§7. Effects on Investment

Because of these inventions, introducing economies which revolutionized industry, common stocks on the American exchanges have advanced in 1928 and 1929, so that the dividend yields of dividend paying stocks were lower than the interest yields of high grade bonds. As an example of the eagerness of the investing public to finance newly-evolving industries, the Daniel Guggenheim Fund for the Promotion of Aeronautics announced that it was no longer necessary to grant equipment loans to air-transport companies, because, it stated, the "investment public is now ready to supply the capital for enterprises of this kind." By the close of the third decade of the twentieth century America had already shot ahead of Europe in commercial aviation, and was Edition: current; Page: [353] operating more than eighteen thousand miles of airways, of which eight thousand miles were lighted for night travel. The New York Trust Company in its reports took note that airplane production for 1928 was about five times that of 1927, and that demand for almost every type of aviation market was rapidly expanding.

Among investors there was knowledge that many of the inventions and discoveries made by the agencies of research would quickly find practical use. With the certainty that epoch-making inventions and methods of higher organization were being applied in the arts, opportunities to invest were multiplied, and thousands of new investors increased the transactions of the stock exchanges.

This varied and exciting chapter in modern industrial expansion is summed up by the Hoover Committee on Recent Economic Changes in its review (p. 844):

"By no means all the increase in efficiency took the form of a net gain in current livelihood. To use the technique founded on science, men had to build machines, factories, railways, roads, warehouses and sewers. In developing new resources, they had to dig mines; to break the prairies and fence the farms; to make homes in strange habitats. And this work of re-equipping themselves for making consumers' goods was never done. Every discovery put to use on a commercial scale meant a new equipment job, often of great extent. But after all this work on the means of production was done, there remained an even larger flow of the things men eat and wear, house and amuse themselves with.

"The net gain in ability to provide for their desires brought men the possibility of raising their standard of consumption, of reducing their hours of work, of giving their children more education, of increasing their numbers. They took a slice of each of these goods, rather than all of one. They worked somewhat less hard as the decades went by; they raised their standards of consumption appreciably; they established compulsory education and reduced illiteracy; they added to the population...."

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