During World War II, posters with slogans such as “Lend a Hand!” Bonds, Buy Bombs” and “Let Them Have It!” Buy additional bonds” were commonplace. These messages advertised war bonds, which were used by the U.S. government to finance both world wars. In this article, we will give you a brief history of war bonds and the role they played in military operations.

What are war bonds?

War bonds are debt instruments issued by governments to finance their militaries and provide economic support during times of conflict. The U.S. government issued war bonds to quickly raise capital from the public during World War I and World War II.

However, war bonds also played an important psychological role during both conflicts. The government launched a massive propaganda campaign to encourage citizens to show their patriotism by purchasing war bonds, often using famous spokespeople to support the effort.

The U.S. government first introduced war bonds (then called defense bonds), called Liberty Bonds, during World War I. The sale of Liberty Bonds generated $21.5 billion between 1917 and 1919, the equivalent of more than $5 trillion today.

During World War II, the federal government renamed defense bonds war bonds after the Japanese attack on Pearl Harbor. More than 84 million Americans purchased approximately $185 billion in war bonds (nearly $1 out of every $5 borrowed by the United States to fight the war) during World War II. Throughout the conflict, war bonds were used not only to support military efforts, but also to take money out of circulation and control inflation. These bonds were also known as Series E bonds.

How did war bonds work?

Whenever you buy bonds, you are essentially lending money to the government or the issuing company. War bonds were no different. People who bought war bonds were lending money to the U.S. government.

War bonds were a type of savings bond known as zero-coupon bonds. Unlike most bonds, which offer periodic fixed interest payments (called coupons) until the bond matures, zero-coupon bonds are purchased at a discount and then redeemed at full face value at the end of the year. due date. For example, you could buy a war bond for $18.75, then redeem it for $25 when it matures 10 years later.

Can you still redeem war bonds?

Series E bonds were discontinued in 1980; the last Series E bonds stopped earning interest in 2010. Although the bonds did not make interest payments, they could earn interest and appreciate in value for 30 to 40 years.

If you own war bonds – either because you were the original owner or because you inherited them – you can always redeem them. You can use the Treasury Savings Bond Calculator to find their value. You will need to enter:

• The bond series (E, in this case)
• Denomination
• Date of issue (war bonds were issued on paper; you can find the date in the upper right corner)

You can redeem paper war bonds at a bank that offers savings bond redemptions or by mail.

Related investment topics

Ukraine: a modern example of war bonds

The Ukrainian government faces a growing debt after two and a half years of fighting the Russian invasion. It therefore turns to war bonds to pay the ongoing cost of the conflict.

Reuters reports that Ukraine’s Finance Ministry doubled its domestic borrowing in September 2024 compared to the previous month, generating about 28.9 hryvnias (Ukrainian currency), or about $700 million in war bonds. The government has seen an increase in the number of Ukrainian individuals and businesses purchasing war bonds since the start of the war.

Ukrainian war bonds generate returns of 15% to 18% for hryvnia-denominated securities and more than 4% for dollar-denominated securities, Reuters reports.