From: ph@netcom.com (Peter Hendrickson)
Date: Tue, 22 Mar 94 12:18:03 PST
To: hfinney@shell.portal.com
Subject: Re: Promise her anything...
In-Reply-To: <199403221558.HAA09454@jobe.shell.portal.com>
Message-ID: <199403222018.MAA23555@mail.netcom.com>
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One footnote to Hal's cool message:

> I imagine it is possible for a person to create a "bearer"
> promissory note, where he will pay back some loan to whomever
> presents the note.  In normal circumstances, though, no lender would
> want to lend in exchange for such a note, since the regular
> promissory note gives him more protection.  It's not clear, too, how
> enforceable such a note would be, especially if presented by someone
> not the original lender, say if the original lender contested the
> note (claiming it was stolen or such).

The IRS made bearer bonds illegal about ten years ago.  It seems
people were using them to evade income tax.  I believe they are
forbidden within the United States and U.S. citizens are forbidden to
own them at all anywhere.

Bearer bonds are still widely used in Europe.  They are liked because
they simplify payment and bookkeeping - nobody has to go through a
transfer agent to exchange them.  Problems with theft and fraud appear
to be manageable.

There was an interesting case a few years ago when somebody tried to
sell stock in the United States which was convertible to bearer bonds.
Is it legal for a U.S. citizen to hold the stock if she or he does not
convert it into a bearer bond?  I don't know what the court decided,
but the fact that the case was brought makes me think the authorities
are pretty touchy on this issue.

But, there might be some legal variant of the idea.

Peter