Did wealthy U.S. Presidents historically divest themselves of business interests or place them in blind trusts while serving their term of office, to avoid the appearance of a conflict of interest?

by Argos_the_Dog

This came up in a discussion I was having, and I thought this would be a great place to ask.

Jimmy Carter famously placed his family's peanut farm in the hands of trustees in 1977, to avoid the appearance of any conflicts of interest. Was this something that was done by previous presidents with significant assets? I am thinking, for example, of JFK and FDR, who were both quite well off when elected. Many of the early presidents were plantation owners with significant wealth in the form of land, slaves, etc. Did this issue come up prior to Carter, or was it just something that nobody worried about or brought up?

Khenghis_Ghan

To my understanding, much of how we view these things are colored through the post-Watergate lens. As far as I’m aware, much of how we structure and empower financial/ethical investigations today comes from the Ethics in Government Act in 1978, created in the wake of the Watergate scandal. It gives us many of the things we recognize today as apparati for investigating finance/ethics in government of Presidents (good or bad, pending your perspective): what today we call the Special Counsel, previously called the Special Prosecutor when the law was first enacted, is Title 6 of the Ethics in Government Act. You’ll note, Jimmy Carter began his Presidency the first year of the Act, and so it isn’t unfair to say he likely received additional attention for being the first person focus could be directed at through the Act’s new powers.

In fact, and very pertinently, one of the criticisms of the Ethics in Government Act was that it treated earned income (wages and salaries) differently than passive incomes (stocks, bonds, ownership in an entity). Earned income from secondary sources for elected officials was (and may still be) capped at a rather low percentage of their publicly allocated wages, but there was effectively none on passive incomes, meaning not only did politicians who came from wealth escape serious limitations on their earning potential for serving the public (as most wealth is securities of one fashion or another) and so had far greater earning potential than those who worked for their income (typically through continuing to practice law or lobbying), most pertinent to your question, Congresspeople impacted weren’t required to divest.

For comparison, in most any other circumstance, a transparent declaration of a potential conflict of interest is enough to permit whatever would follow, the argument being “if we [the public/whoever’s making a decision] know about a candidate’s areas of potential conflict, those things are then open to scrutiny, and so we do not have to make someone forfeit their property/assets unduly as long as we can check in and see that nothing’s being done improperly.” There is an argument to be made that divestment is the wrong way to examine conflict of interest, that by demanding divestment people are actually able to obscure where their wealth is translated to and yet may remain aware of its ultimate destination either directly or via an intermediary, whereas simply demanding total transparency of known quantities allows constant observation.