There have recently been formed several large companies whose business
it is to issue bonds on the security of other bonds. The idea is
similar to that of real-estate title insurance. Such companies are
supposed to have superior facilities for investigating securities.
They purchase those which they consider good and at the best prices
possible. These they deposit with some trust company or banking
institution. With these bonds which they buy as their original
property they issue new bonds of their own, which they sell to the
public and which they guarantee. The differences in prices and in
interest make up their profits.