Another $1000 James Madison Portrait Issue Usage

I left another series of blogs unfinished during my two month hiatus from the 1898revenues blog. I last had been blogging about on-document usages of the three high value Portrait Issues. To review those prior blog posts featuring the $100 John Marshall, the $500 Alexander Hamilton, and the $1000 James Madison issues, all used on stock certificates, go here.

Today, courtesy of Bob Mustacich, we feature a usage of both the $500 and $1000 issues on a railroad mortgage bond. It's only the second reported on-document usage of the $1000 Madison stamp, and, the only document we've seen featuring both the $500 and $1000 stamps on the same document. WOW!

Dawson Railway Company

First Mortgage Fifty Year $3,000,000 Gold Bond

July 1, 1901

Bob Mustacich scan

The Dawson Railway was built during 1901-03 to connect the newly established coal-mining town of Dawson, New Mexico with Tucumcari, New Mexico. It included lucrative linkages with both the Atchison, Topeka and Santa Fe Railway and the Chicago, Rock Island, and Pacific Railroad.

Executed on July 1, 1901 the bond provided seed money for the initial construction of the rail line beginning in August 1901. It was issued under, and secured by, a first lien mortgage deed of trust executed by the DRC with the Colonial Trust Company of New York City. I've not seen the bond's signature page, but suspect Charles B. Eddy who founded the El Paso and Northeastern Railway system, under which the Dawson Railway operated, may have been involved.

Eddy subsequently sold his railroads to the Phelps Dodge Corporation who had extensive mining operations throughout the Southwest, including some located in Dawson. Phelps Dodge later sold all its western US railroad operations to the Southern Pacific in the 1920s.

The bond's due date was July 1, 1951. By then the coal was gone and, for the most part, so was the town of Dawson. Reportedly it was a ghost town by 1950 and today little remains other than a cemetary. Again, I've not seen the entire document, but with the various sales and transfers of ownership the bond and its underlying mortgage likely had been called or renegotiated long before the due date.

Detail of $1000 James Madison Portrait Issue

showing cut and manuscript pencancel

Dawson

Ry Co

July 1

1901

As a precaution against reuse, most higher value tax stamps, as evidenced here, were subjected to "cut" cancellation as well as handstamp or pen cancellation. The $500 stamp on the document was similarly cancelled. It is interesting to note that the bond was issued on July 1, 1901, the effective date for the War Revenue Reduction Act of 1901, abolishing the proprietary taxes and eliminating or reducing many of the other taxes established under the War Revenue Act of 1898. The tax on bonds, however, remained unchanged at 5 cents per each hundred dollars in value or fraction thereof so the $1,500 represented by the Hamilton and Madison stamps was the proper tax to pay.

New Mexico was still a territory in 1901 undergoing raw growth and development. Our thanks again go to Bob Mustacich for providing this great document, a tangible example from this fascinating era in US history.

NOTE: Bob also provides an excellent site for 1898 revenue stamp collectors; especially helpful for collectors of proprietary handstamp cancels.

$200 and $500 Bonds

Neither of the bonds shown below, again courtesy of JW Palmer, were good investments. Both offered an attractive 5% return in an era when 3% was the norm, likely in an effort to secure speculative investors. The lower $500 and $200 face values also may have spurred some toward these chancy investments.

They nonetheless serve to show interesting usage of the 25-cent and 10-cent battleship revenues respectively paying the 5-cent per $100 in face value tax rate.

Kansas City Northwestern Railroad Company

$500, 5% 40-Year Bond

Issued April ?3, 1899
JW Palmer scan

The Kansas City Northwestern Railroad was never a successful venture. Troubled from its start as the Kansas City Wyandotte Northwestern Railroad, it came under the control of the Missouri Pacific (MOPAC) Railroad with service being suspended in 1919, years before this bond was scheduled to mature in 1933.

K. C. No. W. R. R. Co.

APR ?3, 1899
JW Palmer scan

The American Tropical Planting Company, incorporated in Delaware with offices in Philadelphia, offered a 5% annual dividend for its bond plus pro-rata payments on any additional net profits on its produce(bananas) operations on some 5,123 acres in La Mosquitia, Colon, Honduras. Considering the environs of La Mosquitia, this appears to have been a scandelous investment scheme.

That only the first annual coupon, due January 1, 1901, has been clipped from any of the several known surviving bonds and the tax on the original issue was not paid until February 14, 1901 further suggests was not a successful venture. The bond, though, features an attractive vignette of a man picking bananas.

The American Tropical Planting Company

$200, 5% + pro-rata profits First Mortgage Bond

Issued December 21, 1899
JW Palmer photo

Cancel Dated: FEB 14 1901
more than a year after bond was issued
JW Palmer photo

$5,000 and $10,000 Bonds

$1,000 Railroad bonds were a popular investment vehicle in the late 19th and early 20th centuries. Bonds in other denominations existed, but the $1,000 bond was by far the most common.

JW Palmer has provided properly taxed examples of much less common $5,000 and $10,000 bonds for today's post.

New York Central and Hudson River Railroad

$5000, 3 1/2% 100-Year Lake Shore Collateral Gold Bond

Issued July 14, 1898

Properly taxed $2.50 at the rate of 5-cents per $100 or fraction thereof in face value, the above $5,000 bond from the New York Central and Hudson River Railroad was backed by a mortgage on the Lake Shore and Michigan Southern Railroad , then a wholly subsidiary of the NYC&HRRR. It's interesting to note that the purchaser was a Briton. That British government bonds only paid 2 1/2% to 2 3/4% at the time made American railroad bonds a popular alternative for many Britons.

double-ring cds cancel

TREASURER

JUL

14

1899

N.Y.C. & H.R.R.R.

New York and Harlem Railroad Company

$10,000, 3 1/2%, 100-Year Gold Bond

Issued May 1, 1900

A nice single usage of the $5 Commerce issue paid the proper tax on the $10,000 New York and Harlem Railroad Bond shown above.

The railroad and mining industries were often intertwined as they depended upon each other for success. So it's not surprising that this $10,000 was owned by the Coxe Brothers Incorporated, a mining enterprise.

cut and cds handstamp cancel

N.Y. & H.R.R. Co.

May

1

1899

It is not unusual to find cut-cancels, in addtion to company datestamps, on the dollar values of the Spanish American War era revenues; added protection against reuse.

Bonds with Battleship and New York State Tax on Investment Tax Stamps

This is the final installment of a three-part post about the usage of Battleship revenues in combination with the New York State Mortgage Endorsement, Secured Debt, and Tax on Investment stamps of 1911-1920.

We've covered the Mortgage Endorsement and Secured Debt usages previously. Today we'll look at two Cleveland, Cincinnati, Chicago, & St. Louis (aka The Big Four) Railway bonds taxed during the final, Tax on Investment, phase of New York State's tax on mortgage bonds.

Again, for more details about how all of these three New York State stamp issues were used, I invite readers to Michael Mahler's series of articles on the American Revenue Association's website. The specific article about the Tax on Investment stamps may be found here.

Cleveland, Cincinnati, Chicago, & St. Louis Railway

$1,000, 4% Gold Bond Issued June 1, 1900

$4 NY Tax on Investment Stamp added 1918

Michael Mahler scan

The $1,000 bond above was originally issued June 1, 1900 during the Spanish American War tax era and was then properly taxed 50-cents (5-cents per $100 in value or fraction thereof) with an R171 50-cent Battleship revenue. The $4 Tax on Investment stamp, paying New York State's 20-cent per $100 per year mortgage bond tax for two years was added June 12, 1918 when the bond was registered with the Comptroller's office. This is the only bond currently known showing a joint usage of a Battleship revenue with a New York State Tax on Investment stamp.

Octagon $4 Tax on Investment Stamp Cancel:
TAX EXEMPT FOR TWO YEARS
JUN/12/1918
Boxed 50-cent Battleship Stamp Cancel:
C.C.C. & ST. L. RY. Co.
JUN/1/1900
Michael Mahler scan

As Mahler notes in his definitive article, the New York Tax on Investment actually was simply a renewal of the Secured Debt tax, albeit with new increased tax rates and a new set of stamps. Because the new stamps weren't immediately available the old Secured Debt stamps were used for several months. The "carryover" usage of the Secured Debt stamps is illustrated on the C.C.C. & St. L. Railway bond shown below.

It was originally issued on November 1, 1899 and then properly taxed 50-cents with an R171 Battleship revenue. On September 18, 1917 when the owner decided to register it with the State of New York and pay the then current Tax on Investment fee of $10 for five years, a $10 Secured Debt stamp from the 1911 issue was used to pay the fee.

Cleveland, Cincinnati, Chicago, & St. Louis Railway
$1,000, 4% Gold Bond Issued November 1, 1899
with $10 Secured Debt Stamp Paying Later 1917 Tax on Investment 5-Year Rate

Boxed 50-cent Battleship Stamp Cancel:
C.C.C. & ST. L. RY. Co.
NOV/1/1899
Boxed $10 Secured Debt Stamp Cancel:
TAX EXEMPT FOR FIVE YEARS
SEP/18/1917

A Bond with Battleship and New York State Secured Debt Tax Stamps

New Mexico Railway and Coal Company

50-Year, 5%, Gold Bond

Issued October 1, 1898

Michael Mahler scan

The New York State Mortgage Endorsement tax stamps shown in a previous blog applied only to bonds secured by a mortgage of properly located wholly or partly with the State of New York.

Bouyed by the success of that tax, New York widened the scope of its exemptive tax program in 1911 by offering State residents the same permanent exemption from the annual personal property tax for all mortgage bonds provided they pay a one-time Secured Debt tax of 0.5%; later increased to 0.75%

The full story is not that simple. The details of this on-again, off-again Secured Debt tax show how the State of New York struggled to find an equitable solution that would provide a revenue stream for the state's coffers, yet be accepted by the majority of its residents. As with the Mortgage Endorsement tax, Michael Mahler has done a masterful job of spelling the fascinating story behind the Secured Debt tax within its historical context while at the same time providing profuse illustations of bonds demonstating how the tax was paid. Mahler's Secured Debt tax article is available on the ARA website.

Unlike the generic Mortgage Endorsement stamps, a series of denominated stamps was issued for the Secured Debt tax, thus showing exactly how much tax had been paid on each bond. More than 100 bonds bearing the Secured Debt tax stamps are known, but only one is known in combination with a Battleship stamp from the 1898-1902 Spanish American War tax era. As illustrated above, a $1000 New Mexico Railway and Coal Company bond originally issued on October 1, 1901 and then properly taxed 50-cents with an R171 Battleship stamp, also bears a $7.50 Secured Debt tax stamp properly paying the 0.75% state tax in effect when it was applied on September 21, 1898.

Thanks Michael for sharing this unique usage!

Bonds with Battleship and New York State Mortgage Endorsement Stamps

Using primary source material and contemporary reports from the New York Times, Michael Mahler has meticulously researched the history of New York State's confusing early 20th century property tax laws. And in doing so he has unclouded the mysteries surrounding the usage, between 1911 and 1920, of the New York State Mortgage Endorsement, Secured Debt, and Tax on Investments stamps.

Until Mahler's definitive works about these stamps most collectors, myself included, had scant knowledge about them and little understanding of how they were used. I feel fortunate, over the years, just to have acquired a number of bonds bearing stamps from both the 1898-1902 Spanish American War federal tax era and New York's 1911-1920 personal property tax era.

So just how did it come to pass that some mortgage bonds taxed during the Spanish American War era also have NY State property tax stamps affixed? The story is too long and involved to tell here, so I invite readers to read Mike Mahler's four articles about them on the American Revenue Association's website. It's a fascinating story and Mahler tells it with clarity and profuse illustrations.

Let's look at the bonds that show the 1898 federal stamps and the earliest of New York's stamps, the Mortgage Endorsement issues. Mahler’s census of usage of the New York Mortgage Endorsement stamps on mortgage bonds total about 700 including some anecdotal usages. Of those only three bonds are also known with a 50-cent 1898 Battleship stamp.

I’m pleased to show all three combo usages below. For the specific article about usages of the Mortgage Endorsement issues shown in this blog, go here.

Outside Front and Back of New York Central and Hudson River Railroad
100-Year, 3 1/2%, $1000 Gold Bond of 1897
Issued February 10, 1899 -- Michael Mahler scan

Detail showing R171 50-cent Battleship with cds reading:
N. Y. C. & H. R. R. R. Co.
FEB/10/1899 -- from Michael Mahler scan

Detail from Bond Face Showing Green NY Mortgage Endorsement Stamp
Cancelled in New York County SEP 27, 1912
from Michael Mahler scan

I only showed scan details for the bond above as the full face is exactly the same as the bond below, also from the 1897 New York Central and Hudson River Railroad Company bond offering. This one features the later orange NY State Mortgage Endorsement stamp that replaced the green issue in 1915. It also benefits from having both stamps on its face.

It was originally sold on September 15, 1898, about 5 months prior the the example above and in this instance the R171 50-cent Battleship revenue was affixed and cancelled by the Trustee for the bond offering, the Central Trust Company of New York. Apparently by February 1899, when the bond shown previously was sold, the NYC & HRR company itself was handling sales.

New York Central and Hudson River Railroad

100-Year, 3/12 %, $1000 Gold Bond of 1897

Issued July 15, 1898

Detail Showing Orange NY Mortgage Endorsement Stamp
Cancelled in New York County DEC 23, 1915
and
R171 50-cent Battleship with decipede cancel
reading: C. T. Co./JUL/15/1899/OF NEW YORK

Vignette of Cornelius Vanderbilt II, President of NYC&HR
who died September 12, 1898, three days prior to the issuance of this bond

Mohawk and Malone Railroad
100-Year, 3 1/2%, Gold Bond of 1902
Issued April 9, 1902
Michael Mahler scan

Detail of Cancel
M. & M. RY. CO.
APR 9 1902
from Michael Mahler scan

The orange New York State Mortgage Endorsement stamp on the Mohawk and Malone bond was cancelled May 26, 1919 in Oneida County, NY.

A Spectacular Bond

When I started blogging about bonds a few days ago, I emailed Bob Patetta, who has contributed some great documents before, asking if he had any unusual bonds.

Am I glad I asked! It turns out Bob has a spectacular bond, ex Morton Dean Joyce, written for Three Hundred and Fifteen Thousand, Two Hundred and Eighteen Pounds, Fourteen Shilling Sterling. That converts to $1,525,658.50 with the tax at 5 cents per $100 in face value, or fraction thereof, being $762.85

The $762.85 tax was paid by an interesting combination of stamps: four $50, five $30, twenty $10, twenty-nine $5, twenty-two $3, one $1, one 80-cent, and one 5-cent.

The Securities Company Consol (Bond)
New York, New York September 1, 1899
Bob Patetta

front of attachment sheet showing tax stamps
Bob Patetta scanback of attachment sheet showing the balance of the tax stamps
Bob Patetta scan

I'm guessing this Securities Company bond was a type of investment vehicle where the assets of various investors were pooled to create a super bond. Considering the official British Government bonds of the period generally paid just 2 3/4% annual interest, the 4% offered through this bond must have looked attractive to its investors. Anyone who can shed further light on how this investment likely was structured is invited to Comment below, or email 1898revenues@gmail.com

The stamps are all cancelled with a single-line hand stamp reading, J. A. H. Macnair, C. A. , the company's named agent, and a separate single-line date stamp dated, 29 AUG 1900. There is no indication other than the lined out signatures that the bond was called, but the fact that it was not taxed until 2 days prior to September 1, 1900, one of the interest due days when the principal also could have been paid off, suggests that's what occurred thus forcing Macnair to pony up the tax nearly a year after it should have been paid.

It's hard to find on-document usages of the $3 and $30 Commerce issues. To find both on the same document is a real coup! And it's likewise hard to find on-document usages of the 80-cent Battleship.

Thanks Bob for sharing this spectacular bond. If anyone else has an unusual bond with unusual taxation, please send a scan and description to 1898revenues@gmail.com

Bonds - Michigan Central Railroad 1902 Gold Bond

Michigan Central Railroad 3.5% First Mortgage 50-Year Gold Bond

May 1, 1902

Long term railroad bonds appear to have been a popular investment at the turn of the 19th century. The security of a first mortgage on the company's tangible property must have added to their popularity as opposed to less secure investments in stocks. The Michigan Central mortgaged the best part of its 270 mile route from Detroit, Michigan to Kensington, Illinois along with its terminal properties and any future acquisitions for this 50-year 3 1/2% coupon bond.

It was beautifully engraved by the American Bank Note Company, with ornate green borders and scrollwork. Looking closely at the vignette of the steam locomotive at left one can make out a set of golf clubs lying on the luggage gurney in the foreground. Someone was headed for a golfing vacation.

The MCRR was incorporated in 1846 to acquire the line the State of Michigan had built from Detroit to Kalamazoo. It extended the line over the years, but also ran afoul of the State of Michigan who pulled its charter in 1900 over a dispute involving allegedly delinquent taxes. The State allowed it to reincorporate in 1901 and issue this bond offering in May 1902. The influx of cash allowed the company to expand operations and to take over some other lines. For details of MCRR operations as of 1912, go here.

The 5-cent per $100 tax was paid with a single 50-cent battleship cancelled with a light blue circular datestamp of the M.C.R.R. Co. The stamp was further defaced with a three line cut-cancellation. This is late in the tax period; the tax on bonds and all other documentary taxes were repealed as of June 30, 1902.

M. C. R. R. Co.
May
1
1902

Corporate Bonds - The Patchogue Ice Manufacturing And Cold Storage Company

The tax on bonds was defined in the very first paragraph of the War Revenue Law Schedule A Documentary Stamp Taxes. Specifically, bonds, debentures, or certificates of indebtedness issued by any association, company, or corporation were taxed at the rate of 5-cents per each $100 of face value, or fraction thereof.

That initial Schedule A paragraph goes on to define taxes on both the initial sale, and on any resale, of stock certificates (we'll cover those taxes in subsequent posts). But there is no mention about any tax on the resale of bonds.

I'm not a student of financial history and there simply may not have been a resale market for bonds at this time. But it always has seemed odd to me that the law specifically taxed both the sale and resale of stock certificates, while only taxing the initial sale of bonds. We'd welcome comment from anyone who could share additional information or insight about the investment bond market circa 1900, and why only the initial sale of bonds was taxed.

I've found only scant information about the Patchogue Ice Manufacturing and Cold Storage Company whose $100 bond appears below. The company, according to its seal, was incorporated in 1898 and apparently was created via this $15,000 (later raised to $20,000) ten-year bond offering.

Only the first three annual interest coupons have been clipped on the several examples I've seen suggesting the company either was sold or closed in 1902. Can anyone offer further information about the disposition of the company and the fate of its founding investors?

It does clearly illustrate the basic 5-cent per $100 rate with a single five cent battleship documentary affixed next to the corporate seal, properly cancelled with the initials of its secretary and date of 12-28-98.

The Patchogue Ice Manufacturing and Cold Storage Company

$100 Ten Year 6% Mortgage Bond

Although it exhibits ornate scrollwork, the bond is not engraved, but appears instead to simply have been litho-printed on a generic stock form devoid of any defining vignettes. It nonetheless was nicely designed with the type having been set specifically to accomodate the placement of the corporate seal and the necessary tax stamp; a nice touch not found on some of the more elaborate, engraved bonds we'll show in future posts.

Detail showing seal and cancelled stamp with the

signature of Secretary, Joseph T. Losee, below

Closeup showing one of the attached annual interest coupons