“Into what units is your stock divided?”
He jerked a billfold from his pocket, tapped the desk with it impressively. “Mr. Fischler, when the Foreclosed Farms Underwriters Company was established, it was an agricultural enterprise launched in the midst of a vast business depression which had for its primary object the redemption of lands which had been foreclosed in mortgage sale. Therefore, the corporation had a low capitalized stock valuation. Now that this vast new enterprise has developed, the logical thing to do would be to increase our stock capital by one thousand per cent. In other words, a share of stock which had a previous par value of one dollar should be split up into one thousand shares of stock, each of one dollar valuation. It would be readily possible to do this, but in order to accomplish it, there would be legal difficulties, a lot of red tape, incidental delays, and the making of profit for our stockholders would be delayed just that much.
“It is the policy of our directors — young vigorous men, broad-minded, aggressive, and determined — to cut away all of this red tape, to rush into production in order that our stockholders can start enjoying their profits almost immediately.”
“How much would I get for five hundred dollars?”
“You would get one share of stock. The par value would be one dollar. The actual value right today would in all probability be five thousand dollars. Within sixty days, you can doubtless sell it for ten thousand five hundred dollars. At the end of a year, that stock will be worth one hundred thousand dollars.”
I squinted my eyes thoughtfully. He knew then the time had come to close, and, good salesman that he was, he withdrew discreetly to the background so that I could let the details soak in.
“I haven’t much money now,” I said. “In about thirty days, I expect to have a lot more money.”
“In thirty days,” he said, “the stock will, of course, have increased in value, but it will still be a marvellous investment.”
“Look here,” I said, “could I buy five hundred dollars’ worth of stock, and then get an option on a large block of stock by paying another five hundred dollars?”
“I’d have to take it up with the main office,” he said. “That’s rather unusual. You can see what that would mean, Mr. Fischler. If you tied up a block of stock for only five hundred dollars, you could sell out within a week for a respectable profit. Inside of thirty days, you could probably realize twenty thousand dollars for your five hundred dollar option.”