The Psychology of Speculation by Henry Howard Harper

A matter of present and future importance in connection with many / investment and speculative stocks, involving as it does questions on / which there is a wide diversity of opinion, is the modern practice of / increasing the outstanding shares of corporations by splitting them up / into fractions, or by declaring liberal stock dividends. Many of the / large companies have recently doubled and quadrupled their shares, and / some have issued as high as nine new shares for one, on somewhat the / same principle as the Government will issue ten one dollar notes in / exchange for a ten dollar bill. And in several instances the fractional / shares have been split a second, and even a third time. In past years / when there were only a few listed securities it was possible for any / well informed person in financial circles to tell the par value and / the approximate book value of all the leading stocks, but the good / old-fashioned methods are no longer in vogue; there are now 1,045 / stocks listed on the New York Stock Exchange alone, representing almost / every imaginable industry, from steam locomotives to lunch counters, / and under the new capital readjustment process it takes a professional / statistician to keep up with the changes and determine what stocks are / actually worth. But whatever their value may be, it is at least certain / that there is not enough money in the world to cash them all in at / anywhere near their present market price. Nowadays it is not unusual / for industrial companies to have from five to ten million or more / shares outstanding.

The lately devised and much over-worked practice of / splitting stocks up into small fractions, avowedly for the convenience / of traders, savors strongly of the old worn-out custom of "baiting" the / public with low-priced issues, ranging from $1 a share upward. As long / as we are riding on the crest of the wave of prosperity there appears / to be no imminent danger in such inflation, but when business slackens, / as it always has periodically in the past -- -- However, the optimists / contend that these problems are too far in the future to worry about. / Furthermore it is not the design of this article to criticise abuses, / or to prognosticate future difficulties that seem likely to grow out / of them.