Thomas Mellon: Changing Your Life Through Concurrent Benefits

The 2006 book “Mellon: An American Life” covers the life of Andrew Mellon as he built a fortune through Alcoa, Gulf Oil, and the Mellon banks while becoming one of the most influential citizens in United States history via his advocacy to the President during the administrations of Warren Harding, Calvin Coolidge, and Herbert Hoover. The modern-day sports mogul Stan Kroenke, with ownership interests in the Denver Nuggets, Colorado Avalanche, Colorado Rapids, Colorado Mammoth, English football club arsenal, and the St. Louis Rams, spent the early years of his adulthood fiercely studying Carnegie’s focus on developing long-term projects and keeping the same management teams in place for decades on end.

Carnegie’s buy-and-never-sell approach (only using cash profits to accumulate more) has become Kroenke’s signature style. But as interesting as the story of Andrew Mellon is, the real underrated story is that of his father: The jurist and businessman Thomas Mellon.

Mellon read the autobiography of Benjamin Franklin (“The Autobiography of Benjamin Franklin”) at age 14 and read it approximately “three or four times per year” over the course of his life. In the 1820s, the typical highly educated American read twelve books per year (modern-day Americans read about 0.7 per year). Barely into his teenaged years, Thomas Mellon made an all-in wager on Benjamin Franklin.

It paid off. He vowed to get off the farm in Westmoreland County, Pennsylvania, aggressively harvesting crops to enroll in Western University (n/k/a the University of Pittsburgh). He graduated in a little over two years, taking an intense focus on the intersection of business and law. He worked on property and bank-related cases, developing expertise in the business side of the field as he had a birdseye view of the mistakes of others when he settled their banking and real estate disputes.

On the eve of the Civil War, he became a judge in the Allegheny Court of Common Appeals, giving him an unusual level of job security as one of the two wildest rides in American history was about to take place (either 1861-1865 or 1941-1945 were the most defining moments in Post-Revolutionary America, take your pick).

Secure in his position as judge, he saw the Battle of Gettysburg take place in his own backyard. On July 3, 1863, General Meade’s Army of the Potomac defeated General Robert E. Lee’s Army of Northern Virginia. While General Lee was enduring “the humiliation of his life” as Confederate President Jefferson Davis second-guessed General Lee’s advancement of American troops into the North, Judge Thomas Mellon saw the deeds to downtown Pittsburgh real estate become available on the cheap and he aggressively moved to lay the foundation of a young real estate empire. By 1869, he was collecting more income from Pittsburgh rents than the capital he invested in 1863.

The money provided from this rental income became so extensive that he left the bench in 1869 as the opportunity cost of being a judge became too high compared to his business opportunities (this is a problem that continues to this day, as the most brilliant legal scholars opt for business and private legal practice because it is more lucrative than the typical $163,000 judicial salary).

In his first move as a standalone businessman, Thomas Mellon used the Pittsburgh real estate money to open the. T. Mellon & Sons’ Bank. It is now the colossal BNY Mellon Bank. When Thomas Mellon’s son Andrew turned 26, he turned over management of the empire to him. Although Andrew Mellon became the historically famous one, at one point paying the third-highest tax burden in American history, it was the work of Thomas Mellon that broke the cycle of poverty on the farm and paved the way to some of the greatest family abundance in the rapidly industrializing America.

Thomas Mellon’s formula for leading a high-impact life was the result of realizing concurrent benefits to rapidly increase his earnings power. If he had become a civil rights lawyer instead of a property lawyer, his legal training wouldn’t have provided him with the knowledge base to buy Pittsburgh real estate near its cheapest valuation in history. He still could have realized concurrent benefits–maybe picked up a column in the Gazette for some side money and to increase name recognition to drive customers to his practice–but I doubt the path would have been as lucrative.

The secure income provided from being a judge allowed him to make the investments that looked speculative to the outside observers. The stability of his job in the judiciary provided him the opportunity to ride out the volatility in the real estate market. Then, the benefits of the real estate market permitted him with the resources to pursue his other personal interest, banking. Being a judge provided the opportunity to invest in real estate. The real estate investments led to banking. It’s all interconnected.

This philosophy–finding a way to maximize your general activities to realize a desired life outcome–is an important life skill not covered in skill. Want to get in shape, become attractive, and improve health? Look at becoming a fitness instructor. What you do to earn a paycheck also grants you the opportunity to simultaneously realize the goal of getting fit. Heck, that’s how my website got started. I was earning minimum wage in a computer lab at Washington & Lee University and only had to work about fifteen minutes of every hour. On a lark, I started writing finance articles with the available three hours on a four-hour shift. No way this hobby would have gotten started during law school. The next level of concurrent benefits is that writing about investments for others develops the skill for myself as well.

The reason why people don’t take advantage of this model is that they take examples of others literally rather than looking for a general principle that can be extracted. For instance, you might watch soccer and think, “I can’t use my job to get fit because I’ll never be a professional athlete.” You don’t have to evaluate the lives of others that literally. As a soccer fan, you can purchase a stationary bike and get in the habit of riding it during the entire time you watch the game rather than just sit on the couch. Suddenly, a leisure activity becomes a productive source of your time.

Drury Hotels got started by a construction firm that got tired of receiving one-off payments and wanted to continuously collect income from past work so the Drury family got into hotel construction and ownership in Sikeston, Missouri instead of just hotel construction for other companies. Small tweaks in the formula can lead to outsized outcomes. If Thomas Mellon simply took an isolated, rather than interdisciplinary, approach to life, he would have been far less prosperous despite having the knowledge and skills rattling around in his brain to become one of the most illustrative rags-to-riches stories produced in the Western Civilization.