"It is assumed that the reader is familiar with some, at least, of the various conceptions of the business cycle currently discussed by economists. These are summarized, in greater detail than is necessary for our present purposes, in Mitchells "Business Cycles, The Problem and the Setting" (1927), and Kings "The Cause of Economic Fluctuations" (1938); the latter being noteworthy for its sympathetic reference to those who have found it necessary to push their search for the underlying causes of business cycles beyond the limits customarily regarded as the boundaries of the economic field."
Edgar Lawrence Smith was an economist, investment manager and author of the influential 1924 book Common Stocks as Long Term Investments, which promoted the then-surprising idea that stocks excel bonds in long-term yield.
"Labor seeking higher wages is, in part, attacking the value of the dollar; farmers seeking higher prices for their products and eager to pay off the mortgage on the farm are, in part, assailing the value of the dollar; tariff protected industries join in reducing the purchasing power of the dollar. All debtors favor a depreciating dollar."
"The Dollar to-day is a different measure from the Dollar of yesterday."
"Safety of principal," yes—that is the first essential. But what is "principal"—is it merely the obligation of some sound organization to repay a certain number of fluctuating measures of value at a future date? What if, at the date of repayment, the measure has shrunk to one-half of its present size? Has the principal been safeguarded?"
"In periods of high interest rates, such as were current in 1866, long term bonds are not freely offered, as the managements of issuing companies endeavor to protect themselves against the permanent payment of such rates."
"The economists would say that it is the upward "Secular Trend" that favors common stocks as opposed to bonds, so long as the population and the business of the country are increasing. There is something more than growth of population that contributes to the rise in the "Secular Trend" and the increase in business from decade to decade. It is the constantly accelerating speed of modern life. All of our activities are on a much more rapid basis to-day than they were twenty years ago, due in part to the constant increase in the speed of communication and transportation and the countless major and minor time-saving devices that have been introduced into our business and private life."
"All lenders of money, particularly bondholders, favor an appreciating currency. No other class is always actively in favor of an appreciating currency. In theory they all believe in sound or stable currency, but each, in his effort to widen the margin of profit that he makes in relation to profits in other lines, at times subscribes to activities which tend toward depreciation. Fortunately business men are both buyers and sellers. In buying they work for appreciating dollars, in selling they endeavor to depreciate the currency."