investment connections will take as much underwriting as they are
offered, in many cases without making very searching inquiry into the
terms of the security offered. The name of the issuing house and the
amount of the underwriting commission --which we will suppose in this
case to be 2 per cent.--is enough for them. They know that if they
refuse any chance of underwriting that is offered, they are not likely
to get a chance when the next loan comes out, and since underwriting is
a profitable business for those who can afford to run its risks, many
firms put their names down for anything that is put before them, as long
as they have confidence in the firm that is handling the loan. This
power in the hands of the big issuing houses, to get any loan that they
choose to father underwritten in a few hours by a crowd of eager
followers, gives them, of course, enormous strength and lays a heavy
responsibility on them. They only preserve it by being careful in the
use of it, and exercising great discrimination in the class of
securities that they handle.

While the underwriting is going on the prospectus is being prepared by
which the subscriptions of the public are invited, and in the meantime
it will probably happen that the newspapers have had a hint that a
Ruritanian loan is on the anvil, so that preliminary paragraphs may
prepare an atmosphere of expectancy. News of a forthcoming new issue is
always a welcome item in the dull routine of a City article, and the
journalists are only serving their public and their papers in being
eager to chronicle it. Lurid stories are still handed down by City
tradition of how great City journalists acquired fortunes in days gone
by, by being allotted blocks of new loans so that they might expand on
their merits and then sell them at a big profit when they had created a
public demand for them. There seems to be no doubt that this kind of
thing used to happen in the dark ages when finance and City journalism