This group of documents is the result of a chance discovery while browsing running auctions on eBay far outside the usual Stamps category, which led me to explore other listings from the same seller. My interest initially was only in one of the revenue-stamped documents, but I then took a more considered approach, altering my perspective to view the documents through the wider lens of American railroad history, and not just my narrow focus on revenue stamps. I ultimately decided that if possible, I would try to keep all of these items together (including the non-stamped documents) rather than letting them be scattered to the corners of the earth. This was somewhat difficult since they were all in different listings.
What ensued was communication with the seller and through them the consignor, asking if they would consider an offer for immediate purchase. After a back and forth discussion, all the while my hoping that nobody bid on the items in the interim, the seller was willing to end the listings and consolidate them into a Best Offer scenario, and we came to a resolution. It resulted in a higher cost than originally anticipated, but in retrospect I'm glad I did this, as after subsequent research, I believe the story told by the entirety is greater than the sum of its parts.
Admittedly, some of this article is speculation. I've posed some questions at the bottom of the page that I would appreciate assistance with, so feel free to email me if you have any answers, suggestions, or opinions. I have included additional commentary from Terry Cox, author and maintainer of the definitive database on railroad stocks and bonds, located at www.coxrail.com His comments are highlighted and boxed below. My thanks to Terry for his considerable time and input. –Dan
The Baltimore and Ohio Railroad (the B&O Railroad of Monopoly fame) began operations in 1830. From Wikipedia:
The railroad was founded to serve merchants from Baltimore who wanted to do business with settlers crossing the Appalachian Mountains. It would compete with several existing and proposed turnpikes and canals, including the Erie and Chesapeake and Ohio Canal. Building west from the port of Baltimore, the B&O reached Sandy Hook, Maryland, in 1834; Cumberland in 1842; the Ohio River at Moundsville, Virginia, in 1852; Wheeling in 1853, and in 1857, Parkersburg, Virginia, below rapids that made navigation difficult during parts of the year.
The railroad, whose owners were Union sympathizers, proved crucial to the North's success during the American Civil War, which caused considerable damage to the system. After the Civil War, the B&O consolidated several feeder lines in Virginia and West Virginia, and expanded westward into Ohio, Indiana, and Illinois.
Fast forwarding to the end of the 19th century, and the railroad came under financial difficulties. The following is taken from the 1899 edition of Poor's Manual of Railroads. I have highlighted certain portions in yellow that will become relevant.
The company being unable to meet its obligations maturing March 1, 1896, the president and the vice-president were, on that date, made receivers for all lines owned, controlled, or operated by it, except the Baltimore and Ohio Southwestern Ry., the Valley RR. of Virginia, the Staten Island Rapid Transit RR., the West Virginia and Pittsburgh RR., and the Cleveland Terminal and Valley RR. Separate receivers were subsequently appointed for some of these associated roads. (See appended statements, pages 70 to 85.)
A plan for the reorganization of the company was issued under date of June 22, 1898, and published at much length in the MANUAL for 1898, page 1378 et seq. On July 20, 1898, the 1st preferred stockholders asked for an injunction, which was subsequently granted, restraining the reorganization committee from carrying out the plan pending a decision by the United States Supreme Court as to the rights of the 1st preferred stockholders. On Oct. 24, 1898, however, the injunction was dissolved and the reorganization allowed to proceed.
In Nov., 1898, the opposition of the 1st preferred stock holders was removed, and all litigation withdrawn, by the reorganization committee agreeing to purchase the 1st preferred stock at a price of $75 per share in cash. Practically all of the rest of the securities affected by the plan had been deposited as agreeing to its terms, so that it became fully operative.
ORIGINAL PLAN OF REORGANIZATION. The plan issued under date of June 22, 1898, provided for the retirement of the capital stock, the main line mortgage loans of 1853–1935, 1872–1902, and 1874–1910, the loans secured by mortgage lien and collateral, the loans secured by collateral only, and the terminal mortgage loan of the Baltimore and Ohio RR. Co., the preferred stock and 1st mortgage bonds of the Akron and Chicago Junction RR. Co., the 1st mortgage extended 4% and 1st mortgage 7% bonds of the Pittsburgh and Connellsville RR. Co., and the bonds of the Washington City and Point Lookout RR. CO.; a new company to be organized with a capital of $35,000,000 of common stock and $40,000,000 of noncumulative 4% preferred stock, and with authority to issue $70,000,000 of prior lien gold bonds and $63,000,000 of 1st mortgage gold bonds. The terms under which the new securities are to be issued to the holders of those to be retired are stated in the MANUAL for 1898, on pages 1378 to 1381.
The carrying out of the plan will use up $31,178,000 of the common stock, $17,218,700 of the preferred stock, $60,073,090 of the prior lien bonds, and $36,384,535 of the 1st mortgage bonds ; $16,450,000 of the preferred stock, $9,000,000 of the prior lien bonds, and $12,450,000 of the 1st mortgage are to be sold to a syndicate to provide the cash requirements of the plan; and $3,822,000 of the common stock, $1,331,300 of the preferred stock, $926,910 of the prior lien bonds, and $1,165,000 of the 1st mortgage bonds are provided for contingencies, etc., any surplus of them going to the reorganized company. The remaining $5,000,000 of preferred stock and $7,000,000 of the remaining $13,000,000 of 1st mortgage bonds are to provide working capital for the new company, while the balance, $6,000,000, of 1st mortgage bonds is reserved to be issued only to retire the 1st mortgage 5% bonds of the Baltimore Belt RR. Co.
The preferred and common stock of the reorganized company, except enough shares to qualify directors, are to be vested in William Salomon, Abraham Wolff, J. Kennedy Tod, Louis Fitzgerald, and Charles H. Coster, as voting trustees, to be held by them for five years, although the trustees may, in their discretion, deliver the stock at any earlier date. In the meantime, certificates of beneficial interest will be issued, entitling the registered holders to their shares of the stock and to any dividends that may be declared thereon.
The Prior Lien Gold Bonds will mature in 1925, and bear interest at the rate of 31 p. c. per annum from July 1, 1898. The actual interest was 3.5%. (Examples of these bonds are known and cataloged as BAL-662d-B-19 and B-20.) They are to be secured by a mortgage upon the main line and branches, Parkersburg Branch and Pittsburgh Division, covering about 1,017 miles of road, also on all the equipment now owned or hereafter acquired in any njanner except by the use of the $7,000,000 1st mortgage bonds reserved for the use of the new company, and of $27,000,000 additional of such bonds which may be issued for extensions, betterments, etc., as hereafter stated. The right will be reserved to issue, after Jan. 1, 1902, not to exceed $5,000,000 additional of prior lien bonds, at the rate of not exceeding $1,000,000 a year, for the enlargement, betterment, or extension of the properties covered by the mortgage, or for the acquisition of additions thereto.
The 1st Mortgage Bonds bear interest at the rate of 4% per annum from July 1, 1898, and will mature in 50 years, the right being reserved, however, to call in and redeem any or all of them after 25 years, at 105%. They are to be secured by a mortgage which will be a first lien on the Philadelphia, Chicago and Akron Divisions and branches, and the Fairmont, Morgantown and Pittsburgh RR., covering about 570 miles of road, and also on the properties covered by the Baltimore and Ohio terminal mortgage of 1894, when the lines and properties mentioned are acquired by the new company. They will also be a first lien on the Baltimore Belt RR., when that road is acquired by the new company; and a lien subject to the prior lien mortgage on the property covered by that mortgage. The right wiil be reserved to increase the amount of these bonds to $90,000,000, the additional $27,000,000 to be used only for the enlargement, betterment, or extension of the railroads and properties covered by the prior lien mortgage, and also those covered by the 1st mortgage, or for the acquisition of extensions or additions thereto, or equipment for use thereon, at the rate of not exceeding $1,500,000 a year for the first four years after the organization of the new company and of not exceeding $1,000,000 a year thereafter. The right will also be reserved to issue not to exceed $75,000,000 additional of the bonds to retire the prior lien bonds at maturity.
SUPPLEMENT TO PLAN OF REORGANIZATION. The reorganization managers will recommend to the reorganized Baltimore and Ohio RR, Co. that the latter shall acquire the properties or outstanding securities of the Central Ohio RR. Co., Savdusky, Mansfield and Newark RR. Co., Columbus and Cincinnati Midland RR. Co., Newark, Somerset and Straitsville RR. Co., and Pittsburgh Junction RR. Co., all of these to be known as the Pittsburgh Junction and Middle Division, and of the Baltimore and Ohio Southwestern Ry. Co., to be known as the Southwestern Division, and for that purpose shall increase its preferred stock to $60,000,000, and its common stock to $45,000,000, and shall issue $15,000,000 of Pittsburgh Junction and Middle Division 1st mtge. 31 p. c. gold bonds of 1925, bearing interest from Nov. 1, 1898, The actual interest was 3.5%. (Examples of these bonds are known and cataloged as BAL-662f-B-60 and B-61.) and $40,000,000 of Southwestern Division 1st mtge. 31 p. c. gold bonds of 1925, bearing interest from Jan. 1, 1899. The actual interest was 3.5%. (Examples of these bonds are known and cataloged as BAL-662e-B-50, B-55, B-56, B-57, and B-58.)
The exact timing of when certain events actually occurred is unclear from the above, but the following article from the August 1899 issue of The Book of the Royal Blue, the house organ of B&O Railroad, sheds some light.
The receivership of the Baltimore & Ohio Railroad terminated at twelve o'clock midnight, June 30, 1899, and the property was turned over to the stockholders without celebration or formal ceremony. The new officers are: President, John K. Cowen; First Vice-President, Oscar G. Murray; Second Vice-President and General Manager, Fred D. Underwood; Treasurer, W. H. Ijams; Secretary, C. W. Woolford; General Attorney, Hugh L. Bond, Jr.; Board of Directors, William Salomon, Chairman, New York; Jacob H. Schiff, New York; James J. Hill, St. Paul; Edward R. Bacon, New York: Norman B. Ream, Chicago; James Stillman, New York; Edward H. Harriman, New York; J. Kennedy Tod, New York; Charles Steele, New York; Alexander Brown, Baltimore; H. Clay Pierce, St. Louis; H. Crawford Black and John V. L. Findlay, Baltimore. The executive committee is composed of Willian1 Salomon, Chairman; Jacob H. Schiff, James J. Hill, Edward R. Bacon, Norman B. Ream, Edward H. Harriman and Charles Steele.
John K. Cowen and Oscar G. Murray were appointed receivers of the company on February 29th, 1896, by the United States Court for the District of Maryland. Being familiar with the needs of the property, the receivers decided that the only wise course to pursue was to practically rebuild and re-equip the railroad. The physical condition was bad, its equipment antiquated and inadequate to handle business and its insufficiency was such as to seriously injure the revenues.
The receivers' plans were discussed by the security holders, and as a large majority agreed to the provision of enough funds to place the road in a condition to handle its traffic, they obtained permission of the court to issue certificates for the purchase, by means of equipment trusts and receivers' certificates, of new cars and locomotives and to improve the physical condition of the property.
The court took a broad and liberal view of the situation, and although there was opposition on the part of some of the minority security holders, granted the petition and the result is well known. The Baltimore & Ohio Railroad is now in good physical shape and has equipment of modern construction, sufficient to handle a large traffic satisfactorily. The gross earnings have greatly increased and the net earnings are expected to be larger when the improvements now under way, become available.
The reorganization plan as prepared by its managers, Speyer Bros. & Co. of London; Speyer & Co. and Kuhn, Loeb & Co. of New York; and the advisory committee, General Louis Fitzgerald, E. R. Bacon, Henry Budge and W. A. Reed, gives the company the following new securities: - prior lien 3-1/2% gold bonds, $70,000,000; first mortgage 4% gold bonds, $63,000,000; 4% non-cumulative preferred stock, $40,000,000; common stock $35,000,000. On June 28th the preferred stock was increased to $60,000,000 and the common stock to $45,000,000, for the purpose of carrying out the plan of reorganization of the Baltimore & Ohio Southwestern Rail way.
So that is the backstory... now on to the specific documents in question. Visually and aesthetically, they are in my opinion the most boring, nondescript stock certificates one could possibly imagine (text only, no engraved vignettes, no ornate frames printed in multiple colors, etc.). Rather, their beauty is historical. I speculate that the reason for the plain design compared to certificates for common and preferred stock that we typically see from B&O railroad during this time period (virtually all of which have a pictoral vignette and are printed in 2 colors), is that these were never intended for public consumption. They were strictly internal, to document required transactions.
The first document is a stock certificate from The Baltimore and Ohio Railroad Company, dated May 23, 1899, serial #1, stating that William Salomon, Abraham Wolff, J. Kennedy Tod, Louis Fitzgerald, and Charles H. Coster, voting trustees are owners of 400,000 shares of preferred stock at $100 per share = $40 million ($1.5 BILLION in 2024 dollars).
(Clicking on any image in this article will open a higher-resolution version of the image in a new browser window.)
Based upon the revenue tax rates at the time, the tax due on this transaction would have been $20,000... or 400 copies of the $50 revenue stamp (Scott #R178) shown above. Well... combined with the above 8 stamps, the following somewhat mangled attached sheets come up 2 stamps short: 398 stamps lightly canceled in red with "B. & O. R. R. Co." circular handstamp cancels, and you can see where the 2 missing stamps have fallen by the wayside. While from a collector's perspective one can bemoan the poor condition of the attached sheets, careful treatment and storage conditions were of little to no concern to clerical staff once the tax was paid.
So this certificate appears to consitute the entire $40 million of preferred stock issued to the voting trustees as part of the company reorganization.
In another eBay listing, a bound book of blank stock certificates of similar design, something caught my eye: what appeared to be the receipt stub associated with this certificate:
If you notice, the receipt stub has the interesting note "Transferred into Certif. No 3." We'll come back to this shortly.
Fast forward in the calendar to August of 1899, after the date the decision was made to increase the shares of both common and preferred stock.
Here we have certificate serial #2, dated August 28, 1899, for 200,000 shares of preferred stock at $100 = $20 million, to the same trustees as above. This constitutes the increase in the number of shares of preferred stock that occurred in June of 1899. No revenue stamps affixed paying the $10,000 tax due. I initially thought that perhaps attached sheets were lost along the way, but I don't actually think that's the case, as I'll explain shortly.
Notice that the attached receipt has a similar note to certificate #1: "Transferred into Certif. No. 4." (You can't see the 4 in the image, but that is what it reads.)
Now we get to certificate serial #3, also dated August 28, 1899. It, like certificate #1, is for 400,000 shares of preferred stock at $100 = $40 million, to the same trustees. Like certificate #2, there are no revenue stamps affixed, nor indication of any tax paid.
But there are some differences in the printed text on certificate #3 vs. certificate #1:
Additionally, there is a paragraph of handwritten text written up the left side of certificate #3, not present on certificate #1, which appears to have been written several years after the fact, not in 1899:
Voting trust certificates were surrendered against the issue of stock certificates of the Baltimore and Ohio Railroad Company in the new form, which latter were registered against cancellation on account of the worth in certificate from September 12, 1901, from time to time to January 11, 1907, when all shares of stock outstanding were represented by the new form of certificate and the worth in certificate was cancelled and delivered to the Railroad Company on order of Voting Trustees, dated December 1, 1906.
So, let's revisit my initial thoughts regarding the missing revenue stamps on certificate #2, and now #3. The "transfer" of certificate #1 into #3 was a bookkeeping transaction, not a transfer of ownership which would have triggered additional tax due. Since the required tax was paid on certificate #1, no tax was due on certificate #3. Similarly, since no tax was paid on certificate #2 and it contains the note that it was transferred into certificate #4, if both transaction pairs were treated the same, that would mean...
Certificate serial #4, also dated August 28, 1899 (so 3 of the 4 certificates were issued the same day), is for 200,000 shares of preferrred stock at $100 = $20 million ($750 million in 2024 dollars), to the same aforementioned trustees. It too is the second version of the certificate wording, like certificate #3.
This is "the big kahuna" in my opinion. It is the very first certificate of this group that I saw on eBay, that sent me on the chase across listings which ultimately revealed the related items. Tax due on 200,000 shares was $10,000. Unlike certificate #1, where the tax was paid by 400 copies of a $50 revenue stamp (R178), in this case the tax was paid using the $1000 James Madison (Scott #R181), a very scarce stamp, and virtually impossible to find still on document. There should have been 10 stamps paying the tax, but it appears that one has fallen by the wayside in the last 124 years, as there are only (!) nine R181 on the document. These stamps were issued without gum, so the amount of adhesive used by the clerk could vary considerably. One of the stamps on the front of the document was fairly loose as it was. Based upon the sequence of serial numbers on the stamps, presumably the missing stamp is serial #600.
I want to give the reader some context as to just how rare this document is from the perspective of collecting revenue stamps and documents. Prior to the discovery of this document, there were only two known documents with R181 affixed (corroborated by Frank Sente, Bob Mustacich, Richard Friedberg, and Eric Jackson):
The newly-discovered document is only the third reported document with R181 affixed. It is the only document with multiple R181 affixed... and nine of them to boot... all uncut! In my opinion an absolutely magnificent revenue document.
I'm going to put forth the argument that these documents comprise a singular unique usage of the two certificate types shown above and that no other issued certificates exist. Even beyond my speculation that the nature of these transactions was inhouse for a specific purpose, the details of the bound book shown earlier is what lead me to believe that there aren't other certificates out there.
The book has (or had) both certificate types bound into it. A custom binding like this, as opposed to there being separate bound volumes of each certificate type, implies limited purpose. We can differentiate which stubs were for which certficates because the two certificate types had different stub formats. The earlier certificates ($40 million in preferred stock) had a printed separator between stub and certificate. The later certificates ($60 million in preferred stock) had a perforated rather than printed separator, and the stub is approximately a half inch wider than the stub of the earlier certificate type. See the following photo showing both stub types.
The book contains exactly four stubs or remnants of stubs for the first certificate type ($40 million in preferred stock), including the stub for certificate #1, the trimmed off stub for certificate #2 (there is manuscript text continuing from the stub to the remainder in the binding), and two blank stubs without serial number or transactional information, both with pencil "Cancelled" notations on them, one of which is shown in the picture above.
With respect to the second certificate type, the book contains exactly two stub remnants clipped close to the binding, corresponding to certificates #3 and# 4. There are approximately 10 complete stubs where the certificates have been removed, but all of those stubs are completely blank, with no serial numbers, names, or transactional information. It's quite possible that blank certificates were subsequently removed for clerical reasons or in the intervening 124 years for collector purposes. The remaining pages of the book are fully intact blank certificates of the second type.
Lastly, while not definitive, neither of these certificate types were listed in Terry Cox's comprehensive railroad certificate database at the time of this find, which would be unusual for a prolific railroad of this size. Additionally, I have not been able to locate a single image anywhere online of either of these two certificate types. Note: subsequent to contacting Terry, the two certificate types from this find have now been listed in his database as BAL-662d-S-80a and BAL-662d-S-80b.
None of this is 100% conclusive, but it all aligns with these certificates possibly being the only issued examples. In my opinion certificate #4 is a one-of-a-kind document... within a one-of-a-kind group of documents. It may be the case that railroad-related importance of the documents may dwarf the revenue-related importance. At the end of the day, this group of documents is a reminder that there are always new discoveries to be made, and new pieces of history to be unearthed... sometimes in places you wouldn't normally expect. Don't become complacent under the mistaken notion that everything important and interesting has already been discovered. Always keep searching!
I would appreciate any assistance with these questions, so feel free to email me if you have any answers, suggestions, or opinions.
Q1: Was the folding in of certificate 1 into 3 (and 2 into 4) a required transaction for bookkeeping purposes? What purpose did it serve?
From the perspective of geologist instead of a corporate bookkeeper, I personally doubt there was a bookkeeping requirement. Instead, I suspect it was a cautionary move. The physical proof of the voting trustees' authority to "vote" on behalf of stockholders lay entirely in these single pieces of paper. And trustees of that caliber were all too familiar with the tendency of minor shareholders to initiate legal challenges on all sorts of issues. Many challenges would have ben of minor importance to a business the scale of the B&O Railroad, but they could have caused trouble nonetheless. Therefore, I can imagine a potential challenge to trustees' authority to vote on issues of overwhelming corporate importance with an "old and outdated" certificates that represented outdated capitalization. After all, serials #1 and #2 "clearly" gave trustee authority to vote on $75 million worth of stock, but not $105 million. Hence, the re-printing and re-issuance of the preferred certificates. It's what I would have done.
Q2: Why the delay from the date of the decision in June until August 28, 1899 to issue these certificates? Availability of signatories?
I think it might depend on how the raise from $40,000.000 to $60,000,000 was accomplished. And "why." If it were merely an increase in the amount of preferred stock authorized by the board, a couple months of delay would not have mattered because I doubt legitimate stock would have been issued during the reorganization period. If it were somehow based on a recalculation of outstanding preferred stock, or some sort of conversion of bonds or common stock into preferred, that would have been a much different matter. We also need to remember that no small number of B&O shares were held by investors in England, the Netherlands and elsewhere in Europe. Since these were voting trust certificates, there might have been delays in receiving outstanding shares or conversions sufficient to need to raise the stated voting power. I bet the real story is hiding in the minutes of the B&O board of directors.
Q3: I'm having a hard time wrapping my brain around the timeline of the construction of the book, and this could very well undermine my conclusions regarding it being unique: If the book was bound prior to any of the certificates being issued (which is the norm), this means that both certificate types had been printed prior to May 23 when the first certificate was issued... which was before the decision was made to increase the number of preferred stock shares. Some of the stubs are cut so close to the binding, the book had to have been bound prior to the certs being issued (or at least the stubs being removed), but yet they are bound together. Is going by the public dates mentioned in the accounts above a mistake, i.e., decisions on when and what to print may have been made long before or unrelated to published dates? Alternatively, is it possible that the book was bound AFTER the June decision and the second set of certificates printed, and certificate #1 (the only one of the four dated prior to June 1899) was retroactively dated to fall prior to the change date? I find it interesting that on all the sheets of stamps attached to certificate #1, the handstamp cancel only has the year; the day and date slugs are mute... coincidence?
I am guessing the CURRENT stock book was bound AFTER issuance of the certificates. That is not to say there was not an earlier binding that held a stack of "$40,000,000" certificates. Chances are, the company had printed a fair number of the early certificates in anticipation of conversion of full-fledged stock certificates into voting trust certificates. In fact, it is sort of curious that only two certificates were issued. We should remember, that taking apart an earlier stock book and removing two certificates was a trivial matter of applying heat to the binding of a stock book held together by hide glue.
My reply:
I'm still struggling with Q3, since if the timeline occurred as you imply, that means that certificates 1 and 2 would have still been fully intact with stub and included in the book at the time of binding (since the stub remnants are bound into the book). This is especially problematic with #1 since that is the one with the numerous sheets of revenue stamps attached... unless there was a predetermined plan for these two stock issuances (which doesn't logically make sense), the stock certificates of both types were bound together, and only after that point were the issued stock certificates actually removed, dated, taxed, and accordingly filed. This means that there had to have been some retroactive dating and/or canceling going on. Otherwise the timeline doesn't work.
Terry's response:
This really is a mystery. After an inordinate amount of thought, I now suspect some post-dating took place with certificates #3 and #4.
I will first enumerate apparent "facts" about these certificates as my current experience suggests.
Having not touched the paper myself, I now suspect:
It seems like an accidental oversight of paying the revenue tax would have given an appearance of impropriety that the company would not have wanted during the tricky period of reorganization. It would have been much better to pay the tax, postdate, and concoct a cockamamy story of same-day transactions later if ever questioned. Who at that time would have noticed trimmed signatures on #1 and #2.
Although the stamps and certificates were dated August 28, I cannot devise any way that #2, #3, and #4 could have come from the same book on the same day. Better to postdate than to make it look like tax avoidance, even if accidental and for only a week or two. Even if stubs #1 and #2 had been removed from their original stock book, it seems unlikely the printer could have composed, sewn, trimmed, rebound, and delivered "stock book 2" for signing by the voting trustees on the same day. Two days? Possibly. A week or two? Even better.
Q4: Is there an alternative accounting- or bookkeeping-related reason for the two certificates to be bound together? Was this standard practice of the era?
I personally find it very curious that certificates from two different printings were bound together. I STRONGLY suspect it had nothing to do with bookkeeping and everything to do with a convenient way to keep similar records together. After all, once the reorganization had been completed, these certificates would have had little relevance for the new organization and everything to do with the ability to prove how business had been conducted during the transitional period. Any suggestions of impropriety would have involved these four certificates. (And, of course, the missing common stock correlatives.)
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