National Defence bonds went on sale this week in 1965 to raise funds for Malaysia's defence against the Indonesian Confrontation.
The new nation of Malaysia, which included Singapore, had come under attack by Indonesia which opposed the formation of the federation.
Malaysian Finance Minister Tan Siew Sin called on all citizens to show their faith in the country's future by buying the bonds.
He made this plea over Radio and Television Malaysia, explaining that the Government's financial resources were "being fully stretched to meet the demands of defence and development".
"It is therefore necessary for the Government to mobilise all available resources to meet these rising expenditures. One way of raising money is by means of voluntary contributions," he said, adding that defence bonds were a way for ordinary citizens to make these donations.
The bonds, which were sold at all post offices and banks, were available in multiples of 50 Malaya and British Borneo dollars "to ensure that even the smallest investor with limited resources will be able to take part in this national and patriotic effort", said Mr Tan.
He added that the bonds would be issued at $98 for every $100 bond, and the interest rate would be 5 per cent a year for the first two years, 5.25 per cent a year for the next three years and then 5.75 per cent a year until the bonds matured in 1973.
Singapore pledged its support as well. Culture Minister S. Rajaratnam said that buying the defence bonds would be a way for citizens to support the Government's war effort. He said: "Those who cannot afford to buy them are not necessarily disloyal to the country. But we hope that those who have the finances will help the Government by buying these bonds."
Mr C.V. Devan Nair, secretary- general of the National Trades Union Congress, also urged all NTUC affiliate unions to buy the defence bonds.
Sales of the bonds at the central bank, Bank Negara, reached $1.8 million by the third day, but sales were slow in other parts of the country. The sale of bonds ended on Dec 18 with $10,189,100 in the kitty, just exceeding the $10 million target.
