106 The Stock Market Crash—dAnd After
But it should be borne in mind that the economies
from mergers take time to develop, while the effect
on the stock market of their formation is instant.
Sometimes, when from twelve to eighteen months
elapse before economies are reflected in added divi-
dends, the ratio of prices of merger stocks to earn-
ings may seem to rise unduly. Yet an eventual con-
tinuous bettering of earnings may justify the higher
prices.
This, with its resultant economies of large-scale
production, accounts in large measure for the great
appreciation of security values during the last few
years. During the Roosevelt and Wilson régimes
there was an organized effort at “trust busting”;
it was the popular sport of politicians, but in these
days under Coolidge and Hoover, governmental
authorities have gone the limit to stretch the Sherman
Act and the Clayton Act in order to aid the move.
ment for business efficiency, because so many now
believe the interests of the people of the United
States require big business. True, there are still
prosecutions under the anti-trust laws, but they are
fewer and not trumpeted for political effect. While
we avoid the word “trust” today, we do have the
same result through “mergers”; these have not
fallen heir to the unpopularity of the trusts, but are
recognized as a means of economy.
In fact, amendments have been from time to time
offered considerably modifying the Sherman Anti
Trust Act, the Clayton Act and other anti-trust
laws. In the last administration President Coolidge