CHAPTER V 
PLOWED-BACK EARNINGS 
THE increase both in dividend payments and in 
plowed-back earnings during 1929 over 1928, was 
not only a primal cause of the new plateau of stock 
prices, but gave promise of continuing prosperity to 
business for 1930. This increase should minimize 
the effects of the panic, which was largely restricted 
to the stock market. 
When earnings are turned back into a business 
it is in order to increase the rate of profits according 
to the same method by which interest is compounded 
on savings. There has always been a plowing-back 
of earnings, but it has been especially done in the last 
few years. 
In measuring the average annual rate of change 
in the economic movements in the United States from 
1922 to 1927, inclusive, President Hoover's Com- 
mittee on Recent Economic Changes shows that the 
rate of profits, or earnings, for industrial corpora- 
tions has increased by 9 per cent yearly, and the 
rate of dividend payments for industrial and miscel- 
lancous corporations has increased yearly by 6.8 per 
zent. 
These figures imply that the increase in the average