Books: Fortune Making

MELLON’S MILLIONS—Harvey O’Connor—John Day ($3). Few stars have receded into space more swiftly than, in a few months time, the Greatest-Secretary-of-the-Treasury-since-Alexander Hamilton has receded into history. Time seemed ripe for a biography before Andrew William Mellon dwindled entirely from man’s ken. Biographer O’Connor is no flattering admirer. Far from it. With no sympathy for his subject, he is still journalist enough not to enter into vituperation, historian enough to dig diligently for facts. Hence Mellon’s Millions, no impartial appraisal of Andrew Mellon, tells more of how the Mellons made their millions than has been told before. Andrew’s father, Thomas (son of an Ulsterman who had migrated to a farm in Pennsylvania) studied law in a Pittsburgh law office which bore on its wall the motto: A pearly shell for yon and me; The oyster is the lawyer’s fee. Starting with practically no capital, in five years Thomas amassed $12,000 by buying up small judgments for cash, small money lending, turning every possible penny. He married for a businesslike reason: to avoid living in a boarding house. In his autobiography (presented in later years to friends) he said of the selection of Andrew’s mother: “All in all, I saw no one that pleased me better. . . . There was no love making and little or no love beforehand so far as I was concerned. . . . When I proposed if I had been rejected I would have left neither sad nor depressed nor greatly disappointed, only annoyed at the loss of time.” Andrew Carnegie admired his friend’s autobiography very much. Thomas Mellon became in a few years one of Pittsburgh’s most substantial citizens, had five sons: Thomas Alexander, James Ross, Andrew William, Richard Beatty, George Negley. All save the youngest (George, who was tuberculous) became moneymakers. After Andrew left Western University (now University of Pittsburgh) in 1873 his father set up him and his brother Dick with a subdivision and a lumber yard—selling lots to expanding Pittsburgh, and lumber to those who built on the lots. The depression of 1873 put an end to selling lots but the Mellons soon were acquiring property cheap at forced sales—to be resold to Pittsburgh in succeeding booms. Andrew Mellon, aged 22, working in his father’s private bank, met Henry Clay Frick, aged 26. The wise Mellons lent young Frick money with which he proceeded to buy coal mines, acquire a practical monopoly of coke making. Coke prices soared from 90¢ to $5 a ton; Frick became a millionaire at 30. He and his friend Andrew went to London, Paris, Venice in celebration.* After they returned Andrew was best man at Frick’s wedding. Frick was to have reciprocated, but Andrew’s fiancee caught consumption, died after a lingering illness. Andrew gave up social affairs and devoted himself more & more to business. He became his father’s right hand. In Andrew, his father saw a money-making expert. When Andrew was 25 he gave him his unlimited power of attorney. Andrew stepped out, added other interests to his father’s private banking and real estate business. Andrew, with Frick, bought control of Pittsburgh National Bank of Commerce. Andrew took over Union Insurance Co. and became its president. Andrew put $250,000 capital behind a young company, Pittsburgh Reduction, to enable it to exploit a new metal, aluminum. Andrew founded Union Trust Co. to take care of Pittsburghers’ estates. He backed his young nephew, William Larimer Mellon, in the oil business. John D. Rockefeller was driving all rivals to the wall. The Mellons planned, then built in haste a pipe line from their wells in Western Pennsylvania across the Alleghenies to the DelawareRiver. Rockefeller, who had stopped others, could not stop this swift, calculated move. Two years later the Mellons sold their pipe-line which had cost $2,500,000 to Standard Oil for $4,500,000. All this happened by 1895 when Andrew was 40. The next decade, the decade of the Spanish War, was greater for Andrew. In the war boom he turned promoter on a grand scale. He merged coal properties around Pittsburgh (many of them Mellon owned) into two great companies and sold their stock to the public. He merged the Pittsburgh traction companies (many of them Mellon owned). T. Mellon & Sons private bank became Mellon National. Andrew and Frick got an option on Carnegie Steel Co. for $160,000,000. Mellon agreed to raise $80,000,000 of the price and asked J. P. Morgan (the elder — the present J. P. Morgan was still in his financial nonage) to take the other half. Morgan refused, said the price was outrageous — and a year or two later paid Carnegie $492,000,000 when buying the company to found U. S. Steel. Mellon and Frick lost $1,170,000, the price they had paid Carnegie for the option. Angered, they started Union Steel Co. which promptly began to expand, bought or built blast furnaces, bar, wire, tube, plate mills; went to Mesabi for ore. Mellon provided customers for Union Steel: he started New York Shipbuilding Co. (see p. 41) at Camden and Standard Steel Car. He backed two young men and took a 60% interest in McClintic-Marshall Construction Co. Meantime U. S. Steel had been formed. When Union Steel announced plans for building a rail mill and a new railroad to Pittsburgh, U. S. Steel came around to bargain, bought Union Steel at a huge profit to Mellon and Frick. While all this was going on, one morning in 1901 a Jugoslav mining engineer punched a hole in a salt dome on the Texas plains and a huge fountain of oil such as man had never seen before spouted into the air. That well at Spindletop was to turn out more oil in the first three years than all the wells of Pennsylvania combined. It remade the oil business. Unable to cope with a financial find of such magnitude the Jugoslav and his backer called in Colonel Guffey of Pittsburgh. Guffey soon called in the Mellons. Andrew Mellon bought out the discoverer for $400,000. The $15,000,000 Guffey Petroleum Co. (later Gulf Oil) was founded—40% Mellon owned to begin with—more as time went on. In the midst of these busy times, Andrew Mellon, aged 45, finally married. His wife was Nora McMullen, daughter of a Dublin distiller, whom Mellon met while she was visiting in Pittsburgh. Donora, Union Steel’s new works, was named after the bride and W. H. Donner, Union Steel’s president (first father-in-law of Elliott Roosevelt). Considering the other projects which Andrew Mellon had afoot in those years her later complaint that he devoted too much time to business, too little to her, sounds genuine. The marriage lasted only ten years. The divorce was bitterly but privately fought in the courts. Through his friend Boies Penrose, Andrew Mellon had special laws enacted to keep the trial from, becoming public. In 1908 old Thomas Mellon died on his 95th birthday but he had long outlived his money-making days—Son Andrew and Son Dick, who worked with him, were at the height of their powers, building up the Mellon banks, building up Gulf Oil, building Aluminum Co. Patent struggles had threatened their aluminum monopoly but they bought out contenders whom they could not beat at law. As their patents expired they fortified their monopoly by other means—acquired all the available bauxite deposits in the U. S. and South America, pre-empted cheap waterpower sites at Niagara, in the Carolinas, in Canada. The Aluminum company got rid of competition as effectively as Standard Oil before it, and as unscrupulously, said would-be rivals. Profits were plowed back into the business—$70,000,000 of them had gone back in by 1917. The market value of its stock, largely Mellon owned, was $150,000,000. Just at the beginning of the War Mellon also bought Kopper Co. which turned into a gold mine with the war demand for coal tar products for explosives. Millions added to millions—the best part of the $2,000,000,000 fortune of the Mellons had already been assembled. In 1921 Pennsylvania’s politicians pressed Mr. Harding to name “America’s second richest man” Secretary of the Treasury. If the announcement had been made publicly few could have guessed who was meant. The Press had never told the public that Andrew Mellon existed. Never before 1921 had the name of Andrew Mellon appeared in a famed newspaper whose motto is “All the News That’s Fit to Print!” (N. Y. Times}. The Author— Harvey O’Connor, 36, born in Minneapolis, son of a railway cook, was raised in the Northwest, spent his early years as a journalist for the radical wing of American labor—editor of the Daily Call, International Weekly, Union Record (labor paper)—all in Seattle. In the 1920’s he was editor for three years of the journal of the Brotherhood of Locomotive Engineers, later eastern bureau manager of the Federated Press (news service for Labor and liberal papers). Many another man is better fitted to write the story of Andrew Mellon’s career, but within the limits of his training Author O’Connor has done a far better job than could be expected. On the labor policies and monopolistic tendencies of Mellon companies he looks with ill-concealed hatred, does not think to pry closely into the real causes of Andrew Mellon’s success. Between the lines of his book these things appear: Mellon’s willingness to back the right (but unknown) young men with substantial capital; Mellon’s policy of lending to others for their ventures but never borrowing for Mellon ventures — building Mellon companies by plowing back profits decade after decade; Mellon’s uncanny judgment as banker, as promoter, above all as investor.

Gutter to Grave

THE PROGRESS OF JULIUS—Daphne du Maurier—Doubleday, Doran ($2.50). Julius Levy was bred in the gutters of a Paris suburb, son of a Jew huckster who choked his buxom wife to death one night when Julius found her in bed with the landlord’s son. Julius and his father straggled off to Algiers. There, orphaned, Julius learned to steal, snuggle in the arms of a Negro laundress, consider the English a “race of fools.” Presently, accompanied by a 14-year-old prostitute disguised as a boy, Julius was en route to London. In London he followed the success story formula. He worked as a baker’s boy, bought out the bakery, turned it into a restaurant, opened another, built up his business until he had put “a chain around England.” Meanwhile his prostitute died of consumption and Julius learned to like good living. He married a well-born Jewess named Rachel, had affairs with actresses until he was 50. After that his daughter, Gabriel, became his inamorata. When she fell in love, Julius, a lonely old man tasting the futility that in most aphorisms is indelibly associated with using selfish methods to become a millionaire, crept off to Paris to die. Granddaughter of the du Maurier who wrote Trilby, daughter of Actor Sir Gerald du Maurier, Daphne du Maurier writes with a great deal more solemnity and a good deal less charm than her grandfather, but she has aptitude and intelligence. The Progress of Julius, her third novel, is a florid 325-page portrait polished off with workmanlike aplomb.

Spongy Brother

THE SOFT SPOT—A. S. M. Hutchinson —Little, Brown ($2.50). Twelve years ago the huge success of the novel If Winter Comes caused its shy author, Arthur Stuart Menteth Hutchinson, to flee precipitately from England to the Balearic Islands. The success of Author Hutchinson’s latest tome, The Soft-Spot, a painfully mannered and prolix dissection of an Englishman with a talent for sponging, should cause him no such embarrassment whatever. Stephen Wain developed the habit of living off his half-brother Maxwell, a wealthy explorer, when they shared diggings in Bayswater, where Stephen studied architecture. Later, as a practicing architect, he was too obliging to examine closely the shoddy materials his friends the contractors supplied him. Consequently he got a bad reputation, lapsed into weak self-pity. When his brother decided to reside in England permanently, Stephen managed to join him again, began to let his business slide. Maxwell bought “Shipmates,” the country seat of Sir Nigel Fearless, a bankrupt baronet, who promptly proceeded to drown himself as a family tradition required. Great was Stephen’s resentment when his brother fell in love with the baronet’s widow, made a will in her favor. He felt that he had been unjustly cheated out of an inheritance. When Maxwell tried to take an innocent-looking but impossible jump in the hunting field. Stephen did not bother to warn him, let him break his neck instead. Then Stephen quietly suppressed the will by which his brother’s estate went to Lady Fearless and her small son Nigel, and took possession himself. Conveniently, Lady Fearless was drowned as her husband had been. Young Nigel, whisked away by an itinerant tinker, was brought up in ignorance of his birth. His new position enabled Stephen to marry well, prosper mightily in business. But he was haunted by his memories, superstitiously felt that his luck was too good to last. At length he fled secretly to the Malay archipelago. There he met an Englishwoman with a past as plaguey as his own and shared an island with her for three idyllic months. She swam out to the sharks when he asked her to share his hut. Heartbroken, Stephen returned to England to discover that his daughter had unknowingly fallen in love with young Nigel, now grown up and endowed with an Oxford accent. Inspired by an evangelist who exhorts him to “tune in on the Universal Spirit,” Stephen rescues his brother’s will from a burning home, on his deathbed restores the 14th Sir Nigel Fearless to his ancestral seat. The 14th Sir Nigel takes Stephen’s daughter with him. For Author Hutchinson, an ounce of moralizing is worth a pound of narration. Beginning as a valid study in character degeneration, The Soft Spot becomes steadily more tiresome by its heavy underscoring of the obvious.

*Last week H. C. Frick Coke Co. was the storm-centre of the New Deal’s greatest labor trouble (see p. 11).