ABSTRACT
Issued in the summer of 1915, 4½ per cent War Loan 1925-45 was dated, with an option period, and large. The similarities with Lloyd George’s Loan went no further. McKenna’s Loan was open-ended, the first such issued by the British Treasury. The purpose was to repay monies the Treasury had borrowed from the Bank of England, curb consumption and increase saving. The smallest investor was courted with tailor-made issues. Advertising was professional. Most importantly, the Loan carried two conversion privileges: an option to convert into it from existing issues and an option to convert out of it into any long-or medium-dated loan which might be sold later in the war. Thus, if yields rose and the government found it necessary to produce another loan, an issue would be created that was at the same time expensive to service, probably dated, and potentially as large as its own new money subscription and the 1915 Loan combined. The Loan was clever, technically innovative, and the most clumsy debt management episode of the war.
