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Consol (short for consolidated) bonds were issued by the U.S. Treasury during the 19th and early 20th Centuries. Used to refinance the national debt, the 41st Congress passed an act in 1870 authorizing three separate consol issues with redemption privileges after ten, fifteen, and thirty years. Unlike traditional debt issuances, consols have no definitive redemption dates. It is from this feature that they are occasionally referred to as "perpetual bonds." They are redeemable at the pleasure of the Treasury Department after a specified date. Several nations have issued sovereign consols. The interest rates on these securities are such that governments have often left consols outstanding for decades.  In 2014, the British government redeemed 4% consols issued to pay for the costs of WWI. The Acts of July 14th, 1870, and January 20, 1871 provided authorization for the issuance of $1 billion of thirty-year consols, exempted from all local, state, and federal taxation. The Herbstman Collection features the only known examples of registered bonds authorized by the act. These bonds were referred to as the Funded Loan of 1907.

1877  $50 Thirty-year Registered 4% Consol

$740 Million Issued

Like other sovereign-issue consols, this debt security has no definitive payable date. The bond is redeemable at the pleasure of the Treasury Department after July of 1907.  This security, known on the government's books as the Funded Loan of 1907, was issued between 1877-1879. The interest on this security was paid quarterly: January, April July, and October. The back of this security features the Treasury's transfer form for registered bonds. Also featured are two parallel blue-colored anti-counterfeiting swaths imbedded within the paper itself.

The only $50 registered consol known to exist from this year, and one of two registered 1877 Consols known

1877  $100 Thirty-year Registered 4% Consol

$740 Million Issued

This $100 Registered Consol features a two shilling tax ink stamp. According to the June 17, 1916 issue of the Commercial and Financial Chronicle, the British Government imposed this tax on Americans, domiciled in the UK, on U.S. securities held that were subject to British income tax. The Chronicle was a financial journal styled after the Economist, predating the Wall Street Journal.  Of note also is the fact that, in the case of this particular security, the bond was due to for redemption by the Treasury well before the British tax would have been imposed. 

The second of two registered 1877 Consols known outside the archives of the Bureau of the Public Debt

1877  $50 Consol Quarterly Interest Coupon

Fifty Cents, Payable July 1, 1886

Consols came in both registered and coupon (bearer) forms.  As of today, there is one surviving bearer example from the 1877 issue, displayed at the Higgins Museum of National Bank Notes in Okoboji, Iowa.  There are however several surviving examples of coupons from the 1877 Consol issue.  It is thought that these coupons were clipped and used at times in lieu of coinage.

 

One of several coupons known from the 1877 issue

1879 Deposit Receipts for Bearer Consols

J. S. Morgan & Co. and N. M. Rothschild & Sons

These two receipts, made out to the J.S. Morgan and N.M. Rothschild & Sons firms respectively, represent deposits of bearer consol securities. The first deposit of is from the firm J.S. Morgan & Co.  J. S. Morgan & Co. was a merchant bank founded by Junius S. Morgan, father of J.P. Morgan.  The second deposit receipt is on behalf of N.M Rothschild & Sons, a multinational British investment bank that is still operating today.

Copyright The Joe I. Herbstman Memorial Collection of American Finance 

 

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