Israel Bonds Records

The idea to float bonds issued by Israel's government was conceived by Israel's first prime minister, David Ben-Gurion, in the aftermath of Israel's War of Independence. The war had taken a terrible toll in casualties (more than 1% of the country's population was killed), and the nation's fledgling economy was devastated.

Compounding the dire situation was the fact that Israel faced economic demands unique to the new state, most especially the arrival of hundreds of thousands of immigrants. In Israel's early years, immigrants generally fell into two categories: Holocaust survivors and Jewish refugees from Arab countries. For Holocaust survivors, the journey to Mandate Palestine prior to Israel's independence had been extremely perilous. The British patrolled the coastline, maintained a blockade to prevent entry, stopped many ships, and sent the passengers to displaced persons camps in Europe. On May 15, 1948, the end of the British Mandate and the establishment of Israel removed all impediments to immigration. As a result, a large portion of the surviving remnant of European Jewry quickly set sail for Israel.

Meanwhile, Jews from throughout the Middle East, who fled, were expelled, or were rescued through missions such as Operation Magic Carpet, added to the enormous influx of immigrants. Israel's chronic lack of funds forced the government to settle the wave of immigrants in primitive shelters. Food was scarce and strictly rationed.

With his country financially overwhelmed, Ben-Gurion turned to the Diaspora community for help. In September 1950, he convened a meeting of American Jewish leaders at Jerusalem's King David Hotel, where he proposed issuing bonds to help provide Israel with a more secure economic foundation. Ben-Gurion's goals were two-fold: to obtain millions of dollars in funding for immigrant absorption and the construction of national infrastructure, and to engage Diaspora Jewry as active partners in building the new Jewish state.

The American Jewish leaders supported Ben-Gurion's plan and, the following spring, the prime minister traveled to New York to help launch the inaugural Independence Issue at a gala Madison Square Garden ceremony. Expectations for first-year sales were $25 million. Instead, final results for 1951 more than doubled projections, exceeding $52 million. The new organization increasingly expanded operations throughout the US and Canada, providing proceeds utilized to help fund projects in Israel's industrial and agricultural sectors, including the Dead Sea Works and National Water Carrier.

Within six years, according to an article in the January 21, 1957, issue of Time magazine, "bond sales alone amounted to an astonishing 35% of Israel's special development budget. Over subsequent decades, sales continued to increase, particularly in times of crisis. During 1967's Six-Day War, sales exceeded $250 million a mark that more than doubled during the Yom Kippur War of 1973. From the mid-1980s to 1992, Israel bonds were the major source of external net borrowings by the Government of Israel. In 1991, the year of the Persian Gulf War and Iraqi missile strikes on Israel, annual sales broke the $1 billion threshold.