If you expect to deal through a broker who is not in New York, ask your bank to write to a bank in the city where he is in business. If you do not keep a bank-account, ask some friend who does, to get the desired information for you.

The reason I insist all through this book upon the desirability of consulting the officers of the bank where you keep your savings or checking account is that bankers learn by long experience to detect quickly the difference between a fake broker and an honest one, or between a fake investment and a desirable one. It gets to be a matter of instinct with bankers and trained financial experts, whereas with the or-dinary layman there is nothing visible on the surface to indicate the absolutely necessary distinction.

If you dislike to ask too many favors of your local bank or newspaper, ask them to recommend a reporting agency. Usually these agencies will make specific reports for moderate fees, often as low as five dollars.

In practically all cases, the financial editors of newspapers will give you an honest opinion regarding brokers in their cities. Even where the newspapers accept disreputable financial advertising, the financial editors themselves have too much personal self-respect to recommend a faker, and financial writers usually know a faker when they see him, just as bankers do.

One difficulty that I have to meet in answering questions on the general subject of "Whom can I trust?" is that people fail to make distinctions between the trust that may safely be reposed in a reliable broker or bond dealer and the quack or faker. Once having picked out an honest reliable broker, there is no reason why you should not send money to him and order stocks or bonds without the fear of being robbed.

The time to be nervous about one's relationship to a broker is usually before you have chosen him, not afterward. If he has a good standing in his community he will not knowingly or willingly cheat you. You can send him thousands of dollars, and he will not run away with them, because he is receiving far larger sums every day. That is his method of doing business. But first be sure that, in the opinion of bankers, associates and reporting agencies, he is not the kind of broker that does run away, because there are many that do.

Another method to pursue, in the case of a member of any reputable stock exchange, is to write to the president of that exchange for the information. Be careful not to be misled by information on the broker's door or letter-head to the effect that he is a member of the "New York Exchange," or some other purely fictitious organization. That is an old dodge of the regular swindler. In many large cities there are imitation or fake stock exchanges, and you must be sure that your "broker" friend does not use one of these mythical institutions to bolster up his respectability.

Many of the best known dealers in bonds, and also many dealers in unlisted stock, do not need to be members of any exchange. But if a broker buys and sells stocks that are listed on a recognized exchange, he should with few exceptions, be a member of it. Beware the broker who promises very large returns, or who is constantly urging you to shift from one stock to another. Beware the countless small brokers who spring up overnight from nowhere when a boom is on.

Now without taking back a single word of what I have said about the desirability of forming a connection with a reliable investment banker, I want to urge my readers to learn to look out for themselves. Although many investment bankers have a splendid record, and no business has a higher standard of ethics, yet it is an unfortunate fact that dealers make their largest profits, not from the best, but from the poorest securities. That is because they themselves take more risk with the low-grade "stuff," and have to make a larger profit on it. I do not say they try harder to sell the poorer qualities, but the temptation is always present, especially for the raw young salesman. You can trust your investment banker or your broker to a large extent, but don't be a simpleton about it. You must look out for yourself in this world. You are your own best friend. Use ordinary caution. Don't be an "easy mark." As already explained, there are two kinds of brokers - those who have stocks and bonds of their own to sell, and those who merely buy for you on a commission on the stock exchanges. The former naturally want you to buy their particular goods, just as any other merchant does, and it may be you would rather have somebody else's goods, even though the first man is the most honest and high-minded person living. The second kind of broker has no impelling desire to have you buy any particular stock, but he has a tremendous desire that you should buy just as much as possible of some stock, because his living comes from the commissions on the exchange, and the more you buy the more he makes, although he naturally does not want you to lose, because then he loses your patronage. In one case you must be strong-minded enough not to confine yourself entirely to one line of goods, in the other case you must keep from "over-trading."

Learn, as far as possible, to study investments for yourself. Don't either suspect or trust everything. Either extreme is a sign of ignorance.