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Scripophily…say what?

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Scripophily is the collection of old stock and bond certificates, which gained recognition as a hobby around 1970.

The word scripophily is formed by combining the English and Greek words “scrip” and “love”.  "Scrip" represents an ownership right (e.g. a certificate) and the word "philos" means to love.

There are thousands of Scripophilists worldwide. Many consider scripophily a good investment, but most see scripophily as a hobby, one of these being Andrew Canter. Andrew’s passion for scripophily started in the 1990s and to date he’s collected around 1 500 share and bond certificates. We spent an afternoon with him as he showed us his collection. We learnt about his favourites and the rich history each certificate holds. Very intriguing!

What got you interested in Scripophily?

As a business we “collect” bonds, so, naturally, my professional interest is investments – collecting bonds is an expression of our daily work!  As investors, we think that what we do today is different to what they did 100 years ago. This is not true. The process by which we make loans and buy shares is now “digital” but the core business is very much the same.  There is a truism: In finance we don’t stand on the shoulders of giants and get ahead (as scientists build on each others’ work), but rather, we repeat the mistakes of our fathers and grandfathers.  If you study financial history – and it is visible in front of you – then you can avoid repeating all those mistakes.

Can you give an example of history repeating itself?

Sure, just last week we were talking about the potential roll-out of fibre-optic infrastructure by dozens of companies to houses all over South Africa.  Eventually, they will become over-geared, and there would be a natural trend toward industry consolidation. This precisely echoes the railroad boom (and bust) of the late 1800s.

   
The illustration on this Ethiopian bond certificate indicates that they were raising funds for construction of a railway

What fascinates you about these bonds?

Each certificate tells a story of an endeavor – a business, a project, a country, and even the state (and location) of capital markets – and links to the history of its time, such as the wars and financial panics.  Many are beautiful art works as well. The illustrations often indicate what the issuer was raising funds for: roads, bridges, railroads, canals, city governments, etc.  While many items are not artistic, the most beautiful scrip was produced between about 1880 and 1940, in concert with the rise of capital markets. Scrip can tell you a story, much as Futuregrowth loves to tell the stories of our clients’ investments. For example, you can tell when a company went bankrupt, or a nation fell, by the last date the coupons were clipped for deposit.

Where do you source your bonds and what do you look for in a certificate?

There’s a market for old scrip in every country that has had capital markets in the past 150 years and in the old days you’d have to hunt down the dealers in small shops in alleys (or even visit their homes). But nowadays many certificates are traded on eBay and other auction sites. My collecting theme has always been infrastructure related – what we do at Futuregrowth. Infrastructure is foundational to all countries’ development, always needed capital to be built, and also gave opportunities for pretty pictures.  Beyond this, my search would be guided by artistic merit, historical interest, quality of the item and its scarcity.


My favourite, the Constantinople bond - a great example of a properly structured municipal bond

Scarcity?

Unlike other collectables like stamps and paper money, all share and bond certificates were numbered and registered. You can always tell how many of the items were originally in issue, and the quantum of each item was limited.

Does the artistic quality of a bond say anything about the credit quality of the issuer?

Ha Ha!!  It’s an inverse relationship! The prettier the scrip, the dodgier the issuer was likely to be.  For example, some of the most beautiful items were issued by banks - and all banks eventually fail.  For issuers (and their bankers) to spend money on engraving and high-quality printing was very much part of the sales process of bonds to investors: the prettier the bond, the easier it was to sell.                           

 Lloyd bank_share bond
Share bond issued by Lloyd Bank in Hungary, Budapest