Investment institutions may be divided into three general groups - wholesale houses, large retail houses, and small retail, or bond, houses. The first group is composed of about a dozen large banking firms with many correspondent connections abroad. These houses undertake the marketing of the larger issues of railroads and of foreign governments, exceeding at times $100,000,000 in amount, by selling them, usually not. to the public directly, but indirectly through other houses. As wholesale houses are engaged mainly in the purchase of securities, the organization of their buying department is of special importance, and so it usually retains the services of engineers, accountants, lawyers, and other experts for the complete evaluation of the properties on the basis of which the securities are issued.

For the selling of these securities the wholesale houses in most cases associate themselves with the large retailers, who are much more numerous. These usually have their home office in New York City, in some other Eastern money center, or in Chicago, and operate in other important cities through their own branches or through partnerships and corporations which are independently organized, but always closely affiliated with the home office. The securities companies of national banks and the bond departments of trust companies are, of course, not permitted to organize branches, but instead operate correspondent offices which perform about the same activities as private investment banks. The large retailers will purchase securities for their own account directly from the issuing corporations to a limited extent only, and for relatively small amounts. In the case of large issues, the retailers will not usually assume the responsibility alone, but join with others in a syndicate or group of houses, of which each takes over a portion of the securities. As the main task of a large retail house is the disposing of securities, the sales department is the most important unit in its organization.

Large retail houses may be grouped according to the form of the securities or the nature of the issues in which they are interested. Thus there are houses specializing in bonds or stocks, or in both forms of securities. Other firms handle only such issues as government bonds, railroad, public utility, or industrial securities. While most investment banks naturally press the sale of their own specialties or issues, at the same time they will also execute orders to buy and sell other stocks and bonds either directly as members of the various stock exchanges or indirectly through brokers.

The branches and the affiliated offices of the large retailers throughout the country come into active competition with the bond houses or small retailers. These are of several classes, such as small banks and brokerage houses dealing in all kinds of securities, or handling specialties such as Standard Oil stocks, equipment bonds, and issues of local corporations. The organization of the small investment house is quite similar to that of the large retail firm, but on a more limited scale, for usually the buying and selling departments are conducted by only one person, who controls the entire business. The small bond house at times finds difficulty in obtaining high-grade securities, for those yielding a satisfactory profit are handled by the large retail houses themselves, which allow only a small commission on these sales.