Why is Yahoo finance's historical prices so high. For example, IBM's prices in the 70s are in the $300 range. I know that there are some errors in this data, but this a trend in many of their charts. What is this price reflect? I'm sure it's not the market price in 70s dollars. Is this also an error in data before they started collecting it or does it take into account of splits or something else?
Prices (and potentially volumes) have been adjusted for historical corporate actions. For example, if there was a 10:1 split in the past, then todays share is equivalent to 1/10th of a share before the split. This is the correct way to view price/volume time series.
Here it seems that corporate adjustments before a point were not applied. When you look at the IBM splits, you can see that the split in '66, '68, '73 and '79 have not been applied in Yahoo finance. http://www.ibm.com/investor/pdf/ibm_ir_stock_splits_2008.pdf