Just watched Die Hard and in the film the excellent antagonist Hans Gruber is trying to steal over $600 million in German bearer bonds from the Nakatomi corporation. It occurred to me that I have no idea what they are or why a company would have them.
In: 117
Alice’s company Megacorp Inc. needs money. One of the ways that Alice can raise money is to sell an IOU. The IOU is basically a piece of paper that says “Megacorp Inc. will pay you $1 million on May 9, 2025.” Alice then organizes an auction where this piece of paper is sold. It’s bought by some investor Bob.
These IOU’s are called “bonds.” They are an extremely common way for large companies and governments to borrow money.
In modern times, usually Alice records the identity and contact information for either Bob, or Bob’s stockbroker, so she knows who to pay when the time comes. The piece of paper itself is basically irrelevant. (Well okay, in theory, Bob might need to use the piece of paper to prove he’s entitled to be paid in some bizarre case where something goes wrong and Megacorp Inc. forgets it’s supposed to pay Bob, but in practice large companies are rarely that lax about their financial record keeping.)
In older times, instead of maintaining records of the borrowers, some companies would ask you to turn in the piece of paper to get paid. That is, the payment goes to the *bearer* — the person who bears (physically holds) the piece of paper (the bond).
Essentially the above listed piece of paper was worth $1 million — anyone who physically possessed it could show up at the company office on May 9, 2025 and walk out with $1 million in cash.
It seems absurd today, but a few things to keep in mind about the past:
– Verifying someone’s identity used to be a hard problem. The vast majority of the adult population having a government issued photo ID is a fairly recent phenomenon.
– Movement of money used to be much less intensely regulated.
– Printing equipment used to be rare and expensive, copying equipment didn’t exist or had limited capabilities, and anti-counterfeiting measures were cheap and effective.
According to Wikipedia [here](https://en.wikipedia.org/wiki/Bearer_bond), in the US new bearer bonds have been illegal since the 1980’s, but bearer bonds that were issued before the law changed can still be redeemed (provided the company that issued them still exists).
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