Assessable Shares

The vast majority of early American certificates carried par values of $100 per share. In 1840, a hundred dollars had the spending power of roughly $2,700 in today's money. To enhance sales, many companies allowed investors to 'subscribe' to their $100 shares with $10 down and the remainder payable over time. Once subscriptions were in place, companies levied assessments, usually $10 at a time, until shares were fully paid.

However, state corporation laws allowed companies to continue to assess stockholders for additional funds if needed for purchases and operating expenses. There does not seem to have been any limit on the amounts companies could assess, as long as assessments were for the purpose of pursuing profit. An article in the American Railroad Journal (January 19, 1833) reported about work on the Boston & Lowell Railroad and commented that, "seven assessments upon the stock have been made, amounting to $300 per share."

It appears that all early American shares were assessable. State laws seem to have been written to assure corporate success, even at the expense of investors. For instance, if investors failed to pay assessments, companies had the legal right to re-sell those shares to others. That technicality might explain why I have recorded duplicate serial numbers among several varieties of early certificates.

While state laws and courts governed the powers of corporations to levy assessments, the laws of economics governed the attitudes of investors. It is easy to imagine that unbridled assessments would have jangled the nerves of even the hardiest investors.

While I lack documentary proof, I suspect the appeal of non-assessable stocks appeared relatively early. The earliest certificate I have encountered that specifically addressed the issue was dated 1866 and labeled "free from all assessments." It appears that huge numbers of companies declared their shares 'non-assessable' over the following twenty years. Clearly, non-assessable stocks proved easier to sell. Assessable stocks definitely were on their way out by the 1890s.

In the mid- to late-1890s, numerous articles in mining journals suggests mining companies in the American West had become really worried. Banks were not always happy to loan to such ventures because mining was so unpredictable. Because of the ability to raise money through assessments, miners wanted to keep assessable stocks in their industry as long as possible.

But they were fighting a losing battle. Once economics starts a trend, resistance becomes futile. It appears the vast majority of stocks were non-assessable by the first decade of the 20th century. Just as it is hard to pinpoint when the first non-assessable stock appeared, it is equally hard to find evidence of when the last assessable stock disappeared. An article in the Sep. 23, 1918 issue of Investment Weekly (pg. 18) claimed, "There is no such thing as an assessable railroad stock."

In my experience, collectible evidence of assessments is very rare indeed. We must remember that requests for payment and resulting receipts were ephemeral and never intended for storage. Such documents appear for sale very infrequently. Only 58 (!) assessment receipts appear among records of over one million sales, offerings, reports and records of railroad-related certificates in my database. Most surviving receipts are dated in the 1870s and 1880s with dates ranging from 1838 to 1891. Even rarer are requests for payment of assessments. Only a single 1847 assessment request is known to me. That is not to say these documents are equally uncommon for the mining industry, but they are definitely rare for railroads.