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Stocks and Bonds

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Fourth Liberty Loan $50 1918

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Framed. This 1918 $50 Fourth Liberty Loan carried a 4-1/4% interest rate, and would have started with coupon #5. This issue has the distinction of being the only federal bond issue within American history to default on its terms. The Fourth Liberty Loan was to be payable, "in United States gold coin of the present standard of value." However, in 1933 Congress passed House Joint Resolution 192 which suspended payment in gold, a year before the Fourth Liberty Loan was to be called. Despite a legal challenge to the default, (wherein the Supreme Court acknowledged a violation of the 14th Amendment), the Fourth Liberty Loan was not redeemed at the original terms of its issuance. The high court felt that to pay bondholders at a 1918 gold value would be an unjust enrichment. Between 50 - 100 examples likely exist of this denomination. Donated from The Joe I. Herbstman Memorial Collection of American Finance to the SPMC.

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