Methuselah Trusts, Compound Interest, and the Silent Legacy of Jonathan Holdeen
Trust Issues is an utterly fascinating article at Lapham’s Quarterly about “Methuselah” trusts. Named after the long-lived Biblical Methuselah, these perpetual trusts are pockets of money that are meant to accrue interest over extraordinarily long periods of time.
The catch? We’re actually talking about compound interest.
The main focus of the article is Hartwick College, which actually has a thousand-year trust. Just how much money, you might ask yourself, does something like that return?
The Hartwick College trust wasn’t the first attempt at a long-term trust. Benjamin Franklin actually stipulated in his will for money to be set aside for both Boston and Philadelphia. This money was to be invested and accrue compound interest for 100 years. But even more than that, after that first century… an additional amount of funds was to be re-invested, set aside to grow for another 100 years. At the time of his death in 1790, Benjamin Franklin was thinking as far ahead as 1990.
The article also references a Peter Thellusson, who in his will instructed that his £600,000 fortune be invested at compound interest… until every existing heir was dead. Translated into today’s terms, this would have amounted to about $68 million dollars.
The ensuing legal battle that took place was, suffice it to say, massive. It took 62 years to settle and ate up most of the money through legal fees. It was also the inspiration for the fictional Jarndyce and Jarndyce court case, found in Charles Dickens’ Bleak House.
In terms of the longest trust set up, the man responsible for the Hartwick College gift was Jonathan Holdeen. There are several great lines in the article, but this is a fantastic description of the man:
His diet aside, Holdeen’s legacy was impressive. He took Franklin’s vision, and went about creating an even larger, more grandiose version of a perpetual trust… creating one that wouldn’t mature for a thousand years. While the trust still exists (but no longer accumulates compound interest), Hartwick receives an impressive $450,000 annually from the gift.
But what’s crushingly sad is that Holdeen never asked or required recognition for the gift. As a result, despite these massive amounts received by the college… there is no mention or monument to Holdeen. His name is nowhere to be found on the campus.
After reading this article yesterday, I’ve been thinking a lot about it. I focus so much on my day to day, trying to imagine long term goals like Franklin and Holdeen kind of blows my mind. It’s a fascinating read, and even if you’re not that into money… I highly encourage you give this article a few minutes of your time.
It’s worth reading, and will be good for you… in the long run.
The Clock in the Mountains