We receive calls or emails a few times a month from those who have found a Republic of Poland Gold Bond usually issued in the 1920’s or 1930’s. These folks are asking where they can cash them in or the status of these bonds.. Usually the calls originate because they have seen these bonds on our website or they have called some other entity, including the Treasury Department or congressional offices and those offices have in turn referred them to us. In hopes of answering the majority of questions we’ve received about Republic of Poland Gold Bonds issued during the 1920’s and 1930’s, and not the current Republic of Poland post 1990/1991, we do this blog post.
First, let’s define the Republic of Poland Bonds to which we are referring in this blog. These bonds are usually referred to as “Republic of Poland U.S. Dollar Gold Bonds” of various issue dates through the 1920’s and even into the 1930’s. The most common Polish bond we are asked about is the 1920 issue “20 Year Republic of Poland 6% $50 U.S. Dollar Gold Bond” due in 1940. Usually the $50 denomination is the most common, but we have found these bonds in denominations of $100, $500 and $1000, though such higher denominations are far less common than the $50 bond. The $500 and $1000 bonds were issued in 1925 and had a 25-year term. These bonds are much more scarce. Other far less common bonds were those issued into the late 1920’s and mid-1930’s.
The 1920 bonds appear to have been marketed to the Polish American community and sold through a variety of agents and banks, primarily in the Polish communities in the U.S. The bonds’ lead underwriter and servicer was National City Bank of New York, now Citibank. So these bonds had a good measure of credibility when issued. One can only speculate as to the purpose of these bonds, but the new Republic of Poland had just emerged after the carnage of World War I and in turn the Polish-Soviet War of 1919-1920. This new Republic of Poland, technically referred to as the Second Republic of Poland, was likely in need of an influx of capital for rebuilding and for civil improvements after the wars. By this time, after the migrations of the late 1800’s and early 1900’s, the Polish American community had gained a footing in America and had obtained some wealth, which the Republic of Poland had hoped to tap by issuing these bonds.
Most of the 1920 issue bonds were $50 denomination, which indicates that these bonds were target marketed to the Polish American community and individuals rather than institutions or wealthy investors. Thinking about it, there are a lot more customers for a $50 bond than for a $1000 bond, especially considering how much $50, let alone $1000, was worth in the 1920’s. That, in part, explains why these bonds are so common, especially in the Chicago, Milwaukee and New York City areas. These $50 bonds came with coupons attached and when you see them today, the coupons still attached are usually clipped until the 1939 and later coupons. In 1939, as a result of World War II, interest payments were stopped and payment of the $50 principal amount of the bonds was impossible.
The post World War II period was not much better as Poland was devastated by the war and creeping communist government takeover meant that there were no resources and no resolve to deal with Poland’s pre-war debt. The bonds languished and while there was some attempt to demand payment on the Polish bonds due in 1950, nothing happened. This continued until the mid 1970’s when the new Gierek led Polish government re-entered western capital markets and borrowed substantial sums to modernize Polish infrastructure and industry. In order to access western capital markets, the then Polish People’s Republic had to deal with the prior government’s outstanding debt
In July 1973, the communist government of Poland, The Polish People’s Republic, made an offer of settlement on Republic of Poland bonds as well as bonds issued by some local governments in Poland.
The bonds included in the settlement were the following:
- 7% City of Warsaw Gold Bond Loan of 1928, and 4.5 Per Cent City of Warsaw Assented Sinking Fund External Bonds, due 1958;
- 7% Province of Silesia External Gold Bond Loan of 1928, and 4.5 Per Cent Province of Silesia Assented Sinking Fund External Bonds, due 1958;
- National Economic Bank 7% Mortgage Gold Bond Loan (II issue P.Z. (I) of 1928, dated 1930, (Interest rate 4.5%);
- Land Mortgage Bank of Warsaw Guaranteed First Mortgage 8% Loan of 1924. (Interest rate 4.5%);
- Republic of Poland 7% Stabilization Loan of 1927, and 4.5 Per Cent Republic of Poland Assented External Sinking Fund Bonds due 1968;
- The Republic of Poland 3% Dollar Funding Bonds Stabilization Loan Series due 1956;
- Republic of Poland twenty Year 6% US Dollar Gold Loan of 1920 and 4.5 Per Cent Assented Sinking Fund External Bonds due 1958;
- Republic of Poland 8% External Sinking Fund Gold Dollar Bond Loan of 1925 and 4.5 Per Cent Assented External Sinking Fund Bonds due 1963.
The settlement offer ran for an original period of July 1, 1973 to June 30, 1975 but was subsequently extended to July 16, 1975. The settlement provided for payment of about 40% on the principal amount of the bond for those bonds tendered including payment of a small amount of interest and a deduction of ½ of 1% of the bond’s face value as compensation to The Foreign Bondholder’s Protective Council, Inc. as a contribution towards its expenses. Apparently, The Foreign Bondholder’s Protective Council, Inc. was integral in the negotiation of the settlement with the then Polish government. Payment of the settlement amount to bondholders was to be made during a period from July 1976 to July 1977.
The payment agents for these bonds were essentially the banks or brokerages originally listed on these bonds or their successors and included:
- First National City Bank of New York;
- Irving Trust Company;
- Dillon Read and Company: and
- First National Bank of Chicago
First National Bank of Chicago had no role originally in the issuance or sale of any of these bonds but appears to have been added due to Chicago’s large Polish American population and consequent large holdings of these Polish bonds in the Chicago area.
The settlement made clear that only the bonds tendered by July 1, 1975 (later extended to July 16, 1975) would be paid out and this was a final settlement offer. If not taken, the bonds would become, from a financial instrument perspective, worthless. There is some indication that the tender was extended to July 16, 1977, but even in that event, almost 40 years have passed since the tender deadline.
So in a word, as a financial instrument, these bonds are essentially worthless. The settlement made during the 1970’s was termed a final settlement and seems to extinguish any value for these bonds as a financial instrument. As a historical or collector’s item, these bonds do have some value and receive some collector interest here in the United States, but especially in Poland. Collector’s values for these bonds vary upon the issuer and the denomination, with the higher denomination bonds garnering higher prices.
Do you have an old Polish bond of one of the varieties listed above or another old U.S., Canada, Cuba, Newfoundland, China or other foreign bond or stock certificate and unsure of it’s validity or value? Email us and send a scan of the bond or stock. We purchase these collector’s instruments and know collectors interested in purchasing these bonds and stock certificates. Contact us at firstname.lastname@example.org!
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