During deadly flu pandemic, Fed drove vital funding for World War I
By Stan Austin
via the TEN magazine web site, published by the Federal Reserve Bank of Kansas City
A mysterious and lethal virus rapidly spreads across the globe. Hospitals and caregivers scramble to confront a sickness that leaves the public fearful and medical professionals perplexed. Authorities order business and social restrictions to stem the surge.
The year? ... “2020” might be an obvious answer as the COVID-19 outbreak continues. However, that scenario actually describes the “Spanish flu” outbreak of 1918. There are stark similarities between that Great Pandemic and the current one–face masks, social-distancing recommendations and overwhelmed health professionals, for example. However, there are many important differences.
Chief among them, the flu’s staggering death toll – estimated at more than 50 million people worldwide – and America’s involvement in World War I. Historians agree that the country’s frenzied war buildup was a major factor in spreading the virus, as thousands of sailors and soldiers were rushed via crowded ships to join the Allies in Europe. Still, today’s coronavirus pandemic has many people looking back 102 years for parallels.
The Fed responds
From the standpoint of economic stewardship, one constant in the 1918/2020 comparisons is the vital and highly visible role played by the Federal Reserve. This year, the Board of Governors has taken several actions aimed at protecting consumers, helping businesses stay afloat, and revitalizing a national economy battered by COVID-19 shutdowns and historic unemployment.
In 1918, just five years after the central bank was established, the regional Reserve Banks and the Treasury were guiding the Liberty Loan program to help finance the war effort. Aided by a massive promotional campaign involving celebrities, local volunteers and even school children across the country, $20 billion was raised through four Liberty Loan drives and a “Victory Loan” drive that was conducted after the WWI armistice was signed Nov. 11, 1918. Although the flu was still raging, a Federal Reserve System publication the next month captured a sense of optimism about the Kansas City Fed’s region.
Read the entire article on the Ten Magazine web site here:
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