# Andrew Mellon Andrew William Mellon (1855–1937) was a Pittsburgh banker, industrialist, and **U.S. Secretary of the Treasury** (1921–1932) under Presidents Harding, Coolidge, and Hoover — the longest-serving Treasury Secretary since [[Alexander Hamilton]]. Mellon was the **original supply-sider**: he slashed the top marginal income tax rate from 73% to 24%, eliminated the gift tax, halved the estate tax, and argued that lower taxes on the wealthy would increase revenue by stimulating economic growth — the precise argument that Reagan, [[George W. Bush]], and Trump would repeat decades later. Mellon matters for the KB as the figure who **translated Gilded Age plutocratic economics into government policy** — the hinge between the Robber Baron era and modern conservative fiscal doctrine. Every Republican tax cut since 1981 is a Mellon Plan with updated branding. He is also the proof that the cycle works: Mellon's tax cuts fueled the speculative boom of the 1920s, which produced the crash of 1929 and the [[Great Depression]] — and conservative economics has spent the subsequent century arguing that the problem was not too little regulation but too much. ## Background - Born March 24, 1855, in Pittsburgh, Pennsylvania — son of [[Thomas Mellon]], a banking and real estate fortune builder - Attended Western University of Pennsylvania (now University of Pittsburgh) - Entered [[T. Mellon & Sons]] bank (1874); assumed control in 1882 - Built a financial empire through banking and strategic investments in: - **Aluminum Company of America (Alcoa)** — monopoly on American aluminum production - **[[Gulf Oil]]** (later merged into Chevron) - **Koppers Company** (industrial chemicals, coke) - **Union Steel** (later acquired by U.S. Steel) - **New York Shipbuilding** - By 1920: one of the three richest Americans (along with Rockefeller and Ford) - **Secretary of the Treasury** (1921–1932) — appointed by Harding, retained by Coolidge and Hoover - Ambassador to the United Kingdom (1932–1933) - Died August 26, 1937, in Southampton, New York, at age 82 ## The Mellon Plan Mellon's tax policy as Treasury Secretary was the **prototype for modern conservative economics**: **The argument:** High tax rates discourage investment and drive capital into tax shelters. Lowering rates — especially on the wealthy — would increase economic activity, broaden the tax base, and actually *increase* government revenue. The rich would voluntarily pay more taxes at lower rates because they would stop sheltering income. **The policy:** - Top marginal income tax rate: cut from **73% (1921) to 24% (1929)** - Estate tax: cut in half - Gift tax: eliminated entirely - Corporate tax: reduced - Excise taxes: eliminated on many items **The results (1920s):** - Federal tax revenue did initially increase as the economy boomed - The top 1% saw their share of national income rise from 12% to 19% - The stock market quadrupled (1924–1929) - Speculative lending and margin buying exploded - Then came the crash of 1929 and the Great Depression **The contested legacy:** Mellon's defenders argue that his tax cuts produced genuine prosperity in the 1920s and that the crash was caused by Federal Reserve policy, not tax policy. His critics argue that the tax cuts produced a speculative bubble, extreme wealth concentration, and insufficient demand — the conditions that made the Depression inevitable. This debate has never been resolved; it has merely been repeated in every generation. ## The Supply-Side Lineage Mellon's tax philosophy is the **direct ancestor** of modern Republican fiscal policy: | Era | Policy | Champion | Top rate before → after | |-----|--------|----------|----------------------| | 1920s | Mellon Plan | Andrew Mellon | 73% → 24% | | 1960s | Kennedy-Johnson cuts | JFK/LBJ | 91% → 70% | | 1980s | Reaganomics | Reagan/Kemp/Laffer | 70% → 28% | | 2000s | Bush tax cuts | George W. Bush | 39.6% → 35% | | 2010s-20s | Tax Cuts and Jobs Act | Trump/Ryan | 39.6% → 37% (+ corporate 35% → 21%) | The intellectual chain: Mellon → the [[Chicago School]] → [[Milton Friedman]] → [[Arthur Laffer]] → Jack Kemp → the [[Heritage Foundation]] → [[Grover Norquist]]'s "[[Taxpayer Protection Pledge]]" → [[Paul Ryan]] → the 2017 TCJA. The specific claim — that cutting taxes on the wealthy increases revenue — has been tested repeatedly and has failed to produce the promised results in every instance except arguably the 1960s Kennedy cuts (which started from a 91% rate). But the political function of the claim is independent of its empirical validity: it provides intellectual cover for policies that benefit the donor class. ## The Conflict of Interest Mellon served as Treasury Secretary while maintaining his business interests — a conflict that would be the defining scandal of a modern administration but was barely remarked upon in the 1920s: - He continued to own large stakes in Alcoa, Gulf Oil, and numerous banks while setting tax policy that directly benefited those companies - He personally benefited from the tax cuts he championed — his own tax burden dropped by millions - He used his position to settle favorable tax assessments for his own companies - The House of Representatives voted to impeach Mellon in 1932 (for tax fraud and conflicts of interest); Hoover avoided the impeachment by appointing Mellon ambassador to Britain - The Treasury Department later pursued Mellon for tax evasion, settling for a fraction of the amount owed The Mellon conflict-of-interest pattern — the wealthy using government positions to enrich themselves while claiming to serve the public good — is the template for every subsequent KB entry involving plutocratic self-dealing, from Koch political spending to Trump's tax cuts to DOGE's Musk problem. ## The National Gallery Mellon's major philanthropic act was the donation of his art collection and construction funding for the **National Gallery of Art** (1937/1941) — one of the world's great museums. Like Carnegie's libraries and Rockefeller's foundations, the National Gallery served both a genuine public purpose and a reputational rehabilitation function — Mellon donated his collection during the very period he was under investigation for tax fraud. The pattern: **use philanthropy to launder a reputation damaged by the methods used to accumulate the fortune being donated.** This is the Carnegie-Rockefeller-Mellon template that Sackler (Purdue Pharma), Koch (arts and cancer research), and other modern plutocrats have followed. ## See Also - [[Scaife-Mellon Family]] — the political-philanthropy dynasty the Mellon fortune later funded, via grandson [[Richard Mellon Scaife]] - [[Andrew Carnegie]] — Pittsburgh peer, fellow plutocrat-philanthropist - [[J.P. Morgan]] — Banking peer, fellow architect of Gilded Age financial power - [[John D. Rockefeller]] — Fellow monopolist whose philanthropy created the "establishment" - [[Henry Clay Frick]] — Carnegie/Mellon associate, Pittsburgh industrialist - [[Gilded Age Plutocracy]] — The through-line from the 1870s to the present - [[Powell Memo]] — The institutional strategy for restoring Mellon-era economics