J K Galbraith on investment trusts

The most notable piece of speculative architecture of the late twenties, and the one by which, more than any other device, the public demand for common stock was satisfied, was the investment trust or company. The investment trust did not promote new enterprises or enlarge old ones. Even in the United States in the twenties, there were limits to the amount of real capital which existing enterprises could use or new ones could be created to employ. The virtue of the investment trust was that it brought about an almost complete divorce of the volume of corporate securities outstanding from the volume of corporate assets in existence. The former could be twice, thrice or any multiple of the latter. The volume of underwriting business ad of securities available for trading on the exchanges all expanded accordingly.