Security Of Stocks Which Rest On Money. Stability Of Money

Again, being itself the standard of value as well as its measure, Money is the commodity which varies least over great lapses of time, while over short periods, when compared with all other commodities, it may well stand as the image and type of stability itself. It neither deteriorates appreciably by wear and tear, as other commodities do, nor at all by keeping; nor is its value affected, as with other commodities, by new inventions and processes; nor does it depend for its stability on the genius, foresight, skill, or life of its owners; and so it can be more depended on to keep its own proper value intact over the ordinary periods during which business transactions run, than any other commodity whatever. And accordingly, businesses resting throughout primarily on Money as their stock in trade, both of purchase and sale, take a natural rank for stability and security of investment, as well as for freedom from risk of loss of capital, far above what is attainable in the wide fluctuations of market values and the constant ups and downs which characterise the business transactions which rest primarily on Industry and Trade. It is true, of course, that Money, like the sun in its relative position among the planets and stars, slowly changes its value in reference to other commodities over long periods of time, but over short periods the change is so slight as to be practically inappreciable. But if, besides resting primarily on Money, a business rests also on the mathematical Law of Probabilities, it will take an even higher rank for stability than if it rested on Money alone; for the possessor will not only be able to equalise the risks that arise amid the multiplicity of individual transactions which make up his business, so that he will get back sovereigns for sovereigns, but also to make sure of an even profit as well. And, further still, if a business rests on transactions in which the element of time is so short that they are as near to cash transactions as possible, it will have attained to the highest natural rank of investment for stability, security, and freedom from risk.

Money Changes Its Value

Now, the ideal of a combination such as I have described, where a pure Money business rests on Bank of Monte Carlo an example of a money business.

Security Of The Bank Of Monte Carlo

the Law of Probabilities, and confines its transactions to cash payments only, is best seen in such an institution as the gaming Bank of Monte Carlo; and it may well be taken as a standard by which all stocks which rest primarily on this basis, although not in such ideal form, may be measured. For not only its capital and reserve, but all its transactions are in money down, with no process of bargain and sale to disturb calculations, nor ups and downs of supply and demand, nor conditions of Money Markets, no estimates of the credits of customers, no intrusions of outside or business complication; while all risks from the chances of individual spins or runs of luck are neutralised by the operation of the Law of Probabilities, which, working under ideal conditions in the construction of the tables, grinds out its level profit in cash with undeviating regularity. In other words, while the previsions and calculations, on which all ordinary businesses depend for success, must always be a matter of more or less uncertain speculation, and of hit or miss, the Bank of Monte Carlo, like a piece of artillery mounted and planted on a level plain, can be so sighted and adjusted by means of the zero and the limitation of stakes, as to hit its mark - the share of profit it proposes to take for itself - every time; and the longer the wheel continues to spin, the more exactly will the profits of the table correspond to the amount allotted to it beforehand by the application to it of the Law of Probabilities, and with nothing to limit the yield of these profits but the number of customers who can be induced to patronise the bank in a given period of time. In this way it defies, in its freedom from risks, the mutations of ordinary business, as the Pyramids defy the mutations of time.

An Ideal Money Stock

Now, with the Bank of Monte Carlo as our ideal and standard for estimating the status of all stocks resting primarily on the triple pillars of Money, the Law of Probabilities, and Cash Payment, we may next proceed to try to estimate the relative status, as safe and stable investments, of Banking and Insurance companies respectively, both of which rest mainly on the same triple pillars, but are prevented from reaching this ideal security by the admixture in each, in varying degrees and proportions, of the risks pertaining to ordinary industrial and commercial businesses.