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.