Bad News Bonds

Washington's new sales pitch

For three generations, U.S. Savings Bonds have been favored gifts for babies, college grads and newlyweds. In recent years, however, that so-called share of America has been a bum investment. Government bonds are safe, but the maximum interest of 7% has often been only half of that earned on almost equally secure bank savings certificates.

Now the Gray Panthers, a senior citizens lobby, has forced Washington to admit that bonds are not a wise way to make money. Last year the group complained to the Federal Trade Commission that the Government was misleading investors, who did not realize that the real value of the money put in bonds was decreasing rather than increasing during a period of high inflation.

The FTC normally chases after false corporate advertising claims, such as Carter's Little Liver Pills' promised relief from liver ailments or Listerine's guarantee that it helps fight colds. But last week the FTC forced the U.S. Treasury Department to change the ads it uses to promote bonds. Previously it had emphasized the interest earned and claimed that bonds were a "good investment." The new ads will stress that through plans like payroll deductions, bonds can be a good method of forced regular saving.

The new honest advertising is unlikely to set off any stampede to buy bonds. Sales reached a patriotic peak during World War II, but in recent years the investing public has preferred to put its spare cash into stocks or socks. Last year only $144 million in bonds were sold, compared with $303 million in 1945.

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