Statue of Leonardo Fibonacci, Pisa, Italy.
The inscription reads, "A. Leonardo Fibonacci, Insigne
Matematico Piisano del Secolo XII."
Photo by Robert R. Prechter, Sr.

HISTORICAL AND MATHEMATICAL BACKGROUND OF THE WAVE PRINCIPLE

The Fibonacci (pronounced fib-eh-nah´-chee) sequence of numbers was discovered (actually rediscovered) by Leonardo Fibonacci da Pisa, a thirteenth century mathematician. We will outline the historical background of this amazing man and then discuss more fully the sequence (technically it is a sequence and not a series) of numbers that bears his name. When Elliott wrote Nature's Law, he referred specifically to the Fibonacci sequence as the mathematical basis for the Wave Principle. It is sufficient to state at this point that the stock market has a propensity to demonstrate a form that can be aligned with the form present in the Fibonacci sequence. (For a further discussion of the mathematics behind the Wave Principle, see "Mathematical Basis of Wave Theory," by Walter E. White, in New Classics Library's forthcoming book.)

In the early 1200s, Leonardo Fibonacci of Pisa, Italy published his famous Liber Abacci (Book of Calculation) which introduced to Europe one of the greatest mathematical discoveries of all time, namely the decimal system, including the positioning of zero as the first digit in the notation of the number scale. This system, which included the familiar symbols 0, 1, 2, 3, 4, 5, 6, 7, 8 and 9, became known as the Hindu-Arabic system, which is now universally used.

Under a true digital or place-value system, the actual value represented by any symbol placed in a row along with other symbols depends not only on its basic numerical value but also on its position in the row, i.e., 58 has a different value from 85. Though thousands of years earlier the Babylonians and Mayas of Central America separately had developed digital or place-value systems of numeration, their methods were awkward in other respects. For this reason, the Babylonian system, which had been the first to use zero and place values, was never carried forward into the mathematical systems of Greece, or even Rome, whose numeration comprised the seven symbols I, V, X, L, C, D, and M, with non-digital values assigned to those symbols. Addition, subtraction, multiplication and division in a system using these non-digital symbols is not an easy task, especially when large numbers are involved. Paradoxically, to overcome this problem, the Romans used the very ancient digital device known as the abacus. Because this instrument is digitally based and contains the zero principle, it functioned as a necessary supplement to the Roman computational system. Throughout the ages, bookkeepers and merchants depended on it to assist them in the mechanics of their tasks. Fibonacci, after expressing the basic principle of the abacus in Liber Abacci, started to use his new system during his travels. Through his efforts, the new system, with its easy method of calculation, was eventually transmitted to Europe. Gradually the old usage of Roman numerals was replaced with the Arabic numeral system. The introduction of the new system to Europe was the first important achievement in the field of mathematics since the fall of Rome over seven hundred years before. Fibonacci not only kept mathematics alive during the Middle Ages, but laid the foundation for great developments in the field of higher mathematics and the related fields of physics, astronomy and engineering.