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How a goatskin bond outlived the guilder and pays in euros

Published .

Of the tens of thousands of manuscripts in Yale’s rare book library, one still earns interest. It is a bond written on goatskin. It was issued in 1648 by the Dutch water board Lekdijk Bovendams to pay workers building new piers that kept the river Lek from eroding its banks. The loan of 1,000 guilders was made at 5% a year in perpetuity, with no repayment of principal, and each payment was recorded right on the document.

The payer was a board of landowners and leading townspeople, and the payee is whoever presents the paper: it is a bearer bond, and no register of holders was ever kept. The rate was later cut to 2.5%, the goatskin ran out of room for entries, and a paper allonge was attached to it. In 2015 a library curator traveled to Amsterdam to visit the successor of Lekdijk Bovendams and collected twelve years of interest: 136.20 euros.

Today perpetual bonds are issued mostly by banks. Yale won’t let the Dutch goatskin out of the library, so every couple of decades only the paper allonge travels to the Netherlands to collect the interest.

Source: YaleNews, 2015

Story archive

All issues in order, newest first.

  1. How a goatskin bond outlived the guilder and pays in eurosOf the tens of thousands of manuscripts in Yale’s rare book library, one still earns interest.
  2. The pension where the last survivor winsThe tontine insured against a misfortune nobody expects: living too long.
  3. How a pact of 24 brokers became the New York Stock ExchangeThe world’s largest stock exchange began as a cartel: 24 brokers promised each other to hold their commissions.
  4. How “Bogle’s Folly” grew into trillionsThe first index fund for retail investors raised just $11 million, and competitors dubbed the venture “Bogle’s Folly.”
  5. How two traders cost the exchange its onionsA sack of onions was once worth less than an empty sack.

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