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Can investing and collecting go hand-in-hand? Yes -- especially if you are collecting coins, stock certificates, bank notes, or other rare items of value. Larry Schutts, an expert in investment-related collectibles, will review items of interest from his collection and answer your questions here each week.
During its brief four-year existence, the government of the Confederate States of America issued debt instruments valued at over $800 million. These included a variety of coupon bonds, call certificates, registered bonds, non-taxable certificates and loan agreements. After the military defeat of the Confederacy, much of this paper was lost or simply thrown away, but enough survived to spark the interest of collectors. As we approach the 150th anniversary of the founding of the CSA, that interest is growing.
Far and away, the most commonly issued Confederate debt instrument was the coupon bond. The example shown is an unissued $1000 document, with a full complement of sixty attached coupons. For one's original $1000 investment, one was to receive semi-annual interest payments of $30. These were collected by turning in individually dated coupons clipped from the bottom of the sheet. Then, after thirty years, the top portion of the sheet would be redeemed for the original $1000.
After the war, of course, the Union refused to recognize debts incurred by the rebel government and none of the long-term instruments reached maturity. That left many of the later coupon bonds intact, or nearly so, allowing patient collectors to put together handsome sets of representative varieties. It is estimated that only four to ten specimens of the particular variety pictured have survived. Five years ago, it was a $300 item. Now, the going rate is $700.
The artwork associated with certain of the documents makes them collector favorites. The call certificate illustrated here features a female representation of Commerce holding a cornucopia. It could be held for semi-annual interest payments, or could be redeemed for Treasury notes. The $5,000 certificate depicts a rustic scene, with a man at a style. Both the principal and interest associated with this paper were exempt from federal taxation. The two pieces pictured also fall into the extremely rare category. Prices on both are up about 50%, in the past three to four years.
There was also nice art on a series of 1863 bonds intended for European investors. These were priced on the basis of government pledges to deliver set amounts of cotton. The bonds were actually prepared in London, where skilled engravers and printers took advantage of the latest hardware to generate a female representation of the Confederacy, leaning on bales of cotton and holding a flag. The example shown promises delivery of 20,000 pounds of cotton and features the price in both British pounds and French francs. Although it is a relatively common piece, price points for this particular bond have increased from $400 to $750, in the past five years.
Altogether, collectors recognize nearly 400 varieties of CSA debt paper. Common types are readily available from numerous obsolete currency dealers, but rare specimens are only seen at the periodic sales conducted by major auction houses. Prices for investment grade examples run from about $75 to well over $10,000. There is usually a decent assortment available on the major Internet auction sites, but one should become familiar with average bidding levels before committing any significant sums. Don't be fooled by what appear to be bargain basement prices. Asking prices under about $15 usually involve individual coupons, being advertised as "bonds."
Larry Schutts has invested in high grade collectibles for over twenty years and recently opened an online Collectible Investment Store.
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Reader Comments (Page 1 of 1)
12-18-2008 @ 6:30PM
Peter said...
There is a certian wonderful irony in the fact that the bad debt of the side that lost the Civil War has more value gain than most real estate investments over the past five years. Only in America...
12-18-2008 @ 10:00PM
beachpaul said...
Vintage guitars. You can buy them, play them, even resell them for more than what you paid. Pre CBS fenders( built before Fender was sold in the mid sixties) in good shape are almost worth their wait in gold. Successful musicians will find you. You won't have to look for them. I know a guy who has a small fortune in collectible toys. I thought he was nuts but there is a steady market to sell into. He does it consistently. There are all kinds of things to get involved in besides stocks. Vintage cars, rare books, etc. Though, in collectibles, greed isn't good. It is actually, rather rude.
12-19-2008 @ 8:30AM
Evelyn Guzman said...
Collectibles and investing can go together. Look at all the sport cards that have netted collectors some huge amount. But collecting debt instruments I believe is another matter. Perhaps for people who have lots of extra money, it will be a challenge to collect debts incurred by rebels for instance.
Evelyn Guzman
http://www.debtchallenges.com (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)