If you built a time machine and went there benjamin franklinWhat would he think of modern markets and regulations that give some investors broad access to risk, diversification, and upside while restricting the participation of others?
This was actually the antecedent of the end times. Capital Ideas Interview with economist and writer Mark Skousen.
This podcast might be the next best thing to having a time machine; It offers a glimpse into how Franklin’s financial innovations helped shape the foundations of modern capital markets.
As America approaches its 250th anniversary, attention naturally turns to the Founding Fathers and the principles that shaped the country.
Less attention is paid to the financial and institutional foundations that transformed a young agricultural society into the world’s leading economic superpower.
Benjamin Franklin helped build both.
That was the main theme of a recent Capital Ideas conversation with economist and author Mark Skousen. The Greatest American: Benjamin Franklin, the World’s Most Versatile Genius He argues that, far from being a traditional statesman, Benjamin Franklin may have been one of history’s earliest architects of modern capital formation.
Skousen, also a direct descendant of Franklin, offered a startlingly contemporary interpretation of America’s most versatile Founder: Franklin as entrepreneur, business advocate, monetary innovator, investor, and institution builder.
A Founder Who Defends the Commercial Society
Skousen began by stating that before financial infrastructure could exist, a society needed a culture that tolerated risk-taking and entrepreneurship, and that this culture was rare in the 18th century. At the time, most philosophical traditions were skeptical of trade and speculation. Franklin broke away from this. Skousen noted that Franklin is one of the few names included in the 101 Greatest Philosophers in History because he championed commercial society at a time when savings, investment, and speculation were widely viewed as morally suspect.
Franklin envisioned a dynamic, stable commercial society; who could occasionally get carried away (Franklin, like George Washington, had lost money speculating in Ohio Valley lands), but Skousen called it the most modern perspective of any Founding Father.
Printing Money and Inventing Tools to Protect Money
The first deep dive into the conversation focused on currency. Colonial America was facing a real liquidity crisis: By restricting the flow of gold and silver coins, Britain blocked the money supply needed for trade expansion. Franklin, a successful printer in Philadelphia who was successful enough to retire at age 42, published a pamphlet advocating paper currency and then signed a contract to print it himself.
But printing paper money created a problem: counterfeiting was punishable by death because it was so easy to do. Franklin’s solution was technological. He developed a technique by pressing real leaves onto printing plates, producing patterns that are impossible to copy because no two leaves are the same. He is also known to have designed one of the first American coins, a bronze piece with the inscription “mind your business.”
Skousen attributed this to the “true bill doctrine,” the idea that the money supply should increase only in proportion to business growth. Franklin supported it for most of his life, but later acknowledged that paper money could be dangerously overused after living through the inflation that nearly bankrupted the Revolution.
200 Yearly Donation
Perhaps the most striking example of Franklin’s forward-looking financial mindset emerged in his will.
Skousen explained that Franklin left £1,000 each to Boston and Philadelphia, with instructions that the funds be loaned to young artisans at 5% interest for the first century and then directed to public improvements.
According to Skousen, Franklin’s goal was to demonstrate the power of unification.
The original £1,000 eventually turned into millions of dollars, helping to support institutions including the Franklin Institute.
Skousen tied this philosophy to three principles that Franklin repeatedly emphasized: Industry. Economical. Prudence.
Franklin also believed strongly in diversification.
He spread his assets across multiple banks, a decision he later said helped him avoid the financial trouble that had devastated others.
This sounds pretty familiar today.
The Building Block of Modern Portfolio Theory
The third prong of Skousen’s case is insurance; The field, he says, deserves to be added to Franklin’s long list of careers. Fire was an omnipresent danger in colonial Philadelphia, and Franklin attacked the problem from many angles, improving the efficiency of home heating with the Franklin stove and inventing the lightning rod through electrical experiments.
In 1752, Franklin helped found the Philadelphia Contributionship, which was built around the pooling of capital to collectively manage fire risk. Most importantly, Contribution Insurance did not automatically insure every property; first assessed the risk, evaluated construction materials and protective measures, and priced the policies accordingly. According to Skousen’s framework, this underwriting model is a conceptual building block of modern portfolio theory and the broader insurance industry, which today is among the largest institutional investors in global markets.
Franklin in the Age of SpaceX
When asked how Franklin would view today’s markets, Skousen said he would be impressed by startups like SpaceX because of his documented passion for space and technological advancement.
At the same time, Franklin’s broader philosophy raises an increasingly relevant question: Who has access to innovation?
Skousen argued that Franklin, who may have informally reviewed drafts of Adam Smith’s The Wealth of Nations while they were both in London, would have preferred clear rules and broad participation over complexity and unnecessary obstacles.
He noted that Franklin was a determined free trader who believed that no nation should be ruined by trade.
Franklin’s Enduring Lesson
Franklin cannot be said to have invented modern markets. But many of the principles that underpin them—safe money, compounding, diversification, and pricing risk systems—bear his fingerprints.
Perhaps that’s why, 250 years later, in an age where the future of private markets, investor access, digital assets and capital formation are being debated, his ideas remain unexpectedly relevant.
Nick Morgan He is the President and Founder ICAN, Investor Choice Lawyers Networkis a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group. Paul Hastings law firm. Morgan previously served as Senior Litigation Counsel in the SEC’s Enforcement Division. Capital Ideas It is a series created by Morgan and Dara Albright.
