together in social units. Their holdings are also
larger, their capital needs greater, and their business instincts more
highly developed.

There seems to be no good reason, however, why the joint-stock
mortgage bank should not flourish here as well as in Europe. It is a
purely private business enterprise of the kind with which we are
perfectly familiar. The mortgage bond ought to appeal to our
investors, many of whom have exhibited a strong predilection for
mortgage security and real estate investments, and long-period
mortgage loans, repayable on the annuity plan, would meet the needs of
many land purchasers and of people who need to invest considerable
sums in drainage, irrigation works, etc., better than our present
methods. In most, if not all, of our states, trust companies could
develop these new lines of finance without prejudice to the other
branches of their business.

The use of state, county, and municipal subsidies or credit in
enterprises of this kind is rendered difficult, if not impossible, in
this country, by strong prejudice against the use of public funds in
private enterprises, and in some states by constitutional
prohibitions. This prejudice is based upon unfortunate experiences,
and is at least partially justified by the laxness of our
administrative methods and the prevalence of graft, which expose us
to the danger of the improper use of public funds devoted to
enterprises of this kind. There is no reason, however, why our states
should not take the initiative in the improvement of our investment
banking machinery and why private capitalists and philanthropists
should not turn some of their energy into this channel.

Suggestion and leadership are needed in this field quite as much as
legislation tending to restrict and regulate the operations of
existing institutions.

REFERENCES

The following books are comprehensive in character, treating most of
the subjects covered in the foregoing chapters:

MACLEOD, H. D., Theory and Practice of Banking.
GILBART, J. W., History and Principles of Banking.
BAGEHOT, WALTER, Lombard Street.
DUNBAR, CHARLES F., History and Theory of Banking.
SCOTT, WM. A., Money and Banking. Rev. Ed.
WHITE, HORACE, Money and Banking.
FISK, A. K., The Modern Bank.

The subject of clearings and the exchanges are discussed in the
following books:

CANNON, J. G., Clearing Houses.
CLARE, GEORGE, The A, B, C of the Exchanges.
CLARE, GEORGE,