90 The Stock Market Crash—And After
ing the panic, it would seem that the level of stock
prices was constantly at a slower rate of increase
than the rate of earnings of corporations. As compared
 with 1928, this ratio had been reduced by
careful selection of stocks in the market until the
panic brought the entire level of stocks down to a
point comparable with the old ten-to-one ratio that
prevailed prior to the period of increased “tempo”
in business, so thoroughly described in the report on
Recent Economic Changes.
That is too low a ratio of stock prices to earnings.
 The old static conditions of industry and trade
have given way. We are in a dynamic world, where
the old conception of any fixed ratio of earnings to
prices of stocks as a proper ratio must yield to the
demands of shifting scales of industrial effort.
THe price-earnings ratio of bonded securities, of
course, is relatively fixed for the life of each particular
 bond. For bonds the term “yield” is
synonymous with earnings, while for stocks it is not.
Bond yields, the reciprocal of the price-to-cashearnings
 ratio, during 1929 ranged from 3.4 per
cent for Liberty Bonds and 4.3 per cent for municipals,
 to 4.7 and 4.9 per cent for rails and utility
bonds respectively. For industrial bonds it was s.1
per cent. The price earnings ratio for Liberty
Bonds, for example, was 33 to 1. Leonard Ayres
reports that during the twenty-eight years from
1900 through 1927, the market prices of dividend
paying industrial common stocks averaged about
sixteen times as much as their dollar dividends; that
during the same period the prices of a list of high-