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entrepreneur, Secretary of the Treasury
Andrew William Mellon was born in Pittsburgh, Pennsylvania, on March 24, 1855. His father was Thomas Mellon, a banker and judge who was a Scots-Irish immigrant; his mother was Sarah Jane Negley Mellon. He also had one brother, Richard.
After graduating from the University of Pennsylvania (now the University of Pittsburgh) in 1873, Andrew and his brother established a coal and timber business. In 1874, the brothers merged their interests with their father's banking interests to form T. Mellon and Sons, and Andrew became sole owner of the firm in 1882.
An extraordinary judge of entrepreneurial talent, Mellon invested in a variety of industries and enterprises, and among the many companies he helped to found and fund were Gulf Oil (1895), the Union Trust Company (1898), the Pittsburgh Coal Company (1899), ALCOA, Carborundum, and Koppers. He rarely interested himself in the details of such businesses, but he acquired extensive holdings, which meant that by the mid-1920's he was the third highest income tax payer in the U.S. behind only John D. Rockefeller and Henry Ford. During World War I, Mellon participated in many fundraising activities for many organizations including the American Red Cross, the National War Council of the Y.M.C.A., the Executive Committee of the Pennsylvania State Council of National Defense, and the National Research Council of Washington.
Despite his extraordinary wealth, Mellon was relatively unknown outside of Pennsylvania until being appointed Secretary of the Treasury by President Warren G. Harding in 1921; he continued in this position under Presidents Calvin Coolidge and Herbert Hoover. He entered office with his chief goal being the reduction of the huge federal debt from World War I. To do this, he needed to increase the federal revenue and cut spending, and he believed that the best way to accomplish both was a drastic reduction in tax rates. He believed that if the tax rates were too high, then the people would try to avoid paying them. He observed that as tax rates had increased during the first part of the 20th century, investors moved to avoid the highest rates -- by choosing tax-free municipal bonds, for instance.Conversely, lower taxes allowed people and businesses to spend and invest more, putting more money into the general economy. According to Mellon, this increase in overall spending would put more money in the pockets of the people which, in turn, would lead to more people paying income taxes. Mellon's plan worked, for by the end of the 1920's the national debt had been reduced from over $25 billion to about $16 billion. Mellon explained his theories in his 1924 book Taxation: The People's Business.
The onset of the the Great Depression in 1929 brought a sudden end to the success of Mellon's plan, as reduced revenue and increasing spending caused the national debt to rise again. Seeking to make up for the lost revenue, Mellon spent much of the period between 1929 and 1931 in Europe negotiating for repayment of war debts owed by former allies. With the general public believing that Mellon's policies benefited big business at the expense of the public, President Hoover decided it was time to make a change and, on February 12, 1932, Mellon agreed to step down as Secretary of the Treasury; he was replaced by Under Secretary of the Treasury Ogden L. Mills, who had served as Hoover's principal economic adviser while Mellon was in Europe. After leaving the Treasury Department, Mellon served a year as Ambassador to Great Britain before retiring to private life.
During his life, Mellon gave away over $10 million, much of it to educational and charitable institutions in his native Pittsburgh. In 1913, he and his brother founded the Mellon Institute of Industrial Research, an organization designed to forge a partnership between American scientific research and industry; originally a department of the University of Pittsburgh, the institute is now an integral part of Carnegie Mellon University. Mellon's most famous philanthropic work, however, was his donation of money and paintings for the establishment of the National Gallery of Art in Washington, D.C.
Andrew W. Mellon died in Southampton, New York, on August 26, 1937, just a few months after Congress agreed to build the National Gallery of Art, and was buried at Trinity Episcopal Church Cemetery in Upperville, Virginia.
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