MELLON, ANDREW

In the 1920s Andrew Mellon (1855–1937) was one of the richest men in the United States through his investments in many industries, including aluminum, coke, oil, and steel. In that decade he became an influential member of the government, serving as Secretary of the Treasury for 12 years during the administrations of Warren G. Harding (1921–1923), Calvin Coolidge (1923–1929), and Herbert Hoover (1929–1933).

The fourth son of millionaire Pittsburgh banker Thomas Mellon, Andrew took over his father's business when he was in his twenties and steadily expanded it until the family bank became the leading financial institution for industry in the Pittsburgh area. In 1889 Mellon granted a loan for the manufacture of aluminum to the Pittsburgh Reduction Company, which had acquired the patent for processing aluminum alloys by electrolysis. The process had been discovered by Charles Martin Hill in 1886 and permitted the extraction of aluminum from bauxite at a relatively low cost. Until that time aluminum was expensive to produce and used only for costume jewelry. With this new procedure the price fell dramatically so that commercial aluminum production was now practical. Mellon was able to use his financial leverage to take over Pittsburgh Reduction, and his shrewd business practices enabled him to control all aspects of marketing and production. By 1907, when the Pittsburgh Reduction Company changed its name to the Aluminum Company of America (Alcoa), the corporation had a monopoly in North America and an important share of the world market.

In 1901 oil was discovered in quantities that had not been seen before at a salt dome named Spindletop near Beaumont, Texas. The well had been drilled by the J.M. Guffey Petroleum Company of Pittsburgh, which had been financed by a $400,000 loan from the Mellon bank. Because of the size of the find, Guffey soon asked for more money to exploit it properly. Mellon agreed but demanded 40 percent of the stock in return. He was favorably impressed with Spindletop's massive production but not with the waste and rapid depletion of the oil reserves, which were exhausted in only two years. So Mellon bought out Guffey's interest and in 1907 replaced him as president with his nephew William L. Mellon. They renamed the corporation the Gulf Oil Company.

In 1920 Mellon underwrote a __BODY__.5 million deficit in the National Republican Committee's campaign fund, and in compensation President Harding appointed him Secretary of the Treasury. He was considered one of the most important cabinet members in the 1920s, and his unqualified affirmation of capitalism dominated Republican thought. He advocated high tariffs and cuts in government spending and corporate taxes. In his view, low taxes would free up money that could be invested in business and industry to create jobs and improve the economy.

In 1926, after Congress passed the Mellon Plan, a package of legislation that embodied his economic principles, both industrial production and the stock market soared, and his prestige was never higher. He was called "the greatest Secretary of the Treasury since Alexander Hamilton." He became a candidate for president in 1927 but lost the Republican nomination to Herbert Hoover, who kept Mellon as his Secretary of Treasury after his election in 1928.

Mellon's prestige fell dramatically after the Wall Street crash of 1929. He along with Hoover and Coolidge were blamed for the disaster, and Mellon appeared foolish when he predicted that the depression would come to a swift end. Although he overcame an attempt to impeach him in 1932, Mellon resigned his position that year to become ambassador to Great Britain. After the election of President Franklin D. Roosevelt (1933–1944), he became a private citizen, but he continually had to return to Washington to answer questions about his administration of the country's finances. Andrew Mellon died of a stroke, while visiting his daughter in 1937.

Not usually given to philanthropy, he left his art collection and enough money to build an art gallery to the government. Constructed of white Tennessee limestone, the National Gallery of Art, which is sometimes called the Mellon galleries, is one of the most attractive buildings to grace the capital mall in Washington D.C., and it houses one of the nation's most important art collections. It opened in 1941.

Mellon left a mixed reputation. On the one hand, he was a banker with an extraordinary ability to make sound investments and so created a diversified fortune that continued to grow with the country. He was influential in establishing the aluminum industry and in opening the Texas oil fields. His bank was also important in financing heavy industry during an important period of its development. He was one of the three richest men in the country when he entered politics at age 65. During the 12 years that he was Secretary of the Treasury, his influence over the nation's economy was enormous. He represented business interests at a time when their prestige was at their highest. But when the country fell on hard times, the unfettered capitalism that he had advocated was then considered a ruthless economic system, and he became the personification of all the evils associated with it. Opinion of him has subsequently mellowed, so that one may see his faults as also the faults of his age and still appreciate the creativity and enterprise with which he conducted his affairs.

MELLON, ANDREW

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