Steve Cotler

In his 1905 book, The Protestant Ethic and the Spirit of Capitalism, German economist and sociologist Max Weber theorized that capitalism’s ascendancy owed much to Protestantism’s emphasis on hard work and worldly success. Whether or not Weber was actually right, the term he coined, “Protestant ethic,” has, to many, become accepted as part of our shared American definition.

Also in 1905, another German, Albert Einstein, as a pioneer of modern physics, published three seminal papers, including one that would eventually bring him a Nobel Prize. Surprisingly to us today, the prize-winning paper was not the one on special relativity (“On the Electrodynamics of Moving Bodies”) in which he derived the formula that eventually made him a household name: E=mc². It was a paper about the photoelectric effect (“On a Heuristic Viewpoint Concerning the Production and Transformation of Light”) that proposed the existence of energy quanta; energy had to exist in discrete, non-continuous steps.  The third paper (“On the Motion Required by the Molecular Kinetic Theory of Heat of Small Particles Suspended in a Stationary Liquid”) explained Brownian motion—the jiggling of small particles in a liquid—a phenomenon that had been observed for almost a hundred years, but was unexplained. With this paper, Einstein indirectly confirmed the existence of atoms.

In 1905, physics was a rapidly expanding field. Scientific—include here the new “science” of economics—progress was accelerating, and science was expected to provide physical/mathematical/logical explanations to all previously unsolved or unsolvable conundrums…including the stock market.

In 1904, Roger Ward Babson, a 29-year-old, tenth-generation native of Gloucester, MA, formed what would eventually become Babson’s Reports, a stock market research/analysis company. Babson, a Protestant, a capitalist, and also a graduate of MIT, subscribed to a scientific explanation of economic cycles, relying upon Newton’s law of action and reaction. Babson’s company prospered, and he became well known and somewhat influential. In a speech on September 5, 1929, he predicted, “Sooner or later a crash is coming, and it may be terrific…Factories will shut down…Men will be thrown out of work…and the result will be a serious depression.” By the end of the day, the market was down 3%. John Kenneth Galbraith, in The Great Crash (p. 85), noted that

“Babson was not a man who inspired confidence as a prophet…. As an educator, philosopher, theologian, statistician, forecaster and friend of the law of gravity [Blogger’s note: in 1948, Babson founded and financed the Gravity Research Foundation which encouraged research into anti-gravity physics], he has sometimes been thought to have spread himself too thin. The methods by which he reached his conclusions were a problem. They involved a hocus pocus of lines and areas on a chart. Intuition and even mysticism played a part. Those who employed rational, objective and scientific methods failed to foretell the crash. In these matters, as so often in our culture, it is far, far better to be wrong in a respectable way than to be right for the wrong reasons.”

A generous philanthropist, Babson founded three business colleges: Babson College in Babson Park, MA (1919),  Webber College, now Webber International University, in Babson Park, FL (1927), and the now-defunct Utopia College, in Eureka, KS (1946).

Eccentric and somewhat poetic, Babson wrote in his autobiography, Actions and Reactions (1935):

“Another thing I have been doing, which I hope will be carried on after my death, is the carving of mottoes on the boulders at Dogtown, Gloucester, Massachusetts. My family says that I am defacing the boulders and disgracing the family with these inscriptions, but the work gives me a lot of satisfaction, fresh air, exercise and sunshine. I am really trying to write a simple book with words carved in stone instead of printed paper. Besides, when on Dogtown common, I revert to a boyhood which I once enjoyed when driving cows there many years ago.”

For more on this unusual man, see this review of his autobiography.

Last month I walked among Babson’s boulders (images of all 24 here). Viewed from within this new economic crisis, Babson’s worthy, Protestant ethic inscriptions seem quaint and entirely out of touch with modern Wall Street sensibilities.

Be Clean       Be on Time       Be True       Courage       Get a Job    Help Mother
Ideals       Ideas       If Work Stops Values Decay       Industry       Initiative
Integrity       Intelligence       Keep Out of Debt       Kindness       Loyalty
Never Try/Never Win       Prosperity Follows Service       Save
Spiritual Power        Study       Truth       Use Your Head       Work

What would today’s Wall Streeters inscribe on their boulders?

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[If you are in Gloucester and want to see the Babson Boulders, contact Walk the Words for a personal tour. Photos of me and the boulders courtesy of Seania McCarthy/Walk the Words.]