This article originally appeared in the fall 2019 issue of Morningstar magazine. To learn more about Morningstar magazine, please visit our corporate website.
The issuance of bonds traces its history to early human civilization, when payments were made in grain and terms were chiseled on tablets. In the 12th century, European rulers funded military adventures through debt instruments, giving rise to the sovereign credit market. Borrowing made possible through long-term obligations propelled the development of the West, supplying the capital not just for wars but also for global trade and foundational infrastructure such as canals and railroads. Generations of American investors have bought Treasury bills, notes, and bonds backed by the "full faith and credit" of the U.S. government.