A recent post about the founding of Babson resonates on the occasion of this week’s Climate Action Summit. Here’s why:
- our founder believed data can help businesses act more responsibly. This is a focus of my research and writing and this is a hot topic, now more than ever. For example, articles on the potential impacts of blockchain on sustainability disclosures and greener supply chains and governance are here and here, respectively. I’ve also prepared sustainability reports, and noted cities should also see them as essential as a step to acheiving net zero environmental harm.
- he embodied entrepreneurship and far-sightedness by (1) making his fortune in selling analyses of investments and business conditions and then (2) reinvesting in businesses with positive social impacts. Both of these are part of the $26 Trillion in estimated economic opportunities in decarbonization (for example, Las Gaviotas illustrates how to profitably restore rainforests).
- he did his best to shake people out of complacency when the status quo was not sustainable prior to the crash of 1929. With Mel Edwards and Ed Freeman, we noted this is a pattern among visionary business leaders, especially now.
For these and other reasons described below, it’s clear that Roger Babson would be excited about the opportunities in the current era of #ClimateAction.
Happy 100th birthday, Babson College!
In a 1930 issue of The New Yorker magazine, Henry F. Pringle profiled Roger Babson and explained his motivations for founding Babson College, which the author described as the entrepreneur’s “greatest enthusiasm” — on par, the author suggested, to having a child.
(1) the Seer of Wellesley Hills (as Roger Babson was known for predicting the crash of 1929) likely would have endorsed our learning goals,
(2) his founding motivation — his belief in the dire need for infusing business leaders with a sense of ethics and societal responsibility — resonates now, as does the fact that
(3) he believed that measurement and reporting data about business organizations can benefit investors and all of society (a focus of my research).
The whole 3-page article is worth a read. Here are highlights:
Why did he found our school?
“What America needed, he decided… was men [reminder: this was written in 1930 — we would now use the word ‘people’] trained for the responsibility of wealth, and so he founded a school like no other in the country.” His father Nathaniel had judged Harvard, Amherst, and Williams to have been “breeding-places for idleness” (Roger had been allowed to attend that other Boston area school with a beaver for a mascot, MIT).
What were the roots of his values, and what were they?
“He comes of New England stock, and is a sternly religious person who makes a clear distinction between investment and speculation. His forebears, knowing that the Lord would frown if profits came too quickly, found satisfaction in toiling for a living. Mr. Babson feels the same way. This leads him to make rigid distinctions between speculation and investment, and to exhort his clients against purchases on margin.”
Given these strong religious feelings (he said “there is an excess of everything except religion” in the United States, and several of his authored books concerned religion or morality), it is especially interesting that Roger Babson founded an educational institution for scions of “Captains of Industry, of millionaires. They will control the destinies of thousands of employees.”
What was his vision for the world?
“Roger Babson has often dreamed of a world in which there would be no war, no bitter contrast between affluence and poverty, no labor disputes.” He also had a theory as to whom to blame for disputes with employees. “He felt that labor disputes were the result of bad management on the part of capital, and he pondered several solutions. One was to prevent the ownership of great industries from passing by inheritance to sons utterly unqualified to run them. He went so far as to question all inheritances.”
The author of the profile allows himself to editorialize at one point, writing that “Roger Babson has often been strangely radical in his utterances on capital and labor,” and (presumably) Pringle imagines that “[t]here was a sulphurous odor of socialism in the air” when Babson testified before a federal industrial commission. “He said bluntly that too many industries were controlled by bankers indifferent to the needs of the wage-earner. They were interested only in dividends. Finally, one nervous commissioner asked him whether this was not sheer socialism.”
Babson’s answer to the question of whether his concerns for societal and employee well-being smacked of socialism are worth remembering:
“‘When a man is asked for a definition of a gentleman,’ Mr. Babson replied, ‘he gives one that will include himself. When asked for a definition of socialism he gives one that will exclude himself.’”
Roger Babson felt sympathy for investors; he “pride[d] himself that he represents the buyer of securities, while the vast machinery of Wall Street is organized for the benefit of those who sell.” He also warned that “bank mergers may be carried too far and subject America to new perils.”
Especially interesting for those of us who are fans of data, birds, and conservation:
Roger Babson was convinced that “statistics could prevent international complications” (indeed, he started earning his fortune by providing statistical services to investors) and was an ornithologist in later years who created two bird sanctuaries.
A final two quotes about Roger Babson seem worthy of highlighting. First, “[u]tility, rather than form, interests him,” and, finally, “in his late twenties, he became a salesman, and traces of the art still linger. Thus he is never at a loss for words. Thus he is not unwilling to look back across the years and relate the story of his achievements.”
May we, as we look past the finish line of 100 years and plan for sustaining Babson’s legacy into a second century, likewise celebrate our successes in living up to our founder’s aspirations for “his greatest enthusiasm.”
The author wishes to thank our colleagues in the Economics Division for leaving a photocopy of the quoted profile pinned on a bulletin board in their cozy retreat in the woods. The full article may be found on pages 23–25 of the February 15, 1930 issue of The New Yorker magazine.