Changed Ratio of Prices to Earnings 91 
grade rail bonds averaged about twenty-two times 
as much as their dollar yield. Relationship between 
the yields was that of eleven to eight. 
But unlike the fixed relation of bond prices to 
bond yields, the price-earnings ratio for stock 
should reflect not only current earnings but expected 
earnings. That is why the price-earnings ratios 
should not be fixed to any standard, but wholly with 
reference to expected earnings of different stocks. 
At the average price-earnings ratio of ten to one, 
which prevailed after the panic, however, it should 
be noted that while the stock exchange had endured 
the severest break in history, this did not suffice to 
shake the price level of stocks off a warrantably new 
high plateau which had been built up since 1922. 
Within a month the market rebounded to a level 21 
per cent higher than the low of November 13th— 
and that low was 30 per cent higher than the 1926 
level of stock prices. 
A potent reason for the post-panic rebound of 
1929 is found in the record of dividend payments 
and of corporation earnings for the first nine months 
of 1929. This, as reported by the New York Times, 
spelled a gain in real income and sound conditions 
of business that was reflected in cash dividends 
amounting to $3,122,000,000 during the first three 
Quarters of 1929, as against $2,395,000,000 during 
the like period of 1928. Cash dividends aggregated 
more than $399,000,000 during September, 1929, 
as contrasted with $278,000,000 during September, 
1928, 
Moreover, greatly as cash dividends increased