Bond History: The Important Story of War Bonds

By Russell Wild

Part of Investing in Bonds For Dummies Cheat Sheet

At the heart of the fundraising effort in World War II was the creation of war bonds. Even before the United States entered World War II, a massive effort was underway to raise money to build the military and support allies in war-torn Europe and Asia.

In April 1941, with great fanfare, President Franklin D. Roosevelt purchased the very first such bond from Secretary of the Treasury Henry Morgenthau, Jr. Posters, radio commercials, newspaper advertisements, and newsreels in theaters spread the word that purchasing a bond was the patriotic thing to do.

The government made it easy to invest by issuing cards with slots for quarters. When a person collected 75 quarters — $18.75 — he or she could bring the card into any post office and receive a $25 bond redeemable in ten years (with no actual interest payments in the interim). That worked out to 2.9 percent annual compound interest — considerably lower than prevailing rates at the time.

More than six out of ten U.S. citizens bought war bonds, raising nearly $200 billion (worth about 13 times as much in today’s dollars), and Hitler and Hirohito got what was coming to them.