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The Hopeful Outlook 263
have been discounted further and further into the
future. The consequence is that the average justifiable
 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 preceding
 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 precipitated
 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 measure
 of the selling by British holders, with the con-