But at the same time ,a fund of knowledge has been accumulated, and new departments of professional skill have been developed embracing men who are taking their places alongside the original professions of law, medicine and theology. If the investor should appeal directly to this knowledge and this body of professional experts for protection, his situa tion would be as pictured in Figure 9.
Only the greatest individual and corporate in vestors, such as life insurance companies and large banks, can afford to pay the consultation fees and the expenses of special investigation which such a direct relation would involve. This professional skill has therefore been organized, for the use of the general investing public, into the form of the consultive and permanent staffs of the leading bond houses. Thru such an organization, investors are able to concentrate their patronage in a manner which makes the cost of adequate protection very moderate. This situation may be pictured as in Figure 10. At the same time still another safeguard is erected, namely, the pride of the bond house in its record and its clientele.
A first-class bond house makes thoro investigations, purchases securities with its own money, sells these securities to investors at a slight advance in price, furnishes reliable summarized information, provides a market for the resale of the securities furnished to clients, and defends its investors against the misman agement or temporary misfortune of the operating companies by the use of its staff and its great financial resources.
Ex-President Eliot has charged that one of the characteristic defects of American practice is failure to esteem the expert sufficiently. To this point at tention was drawn in the first of the rules offered in this chapter, where it was urged that, within the limits of his individual sphere of action, the investor should strive for thoroness. To the same point this last rule returns in urging that, beyond his proper domain of independent action, the investor should be guided by experts who are animated by high ideals of profes sional service.