Before the 1920s, it was not a common experience for America’s affluent class to own any stocks at all in their portfolio, unless they had a hand in creating the company, working for it, or a close association with it (e.g. you’ve been living in St. Louis since the 1890s, and Anheuser-Busch is the largest profitable enterprise in the city, so you might own that).
In a way, corporate bonds were regarded in the same way that long-term investors think about purchasing stocks today; an act of total ownership. If you purchased a General Mills bond in 1905 that was secured by a mortgage on the flour mill, you felt pretty secure. If Americans stopped eating cereals and using flour, you’d get a big chunk of your investment back when the factory got auctioned off. Talking about a portfolio of common stocks would have made you persona non grata in … Read the rest of this article!