Benjamin Franklin and the law of compounding interest

Benjamin Franklin - Wikipedia, the free encyclopedia: "At his death, Franklin bequeathed 1000 pounds (about $4400 at the time) each to the cities of Boston and Philadelphia, in trust for 200 years.

The origin of the trust began in 1785 when a French mathematician named Charles-Joseph Mathon de la Cour wrote a parody of Franklin's Poor Richard's Almanack called Fortunate Richard. In it he mocked the unbearable spirit of American optimism represented by Franklin. The Frenchman wrote a piece about Fortunate Richard leaving a small sum of money in his will to be used only after it had collected interest for 500 years.

Franklin, who was 79 years old at the time, wrote back to the Frenchman, thanking him for a great idea and telling him that he had decided to leave a bequest of 1,000 pounds each to his native Boston and his adopted Philadelphia, on the condition that it be placed in a fund that would gather interest over a period of 200 years.

As of 1990, over $2,000,000 had accumulated in Franklin's Philadelphia trust since his death. During the lifetime of the trust, Philadelphia used it for a variety of loan programs to local residents. From 1940 to 1990, the money was used mostly for mortgage loans. When the trust came due, Philadelphia decided to spend it on scholarships for local high school students.

Franklin's Boston trust fund accumulated almost $5,000,000 during that same time, and eventually was used to establish a trade school that, over time, became the Franklin Institute of Boston. (excerpt from Philadelphia Inquirer article by Clark De Leon)"