Long-term investors and those seeking safety not found these days in the stock markets have been fleeing to bonds, giving rise to speculation about a “bond bubble.” As experts weighed in on the discussion, additional aspects of the bond market surfaced as railroad operator Norfolk Southern issued bonds with a 100-year maturity date, making long Treasury bonds (30-year term) look like striplings. [After clicking on bond link, scroll down to "In the Year 2110."]
Such extra-long-lived methods of financing improvements are, of course, far from new. A group of bonds sold just a few years after the Civil War ended finally approached maturity beginning in 2009. The bonds were sold to finance a road (formerly Central Avenue and now known as Jerome Avenue) to a race track at Jerome Park (long since defunct and replaced by a reservoir), both built by Winston Churchill’s grandfather, Leonard W. Jerome.
After 135 years of dividends, paid first by the towns of Morrisania and West Farms, then by the City of New York once those towns were subsumed into the larger entity, one of the bonds matured in 2009. Of course, some of those bonds are just coming into their middle years, and will continue to pay dividends until 2147. And they’re not the oldest active bonds out there – Britain has issued “perpetual” bonds, known as consols, which are not likely ever to be redeemed, thanks to their low interest rates, and pay dividends “forever.”
First issued in 1851, consols (for “consolidated annuities“) have been popular and useful. Now the idea is being floated that the U.S. should consider issuing its own consuls, as a means of saving taxpayer money.