War has always been the crucible of financial innovation. When states go to war, they confront an immediate problem: how to spend in the present while promising to repay in the future. The solutions governments have devised to this challenge — bonds, lotteries, patriotic appeals to civilian savings — have shaped the development of capital markets from the eighteenth century to the present.
The documents in this exhibit span 165 years and five nations, from the American Revolution to the Second World War. Together they trace a remarkable evolution in the practice of war finance: from the improvised expedients of the Continental Congress in 1776, which raised funds through lottery tickets and state bonds issued to individual soldiers and merchants, to the mass mobilization of civilian savings in the twentieth century, when governments sold small-denomination bonds to factory workers and schoolchildren as acts of patriotic duty.
What connects these documents is not just the fact of war but the problem of legitimacy. Every war bond is, in some sense, an act of political trust: a citizen lending money to a state in the expectation that the state will survive, honor its commitments, and repay. This trust was sometimes vindicated — Massachusetts honored its 1777 bonds when the Revolution succeeded — and sometimes catastrophically betrayed. The Confederate Cotton Loan, the Russian Liberty Loan, the Austrian War Loans all ultimately became worthless. The history of war finance is, among other things, a history of the promises governments kept and the promises they could not.