The Eighth Wonder of the World Is Compound Interest

Albert Einstein? Napoleon Bonaparte? Baron Rothschild? Paul Samuelson? John D. Rockefeller? Advertising Copy Writer? Apocryphal?

Dear Quote Investigator: Salespeople and advertisers invoke the name of the scientific genius Albert Einstein when they wish to impress gullible individuals. The following grandiose statement has been attributed to Einstein:

Compound interest is the eighth wonder of the world.

Sometimes the remark is credited to financial luminaries such as Baron Rothschild or John D. Rockefeller. Would you please explore this topic?

Quote Investigator: The saying appeared in a section titled “Probably Not By Einstein” in the authoritative volume “The Ultimate Quotable Einstein” from Princeton University Press. 1

The earliest close match located by QI appeared in an advertisement for The Equity Savings & Loan Company published in the “Cleveland Plain Dealer” of Ohio in 1925. No attribution was specified. Boldface added to excerpts by QI: 2

The Eighth Wonder of the World—is compound interest. It does things to money. At the Equity it doubles your money every 14 years, but here is an even greater wonder of it—

Deposit five dollars a week for twenty years, say, and let the interest accumulate. You will have actually put away only $5,200, but you will have $8,876.80. The difference of $3,676.80 is what 5% compound interest has done for you.

QI hypothesizes that the statement was crafted by an unknown advertising copy writer. Over the years it has been reassigned to famous people to make the comment sound more impressive and to encourage individuals to open bank accounts or purchase interest-bearing securities.

Below are additional selected citations in chronological order.

Continue reading The Eighth Wonder of the World Is Compound Interest

Notes:

  1. 2010, The Ultimate Quotable Einstein, Edited by Alice Calaprice, Section: Probably Not By Einstein, Quote Page 481, Princeton University Press, Princeton, New Jersey. (Verified on paper)
  2. 1925 April 27, Cleveland Plain Dealer, (Advertisement for The Equity Savings & Loan Co., 5701 Euclid Ave.) Quote Page 26, Column 6, Cleveland, Ohio. (GenealogyBank)

When the Facts Change, I Change My Mind. What Do You Do, Sir?

John Maynard Keynes? Paul Samuelson? Winston Churchill? Joan Robinson? Apocryphal?

Dear Quote Investigator: John Maynard Keynes was an enormously influential economist, but some of his detractors complained that the opinions he expressed tended to change over the years. Once during a high-profile government hearing a critic accused him of being inconsistent, and Keynes reportedly answered with one of the following:

When events change, I change my mind. What do you do?

When the facts change, I change my mind. What do you do, sir?

When my information changes, I alter my conclusions. What do you do, sir?

When someone persuades me that I am wrong, I change my mind. What do you do?

Because there are so many different versions of this rejoinder I was hoping you might determine if any of them is real. Is there any truth to this anecdote?

Quote Investigator: No direct evidence that Keynes made a comment of this type has been located by QI or other researchers. The earliest statement found by QI that fits this template was not spoken by Keynes but by another prominent individual in the same field, Paul Samuelson who was awarded the 1970 Nobel Prize in economics. He was well-known to students for creating a best-selling economics textbook.

On December 20, 1970 he was interviewed by a panel on the television program “Meet the Press.” The transcript of the show was published the next day in the “Daily Labor Report” from the Bureau of National Affairs, Washington. Austin Kiplinger of Kiplinger Publications asked Samuelson about inflation. Boldface has been added to excerpts [PSDR]:

KIPLINGER: Returning to this matter of how much inflation we can absorb effectively, you may remember that Dr. Sumner Schlicter at Harvard shocked, I guess, the American Public after World War II when he said some inflation was not only inevitable but perhaps also desirable to promote growth. My question is do you agree with that general assessment and if so, how much should we have and how much is acceptable?

DR. SAMUELSON: I do agree with it and I suffer for expressing my agreement. Different editions of my textbook have been quoted. In the first edition I said a five percent rate is tolerable. Then I worked it down to three percent and then down to two percent and the AP carried a wire “Author Should Make Up His Mind.” Well when events change, I change my mind. What do you do?

Intriguingly, in 1978 Samuelson used a version of this expression again, and this time he credited the words to Keynes. His statement was reported in the Wall Street Journal in an article by Lindley H. Clark Jr. [PSWJ]:

Paul Samuelson, the Nobel laureate from the Massachusetts Institute of Technology, recalled that John Maynard Keynes once was challenged for altering his position on some economic issue. “When my information changes,” he remembered that Keynes had said, “I change my mind. What do you do?”

It is possible that Samuelson was consciously or unconsciously echoing a remark of Keynes when he spoke in 1970, but there is no compelling support for this because he did not credit Keynes during the television interview.

Here are some additional selected citations in chronological order.

Continue reading When the Facts Change, I Change My Mind. What Do You Do, Sir?