Through the operations considered above, investment banks perform important services for both borrowing corporations and the investing public. To the former it furnishes fluid capital at a reasonable cost, and to the latter it offers opportunities for a satisfactory return on surplus funds.

Valuable aid is also rendered by investment houses to the borrowing corporations, in time of reorganization and failure, especially when due to causes over which their management has no control. Investment banks are then the only sources for new capital, as the public is unwilling to buy the securities of a corporation in default, and only those banks which are able to investigate the entire situation and appreciate the true value of the corporation's assets are willing to provide new-funds.

An investment bank of standing aims to sell its clients securities of reasonable yield and safety only. At times, the selection is not always justified by eco-nomic events, and it is then policy to advise customers to sell these securities if the yield has become unsatisfactory and the value speculative. In order to maintain its reputation, an investment bank will sometimes go to the extent of paying interest to holders of bonds on which the issuing corporation has defaulted.