This is, as you will observe, very similar to the principles upon which the great life insurance companies are managed.
Many of these commenced business starting with but a few thousand dollars, and they now have assets of millions. They have piled up this enormous wealth by insuring the lives of human beings.
Every company which has not succeeded has failed because it did not issue a certain number of policies.
The secret of success is the large number of risks reducing the chance to a minimum.
No life insurance company could succeed if it insured but a few lives.
By the law of average, insurance companies can tell just how many of the people they insure will die each year.
When you make an application for life insurance the first question they will ask is your age, and by referring to their tables they can tell you the month and day when you will die. Now, you may not actually die upon that day, but you do theoretically, and the point is that they have so many risks that the law of average, always prevailing, in the end brings everything out just as figured.
The fact that one person lives longer than the date when his life should end is offset by the fact that another person dies sooner than expected, and thus the law of average is absolutely maintained.
The postal authorities could not come anywhere near telling how many letters would be mailed in the City of New York on a certain day, but they can come with remarkable closeness to the average for a year in advance, and predict with certainty how many people will write letters and forget to address them during that time.
It is by the working out by the law of average as best exemplified by the insurance business that it is possible to work out a plan by which Wall Street stocks can be dealt in with absolute safety and certain profit.