In 1868, Winston Churchill’s grandfather came up with the idea of building a track for horseracing. But the municipality he wanted to build it in — then a suburb of New York City — couldn’t afford to build a road there.
So they issued bonds, with a 7% interest rate, and a redemption date far, far in the future. Out of the hundreds once issued, 39 remain — one of them coming due this March 1. The rest come due in future years — as far forward as 2147 (it’s not quite halfway there).
Why the “long-term” investing? The New York Times delves into the story:
They were the handiwork of a wily 19th-century financier and a couple of cash-strapped towns that schemed to implement a public work at the expense of their wealthy, gleaming neighbor.
“Everybody knew because of the shift of population northward, it was only a matter of time before the City of New York was going to annex the territory,” [a historian] said. “So they issued these bonds with the date of redemption so far in the future because they figured that once the City of New York annexed their town, then the City of New York would assume the payment of the bonds — which is exactly what happened.”
The whole story is a pretty cool read. I mean, I got some savings bonds from my grandmother when I was a kid, but it’s not like I had century-old bonds passed down like an heirloom!
Grant Hamilton
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