MELLON, ANDREW

Andrew William Mellon (March 24, 1855–August 26,1937) was a financier, public official, art collector, and philanthropist who was best known as the longest serving secretary of the treasury in U.S. history. Mellon was lauded during much of his tenure as the greatest treasury secretary since Alexander Hamilton.

Born in Pittsburgh, Pennsylvania, one of five surviving sons of Thomas and Sarah Jane Negley Mellon, he attended Western University of Pennsylvania (later the University of Pittsburgh), before joining his father's private banking firm in 1874; he assumed control of T. Mellon and Sons in 1882. Six years later, Mellon became trust executive for the $4 million family fund. The following year, he helped found Union Trust Company and Union Savings Bank of Pittsburgh.

Mellon financed and advised new enterprises in steel, coal, coke, oil, aluminum, and synthetic abrasives. In 1900, he married Nora McMullen of the Guinness Stout family. They had two children—Ailsa born in 1901, and Paul in 1907—before their divorce in 1912. In 1902 T. Mellon and Sons became the Mellon National Bank, which rapidly came to dominate financial institutions in western Pennsylvania; it later merged with Union Trust. As a memorial to their father, Mellon and his brother established the Mellon Institute of Industrial Research in 1913 to foster cooperation between scientific research and industry to create new and improved consumer products; in 1967, the institute merged with the Carnegie Institute of Technology to form Carnegie-Mellon University.

Active in local and regional Republican Party politics, Mellon led local fundraising activities and served as a delegate to the presidential nominating convention in 1920. President Warren G. Harding chose him as secretary of the treasury, a post he retained during the administrations of Calvin Coolidge and Herbert Hoover.

Harding and Coolidge deferred to Mellon on financial policy. Mellon's primary goals, articulated in the "Mellon Plan" presented to the House Committee on Ways and Means in November 1923, called for reduction of the national debt, curtailment of government expenditures, and lowering of taxes. He further explicated his ideas in 1924 in Taxation: The People's Business. Mellon believed that reducing taxes on those in the upper income brackets would encourage investment that would lead to increased production and, with it, more jobs and an improved standard of living. The Revenue Acts of 1924, 1926, and 1928 significantly altered the tax structure; they reduced inheritance taxes from 40 to 20 percent, repealed capital stock and gift taxes, reduced income taxes by 25 percent, and dropped the surtax by more than half. The national debt had exceeded $24 billion in 1920; by the end of Mellon's time at the Department of the Treasury, it was down to $16 billion. Government expenditures had been reduced by half. Meanwhile, corporate profits and dividends rose by more than 60 percent between 1921 and 1929.

Consistent with his opposition to what he regarded as government interference in the economy, Mellon favored limitations on antitrust activities and resisted federal involvement in the development of hydroelectric power at Muscle Shoals in Alabama, the problems of particular industries, and the mounting agricultural depression.

Mellon remained aloof from the stock market, both in his personal investments and in policy matters. Since the market was subject to the laws of the state of New York rather than the federal government, Mellon found no need to comment publicly on runaway stock prices. Congressional investigation of questionable banking and investment practices did not begin until 1932, as his time at the Department of the Treasury ended.

With the onset of the Great Depression, President Hoover resisted Mellon's advice to allow wholesale liquidation. Hoping instead to stabilize business, industry, banking, labor, and agriculture, Hoover increasingly relied on Undersecretary Ogden Mills, who was named secretary when Mellon became ambassador to Great Britain in February 1932, a post he held until the change of administrations in 1933. While in London, Mellon proved helpful to American oil interests in the Middle East.

Government investigations of Mellon's finances in the 1930s revealed his enormous wealth, but suits for back taxes uncovered no fraud and a grand jury refused to indict him. A collector of fine art since 1880, Mellon devoted his last years to the creation of the National Gallery of Art. He provided initial funds, was influential in the selection of architect John Russell Pope, supervised of construction of the building on the mall in Washington, D.C., established a foundation to maintain the Gallery, and donated a collection of art valued at more than $35 million. The National Gallery opened in 1941, with Mellon's longtime assistant David Edward Finley as its first director. Mellon's children continued his benefactions to the National Gallery.

MELLON, ANDREW

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