Despite their limitations in this respect, the commercial banks must be recognized as of growing importance in the work of encouraging and collecting small savings, which in many cases are better invested in other ways.  In 1916, the centenary of the beginning of savings banks in this country, a nation-wide propaganda was undertaken by the American Bankers’ Association for the encouragement of savings.

Sec. 4. #Investment banking#.  Enormous amounts of securities issued by governments or by corporations (railroad or industrial) are now on the market and to be bought conveniently by private investors.  Through special bond houses some bonds are to be had in denominations as small as $100 and $500.  The regular brokers on the stock exchanges buy and sell, for a small commission, the regular bonds and investment stocks.  Several large statistical and financial expert agencies[5] in return for an annual subscription, offer advice to investors regarding general market conditions and special securities.

For a large number of investors the personal examination and selection of sound securities is too difficult a task.  To serve their needs many bonds and trust companies have of late developed special departments for investment banking.  Through these agencies the banks are constantly placing as relatively permanent investments securities which they have bought or have aided “to float” or which they handle only as commission agents.  In any case the real investment banker is bringing to his task special training and a high sense of his professional obligations, and is employing the services of statisticians, financial experts, and of practical engineers to determine exactly the fundamental conditions of each investment.  Investment banking promises to increase steadily in amount and importance.

Sec. 5. #Savings banks in the United States.# For the increasing number of wage-earners, salaried employees, and persons following professions, investment as active capitalists is impossible.[6] Their savings must take the form of passive investments.  But there are few good opportunities for lending money in small amounts, without great risk, and the requirement of skill, time, and labor to look after the loans and to collect the interest is prohibitive to a small lender.  To provide a place where small sums could be kept with safety and so as to yield a moderate rate of income, the first modern savings bank in the United States was instituted in New York in 1816 after a plan already developed in England.

In form these banks are mutual, having no capital stock on which dividends are to be paid.  The boards of trustees are self-perpetuating and receive only fees for attending meetings.  In their legal aspect these banks have a philanthropic character.  Their investments are limited by law to specified, conservative classes of securities and loans on real estate.  The total increase from investments is, after paying the expenses of operation and setting