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We discussed Money and its forms the other day so let’s look at a particular financial instrument. The simple definition of financial instruments are, according to Wikipedia, a tradable asset of any kind, either cash; evidence of an ownership interest in an entity; or a contractual right to receive, or deliver, cash or another financial instrument. Even the slip of paper you gave your friend Joe that said, “I Owe You $10.” becomes an instrument that is as strong as an actual $10 bill. It is based on a promise to pay and the trust of Joe in you. Just like money. These may sound trivial, but some have even stood the test in court to their validity and redemption obligations.
In 1935, Henry Morgenthau, the then-Secretary of the Treasury, introduced the United States Savings Bond which became one of America’s most popular investments. It gave the small investor safe ways to gain a return on their money. It also provided the Bureau of Public Debit another way to pay for day-to-day operations of the government. This win-win arrangement was the foundation for the success of the savings bond program and explains why, even today, they remain popular gifts and investments. (How the one featured came to be.)
The first Series E Savings Bonds were dubbed Defense Bonds and later were referred to as War Bonds once the U.S. officially entered World War II. These bonds were originally issued as a means of financing the defense and war effort. During the war years, the bonds were actively promoted by banks, businesses, newspapers and volunteers. These promotional efforts gave rise to the payroll savings plan that allowed working people to establish a regular savings program through payroll deductions.
Series E Savings Bonds, like earlier series of savings bonds, were sold at a 25 percent discount from face value and matured at full face value after 10 years, although they could be redeemed earlier. Series E Savings Bonds that were issued prior to November 1965 were granted three 10-year interest extensions, which allowed them to earn interest for up to 40 years. These bonds were sold in denominations ranging from $25 to $10,000.
This particular Series E bond was given to my wife from her uncle in 1951 (when she was born). When it ceased to accumulate interest it was worth $187.50, ten times its original face value. Rather than redeem it, I was told its value as a collectible exceeded that. I have no idea what that value is, nor have I tried to sell it. It, like currency, continues to hold its redemption value at the $187.50 mark.
My wife’s maiden name was Frances Gail Bundy, and her mother Mary Frances Bundy as shown on the face of the bond.
Feel free to Chime in on the subject………ENJOY!!!
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