This Day In Market History: US Treasury Issues First Savings Bond

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1935, the U.S. Treasury issued the first U.S. savings bonds.

Where The Market Was: The S&P 500 was trading at 8.41 and the Dow closed the day at 103.27.

What Else Was Going On In The World? In 1935, the construction of the Hoover Dam was completed and reformed drinker Bill Wilson founded Alcoholics Anonymous. The average price of a new house was $3,450.

Series A Savings Bonds: The first U.S. savings bonds were reportedly issued after Treasury Secretary Henry Morgenthau Jr. realized that the U.S. had no government-sponsored savings program similar to the ones in France and the U.K.

U.S. President Franklin Roosevelt approved the first round of savings bonds on Feb. 1, 1935, and the bonds were issued exactly one month later.

These government bonds offer buyers a fixed rate of interest over a specified period of time. Proceeds from savings bonds are not subject to state and local income taxes, making them an appealing option for fixed income investors.

Related Link: Why Increases In US Bond Yields Hurt Your Stocks

Throughout World War II, savings bonds were referred to as Defensive Bonds and then War Savings Bonds, and proceeds from bond sales were used to help finance the war.

In 2002, the Treasury made savings bonds available via online purchase for the first time. Today, Americans can buy either Series EE fixed-rate bonds or Series I bonds with fixed and variable-tare components by creating a Treasury Direct account at treasurydirect.gov.

A 1944 $100 War Savings Bond Series E. Photo by JHerbstman/Wikimedia.