Benjamin Franklin died on April 17, 1790, at the age of 84. His will contained the usual bequests to family and friends — and then, almost as a footnote, one of the most remarkable financial experiments in recorded history.
The Exact Terms of the Bequest
Franklin left £1,000 each to the cities of Boston and Philadelphia. But the terms were unusual. The money was not to be spent immediately. Instead, it was to be loaned to young tradespeople (specifically married apprentices under 25) at 5% annual interest, with the interest reinvested — compounding continuously.
After 100 years (1890), each city could withdraw up to £100,000 for public works projects. The remainder had to continue compounding until 1990 — a full 200 years after Franklin's death.
I have considered that among artisans good apprentices are most likely to make good citizens... Hereby I have thought to give them an opportunity of sharing in the advantages arising from the compound interest of a small sum of money in a considerable course of time.
— Benjamin Franklin, Will, 1789Franklin was explicit: this was a demonstration of compound interest. He wanted future generations to witness, in financial reality, what he had spent decades writing about theoretically. The will was his final lesson.
The Timeline: What Happened Over 200 Years
The Bequest
Franklin dies. £1,000 each deposited with Boston and Philadelphia, with strict instructions. At period exchange rates, approximately $4,440 each in USD of the era.
First Century
Both cities loan the funds to young tradespeople at 5% interest. Administration was challenging — tracking individual loans, collecting repayments, and reinvesting at consistent rates proved difficult. Neither city achieved the theoretical 5% return consistently throughout the period.
First Withdrawal
Both cities withdraw funds for public works. Boston's fund had grown to approximately $400,000; Philadelphia's to around $130,000. Boston used its withdrawal for vocational education; Philadelphia for public works.
Second Century
Boston invests more aggressively, including eventually in equities. Philadelphia maintains more conservative positions. The divergence in investment strategy produces dramatically different outcomes.
Final Distribution
Boston's fund has grown to approximately $5 million. Philadelphia's to approximately $2.3 million. Combined total: ~$7.3 million from an original £2,000 bequest 200 years earlier.
The Math: What Should Have Happened
Franklin's projected 5% annual compound return produces these theoretical results:
| Year | Theoretical Value at 5% | Boston Actual | Philadelphia Actual |
|---|---|---|---|
| 1790 | £1,000 | £1,000 | £1,000 |
| 1890 (Year 100) | £131,501 | ~£100,000 | ~£32,000 |
| 1990 (Year 200) | £17.3M | ~$5M | ~$2.3M |
Both cities fell significantly short of Franklin's theoretical projection — Boston more than Philadelphia in percentage terms, despite having a larger absolute outcome. The culprits: below-5% actual lending rates throughout much of the first century, administrative friction, and the loss of compounding during periods of dispute over the fund's management.
📈 Run these compounding scenarios with your own numbers.
Compound Interest Calculator →The Rate Sensitivity: Why Boston Beat Philadelphia
The difference between Boston's ~$5M and Philadelphia's ~$2.3M — from the same starting amount, the same instructions, the same time period — comes down almost entirely to investment return rates in the second century. Boston's more aggressive equity investments in the later decades produced higher compounding rates that, over decades, created dramatically different outcomes.
This is the most important practical lesson of the experiment: small differences in annual return rate produce enormous differences in outcome over long periods. The math at different rates over 200 years:
| Annual Return | Year 50 | Year 100 | Year 150 | Year 200 |
|---|---|---|---|---|
| 3% | £4,384 | £19,219 | £84,272 | £369,360 |
| 5% | £11,467 | £131,501 | £1.5M | £17.3M |
| 7% | £29,457 | £867,716 | £25.6M | £752.9M |
| 10% | £117,391 | £13.8M | £1.6B | £190B |
The difference between 5% and 7% over 200 years is a factor of 43x. The difference between 5% and 10% is a factor of 10,982x. This is why minimizing investment fees is so critical: a 1% annual fee drag doesn't reduce your returns by 1% — it reduces them by the compounded effect of that 1% over your entire investment horizon.
What It Means for You
You probably won't invest for 200 years. But the same mathematics apply over 30–40-year investment horizons. The core lessons from Franklin's experiment:
- Start early. The second century of Franklin's experiment produced far more wealth than the first. The last decade of your 30-year investment horizon produces more than the first 20 years combined.
- Rate matters more than you think. The difference between a 0.2% MER index ETF and a 1.5% actively managed fund isn't 1.3% — it's the compounded effect of that 1.3% over decades.
- Never interrupt compounding unnecessarily. Boston's administrative disputes and Philadelphia's conservative management both reduced effective compounding periods. Avoiding unnecessary withdrawals, fund switches, or tax events keeps your compounding period intact.
- Time is the variable you can't buy back. Franklin's £1,000 principal was fixed. What he could give was time — and 200 years of it produced millions from thousands.
🔥 Find your FIRE number and see when compounding gets you there.
FIRE Calculator →Frequently Asked Questions
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Franklin proved his point over 200 years. You can prove it over 30–40 in AlgoPotato — the free browser idle game where compounding drives everything.
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