Antique Securities that Document American Capitalism Are Popular Collectibles. Is the Field Hot? Hey, Was Rockefeller Rich?
Debbi J. Karpowicz
From the Print Edition:
Matt Dillon, Spring 96
Bored with collecting Biedermeier? Blasé about baseball cards? Want to quit coins? If your answer is yes--heck, even if it's no--you'll probably be fascinated by a relatively new area of collecting that's growing by leaps and bounds and attracting scores of dedicated followers. It's scripophily--translated from Greek to mean "love of stock"--and it refers to antique stocks and bonds. Yes, the very same securities that your grandfather and great-grandfather kept under a mattress or in a safe-deposit box, until they were cashed in, lost, burned or--the best scenario--inherited by you.
If you don't already own any, you may want to start. The field of scripophily, which is less than 20 years old, is picking up speed faster than you can say "NASDAQ." And it's no wonder. Some 30,000 collectors worldwide have gotten into the habit, for numerous reasons. "Scripophily is still in its infancy, even after 16 years, and is growing steadily," says George LaBarre, a Hollis, New Hampshire-based dealer who has 5.3 million pieces in his inventory.
"It is appealing for newcomers, because they can get a good buy; there are tremendous opportunities in a new hobby," LaBarre adds. Scripophily also doesn't intimidate enthusiasts or lure them into what LaBarre describes as the "shark-infested waters" of other collectibles. "In three to five years, on a reasonable budget, you can become the serious authority on a given topic, simply because the field is so young," he says. "You can get fabulous things at low cost."
Unlike other collectibles, antique stocks and bonds have a unique distinction: They can be used to trace the history of America's economic development. If you're interested in blue-chip businesses, there's a virtual gold mine of sought-after securities issued at the birth of such industries as automobiles, aviation, railroads and canals. You'll find millionaire's memorabilia bearing the signatures of the original robber barons--Jay Gould, Jim Fisk, J.P. Morgan, Commodore Cornelius Vanderbilt and other captains of industry. Even better, each security also represents the schemes, steals and deals surrounding each share.
Consider, for example, the 1886 bond for the New Jersey Junction Railroad Co. It was issued when J.P. Morgan ended a huge dispute between the competing Rockefeller and Vanderbilt railroads that ran parallel to each other and waged price wars to outdo one another. Since Morgan bankrolled both sides, he brainstormed the idea of creating a junction railway that would link the two, and thus jack prices up, not down! This stock also depicts Morgan's yacht, the Corsair, where the rail barons met to create the new line. It became the inspiration for one of the world's most famous remarks. When someone asked Morgan how much the yacht had cost, he replied, "If you have to ask, you can't afford it."
This story embodies what scripophily is all about.
"Scripophily is the history of American capitalism," says Scott Winslow, a dealer based in Bedford, New Hampshire. "These securities financed the growth of the greatest industrial power on the planet. They represent the success of an entire culture."
Adds Bill Hogan, a collector based in Newton, Massachusetts: "It's a souvenir of the American capitalist market, which we'll never see again."
Haley Garrison, a dealer based in Williamsburg, Virginia, and president of the American chapter of the 566-member International Bond and Share Society, concurs. "Scripophily chronicles the blood, sweat and tears of the American dream," he says. "The antique securities are the financial river that runs through our economic system, that built the empires and companies. [They are] the capitalist system on which our country was founded. Edison couldn't have made a lightbulb without money."
Antique stocks and bonds can also provide a hands-on history lesson that probably couldn't be obtained elsewhere. Just ask Bill Kissinger, a Maryland-based collector who had ancestors on both sides of the Battle of Gettysburg. Kissinger owns numerous Confederate bonds, including one with a silhouette of Stonewall Jackson.
Collector Richard Gregg has what he calls "the oldest-known bond"--one issued by the Dutch East India Co. in 1621. He framed it in a glassed-in case with a model of the Half-Moon, the ship that Henry Hudson used for sailing across the Atlantic.
Since many documents have a fascinating--even irreverent--story surrounding them, they frequently become conversation pieces. Witness, for example, the state of South Carolina's "whorehouse bond," which carpetbagger Gov. Robert K. Scott issued in 1871 on a house of ill repute. When the state found out, the 6 percent Sterling bonds were confiscated and cut-canceled so that no one could redeem them.
Attractive artwork and graphics also make some shares highly desirable as collectibles. The same companies that printed bank-notes produced stock and bond certificates, complete with engravings. There were even special engravers whose sole purpose was to create beautiful portraits, vignettes and lettering.
"It's commercial art, and an art form that we'll never see again," says Hogan. In fact, Hogan has noticed that interior decorators are fond of using vintage shares in private homes and in theme restaurants. It makes sense: What better place to display an old railroad certificate than in a caboose functioning as an eatery?
Especially suitable for framing is a piece such as the stock certificate issued by Ringling Brothers in 1970; it's generally regarded as one of the most colorful American securities ever produced.
It's because of all these things that scripophily attracts people from all walks of life: history buffs, art and antiques lovers, aficionados of cars and, yes, cigars, and people who simply want to rub elbows, so to speak, with some of America's self-made millionaires such as J.P. Morgan.
Yesterday's stocks and bonds are also just the thing for today's millionaires, CEOs, deal-makers and Donald Trump wanna-bes. Folks who work in the financial community collect for obvious reasons: They can use their framed documents as a corporate art gallery to convey success and power to clients, not to mention to open up the topic of finances in a conversation--even though the shares themselves have lost their intrinsic value. (It sure beats an office that displays one's penchant for ducks.)
Joe Queenan will tell you. The well-known satirist owns a Chinese railroad bond and believes that vintage securities are even better than paintings in an office. "They are actually fine art, beautifully drawn," Queenan says. "They're like having a lithograph. Most paintings are terrible and are distractions in an office, but stock certificates fit in."
"They are the original limited-editions," says David Beach, a dealer and collector based in Winter Park, Florida, because only a specific amount of bonds were issued for some ventures. "They were numbered and would be impossible to reproduce today," he adds.
Scripophily has even drawn collectors away from other fields. LaBarre knows all about it. "It has become a strong hobby," LaBarre says. "Unlike coins, [scripophily] is not plagued by grading issues. Grading is an obsession with coins, stamps and baseball cards."
If you have never heard of scripophily before, you're not alone. The field started in the United States only after the publication, in Europe in 1978, of a book titled Old Securities. Compiled by two German bankers, Ulrich Drumm and Alfons Henseler, and containing nothing but photographs, the book started the U.S. trend. Europeans had known about the field for years. Compared to American stocks and bonds, European securities are generally considered more beautiful and better examples of art; a certificate from the Company of the Harbor Facilities of Bruges, Belgium, dated 1904, is a perfect example. "You can walk up to 100 people in Germany, and 95 out of 100 would know about [certificate] collecting, do it themselves or know someone who does," says LaBarre. In fact, he says, "I sell more material to Germany than to the States."
New Hampshire dealer Winslow concurs, saying that he has almost 7,000 people on his mailing list, primarily in the United States, Europe and Canada. "The European activity was a catalyst for growth here," he adds.
Word spread, and by 1980, the auction house R.M. Smythe, in New York City, held its first-ever U.S. auction completely devoted to antique stocks and bonds, says Smythe president Diana Herzog.
Today, the field is burgeoning. Particularly newsworthy is that more than 20 million antique stocks and bonds recently surfaced in the East German treasury archives. At some point, they may flood the market, although no one really knows what's there. Some dealers, like Garrison, dismiss most of the stash as "wallpaper." Herzog says, "I suspect many are 1920s German inflation bonds, printed by the millions, which have never been popular." Dealers such as LaBarre, however, see reason for enthusiasm: "The perception of most dealers is that it will cause a tremendous flurry of excitement--and introduce new people to the hobby. It's a gigantic deal."
Furthermore, some believe that antique stocks and bonds become increasingly valuable simply because the actual issuance of certificates is slowly going the way of the Model T, being replaced by electronic transactions. In fact, in May 1995 the Securities and Exchange Commission approved a "T+3" amendment, which shortens the lag time between a trade and settlement from five days to three.
"It is simply more convenient for investors to keep their stocks in 'street name' with their broker," says Marc Beauchamp, director of media relations for the Washington, D.C.-based National Association of Securities Dealers. This way, he says, there are no actual certificates to be lost, misplaced or burned.
Another factor is that an all-time auction record was recently set when Massachusetts collector Ned Downing paid $36,300 (plus tax) at a Smythe auction for the oldest surviving U.S. stock certificate (see "George Washington Banked Here," page 253). Dated June 7, 1783, it was the only extant share in the first bank in the States--the Bank of North America--which was the first U.S. corporation.
"This record has a positive effect," says Herzog. "It says that these old financial instruments are considered as important as other documents. It takes the field to another level."
OK, by now you're possibly a Ned Downing wanna-be. The million dollar question is: Where to start?
The first thing is to find a theme that interests you. In his second book on the subject, Scripophily: The Art of Finance (The Museum of American Financial History, New York, 1994), author Keith Hollender says, "Deciding on a collecting theme is the first and most important step in starting a collection." Hollender, principal of The Scripophily Shop at London's Brittania Hotel, points out three important events that shaped the commercial development of the United States: the building of railroads, which began in 1830; the discovery and exploitation of minerals, as exemplified by the California Gold Rush of 1849; and the American Civil War. These three themes, Hollender writes, "are most amply depicted by the bond and share issues of the time."
"Develop a coherent idea or goal," advises Winslow. "People collect on many topics. Do some reading on the industry you select. Learn the history of what you're considering." Winslow practices what he preaches: His office is filled with history and reference books.
You might follow Massachusetts collector Hogan's example: A childhood love of German-made LGB train sets inspired his collection of railroad stock certificates. If you share his enthusiasm, there's no limit to the railroad stocks you might acquire. You could purchase a $1,000 bond of the Boston, Hartford & Erie Railroad Co., issued in New York in 1867. As described in Garrison's current catalog, the money-green bond sells for $300 and features a vignette of a large-stacked locomotive puffing billows of smoke, as well as multitudes of coupons, all featuring a miniature train. Or, for $750, you might purchase the aforementioned bond issued to, and signed as trustee by, J.P. Morgan for the New Jersey Junction Railroad Co., issued in 1886 in New York. This bond has two interesting peculiarities, Garrison says. To prevent counterfeiting, the bond was printed in 23 typefaces, and Morgan had the printer include his yacht, the Corsair, in the Hudson River scene below the trustee's signature.
Or you could follow Maryland collector Kissinger's example, and purchase a $500 bond for the Elmira (New York) to Williamsport (Pennsylvania) Railroad. Kissinger wryly states that this was a 999-year bond issued in 1863 at 7 percent interest. At its maturity, it would be worth--let's put it this way: a 7 with 23 zeroes! "It was the original zero-coupon bond," he says with a chuckle. The bond was redeemed in 1937 by the railroad. "They didn't know what they were getting into," Kissinger says. "It would have bankrupted the entire United States."
Kissinger also has a share from the Walt Disney Co., which he has framed with a Disney dollar. "Only two [groups] can print currency in the United States," Kissinger says with a laugh. "The U.S. government and Disney."
Whatever you do, "Don't try to collect everything," warns collector Gregg. "You'll have a hodgepodge. I did that, but then shifted to pre-1800 documents."
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