By Dian Cohen
The Government of Canada has just announced that as of the end of this year, for the first time ever, Canada Savings Bonds will no longer pay interest – they’re telling us all to cash them in.
I was seven years old in 1939. One of the highlights of that year was that King George V1 and Queen Elizabeth visited Winnipeg – along with thousands of others, I stood on Wellington Crescent to wave. Later that year, during the first week of school, the second world war was declared.
Waging war is expensive. Between 1939 to 1950, it cost Canada $21.8 billion – about $386 billion in today’s dollars. More than 45,000 Canadians died, and the Canadian economy boomed. Canada produced $5.8 billion from its natural resources during the war. … Unemployment disappeared (the unemployment rate fell from 11.4 percent in 1939 to 1.4 percent in 1944), wages increased, and many families had two or more members employed during the war, greatly increasing the family income. Huge advancements were made in healthcare, education, transportation, and communication.
All helped by a fantastically successful war bonds campaign. Canadians were enthusiastic about helping the war effort. The bonds were issued with maturities of between six and 14 years with interest rates ranging from 1.5% to 3%. You could do your patriotic duty for as little as $50. I can remember cutting the interest coupons and taking them to the bank for payment.
The end of the war in 1945 was not the end of the campaign. In 1946, Victory Bonds morphed into Canada Savings Bonds and the government made it easy to buy them by launching a Payroll Program, thereby getting tens of thousands of employers to deduct the cost from their employees’ paycheques.
Year after year, the Finance Department and the Bank of Canada beefed up the perks to keep Canadians buying bonds to help pay down the debt and finance economic development. By 1976 the Canada Savings Bonds Program represented 45 per cent of the total marketable debt outstanding. The following year regular-interest “R” bonds and compound-interest “C” bonds replaced old style coupon bonds. Direct deposit of interest payments was also made possible with the introduction of the new bonds. Aside from their popularity with cautious savers, they contributed to the financing of roads, hospitals, power grids, telecommunications lines, airlines, pipelines – just about anything that government wanted to do alone or in collaboration with the private sector.
Ten years later CSB purchases peaked at $55 billion, driven by sky-high interest rates and the fact that they were one of the safest investment vehicles around, fully backed by the federal government and cashable at any time.
Life moves on. Interest rates began to decline in the late 80s, banks and other financial institutions were offering products like GICs, self-directed trading accounts, mutual funds and exchange-traded funds (ETFs), with better rates of return. Canadians switched and the government began questioning the $60-million price tag it cost to run the program each year. Finally and reluctantly, the government stopped selling CSBs in 2017 and as of November 2021, they’ll stop paying interest.
So – if you have any Canada Savings Bonds, get them out and kiss them goodbye. Here’s how.
If you do things online, go to https://www.csb.gc.ca/redeem-your-bonds-in-2021/ for all the information you’ll need.
If you aren’t online, contact Customer Service at 1-800-575-5151. You’ll need some information: your Customer ID, your address at the time of purchase, the bond certificate serial number(s) – if available, and the exact name of the registered owner as it appears on the certificate. And if you don’t have all that, they’ll try to help anyway. But they aren’t miracle workers. If you’ve lost track of your CSBs, you should know in advance that only CSBs (Series 32 and up) and Canada Payroll Bonds issued in 1977 or later are eligible for the lost bond process.
I love history. Happy Canada Day!
Dian Cohen is an economist and a founding organizer of the Massawippi Valley Health Centre.