The Beginning of the Savings Bonds Program
United States Savings Bonds are non-marketable Treasury securities which have been sold continuously since 1935. They were introduced by then-Treasury Secretary Henry Morgenthau, Jr., as a means of encouraging broad public participation in government financing by making federal bonds available in small denominations specifically tailored to the small investor.
While Treasury securities had been offered at various times in our history dating back to 1776, they had previously always been Treasury marketable securities, subject to market fluctuation. Many small savers, particularly buyers of Liberty Bonds during World War I, experienced significant losses when forced by personal circumstances to sell their bonds in the market prior to maturity.
The savings bond was designed to be less susceptible to market conditions. It was offered as a savings type of security with a schedule of fixed interest payments and redemption values, redeemable at any time after a short holding period for the purchase price plus accrued interest. A savings bond was issued in registered form (non-negotiable), and could be replaced in the event of loss or destruction.
Early savings bonds, popularly called "baby bonds", were issued in four successive series, A, B, C, and D, from 1935 to 1941. Offered in denominations from $25 to $1,000, they were sold at 75 percent of face value and paid 2.9 percent interest when held until their full 10-year maturity. Total sales at issue price of the four series, from March 1935 through April 1941, were approximately $4 billion. The last "baby bonds" matured and ceased earning interest in April 1951.