I’ve been spending quite a few of my mornings running through the centre of Cambridge. A lot of it is beautiful – especially the colleges. And they’re very wealthy: the total endowment of Cambridge’s 31 colleges works out at a little over £4 billion, and their net assets run closer to £7.5 billion.
There are many stories to tell about how they got this rich, but a big part of it is that these institutions have been around for a long time. Cambridge’s oldest college, Peterhouse, was founded in 1284, and sixteen colleges have been around since before 1600.
Any institution that’s been around that long should be rich: a single pound (£1) invested at a very modest 3% interest rate in for 784 years would yield £2,806,708,972. So you could say that Peterhouse, with “only” £328,230,000 in assets, has done pretty poorly – I guess they spent most of it on doing the things that Cambridge colleges do.
This is the prosperity that comes from stability and peace,** and it happens to civilisations, countries, families and people. It’s easy to get rich, as long as:
- You have a little something to start with;
- You are free to do something with what you have;
- You remain in existence for long enough;
- You avoid having your assets destroyed by natural disasters, famine, war, riots or government policy;
- No one steals your stuff.***
Of course, there are plenty of cases where people get rich in other ways – protectionism, subsidies, tax breaks and the patronage of people who already have a lot**** – make it easier still.
But the point of today’s post is that having lots of assets isn’t necessarily wrong, and that we need to be clear-eyed about where they came from, for good or ill.
**I thought I’d posted on this from Thucydides, but I can’t find it
***This happens to most people at some point in history – sometimes repeatedly.
****Who may or may not have stolen it from other people at some point.