The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1924-09-06
FUNDS FLOW TO
INVESTMENT :.
BANKERS
Small Savings Form Stream
From Which Corporate
interests Draw
BY MERRYLE STANLEY
RUKEYSER.


NEW YORK, Sept. 6.-The joy
Of investment bankers is to gather
from all parts Of the land, rivulets
Of investment funds and lead them
into a great central stream Of
capital, from which the massive
corporated enterprises of the coun-
try can draw funds for their de.
velopment. The bankers of Wall
Street are essentially middlemen,
bringing borrowers and lenders to-
gether.
High grade investment bankers
are more than mere brokers, They
buy the securities from the Dor
rover themselves and run the risk
or not being able to resell them to
the investing public. Part of their
underwriting fee is the payment
Tor the assumption of that hazard.
Moreover, investment bankers
assume "a moral responsibility for
the genuineness and investment
value OF their offerings. Perhaps
there is not a house whose iudg-
ment has not occasionally erred
to state the case in euphemistic
terms-but in case of trouble, the
investment banker forms protective
committees and endeavors to sal.
wage the interest of those to whom
they sold bonds.
Sit In On Boards
Moreover, even before financial
storms, investment bankers fire.
quently sit in on boards Of directors
Of companies that they finance, and
make sure that borrowed funds are
administered in accordance with
standards which they consider solid.
Sometimes bankers go further than
exercising this negative power Of
veto. They occasionally dominate
enterprises which they finance and
turn the business executives into
super-clerks who do little more
than carry out the will of the
bankers.
Such interference frequently robs
an enterprise of the originality and
peculiar individuality which come
from the express on of the real
personality Of its founders and man
ayers. 1t has frequently tended to
drive Enterprises to the rocks, par
ticularly when such control is as
ISOLATED with inefficient financing
entailing the creation of more Sc.
curtttes than the actual tangible
property behind the enterprise and
Its earning power warrant.
For services rendered the charges
OF stock and bond brokers are mod.
AAt.,
little more than n of l per cent
Of the par value of the securit .es
bought or sold for a customer. In
the, case of new creation of securi-
ties no commission over and above
the offering price is charged
Unit of Trade.
The unit Of trade on the New
York Stock Exchange is 100 shares.
Any block less than 100 shares
is referred to as an odd lot and
may be purchased through any
member house, but the price on the
odd lot is Is to 4 of a point less
favorable than that on a hundred
share unit. In reporting a trans
action to a customer the broker
must reveal the name Of the broker
to whom he has sold the stock or
from whom he has bought it.
New York Stock Exchange
brokers charge al minimum IF
$3.50 for buying or selling zoe
shares of stock selling at less than
$40 a share. The commission is
SIS a hundred shares for stock
selling between SO and $125.
The minimum la S2a a hundred
shares for stock selling higher than
$125 share. Commissions for odd
lots are in proportion subject to
the usual minimum charge of $1.O0
to $500.