Building Home. Eric John Abrahamson
the epitome of Progressive reform: collecting data, addressing underlying causes, marshaling citizen volunteers, often soliciting compliance and sometimes compelling it through state-enforced regulation.
A LOCAL COMPANY TO TAKE THE PLACE OF EASTERN CAPITAL
Will Ahmanson watched all of these developments with an eye to his own opportunities and a growing frustration that his hometown was so dependent on East Coast insurance interests. In April 1919, he saw an opportunity to launch his own local company. But the effort nearly cost him his reputation.
In the securities markets of the 1910s and 1920s, stock scams were common and often targeted rural investors. Will Ahmanson must have known this, but for some reason he trusted the two stock promoters who came to him with the idea of creating National American Fire Insurance.58 They appealed to his personal and civic aspirations and convinced him and other investors that they could create “the largest insurance company west of the Mississippi.”59 To reassure investors, they wanted Will to serve as president and become a major owner. Will agreed and recruited a friend and colleague, James Foster, from Columbia Fire Underwriters, to serve as secretary-treasurer.60
The stock promoters traveled throughout Nebraska and Iowa selling shares to farmers and small-town merchants and bankers. They bought full-page ads in the Omaha World-Herald promising profits and security. “No more attractive investment ever has been offered the public of the west,” the ads exclaimed. “Sound, substantial, and certain of profit.” The writers explained, “The state sees that the company's capital, which you helped to furnish, is kept intact.”61
The promoters offered liberal terms to investors—half of the money down, with the rest due in six months at 6 percent interest.62 Patriotic farmers and citizens were allowed to exchange their deflated Liberty Bonds, purchased during World War I, at full par value for National American stock. Some buyers were even offered seats on the board.63 Using all of these tactics, in six months the promoters sold $1,115 million worth of stock to bankers, merchants, and farmers in towns and cities scattered across Nebraska.64
Will Ahmanson apparently didn't realize that the promoters were more interested in extracting capital than launching an insurance business. He was dismayed when an insurance examiner for the State of Nebraska found that nearly $142,840 had to be written off for “organization expense.” This was money the promoters had skimmed for themselves.65
Ahmanson worked hard to redeem the investors’ trust and protect his own good name. National American Fire Insurance leased an entire floor in downtown Omaha and recruited nearly three hundred agents in the surrounding territory.66 In its first year, the company wrote policies for fire, tornado, automobile, hail, and marine insurance; it had gross premium income of more than $26,000 and net losses of only $1,210. It turned a small profit.67 The chamber of commerce gushed that the company's success was yet another sign of Omaha's growing maturity and place among the nation's great cities. “At the end of its second year [National American] shows a remarkable growth which proves that Western men are beginning to have confidence in Western institutions.”68
With this success, Will Ahmanson imagined his boys becoming executives with the company. He suggested to Howard that after college he might become National American's vice president and treasurer.69 He moved his family to a new home in a part of town that would both reflect his position and epitomize all that he and Florence prized—family, community, responsibility, and stability. The neighborhood they chose was full of like-minded families in pursuit of the American dream.
THE MIDWESTERN IDEAL
The neighborhood of Dundee epitomized the suburban ideal at the beginning of the 1920s, and it would play an important part in Howard Ahmanson's vision of the relationship of home, community, and the economy in his later career. Established as an autonomous community just west of Omaha, it was served by a streetcar that carried businessmen like Will Ahmanson from home to office and back every day.
Advertisements for the development in its early years noted the “high dry pure and clean air,” in contrast to the stench of the stockyards and factories on the city's south side.70 Covenants precluded commercial development and barred all immoral and illegal businesses, including the sale of spirits or malt liquors.71 In short, Dundee offered a refuge from the crowds and corruptions of urban life.
Unlike the suburban tracts that Ahmanson would finance in California, Dundee proudly proclaimed that it had been built “one house at a time.” Prairie-style architecture featuring big porches and hipped roofs rose alongside Colonial, Georgian, Craftsman, Tudor, and Italian Renaissance-style homes. Covenants brought some uniformity to the look and feel of the community, however. The homes had twenty-five-foot setbacks to allow for tree-shaded front lawns. Garages were located at the rear of the lots. Alleys provided service access for trash collection and ice and grocery deliveries. Large municipal parks maintained a sense of nature in the neighborhood and served as community gathering places for picnics, concerts, and church revivals.72
The house that Will and Florence chose, at 5106 California, was a two-story bungalow with a portico front porch and a dormer window that commanded a view of the street.73 Only a narrow driveway separated the home from the neighbors’. It was more house and a finer neighborhood than many families could afford, but the ranks of home owners in Omaha were growing.
Streetcars, low-priced land, and an adequate supply of mortgage credit helped make Omaha a city of home owners by 1920. As a building boom increased the number of dwellings in Omaha by 70 percent between 1900 and 1920, the percentage of owner-occupied residences rose from 27.7 to 47.2.74 Only a handful of other midwestern cities had higher rates.
Home owners in Omaha depended on a variety of formal and informal sources for mortgage capital. Many people borrowed from family members or local merchants. The more affluent turned to commercial banks and mortgage brokers who loaned from their available pools of deposits or acted as agents of large eastern life insurance companies looking for investment opportunities. For the salaried and wage-earning classes, however, the greatest source of mortgage capital was the building and loan, a cooperative institution whose members pooled their savings and invested these funds in mortgages on one another's homes.
As the president of a fire insurance company, Will Ahmanson kept in close contact with the mortgage lenders in Omaha. They were an important source of business and information. Insurance risks and credit risks were often interrelated, and the more Will knew about the trustworthiness of a potential customer, the more he could measure the potential insurance risk.
Attending chamber of commerce meetings as a teenager with his father, Howard Ahmanson met many of these leaders of Omaha's financial sector. From his father he understood that Omaha's high rate of home ownership reflected a well-functioning commercial system, and he aspired to become a part of this system.
SEEKING A PROFESSIONAL EDUCATION IN BUSINESS
Howard already had a sense of himself as a business professional by 1923. He had learned from his father and from his apprenticeship in the offices of National American after school and during the summers. Graduating from Omaha's Central High School on the eve of his seventeenth birthday, he wanted to go east to Yale for college. But his father was not in good health, and Howard was uneasy about the idea of going so far away. Instead, he enrolled at the University of Nebraska to study business.75
Business administration was a relatively new academic discipline, and the University of Nebraska was quite proud of its school. As a “Bizad” major, Ahmanson joined the University Commercial Club. He flirted with journalism and worked on the Cornhusker yearbook.76 But he was already a student of entrepreneurship.
He and his friends frequented a short-order restaurant called the White Spot, where crowds of college students and town folk lined up to buy hamburgers. Ahmanson admired the owner's success, especially after he opened six or seven additional White Spot restaurants around town. But Ahmanson also noticed that shortly after the owner added steaks, lobster, and other