Some sites claim that the proposed upcoming presidential cabinet and cabinet-level posts set a new record for its members' total personal fortunes: one estimate suggests it "could be worth as much as $35 billion.", another estimate suggests 17 of those persons own "well over $9.5 billion". Yet without knowing the net worth of previous cabinets (of comparable personnel size) it's unclear if those seemingly large numbers are truly much greater than prior cabinets' total personal fortunes.

  1. Adjusted to constant dollars which presidential cabinet and administration collectively has had the greatest personal fortune?

  2. Same as #1, but which cabinet's (etc.) total personal fortune was equal to the largest percentage of existing households at the time? (Example: reporter Dan Kopf writes "$9.5 billion ... is greater than that of the 43 million least wealthy American households combined—over one third of the 126 million households total in the US.") So the desired number in that particular 2017 instance would be 1/3.

  3. Given the cabinet/household wealth equivalence ratio in #2, what might the approximate historic average ratio be? (i.e. this would be a number like 1/3, 1/9, 1/20, or whatever it is.)


Notes: to better compare the historical scope of economic disparity, let's broadly define all historic "American households" as comprising everyone who'd be considered part of a household in 2016, (so in 1812, we'd still include Native American households and those under involuntary servitude), provided those families resided in the United States territory at that historic time, (so in 1812, we'd not include Hawaiian households). If anyone wants to include the homeless, or prisoners, (perhaps in fictional "household" aggregates of some arbitrary average size, like 3.5), that also might be interesting.

Where census data is lacking, estimates and arbitrary fudge factors are acceptable.

The number of the cabinet and minister posts has grown over 240+ years, perhaps some arbitrary historic conversion factor can be allowed for that as well.

This question has an open bounty worth +50 reputation from agc ending tomorrow.

One or more of the answers is exemplary and worthy of an additional bounty.

This already has an excellent answer, which two years later still is. So kudos for that one if nothing else.

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    In the early administrations, everyone would have been rich. Also note that one third sounds impressive, but a newborn baby has more wealth than the total of the bottom fifth of households. That is to say that the newborn has zero net wealth and the bottom fifth is net negative. – Brythan Dec 17 '16 at 13:58
  • @Brythan, re "sounds impressive": that's the thing in question, is this 1/3 figure remarkable relative to past eras... – agc Dec 17 '16 at 17:32
  • Another wrinkle of comparing old wealth to modern, is that prior to the 1860s some of the net worth assets of the rich consisted of "owning" people. In 2016 it's difficult to even imagine that as wealth. Perhaps without better stats and accounting on "illth" as a separate object, such historical comparisions are somewhat like trying to do bookkeeping without using any negative numbers. – agc Dec 17 '16 at 17:50
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    As this question is about an unverified, published, claim, it could be asked at Skeptics.SE if no joy is found here. – Todd Wilcox Dec 20 '16 at 2:31
  • @ToddWilcox, thanks but the Q isn't strictly predicated on the existing claims, but the historical fact itself. The 2017 claims may be correct, or not, either way, whether now or in the past, there must have been a richest cabinet. – agc Dec 20 '16 at 9:28
up vote 7 down vote accepted

This is a necessarily incomplete answer, but gathers together a lot of the relevant data points.

There are basically two parts of this question.

One must both estimate the aggregate net worth of the cabinet, each time its membership changed, and one must estimate the share of wealth of less affluent Americans.

The Changing Definition of the Cabinet

One confounding factor regarding the first estimate is that the cabinet has grown larger over time. In 1789, there were just five heads of cabinet departments: the Secretary of State, the Secretary of Treasury, the Secretary of War, the Attorney General, and the Postmaster General.

There are now fifteen cabinet departments. Also every (or almost every) President has had some additional senior presidential advisors and independent agency heads have been included in the cabinet.

Today (per the 2016 World Almanac) these include the Vice President, the White House Chief of Staff, the head of the EPA, the director of the Office of Management and Budget, the U.S. Trade Representatives, the ambassador to the U.N., the chair of the Council of Economic advisors and the administrator of the Small Business administration, for a total of 23 people in addition to the President in the cabinet.

Most Presidents have more than one person serving in any particular cabinet post during their term of office, and there is a fair amount of turnover. For example, there have been 67 people who have served as Secretary of State since 1789 over the course of 44 Presidential administrations.

It is also worth recalling that until the Civil War, the federal government was a profoundly smaller institution. There was much higher turnover even in top positions like members of Congress and judges in the federal courts, because prior to the Civil War, a much larger share of government activity took place at the state and local level and the primary source of federal government revenue was customs duties.

Thus, in the early part of the Republic, cabinet posts lacked the prestige that they have today. Today, that prestige makes it possible for someone like President Obama or President Trump to obtain the willing cooperation of cabinet nominees who are taking a huge pay cut to do their job in the cabinet. Earlier on, the salary was a much bigger share of the draw for these jobs because there wasn't nearly as much prestige involved. So it was harder to get the very rich to serve in those posts.

The Difficult Practical and Definitional Issues

To really get a solid answer you would need detailed biographical information on several hundred individuals, and would also need to convert their wealth at the time into inflation adjusted amounts. And, you do need detail and an ability to determine wealth while in cabinet (presumably the desired definition) when lots of available data can demonstrate peak wealth (often based upon probate information) but not wealth precisely while in the cabinet.

For example, Secretary of Treasury Alexander Hamilton (who created the U.S. Mint and the predecessor to the Coast Guard while in office), is remembered as rather patrician - he was the grandson of an aristocrat, married a daughter of an affluent man, was a lawyer, founded the Bank of New York, helped reestablish Columbia College, was a co-founder of a major manufacturing company, and founded the New York Evening Post. But, while he undoubtedly became a member of the upper class in one sense, he was a poor orphan as a child, he made most of his money from government salaries, did not have a particularly profitable law practice, saw the manufacturing company go bankrupt, and because he died young in a duel, didn't live long enough to see some of his investments in other enterprises come to fruition.

Thomas Jefferson was an early Secretary of State before he served as President. He had a peak net worth of $234 million in 2016 dollars (more than any other cabinet member who later went onto serve as President although George Washington net worth in current dollars was about $580 million and Donald Trump's is more as well; see also here). But, he died broke.

JFK would have had a net worth of close to $1 billion had he lived to inherit his share of his family's estate, but of course, he did not. I believe that RFK also never came into the bulk of the family wealth he was heir to during his lifetime.

Benjamin Franklin served in the cabinet as Postmaster General and had a peak wealth of about $10 billion in current dollars, making cabinets including him competitive with the wealthiest, although, at a time of much less wealth and income inequality. But, the fact that his term as postmaster was under the Confederacy, that predated the current federal constitution adopted in 1789, muddies the question of whether he even "counts" for purposes of the original post. Franklin is arguably the wealthiest individual ever to serve in a prominent role in the United States government, Trump included.

The combined net worth of the members of President Obama's cabinet is on the order of $3 billion including Hillary Clinton at $31 million and chief of staff Bill Daley at $29 million, and a billionaire commerce secretary. (Trump's cabinet nominees have a combined net worth on the order of $15 billion plus which multiple historians have stated is the wealthiest ever).

Generally, the wealth of the top two or three most wealthy cabinet members will dwarf the wealth of everyone else in the cabinet combined, which somewhat eases the biographical challenge. Historically, the most wealthy members of the cabinet have tended to be Treasury Secretaries or Commerce Secretaries (the Commerce and Labor Department was formed in 1903 and was split into two departments in 1913).

The Gilded Age of the late 19th century was another period with many very affluent individuals actively involved in politics.

Still, particularly in light of the pattern of Presidential wealth over the years, there seems to be little doubt that cabinet members over the years have had considerably less than the combined wealth of Trump's proposed cabinet.

A historic average is much harder to come up with.

One useful reference point is that while the American South absolutely had a wealthy plantation, slave owner class, this was an oligarchy and not a winner take all economy like modern big businesses which dominate a national market.

The largest plantation in the nation in 1860 had 1,131 slaves (and this was larger than the largest plantation in the nation in 1850). Only 19 families in the entire nation in 1860 (none of whom had a sitting cabinet member) had more than 500 slaves. Only a handful of plantations were in more than two or three counties and almost all were entirely within a single state. Not a single firm in the entire South had even 0.1% share of the entire cotton producing market in the American South.

George Washington's plantation had about 220 slaves at its peak and a few indentured servants, which suggests that the wealthiest plantation owners in the United States probably still never had a net worth much over $1 billion in current U.S. dollars (doubling Washington's peak estimated net worth). And, Washington would have been in the top 1% of plantation owners, and at least the top 0.3% of the general population in wealth, at the time.

The wealthiest bankers and heads of manufacturing enterprises in the North (which was home to 90% of U.S. manufacturing on the eve of the Civil War and a much larger percentage during Reconstruction) would have been wealthier than any plantation owner in the U.S. for almost all of its post-1789 history. A list of the wealthiest persons in U.S. history is informative.

There have always been very wealthy people in the U.S., but given the smaller scale of the largest enterprises in the U.S. then, relative to today, and the fact none of the very wealthiest of the Gilded Age figures ever held cabinet positions, today's richest people are significantly wealthier than those in most of our history in constants 2016 dollars.

Overall income and wealth inequality

While measuring wealth inequality is the ultimate goal, better data is available for income inequality (because much of it can be gleaned from centrally collected income tax data collected annually), however, and income inequality and wealth inequality are highly correlated, although wealth inequality is generally more extreme than income inequality.

A 2012 article in the Atlantic magazine supplies lots of useful information regarding the latter point, looking at data points in 1774, 1860 and 2010. Generally speaking, income inequality has risen in that time period. For example, the GINI coefficient (a standard measure of income inequality that ranges from 0 with perfect equality to 1 with perfect inequality, i.e. one person having all income) in the 13 colonies in 1774 was 0.437 (much lower than all industrializing countries in Europe at the time), 0.51 in 1860 (a peak in U.S. history), a pre-Great Recession peak slightly above 0.50 and a 2012 value of around 0.47. In 2015, the last year for which estimates are available, it was 0.482. Another source notes a post-Civil War, pre-WWII peak just before the Great Depression in around 1929 at about 0.50.

Generally speaking income and wealth inequality are higher after long periods of economic growth, and are lower at the bottom of the business cycle.

By comparison, the highest GINI index in the world is 63.2 (Lesotho), the highest out of Africa is 59.2 (Haiti), and the highest in Europe is 46.0 (Georgia).

The key point is that the U.S. is slightly below the peak of about 0.50-0.51 reached just before the Civil War, possibly in the Gilded Age (between the numerous panics), around 1929, and around 2007-2008.

This means that at any points in time other than those moments, the cabinet would have had to have been significantly wealthier to have the wealth of 1/3rd of U.S. households, because wealth inequality would have been lower, and that at those peaks, simply comparing the cabinet wealth then in current dollars to cabinet wealth now in current dollars would suffice.

1774

In 1774, shortly before the American revolution, the bottom 40% of the free population had only a small amount of the net wealth. In New England, the bottom 40% had a negative net wealth, -3.1%. As such, any cabinet with a positive net worth would have exceeded the net worth of the bottom 40% in New England.

Source: http://www.nber.org/papers/w18396 (Net_worth_summary_1774.xslx)

And this doesn't include slavery, where a sixth of the population didn't even own themselves (legally).

Prior to Donald Trump, George Washington was the richest president.

This is not a complete answer of course. The data is not fine grained enough to answer for 1790. But this should dispel the claim that we are currently living in the time of highest inequality. The presence of slavery made the first seventy years of the union have even higher inequality than now.

Today

Today, 40% of the population has a negative net worth. Thus, any comparison of people with a positive net worth will be wealthier than 40% of the population.

You might ask why this stat says 40% while the other stat says a third (just over 33.3%). This seems to be an artifact of how households are calculated. There are more poor people than poor households in percentage terms.

Since this data is from 2013, it means that the Obama cabinet was richer than almost as many people as the Trump cabinet will be.

I haven't been able to find the same data for households. The data sources that I found will tell us how many households have zero or negative net worth but not the percentage that in total have zero net worth. I.e. where the positive net worth households just balance the negative net worth households.

Incomplete

Obviously this is an incomplete answer. I wouldn't have posted, except the accepted answer is just as incomplete and currently makes unsubstantiated claims.

Note that Trump's cabinet is estimated as $12 billion richer than Obama's cabinet. This sounds like a lot, but the median net wealth in 2013 was around $80,000 (rounded down). This means that 150,000 households (less than .12%) have $12 billion. The median is at the 50th percentile. And we want to be at the 34th percentile. There are almost certainly more households to get to $12 billion at the 34th percentile than at the 50th. The question is how many.

  • Re "currently makes unsubstantiated claims": please consider elaborating regarding however those particular claims fall short in the comment section of ohwilleke's answer. – agc Dec 27 '16 at 20:16

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