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U.S. TREASURY Paper savings bond is endangered species

Saturday, January 4, 2003


The Treasury Department may start issuing bonds online as part of its effort to reduce paper handling.
SACRAMENTO BEE
A patriotic icon of World War II, the paper U.S. Savings Bond, could disappear into the nation's historical landscape.
Shirley Dodge, who grew up during the era, recalled how her parents supported the war effort. They tended victory gardens, saved tin foil and, like many people, invested in America by buying savings bonds.
"I can remember my mom giving a savings bond to her good friend across the street in Oakland for her son's bar mitzvah," said Dodge, who later established her own tradition of giving the bonds as gifts.
As part of the government effort to go paperless and reduce costs, the Treasury Department is talking about issuing the bonds entirely via online accounts.
Poof goes the feeling of holding a savings bond and dreaming of its future value.
"Going forward, it makes a lot of sense to reduce the amount of paper to be handled," said Daniel J. Pederson, savings bond expert and author of "Savings Bonds: When to Hold, When to Fold, and Everything in Between."
What's behind this
Electronic bonds are cheaper for the bureau to maintain than paper bonds.
Every time a bond is printed or cashed, or when it goes through ownership changes and gets submitted for retitling, it adds to program costs, Pederson said.
But he added that a paper certificate is "an important psychological part of the purchase."
Many people like to see something that looks governmental, Pederson said, especially if they are giving it as a gift.
"A lot of people come to me and say, 'I got this from Aunt Betty or Grandpa Joe,'" he said. "The physical paper is a remembrance of that relative who no longer is alive. To them, it's very significant."
While the timing and the shape of the change remain under debate within the Treasury's Bureau of the Public Debt, an internal planning document dated mid-November leaves no doubt that the goal is to end the old-style certificate.
In a related move, the bureau plans to close 37 of 41 field marketing offices, a decision some believe will further erode the historic program.
"The program has changed over the years, and there are a lot of financial choices," said Bob Sudderth, a bureau information officer in Alameda.
"As a financial product, it [a savings bond] has to be sold, explained and serviced," he said. "People don't buy bonds unless they are informed about them."
Psychological meaning
Dodge, who lives in Sacramento, is one saver who will miss the old-fashioned bond.
"My parents got savings bonds for me, or they were gifted for me, as I grew up in the '40s," she recalled. "I thought it was money. I knew it was savings. My folks were savers."
It wasn't until Dodge became an adult that she took a close look at the certificate -- those that she bought for a friend's grandchild. Later, she began purchasing bonds through her job as a deputy probation officer until 1969.
A bureau spokesman, meanwhile, said any plan would require Treasury approval.
"There are certainly people out there who need paper at this point," said bureau spokesman Stephen Meyerhardt in Washington, D.C. "Our intent is to leave as few people behind as possible as we go into the electronic age."