“Roosevelt had a chance to set the bar very high on political decorum, and he chose not to. He took the low road.”
The retired money manager Greg Steinmetz has now written three books about very rich men. The first, The Richest Man Who Ever Lived, was about the sixteenth-century Augsburg banker Jacob Fugger. The second, American Rascal, was about the nineteenth-century robber baron Jay Gould. The third, The President and the Oligarch, came out this week, and this time the rich man has a president as a co-star. It’s a book about the relationship between Franklin D. Roosevelt and Andrew W. Mellon.
Mellon was the third richest American of his age, behind Rockefeller and Ford. He was, above all, a banker, installed as president of his father’s small-town Pennsylvania bank while still in his twenties, and building it into one of the largest banks in the country. Warren Harding, reasoning that anyone that rich must know something about money, made him Treasury Secretary. He served Coolidge and Hoover too, eleven years in all, the second longest tenure in the department’s history.
And then, in 1934, Franklin Roosevelt came for him. Steinmetz’s revisionist argument is that FDR’s pursuit of Mellon was pure politics. Mellon, who by then was in his late seventies and out of office, had done nothing to him. His supposed crime was taking a tax write-off on art he had donated to a foundation, the sort of thing, Steinmetz claims, (rich) people do every day. Roosevelt’s own attorney general told him there was no case and a grand jury threw it out. Roosevelt pursued him in tax court anyway, until an unloved Mellon died with the matter unresolved.
Steinmetz suggests this is where the modern American fashion of deploying the tax code against political enemies begins. The irony is that Mellon’s paintings that triggered the persecution morphed into the National Gallery of Art — for which Roosevelt took the credit. Poor persecuted Andrew W. Mellon. Or, more accurately, rich persecuted Mellon. Unlike Steinmetz, I find it hard to feel sorry for such a miserable old sod who didn’t even have any fun with his wealth. Maybe Steinmetz’s next book should be about persecuted poor people. He’d find no shortage of subjects.
FIVE TAKEAWAYS
1. The third richest American of his age enjoyed almost none of it. A journalist said he looked like an accountant who had just lost his job; his wife saw Pittsburgh and left him for an Englishman.
2. FDR went after him in 1934 for purely political reasons. His own attorney general said there was no case. A grand jury threw it out. He pursued Mellon in tax court until Mellon died.
3. The crash didn’t cause the Depression, Steinmetz argues — European reparations, German bank failures and the Fed’s inaction did. Mellon ran a surplus every year he was at Treasury.
4. The tax case grew out of the donation that became the National Gallery of Art — 129 masterpieces, which Mellon declined to name after himself. Roosevelt took the credit.
5. American history is a pendulum, Steinmetz concludes. Harding’s 1920 landslide, the 1932 reversal — and, he predicts, another correction now. Democracy solves its own problems.
ABOUT THE GUEST
Greg Steinmetz was born in Cleveland, took his BA at Colgate and a master’s at Northwestern’s Medill School of Journalism, and spent fifteen years as a reporter, including as Berlin and London bureau chief for the Wall Street Journal. He later became a securities analyst and a partner at a New York money-management firm, from which he is now retired. He is the author of The Richest Man Who Ever Lived, a biography of Jacob Fugger, and American Rascal, on Jay Gould. The President and the Oligarch: Roosevelt, Mellon, and the Triumph of Big Government is published by Simon & Schuster. He lives just north of New York City.
ABOUT KEEN ON AMERICA
Keen On America is a daily conversation about the ideas, books and arguments shaping the United States, hosted by Andrew Keen, author of The Internet Is Not the Answer and How to Fix the Future. New episodes every day.
CHAPTERS
00:00 — Three books about very rich men
02:10 — Why Steinmetz admires the wealthy
03:27 — Gulf Oil, Alcoa and fifty-eight other businesses
04:36 — Inherited or earned? The Mellon family bank
06:38 — “An accountant who just lost his job”
08:03 — A miserable husband
08:41 — Hitchcock, FDR and the revisionist turn
09:48 — The two Roosevelts, before and after polio
10:54 — Why this book, and why this moment
12:45 — 1934: the midterm and the pressure from the left
14:45 — “There’s no case”: the AG and the grand jury
16:32 — Reparations, German bank failures and the Fed
17:41 — Tax avoidance versus tax evasion
19:17 — Using the IRS against political foes
20:51 — Surpluses, debt and the paradox of cutting taxes
25:14 — The National Gallery of Art
28:40 — The bonus marchers and the edge of revolution
32:21 — Keen pushes back: where’s the moral blemish?
36:21 — The pendulum, and why Steinmetz is hopeful