How A Thousand-Year Trust Could Rule The World

A story in Lapham's Quarterly looks at the weird, delightful history of "Methuselah Trusts" — trust funds set up to accumulate interest for hundreds of years, allowing them to build massive wealth through the power of compound interest.

Ben Franklin makes a cameo, but the real hero of the story is a lawyer named Jonathan Holdeen — a multimillionaire who "gave himself haircuts to save money, advocated the use of phonetic spelling in English, and lived on a diet of prunes and shredded wheat."

Starting in the 1930s, the story says, Holden "sluiced $2.8 million into a series of five-hundred- and thousand-year trusts—just one of which, allocated to the Unitarian Church, would be worth $2.5 quadrillion upon its maturation in the twenty-fifth century."

Inevitably, the matter wound up in court. Opponents pointed out that if the trusts grew faster than the overall economy (where growth is also compound), they would basically take over the world.

"Any time you wanted to make a telephone call or take a trip...You would be paying money to the Holdeens," one economic forecaster said. "Everyone in the world would work for the Holdeens."

The story ends with a financial whimper. The trusts are allowed to stand, but they are forced to make annual payments to beneficiaries. That means they can't perpetually reinvest their interest payments, and can't amass unfathomable riches.

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