84 The Stock Market Crash—dAnd After 
tion, increase more than 2§ per cent this year as 
compared with 1928. Stock prices, therefore, were 
rising three times more rapidly than earnings. The 
future was being mortgaged further and further 
ahead. There was no statistical precedent by which 
to judge to what degree prices were entitled to out- 
run earnings, but when stock quotations get to step- 
ping thrice as high and handsomely as the intrinsic 
values behind them, it should be time for careful 
people to stop, look, and listen.” 
It was apparently during this three-month period 
prior to the break’ that speculation became feverish 
and unhealthy and stock prices mounted to a danger- 
ous peak. It remains, however, that for the first 
nine months of 1929 the Standard Statistics compu- 
tations show that prices of industrial stocks, in their 
relation to total earnings, distributed and undis- 
tributed, averaged lower during 1929, up to the panic 
of October and November, than during all of 1928. 
{See Chart 10.) 
Had there been inflation in the stock price level 
from the standpoint of earnings due to fundamentally 
unsound conditions of business and earnings during 
1929, it would presumably be reflected in a higher 
and not a lower ratio of stock prices to earnings. 
Instead, earnings of stocks on the average went up 
during 1929 slightly faster than prices on the New 
York Stock Exchange. 
It is nevertheless true that the averages fail to 
give a complete picture. A correspondent notes that 
the “actual danger lay in an excessive inflation of the