TNB Night Owl – Roger Ward Babson

Roger Ward Babson. Image captured by the News Blender.

The sixteenth National Business Conference was held September 5, 1929, on the campus of Babson College in Wellesley, Massachusetts. Roger Ward Babson (1875 – 1967) had founded the college ten years earlier out of the millions he’d made in shrewed business investments and from his company, which studied publicly traded corporations and published investment newsletters . An 1889 graduate of the Massachusetts Institute of Technology with a bachelor of science degree in engineering, his real talent lay in recognizing the value of a business. In the speech he made that day to conference attendees, Babson famously predicted a great market crash in the near future. He was nearly alone in making that dire warning. The only other well-known business guru to agree with him at the time was Henry Varnum Poor of Standard and Poor’s. Virtually every other authority on business mocked the idea that the stock market could be vulnerable to a crash.

Of course, the market did crash on October 29, 1929, resulting in the Great Depression of the thirties. At first, politicians as well as many of the same people who had mocked Babson for predicting it now blamed him for causing it. However, public perception favored Babson as some kind of genius with a crystal ball, and his fame and reputation grew allowing him to write dozens of successful books and become an in- demand public speaker. Oh, and he also ran for president of the United States in 1940. Babson was a household name then, though largely forgotten today.

In actuality, he didn’t peer into any crystal balls, his methods were a bit more – unorthodox – than that. Babson relied on two laws not normally associated with markets and finance: (1) Newton’s Third Law of Motion [for every action there is an equal and opposite reaction] and (2) the law of gravity. Yep, that gravity. No, I don’t understand how he connected the markets to gravity.

Babson, apparently, had an obsession with gravity that colored all of his thoughts and ideas. How this obsession came about is a bit involved. As a young man, likely after MIT and in his twenties, he contracted tuberculosis. His doctors sent him west to recuperate in a sanatorium located at a high elevation. Babson asked for an explanation, and later wrote of the conversation: “”Why the high altitude?” they replied, “Because there is less moisture in the air at a high altitude and hence relatively more oxygen.” They explained how Gravity pulls the moist and humid air down into the valleys and on the low lands in the vicinity of the seacoast.” While this explanation isn’t entirely scientific or factual it does seem to be, in his own written explanation, what started Babson’s obsession. He expanded gravity’s role in his life further by deciding that gravity was responsible for his older sister drowning when he was just a boy. He reasoned that she had been a good swimmer, thus if not for gravity she would not have been pulled under the water. He also obsessed about fresh air and linked gravity to bad air and illness, and broken bones due to gravity-induced falls. The event that really changed his life occurred in 1947, when his 17 year old grandson drowned while saving another’s life. Babson again blamed gravity, but determined to fight it, he established the Gravity Research Foundation, which still exists today. Watch the video for how this institution is still making real science happen.

“The Engineer Who Spent His Life Fighting Gravity” (4:49):

“Roger W. Babson says We’ve Turned the Corner on the Depression in 1931” (1:06):

Question Of The Night: Describe a time when were you right, when everyone else was wrong?

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About Richard Doud 622 Articles
Learning is a life-long endeavor. Never stop learning. No one is right all the time. No one is wrong all the time. No exceptions to these rules.