Andrew W. Mellon

Early life

Mellon's paternal grandparents, both of whom were Ulster Scots, migrated to the United States from County Tyrone, Ireland, in 1818. With their son, Thomas Mellon, they settled in Westmoreland County, Pennsylvania. Thomas Mellon established a successful legal practice in Pittsburgh, and in 1843 he married Sarah Jane Negley, an heiress descended from some of the first settlers of Pittsburgh. Thomas became a wealthy landowner and real estate speculator, and he and his wife had eight children, five of whom survived to adulthood. Andrew Mellon, the fourth son and sixth child of Thomas and Sarah, was born in 1855. Thomas Mellon became a prominent member of the local Republican Party, and in 1859 he won election to a position on the Pennsylvania court of common pleas. Because Thomas was suspicious of both private and public schools, he built a schoolhouse for his children and hired a teacher; Andrew attended this school beginning at age five.

In 1869, after leaving his judicial position, Thomas Mellon established T. Mellon & Sons, a bank located in Pittsburgh. Andrew joined his father at the bank, quickly becoming a valued employee despite being in his early teens. Andrew also attended the Western University of Pennsylvania (which was later renamed the University of Pittsburgh), but he never graduated. After leaving Western University, Andrew briefly worked at a lumber and coal business before joining T. Mellon & Sons as a full-time employee in 1873. That same year, the Panic of 1873 devastated the local and national economy, wiping out a portion of the Mellon fortune. With Andrew taking a leading role at T. Mellon & Sons, the bank quickly recovered, and by late 1874 the bank's deposits had reached the level they had been at before the onset of the Panic.

Business career, 1873–1920

Business career, 1873–1898

Mellon's role at T. Mellon & Sons continued to grow after 1873, and in 1876 he was given power of attorney to direct the operations of the bank. That same year, Thomas introduced his son to Henry Clay Frick, a customer of the bank who would become one of Mellons's closest friends. In 1882, Thomas turned over full ownership of the bank to his son, but Thomas continued to be involved in the bank's activities. Five years later, Mellon's younger brother, Richard B. Mellon, joined T. Mellon & Sons as a co-owner and vice president.

During the 1880s, Mellon began to expand the bank's activities. Along with Frick, Mellon gained control of the Pittsburgh National Bank of Commerce, a national bank that was authorized to print banknotes. Mellon also acquired or helped found the Union Insurance Company, City Deposit Bank, the Fidelity Title and Trust Company, and the Union Trust Company. He branched out into industrial concerns, becoming a director of the Pittsburgh Petroleum Exchange and a co-founder of two natural gas companies that collectively controlled 35,000 acres of gas lands in the late 1880s. In 1890, Thomas Mellon transferred his properties to Andrew, who would manage the properties on behalf of himself, his parents, and his brothers. In late 1894, Thomas transferred all of his remaining assets to Andrew. Despite the large sums entrusted to Andrew, the businesses he ran were still fairly small in the 1890s; T. Mellon & Sons employed seven individuals in 1895.

In 1889, Mellon agreed to loan $25,000 to the Pittsburgh Reduction Company, a fledgling operation seeking to become the first successful industrial producer of aluminum. Mellon became a director of the company in 1891, and he and Richard played a major role in the establishment of aluminum factories in New Kensington, Pennsylvania, and Niagara Falls, New York. The company would emerge as one of the most profitable ventures invested in by the Mellons, and in 1907 it was renamed Alcoa. Moving into the petroleum industry, the Mellon family also established the Crescent Oil Company, the Crescent Pipeline Company, and the Bear Creek refinery. By 1894, the Mellon family's vertically integrated companies produced ten percent of the oil exported by the United States. Partly due to the difficult economic conditions caused by the onset of the Panic of 1893, in 1895 the Mellons sold their oil interests to Standard Oil. At roughly the same time they were selling their oil concerns, Andrew and Richard invested in the Carborundum Company, a producer of silicon carbide. The brothers gained majority ownership of the Carborundum Company in 1898 and replaced the company's founder and president, Edward Goodrich Acheson, with a Carnegie protege, Frank W. Haskell. Mellon also invested in mining concerns, becoming vice president of the Trade Dollar Consolidated Mining Company.

Business career, 1898–1920

By the late 1890s, Mellon had amassed a substantial fortune, but his wealth paled in comparison to that of better-known business leaders such as John D. Rockefeller. In the late 1890s, the Union Trust Company emerged for the first time as one of Mellon's most important and profitable holdings after Mellon broadened the company's activities to include commercial banking. With an infusion of capital from Union Trust, Mellon underwrote the capitalization of National Glass and several other companies. He also became a co-owner of the McClintic-Marshall Construction Company and established Crucible Steel Company, the Pittsburgh Coal Company, and the Monongahela River Coal Company; the two coal companies collectively contributed 11 percent of the coal production of the United States. With Frick, Richard Mellon, and William Donner, Mellon co-founded Union Steel Company, which specialized in the production of nails and barbed wire. Though Frick had fallen out with steel magnate and long-time business partner Andrew Carnegie, Mellon received Carnegie's consent to venture into the steel industry. Responding to the growing emphasis on naval power in the aftermath of the Spanish–American War, Mellon and Frick also became major shareholders in the New York Shipbuilding Corporation.

In 1902, Mellon reorganized T. Mellon & Sons as the Mellon National Bank, a federally chartered National Bank. Andrew Mellon, Richard Mellon, and Frick drew up a new business arrangement in which the three of them jointly controlled the Union Trust Company, which in turn controlled Mellon National Bank. They also established Union Savings Bank, which accepted deposits by mail, and the Mellon banks flourished in the first years of the 20th century. While Mellon's financial empire prospered, his investments in other areas, including Pittsburgh's streetcar network, the Union Steel Company (which was bought out by U.S. Steel), and the Carborundum Company, also paid off handsomely. Another successful Mellon investment, the Standard Steel Car Company, was created in partnership with three former U.S. Steel executives. As part of the Texas oil boom, the Mellons also helped J. M. Guffey establish the Guffey Company. The Mellons later removed Guffey as the head of his company, and in 1907 they reorganized the Guffey Company as Gulf Oil and installed William Larimer Mellon Sr. (a son of Andrew Mellon's older brother, James Ross Mellon) as the head of Gulf Oil. The success of Mellon's financial empire and his varied investments made him, according to biographer David Cannadine, the "single most significant individual in the economic life and progress of western Pennsylvania" in the first decade of the 20th century.

Old Overholt whiskey

In 1887, Frick, Andrew, and Richard Mellon jointly purchased Old Overholt, a whiskey distillery located in West Overton, Pennsylvania. At the time, Old Overholt was one of the largest and most respected whiskey producers in the country. In 1907, as prohibition became more popular across the country, Frick and Mellon removed their names from the distilling license but retained ownership in the company. It is believed that Mellon's connections in the Treasury Department are what allowed the company to secure a medicinal permit during Prohibition. This permit allowed Overholt to sell existing whiskey stocks to druggists for medicinal use. When Frick died in December 1919, he left his share to Mellon. In 1925, under pressure from prohibitionists, Mellon sold his share of the company to a New York grocer.

Early involvement in politics

Like his father, Mellon consistently supported the Republican Party, and he frequently donated to state and local party leaders. Through state party boss Matthew Quay, Mellon influenced legislators to place high tariffs on aluminum products in the McKinley Tariff of 1890. During the early 20th century, Mellon was dismayed by the rise of progressivism and the antitrust actions pursued by the presidential administrations of Theodore Roosevelt, William Howard Taft, and Woodrow Wilson. He especially opposed the Taft administration's investigations into Alcoa, which in 1912 signed a consent decree rather than going to trial. In the aftermath of World War I, he provided financial support to Henry Cabot Lodge and other Republicans in their successful campaign to prevent ratification of the Treaty of Versailles. Mellon attended the 1920 Republican National Convention as a nominal supporter of Pennsylvania Governor William Cameron Sproul (Mellon hoped Senator Philander Knox would win the nomination), but the convention chose Senator Warren G. Harding of Ohio as the party's presidential nominee. Mellon strongly approved of the party's conservative platform, and he served as a key fundraiser for Harding during the presidential campaign.

Political career, 1921–1933

Harding administration

Following Harding's victory in the 1920 presidential election, Harding considered various candidates for Secretary of the Treasury, including Frank Lowden, John W. Weeks, Charles Dawes, and, at the urging of Senator Knox, Andrew Mellon. By 1920, Mellon was little-known outside of banking circles, but his potential appointment to the cabinet received strong support from bankers and Pennsylvania Republican leaders like Knox, Senator Boies Penrose, and Governor Sproul. Mellon was reluctant to enter public life due to concerns about privacy and a belief that his ownership of various businesses, including Old Overholt distillery, would be a political liability. But Mellon also wanted to retire from active participation in business, and he saw a cabinet position as a prestigious capstone to his career.

Mellon agreed to accept appointment as Secretary of the Treasury in February 1921, and his nomination was quickly confirmed by the United States Senate. Though Mellon's supporters believed that he was highly qualified to address the economic issues facing the country, critics of the Harding administration saw the Mellon appointment as a sign that Harding would "reseat the power of special privileged interests, the powers of avarice and greed, the powers that seek self-aggrandizement at the expense of the general public". Harding paired the nomination of Mellon with that of Secretary of Commerce Herbert Hoover, who was distrusted by many of the same Senate Republicans who favored Mellon's candidacy. Before joining the cabinet, Mellon sold his banking stock to his brother, Richard, but he continued to hold his non-banking stock. Through Richard and other business associates, Mellon continued to be involved with the major decisions of the Mellon business empire during his time in public service, and he occasionally lobbied congressmen on behalf of his businesses. His fortune continued to grow, and at one point in the 1920s he paid more in federal income tax than any other individual save John Rockefeller and Henry Ford.

As Treasury Secretary, Mellon focused on balancing the budget and paying off World War I debts in the midst of the Depression of 1920–21; he was largely unconcerned with international affairs and economic matters such as the unemployment rate. To Mellon's chagrin, his department was charged with enforcing Prohibition; he did not believe in teetotaling himself and viewed the law as unenforceable. Aside from balancing the budget, Mellon's top priority was an overhaul of the federal tax code. The income tax had become a major part of the federal government's revenue system with the passage of the Revenue Act of 1913, and federal taxation on income had increased during World War I to provide funding for the war effort. According to M. Susan Murnane, major reforms to the federal income tax in the aftermath of World War I were "inevitable", but the exact nature of the tax system in the 1920s was debated by conservatives and progressives within the Republican Party. Unlike the progressives in his party, Mellon rejected the redistributive nature of the taxation system that had been left in place by the Wilson administration. Owing in part to the high debts left over from the war, Mellon did not join with some conservatives in the party, who favored the virtual abolition of the income tax in favor of high tariff rates, excise taxes, a national sales tax, or some combination thereof.

Coolidge administration

As the economy recovered from recession and began to experience the prosperity of the Roaring Twenties, Mellon emerged as one of the most renowned figures in the Harding administration. One admiring congressman referred to Mellon as the "greatest Secretary of the Treasury since Alexander Hamilton". Harding died after suffering a stroke in August 1923, and he was succeeded by Vice President Calvin Coolidge. Mellon enjoyed closer relations with President Coolidge than he had with President Harding, and Coolidge and Mellon shared similar views on most major issues, including the necessity for further tax cuts. William Allen White, a contemporary journalist, stated that "so completely did Andrew Mellon dominate the White House in the days when the Coolidge administration was at its zenith that it would be fair to call the administration the reign of Coolidge and Mellon."

Coolidge, Mellon, business organizations, and administration allies conducted a publicity campaign designed to convince wavering congressmen to support Mellon's tax plan. Their efforts were opposed by the coalition of Democrats and progressive Republicans that exercised effective control over the 68th Congress. In February 1924, the House Ways and Means Committee approved of a bill based on Mellon's plan, but an alliance of progressive Republicans and Democrats engineered passage of an alternative tax bill written by Democrat John Nance Garner; Garner's plan also reduced income taxes but set the top marginal tax rate at 46% rather than Mellon's preferred 33%. In June 1924, Coolidge signed the Revenue Act of 1924, which contained the income tax rates of Garner's bill and also increased the estate tax. Coolidge signed the bill but simultaneously called for further tax cuts. Congress also rejected Mellon's proposed constitutional amendment that would have barred the issuance of tax-exempt securities and, over Coolidge's veto, authorized a bonus to World War I veterans. Mellon did, however, win one legislative victory, as he convinced Congress to create the Board of Tax Appeals to adjudicate disputes between taxpayers and the government.

Mellon had originally planned to retire after one presidential term but decided to remain in the cabinet in the hope of presiding over the full enactment of his taxation proposals. In the 1924 presidential election, the Republicans campaigned on further tax cuts, while both the Democrats and third-party candidate Robert La Follette denounced Mellon's tax proposals as "a device to relieve multi-millionaires at the expense of other taxpayers". Buoyed by the strong economy, and overcoming the scandals of the Harding years, Coolidge won re-election by a decisive margin. Coolidge saw his victory as a mandate to pursue his favored economic policies, including further tax cuts.

Hoover administration

Coolidge surprised many observers by announcing that he would not seek another term in August 1927. The decision left Hoover as the presumed front-runner for the 1928 presidential election, but many conservatives within the party opposed Hoover's candidacy. The conservative resistance to Hoover centered around Mellon, who controlled Pennsylvania's delegation at the 1928 Republican National Convention and was influential with Republicans throughout the country. Though they had maintained an amicable relationship in public, Mellon privately distrusted Hoover, resented Hoover's engagement in the affairs of other cabinet departments and feared that a President Hoover would move away from Mellon's tax policies. Several Republicans urged Mellon to run for president, but Mellon believed that he was too old to seek the presidency. Mellon attempted to convince Coolidge or Charles Evans Hughes to run, but neither heeded his appeals. In the months before the 1928 Republican Convention, Mellon maintained his neutrality in the presidential race, but with no compelling alternative Republican candidate willing to run, Mellon finally threw his support behind Hoover. With Mellon's backing, Hoover won the Republican nomination on the first ballot of the convention, and he went on to defeat Al Smith in the 1928 presidential election. Defying widespread expectations that he would retire, Mellon chose to stay on as Secretary of the Treasury. Along with Secretary of Agriculture James Wilson and Secretary of Labor James J. Davis, Mellon is one of only three cabinet members to serve in the same post under three consecutive presidents.

Secretary Mellon had helped persuade the Federal Reserve Board to lower interest rates in 1921 and 1924; lower interest rates contributed to a booming economy, but they also encouraged stock market speculation. In 1928, responding to increasing fears of the dangers of speculation and a booming stock market, the Federal Reserve Board began raising interest rates. Mellon favored another interest rate increase in 1929, and in August 1929 the Federal Reserve Board raised the discount rate to six percent. The higher rate failed to curb speculation, and the activity on the stock market continued to grow. In October 1929, the New York Stock Exchange suffered the worst crash in its history in what was called "Black Tuesday". As the vast majority of Americans did not own shares in the stock market, the crash did not immediately have disastrous effects on the U.S. economy as a whole. Mellon had little sympathy for the speculators who lost their money, and he was philosophically opposed to an interventionist economic policy designed to address the stock market crash. Nonetheless, Mellon immediately began calling for cuts to the discount rate, which would reach two percent in mid-1930, and successfully urged Congress to pass a bill providing for temporary, across-the-board tax cuts. Mellon supported the idea of asset liquidation to balance budgets, even if it meant shutting down entire industries.

Pennsylvania politics, 1921–1933

Knox and Penrose both died in 1921, leaving a power vacuum in Pennsylvania Republican politics. Along with his nephew, William Larimer Mellon, Mellon became an influential player in Pennsylvania politics, and their support helped ensure the elections of Senator David A. Reed and Senator George W. Pepper in 1922. Mellon was unable to assert the same level of control that Boies Penrose had had over state politics, and his leadership of the state party was challenged by William Scott Vare of Philadelphia and progressive leader Gifford Pinchot, who won the 1922 Pennsylvania gubernatorial election. Nonetheless, Mellon would continue to exert an important influence on Pennsylvania politics throughout the 1920s, especially in senatorial elections and in Allegheny County. Mellon's influence over state politics waned in the early 1930s, as the progressive allies of Governor Pinchot took control of the state Republican Party.

Later days

Numerous financial institutions failed in the months prior to Roosevelt's inauguration, but Mellon National Bank, the Union Trust Company, and another Mellon banking operation, Mellbank Corporation, were all able to avoid closure. Mellon strongly opposed Roosevelt's New Deal policies, especially the 1933 Banking Act, which required separation between commercial and investment banking. Mellon believed that the various New Deal policies, including Social Security and unemployment insurance, undermined the free market system that had produced one of the largest economies in the world. Aside from banking reform, other New Deal policies, including regulations on utilities and coal mines and laws designed to promote labor unions, also affected Mellon's business empire. Additionally, the Revenue Act of 1934 and the Revenue Act of 1935 rescinded many of Mellon's tax policies and contained other provisions that were designed to increase taxation on top earners and corporations.

Even after leaving office, Mellon continued to be vilified by many in the public, and in 1933 Harvey O'Connor published a popular and unfavorable biography, Mellon's Millions. Democrats won effective control of Allegheny County in the 1933 elections, and the following year Democrat Joseph F. Guffey won Pennsylvania's Senate election and George Howard Earle III won the state's gubernatorial election. Mellon endured numerous attacks during these campaigns, and his unpopularity in Pittsburgh led him to spend most of his final years in Washington rather than his home town.

In the 1930s, the Roosevelt administration conducted several high-profile tax evasion prosecutions against individuals such as Thomas W. Lamont and Jimmy Walker. In response to accusations levied by Republican Congressman Louis Thomas McFadden of Pennsylvania in early 1933, Attorney General Homer Cummings began an inquiry into Mellon's tax history. Between February 1935 and May 1936, the Board of Tax Appeals heard a widely covered case in which the federal government accused Mellon of tax fraud. During the proceedings, Mellon divulged numerous details of his business career that had previously been unknown to the public.

Mellon was diagnosed with cancer in November 1936. His health declined in 1937, and he died on August 26, 1937. Newspapers across the country took note of his death. Secretary of the Treasury Henry Morgenthau Jr. stated that Mellon had lived through "an epoch in the economic history of the nation, and his passing takes one of the most important industrial and financial figures of our time." Months after Mellon's death, the Board of Tax Appeals handed down a ruling exonerating Mellon of all tax fraud charges.

Personal life

In the early 1880s, Mellon had a serious relationship with Fannie Larimer Jones, but he broke off the relationship after learning that she was suffering from tuberculosis. After this experience, Mellon refrained from courting women for several years. In 1898, while traveling with Frick and Frick's wife to Europe, Mellon met Nora McMullen, a nineteen-year-old Englishwoman of Ulster Scots ancestry. Mellon visited McMullen's home of Hertford Castle in 1898 and 1899, and, after a period of courtship, the couple married in 1900. Nora gave birth to a daughter, Ailsa, in 1901. Nora disliked living in Pittsburgh, and she was unhappy in her marriage. By the end of 1903, she had begun an affair with Alfred George Curphey, who would also later be involved with the wife of George Vivian, 4th Baron Vivian. Mellon and Nora eventually reconciled, and in 1907 she gave birth to a son, Paul. The reconciliation proved short-lived, as Nora took up with Curphey again in 1908 and requested a divorce the following year. To avoid a public scandal, Andrew reluctantly agreed to a separation in 1909. Seeking to hold divorce proceedings privately before a judge rather than publicly before a jury, in 1911 Mellon convinced the Pennsylvania legislature to amend a law that had required a jury trial in divorce proceedings. In response, Nora attacked Mellon in the press, and the divorce proceedings were widely covered by the media. Nora went so far to contest the divorce that she made an appeal to King George of England and parliament. In 1912, Mellon and Nora finally agreed on a divorce settlement, largely on Mellon's terms.

Mellon did not remarry. Nora lived in Pittsburgh for several years before eventually settling in the Hudson Valley, and the two children alternated living with either parent. In 1923, Nora married Harvey Arthur Lee, a British-born antiques dealer 14 years her junior. Two years after the Lees' divorce in 1928, Nora Lee resumed the surname Mellon, at the request of her son, Paul. In the 1920s, while Mellon served as Secretary of the Treasury, Ailsa was courted by several influential men, including Otto Christian Archibald von Bismarck, Robert Horne, and Gelasio Caetani. In 1926, in the "greatest society event that the nation's capital had witnessed" since before World War I, Ailsa married David K. E. Bruce, son of Democratic Senator William Cabell Bruce of Maryland. After attending Yale University and the University of Cambridge, Paul briefly worked at Mellon National Bank. He later settled in Virginia, becoming a well-known philanthropist. Mellon's nephew, Richard King Mellon, succeeded Andrew as the head of the Mellon financial empire.

Philanthropy and art collection

Emulating his father, Mellon eschewed philanthropy for much of his life, but in the early 1900s, he began donating to local organizations such as the YMCA. Mellon committed to his first large-scale act of philanthropy in 1913, when he and his brother, Richard, established the Mellon Institute of Industrial Research as a department of the University of Pittsburgh. In 1967, the institute merged with the Carnegie Institute of Technology to form Carnegie Mellon University. Mellon also served as an alumni president and trustee 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. In total it is estimated that Mellon donated over $43 million to the University of Pittsburgh.

Encouraged by Frick and guided by Charles Carstairs, Mellon began collecting art in the mid-to-late 1890s. Over the ensuing decades, his art collection continued to grow as he purchased pieces from Knoedler and Joseph Duveen, and during the 1920s his collection was generally considered to be one of the finest art collections in Washington. In the early 1930s, he purchased twenty-one paintings from the Soviet Union's Hermitage Museum in the Soviet sale of Hermitage paintings. Some of these were among the best paintings held by the Hermitage. They were all subsequently given to the National Gallery of Art.

Mellon decided to use his fortune and art collection to establish a national art museum in Washington modeled after the National Gallery in London. In 1936, Mellon presented President Roosevelt with an offer to establish a national art museum to which Mellon would donate his art collection as well as an endowment, while the federal government would pay for the institution's upkeep. He conditioned the offer on the establishment of a board of trustees, a majority of whom would be chosen by Mellon. Despite the ongoing tax case against Mellon, the Roosevelt administration accepted the offer, and Congress passed legislation authorizing the construction of the National Gallery of Art on Mellon's terms. The National Gallery of Art (now known as the West Building) opened in 1941. Two of his children, Paul Mellon and Ailsa Mellon Bruce, were subsequently among the major donors to the collection. The Mellon Foundation and several family members funded a new museum building, called the East Building, which opened in 1978. Mellon's friend and former employee, David E. Finley Jr., would later preside over the establishment of the National Portrait Gallery, which also hosts several paintings donated by Mellon.

Legacy

Memorials

The Andrew W. Mellon Memorial Fountain in Washington was created by Sidney Waugh and was dedicated in May 1952 by Harry S. Truman. Washington, D.C., also hosts the Andrew W. Mellon Auditorium and the Andrew Mellon Building. 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 US Coast Guard Cutter Mellon (WHEC-717).

In popular culture

Andrew W. Mellon appears in the HBO drama series Boardwalk Empire, in the fifth, eighth and twelfth episodes of the third season, in his capacity as Secretary of the Treasury. His character is played by Carnegie Mellon alumnus James Cromwell.

The fictional town "Melonville" was named for the Mellons and the site of the Canadian sketch comedy series Second City Television.

In the alternate history/time travel story "A Slip in Time" by S. M. Stirling, featuring a history in which the First World War was avoided and the Austro-Hungarian Empire survived, Andrew Mellon was the President of the United States in 1926.

Mellon is the subject of three unflattering chapters in Matt Stoller's 2019 book, Goliath: The 100 Year War Between Monopoly Power and Democracy, which recounts efforts by populists in Washington (namely, Congressman Wright Patman; Roosevelt administration lawyer Robert H. Jackson; and Ferdinand Pecora, attorney for the Senate Banking Committee) to expose Mellon's crimes and abuse of power for personal gain.