Building Home. Eric John Abrahamson
was eager to go to war. Facetiously he announced he “was all set to be a general.”10
Howard F. Ahmanson was undoubtedly amused by the discussion between his two friends. A handsome thirty-seven-year-old man with deep blue eyes that “just looked right through you,” he could be charming “and make you feel like you were the center of the world.”11 When angry, he was often imperious and caustic. An Omaha native, Ahmanson moved to California at the age of nineteen, studied business at USC, and made his first million dollars in the middle of the Depression by selling insurance. Living in a fine house in Beverly Hills, he and his wife, Dorothy “Dottie” Johnston Grannis, had been married eight years but had no children. By nature, he was not impulsive. He worried over business problems but understood the profit to be made by taking calculated risks. Savings and loan executives like Fletcher and Edgerton who steered customers to his insurance company were crucial to his success. They were also among his closest friends.
Ahmanson was cautious about the war. He had seen the rise of militarism in Germany and Japan firsthand. He and Dottie had traveled extensively in Europe during the summer of 1938, shortly after Hitler's annexation of Austria. Two years later, they had sailed to Japan.12 At the time, the Japanese army was ruthlessly suppressing resistance in conquered territories in China and Southeast Asia. Though just a tourist, Ahmanson had observed it all. Now, with war assured, he insisted that, like Fletcher, he would have nothing to do with “this flag-waving uniform business.” If the government wanted him, they would have to come and get him.13
As speculation and rumor fed the conversations at the Shoreham that afternoon, the rumble of taxis and the slamming of car doors could be heard from the lobby. Some of the hotel's permanent residents, including senators and congressmen, rushed off to the Capitol and the White House. That night, President Roosevelt met with congressional leaders from both parties. Bitter party rivalries dissolved in the face of the Japanese attack. As these leaders returned to the hotel in the small hours of the night, word spread that the president would ask for a declaration of war.
Fletcher and Ahmanson may have begun to change their minds about their own involvement in the war the next morning. Edgerton, and perhaps the other two, joined the crowds outside the Capitol plaza as police and Secret Service agents kept access clear. From the packed and tense galleries of the U.S. House of Representatives, Edgerton watched as the president, accompanied by his son, a marine lieutenant in uniform, lifted himself to the microphone-cluttered rostrum.
On a date “which will live in infamy,” the president began, his words crackling through the speakers of millions of radios across the country, “the United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan.”14 The surprise offensive had included assaults on the Philippines, Malaysia, Hong Kong, Guam, Wake Island, and Midway. “No matter how long it may take us to overcome this premeditated invasion,” Roosevelt said, “the American people will in their righteous might win through to absolute victory.” Members of Congress and the audience rose to applaud. Within an hour, both houses of Congress, by a nearly unanimous vote, approved the declaration of war.15
The Japanese attack unified the nation in anger and accelerated the militarization of the economy. Ford, General Motors, and other automobile companies began turning out Jeeps and tanks. Kaiser, Bechtel, and other heavy construction contractors in California started building Liberty ships and military bases. Food processors like Del Monte and S&W Fine Foods began canning California peaches, cherries, and grapes for mess halls in Europe and the Pacific. In Southern California, Douglas Aircraft scrambled to increase their production of bombers. Indeed, Southern California and its economy would be permanently transformed by the war.
Across the country, men and women lined up outside military recruiting offices to volunteer. Many who didn't were drafted. Fletcher and Ahmanson eventually joined Edgerton in the armed forces. None of the three saw combat, but the war years crystallized for them a complicated perspective on the relationship between citizen and country, private endeavor and public service, that would shape their entrepreneurial lives and the social contract between American society and business for a generation. Their wartime experiences would also give them powerful insights into the growing military-industrial complex and its influence on the future of Southern California.
The war reshaped the country's culture. When it was over, the devastation in Europe and Asia ensured that American industries would face limited competition from foreign manufacturers. With a domestic market primed with wartime savings and shortages, consumption skyrocketed as American workers enjoyed an era of unprecedented prosperity. Government policies, especially the GI Bill, recognized the service of veterans and sought to ensure a smooth transition to a peacetime economy. The GI Bill promoted education and training, entrepreneurship, and—most important for Fletcher, Edgerton, and Ahmanson—home ownership.
In this postwar era, all three men would be enormously successful in the savings and loan industry and would contribute substantially to the growth of Southern California. They played a significant role in the region's politics and cultural development. Among them, however, Howard Ahmanson would prosper beyond all imagining, building the largest savings and loan in America and enabling millions of Californians to realize the American dream.
SUCCESS IN A MANAGED ECONOMY
Ahmanson made his fortune in the context of an industry and an economy that became highly managed by government in response to the Great Depression and World War II. In the managed economy, government harnessed the capacities of private enterprise to achieve social goals. In turn, private enterprise maximized its profits by using government to stabilize competitive markets.16
Financial services were at the center of the managed economy. Under this regime, commercial banks and savings and loans enjoyed limits on competition and received government protection from catastrophic risk. Regulation, fiscal policy, and the monetary initiatives of the Federal Reserve were the most important tools the government employed to protect the financial system from collapsing and to provide an economic safety net—and eventually the means to attain a piece of the American dream—for as many citizens as possible. In return, the government expected the banking system to provide a stable supply of credit and an efficient system to channel the nation's savings into investments.
The mortgage industry and home ownership grew tremendously in the era of the managed economy. Government loan guarantees and mortgage insurance provided by the Veterans Administration and the Federal Housing Administration lowered lenders’ risk. With less risk, lenders could afford to make loans at affordable interest rates to younger borrowers with less savings and lower incomes.17 New home construction exploded. By the end of the 1950s, a quarter of the nation's single-family homes were less than ten years old. Middle-class savers provided much of the capital to finance the mortgage market with their life insurance premium payments as well as their savings accounts, and their companies provided more with their pension fund investments.
Among all the institutions shaped by the managed economy, the savings and loans—or thrifts—were especially important for economic, cultural, and political reasons. They represented the blended ambitions of businessmen, regulators, and politicians. Regulators wanted to rationalize the financial system to create stability in the marketplace. Politicians saw in thrifts a return to cultural ambitions rooted deep in the Jeffersonian ideal. By extending the opportunity of home ownership to a majority of the nation's households, Congress and various presidents sought to reaffirm the roots of an independent citizenry in the rich tradition of property ownership. Although leaders in the savings and loan industry—including Ahmanson, Fletcher, and Edgerton—shared this belief in the social value of home ownership, they also saw the entrepreneurial opportunity that the American dream created and appreciated how government intervention limited their business risks.
During the era of the managed economy, entrepreneurs like Howard Ahmanson in industries ranging from communications to transportation to financial services succeeded because they understood the social contract between business and government. They