Roger Babson
Roger Babson
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Roger Babson

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Roger Babson

Roger Ward Babson (July 6, 1875 – March 5, 1967) was an American entrepreneur, Georgist economist, and business theorist in the first half of the 20th century. He is best remembered for predicting the Wall Street crash of 1929 and founding Babson College. He also founded Webber College (Webber International University) in Babson Park, Florida, and the defunct Utopia College, in Eureka, Kansas.

Roger attended the Massachusetts Institute of Technology and worked for investment firms before founding Babson's Statistical Organization (1904), which analyzed stocks and business reports; it continues as Babson-United, Inc.

Babson was born to Nathaniel Babson and his wife Ellen Stearns as part of the 10th generation of Babsons to live in Gloucester, Massachusetts. Roger attended Massachusetts Institute of Technology and graduated from MIT in 1898 with a degree in engineering. As a college student, he lobbied the dean to include a business course, which resulted in a course known as "Business Engineering." Eventually, the business engineering program was expanded, and it is now seen as the forerunner of the MBA degree.

Upon graduation in 1898, Babson worked for investment firms selling bonds. In 1904, Roger and his wife Grace founded the Babson Statistical Organization (BSO) at their home in Wellesley, Massachusetts, with eight clients in its first year. At this time, the modern economic forecasting industry in the United States began to take form. Entrepreneurs (rather than academic economists) such as Babson, John Moody, and James H. Brookmire, dominated the early generation of forecasting services. The industry grew rapidly in the 1920s, and by 1929, Babson's newsletter had 12,000 subscribers (about one third of US market), each paying around $100 per year. The BSO's clients included business managers, investors, and credit-granting institutions.

Initially, the BSO aimed to serve as a central clearinghouse for business data, and to provide investment advisories. Babson's early motivation came in the wake of the 1907 financial panic, after which he sought to "tell readers when to buy and when to sell; and what to buy and what to sell." That year, Babson launched the first weekly forecasting service in the United States, and constructed an index that measured what he called "general business activity". He called it the "Babsonchart". Although Babson's methods were crude by modern standards (he believed Newtonian physics applied to periods of prosperity and depression), they produced some of the first "at a glance" economic indicators.

The collapse of the U.S. stock market in 1929 (and ensuing Great Depression) triggered a crisis for the forecasting industry. Many forecasters such as Irving Fisher had failed to predict the crash or the duration of the downturn, undermining confidence in their models. Babson pivoted his business and marketing strategy, but the earlier aura of "scientific forecasting" was tarnished.

The Babson Statistical Organization has evolved over time and is now operated privately as Babson-United.

In the fall of 1908, Roger Babson met Sidney Linnekin, a young carpenter from Gloucester, Massachusetts, who impressed him with his diligence while working on Babson's garage in Wellesley Hills. Their acquaintance led to a collaboration when Linnekin expressed interest in studying economics and bond salesmanship. Babson created a correspondence course in bond-selling, the first of its kind in the United States, which Linnekin later helped market and expand into a broader program in business education.

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