Collectible Stocks and Bonds from North American Railroads     by Terry Cox

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Why do some certificates lack signatures?

Sooner or later, you will encounter certificates that look like they were officially issued, but which lack a crucial signature. Because of value considerations, it is important that collectors decide whether problematic certificates were fully issued or not. (For even more discussion, see How can you tell if a certificate was issued or not?)

Sadly, it might not be possible to PROVE such certificates were truly issued or not. We can only make general observations. Issued certificated generally show:

  • Impressed company seals
  • Serial number
  • Signatures of two company officers
  • Names of owners
  • Numbers of shares in two places
  • Issue dates

I don't think we can prove the corollary, but I think it a fair assumption to suggest that:

  • Certificates that display signatures of two corporate executives, trust company signatures and/or dates, impressed company seals, owner names, dates, and numbers of shares were almost certainly officially issued.

Depending on the period during which suspicious certificates were issued, issued stock certificates also commonly show:

  • Signatures of trust company clerks
  • Dates of trust company registration

Revenue stamps strongly suggest issuance. Most certificates from the early- to mid-1870s and the late-1890s show adhesive revenue stamps. If revenue stamps were initialed or dated, you have a fairly reliable indication of issuance. Revenue stamps only appeared for short periods, so are not applicable to the vast majority of certificates. I will suggest, though, that:

  • Certificates that display dated revenue stamps along with other valid features were probably valid issuances, even if they lacked one corporate signature.

Trust company registrations strongly suggest issuance. Twentieth century certificates usually show signatures of trust company clerks as well as dates of issuance. Trust company validation was usually the very last step of legitimate issuance.

  • Certificates that display dated trust company signatures were probably fully issued.

Do cancellations prove issuance? It is certainly true that the majority of officially-issued certificates were cancelled in some manner (holes, knife cuts, rubber stamps, ink pens, etc). However, considered alone, cancellations cannot prove certificates were officially issued. For instance, many "remainders" (unissued certificates left over from books of certificates) were cancelled to prevent fraudulent issuance.

I think it is fair to suggest that when combined with other features of valid issuance such as corporate seals, cancellation can strongly suggests issuance. It depends to a certain extent whether the cancellation itself might suggest some problem with issuance. For instance, the if the cancellation says something like, "VOID", then collectors can probably assume that the certificate encountered a fatal flaw during issuance and was cancelled prior to completion.

Many stock certificates were pasted onto stubs when they were sold, transferred and cancelled. This allowed companies to know exactly how many outstanding certificates were unaccounted for. If a certificate otherwise looks issued, and is glued to a stub, you have strong suggestion of issuance. Stubs may have been removed to improve appearance, but you can usually see remaining glue stains.

Stock certificates were always intended to be sold and transferred between owners. Theoretically, certificates should have been cancelled when transferred. Thousands of officially issued and transferred certificates escaped cancellation. In such instances, you will often be able to find signatures on the back. This gives us is another fairly reliable rule:

  • Certificates with signatures on the backs were almost certainly officially issued and transferred.

So, what about certificates that otherwise appear issued (impressed seals, completely filled out, etc), but which lack one signature? In the absence of corporate records, I think that it is generally impossible to conclusively prove such certificates were truly issued or not. Nonetheless, I have seen many such certificates that I THINK were officially issued. If value will be tremendously affected by its valid issuance, then it might be advisable for collectors to seek a third-party appraisal of the suspicious certificate from a reputable dealer.

In the absence on conclusive proof, I feel comfortable in suggesting that certificates with SINGLE problems were often fully issued. It is when we get into multiple problems that I think we need to give up. I do not recall ever having seen certificates with two problems that I felt were officially issued. Consequently, I suggest:

  • Certificates missing one signature AND any other significant feature were probably NOT fully issued.

It is fairly easy to find certificates that show one missing feature: owner's name, issue date, trust company or bank signature, corporate officer, etc. Missing signatures seem to cause the most consternation among my correspondents.

What would cause missing signatures? With over 25,000 railroad companies known so far, the possibilities are numerous.

Remember that the vast majority of railroad companies did not last long. Most companies issued the majority of their certificates within a few weeks or months of their corporate organization. Therefore, we must recognize that most stock certificates were probably issued at times when operating controls were the least stringent. I do not have any proof, but I feel that most certificates missing signatures tend to show low serial numbers.

I also suspect (again with no hard proof) that most of the remaining certificates with missing signatures correspond with periods of high corporate stress. Periods of high stress include bankruptcy and reorganization. Except for companies that were sold or leased soon after incorporation, essentially every company went through periods of stress.

Times that would strain corporate controls likely correspond with periods of bank failures, financial panics, and stock runs. Periods of high turnover of securities were perfect times for signature and issuance errors. It was very common during the 19th century to have huge stock sell-offs purposely driven by rumor and innuendo, only to have those same companies acquired shortly thereafter by stock operators such as Jay Gould, James Fisk, Daniel Drew, and J.P. Morgan. Stock runs often had malicious intent, with little basis in either the market or the companies involved.

Let's also remember that forgotten signatures may have involved periods of stress as prosaic as snow storms, heat waves, broken water pipes, fires, union strikes, the flu, missing the trolley, or a boss having a bad day.

The process of issuing stock certificates. While examples almost certainly exist, I do not remember encountering missing signatures on 20th century certificates. In my experience, all certificates with missing signatures date from the 1800s. By examining the handwriting on 19th century certificates, it appears as many as three to five people were usually involved in issuing stock.

If we look at partially-issued certificates, we can make some guess of the processes. It appears that company presidents and treasurers were often were the first people to touch certificates. It is quite common to encounter large "runs" of certificates signed by one or both officers, suggesting officers frequently signed large numbers of certificates in advance of issuance. In general, many partially-issued certificates are known with only presidential signatures. That suggests to me that presidents were commonly the first signatories.

Treasurers' signatures seem to have come next. Again, numbers of unissued remainders suggest that treasurers' signatures often predated subsequent issuance features.

Handwriting similarities on groups of certificates from the same company suggests that many treasurers were responsible for filling in dates, owner's names, and numbers of shares. However, this is no hard and fast rule because a larger number of certificates show third handwriting styles probably attributable to lower-salary clerks. As a general rule, handwriting styles of those "third" signatories were more precise and easier to read than either treasurers' or presidents' signatures.

It appears that the addition and/or impression of corporate seals came next on 19th century certificates. That step was likely done by either treasurers or clerks. The tools that impressed corporate seals were important and carefully-guarded company tools, so I suspect that treasurers personally made seal impressions in smaller companies.

By the 20th century, and especially by the late 1920s, stock sales and transference became a hugely burdensome task for successful companies. At about that time, it appears that ultimate stock issuance began shifting to trust companies. Certificates requiring hand signatures began disappearing my the mid-1920s and were replaced by certificates with pre-printed facsimile signatures and pre-printed corporate seals.

It appears to me that once trust companies became involved, the number of ambiguously-issued certificates dropped substantially. That relationship suggests:

  • If certificates show both trust company signatures AND corporate seals, they were probably fully issued.

Were two signatures truly necessary? This is a hard question to answer. There were over 25,000 railroad companies with over 25,000 different ways of doing business. Small companies seem to have taken more trusting approaches to stock sales than larger companies. With possibly fewer than 25 stockholders, precise application of signatures on stock certificates may have not been terribly important to small companies.

In a related manner, we need to remember that all but a miniscule handful of American companies issued "registered" stock. Company records of ownership always prevailed. Under the registration system of stock ownership, company records ultimately protected securities against forgery.

What about missing signatures on bonds? The importance of signatures on bonds are vastly magnified because:

  • Issued bonds involved large, sometimes huge, amounts of money.
  • Most bonds issued prior to the 1890s were bearer bonds. Anyone who owned bearer bonds could sell them, regardless of how they acquired them.

For those reasons we see very, very few examples of signatures missing from issued bonds. Yes, a few examples probably exist, but it is my experience that:

  • Bonds missing one or more signatures usually lack corporate seals. Hence, they were almost certainly NOT fully issued.

In conclusion... I want to stress that we can NEVER know the why certificates show missing signatures. I suggest to my readers that:

  • If certificates lack one corporate signature AND there are other curiosities, then such certificates were probably NOT fully issued.
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(Last updated November 11, 2015)


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