First among the institutional investors, we find banks. Savings banks are enormous purchasers of the highest grade bonds. Under the laws of most states their purchases are clearly restricted to bonds of a certain approved class which are frequently referred to in Wall Street as "savings bank bonds." Commercial banks, also, from time to time take large quantities of investment securities, chiefly short-term obligations. Insurance companies spend a vast amount annually in the purchase of investment securities. All institutions the funds of which are held in trust, such as universities, philanthropic institutions, and the like, must confine themselves strictly to investment securities. Estates of deceased persons, administered in trust, are large purchasers.

Institutions, then, constitute the public to which the highest grade investment securities must be sold. Individuals handling their own funds are free to exercise their discretion and take whatever slight degree of risk there may be in the purchase of securities that do not comply with the strict terms of the laws covering institutional investment.

It will be readily seen that there are noteworthy advantages to the corporation which can adapt any important part of its securities to the requirements of institutional investment. First of all, such securities are in high demand and sell at excellent prices. Second, they are likely to "stay put" after they are sold. The institution ordinarily does not die or become hard up or easily panic-stricken; consequently, securities which it has once purchased are likely to remain with it until they mature. Throughout the crisis in the affairs of the New Haven Railroad Company in 1913-1914, the debentures of the company, which were closely held by insurance companies and savings banks, did not to any great extent come on the market.