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).

For more information on Andrew William Mellon, visit Britannica.com.

(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.

1855–1937, American financier, industrialist, and public official, b. Pittsburgh. He studied at the Western Univ. of Pennsylvania (now the Univ. of Pittsburgh), but he left college to organize a lumber business with his brother, Richard B. Mellon. Soon they joined interests with their father, Thomas Mellon, a successful Pittsburgh banker and lawyer, who had helped Henry C. Frick to expand his holdings in the coke industry. When Thomas Mellon retired (1886), the sons took over the banking firm of Thomas Mellon and Sons. In 1889, Andrew Mellon led in establishing the Union Trust Company of Pittsburgh—later to become one of the larger financial institutions in the United States and merge with the Mellon National Bank (and ultimately become Mellon Financial Corporation)—and the Union Savings Bank was created as a subsidiary firm. Meanwhile Andrew Mellon expanded his holdings in key American industries and secured large interests in the Gulf Oil Company, the American Locomotive Company, the Pittsburgh Coal Company, and in hydroelectric, bridge-building, public-utility, steel, insurance, and traction companies. He also played an important role in originating the huge Aluminum Company of America (Alcoa).

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:

"A nation is not in danger of financial disaster merely because it owes itself money."

"Gentlemen prefer bonds."

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