Abstract: Business Barometers: Roger Babson and the Rise of Economic Forecasting

Walter Friedman

Abstract

Forecasting is an ancient art that has always been part of commerce. Beginning in the late nineteenth century, forecasting methods became more scientific. Roger Babson was one of the pioneers of this transition. He collected a range of data, including bank clearings, immigration numbers, commodity prices, railroad earnings, and other information and combined them to form the Babsonchart, which offered predictions of future booms and busts. By the 1920s, Babson was mailing out his forecasts to businessmen and investors around the globe. Not as sophisticated as his competitors at Harvard and Yale, he nonetheless popularized the industry and, also unlike them, correctly predicted the 1929 crash. The story of his forecasts reveals how longstanding commercial ambitions, like the desire to predict the future, became incorporated into managerial capitalism, with its quest for rational efficiency, at the start of the twentieth century.