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U.S. Bonds the Other Rare Collectible
By Bank Note Reporter

What's rarer than some U.S. currency issues? According to Tom Casper and Fred Schwan, you need to look to U.S. government bonds for the answer. Casper and Schwan spoke on the topic on Saturday, March 7, during a meeting of the Chicago Coin Club at the Chicago Paper Money Exposition in Rosemont, Ill. Fifty to 60 people were in attendance.

The presentation was one of two at CPMX related to exhibits on the bourse floor. The other was at the meeting the International Bank Note Society that same day, where Neil Shafer spoke on Philippines emergency and guerilla currency of World War II.

Casper, who had his award-winning exhibit of government bonds on display on the CPMX bourse floor, told those gathered for the CCC meeting that although U.S. government bonds didn't circulate like paper money, they have a lot in common with currency, including the use of attractive vignettes, signatures, serial numbers, portrait position letters, and face check numbers, plus they were printed by the government in intaglio. They are also scarcer than some currency issues because, upon redemption, the bonds were often destroyed by the Treasury.

Fortunately for collectors, some hoards have survived and a number of unredeemed bonds exist.

Turning to the Liberty Loan bonds, issued from 1917-1923, he said redemption periods on these were up to 30 years, with the first bonds issued earning 3.5 percent and later ones climbing to 4.5 percent. If you bought one of the 3.5 percent bonds, you could exchange it for a later higher interest bond. These bonds were also redeemable for gold up until 1933.

There were two major types of bonds that could be purchased. Included were the coupon or bearer bond, which didn't have to be registered to the owner, and the registered bond.

With the coupon bond, every six months the bearer would clip a coupon from the bond and take it to the bank to redeem it for the interest earned.

With the registered bond, the bond carried the registered owner's name and could only be redeemed by that owner. Interest payments on these would come in the form of check sent through the mail.

Among the Liberty Loan bonds, Casper said, the $50 shows Thomas Jefferson, the $100 Andrew Jackson, the $500 George Washington, the $1,000 Abraham Lincoln, the $5,000 James Monroe, the $10,000 Grover Cleveland, the $50,000 William McKinley, and the $100,000 Ulysses S. Grant.

There were four Liberty Loan drives. The first was on April 24, 1917, which paid 3.5 percent. The second was on Oct. 1, 1917 for 4 percent. The third was April 4, 1918 at 4.25 percent; and the fourth was on Sept. 28, 1918 at 4.25 percent. There was also a Victory Liberty Loan bond issued in 1919 that paid between 3.5 to 4.5 percent.

Casper explained that as not everyone could afford to buy a bond, stamps were sold. These green-colored thrift stamps were pasted into a book, and when the book was full it would be worth $4. You would add 12 cents to that, and for $4.12 you could buy a $5 savings stamp that paid interest.

According to Casper, the bonds were sold by some 2 million volunteers who went door to door. Buyers would receive a window sticker to show they supported the war effort.

Boy Scouts and Girl Scouts also took orders and sold stamps. And school children participated in regular "Stamp Days" at their schools.

Bond rallies were also popular and were attended by movie stars and promoted by posters created by famous artists.

Some 60 million bonds were issued during the Liberty Loan period, Casper said, amounting to $21 billion. About half of the population bought bonds, with one-third issued to Americans with annual incomes of the below $2,000. Most commonly sold were the $50 and $100 denominations. Approximately $4 million Liberty Loan bonds remain outstanding, which, he said, translates into about 8,000 bonds, with the fourth Liberty Loan bonds being the most commonly encountered by collectors.

Expanding on how the registered bonds ended up in the collector market, Fred Schwan said that many bonds were lost or stolen and some were spoiled (i.e., they bore mistakes, such as spelling errors, requiring their reissue). If you were the registered owner and your bond was lost or stolen, you could get a duplicate. The original bond could not be redeemed and thus became available to collectors.

Schwan provided an overview of bond sales from 1935 to present, beginning with the 1935 Series A "Baby Bonds" and continuing with the 1936 B bond, the 1937 Series C, and the 1938 Series D, which was in the style of the later Defense and War bonds of World War II. He noted that of these issues he has only encountered an example or two in collections, as A through D bonds are apparently rare.

In the spring of 1940 E bonds came out as Defense Savings bonds, which can be collected by state or even by territory.

In January 1942, after the attack on Pearl Harbor, the government switched from Defense bonds to U.S. War Savings bonds, which were available from thousands of issuing offices. Also issued for direct sale to soldiers were $10 Soldier's bonds. Schwan lamented that he once owned the serial No. 1 $10 Soldier's bond and has since been trying to purchase it back.

With the advent of electronic trading, including via eBay, the hobby has learned that some bonds are more common than previously believed. In 1995, the $10 Soldier's bond was rare, but it now trades in the $40 to $70 range. Schwan continued with an explanation of the introduction of the F and G bonds, which were sold to institutions rather than individuals.

Around 1980, sales of E bonds to individuals was replaced with Series EE, which can still be bought today.

There are also bonds with commemorative overprints, such as the EE Patriot bond, which has an overprint marking 9/11 and can still be obtained through banks, and a Gulf Coast Recovery overprint on Series I bonds issued after Hurricane Katerina in 2005.

Attendees received a souvenir card produced by the CCC showing a 1918 $5 Federal Reserve Bank Note from the Chicago Federal Reserve. The CCC will celebrate its 90th anniversary with a banquet on April 25 at Gianotti Italian Steakhouse, 4926 N. River Rd. Reservations are required.

For information on this and a special medal being prepared featuring Augustus Saint-Gaudens "Standing Lincoln," visit the club's Web site at www.chicagocoinclub.org.


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