I am glad to be able to state, right from the beginning, that I fully agree with Dr. Preinreich as concerns the relativity of depreciation technique. I never had the intention of stating that there is a true method of depreciation, so much the less, as I do not accept any true capital value. This, I hope, will be clear from the following addition to my paper. In my study of depreciation schemes, I have tried to introduce great simplifications. But I do not think this has veiled fundamental difficulties of the problem, as Dr. Preinreich seems to suspect. I should also like to emphasize that my introduction of the distribution, which I may denote by (,u, s) and which is characterized by a slight constant mortality during s years followed by a catastrophical mortality after this time of all buildings left, is something more than the well-known annuity method of depreciation, although it may be interpreted formally in such a way. To replace the vague risk margin in the valuation rate of interest by ,i seems to be a theoretical improvement of the scheme. For with it, depreciation insurance is introduced in practice. But the advantages of the scheme are perhaps more easily grasped when the method is applied to numerical work, and I shall permit myself to come back to this question at a later occasion with the support of practical examples. The simplifications I have introduced (or the restrictions as to generalizations that I have found it advisable to impose on my theory) are evidently, as I have already stated in my paper, a matter of taste, and de gustibus non est disputandum. But in choosing these first approximations, I tried of course to profit by a long experience of practical mathematics. Personally, I am convinced that the choice will prove itself to have been happy, but such statements can be demonstrated only by practical work. I also have the impression that the double line of thought which is illustrated by my two approximations one ad-

THE CLASSICAL THEORY CONSIDER TWO commodities, (0) and (1), the first being denoted as money, and the other being for the sake of representation identified with a certain kind of bills, say payable 20 years hence. By a possible contract (x, y), we shall mean that A buys the amount x of bills from B, paying for it in money y units, the price being p = y/x. In the special case which we shall use as an illustration, we may put