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Ebook has 76 lines and 6138 words, and 2 pages

Illustrator: John Schoenherr

Release date: October 6, 2023

Original publication: New York, NY: Royal Publications, Inc, 1957

The Statistomat Pitch

Illustrated by JOHN SCHOENHERR

The little salesman buzzed into my hotel room exactly at 10. He must have been waiting in the corridor, ambushing the second-hand.

I watched from my deep chair in the corner while he slid open his raincoat, lifted it neatly off his back , and stood with it hanging from his forefinger. With a bright, apologetic smile he hung it up in the alcove behind the door. I decided not to object to his using the hook without asking; it'd just slow things up.

The salesman smiled again, ducked out into the corridor and back in with a flat 24x20 brief case and a large, oddly shaped suitcase. His presentation charts and a mockup of the computer, obviously. More apologetic faces, and he sat down.

I raised my drooping eyelids just enough to see him properly.

"--with all your responsibilities, and I hope I'll be able to answer all your questions on modern estate planning. That's what I'm here for!" He smiled as if he were pausing for questions, but he didn't pause.

He intoned, "The man of wealth has a special responsibility in our society. He is the trustee of invested capital, on which our economy rests. His proud charge is to direct and build his holdings wisely; and natural economic laws have justly placed the nation's considerable estates in the hands of men equal to the charge.

Here we go again, I thought, as he hauled a packet out of his brief case, opened it out into a little stand on the table, and flipped up the first chart.

"Take the case of Robert Jones, who inherits ,000,000 from his father. The inheritance taxes are all taken care of by investment-incentive deductions, so Mr. Jones has ,000,000 in liquid assets to invest."

"Mr. Jones has a wife and one young son." They appeared beside him on the second chart, and they looked very pleasant. The salesman knew Jed Borch was unmarried. "He has planned to his satisfaction a way of life appropriate to his standing." On the next chart the Jones family was backed up by a half-acre bungalow, a lake, and wooded hills.

"I don't want any risk. Can't afford to." I smiled slyly. "Responsibility to society."

"Of course, of course, but you might be willing, like Mr. Thompson, to--er--look beyond the more accepted channels of finance for the sake of the larger returns that can be realized by breaking new ground, as it were--participating in pioneering enterprises."

"Oh, sure. Don't want to miss any bets."

He was adaptable enough to give up the Michael Thompson story and open up the suitcase, promptly and proudly.

"Oh, the computer," I said, almost encouragingly.

But he didn't let that stand. "No," he admitted, "this is just a life-size facsimile of the new Statistomat. I'm afraid the real thing is too valuable and too heavy for me to carry around, even to such an important interview as this."

"How heavy?"

"I'd say about ten times as heavy as this one," he evaded neatly. "Now on this facsimile I can illustrate the ideas we've been developing. Here, you see this screen and these knobs. I'll turn this switch on and we can watch this part of it just as if this was the real computer."

My surprise was genuine. His demonstration mockup was a live one. I wished my brother could see it.

"On this screen we record your time-dependent utility function. For your convenience, the input is mechanical, but from this point on all the Statistomat's computing is performed digitally."

I said, "Huh?"

"Time-dependent utility function," he repeated brightly.

"Oh, I can't be bothered--all that technical stuff--leave it to specialists," I muttered, making the trap nice and inviting.

"Uh ... but it depends on how much I've got." I kicked myself. My brother would not approve my helping the salesman along like that.

"Ah, yes! Certainly! When you have a hundred million, an extra million won't seem nearly as important to you as when you have twenty-five. We understand! Our technical expression for this is that the value of money to the investor is not a linear function of dollars. Logarithmic, some say--but that depends on the investor. Whatever relationship you select as a matter of fiscal policy. That is a part, a critical part, of the information which you give the Statistomat when you work out your time-dependent utility function, or risk function, as we call it for short."

"No risk! Can't afford risk!"

"Mr. Borch, I speak with confidence when I assure you that your estate can be subject to as little risk when its direction is assigned to the Statistomat as in any other way." I almost called him on that, until I reflected that he had really made only one specific claim: that you could feed just as excessively conservative a risk function into the Statistomat, if you were compulsively conservative, as you could into the G.C. Incomac. That might be true.

He went on, "Two of the soundest business research agencies in the country have been invited to inspect all our operations and have okayed us, not once but repeatedly: the S.E.C. and the F.T.C."

Darn right they've checked you, I thought--by law. And don't think they'll stop.

But it didn't do any good to spot a steep slant in his formulations. He was a salesman, after all. Just so he stayed clear of demonstrable falsehoods and "fraudulent tendencies" , he was within his rights.

He was staying clear. Some of his claims a stickler might want to check up on; but I wasn't going to bother any more to watch for things like that. I thought the stickler would find in each case that he'd been wasting his time. This little salesman seemed awfully good at skating just at the edge. He really knew his profession.

I didn't let my bafflement show. I just looked at him dully and made noises as if I was about to say something. I was, but I didn't know what.

So I switched to, "How do I know what stocks this thing'll tell me to buy?"

"Yeah-yeah, but how do I know what stocks I'll be getting? I want General Computers preferred!"

He smiled. "Quite possibly you'll find yourself the owner of a considerable block of G.C. preferred--provided of course your time-dependent utility function dictates a policy which--"

"You mean," I said, with the very suspicious expression my brother always objected to, "you'd let your machine bid for G.C. stock for me?"

"Naturally. The Statistomat has often recommended purchase of G.C. stock. Let me explain to you an aspect of modern firm management which may be so specialized as to have escaped your attention.

"Each firm draws up what is called a preference function. It is somewhat analogous to the investor's time-dependent utility function. It gives exact expression to the objectives of the firm. For any conceivable economic position the firm might be in, it determines, let us say, the weight the board places on a dividend this year as against a larger dividend a year from now, or ten. And so on. It is the criterion for all the optimization computations which pattern the firm's activities.

"Under a 1978 law, every corporation offering stock on the Exchange must publish its preference function. All these preference functions are known to your Statistomat; in effect, it is as if they were all in Statistomat's memory, continuously updated, automatically. Naturally, for a particular kind of investor only certain kinds of stock are suitable.

"But Statistomat does more--and this is the point I think you'll find intensely interesting. After all, more than the firm's policy is important. Two firms may have identical financial policies but very different dividend rates, either due to different degrees of success or to different kinds of partial success. Statistomat also has available to it a sound estimate of the firm's expectations--"

"Who does the--uh--estimating?"

"Based entirely on Commerce Department reports. That's as impartial as you can get, Mr. Borch, and it's also one of the best-informed sources in the country. This information is processed at our home office on one of the largest automatic computers in the world. You see, Statistomat Incorporated is deeply conscious of its responsibility to give flawless service to the men who control and direct America's fortunes."

The little salesman sounded overconfident again so I thought I'd shake him up. "What does General Computers use for their whatchamacallit?"

"The General Computers' Incomac uses exactly the same sources of information."

I said in a bored voice, "What do you do different?"

"The principles of investment planning are scientific principles, Mr. Borch, and anybody working in this field must follow them."

Let's hear you desperate, I thought, but my voice just got drier. "Guess I might as well get an--"

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