How a 200-Year-Old Gift From Benjamin Franklin Made Boston and Philadelphia a Fortune
Less than a year before his death on April 17, 1790, Benjamin Franklin added a codicil, or addendum, to his will. In it, he bequeathed 1000 pounds sterling, or what would have been the equivalent of $4000, to the cities of Boston and Philadelphia. (Franklin had been born and raised in Boston but left for Philadelphia when he was 17, making both cities near to his heart.)
The money, he wrote, was to be handled in a very particular way. For the first 100 years, each of the 1000 pounds sterling would accrue interest and be used to fund loans for young tradesmen starting out in business. Franklin, who had become a printer as the result of a loan given to him, valued resources for apprentices.
At the end of the 100 years, the cities could take 75 percent of the principal and spend it in public works. Boston, he suggested, should invest in a trade school. Philadelphia could possibly pay for water pipes connected to Wissahickon Creek. The remaining 25 percent would be left until another century had passed, at which point the cities and their respective states could spend the funds in whatever way they wished. But after 200 years, would the economic needs of the modern world match up with Franklin’s wishes?
A "vain of fancy"
Franklin had been a lifelong philanthropist, gifting Philadelphia with its first public library, its first hospital, its first volunteer fire department, and even its first streetlight. His Academy of Philadelphia became the University of Pennsylvania in 1750. The funds for his trusts were accumulated from his salary as governor of Pennsylvania from 1785 to 1788, a move informed by the belief that public servants shouldn’t be paid. It was an edict he even tried to include in the Constitution.
Franklin’s desire for the trusts was to bolster the careers and opportunities for young tradesmen looking to start their own businesses. It was a lofty ambition that assumed that need would endure for the next two centuries. Even Franklin was unsure his wishes could be adhered to without dissent. “Considering the accidents to which all human Affairs and Projects are subject in such a length of Time, I have perhaps too much flattered myself with a vain Fancy that these Dispositions will be continued without interruption and have the Effects proposed,” he wrote in his will.
There was wisdom in his words, though it would take some time for them to materialize. For the first 100 years, the funds were used as Franklin intended, subsidizing the pursuits of apprentices hoping to perform their skilled trade. Franklin was very specific about the demographic of loan recipients: They had to be male, a mechanic who had undertaken an apprenticeship, under the age of 25, and married.
As time went on and the concept of apprenticeships fell by the wayside, critics of Franklin’s rigid parameters began to emerge. In 1884, shortly before the 100th anniversary of the funds, The Boston Globe deemed the trusts “inflexible” and irrelevant to a world in which only three people were using Boston’s trust funds for their intended trade purpose. In response, trustees soon removed the apprenticeship requirement, though the other elements remained.
discourse turns disagreeable
If Boston was vocal about how to best use the money, it was because they had more of it. In 1887, Philadelphia’s investments had left them with a total of just $70,800 compared to Boston’s $327,799.45. With 75 percent of the money to be made available for public works in 1890, Philadelphia opted to open a museum named the Franklin Institute. In Boston, a debate began about how best to spend it. Some suggested it could help reduce Boston’s debt. Others wanted to build a public bath house. A recreation hall for Boston Public Garden was discussed.
As Franklin predicted, the discourse eventually turned acrimonious. From 1890 to 1904, no one could agree on how to spend the money, and controversy surrounded a group of Boston aldermen who were accused of misappropriating the funds for junkets. Finally, it was decided that opening a school would honor Franklin’s original intentions of supporting skilled trades. Wealthy philanthropist Andrew Carnegie agreed to donate money if Boston donated land and used the trust to build a trade school. The Franklin Union—later renamed the Benjamin Franklin Institute of Technology—opened in 1908 and eventually became a two-year technical school.
As the 20th century continued, restrictions on the trusts were loosened further. In Boston, more than 7000 medical students received loans between 1960 and 1990.
The way to wealth—and litigation
As the second century of Franklin’s trust drew to a close, both cities were looking to benefit greatly from his generosity. Boston’s trust fund was worth $4.5 million; Philadelphia’s was worth $2 million. Most of the money—roughly 76 percent in the case of Massachusetts—would go toward the state. Just as they had 100 years prior, discussions were had about how the funds should be spent.
In Philadelphia, advocates for low-income housing lobbied for the money. So did those who believed education should be paramount. Philadelphia City Hall argued for elaborate annual parties to draw tourists. Mayor Wilson Goode appointed a committee of Franklin experts to try and adhere to his wishes. The city’s share, roughly $520,000, was ultimately used for grants for high school students looking to learn a trade, with the state giving their share of roughly $1.5 million to the existing Franklin Institute museum.
While Boston saw arguments over the best use of the funds, it also grappled with a claim. The Benjamin Franklin Institute of Technology argued they were owed the $4.5 million due to a 1958 law that terminated the trust and gave it over to the school. The state’s Supreme Court, however, ruled at the time that the trust couldn’t end prematurely. The school argued the law was still valid, however. After several years of court dates, the school was finally awarded the $4.5 million—the total of the funds due both Boston and Massachusetts—in 1994.
Inspired by Franklin’s philanthropy, in 1936 multimillionaire Jonathan Holden used $2.8 million to fund a series of trusts, some of which weren't due to be released for up to 1000 years. Before the idea was leveled in court and converted to trusts that paid out yearly instead of disrupting an economy in the distant future, his donation to the state of Pennsylvania alone would have been worth $424 trillion.