262 The Stock Market Crash—dAnd After
the universities, was the most profitable investment
ever made. Also, the war, with its inflation and
deflation, had resulted in a stoppage in immigration.
This helped to keep wages high and organized labor
was strong enough to resist that recession of wages
which would have followed naturally upon the business
 depression of 1920-1921. The heads of industry
 decided that high wages must be continued, and
that, therefore, it was up to them to save labor
by means of labor-saving inventions.
In addition to the great impulse toward laborsaving
 inventions, owners economized on labor by
introducing industrial management as never before.
The war had pyramided industrial mergers, which by
common consent were condoned. The willing codperation
 of labor with management followed upon
the conversion of the whole country to the advantages
 of higher production per man by the aid of
science.
The studies of the relation of stock prices to
earnings during this period of great increase in
wealth and earning power of corporations, made it
clear that the old arbitrary fashion of estimating
ten times the annual earnings as a fair selling price
for common shares was inadequate. With the rapid
changes in outlook of individual businesses, the
price-earnings ratio becomes meaningless as a guide
to investment without that constant scrutiny of prospects
 which the machinery of investment counsel and
investment trusts has lately provided. Earnings
have been increasing more steeply than formerly and