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The Hopeful Outlook 263 
have been discounted further and further into the 
future. The consequence is that the average justi- 
fiable price-earnings ratio has risen. For the reasons 
enumerated in this book it will hardly return to the 
old level so long as there is still a prospect of rapid 
future increases in earnings. 
But even so, in most of the comparisons of 1929 
with 1928 as to the average price-earnings ratios, 
there is seen a decline in those ratios preceding the 
stock market panic. This indicates that, with the 
exception of two or three months immediately pre- 
ceding the panic, the market was not much, if any, 
overinflated. 
Panic Might Have Been Avoided 
Had there been no such piling up of margin 
accounts as the totals of brokers’ loans revealed, 
incidental in some degree to the issuance of nearly 
eight and one-half billions worth of new securities 
during the first nine months of 1929, there would 
probably have been no panic. 
Or, had there been no Hatry failure, which pre- 
cipitated a panic and consequent fall in prices on the 
London Stock Exchange to a deeper bottom than 
on the New York Stock Exchange, thus occasioning 
the immense withdrawals of funds of British holders 
from the American stock market, it is quite arguable 
that there would have been no American panic. The 
increase in the brokers’ loan account during the 
early stages of the American crash gave some meas- 
ure of the selling by British holders, with the con-