Thank you for the comment. I was referring to our modern understanding of diversification especially in the context of mass public ownership of equities, and how we, as the investing public, were driven to invest in diversified portfolios in their current form, and the impetus and mechanism thereof.

I agree with your comment: diversification, as a principle of risk reduction, is much older. In fact I would go back even further to put a date on it. I tend to think of the Medici's in Italy (1397) as being among the first to apply the technique of diversification successfully on a large commercial scale. In their case, the the problem they addressed was the difficulty and risk of moving and paying for commodities across the Mediterranean trade routes. Individually, both buyer and seller were at significant risk on any given transaction. However, through the the use of Banker Acceptances, the unique risk of any single transaction under the Law of Large Numbers was mitigated. Also, the Medici banker as transaction facilitator, could appropriately price, via the commission or spread on the transaction, to mitigate the potential loss on the transaction.

A later - but still early - application of this technique was in the form of the world's first joint-stock company, the Dutch East India Company (the Vereenigde Oost-Indische Compagnie, or simply, VOC). In this case the risk was the merchant vessel to the East Indies, a long and dangerous journey around the Cape of Good Hope. The failure rate of non-returning merchant vessels was something like 40%, but the profit from those that made it could be as high as four times the initial investment. The creation of the VOC allowed diversification on a massive scale across merchant vessels (as many as 5,000):

"Before the establishment of the VOC in 1602, individual ships were funded by merchants as limited partnerships that ceased to exist when the ships returned.

Merchants would invest in several ships at a time so that if one failed to return, they weren't wiped out. The establishment of the VOC allowed hundreds of ships to be funded simultaneously by hundreds of investors to minimize risk." (http://www.businessinsider.com/rise-and-fall-of-united-east-india-2013-…)

As a side-note, the VOC to this day, on an inflation adjusted-basis, is the largest, most successful and longest-running corporation in world history, even compared to the modern behemoths like Amazon and Berkshire Hathaway.