The idea of a trickle-down economy is largely regarded as false today. While many people all over the US today are actively advocating for more taxation on the rich and large corporations, people rarely ever talk about one of the men most responsible for perpetuating these ideas in America in the first place.
Andrew Mellon was once one of America’s richest men, with a personal fortune of what would today be over $9 Billion, his legacy includes things like the Carnegie Mellon University, his large donations in art and cash to the National Gallery of Art in Washington, and NYB Mellon Bank.
On the other hand, he was also the person who advocated for lower taxation on corporations and billionaires, and introduced a lot of policies in the 1920s that, granted, were responsible for a huge boon for American corporations, but didn’t “trickle down” to the lower levels of the economy as he claimed it would.
Even today, the rich keep getting richer, and Mellon received criticism for his policies even in his lifetime. Held largely responsible for the economic crash in 1929, Mellon left his position as the Secretary of the Treasury in 1932 to serve as the American ambassador to the UK for a year, after which he retired.
Today, we’re going to take a deeper look into the man who more or less laid the foundation for the American economy, so keep reading.
Andrew Mellon Bio Facts
|Birth Date||24th March 1855|
|Birth Place||Pittsburgh, Pennsylvania|
|Nick Name||Andy or AW|
|Siblings||Richard B. Mellon, James Ross Mellon, George Negley Mellon, Samuel Selwyn Mellon, Sarah Emma Mellon, Annie Rebecca Mellon, Thomas Alexander Mellon|
|Children||Paul Mellon, Alissa Mellon Bruce|
|Profession||American Financier, Philanthropist, and Secretary of the Treasury (1921–32)|
|Net Worth||$600 Million, equivalent to $9 Billion today|
|Social Media||Not applicable|
|Companies Associated With||T. Mellon and Sons/Mellon National Bank, Alcoa, Gulf Oils, Koppers, BNY Mellon, Union Insurance Company, City Deposit Bank, the Fidelity Title, Trust Company, Union Trust Company, Crescent Oil Company, Crescent Pipeline Company, Bear Creek Refinery, Standard Steel Car Company, Gulf Oil, Westinghouse Electric Corporation, Pennsylvania Railroad, American Locomotive Company, Old Overholt Distillery,|
Andrew Mellon Key Facts Summary
- Mellon was a successful businessman and investor, who later joined politics and became the Secretary of the Treasury for three presidential terms.
- He was the longest-serving Secretary of Treasury in US history.
- A strong advocate for tax cuts for the rich, Mellon successfully implemented many of these policies throughout his time as the Secretary of Treasury.
- He amassed a fortune of over $500 million through his banking and investment ventures.
- He was a Republican.
- Mellon was responsible for getting the US out of military debt post-WW1 but was also in opposition to increasing remuneration for WW1 veterans.
- Mellon advocated for the government to liquidate major industries and businesses at the time of the Great Depression, a move that might have stabilized the economy but would have had disastrous consequences for American citizens and destroyed jobs.
Andrew Mellon’s Birthplace and Early Life
Andrew Mellon’s paternal grandparents were both Irish immigrants to the US. Their son and Andrew Mellon’s father, Thomas Mellon, settled in Pennsylvania where Andrew Mellon was born.
Andrew along with his siblings attended a school established by Thomas, someone who didn’t believe in the public or private education systems in the country at that time.
In his late teens, Andrew joined his father at his bank – T. Mellon and Sons. Despite his young age, he quickly rose through the ranks to become one of the most important employees there, eventually taking over the bank entirely.
Andrew Mellon also attended Western University, now called the University of Pittsburgh, but never finished his degree.
Andrew Mellon’s Business Success
Andrew Mellon joined his father at his bank at a young age, and quickly became one of the most important employees at T. Mellon and Sons. Eventually, he was given power of attorney over the bank’s matters in 1876 while his father – Thomas Mellon stayed involved in the bank’s affairs.
A few years after this, Thomas Mellon transferred ownership of the bank to Andrew Mellon in 1882.
The bank saw exponential growth in the 1880s, and even took control of Pittsburg National Bank which was authorized to print banknotes.
Over these years, Mellon earned a sizable fortune by investing in many industries like oil and petroleum, aluminum, and coke. He also founded companies like the Union Insurance Company, Fidelity Trust Company, and the Union Trust Company.
In 1889, Mellon loaned $25,000 to Pittsburgh Reduction Company, the first industrial producer of aluminum, which was later renamed Alcoa in 1907.
This was the start of Andrew Mellon’s investments in the mineral oil and manufacturing industries, followed by investments in the Crescent Oil Company, the Crescent Pipeline Company, and the Bear Creek Refinery.
By 1894, companies that Mellon had invested in produced about 10% of US oil exports. Later, Mellon sold his oil shares to Standard Oil in 1895.
In the same year, he invested in the Carborundum Company, a company that produced Silicon Carbide, and eventually gained ownership of it in 1898. He was also the Vice President of the Trade Dollar Consolidates Mining Company.
Over this whole time period, the Union Trust Company was his most profitable holding by the late 1890s. In addition to investing in companies where he saw the potential for growth, he also joined hands with other associates and friends to start some of his own.
These companies include the Crucible Steel Company, the Pittsburgh Coal Company, and the Monongahela River Coal Company. The two coal companies he established accounted for 11% of all US coal production at the time.
Among the companies he established with his friends, there was the Union Steel company with Frick and Richard Mellon, and Andrew Donner.
Mellon and Andrew Carnegie also became major stakeholders in the New York Ship Building Corporation, and T. Mellon & Sons Bank was eventually renamed Mellon National Bank, a federally chartered national bank.
He was also responsible for financing a major portion of World War 1 through the Union Trust Company and many other holdings.
It is safe to say that Andrew Mellon amassed quite a fortune for himself in the course of his career as an investor and banker, and he used his money and influence to join politics later.
Andrew Mellon’s Political Career
Before he actively joined politics, he was a supporter of local Republican politicians in Pittsburgh. Eventually, he was asked to become the Secretary of Treasury by Warren G. Harding – an appointment that gained support from senators like Senator Kose, Senator Boise Penrose, and Governor Sprout.
He was also supported by Pennsylvania Republicans and sold his baking stock to his brother before joining office. However, he kept all the rest.
Warren G. Harding’s Presidency
Andrew Mellon became the Secretary of Treasury in February 1921 and continued to stay involved in his various businesses during his service. According to Mellon’s biography by David Cannadine, he often lobbied congressmen on behalf of his many businesses as well.
It was almost like even during his time in public service; he was looking out for his personal interests. Much of his policies to decrease taxes for corporations and the rich directly benefitted him, and increased the wealth gap in the US, contrary to what he claimed would happen by doing so – wealth from these corporations trickling down to the lower classes.
As we have seen, what happened instead was that the pockets of the rich just kept getting deeper.
Mellon’s department was also responsible for enforcing prohibition, something that he did not like. He viewed the law as unenforceable and saw it beneath his department to be tasked with the job of enforcing it.
After World War 1, tax income for the country had decreased, and the “Mellon Plan” was made to combat this issue. While this plan wasn’t fully implemented until later, but the main goal was always to reduce taxes and debt for the country.
The Revenue Act of 1913 was drafted and approved under Mellon’s supervision, and the key features were lower surtaxes. Mellon argued that this would combat tax avoidance and lead to economic growth. However, the opposition stood in the way of Mellon doing whatever he wanted and limited the tax cuts Mellon wanted to implement.
Mellon also resisted a Bonus Bill that was supposed to provide compensation to World War 1 veterans, as he feared that it would stand in the way of his own plans. This move opened him up to a lot of criticism during the end of his political career.
Calvin Coolidge’s Presidency
Mellon continued to be the Secretary of Treasury throughout John Coolidge’s presidency as well, and it was termed as one of the most successful periods in his career.
According to journalist William Allen White, “so completely did Andrew Mellon dominate the White House in those days when Coolidge administration was at its zenith that it would be fair to call the administration the reign of Coolidge and Mellon.”
This is because both of them had the same opinions about most things, and Mellon received a lot of support for his financial plans. This came in the form of publicity campaigns run by allies like various business organizations designed to convince congressmen and the public to support Mellon’s tax plan.
However, a coalition of progressive Republicans and Democrats managed to keep Mellon’s plans in check – Coolidge was eventually forced to sign a bill that set highest marginal tax at 46% instead of the 33% that Mellon wanted and also increased estate tax.
This bill was written by John Nance Garner, and was signed by Coolidge in February 1924, but not without Coolidge calling for further tax cuts.
After Coolidge was re-elected in 1924, he saw it as an opportunity to further tax cuts and enact most of the plans he couldn’t before, including passing a new financial bill that pleased Mellon since it contained a lot of the things he wanted to see enacted in the economy.
Not only did this include massive tax cuts for the rich, but it also included things like personal exemptions on income taxes, reduced estate tax, the abolishment of the gift tax, and declaring federal income tax returns to no longer be a requirement.
By this time, Mellon was satisfied that most of the tax reforms he had set to make were already enacted and turned his focus on other things. The Reform Bill passed in 1928 only furthered his vision when corporate taxes were cut, but he never did fully manage to repeal estate taxes.
Getting involved in foreign policy wasn’t his job, but he still had an influence on the country’s international financial policy and opposed forgiving WW1 taxes for a lot of European countries. He still recognized that these countries would be unable to pay these taxes without renegotiating the terms.
Herbert Hoover’s Presidency
It wasn’t until Herbert Hoover’s presidency that Mellon saw his fiscal policies that disadvantaged the poor coming back to haunt him, and his stance on how to manage the Great Depression – which he took a lot of the blame for – didn’t help matters. He was of the opinion that the government should liquidate various big industries to solve the crisis.
A move that would have destroyed the jobs and livelihood of many, and was also criticized for his own tax evasion and anti-public policies.
His opposition to compensation to WW1 veterans was also brought up when he opposed a new bill to do the same, and Hoover offered Mellon the position of US secretary to the UK, where he returned to private life after one year in service.
Andrew Mellon’s Legacy Today
While Andrew Mellon is one of the very few secretaries who remained in service for three presidential terms, his policies weren’t the best for the American public. With many of them still calling for a rise in taxation on the rich to bridge the wealth gap that exists in America today, lets take a look at the things Andrew Mellon has left behind.
Tax Policies and Financial Thinking
Mellon’s tax policies are still somewhat supported by the Republican party, and the financial crisis in the US today is largely due to the inequalities arising from Mellon’s tax reforms and policies. However, corporate culture in America has flourished, with some of the world’s biggest companies established here.
National Art Gallery
Andrew Mellon was the person responsible for establishing the National Art Gallery and donated much of his personal art collection to the institute. He also toured multiple countries to gather the collection for the museum, as well as overseeing the construction itself and encouraging his contacts in the business world to donate to the museum.
Carnegie Mellon University
Carnegie Mellon University is also one of the projects Andrew Mellon undertook along with a friend, which is known for its science and technology programs.
Andrew Mellon’s Family [Spouse / Partner, Kids]
Andrew Mellon’s personal life was hardly as successful as his professional life. He refrained from courtship and romantic partnerships for a long time after a failed relationship with Fannie Larimer Jones, who he left due to her getting tuberculosis.
After a few years, he met Nor McMullen, an Englishwoman. The two got married in 1900 after a period of courtship, and she had their first child together in 1901.
Nora was unhappy in Pittsburgh, however, and started an affair with Alfred George Curphey. After the affair came to light, Nora and Andrew reconciled and had another child – Paul Mellon, in 1907. Nora later got back together with Alfred Curphey though and asked Mellon for a divorce.
In an effort to keep the divorce private, Mellon sought out a way to amend a law that required a trial by jury for divorce cases. Nora thwarted these plans when she started talking about Mellon to the media, and the pair eventually finalized their divorce in 1912. After this, Mellon stayed away from romantic partnerships.
Andrew Mellon’s Net Worth and Career Earnings
At the peak of his career, Andrew Mellon’s net worth is estimated to be around $600 Million, though a lot of people say that an estimate of about $300 to $400 Million is more likely. He was never a billionaire, but it declined greatly during the Great Depression. He reported $1.9 Million in 1932.
His net worth today would be equivalent to almost $9 Billion.
Question: Was Andrew Mellon a Billionaire?
Answer: Mellon never technically became a Billionaire, but his fortune of an estimated $600 Million would have been equivalent to $9 Billion today.
Question: How many Kids did Andrew Mellon have?
Answer: Andrew Mellon had two children named Paul Mellon and Ailsa Mellon with his wife Nora Mellon. The marriage eventually ended in divorce and Mellon never remarried.
Question: What were Andrew Mellon’s Political Views?
Answer: Andrew Mellon was a Republican politician who strongly advocated for tax cuts for the rich and corporations throughout his political career.
Question: Was the Mellon Plan Ever Fully Realized?
Answer: The Mellon Plan was fully implemented during Calvin Coolidge’s presidency thanks to support from Coolidge himself, and Mellon eventually got involved in foreign monetary policy to negotiate WW1 debt repayments from European countries.
Question: Was Andrew Mellon a Self-made Man?
Answer: While a lot of Andrew Mellon’s wealth was made during his lifetime, he didn’t exactly start from scratch. He inherited his father’s bank at a young age and made multiple fruitful investments through the bank, eventually growing in influence in investing and banking circles before joining politics.