Since the beginning of the Industrial Revolution in the early 19th century, countless business companies have come and gone. Many of these are now remembered only through surviving examples of their stock or bond certificates. Today these certificates are often collector’s items and, by one estimate, there are more than 100,000 collectors in this field. Even a new term — “Scripophily” — has been coined to describe the collecting of old stock and bond certificates.
Despite this rising interest, old stock and bond certificates can still be found at a relatively low price.
As most readers may know, stock certificates represent ownership in a company, while bonds represent a debt that the company owes the certificate holder. The earliest known stock trading dates from around 1000 AD in Italy. It began in the port city of Amalfi, where shares in maritime venture began to be bought and sold. This type of maritime-venture funding existed until the 19th century. Even the famous British East India Co. was funded by this venture-sharing stock method.
The Amalfi system did not, however, include the buying and selling of shares in individual companies. The earliest known stock company was created in the 14th century in Sweden. Several others soon appeared in England, France and Holland. It was not until the late 17th century, however, that companies began to issue stock and bond certificates that would become collectible. In the 18th century, businesses in Spain, Portugal and Belgium began issuing paper certificates to represent ownership or debt.
Certificates from companies in the New World appeared as soon as American independence was established in the 1780s. In the United States, the very earliest stock and bond certificates, including those from colonial days, were plain. It was only in 1792 that an American company first incorporated an image on its face, specifically, a horse-drawn wagon. Throughout the 19th century, American certificates evolved to become very decorative and included images of miners, trains, ships or anything else in which the issuing company was engaged.
American certificates, however, were relatively sparse in design and color in comparison to their European counterparts. In 19th century Europe, prominent artists were asked to illustrate certificates. One exception, however, was Great Britain. For whatever reason, English certificates were usually done in a single color and were not illustrated.
As a practical matter, stock and bond certificates collectible in the modern market date from the early 19th century to the 1940s. There are several ways in which these old certificates can be valued. An individual certificate can be examined on the basis of its appearance. Detailed figures, vignettes, rosettes, fine calligraphy and varied coloration will enhance value. In a way, this is really a form of financial art.
Another way in which certificates can be evaluated is by putting them into an historical context. Different certificates reflect the development of such industries as diverse as railroads and tobacco. Unless the certificates are dated, however, it can be difficult to determine when a particular certificate was issued. The general designs on stock and bond certificates in the 19th century changed relatively slowly. Dating can be often based on circumstantial evidence, such as the appearance on a railroad stock certificate of an early style of locomotive.
Prices on almost all old certificates are still low and many range well below $100. Value will hinge on such factors as design and coloration, condition and whether the stock represents a well-known or historically significant company. Certificates belonging to companies run by prominent 19th century financial figures will be more in demand. With lesser-known firms, incidentally, there exists no comprehensive database to find out about the history of a company. Various sites on the Internet offer to assist (but give no guarantees) in finding out a firm’s history.
Sometimes coupons may be attached to a bond certificate. The original intent of these coupons was that they be exchanged for “declared dividends” or cash. In such cases where coupons survive to the present, it is a fair bet that the company itself did not survive long enough to have the coupons redeemed. One example of coupons appears in the accompanying photo. The certificate is a bond issued in 1873 from the South Mountain Railroad Co. Attached to the bond are 60 coupons that were intended to be redeemed every six months with the last coupon maturing in 1903. The South Mountain Railroad Co. was a chartered Pennsylvania corporation, but apparently had a short life since none of the coupons were redeemed. There is a “South Mountain” in southcentral Pennsylvania around Gettysburg, so perhaps the company originated there.
In the last twenty years or so, the creation of stock and bond certificates has almost become a lost art. Today, ownership in companies or bond ownership is recorded electronically. (AT&T was the first firm, incidentally, to record stock ownership electronically.) Even today, a few firms still issue certificates, but there are extra fees in getting them transferred and recorded. It appears that the era of physical stock and bond certificates is at an end. It may mean that a rise in prices can be expected in coming years.