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 They will turn back a part of such earnings to surplus account, and invest this increasing surplus in productive operation. Such a policy successfully carried out is in fact a practical demonstration of the principle of compound interest" (p. 77).

Nevertheless, before we accept Mr. Smith's conclusion that there is a margin of advantage in favour of common stocks and shares, certain features about his tests have to be noted.

First, that they all refer to the United States, a country which has, ever since the end of its Civil War in 1865, enjoyed amazing growth and prosperity, tempered by short-lived panics and setbacks. This prosperity was due to the activity of a highly intelligent and enterprising people in opening up, with the assistance of a great stream of immigrants and of capital from the Old World, a country of enormous potential resources which at the beginning of the period had hardly begun to be tapped.

Second, that the industries whose securities have been used as tests have thus been especially favoured by the circumstances under which the population for which they catered has grown in numbers and in wealth with the assistance of foreign credit and capital, and