Flight From Bonds to Stocks 217 
Conversely, funded indebtedness is absent, or the 
restriction of such indebtedness as compared with 
total paid-in capital, so that bondholders and share- 
holders are both protected. Also, there has been 
comparatively little borrowing of banks, the invest- 
ment trusts, Mr. Robinson says, “having only in 
exceptional cases exceeded the limits of prudence in 
the use of short-term credits.” He finds that many 
leading funds and companies were in reasonably 
liquid position at the time the most serious price de- 
clines started. Many had been strongly fortified 
late in October by a relatively high proportion of 
call loans and cash items. 
Of the public financing to a total of $2,440,000, 
000, reported by the Commercial and Financial 
Chronicle for “investment trusts and trading and 
holding companies” during the first ten months of 
1929, it is stated that over 9§ per cent was in stocks. 
Mr. Robinson observes that the greater part of all 
this capital was ‘“‘obviously raised for finance, trad- 
ing, and holding companies, rather than for invest- 
ment trusts.” For this reason he warns against the 
easy habit of lumping together such radically differ- 
ent companies, funds, and common law trusts. When 
they are properly defined, it will be found that in- 
vestment trusts proper weathered the panic in much 
better condition than the speculative pools and indi- 
vidual operators, chiefly through their steady reliance 
upon the principle of diversification and skilled scru- 
tiny in making and changing their investments.