The Babson Ancestry
Representing the tenth generation of Babsons to live in Gloucester, Massachusetts, Roger Babson valued his heritage. He researched his ancestors, investigating their personalities, professions, and lifestyles. Beginning with Isabel Babson, who came to Massachusetts from England in 1637, Roger Babson discovered a lineage of farmers, merchants, midwives, religious preachers, and sea captains. Believing that personality traits were hereditary, he continually looked for opportunities to foster and benefit from his ancestors’ individual attributes.
Educating Roger Babson
Roger Babson also valued lessons from his childhood, especially the business and investment practices he learned from discussions with his father, Nathaniel Babson, who owned a dry goods store. Despite Roger’s interest in business, his father had little faith in colleges and their academic programs. Against Roger’s wishes, Nathaniel decided his son would pursue a rigorous, technical education at the Massachusetts Institute of Technology. Feeling that the instruction “was given to what had already been accomplished, rather than to anticipating future possibilities,” Roger Babson believed that his professors had failed to foresee the great industries of the 20th century: automobiles, aviation, motion pictures, phonographs and radios. The one aspect of his studies at M.I.T. (1895-1898) that he valued throughout his life was learning about the British scientist, mathematician, and philosopher, Isaac Newton. Roger Babson was impressed by Newton’s discoveries, especially his third law of motion—“For every action there is an equal and opposite reaction.” He eventually incorporated Newton’s theory into many of his personal and business endeavors.
While on break from M.I.T., Roger Babson applied his engineering studies to various highway projects throughout Massachusetts. Upon graduating in 1898, Roger knew for certain that he preferred an alternative career. Nathaniel Babson counseled Roger to find a line of work that would ensure “repeat” business indefinitely. After careful consideration, Roger Babson decided to try the world of finance and looked for work as an investment banker.
In 1898, Roger began his business career working for a Boston investment firm where he learned about securities. Inquisitive by nature, Roger Babson soon knew enough about investments to get himself fired. Acting in the best interests of his clients, he had questioned the methods and prices of his employer and quickly found himself out of work. Babson subsequently set up his own business selling bonds at competitive prices in New York City and then in Worcester, Massachusetts. By 1900, he returned to Boston to work once more for an investment house and in March of that year, he married Grace Margaret Knight and moved to Wellesley Hills, Massachusetts.
A New Lease on Life
In the fall of 1901, Roger Babson contracted tuberculosis. His doctors initially told him that that a cold “had settled on his lungs.” When Roger demanded to know the exact nature of his illness, he was given a decidedly gloomy prognosis. The tuberculosis had seriously affected one lung and had begun to attack the other; it was not certain if he would survive. For Roger Babson, resignation was not an option. Demonstrating his characteristically dogged determination, he resolved to fight the disease and live a productive life. Rather than seek a “fresh air” cure in the milder climates of the American Southwest, Roger remained in Wellesley Hills. Cared for by Grace, a nurse by training, Roger gave a great deal of thought to how to continue his investment career away from a city environment. He ultimately decided to start a business based upon his investment expertise. While Roger finalized his business plans, Edith Low Babson, Roger and Grace Babson’s only child, was born on December 6, 1903.
Wall Street Comes to Wellesley Hills
Aware that every financial institution employed statisticians who duplicated each other’s research efforts, Roger chose to develop a central clearinghouse for information on investment information and business conditions. He would publish his analysis of stocks and bonds in newsletters and sell subscriptions to interested banks and investors. In 1904, with an initial investment of $1,200, Roger and Grace Babson founded Babson’s Statistical Organization, later called Business Statistics Organization then Babson’s Reports, and still later Babson-United Investment Reports. As pioneers who helped revolutionize the financial services industry, the Babsons and their organization realized millions of dollars in annual revenues in the company’s first decade.
Pass It Along: Entrepreneurship and Philanthropy
Having amassed a sizable fortune, Roger Babson was not content to join the idle rich. Instead he shared his business knowledge to protect investors, and invested his own wealth in industries and endeavors that would benefit humanity. After witnessing a dramatic stock market crash and financial panic in 1907, Roger Babson expanded his investment practice to include counseling on what to buy and sell as well as when it was wise to purchase or unload stocks. Working with M.I.T. Professor of Engineering George F. Swain, Roger Babson applied Isaac Newton’s theory of “actions and reactions“ to economics, giving rise to the Babsonchart of Economic Indicators, which assessed current and predicted future business conditions. Although the Babsonchart has since proved to be an imperfect tool, through it Roger Babson earned the distinction of being the first financial forecaster to predict the stock market crash of October, 1929.
Roger Babson extended his interest in the public’s welfare beyond investment counseling. He encouraged industries to develop products to improve public health and safety. Among businesses receiving Roger Babson’s approval and financial backing were select manufacturers of sanitary paper towels and other hygienic products, fire alarm call boxes, fire sprinklers, and traffic signals.
Roger Babson saw it as his duty to share his insights and experience. An avid reader and writer, he sought to dispense his brand of advice and wisdom beyond the readership of Babson’s Reports. From 1910 to 1923, he commented on business and other matters as a regular columnist for the Saturday Evening Post. He also contributed weekly columns for the New York Times and for the newspapers owned by the Scripps Syndicate. Babson eventually formed his own syndicate, the Publishers Financial Bureau, to disseminate his writings to papers across the United States. Over the course of 33 years, he wrote 47 books, including his autobiography, Actions and Reactions. Although his writings covered topics as diverse as business, education, health, industry, politics, religion, social conditions, and travel, the primary message behind each work was that individuals and society could and should change for the better.