A Politician We Can Cheer About

by Burt on January 17, 2013

I nominate Andrew Mellon: U.S. Secretary of Treasury in the 1920s. Mellon, unlike most politicians today, succeeded in business before bringing those skills into the service of his country. He was a brilliant banker in Pittsburgh, and he invested wisely in oil and aluminum. President Harding begged him to leave his corporations and apply his remarkable skills to solving the U.S. debt crisis after World War I. High tax rates, high unemployment (almost 12%), and a skyrocketing national debt from the war had made Americans desperate for solutions.

What did Mellon recommend as treasury secretary? Not a stimulus package, and not more government programs, but less government and more freedom. He presided over massive cuts both in federal spending and in tax rates to encourage entrepreneurs to invest once again in America. Balanced budgets were what the U.S. needed to restore a sound dollar and attract investments from all over the world.

During World War I, the national debt had spiraled from $1.2 billion to an astonishing $24 billion. Just the interest on the new debt was almost as much as the entire debt before the war. During the 1920s, under Mellon’s direction, the U.S. chopped almost $1,000,000,000 off the debt each year of the decade. More than one-fourth of the debt simply disappeared–and three-fourths of it would have vanished if the Europeans had paid back the money they borrowed from the U.S. to fight World War I. In typical fashion, the U.S. generously forgave the debts of the British, the French, and the other Europeans. Even with debt forgiveness, U.S. entrepreneurs sparked a wave of prosperity that made our nation the industrial center of the world.

At the 1924 Republican national convention, Andrew Mellon was given a prolonged ovation for improving his country in the same way he improved Alcoa, Gulf Oil, and the Mellon Bank. So effective was Mellon that when FDR became president, he felt compelled to undermine Mellon’s free market approach to economic growth. FDR, through the IRS, launched a tax audit on Mellon. The audit cost the government more than it gained, but the investigation dirtied Mellon’s reputation and sent a warning to other rich men that if they rebelled against FDR’s new taxes and growth of government then more audits might be forthcoming.

Mellon, despite FDR’s trumped up charges, always focused optimistically on the art of the possible. Before his death in 1937, he donated his superb art collection to the United States. In doing so, he wanted to avoid all federal expense, so he built the National Gallery of Art to house the paintings and then donated all of it to his country. Mellon had gone to Washington and changed it more than it changed him.
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A champion of the people « Kai's Coolidge Blog
January 23, 2013 at 4:53 am

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