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Building Home: Howard F. Ahmanson and The Politics of the American Dreamby Eric John Abrahamson
Building Home is an innovative biography that weaves together three engrossing stories. It is one part corporate and industrial history, using the evolution of mortgage finance as a way to understand larger dynamics in the nation‘s political economy. It is another part urban history, since the extraordinary success of the savings and loan business in/i>
Building Home is an innovative biography that weaves together three engrossing stories. It is one part corporate and industrial history, using the evolution of mortgage finance as a way to understand larger dynamics in the nation‘s political economy. It is another part urban history, since the extraordinary success of the savings and loan business in Los Angeles reflects much of the cultural and economic history of Southern California. Finally, it is a personal story, a biography of one of the nation‘s most successful entrepreneurs of the managed economy Howard Fieldstad Ahmanson. Eric John Abrahamson deftly connects these three strands as he chronicles Ahmanson’s rise against the background of the postwar housing boom and the growth of L.A. during the same period.
As a sun-tanned yachtsman and a cigar-smoking financier, the Omaha-born Ahmanson was both unique and representative of many of the business leaders of his era. He did not control a vast infrastructure like a railroad or an electrical utility. Nor did he build his wealth by pulling the financial levers that made possible these great corporate endeavors. Instead, he made a fortune by enabling the middle-class American dream. With his great wealth, he contributed substantially to the expansion of the cultural institutions in L.A. As we struggle to understand the current mortgage-led financial crisis, Ahmanson’s life offers powerful insights into an era when the widespread hope of homeownership was just beginning to take shape.
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"An impressive biography."--Wall Street Journal
"It's very easy to highly recommend Building Home . . . an interesting and uplifting read."--Forbes
"At heart, this is about a son surpassing his goal to earn back a family company lost when his father died, but Abrahamson's dense analyses make this study relevant to today's debates about how to fairly regulate the financial marketplace."--Publishers Weekly
"Despite the nation's now-reluctant familiarity with mortgage finance, it can be a hard topic to warm up to. Reading Building Home, one not only warms to the subject, but also to the argument that big businesses and the government can work together for the public benefit."--New York Observer
"Enjoyable storytelling."--Martin Brower's Oc Report
“An impressive biography.”
“It’s very easy to highly recommend Building Home . . . an interesting and uplifting read.”
“Despite the nation’s now-reluctant familiarity with mortgage finance, it can be a hard topic to warm up to. Reading Building Home, one not only warms to the subject, but also to the argument that big businesses and the government can work together for the public benefit.”
“Ahmanson (who died in 1968) is remembered—if at all—through the cultural institutions he supported: the Los Angeles County Museum of Art and the Music Center. Abrahamson makes a compelling case that Ahmanson ought to be better remembered—positively and negatively—as a man who made much of Los Angeles.”
"[Abrahamson] does an impressive job under difficult circumstances of documenting Ahmanson's life--warts and all. . . . Fascinating reading."
- University of California Press
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Read an Excerpt
Howard F. Ahmanson and the Politics of the American Dream
By Eric John Abrahamson
UNIVERSITY OF CALIFORNIA PRESSCopyright © 2013 Eric John Abrahamson
All rights reserved.
Father as Mentor
THE MINISTER OF THE NORTH PRESBYTERIAN CHURCH in Omaha undoubtedly reminded the worshippers on Easter Sunday morning in 1913 that they were in the house of the Lord—and what a house it was. Inspired by the neoclassical architecture of the 1898 Trans-Mississippi and International Exposition, which celebrated Omaha's heroic role in the opening of the American West, the new church reflected both the hope of the Resurrection and the republican ideals of ancient Greece and Rome. Despite the glory of the space, the reverend often cautioned his congregation against hubris. God's will would be done despite all worldly precautions.
These sermons touched the faith of one man in the congregation who came frequently with his wife and two sons. William "Will" Ahmanson understood that ultimately the world and the afterlife were in God's hands, but he believed that in this world men should not tempt their maker. For the sake of their families, business partners, and creditors, men had a responsibility to insure their property and persons against the risks of fire, flood, and sudden death.
Ahmanson thought he knew how to manage those risks. An insurance man since he was a teenager, he had studied the laws of statistics and probability. He learned to pay attention to the details of circumstances and conditions. Like all actuaries, he had developed a godlike ability to know in the aggregate what would be lost and who would be saved in the event of a fire. Yet like all insurance men, he lived in fear of a great disaster that would overwhelm the predictable cycle of fires and minor floods.
After the service on Easter morning in 1913, the overcast skies began to clear. The dry brown front lawns and shrubs just beginning to bud after the winter smelled of earth and rain. Within the eight blocks between the church and the Ahmansons' modest home at 2516 North Nineteenth Street a diversity of architectural styles reflected the heritage of Omaha's first streetcar suburb. Most of the neighborhood's residents were native born, but there were also Scandinavian, Scottish, German, and English immigrants. The men had white-collar jobs. They were shop owners, postal and city clerks, a streetcar conductor, an orchestra musician, and a pharmacist. Like Will Ahmanson, they were all hoping to get ahead in the world.
Like most of these middle-class proprietors and salary men, Will and his wife Florence had great hopes for their two sons, Hayden and Howard. At age fifteen, Hayden was away from home that Sunday attending the Kemper Military School in Missouri. So Will doted on Howard. At six years old, the boy exhibited a confidence and intellect that ignited Will's pride. He often brought the boy along when he went to meetings or to see customers.
By late afternoon, the day was bright and warm. Then shortly before six o'clock, the wind began to blow. At the Diamond Moving Picture Theater, in a neighborhood not far away that had become home to Omaha's growing African American population, a crowd of sixty people gathered to see the black-and-white silent film Twister. Those who were still outside noticed the sky to the southwest turn luminous, "a lurid brass-yellow" color. A black funnel cloud appeared. As it swirled and twisted toward the city, the tornado slammed to earth and then bounced back into the air. One man said, "It came like a rushing and roaring torrent of water." As the sound increased and the air pressure dropped, the Ahmansons' dog grew nervous and bolted from the house. Howard wanted to run after him, but his parents hurried him into the cellar.
Then suddenly the tornado was on them. The swirling dust and debris blocked the waning daylight. The fierce wind ripped homes from their foundations and lifted them into the air. It tore roofs off homes and trees from the earth and smashed brick buildings. As the walls of the Diamond Motion Picture Theater crumbled, the roof fell in. Then the tornado roared east, crossing the Missouri River and slashing its way toward Council Bluffs.
In the eerie silence that greeted them when they emerged from the cellar, the Ahmansons discovered their house still standing. They could hear shouts, sparks, and explosions as broken gas lines and severed electrical wires ignited fires that danced in the particulated evening air. The bells of horse-drawn fire trucks followed as they raced through the debris-laden streets. Fortunately, a heavy rain began that lasted for almost an hour, making the firemen's jobs easier.
The path of devastation, two to six blocks wide, was so narrow and intermittent that people wondered if it had been inscribed by God. Some believers said that he had sent the deadliest tornado in American history on Easter Sunday to punish Omaha for the drinking, gambling, and prostitution that were legendary in this western city. Others pointed out that among the 135 killed in the city were innocent children as well as aging sinners. Plenty of God-fearing people had inhabited the more than two thousand homes destroyed by the whirlwind. The victims had simply succumbed to bad luck.
MAKING YOUR OWN LUCK
Will Ahmanson's family believed that luck could be shaped by hard work. Will's Swedish father, John, had converted to the Church of Jesus Christ of Latter Day Saints as a young man and had been jailed in Norway in 1852 for preaching the Mormon faith. He helped organize a group of Scandinavians, including his Norwegian wife, Grete Fieldstad, to come to America in 1856. They joined the Fourth Handcart Company, and John was chosen to lead the 162 Scandinavian members to Utah.
Following a series of setbacks en route and a miserable winter in Utah, John grew dissatisfied with the Mormon hierarchy. The following year, he and Grete and their first child left the church and joined a wagon train returning east. When John tried to retrieve his belongings stashed at the Mormon outpost of Devil's Gate, however, church leaders wouldn't return them to him. Frustrated, John and his family continued on to Omaha, where they settled in 1859. John became a hardware merchant and then a grocer. He also sued Brigham Young and the Mormon Church.
John was rewarded for his temerity and persistence. The jury ordered Young to pay him $1,297.50. Young tried to force a new trial but ultimately agreed to pay Ahmanson $1,000. With this payment, John moved his family to Chicago so he could study medicine. After completing his studies, he remained in the Windy City for nearly a decade. In 1879, he returned to Omaha and began practicing as a homeopath.
Of John and Grete Ahmanson's three children, Will was the youngest. Born in 1872, three years after the completion of the transcontinental railroad and four years before the Battle of the Little Bighorn, he grew up with Omaha as it developed from a wide-open frontier town into an agricultural shipping center and one of the Midwest's major cities. When he left high school at the age of fifteen, one friend advised him to become a preacher; another suggested he go into insurance. He chose insurance.
A handsome and elegant man, Will had a strong, square face with a cleft chin. Keeping with the style of the times, he parted his hair loosely in the center. His soft eyes communicated patience and understanding. He wore a starched white collar, a silk necktie, and expensive suits. Undoubtedly, his good looks helped to charm Florence Mae Hayden, a slight, strong-willed woman. Born in Pennsylvania, she had grown up in the Sandhills of western Nebraska. Her Scotch-Irish family had been in the United States since the Revolutionary War. She married Will in 1897 and gave birth to Hayden a year later. A daughter died as an infant. Several years passed and then Howard was born on July 1, 1906. After Howard, Florence had no more children.
FATHER AS MENTOR
Will Ahmanson loved both of his sons, but he showered pride and attention on Howard, whom he called a genius. "Father and Bud were extremely close," Hayden once said, betraying more wonder than jealousy. "They couldn't seem to get to see enough of each other." While Howard was still in elementary school, Will took the boy aside every evening after dinner. "While he smoked a cigar he'd talk over with me the events of the day—business affairs and finances—as if I had the maturity and judgment of a man of 50." When Will played cards or shot pool with his friends downtown, Howard tagged along and listened to the talk of business and politics. Meanwhile, Florence set high expectations. She was smart and competitive, with a strong sense of right and wrong.
Howard received an enormous amount of attention from both his parents. In the second grade, his report card carried A's in every subject except deportment. Rather than let this single instance of imperfection slide, his parents took him to the University of Omaha to be part of a special study. The staff told the Ahmansons that Howard didn't have enough to do. Will and Florence decided Howard needed lessons in German and piano.
On another occasion, when Howard came home from elementary school his father asked if his grades were the best in the class. Howard confessed they were not. A girl in his class was number one; he was number two. His father responded, "Hmm, how in the world did that happen?" This was typical of the way Will approached the issue of setting standards, said Howard. "He never criticized me. He led me by sheer devotion."
Will also believed in giving his son extraordinary responsibilities. When Howard was twelve or thirteen years old, Will opened a brokerage account for Howard, bankrolled it, and told his stockbroker to let the young man decide his own trades. Howard bought Bethlehem Steel while his father bought U.S. Steel. "When my stock went up twice as much as his, he was the happiest man in Nebraska," Howard remembered. Father and son also collaborated on research and sometimes invested in the same company.
An automobile enthusiast in the earliest days of the Model T, Will let his fourteen-year-old son drive. Howard fixed the license plate to a hinge and ran a wire to the driver's seat so that if he saw a policeman he could raise the plate so it was horizontal to the ground and harder to read. "I shouldn't even have been allowed to drive for another two years," Howard recalled years later, "but nothing was too good for me."
Howard skipped a grade and entered high school in 1919 at the age of thirteen. He entertained his friends by playing the banjo, the piano, and the organ, but he showed no interest in the school's music groups. A popular junior, he became increasingly distracted by girls. When his grades fell, his teachers sent home warnings. "We called them flunk notices," Howard remembered. One day, his mother confronted him with the notices and tucked them under Will's plate at supper with the rest of the mail. Howard waited for his father to say something. When he was done eating, Howard excused himself, saying he had a date. Will followed him out the door.
Unable to stand the suspense, Howard asked, "Did you read your mail?"
"You mean those flunk notices?" his father asked.
Will guided him to the car. As Howard slid into the driver's seat, Will closed the door and spoke through the open window. "You're going to make it, aren't you?"
"Oh sure," Howard responded.
"Well—Good night," his father answered.
According to Howard, "that was all that was ever said about it." It seemed to be enough. Howard brought his grades up. "After all," he said later, "what would you do with a father like that? You had to do what he expected you to do."
Under Florence's influence, Howard became a member of the Presbyterian Church. He was active in the YMCA, passing his Bible study course with high marks. But religion never became an important part of his life. Fifty years later, when he had a son of his own, he told a reporter that he was taking his son to a different church every weekend "to find one that fit," as if religion were simply one more accessory to the good life.
Throughout his childhood, Howard's relationship with Hayden was somewhat distant. Eight years older, Hayden left home to attend the Kemper Military Academy just as Howard was starting school. By the time Howard was in his teenage years, Hayden was in college at the University of Nebraska. When Howard was in high school, Hayden was working for his father's company as an assistant underwriter. After Hayden began dating Aimee Elizabeth Tolbod, she joined the family for dinner every Sunday night, introducing another subtle distance between the two brothers.
Later in life, Howard would idealize his childhood in Omaha. He remembered twenty maple trees for climbing in the yard of his parents' house. He played with the neighbor kids. In the summer, the family vacationed at Lake Okoboji in Iowa. Yet Omaha, like the rest of America, was a complicated and sometimes troubled place in the first two decades of the twentieth century.
AN UNSETTLED CITY
The fourth-largest city in the trans-Mississippi West, Omaha lagged only San Francisco, Denver, and Kansas City. On the streetcars, Howard overheard the thick accents of Germans, Swedes, Hungarians, Danes, and Italians who had come to work for the railroad, the packinghouses, the distilleries, and a host of other industries that depended on the shipment and processing of agricultural products.
In this era, the entrepreneurs of the frontier age gave way to business leaders who collaborated to promote the city and resist unionization. The city became a regional center for banking and insurance. Between 1916 and 1918, Omaha rose from sixteenth to fourteenth on the list of cities leading the nation in bank clearings. Nebraska led the nation in the number of banks per capita—with one for every 1,207 people, compared to the national average of one for every 4,032. In Nebraska, and Omaha particularly, managing and protecting capital was big business.
Despite its importance as a financial center, Omaha also had a dark side. As in many American cities, political control rested in the hands of a shadowy political boss. Gambling and saloons flourished even after national prohibition was adopted in 1919. By one estimate, Omaha had twenty-six hundred prostitutes in 1910. Providing sex and liquor to cowboys, railroad workers and other men, the city's houses of ill repute netted $17.5 million a year. In addition to crime, liquor, and prostitution, Omaha also experienced inter-ethnic and racial violence. A mob of a thousand men attacked the Greek section of town in 1909, looting, burning buildings, and attacking residents. Ten years later, as race riots flared in mid-western cities, an African-American packinghouse worker was arrested and accused of assaulting a nineteen-year-old white woman and her companion. A mob stormed the courthouse, nearly lynched the mayor, and then seized the defendant. He was hanged, mutilated, and dragged through the streets with a rope around his neck. His bullet-riddled body was burned as the crowd cheered and posed for photographers.
If he didn't witness the murder, thirteen-year-old Howard Ahmanson certainly heard about it. His neighbor and high school classmate, actor Henry Fonda, was so seared by what he saw that he became a lifelong advocate of racial equality and social justice. The chamber of commerce decried the violence and the breakdown in civil order. But the lesson that Howard seems to have taken from this event was far more practical: in investing or taking risks, avoid the fault lines of society—the boundaries between races—where friction could lead to cataclysm.
SELLING FIRE INSURANCE IN A VOLATILE COMMUNITY
Howard frequently discussed the stock market, grain prices, land deals, the insurance industry, and politics with his father. These conversations undoubtedly influenced Howard's thinking about risk, management, and regulation.
In the 1920s, the American economy was in the midst of a critical transition that had begun well before World War I. New technologies and organizational strategies enabled a great merger movement that concentrated economic power. Giant corporations like Standard Oil, United States Steel, American Telephone & Telegraph, and American Tobacco—known to many as "the trusts"—employed thousands of workers and made millions of dollars in profits. Populists resisted this economic power and called for trust-busting and regulation. Under Presidents Theodore Roosevelt, William Howard Taft, and Woodrow Wilson, the federal government's role in the economy grew significantly. In various state capitals, new regulatory commissions and agencies proliferated to protect consumers and stabilize chaotic markets. Fire insurance, like virtually every other industry, was affected by the increasing scope and scale of business activity and government's growing role in managing the economy.
Excerpted from Building Home by Eric John Abrahamson. Copyright © 2013 Eric John Abrahamson. Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
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Meet the Author
Eric John Abrahamson is co-author of Anytime, Anywhere: Entrepreneurship and the Creation of a Wireless World and founder and principal of Vantage Point History, a consulting firm that focuses on history, public policy and communications.
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