War Bonds Definition
War bonds are the bonds that are issued by governments all over the world to collect funds for military operations during the wars. War bonds also help in controlling inflation during the wars by removing money from circulation till the war is over. The governments sell war bonds to individuals, institutions and corporations, hinging on their patriotic sentiments and eagerness to be a part of war in some way.
These bonds generally pay lower interest rates as compared to other bonds and are sold in different denominations to suit different pockets.
War bonds were issued by many countries, including United States and Germany during World War I and II
War Bonds World War I
During World War I, governments of Austria-Hungary, Canada, Germany and United States issued war bonds to generate capital for the ever-increasing costs of war.
1 . Austria-Hungary: Impressed by the war bonds issued by Germany, the government of Austria-Hungary issued the first war bonds in November 1914. The war bonds were issued twice a year in the months of November and May and provided five percent rate if interest with the maturity period of five years. The smallest denomination at which the war bonds were available was 100 Kroner.
Campaigns to sell war bonds were also launched in schools, known by the name of child bonds through which children could contribute a small amount and take a loan from the bank to cover the remaining amount of the minimum denomination of 100 Kroner. The first three child bond issues helped generate 13 million kroner.
Until 1919, the government of Austria-Hungary issued war bonds together. But from 1919 onwards, Hungary issued stocks which could be repaid on subscriber’s demand after a notice period of one year. Six percent interest rate was provided on the stocks and 50 kroner was the minimum amount.
- Canada: Canada issued its first war bond in November 1915. In November 1917, its name was changed to Victory Bond or Loan which gave 5.5%interest rate and its maturity period was 5,10 and 20 years. Canada’s bonds’ minimum denomination was 50 dollars. The first Victory loan was oversubscribed and the government managed to collect 398 million dollars. Two more issues of Victory Loans were released which fetched 1.34 billion dollars.
- Germany: Germany conducted war bond drives nine times during the First World War. War bonds were issued at half yearly intervals with a rate of interest at 5% which could be redeemed over a period of ten years. Industries, banks and city governments were major investors in the German war bonds which were sold through post offices, financial institutions and banks. The drives were a great success and accumulated around 100 billion marks.
- United States: US issued war bonds known as Liberty bonds in 1917. The then government launched n aggressive campaign to sell Liberty bonds and many celebrities like Charlie Chaplin, Mary Pickford were involved in the campaign to arouse the patriotic sentiments of people at large. Like many other countries in US too, banks and financial institutions were the major investors and not individuals. The government earned 21.5 billion dollars from these Liberty bonds.
War Bonds World War II
- United States: concerned by finances for war, US launched defense bonds or Series bonds aimed at individuals. The minimum denomination of Series bonds was 18.75 dollar which had a maturity period of ten years after which the US government paid 15 dollars to the individual investors. As far as bonds of large denominations were concerned, they were non-negotiable. United States government changed the name of Defense bonds to War bonds in 1941 after the attack on Pearl Harbor. Like the Liberty bonds, campaign for the sale of War binds included Hollywood celebrities. During the World War II, War bonds worth 185.7 billion dollars were sold.
- Canada: Canada used War Savings Certificates and Victory Bonds to fund the expenses on war. War Savings Certificates were first sold in 1940 by banks, authorized dealers and even by volunteers through door to door campaigns. The maturity period of these certificates was 7 years and for every investment of 4 dollars, the investor would get 5 dollars. However, individuals could not invest more than 600 dollars each in thesecertificates. On the other hand, Victory bonds had a maturity period of 6 to 14 years and the rate of interest for short term bonds was 1.5% and for long term bonds it was 3%.Victory bonds were issued in various denominations from the minimum of 50 dollars to highest 100,000 dollars and there was no limit for purchasing these bonds unlike War SavingsCertificates. The Canadian government organized ten drives during the World War II and one drive after the war was over. Victory Bonds were more successful than the War Savings Certificates in mobilizing people for buying the bonds.
- Germany: Unlike World War I when Germany issued war bonds for financing its military operations, the country, during the World War II borrowed money from the financial institutions by giving short term war bonds. Also, German banks forced Czechoslovakia which was occupied by Germany to buy war bonds issued by Germany.
War Bonds Posters
National War Bonds
Austrian War Bonds Postcard
Canadian Victory Bonds Poster
War Bond Posters
World War I Liberty Bonds
German War Bonds
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