Sunday, January 9, 2011

Who were the wealthiest Americans ever?

Jeffery Small over at Small Thoughts posted this fascinating chart from . Converting "wealth at death" into 2010 dollars, who were the wealthiest men in American history? The answers are both surprising, and not surprising.

Not surprising is the fact that Bill Gates, Sam Walton and Warren Buffet are on the list.
Surprising is the fact that they are not closer to the top of the list than they are ( #12,#13, #16 respectively.)

Roll your cursor over the bars to find out who the rest of these men were. You will recognize most, though probably not all, of the names.

What do you know about these men? How did they acquire their wealth? How many were "economic entrepreneurs," gaining wealth through honest voluntary trade, and how many were "political entrepreneurs" who used the power of government to obtain special favors and competitive advantages?

Some of the answers to these questions can be found in two delightful quick reads by Burton Folsom, Empire Builders and The Myth of the Robber Barons. [For a quick glimpse of what you will learn from these books, check out this lecture by Folsom. A video clip of a similar lecture can be found here.] For an in depth article on Rockefellar and Standard Oil, I recommend Alex Epstein's article "Vindicating Capitalism: The Real History of the Standard Oil Company".

One of the interesting points I gleaned from the above chart is the visual representation of the connection between economic freedom and wealth production. See how many of these men lived between 1850 and 1900? While these men were getting richer, so was everyone else. Real income (income adjusted for the cost of living) doubled between 1870 and 1900 (real US GNP per capita rose from $4500 to $9000). What was it about this period of American history that supported so much economic growth?

The turn of the century brought with it a multitude of government interventions into the economic realm--and with the, a dramatic reduction in the accumulation of private wealth. The Sherman Anti-trust Act of 1890 and the Federal Reserve and the federal income tax in 1913 are just a few of the provisions which significantly altered the relationship between government and private economic transactions.

We know a lot about the connection between economic freedom and prosperity in the modern world. (See here , here, here and here.) Other important clues to prosperity lay within understanding the political economy of America in the second half of the 19th century. To better understand how to improve the lot of mankind, more effort needs to be spent learning from that highly productive period of human history.



Elisheva Hannah Levin said...

Thanks! I am having great fun with this. I love being surprised!

HaynesBE said...

Elisheva--Thanks for stopping by and for letting me know that you did.