Scripophily Glossary

by Terry Cox and Bob Kerstein
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Accrued income bond. A type of bond that pays interest only when the company has sufficient income. The company must make up missed payments.Adjustment bonds. Bonds issued in exchange for outstanding bonds when re-capitalizing nearly bankrupt companies. Similar to income bonds because companies may delay interest payments.

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 invested.

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.

Cancellation 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 stockholders.

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.

Counterfeit Protection – Many certificates have different forms of counterfeit protection such as the quality of paper, dots embedded in the paper, watermarks as well as other techniques.

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 specific prices.

Corporate stock. Common stock.

Corporate Seal – 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 interest payments.

Cumulative preferred stock. Preferred stock that allows companies to postpone dividend payments. Dividends accumulate if any are missed.

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 “Dematerialization”.

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 $1000 each.

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 issuedextended 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 with dampness.

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.

Government aid bond. Bond issued by a state, province, county, township, or city to underwrite rail development into areas not served by rail.

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 bondsdo 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.

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 taxes.

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 and non-assessable.’

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 discounts.

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 legal action.

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 items.

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 re-funding.

Registrar – 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 amount.

Registered bonds. Bonds registered to specific owners. Only registered owners, or their legal assignees, can collect interest and principal.

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.

Serial Number – Unique serial number is assigned to each certificate.  Usually preprinted.

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. 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 particular certificate.  Specimens were also used to show prospective clients different types of certificate designs that were available. Most specimens are numbered “00000” and are stamped “SPECIMEN”, commonly in the signature area. Specimens are usually minimally punch cancelled.

State of Incorporation – The state in which the company was incorporated and has their corporate charter

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 exchanges Formal 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 dividend Payment 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.

Transfer 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.  Vignettes are normally more valuable if they were made specifically for use by one company versus generic vignettes which were used by many different companies.

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 discount bonds.

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