Saturday, January 26, 2013

The bonds

For some time I have been interested in the sub-branch of numismatics known as scripophily, the art of Gilded Age stock and bond certificates. In most cases these were listed in the conventional way and publicly traded in many jurisdictions. Owners of such financial instruments fell into two main groups—registered holders and “bearers.” Bearer status meant that the bond in question could change hands in transactions that were not necessarily known to the issuer, but could be redeemed later by whoever legally held the scrip. Obviously the methods of engraving the designs on steel plates and then printing them on high-quality paper ran exactly parallel with the production of bank notes. Their complexity was primarily driven by considerations of security, i.e. protection against forgers. The art form certainly reached its apogee in the Edwardian age, but unlike many bank notes the art of stock and bond certificates has since then declined. Those of us fortunate enough to own a modest number of such investments today hold them, relatively speaking, in the ether, and breathe silent prayers that such an arrangement is sufficiently secure. We have seen in recent years that there are no absolute guarantees, and the current price of gold reflects a correspondingly hot desire for intrinsic value. A precious certificate or bill is, of course, only intrinsically valuable in the sense that it stands for what we like to think is a legally binding promise to pay the bearer. I suppose it is better than nothing.

The scarcity of these splendid old bond certificates is simple to explain. Bond markets flourished in the second half of the nineteenth century when impecunious governments raised capital by selling promises to pay back more at fixed interest rates maturing in ten, twenty, thirty, or however many years. Incidentally, this is how the Treasury Department in Washington, D.C., is currently keeping the United States afloat, but 100 years ago there was a massive public infrastructure rationale. Peru, Ecuador, Brazil and Argentina wanted railways. So did China and Japan. Bankers such as N. M. Rothschild and Sons in New Court, St. Swithin’s Lane, in the City of London, negotiated the terms of the bond issue. They also engaged one of a handful of respectable firms of bank-note manufacturers to create the bond certificates, and then sold them to investors. The bank charged a commission (at both ends) but generally bought a stack of bonds also, so they profited in several mutually sustaining ways. With luck Peru and the rest got their railways, and many other multinational mining companies, property developers, and railway builders prospered. Rothschilds invested in all such concerns. It was a whirring financial steam engine. When redeemed by the investor, the bond certificate was afterwards cancelled or destroyed. However, in a number of celebrated instances when the issuer of the bond defaulted, and defaulted spectacularly, as did the Imperial Chinese government in its death throes, bond holders were left holding the certificates. There was nothing to stop the continuing, highly speculative trade in these, and for many years they were bought and sold, drifting poisonously around the markets until history proved their worthlessness, except, of course, as mementoes mori, and, these days, as oftentimes quite astonishing works of the art of master printing and engraving. 

The finest examples exploited the skills of a handful of skilled artisans specializing in attenuated and at times barely legible letter-forms, a froth of curly-cues or, for various dignified headings, the blocky silhouetted typographical equivalents of Stonehenge or the Parthenon. Others worked solely on decorative figures, ghostly bas relief arabesques, medallions, rosettes, garlands, cornucopias, stamps, quatrefoils, and Rococo cartouches containing scenes and motifs directly relevant to the investment for which the certificate stood in loco. There was simply no limit to the decorative vocabulary. Most exempla were conceived as precious hand-illuminated addresses, couched within a wide border strongly reminiscent of the most opulent carved and gilded Louis Napoleon picture frames. In the last quarter of the nineteenth century an ingenious method was invented for producing these mechanically with a sharp chasing wheel controlled by a smooth gear system. This produced the dizzying spirals and intricate guilloche swirls that, it was presumed, no forger could possibly hope to replicate. Thenceforth the border exchanged the pomposity of the picture frame for an equally pompous abstract ornament, proudly technological. There were, in addition, distinct layers or registers of detail produced by the application of up to five or six subtly different colors laid down on separate plates in exact conformation, and, crucially, watermarks also, meaning that the design of the certificate penetrated into the fabric of the paper itself, exactly like bank notes. Black, pea green, plum, rose, eau de nil, chartreuse, and Naples yellow. These were extremely sophisticated techniques of manufacture, and, in the case of Chinese and Japanese bonds, calligraphy and even seals were reproduced even to the point of taking account of the imperfection with which the issuing signatories applied their brushes to the original documents, or the sticky red ink from their jade or hardstone seals.

Scripophily has grown into a vigorous branch of connoisseurship practiced by retired stockbrokers, bankers, and other people interested in the history of finance. Yet I think these ostentatious relics of Gilded Age commerce offer historians of art something more profound. Bond certificates aspired to the dignity of a royal charter, a high warrant, letters patent, even a papal bull. They seem determined to endow the mechanisms of international credit with the awesomeness one might expect from the design of a baroque basilica, and even something of the mystique. Instead of the great seal of the prince, the chancellor, or the pontiff, we find their fin-de-siecle equivalent: the signs manual of now-forgotten ministers of finance, the haughty imprimatur of bankers and brokers who carried almost equal authority but had at their disposal far more money and credit than had ever existed. The bonds are imposingly large. They represent a shift in emphasis from a form of capitalism in tune with Rossini to something more akin to Wagner. Their imagery trumpets a vast expansion in synthesized credit, and, at times, a pig-iron weight of seriousness. The bearer of a one-hundred-pound bond for the 5% Hukuang Railways Sinking Fund Gold Loan of 1911, for example, was possessed of rather more than £100 (plus 5% in due course). It was as if he, she, or it (in the case of institutional investors) were granted a coat of arms, a personal impresa of knighthood in the chivalrous pursuit of that Holy Grail of potentially unlimited profit, as yet unimpeded by the hideous impostures of tax.

In the equivalent, bleak pursuit of pure profit today, all we have to pass back and forth are pitiful shards of plastic, cash, and data.

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