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| Biography: Andrew William Mellon |
American businessman Andrew William Mellon (1855-1937) crowned a highly successful entrepreneurial career with over a decade of service as U.S. secretary of the Treasury.
Andrew Mellon was born on March 24, 1855, in Pittsburgh, Pa. Unlike most members of the industrial elite of his generation, Mellon attended college, although he withdrew shortly before graduation.
In 1882 Mellon became the owner and manager of the family banking firm, T. Mellon & Sons. A few years later he provided financial assistance for the enterprise which would become the Aluminum Company of America, and this concern was controlled by the Mellon family. He began to invest in the oil industry in the 1890s and was one of those who organized the Gulf Oil Corporation in 1901. Mellon invested in a variety of other industrial firms and became a director of many of them. In 1902, when the family private banking house was converted into a commercial bank, the Mellon National Bank of Pittsburgh, he was designated president. As a result of these endeavors, Mellon (gifted with an extraordinary ability to pick winners) achieved great wealth and was "one of the richest men in America."
Mellon dabbled in Republican politics in Pennsylvania, was acquainted with such political notables as Matthew S. Quay, Boies Penrose, and Philander C. Knox, and was a major financial contributor to his party. As a result of these associations plus behind-the-scenes activities, Mellon was appointed secretary of the Treasury by President Warren G. Harding. Partly because of his talent and partly because of the primacy of economic matters during the 1920s, Mellon became the most influential member of the Cabinet under both Harding and his successor, Calvin Coolidge. He was popularly referred to as the "greatest secretary of the Treasury since Alexander Hamilton."
Mellon was a political conservative, and his policies, particularly his opposition to progressive taxation, reflected this. Despite criticism by a minority of citizens, under Mellon's guidance the burden of taxation on those of above-average income was drastically reduced but that on the bulk of the taxpayers was lowered to a much lesser extent. Some of his tax policies benefited Mellon personally and his companies as well; this was true of both the law and the administrative rulings. As one critic said, "The Mellon tax policy, placing its emphasis on relief for millionaires rather than for consumers, made the maldistribution of income and oversaving even worse."
Mellon continued as secretary of the Treasury under President Herbert Hoover. Mellon interpreted the Great Depression of 1929 as a natural phenomenon and favored deflation; he was critical of public works and pursued a traditional policy of economy. In early 1930 Mellon observed, "I see nothing in the present situation that is either menacing or warrants pessimism." However, a combination of criticism of his tax policy and the Depression itself eventuated in his resignation. Hoover persuaded him to accept an appointment as ambassador to Great Britain in 1932.
Mellon returned to private life with the end of the Republican era in the White House and devoted himself to philanthropy. His superlative art collection was donated to the Federal government in 1937 and constituted the foundation of the National Gallery of Art in Washington, D.C.
By getting in on the ground floor of what later became highly profitable enterprises, Mellon had succeeded in becoming rich. His public life, although but a dozen years in duration, was of sufficient prominence so that the history of the 1920s is incomprehensible without reference to him. The Depression resulted in a reversal of public sentiment, so that those of his policies which had once been applauded by the majority were later cited as illustrations of favoritism and special interest and perhaps even as causal factors in the magnitude of the Depression. Mellon died in Southampton, N.Y., on Aug. 26, 1937.
Further Reading
Mellon spoke for himself in Taxation: The People's Business (1924). There is no entirely acceptable biography of Mellon. Philip H. Love, Andrew W. Mellon (1929), is quite favorable, whereas Harvey O'Connor, Mellon's Millions: The Biography of a Fortune (1933), is very critical. See also William L. Mellon and Boyden Sparkes, Judge Mellon's Sons (1948), and Frank R. Denton, The Mellons of Pittsburgh (1948).
| US History Companion: Mellon, Andrew |
(1855-1937), financier and secretary of the treasury (1921-1932). Mellon played leading roles in shaping American industrial development and the federal financial policies of the 1920s.
Born in Pittsburgh, Pennsylvania, Mellon left college before graduating to start a lumber business. In 1874 he entered his father's bank, T. Mellon and Sons, and in 1902 became president of its successor, the Mellon National Bank. As a financier, he showed exceptional ability to select, back, and acquire shares in promising business ventures, with the result that the Mellon interests came to include such major enterprises as the Aluminum Company of America, the Gulf Oil Corporation, and the Pittsburgh Coal Company. Regarded by some as America's greatest venture capitalist, he accumulated one of its largest fortunes and was actively involved in directing numerous corporations.
Mellon, a staunch conservative, entered politics through connections with such Pennsylvania Republican leaders as Boies Penrose and Philander C. Knox; through their influence he was appointed secretary of the treasury by Warren G. Harding in 1921. He brought business methods to government and succeeded, with the aid of an able group of subordinates, in implementing a conservative program of fiscal reforms. His chief legacies were liquidation of the war period's progressive tax structure, establishment of federal budgeting machinery, and a one-third reduction in the national debt. In addition, he chaired a commission responsible for war debt settlements and left the country a better designed and more convenient paper currency, much smaller in size. To the public at large he became, in spite of his frail appearance and retiring manner, a financial wizard whose accomplishments made him the greatest secretary of the treasury since Alexander Hamilton.
In 1929, Mellon's theory of prosperity through upper-bracket tax cuts, as set forth in Taxation: The People's Business (1924), seemed vindicated. But the Great Depression undermined his prestige and made him the subject of political attacks. In 1932 Herbert Hoover appointed him ambassador to Great Britain, a post from which he resigned after Franklin D. Roosevelt's election. Subsequently, he was charged with income tax evasion but was eventually cleared. In 1937 he donated his art collection to the nation along with money to build the National Gallery of Art. Also benefiting from his philanthropies were the Mellon Institute of Industrial Research and the Carnegie Library of Pittsburgh.
Of Mellon's life and work two widely divergent views still exist, one seeing him as a business genius who built great industries and great institutions of education, research, governance, and cultural enrichment, the other regarding him as a ruthless wielder of private power and formulator of public policies that widened economic disparity and helped produce the Great Depression. The latter view long dominated historical writing but has been moderated by recent revisionism and by Mellon's reemergence as a prophet and hero in conservative circles.
Bibliography:
Burton Hersh, The Mellon Family (1978); Harvey O'Connor, Mellon's Millions (1933).
Author:
Ellis W. Hawley
See also Conservatism; Harding, Warren G.; Philanthropy.
| Columbia Encyclopedia: Andrew William Mellon |
Mellon resigned (1921) as president of the Mellon National Bank to become U.S. secretary of the treasury and held that cabinet post until 1932 under Presidents Harding, Coolidge, and Hoover. As secretary, Mellon worked for a downward revision of income taxes and surtaxes, and in spite of drastic tax curtailments, he reduced the national debt from $24,298,000,000 in 1920 to $16,185,000,000 in 1930. He later served (1932-33) as U.S. ambassador to Great Britain. His income-tax return for the year of 1931 was the subject of a federal investigation in 1935, but he was exonerated in Dec., 1937, four months after he died. He gave $10 million for the founding (1913) of the Mellon Institute of Industrial Research in Pittsburgh (since 1967 Carnegie Mellon Univ.); in 1937 he donated his art collection to the public, with funds for the erection of a building in Washington in which to house it (see National Gallery of Art). He wrote Taxation: The People's Business (1924).
Bibliography
See biography by D. Cannadine (2006); F. D. Denton, The Mellons of Pittsburgh (1948).
| Quotes By: Andrew William Mellon |
Quotes:
"A nation is not in danger of financial disaster merely because it owes itself money."
"Gentlemen prefer bonds."
| Wikipedia: Andrew W. Mellon |
| Andrew William Mellon | |
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| In office 1932 – March 20, 1933 (approximate) |
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| Preceded by | David F. Houston |
| Succeeded by | Ogden L. Mills |
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| In office March 4, 1921 – February 12, 1932 |
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| Born | March 24, 1855 Pittsburgh, Pennsylvania, U.S. |
| Died | August 27, 1937 (aged 82) Southampton, New York, U.S. |
| Resting place | Trinity Episcopal Church Cemetery Upperville Fauquier County, Virginia |
| Nationality | |
| Political party | Republican |
| Spouse(s) | Nora McMullen (1878–1973 m. 1900–1912 divorced) |
| Relations | Richard B. Mellon (1858–1933) (brother) |
| Children | Paul Mellon (1907–1999) Ailsa Mellon Bruce (1901–1969) |
| Alma mater | Western University of Pennsylvania (University of Pittsburgh) |
| Profession | Banker, politician |
| Religion | Episcopalian |
Andrew William Mellon (March 24, 1855 – August 27, 1937) was an American banker, industrialist, philanthropist, art collector and Secretary of the Treasury from March 4, 1921 until February 12, 1932.
Contents |
He was born in Pittsburgh, Pennsylvania, U.S., on March 24, 1855, the son of Scots-Irish immigrants from County Tyrone, Ireland. His father was Thomas Mellon, a banker and judge; his mother was Sarah Jane Negley Mellon. He was also brother of Richard B. Mellon. He was educated at the Western University of Pennsylvania (now the University of Pittsburgh), graduating in 1873.[1]
Mellon demonstrated financial ability early in life. In 1872 he was set up in a lumber and coal business by his father and soon turned it into a profitable enterprise.[2] He joined his father's banking firm, T. Mellon & Sons, two years later and had ownership of the bank transferred to him in 1882. In 1889, Mellon helped organize the Union Trust Company and Union Savings Bank of Pittsburgh. He also branched into industrial activities: oil, steel, shipbuilding, and construction.
Three areas where Mellon's backing created giant enterprises were aluminum, industrial abrasives ("carborundum"), and coke. Mellon financed Charles Martin Hall, whose refinery grew into the Aluminum Company of America. He became the partner of Edward Goodrich Acheson in manufacturing silicon carbide, a revolutionary abrasive, in the Carborundum Company. He created an entire industry through his help to Heinrich Koppers, inventor of coke ovens which transformed industrial waste into usable products such as coal-gas, coal-tar, and sulfur.
Mellon eventually became one of wealthiest people in the United States. In the mid 1920s, he was the third highest income tax payer in the U.S. behind only John D. Rockefeller and Henry Ford.[3] His wealth peaked at around $300–$400 million in 1929-30.
Mellon was a member of the South Fork Fishing and Hunting Club, whose earthen dam failed in May 1889 and caused the Johnstown Flood. Mellon was a member of the Duquesne Club. Along with his closest friends Henry Clay Frick and Philander Knox, also South Fork Fishing and Hunting Club members, Mellon served as a director of the Pittsburgh National Bank of Commerce.
During World War I he participated in many fundraising 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 by new President Warren G. Harding in 1921. He served for ten years and eleven months; the third-longest tenure of a Secretary of the Treasury. His service continued through the Coolidge administration and most of the Hoover administration.
President Harding, in his inaugural address on March 4 1921, 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. 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.
Mellon came into office with a goal of reducing the huge federal debt from World War I. To do this, he needed to increase the federal revenue and cut spending. He believed that if the tax rates were too high, then the people would try to avoid paying them. He observed that as tax rates had increased during the first part of the 20th century, investors moved to avoid the highest rates—by choosing tax-free municipal bonds, for instance. As Mellon wrote in 1924:[4]
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.
If the rates were set more reasonably, taxpayers would have less incentive to avoid paying. His controversial theory was that by lowering the tax rates across the board, he could increase the overall tax revenue.
Andrew Mellon's plan had four main points:
Mellon believed that the income tax should remain progressive, but with lower rates than those enacted during World War I. He thought that the top income earners would only willingly pay their taxes if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.
By 1926 65% of the income tax revenue came from incomes $300,000 and higher, when five years prior, less than 20% did. During this same period, the overall tax burden on those that earned less than $10,000 dropped from $155 million to $32.5 million.[5]
Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business[6]
The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their mettle and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.
Mellon's policy reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, but then the Depression caused it to rise again. By 1935, Franklin Roosevelt had gone back to high tax rates and wiped out Andrew Mellon's initiatives. The top tax rate went to 80% by 1935 and the federal government increased excise taxes to make up for the lost revenue.[5]
Mellon became unpopular with the onset of the Great Depression. He advised Herbert Hoover to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."[7] Additionally, he advocated the weeding out "weak" banks as a harsh but necessary prerequisite to the recovery of the banking system. This "weeding out" was accomplished through refusing to lend cash to banks (taking loans and other investments as collateral), and by refusing to put more cash in circulation. He advocated spending cuts to keep the Federal budget balanced, and opposed fiscal stimulus measures. In 1929-31, he spent much of the time overseas, negotiating for repayment of European war debts from World War I. In February 1932, Mellon left the Treasury Department and accepted the post of U.S. Ambassador to the United Kingdom. He served for one year and then retired to private life.
In January 1932, Rep. Wright Patman and others introduced articles of Impeachment against Mellon, with hearings before the House Judiciary Committee at the end of that month.[8] After the hearings were over, but before the scheduled vote on whether to report the articles to the full House, Mellon accepted an appointment to the post of Ambassador to the Court of St. James, and resigned, thus rendering further action on the issue moot.
In 1900, Mellon, then 45 years old, married Nora Mary McMullen (1879-1973), a 20-year-old Englishwoman who was the daughter of Alexander P. McMullen, a major shareholder of the Guinness Brewing Co. They had two children, Ailsa, born in 1901, and Paul, born in 1907. Their marriage ended in a bitter divorce in 1912, which was granted on grounds of Nora Mellon's desertion and her adultery with Capt. George Alfred Curphey, an English soldier, and other men.
Mellon did not remarry, though in 1923, his former wife married Harvey Arthur Lee, a British-born antiques dealer 14 years her junior,.[9] Two years after the Lees' divorce in 1928, Nora Lee resumed the surname Mellon, at the request of her son, Paul.[10]
In 1913, along with his brother, Richard B. Mellon, he established a memorial to his father, the Mellon Institute of Industrial Research, as a department of the University of Pittsburgh. Today the institute is a part of Carnegie Mellon University. Mellon also served as an alumni president[11] and trustee[12] of the University of Pittsburgh, and made several major donations to the school, including the land on which the Cathedral of Learning and Heinz Chapel were constructed.[13] In total it is estimated that Mellon donated over $43 million to the University of Pittsburgh.[14]
During his retirement years, as he had done in earlier years, Mellon was an active philanthropist, and gave generously of his private fortune to support art and research causes.
In 1937, he donated his substantial art collection, plus $10 million for construction, to establish the National Gallery of Art on the National Mall in Washington, D.C. The Gallery was authorized in 1937 by Congress.
Andrew Mellon was made a freemason in 1928, and Raised in 1931.
The Roosevelt administration subjected Mellon to intense investigation of his personal income tax returns. The U.S. Justice Department empaneled a grand jury, which declined to issue an indictment. A two-year civil action beginning in 1935, dubbed the "Mellon Tax Trial," eventually exonerated Mellon, albeit several months after his death. Amity Shlaes argues that the prosecution was politically motivated.[15]
Mellon died on August 27, 1937, in Southampton, Long Island, New York. Buried at Trinity Episcopal Church Cemetery, Upperville, Virginia.
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, as is the 378-foot U.S. Coast Guard Cutter Mellon.
| Political offices | ||
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| Preceded by David F. Houston |
United States Secretary of the Treasury Served Under: Warren G. Harding, Calvin Coolidge, Herbert Hoover March 4, 1921 – February 12, 1932 |
Succeeded by Ogden L. Mills |
| Diplomatic posts | ||
| Preceded by Charles G. Dawes |
U.S. Ambassador to the United Kingdom 1932 – 1933 |
Succeeded by Robert Worth Bingham |
| Awards and achievements | ||
| Preceded by Edward M. House |
Cover of Time Magazine 2 July 1923 |
Succeeded by Mason M. Patrick |
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| National Gallery of Art: A Treasury of Masterpieces (1984 Visual Arts Film) | |
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