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 busi- 
ness depression of 1920-1921. The heads of indus- 
try 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 labor- 
saving 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 codp- 
eration of labor with management followed upon 
the conversion of the whole country to the advan- 
tages 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 pros- 
pects which the machinery of investment counsel and 
investment trusts has lately provided. Earnings 
have been increasing more steeply than formerly and