Victory Bond
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War bonds (sometimes referred to as victory bonds, particularly in
propaganda Propaganda is communication that is primarily used to influence or persuade an audience to further an agenda, which may not be objective and may be selectively presenting facts to encourage a particular synthesis or perception, or using loaded l ...
) are
debt securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
issued by a government to finance military operations and other expenditure in times of war without raising taxes to an unpopular level. They are also a means to control
inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
by removing money from circulation in a stimulated wartime economy. War bonds are either retail bonds marketed directly to the public or wholesale bonds traded on a stock market. Exhortations to buy war bonds have often been accompanied by appeals to patriotism and conscience. Retail war bonds, like other retail bonds, tend to have a yield which is below that offered by the market and are often made available in a wide range of denominations to make them affordable for all citizens.


Before World War I

Governments throughout history have needed to borrow money to fight wars. Traditionally they dealt with a small group of rich financiers such as
Jakob Fugger Jakob Fugger ''of the Lily'' (; 6 March 1459 – 30 December 1525), also known as Jakob Fugger ''the Rich'' or sometimes Jakob II, was a major German merchant, mining entrepreneur, and banker. He was a descendant of the Fugger merchant family loc ...
and
Nathan Rothschild Nathaniel Rothschild may refer to: * Nathan Mayer Rothschild (1777–1836), British banker * Nathaniel de Rothschild (1812–1870), banker and vintner, Château Mouton Rothschild * Nathaniel Mayer von Rothschild (1836–1905), member of the Roths ...
, but no particular distinction was made between debt incurred in war or peace. An early use of the term "war bond" was for the $ raised by the US Congress in an Act of 14 March 1812, to fund the
War of 1812 The War of 1812 was fought by the United States and its allies against the United Kingdom of Great Britain and Ireland, United Kingdom and its allies in North America. It began when the United States United States declaration of war on the Uni ...
, but this was not aimed at the general public. Until July 2015, perhaps the oldest bonds still outstanding as a result of war were the British
Consols Consols (originally short for consolidated annuities, but subsequently taken to mean consolidated stock) were government bond, government debt issues in the form of perpetual bonds, redeemable at the option of the government. The first British co ...
, some of which were the result of the refinancing of incurring debts during the Napoleonic Wars, but these were redeemed following the passing of the Finance Act 2015.


World War I


Austria and Hungary

The government of
Austria-Hungary Austria-Hungary, also referred to as the Austro-Hungarian Empire, the Dual Monarchy or the Habsburg Monarchy, was a multi-national constitutional monarchy in Central Europe#Before World War I, Central Europe between 1867 and 1918. A military ...
knew from the early days of the
First World War World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
that it could not count on advances from its principal banking institutions to meet the growing costs of the war. Instead, it implemented a war finance policy modeled upon that of Germany: Bogart, p. 240 in November 1914, the first funded loan was issued. As in Germany, the Austro-Hungarian loans followed a prearranged plan and were issued at half yearly intervals every November and May. The first Austrian bonds paid 5% interest and had a five-year term. The smallest bond denomination available was 100 kronen. Bogart, p. 239 Hungary issued loans separately from Austria in 1919, after the war and after it had separated from Austria, in the form of stocks that permitted the subscriber to demand repayment after a year's notice. Interest was fixed at 6%, and the smallest denomination was 50 korona. Subscriptions to the first Austrian bond issue amounted to $; those of the first Hungarian issue amounted to $. The limited financial resources of children were tapped through campaigns in schools. The initial minimum Austrian bond denomination of 100 kronen still exceeded the means of most children,Healy, p. 244 so the third bond issue, in 1915, introduced a scheme whereby children could donate a small amount and take out a bank loan to cover the rest of the 100 kronen. The initiative was immensely successful, eliciting funds and encouraging loyalty to the state and its future among Austro-Hungarian youth. Over kronen was collected in the first three "child bond" issues.


Canada

Canada's involvement in the First World War began in 1914, with Canadian war bonds called "Victory Bonds" after 1917. The first domestic war loan was raised in November 1915, but not until the fourth campaign of November 1917 was the term Victory Loan applied. The First Victory Loan was a 5.5% issue of 5, 10 and 20 year gold bonds in denominations as small as $50. It was quickly oversubscribed, collecting $ or about $50 per capita. The Second and Third Victory Loans were floated in 1918 and 1919, bringing another $. For those who could not afford to buy Victory Bonds, the government also issued War Savings Certificates. The government awarded communities who bought large amounts of bonds Victory Loan Honour Flags.


Germany

Unlike France and Britain, at the outbreak of the First World War Germany found itself largely excluded from international financial markets. Chickering (2004), p. 104 This became most apparent after an attempt to float a major loan on Wall Street failed in 1914. As such, Germany was largely limited to domestic borrowing, which was induced by a series of war credit bills passing the Reichstag. This took place in many forms; however, the most publicised were the public war bond () drives. Nine bond drives were conducted over the length of the war and, as in Austria-Hungary, the loans were issued at six-month intervals. The drives themselves would often last several weeks, during which there was extensive use of propaganda via all possible media. Chickering (2007), p. 196 Most bonds had a rate of return of 5% and were redeemable over a ten-year period, in semi-annual payments. Like war bonds in other countries, the German war bonds drives were designed to be extravagant displays of patriotism and the bonds were sold through banks, post offices and other financial institutions. As in other countries, the majority investors were not individuals but institutions and large corporations. Chickering (2007), p. 198 Industries, university endowments, local banks and even city governments were the prime investors in the war bonds. In part because of intense public pressure and in part due to patriotic commitment the bond drives proved extremely successful, raising approximately marks in funds. Chickering (2004), p. 105 Although extremely successful the war bond drives only covered two-thirds of war-related expenditures. Meanwhile, the interest payable on the bonds represented a growing expense which required further resources to pay it.


United Kingdom

In August 1914, the gold reserves of the Bank of England, and effectively of all banking institutions in Great Britain, amounted to £. The banks feared the declaration of war would trigger a run on the banks, so the Chancellor
David Lloyd George David Lloyd George, 1st Earl Lloyd-George of Dwyfor (17 January 1863 – 26 March 1945) was Prime Minister of the United Kingdom from 1916 to 1922. A Liberal Party (United Kingdom), Liberal Party politician from Wales, he was known for leadi ...
extended the August bank holiday for three days to allow time for the passing of the
Currency and Bank Notes Act 1914 A currency is a standardization of money in any form, in use or currency in circulation, circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use wi ...
, by which Britain left the
gold standard A gold standard is a backed currency, monetary system in which the standard economics, economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the ...
. Under this Act the Treasury issued £ (equivalent to £ in 2013) of paper banknotes, without the backing of gold, with which the banks could repay their obligations. Leading banker
Walter Leaf Sir Walter Leaf (26 November 1852, Upper Norwood – 8 March 1927, Torquay) was an English banker, classical scholar, and psychical researcher. He published a benchmark edition of Homer's Iliad and was a director of Westminster Bank for many ...
described these Treasury notes as "essentially a War Loan free of interest, for an unlimited period, and as such was a highly profitable expedient from the point of view of the Government". The first interest-bearing War Loan was issued in November 1914 at an interest rate of 3.5%, to be redeemed at
par value In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (at the par value), over par (over par value) and under par (under par value). Bonds A bond selli ...
in 1925–28. It raised £; £ at face value as it was issued at a 5% discount. It was revealed in 2017 that public subscriptions amounted to £91m, and the balance had been subscribed by the Bank of England, under the names of then governor,
John Gordon Nairne Sir John Gordon Nairne, 1st Baronet (4 January 1861 – 9 February 1945) was a director of the Bank of England and a BBC governor. Life He was born in Castle Douglas, Kirkcudbrightshire, Scotland. He was the son of Andrew Nairne and his wife Is ...
, and his deputy Ernest Harvey. It was followed by £ of a second War Loan in June 1915, at 4.5%. £ of this was accounted for by conversion of the 3.5% issue, and a further £ by holders of 2.5% and 2.75%
Consols Consols (originally short for consolidated annuities, but subsequently taken to mean consolidated stock) were government bond, government debt issues in the form of perpetual bonds, redeemable at the option of the government. The first British co ...
, who were also allowed to transfer to the higher interest rate. The government also pledged that if they issued War Loans at even higher interest, holders of the 4.5% bonds might also convert to the new rate. In his memoirs Lloyd George stated his regret that his successor
Reginald McKenna Reginald McKenna (6 July 1863 – 6 September 1943) was a British banker and Liberal politician. His first Cabinet post under Henry Campbell-Bannerman was as President of the Board of Education, after which he served as First Lord of the Admira ...
increased the interest rate at a time when investors had few alternatives. Not only did it directly increase the nation's annual interest payments by £ but it meant interest rates were higher throughout the economy during the post-war depression. Compared to France, the British government relied more on short-term financing in the form of treasury bills and exchequer bonds during World War I. Treasury bills provided the bulk of British government funds in 1916, and were available for terms of 3, 6, 9 and 12 months at an interest rate of 5%. Although these were not formally designated as war bonds, advertising was explicit about their purpose. This April 1916 advertisement for 5% Exchequer bonds was typical of the time: "Lend Your Money to Your Country. The soldier does not grudge offering his life to his country. He offers it freely, for his life may be the price of Victory. But Victory cannot be won without money as well as men, and your money is needed. Unlike the soldier, the investor runs no risk. If you invest in Exchequer Bonds your money, capital and interest alike, is secured on the Consolidated Fund of the United Kingdom, the premier security of the world." Policy changed when
Asquith Herbert Henry Asquith, 1st Earl of Oxford and Asquith (12 September 1852 – 15 February 1928) was a British statesman and Liberal Party (UK), Liberal politician who was Prime Minister of the United Kingdom from 1908 to 1916. He was the last ...
's government fell in December 1916 and
Bonar Law Andrew Bonar Law (; 16 September 1858 – 30 October 1923) was a British statesman and politician who was Prime Minister of the United Kingdom from October 1922 to May 1923. Law was born in the British colony of New Brunswick (now a Canadi ...
became Chancellor in the new
coalition government A coalition government, or coalition cabinet, is a government by political parties that enter into a power-sharing arrangement of the executive. Coalition governments usually occur when no single party has achieved an absolute majority after an ...
. The third War Loan was launched in January 1917 at a 5% discount to face value and paying 5% interest (or 4% tax-free for 25 years), a rate Lloyd George described as "penal". Holders of existing War Loans, Treasury Bills and War Expenditure Certificates could convert to the 5% issue. Of the £ raised by the 5% War Loan, only £ was new money; the rest was conversions of £ of 4.5% Loan, £ of Exchequer Bonds and £ of Treasury Bills. Labour politician Tom Johnston would later write of the 1917 War Loan "No foreign conqueror could have devised a more complete robbery and enslavement of the British Nation". On 30 June 1932
Neville Chamberlain Arthur Neville Chamberlain (; 18 March 18699 November 1940) was a British politician who served as Prime Minister of the United Kingdom from May 1937 to May 1940 and Leader of the Conservative Party (UK), Leader of the Conservative Party from ...
announced that the Government would exercise its right to call in the 5% War Loan, offering a choice of taking cash or continuing the loan at 3.5%. Although they were obliged to give 90 days' notice of such a change, a 1% tax-free cash bonus was offered to holders who acted by 31 July. This conversion saved the government about £ net per year. On 3 December 2014 the UK Government announced it would redeem the outstanding war loans on 9 March 2015.


United States

In 1917 and 1918, the United States government issued Liberty Bonds to raise money for its involvement in World War 1. An aggressive campaign was created by
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
William Gibbs McAdoo William Gibbs McAdoo Jr.McAdoo is variously differentiated from family members of the same name: * Dr. William Gibbs McAdoo (1820–1894) – sometimes called "I" or "Senior" * William Gibbs McAdoo (1863–1941) – sometimes called "II" or "J ...
to popularize the bonds, grounded largely as patriotic appeals. Kimble, p.15 The Treasury Department worked closely with the
Committee on Public Information The Committee on Public Information (1917–1919), also known as the CPI or the Creel Committee, was an independent agency of the government of the United States under the Wilson administration created to influence public opinion to support the ...
in developing Liberty Bond campaigns. Kimble, p.16 The resulting propaganda messages often borrowed heavily from military colloquial speech. The government used famous artists to make posters and used movie and stage stars to host bond rallies.
Al Jolson Al Jolson (born Asa Yoelson, ; May 26, 1886 – October 23, 1950) was a Lithuanian-born American singer, comedian, actor, and vaudevillian. Self-billed as "The World's Greatest Entertainer," Jolson was one of the United States' most famous and ...
,
Ethel Barrymore Ethel Barrymore (born Ethel Mae Blythe; August 15, 1879 – June 18, 1959) was an American actress and a member of the Barrymore family of actors. Barrymore was a stage, screen and radio actress whose career spanned six decades, and was regarde ...
,
Marie Dressler Leila Marie Koerber (November 9, 1868 – July 28, 1934), known professionally as Marie Dressler, was a Canadian-born stage- and screen-actress and comedian, popular in Cinema of the United States, Hollywood in early silent film, silent an ...
,
Elsie Janis Elsie Janis (born Elsie Bierbower, March 16, 1889 – February 26, 1956) was an American actress of stage and screen, singer, songwriter, screenwriter and radio announcer. Entertaining the troops during World War I immortalized her as " the sw ...
,
Theda Bara Theda Bara ( ; born Theodosia Burr Goodman; July 29, 1885 – April 7, 1955) was an American silent film and stage actress. Bara was one of the more popular actresses of the silent era and one of cinema's early sex symbols. Her femme fatal ...
,
Fatty Arbuckle Roscoe Conkling "Fatty" Arbuckle (; March 24, 1887 – June 29, 1933) was an American silent film actor, director, and screenwriter. He started at the Selig Polyscope Company and eventually moved to Keystone Studios, where he worked with Mabel ...
,
Mabel Normand Amabel Ethelreid Normand (November 9, 1893 – February 23, 1930), better known as Mabel Normand, was an American silent film actress, comedienne, director and screenwriter. She was a popular star and collaborator of Mack Sennett in their K ...
,
Mary Pickford Gladys Louise Smith (April 8, 1892 – May 29, 1979), known professionally as Mary Pickford, was a Canadian-American film actress and producer. A Canadian pioneers in early Hollywood, pioneer in the American film industry with a Hollywood care ...
,
Douglas Fairbanks Douglas Elton Fairbanks Sr. (born Douglas Elton Thomas Ullman; May 23, 1883 – December 12, 1939) was an American actor and filmmaker best known for being the first actor to play the masked Vigilante Zorro and other swashbuckler film, swashbu ...
and
Charlie Chaplin Sir Charles Spencer Chaplin (16 April 188925 December 1977) was an English comic actor, filmmaker, and composer who rose to fame in the era of silent film. He became a worldwide icon through his screen persona, the Tramp, and is considered o ...
were among the celebrities who made public appearances promoting the patriotic element of purchasing Liberty Bonds. Chaplin also made a short film, ''
The Bond ''The Bond'' is a two-reel propaganda film created by Charlie Chaplin at his own expense for the Liberty Loan Committee for theatrical release to help sell U.S. Liberty Bonds during World War I. Made in 1918 with Edna Purviance, Albert A ...
'', at his own expense for the drive. Even the
Boy Scouts Boy Scouts or Boy Scout may refer to: * Members, sections or organisations in the Scouting Movement ** Scout (Scouting), a boy or a girl participating in the worldwide Scouting movement ** Scouting America, formerly known as Boy Scouts of America ...
and
Girl Scouts Girl Guides (or Girl Scouts in the United States and some other countries) are organisations within the Scout Movement originally and largely still for girls and women only. The Girl Guides began in 1910 with the formation of The Girl Guides ...
sold bonds under the slogan "Every Scout to Save a Soldier". The campaign spurred community efforts across the country to sell the bonds and was a great success resulting in over-subscriptions to the second, third, and fourth bond issues. According to the
Massachusetts Historical Society The Massachusetts Historical Society (MHS) is a major historical archive specializing in early American, Massachusetts, and New England history. The Massachusetts Historical Society was established in 1791 and is located at 1154 Boylston Street ...
, "Because the first World War cost the federal government more than $ (by way of comparison, total federal expenditures in 1913 were only $), these programs became vital as a way to raise funds."


World War II


Canada

Canada's involvement in the Second World War began when Canada declared war on
Nazi Germany Nazi Germany, officially known as the German Reich and later the Greater German Reich, was the German Reich, German state between 1933 and 1945, when Adolf Hitler and the Nazi Party controlled the country, transforming it into a Totalit ...
on September 10, 1939, one week after the United Kingdom. Approximately half of the Canadian war cost was covered by War Savings Certificates and war bonds known as "Victory Bonds" as in World War I. Keshen, p. 31 War Savings Certificates began selling in May 1940 and were sold door-to-door by volunteers as well as at banks, post offices, trust companies and other authorised dealers. The certificates matured after seven years, providing a return of $5 for every $4 invested. Initially, individual ownership was limited to $500 in maturities per year, though this cap was later raised to $600. Although the effort raised $ in funds and was successful in financially involving millions of Canadians in the war effort, it only provided the Government of Canada with a fraction of what was needed. The sale of Victory Bonds proved far more successful financially. There were ten wartime and one postwar Victory Bond drives. Unlike the War Savings Certificates, there was no purchase limit to Victory Bonds. The bonds were issued with maturities of between six and fourteen years with interest rates ranging from 1.5% for short-term bonds and 3% for long-term bonds and were issued in denominations of between $50 and $100,000. Canadians bought $ worth of Victory Bonds or some $550 per capita with businesses accounting for half of all Victory Bond sales. The first Victory Bond issue in February 1940 met its goal of $ in less than 48 hours, the second issue in September 1940 reaching its goal of $ almost as quickly. Keshen, p. 32 When it became apparent that the war would last a number of years the war bond and certificate programs were organised more formally under the
National War Finance Committee The National War Finance Committee was set up in Canada in December 1941 by the Department of Finance. It was initially chaired by George Wilbur Spinney, president of the Bank of Montreal, and later by Graham Towers, the Governor of the Bank of C ...
in December 1941, directed initially by the president of the
Bank of Montreal The Bank of Montreal (, ), abbreviated as BMO (pronounced ), is a Canadian multinational Investment banking, investment bank and financial services company. The bank was founded in Montreal, Quebec, in 1817 as Montreal Bank, making it Canada ...
and subsequently by the Governor of the
Bank of Canada The Bank of Canada (BoC; ) is a Crown corporations of Canada, Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surve ...
. Under the more honed direction the committee developed strategies, propaganda and the wide recruitment of volunteers for bonds drives. Bond drives took place every six months during which no other organization was permitted to solicit the public for money. The government spent over $ on marketing which employed posters, direct mailing, movie trailers (including some by Walt Disney in cooperation with the newly established
National Film Board of Canada The National Film Board of Canada (NFB; ) is a Canadian public film and digital media producer and distributor. An agency of the Government of Canada, the NFB produces and distributes documentary films, animation, web documentaries, and altern ...
's animation department that the former partner helped establish), radio commercials and full page advertisements in most major daily newspapers and weekly magazines. Keshen, p.33 Realistic staged military invasions, such as the
If Day If Day (, "If one day") was a simulated Nazi German invasion and occupation of the Canadian city of Winnipeg, Manitoba, and surrounding areas on 19 February 1942, during the Second World War. It was organized as a war bond promotion by the Great ...
scenario in
Winnipeg Winnipeg () is the capital and largest city of the Provinces and territories of Canada, Canadian province of Manitoba. It is centred on the confluence of the Red River of the North, Red and Assiniboine River, Assiniboine rivers. , Winnipeg h ...
,
Manitoba Manitoba is a Provinces and territories of Canada, province of Canada at the Centre of Canada, longitudinal centre of the country. It is Canada's Population of Canada by province and territory, fifth-most populous province, with a population ...
, were even employed to raise awareness and shock citizens into purchasing bonds. Keshen, p. 34


Germany

The
Nazi regime Nazi Germany, officially known as the German Reich and later the Greater German Reich, was the German state between 1933 and 1945, when Adolf Hitler and the Nazi Party controlled the country, transforming it into a totalitarian dictat ...
never attempted to convince the general populace to buy long-term war bonds as had been done during the First World War. Aly & Chase, p. 294 The Reich government did not want to present any perceived form of public referendum on the war, which would be the indirect result if a bond drive did poorly. Aly & Chase, p. 298 Rather, the regime financed its war efforts by borrowing directly from financial institutions, using short-term war bonds as collateral. German bankers, with no demonstration of resistance, agreed to taking state bonds into their portfolios. Financial institutions transferred their money to the Finance Department in exchange for promissory notes. Through this strategy, 40 million bank and investment accounts were quietly converted into war bonds, providing the Reich government with a continuous supply of money. Aly & Chase, p. 295 Likewise, German bank commissioners compelled occupied Czechoslovakia to buy up German war bonds. By the end of the war, German war bonds accounted for 70% of investments held by
Czechoslovak Czechoslovak may refer to: *A demonym or adjective pertaining to Czechoslovakia (1918–93) **First Czechoslovak Republic (1918–38) **Second Czechoslovak Republic (1938–39) **Third Czechoslovak Republic (1948–60) ** Fourth Czechoslovak Repu ...
banks.


United Kingdom

In the United Kingdom, the
National Savings Movement The National Savings Movement was a British mass savings movement that operated between 1916 and 1978 and was used to finance the Government budget deficit, deficit of government spending over tax revenues. The movement was instrumental during ...
was instrumental in raising funds for the
war effort War effort is a coordinated mobilization of society's resources—both industrial and civilian—towards the support of a military force, particular during a state of war. Depending on the militarization of the culture, the relative si ...
during both world wars. During World War II a ''War Savings Campaign'' was set up by the
War Office The War Office has referred to several British government organisations throughout history, all relating to the army. It was a department of the British Government responsible for the administration of the British Army between 1857 and 1964, at ...
to support the war effort. ''Local savings weeks'' were held which were promoted with posters with titles such as "Lend to Defend the Right to Be Free", "Save Your Way to Victory" and "War Savings Are Warships".


United States

By the summer of 1940, the victories of
Nazi Germany Nazi Germany, officially known as the German Reich and later the Greater German Reich, was the German Reich, German state between 1933 and 1945, when Adolf Hitler and the Nazi Party controlled the country, transforming it into a Totalit ...
against
Poland Poland, officially the Republic of Poland, is a country in Central Europe. It extends from the Baltic Sea in the north to the Sudetes and Carpathian Mountains in the south, bordered by Lithuania and Russia to the northeast, Belarus and Ukrai ...
,
Denmark Denmark is a Nordic countries, Nordic country in Northern Europe. It is the metropole and most populous constituent of the Kingdom of Denmark,, . also known as the Danish Realm, a constitutionally unitary state that includes the Autonomous a ...
,
Norway Norway, officially the Kingdom of Norway, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. The remote Arctic island of Jan Mayen and the archipelago of Svalbard also form part of the Kingdom of ...
,
Belgium Belgium, officially the Kingdom of Belgium, is a country in Northwestern Europe. Situated in a coastal lowland region known as the Low Countries, it is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeas ...
, the
Netherlands , Terminology of the Low Countries, informally Holland, is a country in Northwestern Europe, with Caribbean Netherlands, overseas territories in the Caribbean. It is the largest of the four constituent countries of the Kingdom of the Nether ...
,
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
, and
Luxembourg Luxembourg, officially the Grand Duchy of Luxembourg, is a landlocked country in Western Europe. It is bordered by Belgium to the west and north, Germany to the east, and France on the south. Its capital and most populous city, Luxembour ...
brought urgency to the government, which was discreetly preparing for possible United States involvement in
World War II World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
. Kimble, p. 19 Of principal concern were issues surrounding war financing. Many of President
Franklin D. Roosevelt Franklin Delano Roosevelt (January 30, 1882April 12, 1945), also known as FDR, was the 32nd president of the United States, serving from 1933 until his death in 1945. He is the longest-serving U.S. president, and the only one to have served ...
's advisers favored a system of tax increases and enforced savings program as advocated by British economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes ( ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originall ...
. In theory, this would permit increased spending while decreasing the risk of inflation. However, Secretary of the Treasury
Henry Morgenthau Jr. Henry Morgenthau Jr. (; May 11, 1891February 6, 1967) was the United States Secretary of the Treasury during most of the administration of Franklin D. Roosevelt. He played the major role in designing and financing the New Deal. After 1937, whil ...
preferred a voluntary loan system and began planning a national defense bond program in the fall of 1940. The intent was to unite the attractiveness of the baby bonds that had been implemented in the interwar period with the patriotic element of the
Liberty Bonds A liberty bond or liberty loan was a war bond that was sold in the United States to support the Allied cause in World War I. Subscribing to the bonds became a symbol of patriotic duty in the United States and introduced the idea of financia ...
from the First World War. Kimble, p. 20 Henry Morgenthau Jr. sought the aid of Peter Odegard, a political scientist specialised in propaganda, in drawing up the goals for the bond program. Kimble, p. 23 On the advice of Odegard the Treasury began marketing the previously successful baby bonds as "defense bonds". Three new series of bond notes, Series E, F and G, would be introduced, of which Series E would be targeted at individuals as "defense bonds". Like the baby bonds, they were sold for as little as $18.75 and matured in ten years, at which time the United States government paid the bondholder $25. Large denominations of between $50 and $1000 were also made available, all of which, unlike the Liberty Bonds of the First World War, were non-negotiable bonds. For those who found it difficult to purchase an entire bond at once, 10-cent savings
stamps Stamp or Stamps or Stamping may refer to: Official documents and related impressions * Postage stamp, used to indicate prepayment of fees for public mail * Ration stamp, indicating the right to rationed goods * Revenue stamp, used on documents to ...
could be purchased and collected in Treasury-approved stamp albums until the recipient had accumulated enough stamps for a bond purchase. Kimble, p. 24 The name of the bonds was eventually changed to War Bonds after the Japanese
attack on Pearl Harbor The attack on Pearl HarborAlso known as the Battle of Pearl Harbor was a surprise military strike by the Empire of Japan on the United States Pacific Fleet at Naval Station Pearl Harbor, its naval base at Pearl Harbor on Oahu, Territory of ...
on 7 December 1941, which resulted in the United States entering the war. The War Finance Committee was placed in charge of supervising the sale of all bonds, and the
War Advertising Council The Advertising Council, commonly known as Ad Council, is an American nonprofit organization that produces, distributes, and promotes public service announcements or PSAs on behalf of various sponsors, including nonprofit organizations, non-gover ...
promoted voluntary compliance with bond buying. Popular contemporary art was used to help promote the bonds such as ''
Any Bonds Today? "Any Bonds Today?" is a song written by Irving Berlin, featured in a 1942 animated propaganda filmCohen (2004), p. 40 starring Bugs Bunny. Both were used to sell war bonds during World War II. Song "Any Bonds Today?" was based on Berlin's own "A ...
'', a 1942
Warner Bros. Warner Bros. Entertainment Inc. (WBEI), commonly known as Warner Bros. (WB), is an American filmed entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California and the main namesake subsidiary of Warner Bro ...
theatrical cartoon. More than a quarter of a billion dollars' worth of advertising was donated during the first three years of the National Defense Savings Program. The government appealed to the public through popular culture.
Norman Rockwell Norman Percevel Rockwell (February 3, 1894 – November 8, 1978) was an American painter and illustrator. His works have a broad popular appeal in the United States for their reflection of Culture of the United States, the country's culture. Roc ...
's painting series, the ''
Four Freedoms The Four Freedoms were goals articulated by U.S. President Franklin D. Roosevelt on Monday, January 6, 1941. In an address known as the Four Freedoms speech (technically the 1941 State of the Union address), he proposed four fundamental freed ...
'', toured in a war bond effort that raised $. Bond rallies were held throughout the country with famous celebrities, usually Hollywood film stars, to enhance the bond advertising effectiveness. Many motion pictures during the time, especially war dramas (a form of propaganda itself), included a graphic shown during the
closing credits Closing credits, aka end credits or end titles, are a list of the cast and crew of a particular motion picture, television show, or video game. While opening credits appear at the beginning of a work, closing credits appear close to or at th ...
advising patrons to "Buy War Bonds and Stamps", which were sometimes sold in the lobby of the theater. The Music Publishers Protective Association encouraged its members to include patriotic messages on the front of their sheet music like "Buy U.S. Bonds and Stamps". Over the course of the war 85 million Americans purchased bonds totalling approximately $. Named after the 1942
Hollywood Victory Caravan The Hollywood Victory Caravan was a two-week cross-country railroad journey in 1942 that brought together two dozen film stars to raise money for the Army and Navy Relief Society. It was sponsored by the Hollywood Victory Committee, Hollywood Vict ...
, a 1945 Paramount-produced film promoted bond sales after the end of World War II. The short subject included Bing Crosby, Bob Hope, Alan Ladd, William Demarest,
Franklin Pangborn Franklin Pangborn (January 23, 1889 – July 20, 1958) was an American comedic character actor famous for playing small but memorable roles with comic flair. He appeared in many Preston Sturges movies as well as the W. C. Fields films '' Inter ...
, Barbara Stanwyck, Humphrey Bogart, and others. Aside from movies and music, there were countless other programs held throughout the states to encourage the purchasing of war bonds. One such promotion that was held, at the least, in Nebraska and Montana, allowed for citizens to "get Hitler's goat," a play on the phrase "to get someone's goat" meaning to make someone angry or annoyed. The goat would be held up for "auction" with the money going directly towards war bonds. According to one source, the auctioning of "Hitler's goat" in Nebraska in 1942 raised $90,000 in War Bond sales. The National Service Board for Religious Objectors offered civilian bonds in the United States during World War II, primarily to members of the
historic peace churches Peace churches are Christianity, Christian churches, groups or communities advocating Christian pacifism or Biblical nonresistance. The term historic peace churches refers specifically only to three church groups among pacifist churches: * Church ...
as an alternative for those who could not conscientiously buy something meant to support the war. These were U.S. Government Bonds not labelled as defense bonds. In all, 33,006 subscriptions were sold for a total value of $, mostly to
Mennonite Mennonites are a group of Anabaptism, Anabaptist Christianity, Christian communities tracing their roots to the epoch of the Radical Reformation. The name ''Mennonites'' is derived from the cleric Menno Simons (1496–1561) of Friesland, part of ...
s, Brethren, and
Quakers Quakers are people who belong to the Religious Society of Friends, a historically Protestantism, Protestant Christian set of Christian denomination, denominations. Members refer to each other as Friends after in the Bible, and originally ...
. Research has shown that parties to a conflict at the beginning of warfare can obtain cheap financing. As the conflict develops, bond yields increase but only to a certain level. Once a certain threshold is exceeded, there is no increase in the yield. The phenomenon was explained by the clientele effect, i.e., the differentiation of groups that purchase financial instruments. The first issuances of war bonds are mainly covered by investors seeking profit and the so-called "patriotic demand". As the conflict develops, the risk increases, and only patriotic demand persists.


After World War II


South Africa

In the late 1970s and 1980s South Africa issued Defence Bonus Bonds in order to fund the border wars in Angola and Namibia and to fund the Defence Industry that was necessary due to sanctions.


Iraq

During the Iran-Iraq War, the Iraqi government started a compaign to gather warbonds, with paying them being optional, with most Iraqis opting to pay them as a act of honorablity, each war bond costed 100 dinars, they also requested Iraqis donate any extra/spare gold they had to go towards the war effort, Iraqis, by estimate, possibly raised over 700 kilos to a ton of gold to the Iraqi war effort aganist Iran.


Ukraine

On 1 March 2022, following the
2022 Russian invasion of Ukraine On 24 February 2022, , starting the largest and deadliest war in Europe since World War II, in a major escalation of the Russo-Ukrainian War, conflict between the two countries which began in 2014. The fighting has caused hundreds of thou ...
, the Ukrainian government announced it would issue war bonds to pay its armed forces. Between March and May 2022, around $270 million equivalent of bonds were sold, maturing in one year and yielding 11 percent. The bonds were sold in small units of 1,000
hryvnias The ( ; , ''hrn''; sign: ₴; code: UAH) has been the national currency of Ukraine since 2 September 1996. The hryvnia is divided into 100 kopiykas (). It is named after a measure of weight used in Kievan Rus'. Etymology The currency of Kie ...
, with over 70,000 buyers.


Canada

On 28 October 2022, during the Russian invasion of Ukraine, Canada announced that they would sell government-backed, 5-year bonds to raise money for Ukraine. Canada completed issuing C$500 million of the Ukraine Sovereignty Bond at the end of November 2022.


Notes


References

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External links


Bugs Bunny, Porky Pig and Elmer Fudd pitch War Bonds
*{{Wikisource-inline, list= **{{Cite EB1922, wstitle=Dollar Securities Mobilization, first=George Ernest , last=May , authorlink=George Ernest May , noicon=x **{{Cite EB1922, wstitle=Liberty Loan Publicity Campaigns, first=Martin , last=Vogel , noicon=x **{{Cite EB1922, wstitle=Savings Movement, first=Theodore Gervase , last=Chambers, first2=William Mather , last2=Lewis , authorlink=William Mather Lewis , noicon=x **{{Cite EB1922, wstitle=War Loan Publicity Campaigns, first=George Augustus , last=Sutton, noicon=x Military economics Military terminology Government bonds Articles containing video clips