102 The Stock Market Crash—dAnd After 
the stock price level during the long bull market. 
In the public utilities field, especially, mergers are 
responsible for the increase of stock prices to some- 
thing like 26 times earnings up to the market crash 
in October, while the crash itself brought down the 
price-earnings ratio to 16 to 1 during November— 
as against only 1324 to 1 for the average of the 
whole market during the first nine months of 1929. 
Records of Merger Earnings 
Today mergers are generally regarded as inevi- 
table, because they make for lower production costs. 
It is true that the reverse is sometimes the case, as 
the listed securities on the New York Stock Exchange 
have shown for many years. In fact, between 1922 
and 1923, the Federal Trade Commission’s exami- 
nation of costs and earnings in sixteen industries 
showed that the largest mergers were not so profit- 
able as the concerns with investment of between 
$500,000 and $1,000,000. Of companies en- 
gaged in crude petroleum production the invest- 
ment group recording over $25,000,000 capital had 
slightly smaller profits than companies averaging 
from $5,000,000 to $25,000,000; whereas in the 
petroleum refining group the companies averaging 
$100,000,000 and over showed the same percentage 
of return on capital investment as those under 
$1,000,000. These data, the Committee on Recent 
Economic Changes says, are by no means conclusive 
for industry as a whole. It notes as “highly sig- 
nificant” that in eight out of nine large production