Because the distributing agents of social ties in France are the branches of the big banks, where the small investor keeps his de posit, the seller is closely in touch with the buyer at all times, and therefore it cannot cost nearly as much for the selling expenses of these small transactions in France as in Amer ica. There the small investor is legion and well trained. He comes in and buys over the counter. In America he would have to be sold to just as the larger investor is now sold to. The investment banker would have to culti vate his confidence instead of already having it, as in France, because of being his depositary banker to start out with. Until the small in vestors become more numerous in America, and some changes take place in the methods of distributing securities, probably it will not be worth while to issue bonds in smaller de nominations than at present.
Sometimes a corporation can make its se curities comply with requirements to meet a special demand. If it has the possibility within its power to comply, for example, with the requirements for savings banks or trustee investments within a particular jurisdiction, it gains immediately the chance of tapping large amounts of loanable capital. For the most part a corporation can do little in the matter of mere arrangement to aid in this direction, but sometimes it can put itself in the proper position. Only a study of the sit uation in each case can determine what the corporation can do toward this end.
In some jurisdictions a corporation may make its securities tax exempt, and if it can look for a large market for them in that par ticular jurisdiction, it may considerably help their sale by complying with the provisions for tax exemption. A corporation can make its bonds tax exempt in New York, for in stance, by recording them on the payment of one half per cent recording tax. A Penn sylvania corporation can make its bonds tax exempt in that state by paying a small annual tax. By having a Pennsylvania corporation the issuing body, large amounts of railroad equipment securities have been made tax exempt in the state, and thereby appealed especially to the wealthy Philadelphia mar ket. Stock of a Massachusetts corporation is tax exempt in the state, but not stock of a foreign corporation. In order to get that ad vantage in the important Boston market for investments, some foreign corporations have already taken out new charters in Massachu setts and transferred their assets to the cor poration under the new charter. And, by way of a wink at the possibilities, some enter prises, especially holding companies, have or ganized as unincorporated associations under the Massachusetts law, in order to avoid the federal corporation tax. This, however, is aside from our subject and a general matter of corporate organization rather than espe cially of corporation finance.