In 1914, United States carried a debt of $1 billion
By 1919, end of World War I, the debt rose to $25 billion
Personal Income Tax rose to 73%
Bonds and short term debts were not sufficient to paythis debt
In 1921, personal income tax was reduced from 73% to58%, which reduced revenue and Treasury was forcedto consider other debt management tools
In 1929, new security -
Zero coupon bonds
wasintroduced/auctioned. It had less than one-year maturity and was issued at a discount of face value.
These were called Treasury Bills or T-Bills because oftheir short-term nature.