It has been 100 years since the start of the First World War, which was fought for four years and claimed the lives of more than 6,000 soldiers a day. Countries in Europe began marking the centenary earlier this year, and the Tower of London is awash in ceramic poppies in beautiful tribute to the men who died.
The scale of World War I was unprecedented in several ways, including the cost of financing it. In fact, several of the countries involved are still facing related debts.
Last week, the U.K. announced it would repay £218 million ($349 million) from the £2 billion of debt that it incurred during the war. National War Bonds were issued to the public in 1917 to support the effort, promoted by widespread patriotic publicity campaigns and an attractive interest rate (both then and now) of 5 percent. (About 3 million Britons bought the debt, and this is how The Spectator covered the creation of National War Bonds.)
Ten years later, the bonds were refinanced by Winston Churchill into 4-Percent Consolidated Loans—"4 percent Consols" for short. Facing the huge financial strains of the Great Depression, Chancellor Neville Chamberlain used patriotism again to convert some of those 4 percent Consols into perpetual bonds, which give the debtor the right to never pay the principal as long as the interest—which he cut to 3.5 percent—is paid. The government has been paying about £136 million a year to holders of the perpetual bonds and war loans. The government estimates it has paid £1.26 billion in total interest since 1927. Still, the Great War is estimated to have cost the U.K. around £3.25 billion.