A recent survey has shown that every person in the United States now spends $1,000 annually just to cover costs of educating children and teen-agers. And American industry spends more than three times this amount to meet the challenges of tomorrow.

Education has indeed become the country's biggest industry— bigger even than any of the industries which function primarily to feed, clothe and house us.

Two fields have benefited most from this boom in education; book publishing and programmed learning. Let's examine publishing first.

"It comes as rather a shock," remarked Bennett Cerf, president of Random House, "suddenly to find Wall Street tycoons embracing us and waving certified checks in our faces." And Mr. Cerf was speaking for the whole industry.

For years Wall Street regarded the publishing business with skepticism. For years its profit margin had been in decline, generally lower than the average manufacturing operation. For years the plight of publishers had been so well publicized that the industry was among the last things associated with the word "growth."

What has brought about Wall Street's about-face toward publishing issues as a means of investment? Maybe the Sputniks had something to do with it. It seemed as though reading-weary Americans suddenly awoke, in the twilight of the Russian satellites, to the grim reality that they no longer held a monopoly of the modern sciences and technologies. Perhaps they had been too preoccupied with TV, bowling, boating and motoring to catch up with books. Maybe books should have more share in their ever-increasing leisure time.

Maybe even Charles Van Doren had something to do with the sudden outburst of interest in reading. As an actor, Van Doren was certainly superb in his lonely booth. Perhaps he had actually done a service of lasting value to America by the excitement he had aroused in thousands upon thousands of American homes. Perhaps, after all, bookworms were not as remote from money as Americans once had thought they were. And, as more and more girls wrote to Van Doren, exploring the possibility of marriage, it seemed as if Americans were finding truth in an old Chinese saying, "Only in books can you find things as yellow as gold and as ivory as the complexion of a beautiful woman."

But neither the Sputniks nor Van Doren were more than passing influences in making Americans read more books. The real underlying force can be found in the tremendous increase in school enrollment—the most serious result of today's population explosion.

In 1959 elementary and high school enrollment totaled 41 million. This sum is expected to approach 48.5 million by 1965. During the same period, college enrollment is expected to rise from 3.4 million to 5.2 million. Based on this enrollment projection, the growth prospects of the textbook industry are fairly clearly defined. In 1960, textbook sales shot up to $351 million from 1959's $325 million. By 1966, sales of elementary school, high school and college books are expected to rise 60, 80 and 170 per cent, respectively.

The school market has also gotten a big booster from the 1958 National Defense Education Act which provided some $300 million in federal funds (on a matching basis) to schools for science, language and mathematics instruction.
 
The language laboratory, for example, is now a status symbol of the American high school. "If you haven't got a language lab," quipped one leading educator, "you're just not fighting the Russians."

As investors, we are, of course, most concerned about the problem of how to compare values in various publishing issues. The method used by Joan Leibo of Bache & Co. in comparing twelve major textbook publishers should serve not only as a statistical background for investors interested in publishing stocks, but also as an excellent model for value measurement of securities in other industries.

Bache analysts are well known for their research studies based on what they term "comparative values." These criteria seem particularly appropriate at a time when too many investors fail to realize that it is value, not glamour, which should be the ultimate determinant of securities values.

In her April 1961 study of twelve publishing stocks, Miss Leibo showed statistically the earnings per share record since 1955, the current price-earnings ratio, the anticipated 1965 earnings figure calculated under the most optimistic of growth rate projections, and the ratio of current price to 1965 earnings, as well as the multiple on current earnings. In this way she attempted to compare the projected growth rates of the various companies to the average of the group, compare their price-earnings ratios to the average, and thus determine which stocks are the cheapest within the group and which are the most overvalued.

Miss Leibo used Ginn & Co. and Allyn & Bacon as examples in explaining her method of value calculations. According to her statistics, Ginn & Co. looked forward to a 10 per cent growth rate and, quoted at $36 per share on April 20, 1961, sold at 21.8 times 1965 earnings. On the other hand, Allyn & Bacon was expected to grow at 35 per cent annually and, quoted at the then price of $37, sold for 14.8 times 1965 earnings. In other words, Ginn & Co. should grow about two-thirds as fast as the industry, but the shares sell currently at 112 per cent of the average price times 1965 earnings of the group. On the other hand, Allyn Sc Bacon should grow more than twice as fast as the industry and the shares sell at 79 per cent of the average price/1965 earnings.

Using the same method, we could compare other stocks in the publishing or any other industries.

As our schools become more and more crowded, the teacher shortage becomes more and more acute. Today, for instance, the average child gets no more than five minutes of individual attention during the schoolday.

This dangerous shortage has brought about a brand new industry—the teaching machine, or programmed learning.

The teaching machine had its roots in studies undertaken by experimental psychologists more than thirty years ago, principally by Pavlov and Skinner.

The Skinner method is based on repetition and rote learning; the Crowder method relies on the reasoned answer, backed up by remedial explanation in areas where the student shows weakness. Both methods use machines which provide questions and answers, The student learns from the machine at the rate of his own capacity, and without the necessity of the physical presence of an instructor.

Grolier, Inc., was the first publishing company to exploit this new concept in teaching with the introduction late in 1960 of its MIN/MAXf teaching machine which is based on the Skinner, fragment-learning method. The machine and its self-tutoring courses are produced and marketed under an agreement between Grolier and Teaching Machines, Inc.

MIN/MAX is designed for home study as well as for school and business use. Courses in Russian, Hebrew, statistics, fundamentals of music, spelling, algebra are available for additional charges of $5 to $15 ($15 for 500-page program; $7.50 for 200-page program; and $5 for 100-page program). The machine itself is priced at $20. It looks like a small typewriter, with an extra viewing glass available for $1.49. Programmed textbooks are avail-able in 82 x 11 inch machine format in primary and secondary level courses, and later in college courses.

The practicability of programmed learning is based on the requirement that, in the words of the A. M. Kidder analysts, text material should be broken down into very small, easily absorbed segments, and that the method of presentation should allow immediate questioning and correction after each segment to ensure full mastery before allowing the learner to proceed to the next part of the program.

Since under all methods the program consists of a large number of clearly separated steps, it yields itself ideally to mechanical presentation.

Some of the most efficient ways of presenting a programmed course are offered by mechanical aids, ranging from the simplest, plastic masking devices (which, like a sheet of paper, can be used to cover the correct answer until the student has had a chance to make his choice) to the most complicated machines. "For economic reasons," say A. M. Kidder analysts, "the numerically largest school market will probably be best for mass-marketed texts and relatively simple, low cost devices, whereas industrial and government needs may be served better by more complicated, often tailor-designed books and machines, not only for personnel training, but also for extensive functional services."

The advantages of automated teaching are obvious. In addition to eliminating the need for teachers, it creates motivation to learn, resulting from the continued understanding built into the program. A student can progress to his own particular absorbing rate without fear of being either held back or prematurely pushed ahead. He can have his learning so self-paced that he can proceed as slowly or as rapidly as ability permits. In actual comparative experiments, programmed teaching with machines enabled students to complete a course in much shorter time and absorb and retain material more effectively.

While this industry of programmed teaching is only in its formative stage, significant sales and profits should not be too long in coming. Growing profits will come from sales of teaching machines, and, perhaps more important, from program copyrights and royalties.

The early entries in the field have come from companies engaged in electronics, films and projectors, publishing, information technology, technical writing, etc., fields. None of them derives any substantial sales and profits from its participation as yet.

A new entry called Renner, Inc., expects to have 25 to 30 per cent of its 1961 sales contributed by its newly introduced teaching device called Trainer-Tester which is a nonmechanical device which, according to Science and Electronics Investment Letter (June 9, 1961), enables the teacher and student to work together in determining an answer. This is thought possible because this device can be continually fed and has an easy erasure correcting method.

Actually teaching machines are only part of what Mr. Morton Globus, president of Globus, Inc., called "tomorrow's teaching methods" in his survey on education as America's largest industry.

Mr. Globus gave us a "brief glimpse" into "sheer fascination" of automated education. "Already," he says, "a fairly lengthy lexicon is being assembled by specialists in educational automation. Some of the key categories are closed-circuit TV, tape-recorded lectures and language laboratories (Magnetic Recording Industries, Inc., and American Seating Company), teaching machines (Western Design Division of U.S. Industries, Inc.), and electronic classrooms and demonstrators (Television Electronics, Inc.)."

Mr. Globus believes in the "incredible mass uses" to which the "new wealth of electronic hardware and equipage will soon be put." On the other hand, many revolutionary ideas being generated, in his words, "set the stage for profound innovations and radical changes in the age-old techniques still being used in the teaching field. Organized learning is now destined to become infinitely more enjoyable than contemporary TV entertainment and at the same time more fantastically effective than any systematized technique in history.

Are You Ready To Move Onto The Next Lesson? Click Here...