What Are War Bonds, and How Much Are They Worth Today?
A primer on a piece of financial history.
You may have seen the message in old newsreels and advertisements: “BUY WAR BONDS,” in large, bold letters, often laid against a colorful image of Uncle Sam.
Back in the 1940s the U.S. government urged citizens to purchase these bonds as a matter of patriotic duty. Over 85 million American complied, and in doing so, helped the U.S. government fund World War II.
If you know people who still own these bonds—or if you’ve inherited them from older folks—you might be wondering what the fuss was about, and whether the documents have any value today.
What Are War Bonds?
The concept behind war bonds is simple: A nation sells some debt in the form of a bond and uses the proceeds to fund military options. They are essentially a loan to the government to help fund a war. Usually, they are marketed directly to citizens, who purchase them because they wish to support the war effort and because they offer the potential for profit.
Typically, war bonds have been sold at less than face value, and buyers receive the full face value, plus interest, upon maturity. Historically, the rate of return on war bonds has not been lower than traditional bonds.
In the United States, war bonds came into prominence during World War I, when the country began selling Liberty Bonds. The bonds were marketed to play on Americans’ sense of patriotic duty, with slogans such as, “If You Can’t Enlist, Invest. Buy A Liberty Bond” and “Defend Your Country With Your Dollars.” Even Charlie Chaplin and other famous actors appeared in short films encouraging the purchase of war bonds.
Funding World War II
On Dec. 7, 1941, Japanese warplanes attacked Pearl Harbor, marking the beginning of the United States’ entry into World War II.
The nation spent nearly four years at war against the Japanese and Nazi Germany, requiring the services of millions of soldiers, and the manufacturing of countless ships, aircraft carriers, tanks, weapons, and other equipment and supplies.
This was an expensive undertaking for the country. According to an analysis by Norwich University, World War II cost $4.1 trillion, adjusted for today’s dollars. Obviously, the United States did not have this money sitting in a piggy bank. It needed to raise funds quickly, and did so largely by selling War Bonds.
During World War II, Americans purchased $185.7 billion in war bonds. The bonds came in denominations as small as $25 and as large as $10,000, had a 10-year maturity, and were sold at a 75% discount. They were also referred to as Series E bonds.
By contrast, more recent wars, including the conflicts in Iraq and Afghanistan, were primarily financed by increasing the nation’s foreign debt.
The Current Value of War Bonds
War bonds from World War II, or Series E bonds, were supposed to have a maturity of 10 years. But they were granted an interest extension of as long as 30 or 40 years, depending on the size. The final round of Series E bonds stopped earning interest in 2010.
Those who still held Series E war bonds in 1960 were able to swap their original bonds for Series H bonds, thereby deferring any tax liability until the new bonds matured. Series H bonds stopped paying interest in 2009.
If you happen to possess Series E War Bonds, you can go to the bank and redeem them for cash. The U.S. Treasury Department has a helpful calculator to help you determine how much your Series E bonds are worth today. According to the calculator, a $1,000 Series E bond purchased at $750 is now worth $3,623. A $1,000 war bond issued as late as 1946 is worth $4,691.
Again, bonds this old stopped earning interest long ago. So if you happen to own war bonds, there’s no reason to delay cashing them in.
Relatively speaking, war bonds were not particularly lucrative investments. A person who invested $1,000 into the stock market in 1941 would have over $350,000 today.
If you own old paper bonds, you also may want to see what you could earn by selling them to a collector. While a collector would not be able to redeem them, they may see value in keeping them as a piece of history and offer you more than you’d get by cashing them in at a bank.
The U.S. National Archives and Records Administration: "Any Bonds Today: Selling Support for World War II."
U.S Treasury: A History of the United States Savings Bond Program
Vanguard: Historical Rate of Return on Bonds, Accessed October 8, 2019 h
Federal Reserve History: Liberty Bonds
Norwich University: The Cost of U.S. Wars Then and Now