In 1790, Ben Franklin Left Boston About $4,000 to Lend to Young Tradesmen And Grow For 200 Years. By 1990, the Fund Was Worth About $4.5 Million. Franklin Had Projected Far More

In a codicil written the year before he died, Benjamin Franklin set up a compounding experiment meant to run for two centuries. Per Philanthropy Roundtable, he left £1,000 each to Boston and Philadelphia. Mental Floss roughly converts that sum to about $4,000. The catch was that the cities had to lend the money out, one young craftsman at a time.

Philanthropy Roundtable reports that the loans were reserved for “such young married artificers” as had “served an apprenticeship in the said town,” and that they were repaid at 5% interest over ten years. The City of Boston Archives quotes the codicil as requiring borrowers to be under age twenty-five. Franklin gave his reason: “I have considered that among Artisans good Apprentices are most likely to make good Citizens.”

Franklin’s Projection Assumed a Perfect Century

Franklin wrote, as Philanthropy Roundtable quotes him, that if the plan ran “without interruption for one hundred years,” each legacy would reach £131,000. That number is simply his loan rate compounded with nothing going wrong. The original legacy growing at 5% for a century comes to about £131,501. His figure assumed no defaults, no idle cash and never a year without a qualified borrower.

He then told Boston to spend £100,000 on public works and keep lending the remaining thirty-one thousand pounds.

Franklin projected that this balance would reach £4,061,000 after a second century, with £1,061,000 going to the town and £3,000,000 to the state. So his second-century number only grows the piece left after a planned withdrawal.

Boston Ran Into Reality Early

Philanthropy Roundtable puts Boston’s fund at $391,000 after its first century. It says the city “gave up on Franklin’s loan scheme and played the stock market.” Its verdict: “Franklin’s math was sound but his projections were optimistic, in part because of the demise of the system of apprentices and trades from which he had graduated.”

Boston kept its books in dollars while Franklin projected in pounds, so the two can only be compared roughly. The fund grew, just much more slowly than an continuous 5% would suggest. Per Mental Floss, some of the money built the Franklin Union technical school. It opened in 1908 with help from Andrew Carnegie and later became the Benjamin Franklin Institute of Technology.

Year 200 Brought a Fight Over the Money

Education Week reported in April 1990 that Boston’s fund had grown to roughly $4.5 million, and that Massachusetts was entitled to about 20% of it. A later account from Philanthropy Roundtable puts the value at almost $5 million.

That split changed. In December 1993, per the Boston Globe, Massachusetts’ highest court ruled that the trust had expired on June 30, 1991. The money belonged to the city and state, with the state getting roughly three-quarters. In 1990, a Boston official told Education Week the city hoped to continue “in the same vein that Franklin intended, to use the funds for training programs for young people.”

Philadelphia Came Up Even Shorter

Philanthropy Roundtable says Philadelphia’s fund totaled $172,000 by 1907, “less than a fourth of what Franklin had projected,” and that $133,000 of it went to the Franklin Institute.

Per Philanthropy Roundtable, the balance was worth just $2 million by 1990. Philanthropy Roundtable also says the city first planned to spend its $520,000 share on tourism promotion. Billy Penn reports that performers including Ben Vereen and Aretha Franklin were invited. After a public outcry, the money went to scholarships for young people learning a trade instead, and about $1.5 million went to the state, according to Philanthropy Roundtable. Philanthropy Roundtable’s account links the gap between the two cities to management choices.

Your Retirement Calculator Uses Franklin’s Math

A retirement calculator does what Franklin did: it picks one steady rate and compounds it without a break. Put away $100,000 at 7% for 30 years, and it shows about $761,000.

Drop the rate to 5% and the result falls to about $432,000. Two percentage points cost you roughly $329,000, and real portfolios never earn any rate in a straight line.

• Run your plan at a lower rate. Treat the calculator’s result as the best case. If your retirement only works at 7%, check what 5% looks like now, while you still have time to change how much you save or when you retire.
• Avoid breaks in compounding. Franklin’s fund fell behind as the borrowers he had in mind faded away. For a household, the same thing happens when you pause contributions, park long-term money in a 12-month CD paying the national average of 1.8%, or carry card debt at the average 21% APR.
• Don’t spend the projection. A costly mistake is planning withdrawals around the number a calculator promised instead of the balance you actually have. Base your spending on real statements.

Franklin’s money did grow for 200 years, and it still pays for trade training. Remember the gap between his projection and the actual result whenever a spreadsheet shows you a smooth line.

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