viii 
security. It has been theoretically and prac 
tically proved that by splitting up invested 
capital in equal proportions among a number 
of investments similar in quality, yet whose 
price movements are all governed by different 
influences, a combination of investments is 
obtained in which a fall in the realisable value 
of a portion of them is simultaneously counter 
balanced by a rise in the realisable value of 
another portion of them, and that in this way a 
true balance of values is established. 
This system of investment poise and 
counterpoise is known as the system of 
Geographical Distribution of Capital. Just as 
a carefully studied system of averages elimin 
ates all taint of gambling from a sound system 
of insurance business, so a sound system of 
averages, based upon the Geographical 
Distribution of Capital, reduces to a minimum 
the taint of speculation from the act of invest 
ment. From their very nature, insurance and 
investment are both highly speculative trans 
actions, which can only be raised to the 
dignity of solid business by a carefully con 
structed system of averages. 
By means of this system of Geographical 
Distribution of Capital every investor, who 
has quite made up his mind what his real 
investment object is, can, from the very outset