Accrued income bond. A type of bond that pays interest only when
the company has sufficient income. The company must make up missed
Adjustment bonds. Bonds issued in exchange for
outstanding bonds when re-capitalizing nearly bankrupt companies.
Similar to income bonds because companies may delay interest
Annuity bonds. Bonds with no maturity dates. Annuity bonds
make steady interest payments. Also known as perpetual bonds.
Assessable stock. Typical the stock of the 1800s whereby a company
could 'assess' existing stockholders for additional funds to be
Bearer bonds. Bonds with principal and interest payable to
whoever holds the certificates. In other words, it is not
registered in anyone's name.
Bearer stock.Stock controlled by whomever holds the
stock. Extremely rare among North American certificates.
Callable bonds. Bonds that companies may repay (call) prior to
scheduled maturity dates. Companies usually pay interest penalties when
buying back these bonds.
Markings and Date –
When a certificate is cancelled, it is usually marked cancelled by stamp
or pen, or punched with holes. On the more modern certificates, the pin
holes show the date of cancellation.
Capital stock. Represents the entire issuance of all classes
of stock. Most companies issue only one class of stock, so capital stock
is generally synonymous with common stock.
Classes of stock. The two primary classes of modern stock are
"Common" and "Preferred." Some companies further sub-divide these
classes into 'Class A,' 'Class B,' "First Preferred," and so forth. The
intent is to give variable voting rights and dividend rights to
Collateralized Mortgage Obligations. Type of
mortgage-backed security that creates separate pools of pass-through
rates for different classes of bondholders with varying maturities,
called tranches. The repayments from the pool of pass-through securities
are used to retire the bonds in the order specified by the bonds'
Collateral trust bonds. Bonds secured partially
by trust (like a debenture) and partially by collateral.
Common stock. Typical stock. Stockholders share in profits in
proportion to the number of shares they own. Some Canadian and UK stocks
label them as "ordinary."
Consolidated bonds, consolidated mortgages. Sometimes called
monster mortgages. These are new loans issued to pay off several
older loans. Often, those earlier issues carry higher interest rates.
Railroads often used consolidated mortgages when merging smaller lines
into larger systems.
Protection – Many
certificates have different forms of counterfeit protection such as the
quality of paper, dots embedded in the paper, watermarks as well as
Convertible bonds. Bonds exchangeable for stock. Convertible
bonds commonly offer greater potential for appreciation in value if
stock prices rise.
Convertible preferred stock. Preferred stock with special
provisions that allow conversion to common stock at designated times or
Corporate stock. Common stock.
– Official Seal of the Corporation can be printed or embossed – Usually
has name of company, state of incorporation and incorporation date.
Coupon. A small certificate, usually cut from a bond, that
could be redeemed for interest payments. Coupon bonds are no longer used
in the U.S., but a bond’s interest rate is also known as its "coupon."
Coupon bonds. Bonds initially issued with coupons attached.
Coupons were traded for interest payments.
Cumulative income bond. A type of bond that pays interest only
when there is sufficient company income. The company must make up missed
Cumulative preferred stock. Preferred stock that allows
companies to postpone dividend payments. Dividends accumulate if any are
Debentures. Totally unsecured loans. Loans are guaranteed only
by the good reputations of companies. The New York Central Railroad
issued many debentures.
Deferred interest bonds. Bonds that defer interest payments,
often until maturity.
Dematerialization As a result
of the high costs associated with issuing paper certificates, many stock
exchanges and countries around the world no longer require the issuing
of paper certificates. Stock brokerage firms and many if the issuing
company’s enthusiastically support this effort which is called
Dividends. Usually a portions of the company profits paid to
shareholders divided ratably on a per-share
basis as authorized by the company's board of directors. .
Equipment trusts. Forms of collateral trust bonds secured by
railroads’ operating equipment and reputations. Titles to equipment are
normally registered in the names of trustees and are held until loans
are repaid. Equipment trusts are commonly denominated in "shares" of
Extendable bonds. Bonds that give investors the right to
extend the repayment of principal beyond maturity dates.
Extended bonds. Bonds with delayed principal repayments.
Collateral normally stays the same. Often, extension terms are stamped
on the faces of the bonds. Occasionally companies issued extended
debt certificates instead of stamping original bonds.
First mortgage bonds. Primary loans that use companies’
property as collateral.
Float a loan. To initiate a loan. To sell a series of bonds.
Floating-rate bonds. Bonds that employ variable interest
rates. Many recent bonds are this type. Certificates usually show tables
of yearly interest rates.
Foxing - This a print condition of scattered
brown spots usually a result of
too much bleach used to manufacture the paper which reacts chemically
Funded bonds. Money is accumulated in special accounts so
companies can repay loans easily at maturity. Probably synonymous in
practice with sinking fund bonds.
Gold bonds. Bonds payable in gold, as opposed to lawful money.
Bonds were Payable in Gold or Gold Coin to give the impression that they
were a more secure investment. In reality, they were not more secure
since there wasn't any gold set aside as collateral for these bonds.
On April 5, 1933, President Franklin D. Roosevelt signed Presidential
Executive Order 6102 which invoked his authority to make it unlawful to
own or hold gold coins, gold bullion, or gold certificates. The export
of Gold for purposes of payment was also outlawed, except under license
from the Treasury.
On January 30, 1934, the Gold Reserve Act became law which made the
ownership of gold illegal except for coins of numismatic value. As a
result of this law, Bonds were no longer allowed to be Payable in Gold.
Government aid bond. Bond issued by a state, province, county,
township, or city to underwrite rail development into areas not served
Income bonds. Bonds that pay interest only if there are
sufficient earnings. Accrued income bonds and cumulative
income bonds repay all missed payments. Non-cumulative income
bonds do not.
Interchangeable bonds. Bonds that may switch between bearer
and registered status. Coupon bonds from the 1880s and 1890s often show
records of such changes.
Interim receipt. Definition varied among companies, but
generally represented a receipt for a fully-paid stock or bond used
while engraved certificates were being prepared. Often synonymous with a
temporary stock or bond.
Imprinted revenue. A revenue stamp pre-printed on stocks,
bonds, tickets, and checks. The most common U.S. imprints are found from
about 1867 to 1872. British imprints are also very common. U.S. imprints
are usually orange. British imprints are normally red.
Land grant bonds. Loans that used land granted by state and
federal governments as collateral.
Liberty Bond or Liberty Loan Bond. A Liberty Bond was a war
bond that was sold in the United States to support the allied cause in
World War I. Subscribing to the bonds became a symbol of patriotic duty
in the United States and introduced the idea of financial securities to
many citizens for the first time. The act of congress which authorized
the Liberty Bonds is still used today as the authority under which all
U.S. Treasury bonds are issued.
Monster mortgages. Consolidated mortgages that repay
several smaller, higher interest mortgages in exchange for one larger
mortgage with lower interest payments.
Municipal bond - Represents borrowing by state
or local governments to pay for special projects such as highways or
sewers. The interest that investors receive is exempt from some income
No-par value stocks. Stock with no stated value. Companies
sell such stock at market rates.
Non-assessable stock. Stock immune from further company
demands for investment. Most recent stock certificates say, 'Fully paid
Non-cumulative income bond. A type of bond that pays interest
only when there is sufficient income. Missed payments are not made up.
Original issue discount bonds. Bonds that carry below-average
interest rates. To make up for the low interest rates, companies sell
these bonds for less than face values. In other words, they sell them at
Par value. Initially, the selling price of a single share of
stock. The term later evolved into a bookkeeping term. Confusion
eventually forced some companies to state that their stocks had 'no-par
value.' Modern companies often give their stock 1¢ par values.
It is also the minimum legal capital
per share of a corporation that cannot be distributed except by special
Participating preferred stock. Preferred stock with special
provisions that allow stockholders to receive extra dividends if the
company shows excess profits, thereby participating in profits.
Perpetual bonds. Bonds with no maturity dates. Perpetual bonds
make steady interest payments. Also called annuity bonds.
Planchette paper. Special security paper with embedded disks
of colored paper. Invented by American Bank Note Company in 1891, and
widely used after 1940.
Preferred stock. Stock with a preferred status in receiving
dividends. Preferred stock dividends are normally fixed from year to
year and do not vary as dividends for common stocks do. Because of
preferential status, preferred stocks are paid dividends even if there
is insufficient money to pay dividends on common stocks. Preferred
stocks also receive a preferential treatment if there are any assets
left after a company dissolves.
Proof. An unfinished certificate usually created while still
in the engraving stage to check details. Proofs may be missing certain
features or words later included on final-production certificates.
Proofs may be printed on thin tissue-like paper, india paper, or thick
card stock. If subsequently folded, card-stock proofs tend to be in poor
condition. Unlike specimens, proofs tend to be one-of-a-kind
Receiver’s certificates or trustee’s certificates.
Bonds issued by court-appointed trustees in efforts to fund continued
operations in bankrupt or nearly-bankrupt companies. In repaying loans,
receiver’s certificates take precedence over all other securities.
Recto. The front of a certificate.
Redeemable bonds. Bonds that companies may repay prior to
scheduled maturity dates. Companies usually pay interest penalties when
buying back these bonds prematurely.
Refunding bonds. These are new loans that replace older loans,
preferably at lower interest rates. They work similar to home
re-financing to lower monthly payments. Easier to understand as
– The Registrar is usually a trust company or bank charged with the
responsibility of keeping a record of the owners of a corporation's
securities and preventing the issuance of more than the authorized
Registered bonds. Bonds registered to specific owners. Only
registered owners, or their legal assignees, can collect interest and
Revenue stamp. A adhesive stamp attached to stocks, bonds, and
other financial documents representing a small tax paid to either a
country or state. In some cases, revenue stamps were attached to the
stub instead of the actual certificate.
SCRIPOPHILY (scrip-af-il-ly), the hobby collecting
of authentic old stock and bond certificates. The word resulted combining words from English and
Greek. The word "scrip" represents an ownership right and the word "philos"
means to love.
Second mortgage bonds. An additional loan on company property,
already covered by a first mortgage. Second mortgages are
junior to first mortgages, meaning first mortgages must must be
redeemed before second mortgages. Second mortgages are riskier and
commonly carry higher interest rates than first mortgages.
Securities & Exchange Commission (SEC)A federal
agency that regulates the U.S. financial markets. The SEC also oversees
the securities industry and promotes full disclosure in order to protect
the investing public against malpractice in the securities markets.
– Unique serial number is assigned to each certificate. Usually
Serial equipment trust. Trusts that became due and payable
over a period of years, instead of all at once like ordinary bonds.
Share. Equal portion of rights and interest in a company.
Sink a loan. To pay off a loan. To redeem a series of bonds.
Sinking fund bonds. Money is accumulated regularly in special
accounts so companies can repay loans easily at maturity. Theoretically,
sinking fund bonds are safer investments.
Specimen Certificates are actual
certificates that have never been issued. They were usually kept by the
printers in their permanent archives as their only example of a
were also used to show prospective clients different types of
certificate designs that were available.
specimens are numbered "00000" and are stamped "SPECIMEN",
commonly in the signature area. Specimens are usually minimally punch
State of Incorporation
– The state in which the company was incorporated and has their
Stamp frame. And ornamental box to allow uniform placement of
an adhesive revenue stamp. Usually found on the left side of stock
certificates used in the 1860s and 1870s.
Stock exchangesFormal organizations, approved
and regulated by the Securities and Exchange Commission (SEC) in the
United States, that are made up of members who use the facilities to
exchange certain common stocks. The two major national stock exchanges
in the United States are the New York Stock Exchange (NYSE) and the
American Stock Exchange (ASE or AMEX).
Stock dividendPayment of a corporate dividend
in the form of stock rather than cash. The stock dividend may be additional
shares in the company, or it may be shares in a subsidiary being spun off to
shareholders. Stock dividends are often used to conserve cash needed to
operate the business.
Trustee’s certificates. Bonds issued by court-appointed
trustees in efforts to fund continued operations in bankrupt or
nearly-bankrupt companies. In repaying loans, receiver’s certificates
take precedence over all other securities.
Third mortgage bonds. An third loan on company property,
already covered by first and second mortgages. Third
mortgages are junior to second mortgages, meaning first and
second mortgages must must be redeemed before third mortgages. Third
mortgages are risker and commonly carry higher interest rates than
second mortgages. Very few third mortgage bonds are known.
Agents are hired by companies as "caretakers" for their
shareholders. They maintain shareholder records and issue new
certificates (virtual or paper) when needed. They also distribute
proxies, dividends and annual reports to shareholders and brokers, and
forward company correspondence to shareholders.
Verso. The back of a certificate.
Vignette. A vignette
(pronounced vin- YET) is an illustration that appears on stocks, bonds,
paper money, checks, letterhead, invoices, and so forth. Vignettes are
artistic, but they have serious security purposes. In theory,
complicated and delicate vignettes are hard to counterfeit.
Many certificates do not have a vignette, while others have a very elaborate one. Typically, the more elaborate and unique the vignette, the more desirable it is to collectors.
The most common vignette is an eagle. The best vignettes usually shows the company's product or logo.
Certificate Vignette from the Novelty Air Ship Company
Zero-coupon bonds. Bonds that pay no interest. In financial
jargon, bonds’ interest rates are their coupons. By inference,
zero coupon means zero interest. In order to make up for not paying
interest, companies sell zeros for much less than their face
values. Zero-coupon bonds are extreme examples of original-issue
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