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Banking

Coolidge, Calvin

Harding, Warren G.

Hoover, Herbert

National debt of the United States

Revenue Acts of 1924, 1926, and 1928

Stock market crash

The 1920s in America

Mellon, Andrew

by Dale L. Flesher

Identification: American banker, industrialist, and secretary of the treasury

Born: March 24, 1855, Pittsburgh, Pennsylvania

Died: August 26, 1937, Southampton, New York

Andrew William Mellon’s contributions to American economics and society ranged from banking to philanthropy to income tax policy. He became secretary of the treasury in 1921 under President Warren Harding, continuing in that role under his successors, Calvin Coolidge and Herbert Hoover. His 1924 book on tax policy is considered a classic. He was one of the most famous public officials of the 1920s and appeared on the cover of Time magazine twice between 1923 and 1928.

Mellon was the son of a wealthy Pittsburgh banker, Thomas Mellon, and a graduate of the University of Pittsburgh, which was then called Western University. He followed his father into banking. In 1921, he was selected by President Harding to become secretary of the treasury, a position he held until 1932. His objectives as secretary were to reduce the national debt that had accumulated during World War I and to reduce individual income tax rates, which had been raised as high as 90 percent during the war. Mellon’s theory of taxation was that lower rates would result in greater tax collections by the government. He argued that when tax rates were too high, consumers had little incentive to earn more income. But with lower tax rates, consumers would work harder because they would be able to keep more of their incremental income. His tax policy was outlined in his 1924 book, entitled Taxation: The People’s Business. Congress did not immediately lower the rates to the levels he suggested, but by 1929, he had accomplished his goals through a series of tax bills. He also succeeded in reducing the national debt; the lower rates did bring in increased tax revenues.

In 1932, Texas representative Wright Patman threatened Mellon with impeachment due to a conflict of interest. Before the impeachment proceedings came to a vote, however, Mellon resigned to become the American ambassador to Great Britain.

Impact

Mellon had great influence over American tax policy during the formative years of income tax legislation. His tax philosophy of not overtaxing the rich took several years to enact, but it eventually became law. However, much of his work was abandoned under the administration of President Franklin D. Roosevelt, who immediately raised tax rates in opposition to Mellon’s tax policies. Mellon’s tax policy of easing tax burdens on corporations and the very wealthy was resumed in the 1980s under the administration of President Ronald Reagan.

Further Reading

1 

Cannadine, David. Mellon: An American Life. New York: Vintage Books, 2008.

2 

Love, Philip H. Andrew W. Mellon: The Man and His Work. Baltimore: F. H. Coggins & Company, 1929.

3 

Mellon, Andrew W. Taxation: The People’s Business. New York: Macmillan, 1924.

Citation Types

Type
Format
MLA 9th
Flesher, Dale L. "Mellon, Andrew." The 1920s in America, edited by Carl Rollyson, Salem Press, 2012. Salem Online, online.salempress.com/articleDetails.do?articleName=1920_0410.
APA 7th
Flesher, D. L. (2012). Mellon, Andrew. In C. Rollyson (Ed.), The 1920s in America. Salem Press. online.salempress.com.
CMOS 17th
Flesher, Dale L. "Mellon, Andrew." Edited by Carl Rollyson. The 1920s in America. Hackensack: Salem Press, 2012. Accessed September 18, 2025. online.salempress.com.