February 25, 2010

How do you know if certificates were cancelled?

Well...that depends...

Which type of cancellation are we talking about? Corporate cancellation or paper cancellation? The two are different.

Collectors in practically every field ascribe higher values to items that are intact. The less intact, the lower the value. In our hobby, collectors desire fully intact, fully issued certificates. Ideally, collectors want certificates to look like they did on the day they were issued.

(Shown is a Wagner Palace Car certificate cancelled four ways: handwritten, rubber-stamp, circular punches and punches shaped like the letter 'P'.)

Collectors recognize many different types of cancellation. Certificates are often stamped with a rubber-stamp impression that says, "Cancelled." Many certificates were cancelled with punches that spelled out the word "Cancelled" with tiny holes. Older certificates often display the handwritten word "Cancelled", although large handwritten 'X's and marks through signatures are more common.

Cancellation purposely damaged certificates to some degree. The vast majority of certificates were cancelled by holes punches that removed paper. Typical circular paper punches ranged from 1/8" to 3/4" in diameter. Holes of other shapes are less common and were rectangular or shaped into diamonds, stars, crosses, letters, hearts and just about any shape imaginable. Sometimes signatures and big chunks of paper were removed with razor blades and knives.

Less obvious are "cut cancellations" made by special, dedicated cutting devices. From the front, cut-cancelled certificates often look completely intact, but pick one up and your fingers often poke through slits in the paper.

Regardless of methods, the whole idea of cancellation was to make it obvious that documents had been used and were no longer negotiable.

What happens, though, when writing on the backs indicates certificates were transferred, but the certificates are otherwise intact? Were those certificates cancelled?

Collectors say, "No." Companies say, "Yes!"

Many companies, perhaps most, were forgivably sloppy with their paperwork. Companies received cash when they initially issued stocks and bonds. Most were thorough with their initial signing, counter-signing, stamping, and issuance. No company, however, ever made money when it touched its certificates after that point. Because of the potentially large amounts of money involved, there were many steps necessary to transfer certificates from one owner to the next. Unfortunately, all transferences cost companies money.

Our certificates show evidence that many companies skipped steps here and there. Truth be told, the final step of damaging certificates was often redundant and unnecessary. Few if any companies ever intended to let their old certificates out into the collecting world. Almost all companies incinerated their old certificates. Many companies wondered, "Why bother with an additional step of writing, punching or slicing when we're going to destroy our certificates anyway?"

When we talk about cancellations as collectors, we only care whether certificates are marked as little as possible. More properly, we are looking for certificates that do not show any typical evidence of cancellation.

Just because certificates show no evidence of cancellation does NOT mean they are still negotiable securities. From financial and legal standpoints, there is one and only one final proof of cancellation: the corporate record book. If a stock certificate was transferred to another individual, it was cancelled. If a bond was paid off, it was cancelled. Simple as that. The record book always prevails.

Companies and collectors disagree over the definition of the word "cancellation." Since corporate record books are rarely available to collectors, we can never make the definitions consistent. Companies define cancellation as an event whereas collectors define cancellation as a paper condition. Whether paper cancellation reflects the event of corporate cancellation is a matter of luck.

Getting back to the original question, the majority of collectors consider certificates uncancelled when there is no writing or paper destruction.

February 17, 2010

More certificates from the American Bank Note Company archives

Dr. Robert Schwartz has announced the sale of certificates, paper money and ephemera from the archives of the American Bank Note Company. The sale will take place April 15 and 16at the Crowne Plaza Hotel in Englewood, New Jersey. As with Bob's four previous sales, the catalog will be massive and should be available mid-March.

Unlike previous sales, Bob is handling the entire sale himself, a move which I personally applaud. Obviously, this means a tremendous amount of work, but I always collectors are more happy and more willing to spend when they know precisely where the proceeds are going. Dr. Schwartz has been in the business for many years and almost every collector has met him if they've attended shows in the East.

(The certificate shown above is an 1864 South Carolina stock certificate from a blockade running company. I will be most interested to see what that historic item fetches.)

The April sale will be handled entirely under the banner of Arhives International Auctions. There are currently about 500 lots planned for the stock and bond specialty. I don't know the precise percentage that will be rail-related, but you should probably expect about 150 to 200 lots. The sale will offer an additional 1100 lots involving paper money and security printing ephemera.

As I mentioned, the catalog will be availble in mid-March which is really only three weeks away. Catalogs will cost $15 postpaid (!). As always, I recommend putting in your order as soon as you possibly can. Send your email to Robert@ArchivesInternational.com or call Dr. Schwartz at 201-567-1130.

See more information about the sale (with additional fax and mail contacts) at Archives International's new web site at http://www.archivesinternational.com/

February 08, 2010

Railroad and Trains magazines database now online

Several stock and bond collectors have told me they collect railroad magazines. About five years ago, I began compiling a database of information about Railroad Magazine and Trains Magazine, the two longest-running and most collectible consumer periodicals on railroading. I just finished adding that information to my web site at Railroad magazines. (Or click on the menubar at Home > Other interests.)
Frank Munsey started Railroad Man's Magazine in 1906 as an adjunct to his successful Argosy Magazine. Railroad Man's Magazine was a male-oriented "dime novel" (or novelette) monthly that told stories of high adventures and travails in railroading. Railroading had been a popular subject for story magazines since the late 1850s and it is somewhat curious that it took so long to start a dedicated publication on the subject.

Munsey's magazine was moderately successful and survived in monthly form for about thirteen years. Starting in December, 1918, the publisher tried a weekly schedule for the magazine and then tried a combination called Argosy and Railroad Man's Magazine. The experiment does not seem to have worked and by May, 1919, the magazine reverted to independent form and monthly issuance.

Based on the numbers of issues I've encountered, Railroad Man's Magazine must have had modest circulation. Nonetheless, it survived and ultimately changed its name to Railroad Stories in February, 1932. Although the content did not change much, the covers of Railroad Stories were much more intriguing and colorful than its predecessor. In fact, its covers were very much in the style of detective and true crime novels of the time. This move must have kicked sales, because many more issues of Railroad Stories survive.

Like coal mining and other heavy industries, railroading had become much safer and more commoditized throughout the 1920s and 1930s. Fictional stories of train robberies, bridge collapses and fateful crashes became increasingly unrealistic and the desire for fiction gave way to a growing demand for factual articles about railroading. The magazine obviously recognized the trend and changed its name to Railroad Magazine only five years later (September, 1937). While fictional stories and poetry continued to appear for many years, content eventually switched to real history and factual reportage by the 1940s.

The demand for real facts was not lost on A.C. Kalmbach who had made a living reporting on and photographing real railroads. Kalmbach started Trains Magazine in late 1940 and even went so far as to make the cut size of his monthly periodical almost identical to his long-running competitor.

Kalmbach's focus was strictly professional and factual. He chose coated paper over pulp and thereby gained the ability to offer higher quality photographs than Railroad Magazine. The heavy reliance on photographs and costly paper meant Trains Magazine had a higher sticker price – 25¢ versus 15¢. Trains had half the pages of Railroad which meant its actual square-inch cost was almost four times higher.

While obviously covering the same subject, Trains Magazine and Railroad Magazine had noticeably different audiences. The differences are most noticeable in the designs of their covers and their advertising content.

Popular interest magazines of all descriptions began using photographs on their covers by the mid- to late 1930s. Except for a couple single-issue experiments (Nov, 1939 and Jun, 1954), Railroad Magazine relied on custom art work for its covers until 1955. Many of its covers (especially in 1939) were purposely heroic and inspirational. Several covers drew on an earlier Art Deco styles (Apr, 1950) and a few were excellent derivitives of Frederic Remington's "nocturnes" (Aug, 1940, Mar, 1941, Nov, 1948) popularized four decades earlier.

By comparison, Trains Magazines relied on real black and white photographs from its very first issue in 1940. Trains Magazine's photos, both inside and out, often bordered on "artsy," very much in the style of industrial-subject photos that appeared in Life Magazine of the era (Nov, 1940, Dec, 1940, Dec, 1954.) While there may be more, I can only find one dedicated artwork cover (Nov , 1947). The least attractive covers appeared when Trains Magazine experimented with strong graphics on its covers (May, 1954, Jul, 1955 and the abyssmally bad cover of Jul, 1959)

The two magazines also displayed obvious differences in advertising content. From its inaugural issue, Railroad Magazine had always played to a popular consumer audience. Ads included the same ones that readers could find in practically any magazine: cigarettes, Mason shoes, promos for book collections of the classics, fishing lures, the Rosicrucians and get-rich-quick schemes. Trains Magazines tried to appeal to a more world-wise market and featured travel-oriented and image advertising by all the major railroads. The professional railroading aspect was played up with ads about freight movement, reliable wheel bearings, strong diesel power and dependable trucks.

While there are several other railroad magazines with collector interest, I have only collected information about these two classic magazines. I have recorded a few thousand sales of these magazines and show high, low and average prices when possible. I currently offer images of about 270 Railroad Magazine covers and roughly 180 Trains Magazine covers. That means I have a lot of room for improvement. I solicit any new images my readers may be able to supply. If someone might like to contribute information about other magazines (real railroads only), contact me and we'll discuss adding new pages.

Magazines dated after 1980 are usually worth much less than a dollar each, so that has always been my cut-off date. However, if any of you can supply images of Railroad or Trains magazine covers dated after that time, I will be glad to extend my date range.