Series E Bond Definition—From War Bond to Savings Bond

What Is a Series E Bond?

Series E Bonds were initially issued to finance the United States’ involvement in World War II. They were sold at a discount to face value and paid full face value at maturity. Series E Bonds remained available after the war as U.S. Savings Bonds and were replaced by Series EE savings bonds in 1980, also known as "patriot bonds".

Series E Bonds, first issued in May 1941 as defense bonds. The first purchaser of a Series E Bond was President Franklin D. Roosevelt. Series A through D savings bonds were offered from 1935 to 1941. Series E became “war bonds” after the United States declared war on Japan in December of that year. 

Key Takeaways

  • Series E Bonds were war bonds issued by the federal government in 1941 in the midst of World War II with face amounts between $18.75 to $10,000 and a maturity of 10 years.
  • A war bond is an initiative by a government to fund military operations and spending by issuing debt for the public to purchase.
  • Series E Bonds were converted into savings bonds after the conclusion of WWII, and were replaced in 1980 by Series EE or "Patriot Bonds".

Understanding Series E Bonds

Series E Bonds, sold as war bonds, were issued in denominations between $18.75 and $10,000. A war bond, initially known as defense bond, is a debt instrument issued by a government as a means of borrowing money to finance its defense initiatives and military efforts during times of war. 

Series E, war bonds were issued as baby bonds that sold for a minimum of $18.75 with a ten-year maturity. The bonds were zero-coupon bonds, meaning they did not pay regular interest but would pay the face value at maturity. They sell at a discount price of 75% of face value. E Bonds was initially issued with a fixed term of 10 years but were granted an interest extension of either 30 or 40 years, depending on the issue date. Large denominations of between $50 and $1000 were also made available.

War Bonds Through the Ages

During World War I, war bonds were Liberty Bonds and initially met with mixed success. The U.S. Treasury Department responded by enlisting celebrities to appeal to the American public’s sense of patriotism. The Series E campaign built on this success by marshaling the volunteer efforts of bankers, business executives, newspaper publishers, and Hollywood entertainers to support and promote the new bonds, which surpassed financial targets immediately. The initial drive aimed to generate $9 billion but exceeded that goal with income of $13 billion. The seventh drive raised the most substantial gross revenue of $26 billion over 48 days in 1945.

Following World War II, Series E Bonds became known as U.S. Savings Bonds. These bonds have become one of the most popular investments offered in the United States, as they provided the individual investor a safe, tax-free and affordable version of more substantial U.S. Treasuries or corporate or municipal bonds. They no longer offer a significant source of revenue for the U.S. government. The exchange of E Series bonds for H Series is allowed until 2004. That exchange is no longer offered. Instead, holders of mature Series E bonds can redeem them at financial institutions such as banks at an accrual value determined by the U.S. Treasury on a semi-annual basis. The final round of Series E Bonds stopped earning interest in 2010.