Abstract: Low Taxes, High Times? Businessmen, Andrew W. Mellon, and Tax Policy, 1920-1932

Romain Huret

Abstract

From 1920 to 1932, businessmen took an active role in the shaping of federal tax policy. The Mellon Plan of November 1923 was supported by professional organizations (Chamber of Commerce, U.S. Chamber of Commerce, the Association of Credit Men, the Tax League of America, the New York Board of Trade, and the National Association of Retail Grocers) and corporations, which sent thousands of letters and petitions to their congressmen. The petitions were sponsored by Chambers of Commerce and local chapters of service clubs such as the Rotary, Kiwanis, and Lions Clubs. Most were pre-printed and circulated throughout the country, and urged Congressmen "to take a persistent and aggressive stand for lower Federal taxes and to support a tax reduction plan." However, if consensus prevailed in the first years of the 1920s, businessmen were divided along sectorial lines and interests. In Southern and Midwestern states, small businessmen joined tax clubs to advocate for a "full Mellon plan" and the repeal of all war taxes. Some sectors (oil, lumber, paper, chemicals) strongly fueled the movement of tax resistance. However, internationalist corporations were more interested in the scientific and rational association proposed by the Commerce Department in order to increase their competitiveness in foreign markets. Andrew Mellon was caught between two antagonistic interests and sought to build a new fiscal consensus. The Great Depression put an end to such compromise and increased the divide between sectors and companies on the issue of federal taxation.