Benjamin Franklin's legacy of virtue: The Franklin trusts of Boston and Philadelphia

Date of Award


Degree Type


Degree Name

Doctor of Philosophy (PhD)




Ralph Ketcham


Massachusetts, Pennsylvania, Benjamin Franklin, American history, Economic history, Law

Subject Categories

United States History


In life, Benjamin Franklin sought to manage debt, organize credit, build capital, and promote virtue in order to sustain liberty in the young American nation. After death, Franklin sought to create self-sustaining trusts that would produce ever-increasing capital to be used by the industrious to live virtuously and improve the quality of their cities. In 1789, Benjamin Franklin added a codicil to his last will and testament. He bequeathed $}2,000 sterling (\$4,444) to Boston and Philadelphia and to the Commonwealths of Massachusetts and Pennsylvania with explicit instructions as to how they should utilize and dispose of the sum over the course of 200 years. After 100 years of compounding interest on principal his instructions specified a 75% distribution for public improvements, reserving 25% to be held in principal, compounding for another century. Franklin was fascinated with the power of money invested at interest and, particularly, the compounding feature of the 18th century "sinking fund" and its ability to retire large national debt. Franklin adapted this concept in structuring his testamentary trusts.

For the entire 200 years the Franklin Funds were supposed to be invested in loans to young married artisans helping them establish small businesses. The managers in both cities failed to continuously loan the funds to individuals, undervaluing Franklin's proposition that each citizen, working for a higher standard of living and financial independence, when combined with other industrious individuals, would establish a strong moral and ethical community and a broad economic base capable of metabolizing change associated with urbanization and industrialization. Thus, Franklin's trusts failed to promote the value of industry.

Despite the intercession of the courts to stop abuse, the trusts also failed to generate the $36 million forecast by Franklin in the codicil. The 1991 combined value of the two Franklin Trusts was \$6.5 million of compounded capital, demonstrating the virtue of frugality. As to Franklin's last lesson, the nation is still struggling with the management of capital and the economic, social, and political consequences of large public debt. The promise and prosperity of a saving people and a saving nation remains illusive.


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