In 1925, Emory Gearhart put together this sheet detailing the profit which could be made with the Gearhart Knitting Machine. This is his working copy of the sheet; his markup is shown for one of the items. In this sheet, he is comparing four types of investments:
- A savings account earning $2.01 (3%) per year.
- A preferred stock or bond earning $4.02 (6%) per year.
- A minimally used Gearhart machine earning $22.50 per year.
- An actively used Gearhart machine earnng $153.98 per year.
The Gearhart Knitting Machine calculations are accurate based on the times, since he would have taken his $153.98 figure from the input of the Home Earners. At this time, in 1925, the company would have been in full swing, with warehouses of socks arriving and thousands of machines going out the door. Therefore, the company probably had a pretty good number of Home Earners making at least $153.98 per year profit. In today’s dollars, this translates to approximately $1539 per year from an initial investment of appoximately $600 (today’s dollars also) for a machine.
The financial market rates seems somewhat conservative to me though. This was four years before the stock market crash of 1929, so the economy was moving along pretty well. I think he should have said that bonds were getting 6%, and DJIA earnings were around 15%. At least that’s what I see as I look over the DJIA graphs for the last 100 years. Regardless, the Gearhart Knitting Machine, when purchased and used as a home business, did very well compared to the financial market investments. This was especially true at a time when most of America was still rural, and no doubt suspicious about the ways of Wall Street. Hmmm… I’m still suspicious 84 years later.