Collectors are cashing in on some 'worthless' stock certificates

Scripophily. Anyone who can pronounce that word on the first try probably knows what the rest of this column is about.

For those who can't, it's about the hobby of collecting old stock and bond certificates. In the last few years, the hobby has become a big business, with some of these colorful documents fetching several hundred dollars at auctions and among dealers around the world.

Stock certificates issued just a few years ago by companies that went under in one of our recent recessions may be worth something too, though not much. But more on them later.

Many of the older, painstakingly decorated certificates are also pieces of history: a 100-ruble bond issued by the City of Odessa, Russia, in 1902; an American Express stock certificate bearing the signatures of Henry Wells and William Fargo; or a certificate issued in 1921 for the Houdini Picture Corporation and signed by an apparently unchained Harry Houdini.

Indeed, the signatures are one reason old stocks and bonds get so valuable. The certificates usually carry the signatures of two company officials. Some of these captains of American industry have included Thomas Edison, John D. Rockefeller, Commodore Cornelius Vanderbilt, Henry Ford, and J. Pierpont Morgan.

In addition, there are bonds issued by countries around the world as well as nations that no longer exist, like the Confederate States of America. Interestingly, most CSA bonds were sold in Europe, particularly France and England, so today they are more likely to be found in vaults there than in attics in the US.

Some of the most sought-after American certificates are for railroads and automobile companies, a few of which are still in business, many that are not. Among car companies are names like Studebaker, Hudson, Durant, and Ford. Some of the railroad names are as colorful as the documents they are printed on: Hudson & Manhattan Railroad, Monongahela Valley Traction Company, Holman Locomotive Speeding Truck Company, and the Atchison & Pike's Peak Railroad Company. Prices on these can range from $3 or $4 to over $100.

A certificate issued in the 1920s by the Duesenberg Automobile & Motors Company, for example, has no value as stock. But, dealer George H. LaBarre (PO Box 746, Hollis, N.H. 03049) says he would pay about $100 for it. He invites people who think they may have a valuable old stock or bond to send him a photocopy of it, and he will tell them about what it is worth.

For many people, however, their collection of old stock certificates are barely worth the paper they're printed on. The new-issue ''boom'' of the last year or so is reminiscent of another period when new companies were being formed and several new stock issues were coming out every month: the early 1960s. As some of the companies behind today's new issues are likely to fail, so did many of those that issued stock two decades ago. People holding stock certificates from that period - or from any corporation that has failed in the past few years - probably do not have a collector's item. But they may be able to claim the loss as a tax break.

''Most stocks issued since the 1930s are of so little value, they're not worth dealing with,'' Mr. LaBarre says. ''There are exceptions, though, like auto stocks, some railroads, and things like the Ringling Brothers Circus.'' But the bulk of the more recently issued certificates aren't worth much more than a bad memory.

There are people, however, who are willing to help out investors with these documents, too. One of them, John Sehlmeier (PO Box 5324, Oxnard, Calif. 93031), will take as many worthless - and uncanceled - stock certificates as you want to send and pay 25 cents for each of them. You get to write off whatever you paid for the stock, minus the quarter Mr. Sehlmeier will send you.

But both Sehlmeier and LaBarre caution that people should find out for sure if they have a treasure before giving it up as 25 cents worth of junk. In addition to LaBarre, some antique dealers, coin dealers and collectors, and autograph collectors will pay fairly well for important old certificates.

Then, there is the possibility an old stock certificate actually does have value as stock. The company printed on it may not exist, but it may have been renamed or merged with another firm. In that case, you may own thousands, perhaps millions, of dollars worth of stock. You should check with libraries, stockbrokers, the secretary of state in the state of incorporation, or search firms like Tracers or R. M. Smythe & Co., both in New York City, who will research your security for $20 to $25.

Of course, one reason that Sehlmeier buys genuinely worthless certificates is that he is a collector, too. And perhaps some of the paper he is buying today will be valuable in the future. Why can't you do the same thing, then? You can, except all Sehlmeier is giving up is a quarter; you may be giving up the tax loss - as long as the stock truly has no worth.

Finally, if you are thinking of going into scripophily as a hobby or investment, remember that old stocks and bonds, like any collectibles, are subject to whims of the marketplace and changes in the economy. And you should plan on keeping them a long time. So unless you have a genuine interest in these documents and have access to some expertise, you may do better in a more conventional investment - like stocks (from firms that are still in business), bonds, or mutual funds.

If you would like a question considered for publication in this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.

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