victory bonds

[hannahhundeby]

So, in WWI my understanding is that the war was costing Canadian Government one million dollars a day. If the government reduced its spending it would go into debt and they had to feed the soliders so reduction in spending was not an option. Borden eventually introduceed income tax which didn't raise enough money. The government then introduced victory bonds to raise more money. The part that I don't understand is how the government eventually repayed all those people with 5% interest. If they were already almost in debt how did they get enough money to pay the money they got plus extra?

[Mr. Delainey]

Good question. I'm not sure.

I could fudge an answer something like this: the Canadian Government relied upon money coming in from the British, i.e. England buying shells, guns, etc. from us. We used profit gained through this and passed it on to investors.

Again, I am totally fudging it here. Tell you what. How about you do some research into this and if you can come up with the answer I'll throw down some bonus marks for you?

[hannahhundeby]

So, I looked up on the internet about he victory bonds but it wouldn't clearly full out say where they got the money to pay them back. It did say that the money would be payed back over a time period of ten years or more in semi annual payments. This probably shows that it did take the government a while to get all that money back but it still doesn't completely explain how they did it. I think that the answer you said probably is the closest thing to the truth that I can find.