An Index of Industrial Stock Prices
M ONTHLY index numbers of industrial stock prices for the period 1902-2I, computed by averaging the quotations for the common and the preferred shares of twenty manufacturing companies, are presented graphically in Chart I.' The two series of common and preferred stock indices exhibit marked cyclical fluctuations. These series agree in their indication of the dates at which the important upward and downward swings began, but as might be expected, the common stock index fluctuates much more violently than does the preferred. Looking at the curves of Chart I, we see that during the year 1902 the trend of the common stock index was slightly upward, while that of the preferred stock index was practically horizontal. Early in I903 both indices began a downward movement which lasted for about ten months. There was little recovery until the middle of the following year. Beginning with July I904 a sharp upward movement took place, reaching its highest point in January i906. There then followed in succession the bear market of i906-07 and the bull market of i908-09. Stock prices again declined in i9i0 and i9ii, but did not reach nearly so low a level as they had at the end of the two preceding slumps. The period I9I2-I4 was one in which fluctuations in security prices were much less violent than during the decade preceding; there was slight recovery in I9I2, followed by moderate decline during the two following years. The most noticeable feature of the period I9I5-i8 is the divergence which took place between the movements of the common and the preferred stock indices. During the war years the increased earning power of various industrial corporations reflected itself in the quotations of the common shares, and the common stock index rose until it reached figures considerably above the average for I902-I4; the preferred stocks, except for the relatively small number whose dividend-paying records had been poor during the pre-war period, benefited very much less from the increase of profits, and their prices, on the whole, showed comparatively little change from the pre-war level. Examining in greater detail the movements of the indices through the war period, we see that the year II4 closed with prices at a low level. During the first ten months of I9I5 both series showed a decided upward trend, but weakness then developed in the common stocks, while the preferred stock index moved horizontally. This continued until September i9i6, when both indices began a rapid advance. The recovery was short-lived, however, and prices fell throughout I917. From the end of I9I7 until the signing of the armistice the indices rose steadily.
- DOI
- 10.2307/1928512
- Volume
- 3 (8)
- Pages
- 264
- Export
- BibTeX
- Sources
- openalex crossref