Plowed-Back Earnings 71

the net earnings of 271 industrials were 27.04 per
cent higher than for the corresponding nine months
of 1928; of utilities, 17.48 per cent higher, and of
railroads, 17 per cent higher.
These earnings increased at a faster rate during
1929 than the level of stock prices. This is a prime

22C
200
75

PUBLIC UTILITIES
TELEPHONE COMPANIES
1926 =100

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5TOCK PRICFS-30



Yi,

1926

Yel

2H

1920

Cuarr 8.—Upward trend of Public Utility common shares during
latter half of 1929 reflects discounting of anticipated future profits
from mergers,

. . 2
reason for the increased price level of stocks in 1929
over 1928, and helps justify the conclusion tha
’ .
stocks were not so much too high as comm y
thought.

A comparison of the third quarter of 1929, which
included the first month of the stock market break
leading to panic, showed for 224 industrials net earnings
 15.77 per cent higher than for the third quarter