6 Things You Might Not Know About Stock Certificates
Ask anyone younger than 40 what a share of stock is, and they will tell you it is just a digital bit of information, stored on a broker's server. However, If you were to ask what a stock "certificate" was, chances are you wouldn't get a direct answer. While the investment world is filled with savvy investors who have been buying and selling stocks since 1985, they may have never seen a physical share of stock. The history of the stock certificate is full of interesting facts dating back to 1606 when parchment paper was king.
Many Certificates Had Fancy Designs
Stock certificates used to serve as the physical proof that you owned shares of a company and were considered a sign of prestige, if not wealth—so much so that many certificates were made with fancy designs and ornate engravings, often resembling artwork.
Stock Certificates for Kids Were Sold
This was definitely the case with shares of the Disney Corporation, which featured full-color illustrations of some of the company's most famous characters. It was not uncommon for parents to buy their children a single share of the company's stock to frame it and put it on display in their child's bedroom, much like a cherished stuffed animal or toy.
People Used Certificates As Wallpaper
During the years following the great stock market crash of 1929, it was common practice for shareholders of now-defunct public companies to wallpaper a room of their house with worthless stock certificates as a perverse tribute to lost wealth.
It Was a Legal Type of Currency
At one time, the process for printing a stock certificate was as guarded and secretive as printing currency is today because, in a sense, it was a currency in and of itself. For this reason, there were only three companies in the United States that were authorized to print the stock certificates of publicly held companies.
There Is 400 Years of History
In 2010, the oldest surviving stock certificate was found by a history student from Utrecht University who was working on an unrelated research project. The certificate was made out of parchment paper and was printed by hand with ink and a writing quill. This historic document dates back to 1606 and was issued by the Dutch East Indies Company, which was also the first company ever to issue stock certificates.
If you find an old stock certificate among one of your deceased relative's belongings (or in an old antique store), it probably doesn't have any intrinsic value because the company that issued it is most likely long gone. However, the certificate itself may have some collectible value. Scripophily is the pursuit or hobby of collecting old stock certificates, and there is an active community of collectors who will buy worthless certificates solely for their collectibility.
The Stock Certificate Worth
Of course, the most interesting thing about an old stock certificate is the chance that, no matter how far-fetched, it might be worth something intrinsically. If you find an old certificate, the first thing you want to do is determine whether the company that issued it still exists. Depending on how old it is, the issuing company might have been bought out, sometimes numerous times. That doesn't mean the stock is worthless; it just means that you will have to do a bit more homework to track down its status. Next, you want to contact the transfer agent listed on the certificate, and if that doesn't work, contact the Secretary of State of the state it was issued in. That "worthless" certificate just might be worth something.