The antique detective: Collectors investing in obsolete stocks, bonds

• LaBarre was an incurable collector of stamps and coins since the age of nine and that led, as an adult, to being a dealer.
• Many companies no longer issues bond and stock certificates.
• History is one of the most popular collecting categories.

While today’s stock market may be iffy, collecting old and failed company stock certificates and bonds can be money-making investments.

Ever wonder what happens to stock certificates and bonds when the companies fail or simply become obsolete? While many of these are cancelled, the items are destroyed and shredded by banks. Those that survive are born again as an exciting collectible known as Scripophily. Collectors are referred to as scripophiliacs.

This is a good example of when being a pioneer in a collecting category really counts. George LaBarre was a pioneer in this category.

LaBarre was an incurable collector of stamps and coins since the age of nine and that led, as an adult, to being a dealer. All that changed when by chance he saw a large group of Boston, Hartford and Erie railroad bonds.

It was the artwork that caught his eye. "The engraving on those bonds was so beautiful, including superb color, graphs and many rows of coupons all bearing a train vignette, that I was hooked," he said. "I realized this could be a serious collecting category.” Today he has the largest inventory of collectible stocks and bonds in the world: over six million pieces.

As he pointed out, many companies no longer issues bond and stock certificates.

In actuality there were collectors in the 1970s not only in America but Europe as a hobby. These days many collectors see it as an important investment. The category often overlaps to include autograph collectors. Among the most sought after signatures are Ringling Brothers & Barnum & Bailey Circus and Eddie Rickenbacker as president of Eastern Airlines. One of the rarest is a United States Steel, a $100,000 bond issued to Andrew Carnegie with his autograph. It can sell for over $125,000.

Every certificate offers a history of the Company whether they were successful or they failed. “Technically the failed ones were just worthless pieces of paper” LaBarre said.

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Beautiful graphics of early inventions, such as telegraphing (1870s), aviation beginning around 1910 and railroad construction are just a few. These are known as “vignettes.” They are so attractive that collectors often frame them as an art form. However, the bulk of collections are saved in albums.

History is one of the most popular collecting categories. Consider that bonds were issued to finance important events, such as those issued by the Confederate States of America for the Civil War. And, a bond, issued in 1780 to finance the American Revolution.

“Railroad stocks are popular with collectors because of their history and their engraving, printed by some of the finest bank note Companies,”said LaBarre. The earliest known share depicts a horse-drawn wagon and dates from 1792.

What collectors buy often is influenced by their personal interests. For example, a car collector will probably be interested in automotive stocks such as Packard or Ford. A pilot might wish to collect aviation related stocks and bonds. Others look for specific art styles such as Art Deco or Art Nouveau motifs designed by such famed graphic artists such as Alphonse Mucha. Regime changes influenced the look of other countries, such as Imperial China or Tsarist Russia. A recent example would be paper notes with a Saddam Hussein portrait.

As in any category, usually condition is all. Equally important is the number issued as well as the age. At the October auction conducted by Archives International, a Confederate bond that was water and mud stained fetched $10,000.

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Signatures of famous people add to the value but are often either printed in facsimile or signed by clerks. It was a tradition before the 1950s for them to be legally signed by an officer of the company, such as John D. Rockefeller, Thomas Edison and J. Pierpont Morgan.

So far this is one collecting category not bothered by forgeries. As LaBarre observed, “The hobby is still relatively young and prohibitively expensive and difficult to fake engraved stocks and bonds, unlike our current paper money.”

I asked LaBarre what is the holy grail in this collecting category, if there is one. “It would be a certificate owned and signed by Abraham Lincoln of the Illinois Railroad. Lincoln was an attorney for that railroad. However it may never had existed. But, if it had and most were destroyed, just imagine what a single one could be worth.”