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Comment by trgn | Hacker News Reader

Where is the in perpetuity language in the bond terms? Doesnt it say until full repayment?

> [I also declare] to have awarded and given 75 Carolus guilders of twenty stivers apiece per year as heritable annuity, to be paid one half of the annuity aforesaid on the 9 th of June 1625 and the other half the 9th of December following and so on every six months until repayment with all payments entirely free of all taxes, impositions or burdens of whatever name or title none excepted.

It is confusingly written, but what it means by repayment in the above paragraph is not "until you get your 1200 guilders back in these 75-guilder installments", its meaning is clarified by the next paragraph,

> On such conditions that I or my successors [unreadable] of the aforesaid Leckendijck may, at any time when it pleases us, extinguish, repay, and buy back the said annuity in full at once and not in parts or fractions with the sum of one thousand two hundred Carolus guilders

which explains how the board can get itself out of this obligation: by paying the original principal of 1200 guilders back.

Thank you!

Curious why the board never paid back the original principal at any point in time over the past 400 years?

If the current annual interest of 2.5% cited in the article is €13.61, that would make 1200 guilders €544.40.

Did they just forget to? Did they figure the bond would eventually disappear? Or did they at some point think it was really cool to have a piece of "living history" and want to keep the world record alive for oldest active bond? If so... when?

It's such a low amount it's barely a blip on the budget of the successor issuer and by the time it was rediscovered in modern times it was enough of a historical novelty it was more interesting to keep it than to cancel it. Most of these bonds go years without being collected on.

A similar one owned by Yale can be viewed online [0]. It was issued in 1648, and it seems to have a fairly continuous payment history since then. There are gaps of a few decades, but nothing too extreme.

[0]: https://collections.library.yale.edu/catalog/2008714

How is the exchange rate between modern money and "carolus guilders" calculated?

Something like a foreign exchange market cannot help determine this right?

In theory, could the exchange rate for $1 be made equal to 1,200 carolus guilders? (Effectively, making the bonds worthless)

There's a pretty continuous line between the carolus guilder and the euro. For example, the modern-day (2002) guilder was fixed at an exchange rate of 2.2 GLD = 1 EUR. Previous coins also had a more-or-less fixed ratio, aided by the value of the gold and/or silver they were made out of.

If you want to treat it like a completely separate coin, you'd have to buy historical carolus guilders in auctions. They seem to be worth about €1500 [0], although the same amount of gold can be bought for only €240.

[0]: https://www.ma-shops.nl/henzen/item.php?id=77815

It would be done stepwise.

When the Dutch florin was introduced there would have been an agreed (or imposed) exchange rate. Looks like that was 1:1.

Later when the Euro was adopted there was an exchange rate for that too.

To get to USD use the floating exchange rate of the open market.

I guess conversely, if you had a bond dominated in say Francs and the currency goes away do you just default?

Currencies rarely "go away". They are usually replaced by new ones, and the government will buy the old currency and pay you in new currency. Imagine the mayhem if a government decided that all money everyone owned would suddenly be completely worthless!

In 2016 India demonetized some bank notes (true, not the whole currency)

https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...

So if their available interest rates had ever dropped below 6.25% then the issuers should have bought it back?

Thanks, yes, very helpful!

Yes, but they never repaid it. They have just been paying out the interest.

ah thanks, I think I get it now.

"heritable annuity" is the perpetual interest. "until repayment" threw me off.

75/1200 = 6.25% though.

Where does the 2.5% interest rate quoted in the article come from?

Not sure. From other comments, it sounds like that's an adjustment that they made later.

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