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A War Bond is a debt security issued by a government in times of war to raise funds for military operations.

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The government gathered civil donations by appealing to the emotions of  patriotic citizens.
The bonds were sold below their face value. These bonds were also more affordable to retail investors. Investors would gain profit on the maturity date (When a bond reaches face value)

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War bonds help governments quickly raise money to fund military campaigns.

Ukraine raised around $270 million from war bonds in the Russo-Ukrainian war

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The photo depicts an American soldier and a quote stating "Lets all fight, fight war bonds". There are people working in various fields on the left hand side.

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This photo encouraged americans to buy war bonds to help the U.S raise funds for the military during World War II.

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Ryan Scribner explaining how bonds work

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Bond - Money that is loaned to an entity for a period of time
Entities - Companies, States, Governments
Face value - Amount a bond will be worth at maturity
Maturity date - The date the bond will reach face value
Issue price - Original bond price
Credit quality -Bond duration

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The theme of this topic is Propaganda because it was used to gain a large amount of funds to help cover military expenses. The propaganda was successful because it made the patriotism stronger and brought americans together to help in the war.

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Ancheta A. (2022, March 27), War Bonds. Investopedia. Retrieved on March 28, 2023, From https://www.investopedia.com/terms/w/warbonds.asp

Wang C. , Tan W. (2022, March 2)Ukraine raises $270 million from sale of war bonds to fund army as Russia’s invasion continues. CNBC. Retrieved on March 29 2023, From https://www.cnbc.com/2022/03/02/ukraine-raises-270-million-from-sale-of-war-bonds-to-fund-army.html

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What Is a War Bond?

A war bond is a debt security issued by a government to finance military operations during times of war or conflict. Because war bonds offered a rate of return below the market rate, investment was achieved by making emotional appeals to patriotic citizens to lend the government money.

Key Takeaways

Understanding War Bonds

A war bond is a debt instrument issued by a government as a means of borrowing money to finance its defense initiatives and military efforts during times of war. A war bond is essentially a loan to a government. In the U.S., the sale of war bonds was overseen by the War Finance Committee. War bonds were initially known as Defense Bonds and were first issued as Liberty Bonds in 1917 to finance the United States government participation in World War I. Through the sale of these bonds, the government raised $21.5 billion dollars for its war efforts.

After the Japanese attack on Pearl Harbor Dec. 7, 1941, the U.S. entered the Second World War, and Defense Bonds were renamed War Bonds. More than 80 million Americans purchased war bonds and brought in over $180 billion in revenue. The bonds sold for 50% to 75% of their face value and had denominations ranging from $10 to $1,000, depending on the year they were issued. The bonds were sold below their face value-investors paid less than the face value initially and were paid the face value amount at maturity. In other words, war bonds were considered zero-coupon bonds because they didn't pay interest payments throughout the year or coupon payments. Instead, investors earned the difference between the purchase price and the face value of the bond at maturity.

War bonds were baby bonds, which meant they had smaller par values, or face values, than standard bonds. This made them more affordable for retail investors. Another feature of the bonds was that they were nontransferable-only the bond purchaser could redeem the bonds in the future. War bonds originally had a 10-year maturity, which resulted in a 2.9% return. Congress extended the interest that could be earned so that bonds sold from 1941 to 1965 accrued interest for 40 years. Bonds issued after 1965 accrued interest for 20 years. After the end of World War II, War Bonds became known as Series E bonds. The U.S. government continued issuing Series E bonds until 1980 when Series EE bonds replaced them.

History of War Bonds

Besides the United States government, other countries also issued war bonds, including Canada, Germany, the United Kingdom, and Austria-Hungary.

In the U.S., the War Advertising Council promoted voluntary compliance with bond buying. Motives to purchase war bonds were embedded on patriotism and conscience, given that these bonds offered a rate of return that was below the prevailing interest rates in the market.

Advertisements for the bonds were carried out through multiple media such as radio stations, newspapers, magazines, and newsreels in theaters to reach the American people. Hollywood stars like Bette Davis and Rita Hayworth helped promote war bonds by touring the country. People could save up for War Bonds by contributing 25 cents each time. The Girl Scouts also sold stamps valued at 10 cents each. Norman Rockwell created several paintings as part of the advertising effort for War Bonds.

Advantages and Disadvantages of War Bonds

Example of a War Bond

Although War Bonds are not sold any longer, as an example, let's assume an investor purchased a war bond and held it until its maturity in 10 years. The bond was purchased for $75, or at a discount to the $100 face value of the bond. The investor holds the bond for 10 years and is paid no-interest payments over those 10 years. At maturity, the investor cashes in the bond and is paid the $100 face value.

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How War Bonds Originated and How Investors Made Money on them

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A war bond is a debt security issued by a government to finance military operations during times of war or conflict. Because war bonds offered a rate of return below the market rate, investment was achieved by making emotional appeals to patriotic citizens to lend the government money.

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Unt Digital Library Found on March 28 2022 at https://digital.library.unt.edu/ark:/67531/metadc501/

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We've identified this poster as aprimary source within our collections. Researchers, educators, and students may find this poster useful in their work.

This poster is part of the following collections of related materials.

When was this poster last used?

United States. Dept. of the Treasury. Let's all fight: buy war bonds., poster, 1942; [Washington D.C.]. (University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu/ark:/67531/metadc501/: accessed March 19, 2020), UNT Libraries Government Documents Department. https://digital.library.unt.edu; crediting

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civilian -- united states -- posters -- specimens.

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1939-1945 -- united states -- posters -- specimens.

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1939-1945 -- finance -- united states -- posters -- specimens.

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1939-1945 -- economic aspects -- united states -- posters -- specimens.

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savings bonds -- united states -- posters -- specimens.

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We've identified this poster as aprimary source within our collections. Researchers, educators, and students may find this poster useful in their work. This poster is part of the following collections of related materials. When was this poster last used? United States. Dept. of the Treasury. Let's all fight: buy war bonds., poster, 1942; [Washington D.C.].

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"What Is A Bond? 📈 BONDS FOR BEGINNERS!" Youtube, Uploaded by Ryan Scribner, 28 December 2016, https://www.youtube.com/watch?v=xW8q7JY0ZEQ

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American Flag Veteran Wallpaper 1024x768. (n.d). Online stores. Retrieved on March 31, 2023, From https://www.onlinestores.com/american-flag-veteran-wallpaper-1024x768.html

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buy us flags and flagpoles at online stores united states

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American Flag Veteran Wallpaper 1024x768

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