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NYCR 30-year First Mortgage Bond
Item number: C119
Year: AD 1945
Material: Paper
Provenance: Nick Chen 2024
This is a $1,000 face value 30-year first mortgage bond issued by the “New York Connecting Railroad Company” (NYCR) in AD 1945. First mortgage bonds grant holders’ priority in repayment in the event of the debtor’s bankruptcy.
The top design on the front of this bond features the iconic Hell Gate Bridge, which spans the East River and connects the borough of Queens to Manhattan in New York City. Below the image, the title clearly states that the bond carries an interest rate of 2⅞% and matures in October AD 1975. The lower portion of the page, occupying nearly two-thirds of the space, contains detailed handwritten text in English, covering topics such as the calculation of redemption premiums and other related matters. Additionally, there is a stamped seal of the railroad company at the bottom. On the right side of the bond are the coupons for collecting interest payments, with settlement dates in April and October each year, with amounts of $14.38 and $14.37 respectively. The coupon for the 49th period has already been redeemed and is therefore clipped.
On the back of the bond, from top to bottom, are the registration signature field, the face value of the debt, and the guarantors of the bond. On the left side are the serial numbers of the coupons for each period (No.50 to 60). This bond is jointly guaranteed by the “Pennsylvania Railroad Company” and the “New York, New Haven and Hartford Railroad Company”. These railway companies are co-owners of the New York Connecting Railroad Company.
In the early 19th century, the vast territories of the United States followed in the footsteps of Europe and embarked on the construction of new transportation railways. However, the significant costs involved in building railways and the long-term nature of returns necessitated railway companies to raise funds through issuing bonds. Early American railway companies often chose to tap into investors familiar with the commercial benefits of railways, and were among the first to commercialize railways and list them on the London Stock Exchange for fundraising purposes.
However, in AD 1837, due to pessimism among foreign investors about the investment environment in the United States, there was a massive withdrawal of foreign capital, leading to the economic downturn known as the Panic of 1837. This shift prompted the localization of American railway bonds, gradually shifting the marketing of railway bonds to the domestic market. In AD 1865, with the end of the Civil War, railway construction in the United States entered a period of explosive growth, driving innovation in many financial instruments.
In AD 1892, amidst the flourishing development of railways, the Pennsylvania Railroad (Pennsylvania) and the New York, New Haven, and Hartford Railroad (New Haven) jointly established the New York Connecting Railroad subsidiary. Their aim was to create a railway network connecting various parts of New York City. The entire railway line adopted electrified power, and it was completed in AD 1917. As of AD 2024, ownership of the railway has since changed hands, now under the control of companies such as Amtrak and CSX Transportation.
Floyd W. Mundy, “Railroad Bonds as an Investment Security Mundy,” The Annals of the American Academy of Political and Social Science, 1907, pp. 120-143
Barry Eichengreen, “Financing Infrastructure in Developing Countries: Lessons from the Railway Age,” The World Bank Research Observer, 1995, pp. 75-91
