From Mellon vs. Geitner:
Left to its own devices, the economy’s healing powers are extraordinary. For instance, the depression of 1920 was a doozy. Unemployment jumped that year from 4 percent to nearly 12 percent, and GNP declined 17 percent.
Had the likes of Tim Geithner taken over as Treasury Secretary, who knows for how long the pain would have dragged on. But it was not a career bureaucrat that took the job but instead a 66 year old industrialist, Andrew Mellon.
By the summer of 1921, recovery was already underway. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923. By 1926, Treasury Secretary Mellon was able to say, “We are now at a very high tide of prosperity.”
Instead of bailouts, Mellow agitated for lower taxes and immediately went to work on peeling away America’s bloated post WWI debt. Mellon had built industrial dynasties in oil, steel, shipbuilding, construction, and banking. To take the Treasury job he resigned directorships at 60 companies.
His first day, as Mellon biographer David Cannadine relates, Mellon arrived for work at 8am, an hour before the staff. “Such a thing had never happened in the memory of any of the Treasury’s night watchmen.”
Mellon knew that if tax rates were lowered on businesses and individuals that money would be reinvested in the economy, creating jobs and promoting economic recovery. But he didn’t immediately get all he wanted. The farm bloc stood in the way of most of his tax agenda, but taxes were reduced and over time Mellon succeeded.
At the same time, Mellon was able to whittle down the federal debt that stood at $24 billion when he took office. By 1929 he had reduced it to $16 billion, saving the government millions a year in interest payments. He believed the domestic debt would be extinguished by 1942. A goal the Great Depression postponed.