Fundamentals of Prosperity: What They Are and Whence They Come

by Roger Ward Babson

Panics are caused by spiritual causes rather than financial. Prosperity is the result of righteousness rather than of material things.

The large black areas on the adjoining chart are formed by combining and plotting current figures on New Building, Crops, Clearings, Immigration, Total Foreign Trade, Money, Failures, Commodity Prices, Railroad Earnings, Stock Prices and Politics in order to give a composite view of business in the United States. (When Interstate Commerce reports of earnings of all United States railroads became available, January, 1909, this record was substituted in place of the earnings of ten representative roads which had been used previous to that time. Revised scales for monetary figures were also introduced, in August, 1912.)

The line X-Y represents the country’s net gain or growth. Based on the economic theory that “action and reaction are equal when the two factors of time and intensity are multiplied to form an area,”

It will be seen that each area is divided into halves by a narrow white line. This is to emphasize the fact that the first halves of areas below the X-Y line are really reactions from the extravagance, inefficiency and corruption which existed during the latter half of the preceding “prosperity” area. Contrariwise, the first halves of areas above the X-Y line are really reactions from the economy, industry and righteousness developed during the hard times just preceding. The high points of the stock market have come in the early part of the prosperity areas and the low points have come about the beginning of the depression areas. In 1914 the war held down prices of all securities. The highest prices of bonds have usually come about the end of the depression areas and high money rates, and lowest bond prices at about the end of the prosperity areas.

But what causes these fluctuations in business and prices? Statistics show that panics are caused by spiritual causes, rather than financial, and that prosperity is the result of righteousness rather than of material things. Hence, the importance to industry and commerce of the forces already mentioned. These spiritual forces are the true fundamentals of prosperity. This in turn leads us to consider from where they come and upon what we are to depend for their further development. The following pages will give the answer.

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What are the sources of these fundamentals of prosperity? Where do we get this faith, integrity, industry, coöperation and interest in the soul of man upon which civilization is based?

As already explained, we do not get it from the raw materials. We have always had the raw materials. We do not get it from education. From a statistical point of view Germany is the best educated country in the world. It has the least illiteracy. It has the largest percentage of scientific culture. No, these three fundamentals do not come from education. They do not come from the inheritance of property. I mentioned in the preceding pages the investigation we made of leading captains of industry in America, the men who head the various greatest industries in this country. Out of this group of men, only ten per cent. inherited their business, while only fifteen per cent. received special education. This shows that the source of these qualities is from something more than wealth or education.

We are striving and even slaving to lay up property for our children, when statistics clearly show that the more we lay up for them the worse off they are going to be. If statistics demonstrate any one thing, they demonstrate that the less money we leave our children the better off they will be; not only spiritually and physically, but also financially. When it comes to the question of education, we work and economize to give our children an education and to send our children to college. Yet statistics show that only a small percentage of these leading business men are college graduates.