What is Scripophily

What is Scripophily?
by Bob.com Kerstein
, CEO Scripophily.com

SCRIPOPHILY (scrip-af-il-ly), the collecting of canceled old stocks and bonds, gained recognition as a hobby around the mid-1970s.  The word resulted combining words from English and Greek. The word “scrip”  represents an ownership right and the word “philos” means to love.   Today there are thousands of collectors worldwide in search of scarce, rare, and popular stocks and bonds. Collectors who come from the a variety of businesses enjoy this as a hobby, although there are many who consider Scripophily an good investment. In fact, over the past several years, this hobby has exploded.   Modern Dot companies and Scandals have been particularly popular.  You can find our more about modern collectible stock certificates at ModernStocks.com

Many collectors like the historical significance of certificates. Others prefer the beauty of older stocks and bonds that were printed in various colors with fancy artwork with ornate engraving. 

Many autograph collectors are found in this field, looking for signed certificates of famous people like John D.Rockefeller of Standard Oil Company, Franklin Fire Insurance Company signed by famed economist Henry Carey issued in 1836Ringling Bros. Barnum & Bailey CircusAtari CorporationEastern Air Lines with Captain Eddie Rickenbacker as President, Certificate signed by George Bush’s Great Grandfather Samuel Prescott Bush,Broadband.com, Tucker Corporation and many others.  As many certificates become harder to find, Scripophily is an exciting hobby with lots of challenges and potential.  Since the hobby is relatively new (around 20 years),  it prices are still very reasonable.  Where can you find a 100 year old piece of history with a an excellent engraving for under $40? Fortunately,  the hobby hasn’t hit the boiler room call centers yet!

There are many reasons that contribute to the success of this hobby. First of all, it is a worldwide collectible since almost all countries of the world have issued stocks and/or bonds through their governments or businesses. Each certificate is a different piece of history. It describes the company, the type of instrument (usually stock or bond), the year, signatures of officers or officials, who it was issued to, the printer, due date for bonds, and much much more. Many of the certificates have pictures or vignettes showing anything from cars to trains to Indians to leaders to nothing at all. 

Due to the computer age, more and more stock and bonds are issued electronically which means fewer paper certificates are issued as a percentage of actual stock issued.  During the past several years, the Internet has played a major role in the awareness of the hobby. 

The hobby of Scripophily is one of the most fascinating areas of financial history. Over the years there have been millions of companies which needed to raise money for their businesses.  In order to do so, the founders of these companies issued securities. Generally speaking, they either issued an equity security in the form of stock or a debt security in the form of a bond. However, there are many variations of equity and debt instruments. The can be Common Stock, Preferred Stocks, Warrants, Cumulative Preferred, Bonds, Zero coupon bonds, Long Term Bonds (over 400 years) and any combination thereof.  

Just as each company is different, each certificate is different as well. The color, paper, signatures, images, dates, stamps, cancellations, borders, industry, Stock Broker, name of company, transfer agent, printer, holder name all add to the uniqueness of the hobby. Each company needed to raise money to get into business. Each company had their own story as to how they did it. These certificates give us a piece of that story.

Some of the companies became major success stories. Some the companies were acquired and merged into other companies. Some of the companies and industries were successes for of time, but were replaced by improvements in technologies. The railroads are a good example of this.

Most the companies, however, never made it and the certificates became worthless pieces of paper….until the hobby of Scripophily came along!  There were many bubbles that came and went.  The mining boom in the 1850’s, the railroad build out beginning in the 1830’s, Oil Boom beginning in the 1870’s, Telegraph beginning in the 1850’s, Automobile Industry beginning at the turn of the 20th,  Century, Aviation beginning around 1910 after the Wright Brothers, Electric Power Industry in the 1930’s, Airline Wars and Takeovers beginning in the 1970’s, Cellular Telephones beginning in the mid 1980’s, Banks in the 1930’s, Saving’s and Loans in the 1970’s,  Long Distance Telephone Service in the 1990’s, and most recently the Dot Com rags to riches to rags chapter.   

There are many factors that determine value of a certificate including condition, age, historical significance, signatures, rarity, demand for item, aesthetics, type of company, original face value, bankers associated with issuance, transfer stamps, cancellation markings, issued or unissued, printers, and type of engraving process.

Condition   –  The grading scale that could be used in stocks and bonds is shown below.  Generally speaking, however, the grading is not used in the hobby as strictly as it is in coins and stamps.  Most people acquire certificates for the artwork and history.  Fortunately, the hobby has not made it to the slabs yet.

Grading Standards – American Stock and Bond Collectors Association

Cancellations

By their very nature, stocks and bonds are more often than not found in a state of cancellation. A variety of methods were employed over time to cancel certificates, thereby indicating they no longer hold negotiable value. Among the methods used were:

Stamps of varying colors and sizes
Punches
Pen/manuscript
Cut

Each type of cancellation may manifest a wide range of visual appearances, some of a relatively minor detracting nature to those which are very visually unappealing. As a result, the degree and severity of the same method of cancellation employed may vary substantially from certificate to certificate. To the extent that a certificate is heavily cancelled, its grade may be lowered.

Factors and Considerations

Many factors are taken into consideration when grading certificates. Many of these considerations are reflected in the final grade applied to a piece. Some are considered primarily for their importance to the overall eye appeal of an item. These factors include the following:

Eye Appeal
Condition of the paper
Fold weakness
Staining
Foxing
Paper loss – i.e. at fold intersections, edges, etc.
Mildew
Insect or vermin damage
Natural Defect re: hole in vellum
Contemporaneous ink spot
Feathered signature
Strength of ink
Strength of printing text and vignettes
Extraneous bleed-through (show through) of inks from writing on verso
Stamp or glue residues
Unsightly stamps, or cuts such as those on checks, receipts, etc.
Other people\’s endorsements
Mounting traces
Trimmed
Unusual margins
Excessive wrinkling
Graffiti – handwriting accomplished on an item which has no relationship to its history.

A WORD ON RESTORATION
A common practice for decades has been the restoration and repair of historical documents of all kinds. Restorations may be encountered in varying states of quality. Many have been accomplished by trained professionals, others have not. The degree and quality of any restoration, if present, will normally have an effect on the overall assigned grade of the certificate.

Poor (P) This would be a certificate that is essentially uncollectible except in the case of rarity or historical importance. For pieces that are routinely or occasionally available this would be an unacceptable example. Certificates in this grade would exhibit extreme problems. Writing on the certificate may be extremely faded or illegible due to light exposure or other factors. The certificate may exhibit damp-staining, severe water damage or other extreme staining. One quarter or more of the certificate may be entirely missing. This certificate would primarily be collectible only in cases of extreme rarity.

About Good (AG) While better than a certificate rating Poor, this would be an example which would normally be collectible because of rarity or historical importance. For pieces that are routinely or occasionally available this would likely be an unacceptable example. The certificate may exhibit paper loss, dampstaining, fading, severe folding and tears. The certificate may have large pieces missing and possibly rust stains from paper clips — though not to the extreme degree of an example which would grade Poor. May contain large, bold cancellation(s) or transfer block rubber stamps over the face. Vignette may be obliterated by cancellation(s).

Good (G) This certificate will have a number of problems from very moderate to heavy staining, paper loss, tears, edge chinks and other problems. May have significant wrinkling or soiling as well as numerous folds with damage and/or discoloration. A corner or corners may be missing and/or it may be trimmed into the border design. Writing on the reverse might cover the entire back of the certificate. Vignette might not be clear, with written cancellation(s) superimposed over the top.

Very Good (VG) This certificate may display some minor staining, discoloration or other minor problems. It may display significant wear and folds. May have small marginal edge chinks or tears. Also may have weak folds and staple holes may be present. Will have reasonable eye appeal regarding overall condition. Overall a collectible example at the lower end of the desirability scale.

Fine (F) Displaying normal characteristics of some use such as light creasing or folds. May have a couple of small pinholes. May display some minor discoloration or a few minor edge tears at fold ends. May have some light smudging or surface soiling. Staple holes may be present. Light writing on the verso. Vignette should be clear of all obstructions. This grade is representative of an average certificate.

Very Fine (VF) The paper retains some of its original crispness with some light edge wear and perhaps light smudging in upper right corner from counting or handling. May have a slight separation at the margin of a fold or two. Staple holes may be present. Some minimal soiling may be present. Extremely Fine (EF) A certificate which will display light evidence of usage. May have a couple of folds but the paper remains crisp. This certificate would remain largely free from any tears, staining or forms of discoloration. A few light staple holes may be present though not exhibiting rips and tears. Vignette remains sharp.

About Uncirculated (AU) A fresh, clean certificate with crisp paper. Printing remains bright and clean. Free from soiling, edge tears, staining, discoloration or any other defects. This would be an example that would be held back from a higher certificate uncirculated (CU) grade because of a few staple or pin holes or a very light crease. May have a couple of minor corner folds.

AN IMPORTANT NOTE:
Stocks and bonds were customarily folded for storage and delivery through the mail and otherwise. As a result, certificates are, in the majority of cases, encountered with some degree of folds. This alone should not keep a certificate from being graded as About Uncirculated.

Certificate Uncirculated (CU) A certificate free from any defects. The paper remains crisp as printed. Printing remains bright and clean. No corner folds or creases exist. May have one or two staple or pin holes. As it was often a practice of individuals to contemporaneously pin or staple certificates together this alone would not hold a certificate back from the lower end of the numerical scale for this grade. It should, however, be noted.

A SPECIAL NOTE ON LARGE FORMAT BONDS:
It was a common practice for larger format bonds to be uniformly folded following their printing. As a result, many of these bonds have never been unfolded until just prior to being graded. Many remain in a truly uncirculated state but for these folds.

Originial State Uncirculated (OS)
This grade is reserved for those certificates which remain as printed, in pristine condition without folds. The paper will remain crisp and the certificate will remain as it left the press. It will remain free from any trimming, handling marks or other defects. This grade represents the finest condition certificates available. The certificate should be absolutely mint, with no signs of circulation whatsoever. It will remain free of any folds, staple marks, bleaching or processing of any kind. A certificate receiving this grade will exhibit sharp printing and remain free of any edge wear or discoloration.

Age –  Usually the older the more valuable, but not always.

Historical significance    –  What product did the company produce? Was it the first car, airplane, cotton gin, etc. Did the company make it? Was it a fraud? What era was the item issued i.e. during a war, depression, industrial revolution?

Signatures –  Did anyone famous or infamous sign the certificate?

Certificate Owners Name  –  Was the certificate issued to anyone famous or a famous company?

Rarity –  How many of the certificates were issued? How many survived over the years? Is the certificate a low number?

Demand for item   –  How many people are trying to collect the same certificate?

Aesthetics   –  How does the certificate look? What is in the vignette? What color of ink was used. Does it have fancy borders or writing on it?

Type of company –  What type of company was it issued for? Does the industry still exist? Has the industry changed a lot over the years?

Original Face Value –  How much was the stock or bond issued for? Usually, the larger the original face value, the more collectible it is.

Bankers associated with issuance – Who worked on the fund raising efforts? Was it someone famous or a famous bank? Is the bank still in existence? – Who worked on the fund raising efforts? Was it someone famous or a famous bank? Is the bank still in existence?

Transfer stamps –  Does the certificate have tax stamps on it – imprinted or attached? Are the stamps valuable or unusual?

Cancellation markings –  Are the cancellation markings interesting to the item. Do they detract or add to its history and looks?

Issued or unissued   –  Was the item issued or unissued. Was the certificate a printer’s prototype usually stamped with the words specimen? Usually the issued certificates are more valuable and desired.

Printers –  Who printed the certificate? Was it a famous printer?

Type of engraving process  –  How was the certificate made? By hand? By Wood engraving? Steel Engraving? Lithograph? Preprinted Form?

Paper   –  Was the paper use in the printing high quality or low quality. Has it help up over time? Does it have a watermark used to prevent counterfeiting?

As you can see,  Scripophily is more than just collecting another piece of paper. It is collecting history. It is something everyone from all ages and all parts of the world can enjoy. The more you see, the more you collect, the more you appreciate that stocks and bonds were the monetary fabric that built the world as we know it today.

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