Israel Bonds

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 the 1948 Arab–Israeli War. 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, Israel faced unique economic demands, especially the arrival of hundreds of thousands of immigrants from post World War II Europe and the Middle East.

Short on economic resources, Israel suffered food shortages and imposed rationing, and new arrivals had to be housed in primitive shelters.[2]

With the country financially overwhelmed, Ben-Gurion turned to the Diaspora community for help. 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. 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. The American Jewish leaders supported Ben-Gurion's plan and, the following spring, the prime minister traveled to New York City to help launch the inaugural Independence Issue at a 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 amount(ed) to an astonishing 35% of Israel's special development budget." The article quoted Foreign Minister Golda Meir, who emphatically stated, "the central role in building our economic strength has been played by Israel bonds."[3]

Over subsequent decades, sales continued to increase, particularly in times of crisis. During 1967's Six-Day War, sales exceeded $250 million, a total that more than doubled during the Yom Kippur War of 1973. From the mid-1980s to 1992, the bonds were the primary way the Israeli government obtained external funding.[4] In 1991, the year of the Persian Gulf War and Iraqi missile strikes on Israel, annual worldwide sales broke the $1 billion threshold.

Annual worldwide sales remained at $1 billion or above as Israel bonds became increasingly viewed not only as a means of supporting Israel, but as a useful financial investment as well, particularly for pension funds.

In 2004, the Bank of Israel issued a report “to describe the activity of the Israel Bonds organization over the past fifty years and to summarize changes that have taken place in the products the organization offers with respect to quantities, types of bonds and recruitment costs.” In doing so, the report noted, “an analysis of the sale of bonds indicates an increase in sales from one decade to the next.” It also observed that the Bonds organization has been market-responsive over the years, “so that each bond addressed a different target audience: individuals, communities (and) financial bodies.” The report concluded that Israel Bonds is “a uniquely Israeli establishment, and no other countries have a similar organization.” It stated that “(when) Israel has found it difficult to raise high sums of external debt, Israel Bonds has shown itself to be capable of reacting quickly to increased needs for foreign currency.”[5]

In fall 2011, the organization launched its e-commerce site.

In 2013, U.S. sales exceeded $1.1 billion, the first time domestic sales crossed the $1 billion threshold. That achievement was realized in 2014 and again in 2015.

In June 2016, the Bonds organization launched a new initiative to counter anti-Israel activism on campus. Entitled "The Alternative BDS - Bonds Donated to Schools," the program encourages donations of Israel bonds to universities.