Now: How war bonds started a new relationship with government; Then: This is the house that Jack WILL build!

This is the house that 
Jack WILL build!


The investment portfolio of today’s modern farmer likely consists of more than a simple Canada Savings Bond.

But in the 1940s, when life expectancies were shorter, farm receipts and farm debt were smaller and RRSPs and national pensions were far in the future, the investments offered by the Canadian government to help finance the Second World War signalled a shift in Canadian consumerism.

Costs escalated as the country’s war effort ramped up, and by 1943, the Canadian budget was ballooning, even tripling year over year as war-related costs dwarfed every other sector.

“I think a good case can be made that prior to the Second World War, most Canadians could reasonably be called poor and the war really does generate a lot of prosperity in this country,” said Graham Broad, a historian at King’s University College and co-editor of the Wartime Canada website.

To help cover the expenses, the National War Finance Committee introduced a “victory” war bond program early in the war. Canadians bought gold bonds on a fixed term, providing a loan to the government with returns up to 5.5 percent. Half of these bonds were ultimately sold to businesses.

The program, which had previously been used during the First World War, eventually raised billions and funded a large portion of the war effort.

The war effort was also assisting the country’s economy as unemployment fell and inflation stayed low.

“For the first time in memory, Canadians are putting away substantial amounts of money,” said Broad.

“The bonds became perhaps one of the first examples of Canadians making substantial investments for the future.”

Farmers also rebounded from the Great Depression. Export markets strengthened, but war-time restrictions and taxes limited consumer spending on big ticket items.

Today, strong commodity prices and low interest rates are producing record farm receipts, machinery sales and debt loads in rural Canada, but the mood in the war years was different. Farm debt peaked in the late 1930s in Canada at $806 million, which is a small number, even when adjusted for inflation, when compared to the tens of billions in debt that Canadian farmers manage today. It would decrease during the war years.

Farmers weren’t typically buying land, and machinery purchases were minimal.

Broad said it was “boom times” for many growers, although they had less to spend it on. War bonds became an attractive option.

The bonds were marketed to Canadians in urban and rural centres throughout the war. Newspaper ads and posters targeted Canadians’ emotions, playing on a sense of patriotic duty, with images of Canadian soldiers, or on their desires, with visions of post-war Canada.

Others took a more fearful approach, such as First World War ad that threatened, “Canada’s grain cannot be sold unless you buy victory bonds.”

“People could both serve their country, but also be self-interested at the same time. They could both secure their own economic future and their country’s at the same time. There was no contradiction there, and the war bonds ads kind of make that explicit,” said Broad.

“Especially late in the war, when they begin the talk about how soon all of the things you want to buy will be coming back: the cars, the stoves, the fridges. Rural electrification was going to be a big post-war project and that the bonds were ‘your ticket to being able to buy those things.’ ”

The bonds offered a decent return for those who got in early, but the value of the investment diminished as inflation grew. Large numbers of people never cashed them in.

“I think the whole war reorients the way Canadians thought about their relationship between themselves and their government. A much expanded government comes out of the war,” said Broad.

“Businesses in this country began to see that they could have fruitful co-operation with government — it didn’t have to be an adversarial relationship — and the war bonds are part of that.”

THEN: This is the house that Jack WILL build! – ad from April 5, 1945

Jack’s been making money lately. And Jack is a smart business man as well as a good farmer (ever notice how often they go together?) Jack could buy a lot of things he’s had his eye on for a long time. Not to mention the things Mrs. Jack has had her eye on! But Jack looks at it this way …

Prices for things are good right now and labour is mighty scarce. So Jack has decided to do without the things he’d like to buy right now. Instead he’s paying off the last of his mortgage and he’s buying Victory Bonds.



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