WAR BONDS: How We Paid for the War
In World War One, they were called Liberty Bonds, a financial instrument developed by the government to underwrite the staggering cost of war. In May 1941, as Britain suffered in ferocious bombing and Hitler expanded his grip on Europe, the U.S. Treasury began offering Defense Bonds. This would provide a funding stream for the Roosevelt Administration to rev up production of war materiel to defend the homeland and provide resources for Britain. When the U.S. entered the war on December 8, 1941, the bonds were renamed War Bonds. The National Museum of the United States Army tells us that World War Two cost the United States $300 billion dollars to wage—equivalent to $4 trillion in today’s dollars—much of it funded by ordinary Americans who scrimped and saved and went without in order to buy bonds to fund battle operations. Citizens of Canada, Australia, the United Kingdom, Germany, and Austria-Hungary also purchased bonds to fund their armies.
This envelope promoting War Bond and Stamp purchases depicts a Revolutionary War-era Minuteman, encouraging Americans to echo the patriotism of these early defenders of liberty.
War Bonds were baby bonds, meaning they had a smaller face value than a standard bond and were more affordable for small investors. The most popular denomination was the $25 bond, which sold for $18.75. The bond holder would receive the full value at maturity, in ten years—a 2.9 percent return. The bonds were nontransferable: only the person who bought the bond could redeem it at maturity.
Those who couldn't come up with the $18.75 all at once could buy War Stamps for 25¢. These stamps were pasted into a stamp booklet and once all the little squares were filled up, could be traded in for a bond. Children participated in War Bond drives through their schools and other community organizations, contributing their nickels, dimes, and quarters.
The U.S. Treasury recruited Bugs Bunny to pitch War Bonds.
During the war, campaigns to encourage citizens to buy bonds were ubiquitous, with everyone from Judy Garland to Bob Hope to Bugs Bunny featured in advertising, movie shorts, and rallies, urging Americans to put ten-percent of their paychecks toward bond purchases. The closing credits of some films—many of them wartime sagas—urged filmgoers to purchase bonds. When the audience exited, they’d find a rep set up in the theatre lobby, ready to sell bonds. Some estimates say more than a quarter of a billion dollars' worth of advertising was donated during the war and it proved persuasive: according to the National Army Museum, 85 million Americans purchased bonds totaling $185 billion between February 1942 and December 1945. Like tending victory gardens and participating in scrap drives, buying War Bonds was a tangible way Americans on the homefront could demonstrate their patriotism and support for the war effort. It’s a message Hollywood stars went to great lengths to reinforce.
Young Hollywood stars Mickey Rooney and Judy Garland headlined at rallies to encourage fans to buy War Bonds.
Congress later extended the earned interest so bonds sold from 1941 to 1965 accrued value for 40 years. When the war ended, the bonds were renamed Series E bonds, and these were issued until 1980 when they were replaced by Series EE bonds. If you happen upon a bond in an old trunk or in the back of that antique chest of drawers you inherited, you can find the value of it here. If it’s a $25 dollar World War Two-era bond, the value is about $95. But of course, only the holder of the bond can redeem it.
Wartime expenditures in World War Two by country
total: $1,301.316 in Billions USD
Posters like this were ubiquitous to encourage Americans to help fund the war effort.
United States of America—$ 341.491
Germany—$270.000
Soviet Union—$192.000
China—$190.000
United Kingdom—$20.000
Canada—$15.680
Italy—$94.000
Japan—$56.000
France—$15.000
Belgium—$3.250
Poland—$1.550
Netherlands—$0.925
Latin American countries (total)—$1.000
Greece—$0.220
Yugoslavia—$0.200
Source: City of Parramatta Research and Collections, New South Wales, Australia
As you’ll discover when my novel War Bonds is published in February 2024, the title is a play on words: the bonds at the center of the story are not financial instruments or patriotic investments, although some of the characters in the novel do have a discussion about that kind of bond. The bonds explored in my novel are of a more personal, intimate kind—bonds formed in the crucible of war among people brought together in impossible circumstances. They are bonds that provide vital, life-giving support, but as you’ll see, will prove complicated and painful to untangle as the war reaches its apex.
