The Washington times., 1929-07-13
GREW
FROM CHANGE
BY MERRYLE STANLEY
RUKEYSER
Copyright 1879, by Universal
G~.1aaA EnaS

Service, Ine.)
A practical banking motive be-
hind the epidemic Of corporate
mergers in the United States in
recent months has been a rec
ognition Of changing fashions in
investments.
The investor, tinaid concerning
the uncertain economic changes
which the future is likely to bring,
seeks a haven OF safety for his
capital with hopes Of apprecia-
ton also) in the shares OF the
largest and best.managed COM
panies. There is a vast thirst for
shares In billion-dollar corpora
tions.
In specific terms, the investor
would rather buy stocks in out
standing corporations at IL times
earnings than shares in smaller
units at nine times earnings. This
attitude on the part Of investors
makes 1t attractive for a large
and successful holding company to
absorb new units on a more favor
able price earnings ratio than it's
own shares sell for on the stock
exchange.
Julius H. Barnes, American
vice president Of the international
Chamber OF Commerce and conf.
dante Of President Hoover, in q
speech before the International
Chamber at Amsterdam, yestec.
day, sought to give the formula
for American prosperity. He de-
clared:
There is today on the part OF
both employers and employees q
growing appreciation Of . certain
fundamental philosophy Of indus.
try which runs something In this
order:
'Large-scaIe output can be mar
keted only on widespread buying
power. A
widespread buying power rests
on continuous employment anil
adequate wage scales and earn.
ings;
leisure must be maintained by
high individual production per
worker.
High production per worker IL
secured only through machine and
power equipping Of the worker"
In suggesting the practical APP
plications Of this formula. Barnes
said:
iaThis means that resourceful
and progressive industry must be
prepared 20 invest IN buildings
and equipments large capital
sums. It must be prepared for
such revolutionary inyentiOn In
their particular line Of industry
az to render perhaps such invest.
ments ValueIess, and neceesltato Q
new Investment again Of large
ment, This has developed strik-
ingIy In the last few years. The
closed automobile and the equally
heated home, plus the shifting
Of wOmen's taste In wear to silk
instead Of wool, almost destroyed
q great wool industry. Cotton
felt severely the change Of wO.
mems style and the rise 20 silk
standards instead Of cotton, but
another shift In wOmen'S taste
may rebuild the great industry.
silk is battling for popular favor
with rayOn, the product Of the re.
search laboratory.
''The point Is that. throughout
all industry there must be win.
ingness to venture great capital
Investment such as was never
necessary before this machine and
power era Of the past few years.
Capital Is properly timid, unless
there ID assurance Of q fair field
and the stimulant Of reasonably
expected profits. Capital ID mt
Iifeless thing, but an agency df.
rected In the last analysis by
the individual. and that indivi.
dual, by observation and iudg.
meDt, made either fearless or
timid."
Barnes undertook to use the
American experience as an argu-
ment in favor Of private versus
Government ownsrship OF bus.
inNaa.