Historical Gran Colombian Bonds Lead PMG on an Exciting Investigation
Posted on 2/16/2021
Paper Money Guaranty® (PMG®) recently graded a set of three amazing 1826-29-dated Republica de Colombia bonds from the period following the formal creation of the Republica de Colombia in 1821. The geographic area of the Republic of Colombia at that time was much larger than that of modern-day Colombia as it included what are now the separate countries of Colombia, Panama, Venezuela and Ecuador. As such, people sometimes refer to the historical Republica de Colombia (1819-1830) as the Republic of Gran Colombia to differentiate it from present-day Republic of Colombia.
It is difficult for collectors to find written historical information on these Republica de Colombia bonds. Most of these types are listed and pictured in the excellent catalog “Compendio Historico del Papel Moneda en Colombia” by Danilo Parra Ariza according to “DP” reference numbers, but the sheer quantity of notes covered in his catalog understandably does not allow for a great amount of written detail on these bonds.
To help readers gain a better understanding of these bond issues, PMG reached out to leading numismatic experts in Colombia. In particular, we acknowledge the input from Danilo Parra Ariza (author of the above-mentioned catalog) and Andres Felipe Cortazar, President of La Fundacion Numismaticos Colombianos (NUMISCOL), who were both kind enough to talk with PMG and share their insight.
To understand why these bonds were issued and their purpose, we must first set the historical stage:
Starting in the 16th century and continuing on into the early 1800s, Colombia and other Latin American countries were colonies under the control of Spain. Spanish colonies in the Americas were forbidden to trade with other countries and their only source of imported goods was Spain at inflated prices. The local population had little say or control over the government. Local discontent was common, but the Spanish maintained dominant control backed by a powerful army.
The seeds of Colombian independence from Spain could be said to have been planted by the French Revolution that was triggered by widespread discontent with the French monarchy and resulted in a democratic government being established for the first time in Europe. It led to the rise of Napoleon Bonaparte, his invasion of Spain, and King Ferdinand VII of Spain being imprisoned in 1808. The American Spanish colonies then started to question why they should be swearing allegiance to a jailed, conquered monarch?
Colombia celebrates July 20, 1810 as Independence Day. It was on this day in Santa Fe de Bogota that a people’s Junta was formed that threw out the local Spanish officials to take control of local government decision-making. However, it took several more years to gain full independence via the great Liberator, Simon Bolivar.
In 1819, an army led by Simon Bolivar decisively defeated the Spanish forces at the crucial battle of Boyaca on August 7 and the bulk of the Royalist army surrendered to Bolivar. In December 1819, Bolivar made his appearance before the congress that had assembled in Angostura to proclaim a new state. While the Republica de Colombia was proclaimed in 1819, it did not come into formal being until the Congress of Cucuta in 1821. Simon Bolivar served as the President of the Republica de Colombia from 1819 to 1830.
During the chaotic period leading to independence, wealthy individuals both inside and outside of Colombia had donated money and goods to the war effort and received no compensation except promissory notes to be paid in the future. Likewise, patriots had fought in the army with a promise to be paid once independence was achieved. The joy of achieving the newly independent Republica de Colombia was tempered with the realization that debts incurred during the fight for independence had to be paid back. People who had promissory notes started to flood the new government with requests for repayment, creating a huge problem for a new country that had less money than promissory notes.
|1821 Republic de Colombia Angostura Vale, DP4194, 1,000 Pesos,
with 38 spiral loops at left (images courtesy of Danilo Parra Ariza)
Click images to enlarge.
The pictured 1821 Republica de Colombia, Angostura Vale, DP4194 is an example of the first means of payment officially issued by the fledgling Republica de Colombia. These Angostura Vales were issued in handwritten denominations of 10, 20, 50, 100, 500, 750, 1,000, 1,500 and 2,500 pesos. This DP4194 example has 38 spiral loops in the design at the left side of the document. Another similar variety exists, DP4195, that has 40 spiral loops in the design at the left. Historical records indicate that 932 Vales of the DP4194-5 types were issued for a total of 611,796 pesos.
“Vales” are paper debt obligations issued by the government that can be promptly exchanged for a specified amount of money. Vales are different from bonds in that bonds promise to repay borrowed money at a fixed rate of interest at a specified time in the future. While these Vales initially helped to mitigate the avalanche of claims by the patriot troops, the reality was that the new republic did not have the available cash to back the Vales.
Even though the Republica de Colombia borrowed money from the international markets by issuing 1822 bonds payable in Pounds Sterling, they still did not have enough funds to deal with the many individuals who held multiple promissory notes for differing amounts owing. To consolidate this debt and spread out the payments over time, the promissory notes were converted to peso-denominated bonds. The bonds from the early 1820s did not have interest coupons. As people generally preferred bonds with attached interest coupons that could be cashed individually when each was due, coupons became more commonly seen on these bonds by the 1826-dated issues.
|1826 Republica de Colombia bond, DP5025, various amounts,
distribution of national assets to military personnel,
graded PMG 40 Extremely Fine
Click image to enlarge.
The 1826 DP5025 bond pictured above is an example of a bond issued to military personnel who fought in the war for independence. These bonds compensated them for years of service to the war effort. They were issued by the Commission for the Distribution of National Assets with the objective of using “spoils of war” assets that the Spaniards left behind when fleeing territories liberated by the patriots. Interestingly, the pictured bond offers a promise to pay compensation in “Badlands” (government-owned land in more-remote, less-desirable areas acquired from former Spanish-occupied territories).
Non-military, private individuals were able to take their various promissory notes received during the war, and covert/consolidate them into bonds such as the following example.
|1827 Republica de Colombia bond, DP1756, 1,000 Pesos,
Consolidated National Debt of Colombia, 3% Interest,
graded PMG 35 Choice Very Fine
Click image to enlarge.
The above-pictured Consolidated Debt of Colombia bond was issued domestically by Law 22 of May 1826, dated 1827, with 3% interest payable. A 200 peso-denominated bond of the same type is listed as DP1752, but the 1,000 peso denomination bond recently submitted to PMG was not known/listed at the time. This 1,000 peso bond has now been assigned a reference number DP1756.
The Republica de Colombia bonds of the later 1820s record that the debt was further divided into 3 floating debt components (references to the debt types can be found in Article 1, paragraphs 1 and 2 of the law of August 29, 1827):
- National/Domestic debt (Dueda Domestica),
- International/Foreign debt (Deuda Extranjera), and
- Short-term, prompt payable debt (Deuda Pagadera)
|1829 Republica de Colombia bond, DP3140, Nicolas M. Tanco issue,
Domestic Debt, various amounts, 3% Interest,
graded PMG 40 Extremely Fine
Click image to enlarge.
Evidence of this division of debt can be seen in the pictured 1829-dated DP3140 bond from the handwritten word “domestica” found on the second line at the far right in the main body of text. This states the bond was issued for domestic debt rather than for international debt, which would have been written “extranjera” if so. These bonds are known in both “domestica” and “extranjera” varieties. Nicolas M. Tanco’s name appears prominently on this bond as he was the Minister of Treasury of the Republica de Colombia at the time this bond was issued. There were various amounts filled in by hand, with 3% interest payable.
|1828 Republica de Colombia bond, DP2085, Deuda Pagadera, short-term payable debt;
and close-up of reattached counterfoil (Images courtesy Andres Felipe Cortazar)
Click images to enlarge.
The above-pictured DP2085 Deuda Pagadera is an example of a short-term, prompt payable bond dated 1828. Fully issued Republica de Colombia bonds of this period are seen with a wavey cut at the left passing through printed text that separates the bond from the counterfoil. This wavey cut was used as a security feature so that when the bond was redeemed it could be matched to the corresponding counterfoil to help ensure the bond was not counterfeit. The second picture to the right of the bond shows a close-up image of this bond type with a reattached original counterfoil.
By the time Simon Bolivar died on December 17, 1830, Venezuela and Ecuador had seceded from Gran Colombia, leaving New Granada (Colombia and the isthmus of Panama) on its own. For those wishing to own a fascinating piece of Gran Colombian history from the first Republica de Colombia era, these bonds check all the boxes!
PMG Collector members wishing to submit bond and stock certificates for authentication and grading can do so by writing “ESB” in bold letters on the PMG submission form for bond/stock certificates valued up to $1,000 at a fee of $45 per bond/stock certificate. Unlimited value bond/stock certificates can be submitted by writing “HSB” on the form at a fee of $75 per bond/stock certificate. There are no additional oversize fees applicable if the certificates do not exceed 400 X 470 mm in size. Certificates larger than 400 X 470 mm are encapsulated on a case-by-case basis.
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