Sixteen great war poets, including Siegfried Sassoon, are remembered on a slate stone in Westminster Abbey’s Poets’ Corner. The stone’s inscription features the words of Wilfred Owen: “My subject is war, and the pity of war. The poetry is in the pity.”
Lessons from Siegfried Sassoon
Act on your conscience: Siegfried Sassoon saw World War I for the political folly it was and said so, both in his published poetry and in what he called his “willful defiance of military authority.”
Honor your duty: Despite his outspoken opposition to the war, Sassoon didn’t flinch when called to fight. He returned to battle even after his government consigned him to a mental institution for his opposition to the war. He couldn’t bear the thought of his friends’ sacrificing life and limb without him.
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Andrew Mellon
Unleashing Wealth Creators
Of the dozens of people who have held the office of secretary of the treasury of the United States, my choice for the best would be Andrew Mellon.
I must admit up front that I have a fondness for Mellon for a personal reason. Like me, he was of Scots-Irish ancestry and grew up in western Pennsylvania (he in Pittsburgh, I in Beaver Falls). But what he stood for is what really stands out.
From 1921 to 1932, Andrew William Mellon served Presidents Warren Harding, Calvin Coolidge, and Herbert Hoover as treasury secretary. Only two individuals in American history held the office longer than his ten years and eleven months. Mellon’s business prowess before that was legendary. Never impulsive, he put in long hours of study before making an important decision, displaying a sharp intellect and a quiet thoughtfulness that contemporaries admired. With an uncanny ability to pick cutting-edge technologies and the right entrepreneurs to bet on, Mellon built a financial and industrial empire in steel, oil, shipbuilding, coal, coke, banking, and aluminum.
One of the giant firms he helped found was the Aluminum Company of America, or Alcoa. By the 1920s he was one of the wealthiest men in America. He was also one of the country’s most generous philanthropists, not to mention the third highest income tax payer, behind only John D. Rockefeller and Henry Ford.
Arguably, Mellon’s greatest contribution to America was not the vast wealth he created or the vast wealth he gave away, but rather the vast wealth his fiscal policies allowed millions of other Americans to produce. Mellon’s riches did not insulate him from the real world; they reinforced in his mind just how the real world works.
The Mellon Plan
When Mellon came to Washington, the federal income tax hadn’t yet celebrated its tenth birthday, but the false prophets who had scoffed that the rate could ever get as high as 10 percent had already been shamed by events. The top marginal income tax bracket stood at 73 percent by 1921. Mellon noticed that confiscatory rates were putting scarce capital to flight as investors sought refuge abroad or in tax havens at home. He often pointed to John D. Rockefeller’s brother William, who had $44 million in tax-exempt bonds and only $7 million in Standard Oil when he died in 1923.
Mellon’s view of the deleterious effect of high tax rates was formed early in life. His grandfather left Ulster to escape a crushing tax burden, and Andrew’s father made sure his son understood that. In America the Mellon family practiced thrift and entrepreneurship.
As treasury secretary, Mellon argued that taxes had to be slashed “to attract the large fortunes back into productive enterprise.” He added, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower rates.” Henry Ford, he pointed out, made more money by reducing the price of his cars from $3,000 to $380 and increasing his sales than he would have earned by keeping high the price and profit per car.
Words of Wisdom from Andrew Mellon
“If the spirit of business adventure is killed, this country will cease to hold the foremost position in the world.”
Mellon relentlessly pressed Congress to cut taxes across the board, for all brackets. By 1929, when Congress passed his sixth tax cut of the decade, the top rate had been lowered two-thirds, from 73 percent to 24 percent. Those in the lowest income bracket (earning under $4,000 annually) saw their rates fall by an even greater percentage—from 4 percent to 0.5 percent. So many exemptions were introduced or raised that between 1921 and 1929 the number of Americans who paid federal income taxes fell by one million. Barely 2 percent paid any federal income tax at all by the end of the decade.
Mellon also worked to repeal the federal estate tax, but secured just half the loaf; Congress cut it from 40 to 20 percent. At his urging, the gift tax was abolished.
The Mellon Plan was, as Burton W. Folsom points out in The Myth of the Robber Barons, “a startling triumph.” The budget was in surplus year after year. Personal income tax revenues soared from $719 million in 1921 to more than $1 billion in 1929. The national debt was halved. The economy grew by 59 percent, America was awash in new inventions, and American wages became the envy of the world.
Soak-the-rich class warriors cried foul anyway. During the debate over the 1926 tax cuts, Senator George Norris of Nebraska charged that if the administration had its way, Mellon himself would reap “a larger personal reduction [in taxes] than the aggregate of practically all the taxpayers in the state of Nebraska.” Norris never mentioned that Mellon was paying more in taxes than all the people of Nebraska combined.
Senator James Couzens of Michigan, a fellow Republican, fought the Mellon Plan as well. He conducted witch-hunting investigations in an attempt to embarrass Coolidge and Mellon. He publicly charged that the Treasury Department was secretly giving refunds to rich, politically favored businessmen. The effort backfired: the investigation revealed that the refunds were the result of nothing illegal or unethical.
None of Mellon’s congressional enemies made much of a dent in the treasury secretary’s program in the 1920s. Until President Hoover in 1930 began jacking up tax rates, the great majority of what Mellon wanted he got, and very little of what he opposed ever passed.
Against Wasteful Government Spending
To his further credit, Mellon exerted his influence to constrain government spending. In 1928 total federal expenditures were actually a shade lower than they had been in 1923. Mellon slashed expenses and, according to historian Folsom, he eliminated an average of one treasury staffer per day for every single day during the 1920s. The last significant redesign of American currency was Mellon’s doing in the 1920s; he cut the size of our paper notes to save money.
As Mellon’s fiscal policies at the Treasury Department unleashed an explosion of productivity, investment, and innovation, the good times were being undermined down the street by unsustainable monetary policies at the Federal Reserve System. Artificially low interest rates, caused by the Fed’s inflation of money and credit from 1924 through 1928, endangered an otherwise healthy economy. When the Fed burst the bubble by raising interest rates starting in 1929, the boom gave way to the bust, made worse for a decade by tax and regulatory policies that were the antithesis of what Mellon advocated.
President Hoover wrote in later years that Mellon advised him at the onset of the Depression to pursue policies that would “liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate.” The treasury secretary allegedly added: “It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.” No corroborative evidence has ever surfaced to support Hoover’s claim. Hoover boasted that he didn’t follow the treasury secretary’s advice—but he should have. The fact is that the Depression only worsened under Hoover’s endless interventions (higher taxes, tariffs, and spending along with bailouts and other failures that President Franklin Roosevelt would expand even more).
If Mellon indeed said what Hoover claimed, he was actually close to th
e truth. The sooner the economy could slough off the excesses and the unsustainable, artificial investments of the cheap money boom, the sooner it could recover. When the Harding administration had allowed the economy to do just that in 1921, a sharp depression ended in a matter of months.
Finding himself unpopular within the meddling Hoover administration, Mellon resigned his position as treasury secretary in 1932. He then served one year as U.S. ambassador to Great Britain.
FDR Attacks
While campaigning for president in 1932, Franklin Roosevelt declared that “the day of the great promoter or financial titan … is over.” As president, he tried to make an example of Mellon, going after him with a frightening vengeance.
FDR’s Justice Department charged Mellon with income tax fraud. As Mellon biographer David Cannadine points out, Roosevelt’s attorney general took up Mellon’s case from the very beginning, “preempting due process” and operating in a manner “wholly without precedent.” Despite these high-level efforts and months of intense investigation, Justice couldn’t even get a grand jury to indict Mellon.
Cannadine reports that FDR, furious to be thwarted in criminal court, “personally authorized” a civil case against Mellon. Thus began the infamous “Mellon Tax Trial.” For two years the Board of Tax Appeals considered fraud charges against the former treasury secretary. On these charges, too, Mellon was exonerated—but not until three months after his death, at age eighty-two, in 1937. Former IRS commissioner David Blair blasted the whole affair as “unwarranted abuse by high officials of the government.” It was one of many sorry episodes that exposed a nasty side of FDR that his idolaters rarely admit to.
To score political points, FDR attacked rich people like Mellon for their “greed.” Never mind that Mellon created wealth and gave much of it away through his generous philanthropy. He almost single-handedly created the National Gallery of Art in Washington, D.C., donating his substantial art collection, plus millions for construction and endowment. To the National Gallery alone he gave hundreds of millions in today’s dollars, and that was just one of his many charitable causes.
Roosevelt, meanwhile, was a child of privilege who accomplished relatively little in private life before he became a politician. He received a monthly allowance from his mother until her death in 1941—when FDR was fifty-nine and in his third term as president.
Even more important than how these two men handled their personal wealth is how they approached wealth through their public policy. As treasury secretary, Mellon didn’t carve out favors for “the rich”; his across-the-board tax cuts benefited Americans of every class and unlocked the potential of the free American economy to create jobs and wealth. As president, FDR either stifled or swiped wealth, squandering much of it on government boondoggles and misguided programs that generations later would yield destructive dependency and debt. By executive order he once imposed a 100 percent tax rate on all incomes over $25,000; Congress overturned that order but still approved a confiscatory tax rate of 94 percent on the highest incomes.
Andrew Mellon was John Galt from Atlas Shrugged in every sense but one: though he endured shameless abuse for his success, he never disappeared to a hideaway in the Colorado Rockies. But you couldn’t blame him if he had, given how Roosevelt and his henchmen vilified him. H. L. Mencken was spot-on when he wrote that the president was surrounded by “an astonishing rabble of impudent nobodies,” “a gang of half-educated pedagogues, non-constitutional lawyers, starry-eyed uplifters and other such sorry wizards.” The New Deal, Mencken said, was a “political racket,” a “series of stupendous bogus miracles,” with its “constant appeals to class envy and hatred,” treating government as “a milch cow with 125 million teats.” And, I might add, it didn’t cure the Great Depression; it prolonged it by at least seven years.
Mellon’s Legacy
The Roosevelt administration failed in its efforts to convict Andrew Mellon of tax fraud. Its efforts to besmirch his character didn’t succeed either. In 1955, to commemorate the hundredth anniversary of his birth, the federal post office honored the vindicated Mellon by placing his image on the three-cent postage stamp.
Still, statist historians to this day are prone to ignore or attack the achievements of Mellon. After all, he was one of those “rich” guys we’re supposed to dislike. Andrew Mellon, however, is worthy of so much more than all but a few of his critics ever were. He was a successful “one-percenter” who did more for the other 99 percent than all those critics combined.
Lessons from Andrew Mellon
Don’t succumb to the temptations of class warfare: President Franklin Roosevelt, born of great wealth, used to great effect a political ploy popular in our own time: attacking “the rich.” Andrew Mellon’s achievements remind us how misguided such attacks usually are. As a business leader, Mellon created jobs and brought better products to more consumers at lower prices. As a philanthropist, he gave many millions of dollars to charitable causes. And as treasury secretary, Mellon encouraged investment and employment.
Get the government out of the way: As treasury secretary under three presidents, Mellon achieved policy changes we can only dream of today. Whereas many of his successors have tried to use government powers to control the economy, Mellon dramatically reduced government spending, taxation, and debt—and the economy flourished.
19
J. Gresham Machen
God’s Forgotten Libertarian
Of the Presbyterian theologian J. Gresham Machen (1881–1937), Pulitzer Prize–winning novelist and Nobel laureate Pearl S. Buck declared: “The man was admirable. He never gave in one inch to anyone. He never bowed his head. It was not in him to trim or compromise, to accept any peace that was less than triumph. He was a glorious enemy because he was completely open and direct in his angers and hatreds. He stood for something and everyone knew what it was.”
Lest you be tempted to dismiss Buck’s praise as biased—because, after all, she was raised by Presbyterian missionaries living in China—consider the view of H. L. Mencken.
Mencken was known for his caustic criticisms of Christians in general and ministers in particular. He described the Creator as “a comedian whose audience is afraid to laugh” and once wrote, “Shave a gorilla and it would be almost impossible, at twenty paces, to distinguish him from a heavyweight champion of the world. Skin a chimpanzee, and it would take an autopsy to prove he was not a theologian.”
And yet Mencken pronounced great admiration for Machen:
Dr. Machen is surely no mere soap-boxer of God, alarming bucolic sinners for a percentage of the plate. On the contrary, he is a man of great learning.… His moral advantage over his Modernist adversaries, like his logical advantage, is immense and obvious. He faces the onslaught of the Higher Criticism without flinching, and he yields nothing of his faith to expediency or decorum.
When Machen died, Mencken compared him to another prominent Presbyterian, politician William Jennings Bryan, with these words: “Dr. Machen was to Bryan as the Matterhorn is to a wart.”
I present Machen as a hero not because he best represents my personal perspective on Christ, the Bible, and Christianity—though I enthusiastically admit that he does. I do so, rather, because he exhibited a remarkable degree of courage and logical consistency that I wish were far more common within Christian leadership. His convictions were deep and thoroughly reasoned. When he faced opposition, as he often did, he didn’t retreat to his sitting room; instead, he created institutions to advance his principles. He saw liberty as God’s intention for humanity and would not abide the presumptuous claims of earthly governments to diminish it for our own good. This was a man who was confident, persuasive, and fearlessly principled.
Challenging Intellectual Corruption
Machen was born in Baltimore in 1881 to an Episcopalian father, but it was his Presbyterian mother who exerted the greater influence. By the time Machen enrolled as an undergraduate Classics major at Johns Hopkins University, he was Presbyterian to the
core. Having distinguished himself as a first-rate scholar at Hopkins, he went on to Princeton, where he focused on theology at the seminary and philosophy at the university. After a year at a German university, he returned to America in 1906 to teach at Princeton Seminary.
Words of Wisdom from J. Gresham Machen
“When it comes to [education], you have to be a great deal more careful than you do in other spheres about preservation of the right of individual liberty. . . . If you give the bureaucrats the children, you might as well give them everything else as well.”
Machen resolved to defend conservative Reformed theology against the growing influence of the modernists, the theological wing of the “progressive” movement that watered down traditional Christian beliefs and elevated moral relativism and activist government. He proved a worthy antagonist to the religious left. It wouldn’t be correct to consider him a theological “fundamentalist” because he was too scholarly for that; fundamentalism was often anti-intellectual, whereas Machen was a deeply intellectual Christian. He appreciated science as a tool for unraveling the mysteries of an ordered and logical universe. His best-known books were systematic and thorough defenses of Christianity (for example, The Origin of Paul’s Religion and What Is Faith?) and devastating critiques of modernist revisionism (e.g., Christianity and Liberalism) that remain influential nearly a century later.
Princeton was one of many seminaries infected by progressive ideology. Machen butted heads with Princeton’s increasingly leftist faculty until he had had enough. In 1929, after twenty-three years of teaching, he resigned from the university. Rather than seek employment at another established school, he started his own—Westminster Theological Seminary near Philadelphia—and put it on a path to international fame as one of the most rigorous and respected theological institutions in the world.
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