Dear Gregory,
Even though I live in Virginia, I still get the Am-Pol Eagle so I can continue to keep up with my Polish- Buffalo roots. Being a bit of a history buff, I particularly enjoy your articles.
I didn’t think I’d have something for you until I found the enclosed
Republic of Poland bond and its coupons in a box of old paperwork.
I looked on the Internet and found a little information about them, but I still have many questions. Who was selling these bonds and where? Were they legitimate? Did the Polish government ever get any of the money? How much did the bonds cost at the time? Did people really get paid when they turned in the coupons? Are they worth anything today? Does anyone collect these types of bonds? Do you think there were high pressure salesmen selling them to people who may not have understood what they were buying?
I find it intriguing that my grandparents, who came to America only
a few years before and could barely make ends meet, purchased a bond
— and they didn’t cash in any of the coupons.
I’d sure appreciate any information on them. Thanks!
-Christine in Fairfax.
Hello Christine, I’m glad you enjoy the articles. What you have is a bearer bond issued by the Republic of Poland in 1920. Like bonds today, they were used to raise money for the nation of Poland. In Western New York, there were 17 banks authorized to sell these bonds, including three operated by Nowak: the Broadway National Bank, the American Bank of Lackawanna, and Falls National Bank of Niagara Falls.
These were completely legal and legitimate. The Polish government
raised about $50 million from the bond issue with the money being
used in two ways. The first was infrastructure projects like railroad building and natural resource exploration. The second was war.
The Poles were still fighting in the Polish–Soviet War in 1920 and
had to fund the war effort. Since the country was still recovering from the First World War they had to look outside Poland to raise money, and the Polonias of America were beginning to gather some wealth.
The Republic of Poland also used the anti-Bolshevik sentiment found in the U.S. at the time as an easy way to raise money. They would use nationalist lines like, “The Republic of Poland is today the barrier to the spread of Bolshevism. It is fighting the battle of western civilization as well of that for its own security.” “Shall Poland Perish?” and “Poland Must Live!” to tug at the heart strings of the Polish-Americans.
The original investment price was $50 and you would clip off the
coupons for the $1.12/$1.13 to cash them in at the bank where you
bought the bond. When all the coupons were handed in, you handed in
the main document with contract written on it for your original $50.
As a financial document it has almost no value, the Republic of Poland no longer exists so they have no assets.
There is a robust field of collectors who collect old stock and bond
certificates. This field is called scripophily and is considered a subfield of numismatics. It is quite popular because of the beauty of the engravings on the documents and the historical significance of the particular stock or bond draws collectors.
There was pressure to buy the bonds, not from sales people, but
society as a whole. Besides the advertising, they would hear from the pulpit to buy Polish bonds, from their social organizations, friends and coworkers. There would even be quotas set up by different clubs and organizations for raising money for bonds.
Your grandparents probably knew what they were getting into; bearer bonds had been around Europe since the 1880s and were a pretty easy financial instrument to understand. I think that the reason that none of the coupons were clipped was because this bond was renegotiated in 1938 due to a slowdown in the economy.
It went from 6 percent to 4.5 percent and there were new coupons
to reflect that, the bond value would also take a hit, so your grandparents may not have spent a lot of money on it since it looked like it was heading to junk status. The bond reached junk status in September of 1939 as did many other government bonds from Europe.
