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| 1928 $1000 Small-size Gold Certificates |
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| 1928 One Thousand Dollar Gold Certificates |
1928 $1000 Dollar Gold Certificate, Grover Cleveland
Obverse: Portrait of Grover Cleveland.
Reverse: The United States of America - ONE THOUSAND DOLLARS.
Signatures: Walter Orr Woods, Treasurer of the United States and Andrew William Mellon, Secretary of the Treasury.
United States 1000 Dollar Bills
Stephen Grover Cleveland (March 18, 1837 – June 24, 1908) was the 22nd and 24th President of the United States; as such, he is the only president to serve two non-consecutive terms (1885–1889 and 1893–1897) and to be counted twice in the numbering of the presidents. He was the winner of the popular vote for president three times—in 1884, 1888, and 1892—and was one of the two Democrats (alongside Woodrow Wilson) elected to the presidency in the era of Republican political domination dating from 1861 to 1933.
Walter Orr Woods, Treasurer of the United States
Walter Orr Woods (October 31, 1873 – June 7, 1951) was United States Register of the Treasury from October 1, 1927 to January 17, 1929 and 27th Treasurer of the United States from January 18, 1929 to May 31, 1933. Before becoming Treasurer, he was a member of the War Loan Board staff. As Treasurer he supervised the change from the large to the smaller sized U.S. currency now in use.
Andrew William Mellon (March 24, 1855 – August 26, 1937) was an American banker, businessman, industrialist, philanthropist, art collector, and politician. From the wealthy Mellon family of Pennsylvania, he established a vast business empire before transitioning into politics. He served as United States Secretary of the Treasury from March 9, 1921 to February 12, 1932, presiding over the boom years of the 1920s and the Wall Street crash of 1929. A conservative Republican, Mellon lowered taxes and government spending in the aftermath of World War I.
In 1921, Warren G Harding chose Mellon as his treasury secretary. Mellon would remain in office until 1932, serving under Harding, Calvin Coolidge, and Herbert Hoover, all three of whom were members of the Republican Party. Mellon sought to reduce federal taxation and debt. He favored cutting the federal estate tax as well as income taxes on top earners, though he also sought tax cuts for all income levels. His policies were enacted by Congress in the Revenue Act of 1921, the Revenue Act of 1924, and the Revenue Act of 1926. The national debt dropped dramatically during the 1920s, though it would rise again after 1929. Mellon also participated in international agreements such as the Mellon–Berenger Agreement, which reduced French debts from World War I.
Mellon became unpopular after the onset of the Great Depression. According to Hoover, Mellon advised him to avoid intervening in the ongoing economic crisis. In 1932, the United States House of Representatives began conducting impeachment hearings against Mellon. Before the conclusion of the proceedings, Mellon accepted appointment to the position of United States Ambassador to the United Kingdom. He served in that post for the remainder of Hoover's presidency before retiring from public office in 1933.
Secretary of the Treasury
Andrew Mellon was appointed Secretary of the Treasury by new President Warren G. Harding in 1921. He served for 10 years and 11 months; the third-longest tenure of a Secretary of the Treasury. His service continued through the Coolidge and Hoover administrations. Along with Secretary of Agriculture James Wilson and Secretary of Labor James J. Davis, he is one of only three Cabinet members to serve in the same post under three consecutive Presidents.
Harding, in his inaugural address on March 4, 1921, called for a prompt and thorough revision of the tax system, an emergency tariff act, readjustment of war taxes, and creation of a federal budget system. These were policies Mellon wholeheartedly subscribed to, and his long experience as a banker qualified him to set about implementing these programs immediately. As a conservative Republican and a financier, Mellon was irritated by the manner in which the government's budget was maintained, with expenses due now and rising rapidly, with the failure of income or revenues to keep pace with those expense increases, and with the lack of savings.
In 1926 Mellon was involved in drafting the Mellon-Berenger Agreement to set the amount of French debts to the United States arising from loans during World War I and define the repayment schedule. The agreement was named after him and the French Ambassador Henry Bérenger who signed the agreement in April 1926 subject to ratification by the French parliament. The agreement greatly reduced the amount owing, but was felt to be as much as the French would be able to pay.
Mellon was a key negotiator on Germany's war debt, even traveling to Paris in the summer of 1931 to conduct talks on it. He responded to fears that Germany might strike out against its debt plight with: "everything will work out all right".
Mellon plan
Mellon came into office with a goal of reducing the huge federal debt from World War I. To do this, he needed to increase federal receipts and decrease federal spending. He believed that if the tax rates were too high, people would try to avoid paying them. Mellon also believed that by reducing taxes the federal government could actually increase receipts, an idea he termed "scientific taxation." He observed that as tax rates had increased during the first part of the 20th century, investors moved to avoid the highest rates, by choosing tax-free municipal bonds, for instance. As Mellon wrote in 1924:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.
If the rates were set more reasonably, taxpayers would have less incentive to avoid paying. His theory was that by lowering the tax rates across the board, he could increase the overall tax revenue. This is similar to the Laffer curve.
Andrew Mellon's plan had four main points:
1. Cut the top income tax rate from 77 to 24 percent – predicting that large fortunes would be put back into the economy.
2. Cut taxes on low incomes from 4 to 1/2 percent – tax policy "must lessen, so far as possible, the burden of taxation on those least able to bear it."
3. Reduce the federal estate tax – large income taxes tempted the wealthy to shift their fortunes into tax-exempt shelters.
4. Efficiency in government – lower tax rates meant few tax returns to process by few government workers; cutting the actual size of paper bills to fit into wallets saved expenses in paper and ink.
Mellon believed that the income tax should remain progressive but with lower rates than those enacted during World War I. He thought that the top income earners would willingly pay their taxes only if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.
By 1926, 65% of the income tax revenue came from incomes $300,000 and higher, when five years prior, less than 20% did.[dubious – discuss] During this same period, the overall tax burden on those that earned less than $10,000 dropped from $155 million to $32.5 million.
Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business
The fairness of taxing more lightly incomes from wages, salaries and professional services than the incomes from business or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it. In the other, the source of the income continues; the income may be disposed of during a man's life and it descends to his heirs.
Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy, and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earning capacity is at an end.
Mellon's policies helped reduce the overall public debt (the national debt skyrocketed from $1.5 billion in 1916 to $24 billion in 1919 because of World War I obligations) from $33 billion in 1919 to about $16 billion in 1929, but then the Depression caused it to rise again because of reduced revenue and increasing spending. The top tax rate went to 80% by 1935 and the federal government increased excise taxes in an attempt to make up for the lost revenue.
Mellon's tax plan also had social ramifications on society and the cultural development of the American people. The tax reforms exemplified the transition from a 19th-century rural society to the industrial capitalist power the country had become into the 1920s. Populists and rebellious Republicans representing constituencies from the South, West, and mid-West, all opposed Mellon's tax reforms because they were resistant to trend toward an urban society. Since the tax system is a legal system bound by the law, the economic ramifications of its implementation transformed society's interaction and contribution to the overall economy. Mellon's tax plan replaced the United States main source of revenue from national tariffs and general state property taxes to a progressive income tax system. Combined with a pro-big business dominant political ideology and the reformation of the federal government's revenue stream, Mellon's tax cut on the wealthy and big corporations encouraged greater investment by wealthy individuals and big companies. He believed the tax cut's effectiveness on encouraging investment spending was more beneficial to the economy than placing a higher tax burden on the rich. As Mellon had postulated, reducing tax rates on the wealthy class encouraged wealthy individuals to invest more into projects that contributed to the infrastructural development of cities and neighborhoods within. In New York City during the 1920s, the social ramifications were realized as many neighborhoods sprang up and were settled by people of different ethnicities and income that has given the city the cultural diversity for which it is known today.
Great Depression
Mellon became unpopular with the onset of the Great Depression. Herbert Hoover, in memoirs published decades later, wrote that Mellon advised him as President to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people." Hoover claimed credit for disregarding this advice and intervening in the market, though with little success. There is no corroboration that Mellon ever said such a thing, however, and the claim that he did is inconsistent with his published speeches, which supported anti-recessionary measures by the Federal Reserve. As Treasury Secretary, Mellon was an ex-officio member of the Federal Reserve Board. There, he successfully urged the Fed to cut its discount rate after the stock market crash in October 1929, and supported subsequent rate cuts, although only a third of the commercial banks were a part of the Federal Reserve and could benefit from the rate cuts. In November 1929, he recommended a cut of 1 percentage point in personal and corporate income tax rates. He supported Hoover's proposal to increase federal construction spending as an antirecession measure.
In 1929–1931, Mellon spent much of the time overseas, negotiating for repayment of European war debts from World War I. In 1928 Mellon issued a denial to allegations made by a speaker for the Democratic Party in North Carolina that he held an interest in a liquor distillery, and that he was the largest distiller in the world prior to Prohibition. In a letter written to the Republican executive committee of Mecklenburg County, North Carolina, Mellon admits having stock in a distillery, but that he had disposed of all interest in the company prior to becoming Secretary of the Treasury.
Impeachment proceedings
In January 1932, 25,000 jobless men from Pennsylvania (Cox's Army) marched to Washington to petition Congress and Hoover to start a job program. Hoover, fearing Communist agitation, ordered an investigation. The investigation discovered that while the march was not financed by Mellon, he did write a personal check so that 276 participants in the march could return to Pittsburgh. This action may have undermined Hoover's faith in his Treasury Secretary and, coupled with the impeachment hearing (below) led to Mellon's resignation.
In January 1932, Rep. Wright Patman (D-TX) (later an F.D.R. New Deal supporter) and others introduced articles of impeachment against Mellon, with hearings before the House Judiciary Committee at the end of that month. After the hearings were over, but before the scheduled vote on whether to report the articles to the full House, Mellon accepted an appointment to the post of Ambassador to the Court of St. James and resigned as Treasury secretary in February. He served for one year as ambassador and then retired to private life. Representative Louis Thomas McFadden (R-PA) invoked Mellon's appointment while an impeachment was pending in his subsequent attempt to impeach President Hoover.
United States 1000 Dollar Bill Gold Certificate Series 1928