War bonds are government-issued savings bonds which are used to finance a war or a military action. In the United States, the last official war bond was the Series E Bond issued during the Second World War. War bonds generate capital for the federal government and they make civilians feel involved in their national militaries; exhortations to buy war bonds are often accompanied with appeals to patriotism and conscience.

A bond is a special type of security. Bonds are issued by an agency which wants to generate capital, and the people who purchase them are essentially loaning money to the issuing agency. In return for the loan, the bond earns a set interest rate, and the purchaser can redeem the bond for its face value at a later date. Government issued bonds such as war bonds tend to have a yield which is below market value, but the bonds are considered very safe, stable investments.

In World War One, Americans could buy “Liberty Bonds,” while other nations issued an assortment of bonds and savings stamps to finance their war efforts. The language used in the promotion of war bonds is often quite florid, drawing the purchaser into the transaction with an appeal to his or her patriotism. War bonds are available in a wide range of denominations to make them affordable to all, ranging from small stamps which school children could purchase to bonds in very large denominations for wealthier individuals.

During the Second World War, a number of companies encouraged citizens to buy war bonds. In addition to funding the government, war bonds also reduced the amount of currency on the open market, with the hope of keeping inflation rates down. Many Americans think of the Series E Bond when they hear the term “war bonds.” This bond was initially marketed as a “defense bond” in 1935, and with the outbreak of war, the Treasury switched to calling it a “war bond.” Series E Bonds were available from the Treasury until 1980.

The funds from the sale of war bonds are used to finance the military. American Patriot Bonds may seem like war bonds, but the sale proceeds actually go into a general fund, rather than supporting the military specifically. For people who dislike the idea of supporting military action but want the safety and stability of government securities, other Treasury securities are available for sale, including treasury bills, notes, and general bonds.