Military Archive Research
by Dr. Stuart C Blank
Member of the Orders and Medals Research Society (OMRS)
Member of the Royal Air Force Historical Society (RAFHS)
Member of the Naval Historical Collectors and Research Association (NHCRA)
Member of the Nautical Archaeology Society (NAS)
Member of the International Bank Note Society (IBNS)
Member of the International Bond and Share Society (IBSS)




Government Bonds

Governments involved in conducting warfare have to finance their military campaigns. The military conflict impinges upon the fiscal strategies of the combatant nations. In normal times governments raise funds via taxation or through borrowing. In times of war the government will have significant war-fighting expenses which may not be financed solely by taxation. Indeed in a conflict it would be hard for the "invaded" government to maintain and operate a tax collection system. As such the combatant governments are likely to seeking financing the war though the issue of Government Bonds.

The study, research and collecting of old stock, bond and share certificates is called "scripophily". The first government (in modern times) that sought debt financing for the war effort through the issue of Government Bonds was the Confederate Government in North America. This occurred during the American Civil War. The Confederates issued both secured and unsecured bonds during the war. The secured bonds were issued against the cotton crop of the South. The Confederates lost the war and the incoming government of the Union decided not to honour the debts of the Confederacy.

Many of the Southerners who were secured Confederate bond holders sequestered the security for their debts (i.e. cotton) and the Federal government was unable to retrieve very little of this cotton. Foreign bond holders had no such recourse. After the war it was argued by some bond holders that the United States was a successor government to the Confederacy. As such they owned the Confederate's assets and were therefore obligated to discharge its debts! 

A watershed moment was the action by Coutts Bank who organised a Creditors Committee and pursued the American government to settle the Confederate debt. Eventually in 1987 Coutts auctioned these bonds after much legal action against the US Government. This illustrates how wars can be financed via Government Bonds and that the bond holders of the losing side may get no redemption or interest payments for their debt.

Another example is the Imperial Russian Government Bond that was issued in 1916. In 1917 there was the Russian Revolution and the Imperial Russian Government ceased to exist. Whether these bond holders were compensated is unknown but if they were then it was probably many years after the cessation of Imperial Russia. Who says Government debt is risk-free?