I was surprised to learn that billions of pounds worth of British bonds raised during World War I are still outstanding. The International Business Times reports:
Every year £136m is shelled out in coupon payments to holders of the government debt – War Loans – used to fund the role of troops from the British Empire in WWI.
And the owners of 99% of the £1.94bn (€2.4bn, $3.26bn) WWI debt still around are a secret group of financial institutions.
. . .
Between 1914 and 1918, the British public were asked to fund the country’s war efforts with their savings.
They bought up bonds by the millions, called War Loans, as the government went cap in hand to the people to fund the hugely expensive cost of battle. Arms, ammunition, pay for soldiers – the rhetoric of war is cheap, but the reality of it is not.
The first two lots of War Loans were issued in 1914 and 1916 and matured in the following decade.
Then came the third push in 1917. These bonds paid out twice a year on coupons worth 5% of the loan’s total value. Around 3,000,000 Britons invested.
The bonds were supposed to be redeemed by 1947, having given Britons three decades of half-decent returns in exchange for their financial support in the war.
But in 1932, concerned about the cost of servicing its War Loan debt and unable to redeem it all because of the economic depression, the then chancellor Neville Chamberlain changed the terms.
He redeemed the loans of all those holders who wanted to cash in, even giving a financial bonus to those who acted early.
And for those who wanted to carry on, he cut the coupon payment to 3.5% and converted them to a perpetual maturity date, to be redeemed at some point by a government in the future.
That is why the government is still paying out millions of pounds every year to people and institutions still in possession of these century-old bonds, because it has left them untouched.
There’s more at the link.
I wonder how many other countries still have debt outstanding from the First World War? Does anyone know whether the USA issued similar war bonds? If so, please let us know in Comments.
Peter
Peter, here's some links for the history of war bonds. As far as I know, all the debt from WWI and WWII has been settled. But the last link is an interesting read.
http://www.u-s-history.com/pages/h1682.html
http://libertybonds.com/
http://hubpages.com/hub/What-Were-Liberty-Bonds-in-World-War-1
http://unclaimed-funds.org/unclaimed-war-bonds/
Not a clue, but DAMN interesting…
So, old Neville was quite the shrewd fellow, wasn't he?
On the other side, Germany did finally repay the reparations from the Treaty of Versailles in 2010 when they paid the final installment of the loans obtained by the Weimar government in the 1920's.
http://content.time.com/time/world/article/0,8599,2023140,00.html
Peter,
It is as a direct result of that debt that Pax Britanica transfered to Pax Americana as the USA extracted every penny from Britain during the first and second world wars effectively making Britain Bankrupt first before stepping in to the WW1 in 1917 to little effect (although if you watch Hollywood the USA won the war) and the same for WW2 when Britain stood alone against Hitler from from May 1940 (Fall of France) to May 1941 when the USA finally entered WW2. The debt for WW2 was finally paid of to the American Government in the early 2000's ! The rest of europe after WW2 received aid via the Marshall Plan, Britain received nothing except loans to pay war bills that took 60yrs to repay. This included lend leases equipment that was to put it mildly so bad it only acted as decoy ships with no defences. On D-Day Britain and it's commonwealth put ashore the same number of troops as the USA, but agian if you get your histiry from the Discovery Channel we had little to do with winning the WW2 the yanks did it. For example the lead elements of the Allied forces advancing on Paris were British, but were stopped short of Paris by Eisenhower so that American troops could make the trip down the Champ Elyses so American news reals had some good footage to send home.
So it is always interesting to read somebody looking at the cost Britain took in defending Democracy in the 20th Centuary and the fact that nobody has ever thanked the country and said don't worry we'll give you a hand over that problem or this one. Hence why the UK gets a little peeved when Obama has his pivott to Asia and insults our Prime Minister by giving him DVD's as a state present or the US Military is desparaging about us. America really should remember who's it's true long term see you through anyhing friends are.