.
Even though it promised to sell the new bonds, Treasury has been slow to promote them - until now there has been almost no information about them on Treasury's web site. Many experts feel “war bonds” aren't really needed nowadays, and, because they cost more to issue than other financing instruments, they're really an expensive frill.
But, after Sept. 11, it may be the feeling that counts more than the math.
Many senior citizens have fond memories of the World War II variety of war bonds. They can remember hoarding their change to buy savings stamps - when the booklet was full, they could exchange it for a war bond. And it helped that Hollywood stars like Carole Lombard and Dorothy Lamour promoted bond sales.
The new variety of Patriot Bonds are really just warmed-over EE bonds with a new imprint. They're offered in denominations from $50 to $10,000. You buy them at half the face value, and they mature in 17 years. Interest rates, pegged to 90 percent of the yield on five-year Treasury notes, are announced every May 1 and Nov. 1 - the current rate is 4.07 percent until April.
They may appeal to many consumers as a timely, relatively inexpensive Christmas present, especially for kids who need to learn the value of thrift.
But for many savers who are conservative enough to like savings bonds in the first place, a better bet might be the new I Bonds, indexed for inflation. That one has a fixed rate, supplemented by an adjustable rate: Currently, the total interest is 4.4 percent until April.
But that's not the point, really. Right now, just three months after the Sept. 11 terrorist attacks, the patriotic feeling is more important to many Americans.
Homer Brickey is The Blade's senior business writer. E-mail him at email@example.com.