Bye Bye Bad Buy

Inflation kills the $25 bond

The $25 U.S. savings bond was pronounced dead last week, slipping away to join such other relics of the pre-inflationary past as the 5-c- candy bar and the two-bit shoeshine. The bonds will continue to be sold through Dec. 31, 1979, after which they will be replaced by a costlier series that will pay the same 6% but have a much longer maturity. The old issue sold for $18.75 and paid $25 in five years; the new one will cost $25 but pay off $50 in eleven years and nine months.

It was in May 1941, when Hitler was preparing to invade Russia, that the first buyer anted up $18.75 for the first $25 Series E bond. By last year 2.7 billion of them, $67.5 billion worth, had been sold to kids who brought in their pennies and workers who had money deducted from each paycheck. Sales held steady over the years, even though inflation made the bonds a bad investment. But the expense of processing them went up so much that it did not pay to issue them. "The cost is the same whether the bond is $25 or $100," says a Treasury official, who estimates that eliminating the old $25 standby, plus some other changes, will slice $20 million off administrative costs.

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