Aluminum ingots, balance scale, and financial ledgers on a 1910s Pittsburgh banking desk.

Andrew William Mellon Biography — Financing the Rise of Alcoa and Gulf Oil

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In 1889, the founders of the Pittsburgh Reduction Company approached banker Andrew W. Mellon for a loan to pay off a note at another bank. Mellon offered more than they had asked for. He went on to buy shares, join the board, and finance an expansion that drew on hydroelectric power at Niagara Falls.

The company became the Aluminum Company of America, known as Alcoa. By then, Mellon had gone from working at his father’s bank to leading Mellon National Bank and financing the expansion of several industries.

A Quick Look at the Life of Andrew W. Mellon

Biography Summary

Andrew William Mellon led his family’s Pittsburgh banking business before serving as U.S. Treasury secretary under three presidents and as ambassador to the United Kingdom. He helped establish the Mellon Institute of Industrial Research with his brother Richard and gave the founding collection and building for the National Gallery of Art.

Profile

Full name — Andrew William Mellon

Born — March 24, 1855, Pittsburgh, Pennsylvania

Died — August 27, 1937, Southampton, New York, aged 82

Education — Attended Western University of Pennsylvania, now the University of Pittsburgh

Major roles — President of Mellon National Bank, U.S. Treasury secretary (1921–1932), U.S. ambassador to the United Kingdom (1932–1933)

From a Family Bank to a Network of Institutions

Judge Thomas Mellon founded T. Mellon & Sons’ Bank in Pittsburgh in 1869. Andrew attended Western University of Pennsylvania and worked in the lumber business before joining his father’s bank in 1874. In 1882, Andrew took over from Thomas. His brother Richard B. Mellon became an important partner in the family business.

By the late 1880s, Andrew was helping build a group of financial institutions around the original bank. He helped organize Union Trust and Union Savings in Pittsburgh and worked with Henry Clay Frick in trust and industrial ventures.

The private banking house became Mellon National Bank in 1902. Andrew became its president while serving as vice president of Union Trust, which was to acquire the national bank’s shares.

From Aluminum to Gulf Oil

The Pittsburgh Reduction Company was already putting Charles Martin Hall’s aluminum process to commercial use when Mellon offered financing. Investors organized by Alfred E. Hunt had backed the company at its founding in 1888. It took the name Aluminum Company of America in 1907.

The Mellon brothers entered the Texas oil business after the Spindletop discovery in 1901. They invested alongside James M. Guffey and other associates in the J. M. Guffey Petroleum Company, which was formed to develop the field. The same group organized the Gulf Refining Company of Texas later that year, and a refinery was built at Port Arthur.

As Spindletop production declined, the ventures had to reorganize. William Larimer Mellon, Andrew’s nephew, took active charge of operations. Andrew became president of the newly formed Gulf Oil Corporation in January 1907, and the corporation bought out Guffey’s interest. Gulf built a pipeline to an Oklahoma oil field and began refining Oklahoma crude at Port Arthur that September.

The Mellon banking network also financed coal and steel fabrication. Andrew helped establish Union Steel, which later merged with U.S. Steel. Mellon financing also backed Carborundum, a maker of industrial abrasives, and Koppers, which made coke ovens that recovered valuable chemical by-products.

Industrial Research Becomes a Permanent Institution

Chemist Robert Kennedy Duncan brought his industrial fellowship model to the University of Pittsburgh in 1911. Andrew and Richard Mellon put the work on a permanent footing in 1913 by establishing the Mellon Institute of Industrial Research. Companies sponsored fellowships in applied research. The institute later merged with the Carnegie Institute of Technology to form Carnegie Mellon University in 1967.

From Pittsburgh Banking to the U.S. Treasury

President Warren G. Harding appointed Mellon Treasury secretary in 1921. Mellon stayed in the post under Calvin Coolidge and Herbert Hoover. Under the original Federal Reserve Act, the Treasury secretary also chaired the Federal Reserve Board by virtue of the office.

At Treasury, Mellon favored a balanced budget, a smaller federal debt, and lower taxes. “The history of taxation shows that taxes which are inherently excessive are not paid,” he wrote in his 1924 book Taxation: The People’s Business. He argued that high rates could push capital toward tax-exempt investments and other ways of lawfully avoiding taxable income. The revenue acts of 1924, 1926, and 1928 incorporated elements of his program.

The Depression and the House Inquiry

The 1929 crash and the Depression eroded Mellon’s standing. He continued to favor balancing the budget, now through spending cuts and tax increases. As Mellon took part in overseas negotiations on World War I debt payments, Hoover increasingly turned for advice to Treasury undersecretary Ogden L. Mills.

In January 1932, Representative Wright Patman brought impeachment charges concerning Mellon’s business interests while in office. Mellon had given up formal corporate directorships and transferred his bank stock to his brother. Biographer David Cannadine interpreted Mellon’s diary as evidence that he continued to take an active role in his businesses.

The House inquiry was still open when Hoover nominated Mellon as ambassador to the United Kingdom and the Senate confirmed him. Mellon resigned from Treasury in February 1932, and Mills succeeded him. The House dropped the inquiry without deciding the merits of Patman’s charges. Mellon presented his diplomatic credentials in April 1932 and left England the following March.

The Dispute Over Mellon’s 1931 Tax Return

Federal authorities challenged deductions and other items on Mellon’s 1931 income-tax return. The Commissioner asserted a civil deficiency of about $1.32 million and sought a 50 percent fraud penalty. Mellon denied fraud and claimed he had overpaid. In May 1934, a federal grand jury declined to indict him.

The separate civil case continued after Mellon’s death. In December 1937, the U.S. Board of Tax Appeals found no fraudulent intent but determined that Mellon owed about $403,000 in additional tax. His estate later agreed to a settlement of about $668,000, including interest. Both sides agreed to forgo an appeal.

A Private Collection Becomes the National Gallery

Mellon first wrote about establishing a national art museum in 1927, while still at Treasury. In 1931, he completed the purchase of 21 works from the Hermitage, including Raphael’s The Alba Madonna and Jan van Eyck’s The Annunciation. By 1935, he had commissioned architect John Russell Pope to prepare early sketches for the museum.

On December 22, 1936, Mellon formally offered President Franklin D. Roosevelt both his collection and a building to house it. Roosevelt endorsed the offer, and Congress provided for the National Gallery of Art in March 1937. Work had begun when Mellon died that August.

At the dedication on March 17, 1941, Paul Mellon presented the museum on his father’s behalf and Roosevelt accepted it for the nation. Andrew Mellon’s 126 paintings and 26 sculptures formed the core of the museum’s collection when it opened to the public.

Timeline

Key dates in Mellon’s banking career, public service, and philanthropy.

Timeline.

1855

Andrew William Mellon is born on March 24 in Pittsburgh.

1869

Thomas Mellon establishes the family bank.

1874–1882

Andrew joins his father’s bank in 1874 and takes over its leadership in 1882.

1889

Mellon supplies early financing to the Pittsburgh Reduction Company.

1901–1907

The Mellons invest in oil ventures tied to Spindletop in 1901. The family bank becomes Mellon National Bank in 1902. Gulf Oil Corporation forms in 1907 with Andrew Mellon as president.

1913

Andrew and Richard Mellon establish the Mellon Institute of Industrial Research on a permanent basis.

1921–1924

Harding appoints Mellon Treasury secretary in 1921. Mellon publishes Taxation: The People’s Business in 1924.

1932–1933

Mellon leaves Treasury, the House ends its inquiry, and he serves as U.S. ambassador to the United Kingdom through March 1933.

1934

A federal grand jury declines to indict Mellon over his 1931 tax return.

1936–1937

Mellon formally offers his collection and a gallery building to the nation in December 1936. Congress provides for the National Gallery of Art in March 1937. Mellon dies on August 27.

1937–1938

After Mellon’s death, the Board of Tax Appeals finds a civil tax deficiency and issues its final order.

1941

The National Gallery of Art is dedicated on March 17.

FAQs

Did Andrew Mellon found Mellon Bank?

Thomas Mellon founded the original family bank in 1869. His son Andrew took over its leadership in 1882 and was president when the private bank became Mellon National Bank in 1902.

What was Andrew Mellon’s role in Alcoa?

Mellon supplied early financing to the Pittsburgh Reduction Company, became a shareholder and director, and helped finance expansion at Niagara Falls. Charles Martin Hall and the investor group organized by Alfred E. Hunt had started the company in 1888. It took the name Aluminum Company of America in 1907.

What happened in Andrew Mellon’s tax case?

A federal grand jury declined to indict Mellon over his 1931 tax return. In the separate civil case, the Board of Tax Appeals found no fraudulent intent and determined a tax deficiency. His estate later agreed to a settlement of about $668,000, including interest.

Further Reading

Sources