MILLION MILLIONS

Evening Post, Volume CXXV, Issue 9, 12 January 1938, Page 18

MILLION MILLIONS

A WEALTH? FAMILY

GROWTH OF THEIR HOLDINGS

ROCKEFELLER RIVALS

Recently it was announced that Mr. Andrew Mellon had bequeathed his entire fortune (o an educational and charitable trust, with the exception of £45,000, which he left to personal employees. The fortune is estimated at £100,000,000, says s a writer in the Melbourne "Age." '

In devoting an enormous fortune to educational and charitable purposes, the late, Andrew Mellon has followed the excellent example of other American multi-millionaires. The late John D. Rockefeller, who died a few months ago, spent £120,000,000 during his lifetime in founding and financing institutions "for the promotion of the wellbeing of mankind throughout the world." Of this vast sum, £30,000,000 went to the Rockefeller Foundation, which since its establishment in 1901 has spent millions of pounds in medical research and in campaigns against disease. The late Andrew Carnegie devoted the latter years of his life to putting into effect his gospel of wealth, that a rich man is merely the trustee of his wealth, and should use it in social service. During his lifetime his distributions amounted to £70,000,000, and about two-thirds of this sum went towards the creation of eight large permanent funds, the income of which is employed in work for the good of humanity. Other American millionaires whose fortunes did not compare with those of John D. Rockefeller and Andrew Carnegie, spent money generously in the foundation of charitable and educational institutions. In an article in "Current History," Mr. Edward L. Schumann gave a list of twenty-one of the largest of these funds, whose total capital amounted to £138,000,000. He estimated that the total capital set apart for philanthropic purposes by wealthy Americans, past and present, amounted to over £200,000,000, and ;that the annual income derived from these funds for carrying out the objects of the benefactions was £12,000,000. AIT UNKNOWN MILLIONAIRE. In 1921 the late Andrew Mellon took the important Cabinet post of secretary of the Treasury in the Administration formed by President Warren Harding. Previous to accepting this appointment, Mr. Mellon had played no part in political life or in any phase of public life. When his appointment was announced the American newspapers searched reference books in vain for information about him. His name was not mentioned in any of them. He was the second-richest man in. America—second to John D. Rockefeller—but he had never been mentioned in the newspapers as a millionaire. He belonged to a family which for two generations had continued to add to its great wealth, but the family had never been included in any published list of wealthy- families in America. When his name was suggested to President Harding as a suitable man for the Cabinet post of Secretary of the Treasury, President Harding had not previously heard of •him. But at the time he was a director in numerous' public companies whose assets were capitalised at £322,734,890; and he was a member of the board's of directors of fifty-one companies, several of which were holding companies for numerous subsidiary conMr! Mellon was what is known, in American politics as "a fat cat,1' ■ that is a man who has been successful in accumulating a fortune in business or finance, and in his later, years finds that there is no thrill in adding to his wealth arid yearns for some sort of •public distinction, for which, of course, he is willing to pay. The "fat cats, of American politics contribute handsomely to the election campaign funds of the political party with i which they are associated. Mr. Mellon's chief Qualification for the post of Secretary Stos Treasury-apart from any contribution he may have made to the election funds of the Republican Party -waftiiat his business career, which expended to industries of all i kinds, had Sen phenomenally success^. IN THREE ADMINISTRATIONS. It was thought that a man who had SSfwould be invaluable m managing the. affairs of the country. He retained his post as Secretary of the Trpasurv in the Administrations of Sreesuccessive Presidents-Harding, Coblidge, and Hoover-and when eventually it was found desirable to get rid of him, he was given the post of American Ambassador in London, which he filled until tlie Republican, Party was defeated in the Presidential election in 1932. : . ... ■..„ Mr. Mellon was an unimpressive figure -i.to look at. He was shy and reserved—the very opposite of the big, blustering, aggressive type of politician which America has produced so plentifully. Whenhe went to Washington to take the post of Secretary of the Treasury, an American journalist described him as looking "like a tired double-entry bookkeeper. afraid_ ot losing his job; worn and tired, tired, tired." • . .. ~ "The contrast between this timid, shrinking figure who blinked in the sudden glare of publicity, and the immense: Mellon fortune, gave rise to the belief that he was vested with certain magic powers," writes Mr. Harvey O'Connor, an American journalist, in his book, "Mellon's Millions—the Biography of a Fortune." "The public had been fed on potent lusty Croesuses who fought for their millions in spectacular battles that resounded through the nation's Press. Here was a man, a veritable Midas, whose name had never appeared in the headlines to crush a strike, corrupt a legislature, break a competitor,, or swindle a thousand shareholders. It was a monument to the discipline of the Pittsburgh newsr papers. The man .had. as ~well been born yesterday; that, in fact,- was among his greatest assets in an Administration laden down with figures lacking in child-like innocence."

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[spoke unless directly appealed to. "When he did speak it was with the authority of millions," states Mr. Harvey O'Connor. "The possible scrapping of a Government war plant was being considered, and various Cabinet officers were expressing their theories. Mellon was asked his advice. In a .scarcely audible voice he remarked: 'I have not looked into it thoroughly yet, but I had a similar cane recently in one of my own plants to deal with. The amount involved was the same—: 12,000,000 dollars. I scrapped mine.'" How was it that Mr. Andrew Mellon and his relatives had gone on accumulating great wealth for two generations without attracting the attention of the American newspapers, which have always been eager for copy about the country's multi-million-aires? Because the vast business interests of the family were scattered over so many industries, and in scores of companies that they gathered their wealth from hundreds of sources in amounts which singly did not look impressive in a country, of great 'industrial wealth. "The Mellon fortune grew steadily into the hundreds of millions (i.e., of dollars) before the Mellon name was known outside the intimate circles of finance and industry," writes Mr. O'Connor, in his study of Andrew Mellon and his money. 'Tew knew by what means these Pittsburgh bankers drew such prodigious nourishment from the nation's needs. Never before had money-making plied its trade in millions with such an utter lack of publicity. Yet not a citizen of the United States escaped making his contribution to the Smithfield Street banking house. .

"In one way the Mellon foutline was' unique," continues Mr. O'Connor. "It embraced the widest diversity.in the ■methods of accumulating wealth that acquisitive art had yet attained. The Rockefellers based their millions on petroleum, the Fords on automobiles, the Dv Ponts on explosives and chemicals, the Vanderbilts on railroads, and the Morgans on finance. The Mellons ran nearly the Vrhole gamut. Segments of,their billions represent gains from real estate, moneylending, steel, railroad equipment, oil, coal and its myriad,by-products, aluminium, carborundum, and public utilities." ■■■'■ .'. • .'■■■■■■•., BANKERS IN PITTSBURGH. The Mellon family are Pittsburgh bankers who hold shares in scores of industrial and financial companies. In some of these companies the family's holdings amount to the full 100 per cent., and in others it is as low as 5 per cent. They are interested in coal mines, iron mines, timber forests, in steel smelting works, petrol and motor oils, in the manufacture of gas and coke, gas ovens and cooking utensils. "A biographer of the Rockefeller fortune," writes Mr. O'Connor, "estimated the market value of their holdings in 1932—after hundreds of millions had been given away—at 150,000,000 dollars (£ 30,000,000). The Ford Motor Company, whose proprietor was believed to be brie of the nation's three wealthiest men, was valued in 1933 at 628,000,000 dollars (£125,600,000), The Mellons could match that easily with just one: of their corporations, magnificent Gulf Oil, whose assets were counted at 743,000,000 dollars! (£148,600,000). If the Mellon fortune^ seemed to sprawl out across an entire continent in a score of unrelated industries, it was nevertheless neatly integrated through Union' Trust, a quarter billion dollar banking institution which could claim the world's highest bank rate dividend, 200 per cent.; a year.,: Through Union Trust passed the profits of, a hundred Mellon companies. As financial agent for most of the puissant corporations of the Pittsburgh. region, it collected meaty tribute. Under Union Trust's hegemony the fortune grew until it was measured at more than 2,000,000,000 dollars (£400,000,000), while the Mellons were associated in corporations whose assets and resources were nearly 10,500,000,000 dollars (£2,100,000,000). For many years past the Mellon family has controlled the output of aluminium and has fixed the price of the metal. Numerous industries require aluminium as.part of their raw material. Electric companies need aluminium wire for long-distance transmission; Builders require aluminium for lightweight beams and embellishments. Aluminium is used in the manufacture of motor-cars and aeroplanes. And it is extensively used in the manufacture of cooking utensils. In six years—l 926 to 1931—the profits of the Mellon family from aluminium alone reached £20,000,000. :

The founder of the Mellon fortune was Thomas Mellon, the father of Andrew Mellon. As a boy he emigrated from Ireland with his parents, who settled in Pennsylvania. But at an early age Thomas Mellon realised that there was little money to be made by farming. He studied law, and set up in practice in Pittsburgh, where he became a Judge. He. established a bank, and when he died in February, 1908, at the ripe age t of 95, he left behind to two sons a fortune of some millions of dollars. ,

"From first to last' Andrew "Mellon ■was armed with power—the power of his father's millions," writes Mr. O'Connor. "An endless-succession-of'-op-portunities came to him for making money. Necessitous men with ideas, others with unique . access to natural resources,. laid their potential wealth at his feet in return for his financing. -He neglected few of the techniques by which money could be made. The first few thousands wrung by his father from mechanics' liens, notes, and mortgages grew in 75 years to hundreds of millions, hired but to eager borrowers, and secured by underlying mortgages on choice property and industries. The keystone of his industrial fortune was the use of monopoly, the restriction of output, the raising of prices to artificial levels, the tying up of processes by patents. Andrew Mellon disliked vulgar competition with others; he preferred to corner a raw material or process, and force consumers to bargain with him for access to their requirements." Where monopoly was impossible the Mellons speculated discreetly. In the early days of the history of Pittsbufg they bought large tracts of land, and exacted high prices for it when it was required to house the inhabitants of the growing city. By their control of public utilities, such as railways and tramways, they were able to direct the development of the city in directions where they held land. For decades the Xvlellon' family exercised unchallenged dominion over their home town of-Pittsburgh, states Mr. O'Connor, and adds that no city' has"'surpassed it "in municipal sloth and'corruption, in ramshackle houses for w.orkers, and. in _.^s|iritLess.._!e»viron-