Ben's Bad Calculation

Long-range financial forecasts can embarrass anyone--even so savvy a money manager as Benjamin Franklin. Eager to demonstrate that a penny saved is indeed a penny earned, Ben at his death in 1790 left a bit less than $9,000 in trust for 200 years to the cities of Boston and Philadelphia; he directed that it be loaned to "young married artisans" who had finished apprenticeships and were setting up their own businesses. Interest on the loans, he predicted would build up the funds to $18 million by 1990.

No way. The funds were drained in the mid-19th century by defaults among borrowers who took the money and ran (illustrating another Franklin maxim: "Opportunity is the great bawd"). Today the trusts hold less than $4 million: $3.2 million in Boston (now loaned to medical students at 2%), and $770,000 in Philadelphia (currently invested in mortgages). Boston Trustee Noel Morss figures that his city's sum will grow only to $5 million by 1991, when it is to be divided between Boston and the state of Massachusetts under the terms of Franklin's will. The suggestion has been made that that sum be donated to Boston's Franklin Institute, but the legislative time and effort required to process such a transfer might well cost more than the $5 million.

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