War Bond


War bonds are debt securities issued by a government to finance military operations and other expenditure in times of war.

War Bond

What is a ‘War Bond’

A war bond consists of debt securities issued by a government for the purpose of financing military operations during times of war. It is an emotional appeal to patriotic citizens to lend the government their money because these bonds offer a rate of return below the market rate.

Explaining ‘War Bond’

At first they were called Defense Bonds and issued by the U.S. Government, but that name was changed to War Bonds after the Japanese attack on Pearl Harbor on Dec 7, 1941. The bonds were zero-coupon bonds that sold for 75% of their face value in denominations from $10 to $100,000. To get an idea of the relative value of a dollar in 1942, in current terms, something that cost $1.00 in 1942, would cost around $11.00 in 2002.

Further Reading

  • The original Operation Twist: the War Finance Corporation's war bond purchases, 1918–1920 – www.cambridge.org [PDF]
  • Dissolution of an empire: Insights from the İstanbul Bourse and the Ottoman War Bond – www.tandfonline.com [PDF]
  • Daily Newspaper Advertising Trends During World War II: IRS Tax Rulings and the War Bond Drives – www.tandfonline.com [PDF]
  • Did Nordic countries recognize the gathering storm of World War II? Evidence from the bond markets – www.sciencedirect.com [PDF]
  • Bond underwriting by banks and conflicts of interest: Evidence from Japan during the pre-war period – www.sciencedirect.com [PDF]