This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
In view of what has just been said concerning the issuance of watered shares, it is clear that there is no necessary or even close relationship between the par value and the market value of the shares of many corporations. A glance at the daily list of sales on any stock exchange will substantiate this statement. In order to avoid all question in regard to overcapitalization and undercapitalization and concerning the value of property acquired in exchange for shares, a considerable number of corporations have adopted the plan of issuing shares without par value. The company makes no claim, either expressed or implied, as to the value of the assets. Its balance sheet shows, instead of capital stock and surplus, simply the value of the equity which is divisible among the shareholders. Anyone interested, if he knows the number of shares outstanding, may figure for himself the book value of each share. This method furnishes probably the simplest and most satisfactory means of handling the whole question of capitalization and of valuation of property and services. Among the corporations which have adopted this system are the following: the Submarine Boat Corporation, which was chartered in New York in August, 1915, with 800,000 shares of no stated par value; the Kennecott Copper Company, which is understood to be a Guggenheim enterprise; the Adams Express Company; the Amoskeag Manufacturing Company; and Montgomery, Ward and Company.