Shares were issued in halves, thirds, fourths, fifths, eighths, tenths, sixteenths, and most points in between.a At any given point, a company might have a half-dozen fractional shares issued and trading. This allowed smaller investors to jump on the bandwagon and make money along with their richer friends.a In addition to this, the railroad might issue shares specifically for specific routes along the railroad which would be separate from the main line.a This allowed the railroad to issue new shares at lower prices on the installment plan, and since money is fungible, use the money as they best saw fit.
Of course, most shareholders wanted to receive income on their shares in the form of dividends. After the railroad mania of the 1840s was over with, profits were lower and shares had declined in value. It became more difficult to raise money from this sector of the investing public, so some of the railroads began issuing "preferred" shares which were paid ahead of the common stocks.a In fact, it was the London and Greenwich Railway which was the first to do this, issuing a 5% preferred in April 1842.
By the time the railway mania of the 1840s was over, the result was that the outstanding securities of some railroads were a mess.a Most railroads never made it to the full u100 paid in, so the paid in value was only a portion of their par value.a In addition to that, fractional shares were outstanding, and there were the shares from extension lines of the railroad as well as shares in railroads taken over during the boom, which usually traded separately from the parent shares.
To eliminate the confusion, railroads consolidated shares once the building boom was over with.a If a u100 par share was at u20 paid, the company would do a 1:5 reverse split turning the stock into a u100 par share.a If there were half shares or quarter shares outstanding, they would do aa1:10aora1:20areverse so all the fractional shares were eliminated.a If an extension rail line was at u10 par, it would have aa1:10areverse.a Consequently, all the shares would be consolidated into a single security.