This is a tool I picked up last week; a Stanley No. 197 Fluting Tool. Jim Bode listed it as being "Very Rare" and I believed him, as I had never seen one before.
Checking out the four Stanley catalogues I have, ranging from 1897 through 1958, I couldn't find one listing for the thing. It does have "Stanley, Made in USA" stamped on the ferrel. Searching the web, the only other reference to one that I could come up with was one displayed in Bob Kaune's, "Seldom Seen Archives" page. His example has a completely different handle than this one.
Here's the rub. I have no idea how to work it.