Letter to the editor: Andrew Mellon not quite a hero

In “Andrew Mellon, hero of the 1920s” (Aug. 9, TribLIVE), Lawrence Reed presents Mellon as the “best” secretary of the Treasury in history. Reed’s account is startling for its omissions; the stock market crash of 1929 was directly attributable to Mellon’s policies. Income inequality under Mellon was the greatest in American history, only matched by today’s.

Mellon put an enormous amount of money in the hands of the wealthy but it increasingly did not go into “productive enterprise.” The agricultural sector was left out of this “vast wealth”; a depression started in 1921 among farmers and persisted into the 1930s.

Wall Street was hard put to find a use for the money flood. So a stock market boom was started to absorb it. Radios sold at an astonishing rate, but not nearly enough to justify RCA’s stratospheric $505 share price in September 1929. Wall Street invented “holding companies” that did nothing but own shares of other companies. And then it invented holding companies of holding companies! So much cash flew to New York to finance purchases of stocks on margin that cash shortages appeared around the country. For my family, Mellon was disaster.

This is not ancient history. The crash of 2008 was fed by the same old income inequality fed by the same old tax cuts as in Mellon’s day. So Wall Street again invented new devices — “collateralized debt obligations” and “credit default swaps” — to soak up the money. And millions lost their homes in the ensuing disaster.

Robert Supansic

McKeesport