Not only does general knowledge put up prices and thus reduce interest rates, but what might be called an active market for securities tends to reduce the interest rate. To have a stock or bond listed and actively dealt in on the New York Stock Exchange is pretty sure to raise its price and lower the interest return, simply because everything in this world costs something, and this open public market costs real money.

As a rule, although not always, very large enterprises are able to sell their securities at higher prices than small enterprises. This is because more people know about them and there is therefore a wider market. Such concerns may not be any safer, or even so safe, as smaller enterprises, but the knowledge of such safety as they have is more widespread, and the larger concern is more likely to be listed on the stock exchange.

Generally speaking, there are the bonds of large, well-known companies which are listed on the stock exchange, and bonds of small companies, not listed, but sold by and familiar to investment bankers. The first is called "big stuff," and the other "little stuff." Historically speaking, one class of bond has about as good a record as the other. But the investor should pay less for the little unknown bond than for the big well-known one. If he deals with a reputable investment banker, he can buy just as safe bonds in the little unknown class as are to be found in the other group, and they will bring him a much higher rate of income. As already suggested, this is especially true of municipal bonds, few of which are listed on any of the exchanges.

Now there are thousands of people who will not have any security unless it is listed on the New York Stock Exchange. They want to see it quoted in the newspaper every day, and if possible, traded in over and over again. Then, too, big institutions, such as banks and large business concerns which invest their cash surplus in securities, must have a quick market to sell upon.

Perhaps more important than any of these considerations is the fact that banks prefer to lend on stock exchange securities. This is not because banks do not recognize the value of other investments, but because the bank has no time to investigate every form of collateral offered to it as security for a loan. A stock or bond frequently quoted on the stock exchange is instantly recognizable. The banker knows immediately and at any moment just what price he can get for it. His business is primarily lending money and he much prefers to lend upon something the market value of which is always known to him.

For all these reasons there is a tremendous demand for stock exchange securities, and the prices of safe ones are naturally high. But it is not worth while to list stocks and bonds of small concerns upon the stock exchange. Even more absurd would be any attempt to list single mortgages upon the exchange. The only securities available there are those issued in many millions of dollars.

Thus it is clear that to find safe investments at high interest rates one must search for industries, or real-estate mortgages or municipal bonds that come under one or more of these heads: (a) Far away from the great money centers and currents; (b) Conducted on a small scale; (c) Not as yet especially well known; (d) Issued in relatively small amounts; (e) Not listed or actively dealt in on the great stock exchanges.

Perhaps first mortgages on real estate offer the greatest opportunity. Also the bonds of small towns, street improvement bonds and other obligations of the smaller nature supported by taxation. Then, too, there are countless securities of the industrial and public utility groups which pay high interest rates because they have not yet become conspicuous on the stock exchange or in the money markets.

I would not have it supposed for a moment that I am criticizing the stock exchange or denying the investment opportunities that exist among its securities. It is the one most important single barometer of business and financial conditions. Without the stock exchange it would be extremely difficult to judge the value of the other types of securities I have mentioned. It is the quickest place to invest, and by far the safest unless one has an investigating type of mind or has plenty of expert advice upon which to rely.

The stock exchange, and other similar markets, frequently offer real "bargains." Mortgages, municipal bonds and securities in small companies, or those distant from the financial centers, do not fluctuate much in market price, simply because they have no big broad market. The offering price may vary, but never suddenly or violently. They run along about the same level.

But prices on the stock exchange fluctuate because of world-wide conditions in no way affecting the intrinsic worth of the securities listed there. The stock exchange is like the open sea upon which winds blow and waves rise high or a great calm prevails. Thus one may pick up bargains on the stock exchange. Stocks and bonds alike sell below or above their normal regular level of prices. It is a place to reap big profits and also big losses. People buy on the stock exchange not so much for a certain fixed income as for profits in the way of an advance in price. This method has its advantages, but also its obvious dangers.

The great point in making an investment is to buy only what you really want and need. There is none that is ideal, any more than human beings are perfect. One man may be a good golf player and kind to his mother but a very poor accountant. In the same way if you look only for safety in a bond, or only for a quick market, you can usually get what you want if you pay for it in other qualities. Just so a man may acquire an immense collection of cut-glass vases, if he sticks to it long enough, but he will sacrifice time and money in other directions.