Collectible Stocks and Bonds from North American Railroads     by Terry Cox

A guidebook and catalog of prices
(I neither buy nor sell stocks and bonds)

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Search the Coxrail database for descriptions of 23,700+ certificates from over 7,400 North American railroad companies.


Contact me if there are more terms you would like included in this glossary. Financial jargon indicated by italics.


Accrued income bonds. Bonds that pay interest only when sufficient income has accrued. Companies must make up missed payments.

Adjustment bonds. Bonds issued in exchange for outstanding bonds. Used when re-capitalizing nearly bankrupt companies to adjust interest rates. Companies may delay interest payments.

Annuity bonds. Bonds with no maturity dates. Annuity bonds make steady interest payments. Also known as perpetual bonds.

Assessable stock. Typical stock sold prior to the 1850s, whereby companies could assess additional funds from stockholders.

Bankruptcy. The state of having insufficient income to pay debts. The majority of North American railroads probably went bankrupt at some time in their histories.

Bearer bonds. Bonds that paid principal and interest to certificate or coupon holders, not necessarily legitimate owners.

Bearer stock. Stock controlled by whomever held the certificate. Rare among North American certificates.

Callable bonds. Bonds that companies may "call" or repay prior to scheduled maturity dates. Companies usually pay penalties when buying back these bonds.

Capitalization. The sum of the number of shares times the stock's par value. Older stock certificates often show capitalization amounts. Today's companies usually define capitalization as the total amount of money invested, including share equity, long term debt, retained earnings and cash.

Collateral trust bonds. Bonds secured partially by collateral and partially by trust. These are a cross between mortgage bonds and debentures.

Capital stock. The entire issuance of common and preferred stock. Synonymous with common stock when only one class of stock is issued.

Classes of stock. Varieties of stock issued by companies, each with different voting and dividend rights. Common and preferred are two familiar classes of stock. Some companies sub-divide stock into "Class A," "Class B" and so forth.

Common stock. Typical stock. When companies pay dividends, stockholders share in profits in proportion to the number of shares they own. Many companies do not pay dividends.

Consolidated bonds or consolidated mortgages. Bonds designed to pay off two or more loans that carry higher interest rates. Railroads often issued consolidated bonds when they merged several lines into larger systems.

Convertible bonds. Bonds exchangeable for stock at pre-established prices. Convertible bonds commonly offer greater potential for value growth if stock prices rise.

Convertible preferred stock. Preferred stock with special provisions that allow conversion to common stock at designated times and prices.

Corporate stock. The entire issuance of common and preferred stock. Synonymous with common stock or capital stock among companies that issue a single class of stock.

Coupon. A small warrant or certificate attached to a bond and redeemable for interest payments. Coupons were usually redeemed twice a year for interest payments in cash.

Coupon (rate). A bond's interest rate.

Coupon bonds. Bonds issued with coupons attached. Collectible bonds may be missing coupons. Most coupon bonds are bearer bonds.

Cumulative income bonds. Types of bond that pay interest only when there is sufficient income. Companies must make up missed payments.

Cumulative preferred stock. Preferred stock that allows companies to postpone dividend payments, thereby allowing dividends to accumulate.

Debentures. Unsecured loans, guaranteed only by the reputations of companies. The New York Central issued many debentures.

Deferred interest bonds. Bonds that allow companies to defer paying interest, often until maturity.

Dividends. Portions of company profits, divided on a per-share basis.

Embarrassment. Antiquated financial jargon for bankruptcy.

Equipment trusts. Forms of collateral trust bonds secured by railroads' operating equipment and reputations. Titles to equipment are normally registered in the names of trustees.

Extendable bonds. Bonds that give investors the right to extend the repayment of principal beyond maturity dates.

Extended bonds. Bonds with principal repayments delayed by companies. Collateral normally stays the same. Extension terms are often stamped or overprinted on the faces of the bonds. Some companies issued "extended debt certificates" instead of stamping original bonds.

First mortgage bonds. Primary loans that use company property as collateral. First mortgage bonds are the first to be redeemed when companies are dissolved.

Float a loan. Financial jargon meaning to initiate a loan or sell a series of bonds to investors.

Floating-rate bonds. Bonds with variable interest rates. Many recent bonds are of this type. Certificates usually show tables of yearly interest rates.

Funded bonds. Money is accumulated in special accounts so companies can repay loans easily at maturity. Probably synonymous in practice with sinking fund bonds.

Gold bonds. Bonds that must be repaid in gold coinage instead of lawful money.

Income bonds. Bonds that pay interest only if there are sufficient earnings. Accrued income bonds and cumulative income bonds repay all missed payments. Non-cumulative income bonds do not.

Interchangeable bonds. Bonds that may switch between bearer and registered status. Coupon bonds from the 1880s and 1890s were generally of this type and occasionally show records of such changes on their backs.

Junior. Financial jargon meaning an obligation that is secondary to an earlier, senior obligation.

Land grant bonds. Loans that used land granted by the Federal government as collateral.

Monster mortgages. Financial jargon for consolidated mortgages that repay several smaller, high interest mortgages in exchange for one larger mortgage with lower interest payments.

No-par stocks. Stock with no stated share value. Companies sell such stock at market rates.

Non-assessable stock. Stock immune from future company demands for investment. North American stocks have been non-assessable for over a century, but even recent stock certificates still say, "Fully paid and non-assessable."

Non-cumulative income bonds. Bonds that pay interest only when there is sufficient income. Missed payments are not made up.

Non-voting stock. A type of stock that offers dividends to stockholders, but does not allow them to to vote on issues related to corporate management.

Odd lot. Financial jargon for stock sold in amounts of less than 100 shares.

Original issue discount bonds. Bonds that carry below-average interest rates. To make up for the low interest rates, companies sell these bonds for less than face values. In other words, companies sell the bonds at discounts to stated face value.

Par value. Initially, this term meant the selling price of a single share of stock. The term later evolved into a bookkeeping term. Confusion eventually forced companies to state that their stocks had 1¢ par values or "no-par value".

Participating preferred stock. Preferred stock with special provisions that allow stockholders to receive extra dividends if the company shows excess profits.

Penny stocks. Financial jargon for shares that trade for fractions of a dollar or shares with par values stated as fractions of a dollar.

Perpetual bonds. Bonds with no maturity dates. Perpetual bonds make steady interest payments forever. Also called annuity bonds.

Planchette paper. Special paper with embedded disks of colored paper. Invented by American Bank Note Company in 1891 to thwart counterfeiting and widely used after 1940.

Preferred stock. Stock given preference when disbursing normal dividends. Because of preferential status, preferred stocks receive dividends even when there is insufficient profit to pay dividends on common stocks. Preferred stocks also receive preferential treatment if there are any assets left after a company dissolves. Dividends on preferred stock are normally fixed and do not vary like those for common stocks. Unless specifically addressed in corporate by-laws, preferred stock does not benefit when corporate profits are higher than expected.

Receiver(s). Person(s) appointed by courts to handle the affairs of companies in or approaching bankruptcy.

Receiver's certificates. Debt issued by court-appointed receivers and trustees in efforts to fund continued operations in bankrupt, or nearly-bankrupt, companies. These loans take precedence over all other debt obligations.

Recto. The front of a single page document. The front of a leaf in a book. The right page of a book in languages that read left to right. The side of a piece of papyrus with grain running horizontally (left to right).

Redeemable bonds. Bonds that companies may repay prior to scheduled maturity dates. Companies usually pay interest penalties when repaying bonds prematurely.

Refunding bonds. New loans that replace older ones, preferably at lower interest rates. They work similar to home refinancing to lower monthly payments. Easier to understand as "re-funding" (as in "to fund again").

Registered bonds. Bonds registered to specific owners. Only registered owners, their heirs or their legal assignees can collect interest and principal.

Reorganization. The process of restructuring internal corporate organization; the process of restructuring corporate debt during bankruptcy.

Reverse stock split. A decrease in the number of company shares meant to increase the market price of shares that have fallen below acceptable levels. Also known as a stock consolidation.

Round lot. Financial jargon for shares sold in increments of 100 shares.

Second mortgage bonds. Loans on company properties already covered by first mortgages. Second mortgages are junior to first mortgages, meaning first mortgages must be redeemed before second mortgages. Second mortgages are riskier than first mortgages and commonly carry higher interest rates.

Senior. Financial jargon meaning financial obligations that must be repaid before any others.

Share. Equal portion of ownership rights and interest in a company. Shares are issued only by companies that have been officially organized under the laws of states, provinces or Federal governments. Confusingly, the term is also used to indicate a portion of ownership in equipment trusts even though trusts do not always need to be officially registered with governments.

Sink a loan. Financial jargon meaning to pay off a loan or to redeem a series of bonds. Opposite of "float a loan."

Sinking fund bonds. Money is accumulated regularly in special accounts so companies can repay loans easily at maturity. Theoretically, sinking fund bonds are relatively safer investments.

Sterling bonds. Bonds repayable in British silver coinage.

Stock split. A division of a company's shares into multiples. A "2 for 1" split doubles the number of shares available to investors. Collectors can often identify "2 for 1" stock splits when they notice $100 shares suddenly change par values to $50 at a specific point in time. Railroad companies often split stock when share prices exceeded $100 for extended periods or when there was great demand for company stock.

Trustee's certificates. Debt issued by court-appointed trustees in efforts to fund continued operations in bankrupt or nearly-bankrupt companies.

Third mortgage bonds. Loans on company properties already covered by first and second mortgages. Third mortgages are junior to second mortgages, meaning both first and second mortgages must be repaid before third mortgages. Third mortgages are risky and commonly carry higher interest rates than second mortgages. Very few third mortgage bonds are known.

Verso. The back of a single page document. The back of a leaf in a book. The left page of a book in languages that read left to right. The side of a piece of papyrus with grain running vertically (up-down).

Zero-coupon bonds. Bonds that pay no interest. In financial jargon, bonds' interest rates are their coupons. By inference, ‘zero coupon' means zero interest. In order to make up for not paying interest, companies sell zero-coupon bonds for much less than their face values.

Zeros. Financial jargon for bonds meant to repay principal, but not pay interest. Investors buy zeros at substantial discounts to face values in hopes of redeeming for full face value at maturity.


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