The Magazine

Prophet of Prosperity

A second look at a great American capitalist.

Jun 25, 2007, Vol. 12, No. 39 • By EDWIN M. YODER JR.
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An American Life

by David Cannadine

Knopf, 800 pp., $35

The portrayal of American worthies in the binary mode, as either paragons or demons, may originate with Parson Weems. But even now our estimates of the eminent are often caricature, with Daumier and Nast as the presiding muses. That is one of many reasons David Cannadine's resolutely rounded portrait of Andrew Mellon is a significant addition to the canon of American biography.

Mellon's name is now associated with a great charitable foundation, as well as the National Gallery of Art, whose core collection--and the great building on the Mall that houses it--was his personal gift to the nation. But there was a time when Mellon was viewed, through lenses darkened by Depression-era disillusion, as one of the exemplary rascals of the Roaring Twenties. Accordingly, Cannadine's measured portrait will disappoint those who cling to that view, as well as those who apotheosize the Pittsburgh banker and perennial Treasury secretary (1921-32) as the faultless prophet of prosperity. Cannadine has no patience with the binary approach, which he rightly dismisses as unhistorical.

Mellon's father, "Judge" Thomas Mellon, was a protestant Irish immigrant to western Pennsylvania who imported the Calvinist attitudes that, somewhat secularized, marked his son. Andrew Mellon led a melancholy and reclusive private life, seared by an unhappy divorce and distant relationships with his two children: a personal aspect that receives a degree of attention exceeding its intrinsic interest here. For most readers of this very long book, the compelling interest of Mellon's life lies in his career as public man, featuring his decade as secretary of the Treasury under three Republican presidents.

Cannadine's examination of the Treasury years may surprise those who assume that a rock-ribbed Republican, nurtured in banking, mining, and manufacture, and fiercely hostile to unionism, would reflexively pursue the self-interested policies we too often expect of tycoons raised to public office. Mellon was, indeed, the first apostle of supply-side economics: Steep cuts in marginal income tax rates. What is less clearly understood is Mellon's rationale.

He was himself, after John D. Rockefeller and his fellow townsman Andrew Carnegie, the nation's third largest payer of income taxes. He saw them as his duty. But he argued that at a time when few Americans paid any income tax--the tax in its post-16th Amendment incarnation was only a decade or so old--rich men were driven by high marginal rates (up to 50 percent on the last dollar) to shelter capital in tax-exempt government securities. Lower marginal rates, the core of the "Mellon Plan," would, he insisted, tilt investment towards equities, nourishing industrial capitalization and, perhaps, boosting net revenues. Sen. James Couzens of Michigan, a progressive Republican and a fellow millionaire, trenchantly disputed Mellon's analysis, and the "battle of the millionaires" became a star turn of fiscal debate in the mid-twenties. Mellon finally got his tax reform bill in 1926, but the argument goes on. It was a point in Mellon's favor when it was revealed that Couzens had heavily invested his own fortune in tax-exempts.

The most engaging pages of this book, humanizing Mellon's notoriously austere and taciturn personality, concern his art collection, his supervision of the building of the great beaux arts Federal Triangle in Washington, and, far from least, the Justice Department's assault on him in the mid-1930s as an alleged tax delinquent--an episode that shows Franklin D. Roosevelt and Atty. Gen. Homer Cummings at their pettiest. The essence of the charge was that Mellon, by dubious gifts to his charitable foundation, had drastically underpaid his 1931-32 taxes. With interest and penalties, the bill assessed came to more than $3 million.

Cannadine suggests that Mellon was targeted as a very visible representative of the "malefactors of great wealth" reviled by FDR's cousin Theodore in the Progressive era, and identified by FDR himself as "money changers" who must be driven from "the temple of American civilization." Cannadine has written well of the vicissitudes of the British aristocracy, and is perhaps more attuned than a native biographer to the class overtones of this paradigmatic clash. It pitted old money (FDR's family fortune was founded in the old China trade) against the upstart 19th- and 20th-century millionaires.