War bonds are debt securities issued by a government usually in a wide range of denominations so that about everyone could afford them. They are sold by appealing to patriotism and the conscience. They are issued:
– to finance war activities
– as a means to control inflation in an over-stimulated economy by removing money from circulation
– as a means to stimulate consumer spending after liquidation post-war in order to support a smooth transition into a peacetime economy.
War bonds were first used as a means to finance the American Civil War by raising money from the general public from both, theUnionand the Confederate government. Countries involved in WWI depended heavily on bonds to finance their expenses. While the German government feared the outcome of a public referendum on war, what the sale of war bonds would have been, and rather relied on borrowing directly from financial institutions; and the British, relying on findings of Keynes, raised funds for WWII through the National Savings Movement and higher taxes, Canada and the USA issued again war bonds.
TheUSissued Series E Bonds were non-negotiable “defense bonds” (afterPearl Harborthe name was changed into War Bonds). They were the brainchild of Secretary of Treasury Henry Morgenthau, Jr. The promotion was done with the help of popular contemporary art such as Warner Brothers’ theatrical cartoon “Any Bonds today?”. Bond rallies were held throughout the country, which were attended by celebrities, usually Hollywood actors. Parallel to the defense bonds theUSgovernment issued civilian bonds for those who could not consciously buy something that would support a war.
Series E Bonds were sold until 1980. Thereafter the government issued Series EE Bonds. A version of Series EE Bonds, known as Patriot Bonds, was issued as a sort of post–September 11 war bond, but never gained the same popularity as the Series E Bond.