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Andrew W. Mellon

From Academic Kids

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Formal portrait of Mellon

Andrew William Mellon (March 24, 1855August 27, 1937) was an American banker, industrialist, philanthropist, and Secretary of the Treasury from March 4, 1921 until February 12, 1932.

He was born in Pittsburgh, Pennsylvania, the son of the banker and Judge Thomas Mellon and Sarah Negley Mellon. He was educated at the Western University of Pennsylvania (now the University of Pittsburgh), graduating in 1873.

Mellon demonstrated financial ability early in life by starting a lumber business at the age of 17. He joined his father's banking firm, T. Mellon & Sons, two years later and had the ownership of the bank transferred to him in 1882 at the age of 27. In 1889, he helped organize Union Trust Company and Union Savings Bank of Pittsburgh. He also branched out from banking into industrial activities, and amassed a fortune from oil, steel, shipbuilding, and construction.

In 1900, he married Nora McMullen in Hertford, England, and had two children, Ailsa Mellon-Bruce in 1901 in Pittsburgh, Pennsylvania, and Paul Mellon in 1907.

In 1913 along with his brother, Richard Mellon, he established a memorial to his father, the Mellon Institute of Industrial Research.

During the World War I years he participated in many patriotic civilian activities such as the American Red Cross, the National War Council of the Y.M.C.A., the Executive Committee of the Pennsylvania State Council of National Defense, and the National Research Council of Washington.

Andrew Mellon was appointed Secretary of the Treasury and became a member of the Cabinet put together by President Warren G. Harding in 1921. Other members included Charles Evans Hughes as Secretary of State, and Herbert Hoover as Secretary of Commerce. The President, in his address on March 4, 1921, had called for a prompt and thorough revision of the tax system, an emergency tariff act, readjustment of war taxes and creation of a Federal budget system, among others. These were policies Mellon wholeheartedly subscribed to, and his long experience as a banker qualified him to set about implementing these programs immediately. As a conservative Republican and a financier, Mellon was irritated by the manner in which the Government's budget was maintained, with expenses due now and rising rapidly, with income or revenues not keeping pace with those expense increases, and with the lack of savings.

Secretary Mellon believed that high taxes increased the cost of living, and that, as far as possible, taxes should be reduced and the cost of living lowered. He proceeded, therefore, as he repeatedly pointed out to Congress, to attack the fixed expenses, especially interest on the public debt paid out by the Government. He acted to reduce the public debt, and as it was paid off, the interest charges became less, thus effecting a saving each year in the Government's budget expenses. With these lowered expenses, taxes could also be lowered.

Mellon believed that the government should give tax breaks to large corporations, allegedly so that money could "trickle down" to the general public, in the form of extra jobs. President Hoover adopted this policy during the Great Depression.

When Mellon became Secretary, the cost of running the Government for the previous year (Fiscal Year 1920) was $6.5 billion and the Government had fixed expenses and obligations maturing within the next 2-1/2 years amounting to $7.5 billion. At the end of his first three years as Secretary, the Government's annual budget was reduced to $3.5 billion, and the fixed short-term expenses of $7.5 billion had either been completely paid off or traded for more advantageous maturities. The public debt had been reduced by $2.8 billion, which meant decreased Government interest charges paid out, and, a savings of Government expenses each year.

In November 1923, Secretary Mellon presented to the Chairman of the House Ways and Means Committee a letter in which he outlined what has come to be known as "Mellon Plan". It was a program for tax reform based upon the idea of lowering taxes out of surplus revenues. It subsequently became law as the Revenue Act of 1924, although without some of the reforms Mellon advocated. It did reduce the taxpayers' bill by some $400 million annually over what would have been collected if the 1921 tax rates had remained in effect. Mellon reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, when the depression caused it to rise again.

Mellon became unpopular with the onslaught of the Great Depression. Upon leaving the Treasury Department and President Hoover's Cabinet in February 1932, Mellon accepted the post of U.S. Ambassador to the United Kingdom, serving for one year and then retiring to private life.

Mellon on U.S. stamp
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Mellon on U.S. stamp

During his retirement years, as he had done in earlier years, Mellon was active in philanthropy, and gave generously of his private fortune to support educational, cultural, and research causes.

Throughout his lifetime, Mellon exhibited a genius for recognizing the potential value of a person or an idea, and never hesitated to back his conviction with financial support. Three such infant concepts that grew to giant proportions were his backing of Charles M. Hall, which Mellon built into the Aluminum Company of America; his aid to Edward Goodrich Acheson, becoming his partner in manufacturing carborundum steel, which Mellon built into the Carborundum Company; and creation of an entire industry through his help to Heinrich Kopper, who invented coke ovens which transformed industrial waste into usable products such as gas, tar, and sulfur.

However, sometimes his genius failed him. For example, in 1925 he praised Mussolini as a "strong man with sound ideas and the force to make these ideas effective," while arguing that Mussolini deserved US support and sympathy.

In 1937, he donated his art collection, plus $10 million, to build the National Gallery of Art in Washington, D.C.

Andrew W. Mellon died on August 27, 1937, in Southampton, Long Island, New York.

The Andrew W. Mellon Foundation, the product of the merger of the Avalon Foundation and the Old Dominion Foundation (set up separately by his children), is named in his honor.

Books

  • Taxation: The People's Business (1924)

References

External link


Preceded by:
David F. Houston
United States Secretary of the Treasury
19211932
Succeeded by:
Ogden L. Mills

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