Home U.S. & World Currency Forum

US Treasury Certificate (bearer bond)

dcarrdcarr Posts: 7,984 ✭✭✭✭✭

I rarely see US Treasury bearer bonds of any kind, so I am always curious when I see one. I think they are under-appreciated (and under-valued) compared to a lot of other US currency. The are very much like currency in appearance and in the way they are printed. I think the values would be a lot higher if they were listed in catalogs as interest bearing notes. Some interest bearing notes are already listed as currency, such as the Compound Interest Treasury Notes of 1863-1864, Interest Bearing Notes of 1861-1864, and the 1879 Refunding Certificates. The bearer bonds that I refer to were issued during the time frame of WW1 through the Great Depression.

Starting around WW2 Savings Bonds were no longer payable to the bearer on demand. They were only payable to the registered owner and were not transferable except to the heirs of an estate. They had the name of the registered owner typed on the bonds themselves. At any given time there is usually quite a few of the WW2 era (or newer) savings bond on eBay (most are already redeemed and cancelled). The bearer bonds are a lot rarer because they are older, and the physical bond had to be completely surrendered when cashed in.

Anyway, here is my recent eBay acquisition (and probably the only major find I've ever had of a paper item on eBay):
https://ebay.com/itm/234504628162

Comments

  • Steve_in_TampaSteve_in_Tampa Posts: 1,819 ✭✭✭✭✭

    The biggest difference between bonds and Treasury Notes and Interest Bearing Notes is that bonds seldom, if ever circulated. Photo of OP’s bond.

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭
    edited May 8, 2022 2:40PM

    @Steve_in_Tampa said:
    The biggest difference between bonds and Treasury Notes and Interest Bearing Notes is that bonds seldom, if ever circulated. Photo of OP’s bond.

    True, although the fine print on the bond pictured does state that it can be used to pay income taxes.
    And being a bearer bond means that it could be freely traded among individuals and businesses.
    But, of course, you probably wouldn't find one in the cash register at the local store.

    I don't think the Refunding Certificates of 1879 actually circulated like currency very much either.

  • Hopefully it is genuine. It is serial number 1.

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭
    edited May 9, 2022 12:49PM

    @vonlettow said:
    Hopefully it is genuine. It is serial number 1.

    Yes, I noticed that ;) The seller apparently did not ?

    Here it is now that I have it, and it is out of the frame:

    Letter, signed by Treasury Secretary Ogden L. Mills. Guy Emerson was an executive at the Banker's Trust Corporation. He helped the US Treasury with this bond offering. So it would make sense that he would have bond #1. He also argued against the dangers of giving banks any form of blanket protection (backing) by the US government, although he did see the need for something like the FDIC and was instrumental in getting it set up.

    There is one fold down the middle of the bond. That would make sense if it was mailed in an ordinary letter envelope with the letter (which was also folded to fit). There are no pinholes, tears, or thins. I grade the bond AU-55. It is definitely genuine. Note the embossed Treasury Department seal (easier to see on the back).

  • Without the serial number, it is probably a $4-5,000.00 piece. As serial number 1, I would double that at least. Great find.

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭
    edited May 9, 2022 1:15PM

    I searched the internet for several hours and I was unable to find another example of this bond pictured anywhere.
    I did find a document from September 1932 (about 6 months after these bonds were issued and six months before they fully matured). The document shows that the amount issued of this particular bond was much lower than most others (see the red highlighted section). Also of note is that a significant number had already been redeemed early (prior to maturity) by September 1932. What makes most of these bearer bonds quite rare is that the main bond itself would have to be surrendered to get the principal back ($50 in this case).

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭
    edited May 14, 2022 12:22PM

    Here is an excellent web site with pictures and information about numerous types of collectible US bonds:
    "The Joe I. Herbstman Memorial Collection of American Finance":

    https://theherbstmancollection.com/the-collection

    .

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭
    edited May 14, 2022 1:06PM

    After some research, I have discovered a somewhat dubious (but historically significant) aspect to this bond.

    All United States bonds issued from 1917 through March 1933 were clearly payable in "gold coin" upon maturity. On March 9 1933 President Roosevelt signed into law the "Emergency Banking Act of 1933". At that point, the gold coin obligations were negated. Any bonds presented after that would not receive gold. Instead, they would receive "lawful money" that was soon to be devalued by 60% in relation to gold. This was the first time that United States gold bonds were defaulted on.

    This is quoted from "The American Spectator":
    https://spectator.org/42298_was-there-ever-default-us-treasury-debt/

    Did the U.S. ever default on its debt?

    Yes: The United States quite clearly and overtly defaulted on its debt as an expediency in 1933, the first year of Franklin Roosevelt’s presidency. This was an intentional repudiation of its obligations, supported by a resolution of Congress and later upheld by the Supreme Court.

    Granted, the circumstances were somewhat different in those days, since government finance still had a real tie to gold. In particular, U.S. bonds, including those issued to finance the American participation in the First World War, provided the holders of the bonds with an unambiguous promise that the U.S. government would give them the option to be repaid in gold coin.

    Nobody doubted the clarity of this “gold clause” provision or the intent of both the debtor, the U.S. Treasury, and the creditors, the bond buyers, that the bond holders be protected against the depreciation of paper currency by the government.

    When the gold clause on government debt was negated on March 9 1933, that was six days prior to the maturity of the 2% United States Treasury Certificate (of Indebtedness) of 1932-1933. This was the first bond type to reach maturity that would be affected by the default. The bond featured in this thread is the first one issued of the type due on March 15 1933, and it is serial number 1 (the very first bond issued with a maturity date after March 9 1933). That means that this specific bond is literally the first one ever defaulted on by the United States.

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭

    I happened to come across this vintage photo recently on the internet, so I bought it to go with the bond:

  • JBKJBK Posts: 14,734 ✭✭✭✭✭
    edited July 9, 2022 3:27PM

    Incredible item. It is amazing that it was not glued down in the frame. And the letter (was it behind the bond?) was a huge bonus.

    It has only two interest payments so the two coupons mean it is complete.

    Still redeemable for $51 at the US Treasury.
    :D

  • dcarrdcarr Posts: 7,984 ✭✭✭✭✭

    @JBK said:
    Incredible item. It is amazing that it was not glued down in the frame. And the letter (was it behind the bond?) was a huge bonus.

    It has only two interest payments so the two coupons mean it is complete.

    Still redeemable for $51 at the US Treasury.
    :D

    It was in an older 2-sided frame with the bond showing on one side and the letter on the other.
    I was able to separate the two without any damage to the papers.

Sign In or Register to comment.