There are a number of ways in which this is done. Circularizing and direct personal salesmanship are the two most important. Every investment banlcing house of any ac count has a large list of actual and prospective clients. To this list (which in the case of some of the larger houses runs up to 20,000 or even 30,000 names) the new securities are offered. By .no means, however, is the offer ing necessarily limited to the existing list. Advertising, both in newspapers and maga zines, to-day plays an important part in in vestment banking. Through it countless new names are each year added to investment bankers' lists and through it vast amounts of new securities are each year being actually sold.
In the investment banldng business the day of large profits is a thing of the past. It used to be the case that, for the banker bringing out the securities even of a corporation of established credit, there was a profit running often in excess of 10 per cent. The establish ment of public service commissions all over the country and the greater degree of super vision now exercised by the Interstate Com merce Commission over the railroads' finances has put a stop to that. Industrial and manu facturing concerns, Trot being subject to such supervision, are in some instances still being made to pay heavily for their money, but even here the.,profits of the investment banker are
nothing like what they used to be.
Investment banking is by no means to be confused with promotion— that is to say the providing of capital for new and untried en terprise. To the investment banker of reputa tion and who is in the business to stay, the primary consideration is by no means the amount of the profit he is going to make, but rather the safety and desirability of the in vestment he is offering his clients. A clientele financially strong, and which can be relied up on at the banker's suggestion to absorb any issue of securities offered, is an asset which can be acquired only by years of c,areful, pa tient and intelligent effort. The true invest ment banker, having established such an out let for any new securities he may want to handle, takes the greatest care that no securi ties reach clients which may impair their opin ion of his own integrity and. judgment.
Chamberlain, L., The Work of a Bond House) (New York 1912) ; Escher, F., (Practical Investing) (New York 1914) ; Lownhaupt, F., (Investment Bonds) (New York 1908).