A stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation.
There are two types of certificate: registered stock certificates and bearer stock certificates.
The former is merely a record of the transaction, similar to a receipt, whereas the latter is a bearer instrument, in that ownership of the document itself proves ownership of the stock.
The hobby of studying and collecting stock certificates is known as scripophily, and is popular throughout Europe and North America.
There is a large collecting community, a recognised grading scale for value and condition and a growing market for antique and vintage certificates.
Often the value of the stock itself is worth less than the certificate as a collectible item.
The certificates which only have value as a collectible item are also known as ‘nonvaleurs’ in some markets.
Collectors often focus their collections on a specific area of certificates. This can range from stock from companies in a particular country or city, a particular industry (such as Mining, Railroad or Entertainment companies) or period of time. The hobby is closely linked to the study of business history, as often research is needed to determine the value and rarity of a particular certificate.
Certificates issued by significant companies, or signed by famous businessmen (such as John D. Rockefeller) are particularly popular with collectors.
Innovative companies, or those involved in the early booms of certain industries such as the oil industry in the 1870s, are highly valued, along with now-defunct businesses (such as Enron) who found infamy through fraud scandals and corruption.
Also popular are more modern certificates issued by companies during the dot-com boom of the 1990s.
The value of stock certificates can depend on a large number of factors including age, rarity, historical significance, value, design and who it was signed by. As a general rule older certificates are considered more valuable (although not always), and the grading system for condition is as follows:
- Uncirculated - Looks like new, no abnormal markings or folds, no staples, clean signature and no stains
- Extremely Fine - Slight traces of wear
- Very Fine - Minor traces of wear
- Fine - Creased with clear signs of use and wear
- Fair- Strong signs of use and wear
- Poor- Some damage with heavy signs of wear and staining
In 1602, the States-General of the Netherlands issued a royal charter to found the Dutch East India Company.
The Dutch government guaranteed the company a 21-year monopoly on Asian goods and ownership of discovered territories and in 1603 it became the first company to issue stocks, raising 6.5m Dutch Guilders and enabling the company to employ over 80,000 people (including a private army).
From that point on the notion of the stock market was born, and companies slowly began to issue stock in order to raise capital.
The first American stock exchange was founded in Philadelphia in 1790, and the Stock Exchange in New York followed shortly, in 1792.
This organization evolved into the New York Stock Exchange, which opened in the 1860's to deal with large-scale stock trades.
By 1800 295 companies had issued stock, but only 20 of them had traded it publicly. However, by 1835 120 companies existed with publicly-traded stock and the market began to grow at a quicker rate.
As far back as the 19th century, the value of antique stock and bond certificates as historical documents was already recognised.
In 1876 a collector named Haseltine began amassing nonpar confederate bonds used to finance the American Civil War, and four years later Wall Street broker Roland M. Smythe began to trade historical documents. He predicted in an interview with the New York Herald Tribune on March 24, 1929:
"People will begin buying thousands upon thousands of old stocks and bonds in the hope of an increase in value. They will not be relinquished no matter what happens."
In 1880 Smythe formed R.M Smythe & Co, an auction house dedicated to antique stock and bond certificates (along with coins and autographs), which continued to operate until 2008 when it was bought out by Spink and Son.
Former R.M Smyth owner John E. Herzog founded the Museum of American Finance in 1988.
The practice of collecting certificates remained the domain of a small number of financial historians and manuscript collectors until the 1970s, when the hobby became began to grow. In 1978 the London Times held a competition to create a name for the hobby, the winner being scripophily.
The world’s most expensive stock certificate
The most expensive stock certificate ever sold at auction is one issued by artist Marcel Duchamp for his company ‘Roulette de Mote Carlo’ in 1924.
Duchamp claimed to have devised a system of wagering in roulette which could guarantee a profit, and needed funds to use as part of his experiment.
He decided to sell stocks, thirty shares at an assigned value of 500 francs each, repayable to investors at the rate of 20 interest over the course of a three-year period.
Only eight stock certificates were ever produced, created by Duchamp and his friend Man Ray, featuring a collage and a list of company statutes.
In November 2010 the first of these certificates produced sold at Christie's in New York for a record price of $1,082,500.
Other notable stock certificates
Main article: List of notable stock certificates
Stock certificate dealers
Main article: List of stock certificate dealers
Clubs and societies
Main article: List of stock certificate collectors' clubs and societies
Related Wikicollecting articles
The bookmarklet lets you save things you find to your collections.
Note: Make sure your bookmarks are visible.
Click and drag the Collect It button to your browser's Bookmark Bar.