In 1938, a 1,200 dutch florin floating-rate perpetual bond that had been issued in 1624 was registered by the New York Stock Exchange, acting as transfer agent for the issuer, Lekdyk Bovendams Co. of Utrecht. The bond, which had been held in a family for more than 300 years, continued to pay interest as late as 1957, when it appears to
have been redeemed at par, with accrued interest.

Old bonds have remarkable powers to return to life and profit. Unlike common and preferred shares, which sink to zero value when a company goes bankrupt or just folds up and disappears, bonds retain claims on the residual assets of the business. The problem is to find those assets.

Researching old bonds and stocks is a cottage industry run by people with a passion for archival research and an affinity for old documents. Bob Kerstein, president of OldCompany.com (www.oldcompany.com), one of the leading firms in the field, was chief information officer in the mid-1990s for Orca Bay Sports and Entertainment, owner of the Vancouver Canucks. His company, based in Fairfax, Va., gets 15% of its business from Canadian investors, he says. After he provides the history of a bond certificate and its links to what money remains, he leaves it to the holder to work out a sale or to cash it in.

“Time is the enemy,” Kerstein explains. He does securities searches for US$39.95 per issue. He notes that if a bond-issuing company goes out of business with assets intact, then any value attributable to the issue in question reverts to the government of the jurisdiction in which the company is registered. The funds tend to be held for five to seven years by each registrar. If the registered owner or claimant does not communicate with the holder of the funds, then the money will move to the general account of the state or province, he adds.

Researching old bonds and stocks is potentially profitable. Cheryl Anderson, president
of America West Archives Inc. of Cedar City, Utah (cheryl@goldstockresearch.com), finds value in half of the securities she researches. Her fee is US$45 per certificate.

Canada also has specialists in tracing old bonds and stocks. In Ottawa, Don Levy does securities tracing for $35 per security or company, starting with provincial and federal company registrars. (He can be reached at don.g.levy@sympatico.ca.) It’s a sideline for his main work as a forensic accountant, he says.

In New York, R.M. Smythe & Co. , an auction house specializing in numismatics and old stock and bond certificates, researches old bonds and stocks. “We do a few thousand issues a year and find value in a small fraction of those that turn up,” says Caleb Esterline, director of research. His company specializes in U.S. and Canadian issues. See www.smytheonline.com.

“If the company is still in business, we go to the horse’s mouth and get the information directly,” Esterline notes. “Each bond is case-specific, and often there has been a settlement.” Even the most dubious securities can have value. Esterline notes that German bonds issued in the Second World War were covered by the London Debt Agreement of 1954, which set up parameters for payment of pre-1945 German bonds.

Do-it-yourselfers can begin with the manuals published by FP Bond Books in Toronto, an affiliate of the National Post. Those who want to do their own research can consult a bibliography of such resources as The Directory of Obsolete Securities, published annually by Financial Information Inc. of South Plainfield, N.J. (www.finet.com). More information on old securities searches can be found in a discussion of the process at www.epfl.net/bst/OldStockCertificates.

A list of resources for finding the value of old securities is listed at www.goldsheetlinks.com. Contacts for registrars of all Canadian provinces, territories and the 50 U.S. states are provided. A link to specialists in tracing British securities can be found at
http://money.independent.co.uk/personal_finance/invest_save/article309865.ece.

The fact that a bond has been turned in and cancelled by the issuer or issued by a company that went bankrupt does not automatically mean it has no value. A U.S. Steel Corp. 5% bond issued in 1901 for $100,000 and signed by Andrew Carnegie, who founded the company with the help of financier J.P. Morgan, went on the auction block with an asking price of $70,000. Payable in gold at market price or in U.S. Treasury greenbacks, the bond had been paid and cancelled by the issuer. But negotiability is not the only test of value in the market for antique or unusual bonds and stocks, collectively called scripophily.

@page_break@The field is filled with bonds that are traded at the customarily wide spreads characteristic of the antiques trade. Yet retail prices asked for old bonds indicate their intrinsic value as curios. At www.scripophily.com, you can find a 7% 1863 Confederate States of America issue with four annual coupons still attached priced at US$249.95.
The Confederacy did not survive to make payment, but there is an active market for such bonds among U.S. Civil War buffs.

A £1,000 Province of Nova Scotia callable perpetual bond issued as “government redeemable stock” in 1904 with a 3.1% annual coupon and later paid and cancelled is available at time of writing from www.scripophily.com for US$49.95.

A 10,000 lei 4.5% Government of Romania Second World War Loan issued in 1941 can be yours for US$59.95, also at www.scripophily.com. Engraved in the Balkan realist style with images of a rickety bridge, naked maidens, a tank, a hay wagon, fish and eagles, it is better as wallpaper than as a fixed-income instrument. The regime of former Romanian dictator Nicolae Ceausescu had cancelled its obligations to pay bondholders. On Christmas Day in 1989, Romania cancelled Ceausescu, executing the man who called himself “the genius of the Carpathians.”

Researching old bonds is a dying skill, for the rise of book-based securities means in future there will be fewer instruments with printed pathways to transfer agents and issuers.

Book-based registration systems include that data, of course, but the option to sell an elaborately engraved bond or stock certificate on the scripophily market will decline.
As that happens, the dwindling supply of old paper bonds will presumably become more valuable.

Therein lies the best chance old securities have for regaining some of their worth. No security certificate is ever too old or too dubious to have value — if not as a security, then as a collectible. IE