I’ve outlined now some of the numbers which grew important enough to earn their own names. Most of them are counting numbers; the stragglers are a handful of irrational numbers which proved themselves useful, such as π (pi), or attractive, such as φ (phi), or physically important, such as the fine structure constant. Unnamed except in the list of categories is the number whose explanation I hope to be the first movement of this blog: e.
It’s an important number physically, and a convenient and practical number mathematically. For all that, it defies a simple explanation like π enjoys. The simplest description of which I’m aware is that it is the base of the natural logarithm, which perfectly clarifies things to people who know what logarithms are, know which one is the natural logarithm, and know what the significance of the base is. This I will explain, but not today. For now it’s enough to think of the base as a size of the measurement tool, and to know that switching between one base and another is akin to switching between measuring in centimeters and measuring in inches. What the logarithm is will also wait for explanation; for now, let me hold off on that by saying it’s, in a way, a measure of how many digits it takes to write down a number, so that “81” has a logarithm twice that of “9”, and “49” twice that of “7”, and please don’t take this description so literally as to think the logarithm of “81” is equal to that of “49”.
I agree it’s not clear why we should be interested in the natural logarithm when there are an infinity of possible logarithms, and we can convert a logarithm base e into a logarithm base 10 just by multiplying by the correct number. That, too, will come.
Another common explanation is to say that e describes how fast savings will grow under the influence of compound interest. A dollar invested at one-percent interest, compounded daily, for a year, will grow to just about e dollars. Compounded hourly it grows even closer; compounded by the second it grows closer still; compounded annually, it stays pretty far away. The comparison is probably perfectly clear to those who can invest in anything with interest compounded daily. For my part I note when I finally opened an individual retirement account I put a thousand dollars into an almost thoughtfully selected mutual fund, and within mere weeks had lost $15. That about finishes off compound interest to me.