Some of the Union securities were bearer instruments: the holder received any principal or interest due by surrendering the instrument to the Treasury or its paying agent. Others were coupon bonds: the holder received interest payments by clipping off and remitting part of the bond, called the coupon, when due. Still others were registered: the bond owner’s name was tracked in account books and interest credited when due. Bearer securities were the most liquid (easily traded) while registered debt was the most secure (safe from theft or loss).
Seven-Thirties were notes that matured (principal had to be repaid) in three years. They were so named because they paid investors 7.30% interest per year, or 2 cents per day per $100 invested.
Five-Twenties were bonds so named because they matured in 20 years but were redeemable (the government retained an option to repay the principal if it saw fit) after only five years. They paid 6% interest.
Certificates of Indebtedness were bonds bearing 6% interest paid to satisfy audited accounts due to Union contractors. They matured in one year but were immediately redeemable by the government. Almost $562 million were issued during the conflict.
Ten-Forties were bonds so named because they matured in 40 years but were redeemable at the option of the government after 10 years. Some paid 6 and others 5% annual interest.
Compound Interest Notes were legal tender notes issued in denominations ranging from $10 to $1,000. They were designed to circulate as currency but seldom did so because they paid 6% interest. Almost $249 million were issued during the war.
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