CHAPTER IV 
THE DISTRIBUTION OF SECURITIES 
Listed Securities Considered.—In a preceding chapter’ 
the broad, fundamental economic benefits and services per- 
formed by the organized markets have been discussed. But in 
order to give fuller and more definite illustration of the prac- 
tical workings of several of these principles as they manifest 
themselves each day in the Stock Exchange, we must consider 
in some detail the chief successive stages by which securities 
are distributed—{from their first issuance by corporations until 
they at last find a permanent resting place in the investor’s 
deposit box. With listed securities, traded in on the Stock 
Exchange, a very important part of the process of distribution 
is effected through the Exchange; on the other hand, there is a 
huge amount of unlisted securities which are not traded in upon 
the Stock Exchange and in whose distribution the Stock Ex- 
change plays no part whatsoever. These latter securities vary 
all the way from many gilt-edged and extremely conservative 
bonds issued by the oldest and most reputable underwriting 
houses in America, down to the rank fraudulent stocks of 
spurious oil companies, glass casket concerns, crooked motor 
and moving picture enterprises, and the like, which swindlers 
peddle out to the American public in large quantities each year.® 
The present chapter is limited to the distribution of the strictly 
legitimate although frequently speculative securities which are 
listed on the Exchange. 
Basis of Corporate Security Financing.—Everywhere 
today corporations are constantly in need of fresh capital to 
1 See Chapter II. 
2 Appendix IVa. 
2A