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Building Home: Howard F. Ahmanson and the Politics of the American Dream

Eric John Abrahamson
Copyright Date: 2013
Edition: 1
Pages: 368
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  • Book Info
    Building Home
    Book Description:

    Building Homeis 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.

    eISBN: 978-0-520-95342-0
    Subjects: History

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
    (pp. vii-x)
  4. Introduction
    (pp. 1-10)

    LIKE MOST AMERICANS THAT SUNDAY AFTERNOON, the three men at the Shoreham Hotel in Washington, D.C., were surprised and dismayed by the news. Crackling through the speakers and interrupting the music, the announcer proclaimed: “. . . Japanese planes have attacked the U.S. naval base in Hawaii . . .” Without much elaboration or detail, the station returned to its regular Sunday afternoon broadcast.

    With cigarette smoke drifting among them, the suntanned and ruddy-faced California executives discussed what the news would mean to their businesses and their lives. They were on their way home from the annual convention of the...

  5. ONE Father as Mentor
    (pp. 11-27)

    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.¹ Despite the glory of the space, the reverend often cautioned his congregation against hubris. God’s will would be done despite all worldly precautions....

  6. TWO Among the Lotus Eaters
    (pp. 28-45)

    ARRIVING IN LOS ANGELES in the fall of 1925, Howard Ahmanson discovered a city like Omaha. It was full of progressive, middle-class midwesterners, who had come after selling their farms and businesses. In many ways they had recreated a community they knew and understood, with “state societies” like the Iowa and the Nebraska clubs. They called themselves “Hawk-eyes” or “Cornhuskers.” They socialized with others from their home states and attended enormous annual picnics celebrating the history and culture of the Midwest.

    Everyone seemed to be a recent transplant. Nine out of ten residents had been in Los Angeles less than...

  7. THREE Undertaker at a Plague
    (pp. 46-61)

    THE LOS ANGELES TIMES BLAMED home buyers. A “careful study of conditions,” theTimesreported in July 1931, revealed that most home owners going through foreclosure had only themselves to blame for “attempting more than they can handle” or for having “overextended themselves in an effort to ‘keep up with the Joneses.’ ” Most foreclosed homes were “not those of the moderate-priced class, but are the more expensive type residence bought by persons in a ‘flush’ financial period.” In some cases, theTimesconceded, the “downright dishonesty” of either the contractor or the lender was also to blame. ButTimes...

  8. FOUR The Common Experience
    (pp. 62-75)

    SOCIOLOGISTS AND HISTORIANS often point to the equalizing effect that military service had on men in America. It gave them a common experience, a frame of reference for every conversation. It reinforced the appeals to civic duty made by President Roosevelt in his fireside chats and echoed by civic and political leaders across the country. It fortified a fundamental sense of a social contract between the individual and the state that incorporated basic entitlements, including Roosevelt’s “freedom from want.” It also heightened awareness of the personal and collective responsibilities of citizens for the preservation of a free society.¹

    In the...

  9. FIVE Building Home
    (pp. 76-92)

    WHILE SOME SOLDIERS and sailors moved home with their parents, doubled up in apartments, or lived in converted garages, Howard and Dottie Ahmanson arrived at the Beverly Hills Hotel on New Year’s Eve, 1944, intending to stay for a while.¹ Day and night, the hotel was a social center, a community forum, and a watering hole for Hollywood stars. Women’s groups held their luncheons and charity events in the ballroom. Hollywood regulars included Humphrey Bogart, Marlene Dietrich, and Katherine Hepburn, as well as the already reclusive Howard Hughes.² Poolside during the day or sipping cocktails in the Polo Lounge at...

  10. SIX Scaling Up
    (pp. 93-111)

    THE OLD GUARD was leaving the savings and loan industry in the early 1950s. Managers and owners who had weathered the Depression and the war were ready for retirement. Few had gotten rich. If they had equity in a thrift, they couldn’t get it out. Liquidating would hurt depositors, many of whom had personal relationships with the savings and loan managers. Meanwhile, as Robert DeKruif recalls, “No one wanted to buy a savings and loan.”¹ Except Howard Ahmanson.

    Ahmanson, like A. P. Giannini, the founder of Bank of America, realized that additional branches would leverage his investment in advertising, create...

  11. SEVEN Home and the State
    (pp. 112-130)

    AS THE SAVINGS AND LOAN INDUSTRY in Southern California grew in the postwar years, it was elaborately integrated with a system of state and federal regulations.¹ The system, like theTitanic,was designed to be unsinkable, with separate compartments, so that if one was punctured the others would keep the massive ship afloat and on keel.² It was a system designed by politicians during the Depression to ensure stability regardless of the cost to competition and efficiency. It favored entrepreneurs who understood both the legal and the political purposes of the law and who worked well with lawmakers and regulators...

  12. EIGHT Political Economy
    (pp. 131-145)

    THROUGHOUT HIS LIFE, Howard Ahmanson flirted with the limelight. In college, he evidenced a powerful intelligence but he had no interest in becoming an academic. He liked to theorize about the world and occasionally wrote a speech offering his views on the economy or society, but he had no desire to become an intellectual leader. When he acquired control of National American Fire Insurance in 1943 and was elected president of the company, he told Gould Eddy and his brother, Hayden, that he wanted to get some publicity for this accomplishment—an unusual move given his usual preference for a...

  13. NINE Big Business
    (pp. 146-152)

    HOME’S SUCCESS SPARKED a land rush of would-be entrepreneurs to Southern California’s savings and loan business. At times, Commissioner Shaw and his staff were overwhelmed. Shaw complained that his Los Angeles office received an average of five phone calls a day from people who wanted to start new associations. He told Federal Home Loan Bank Board officials in Washington that he believed “promoters are moving into the field who are more interested in organization than they are in operation of an association.” Speculators were filing applications with the intention of selling the licenses as soon as they obtained them.¹ Shaw...

  14. Illustrations
    (pp. None)
  15. TEN The Crest of a New Wave
    (pp. 153-161)

    IN JULY 1957, Howard and Dottie invited the Fletchers and the Edgertons to Harbor Island to catch up. “Put a couple of extra bolts in the diving board,” Edgerton responded, “and practice up on your finest martinis.”¹

    All three men had come a long way since 1941. After seventeen years of marriage, Howard and Dottie’s home had been transformed when Dottie gave birth to a son on February 3, 1950. Howard senior spoiled Howard junior and pronounced him a genius, just as his father had done with him. The Edgertons’ children, a daughter and a son, were grown and in...

  16. ELEVEN Southland Patrician
    (pp. 162-180)

    HOWARD AHMANSON SENT a cryptic letter to painter and sometime architect Millard Sheets in 1953. According to Sheets, it was almost like a telegram:¹

    Dear Sheets. Saw photograph building you designed, L.A. Times. Liked it. I have two valuable properties, Wilshire Boulevard, need buildings. Have driven Wilshire Boulevard twenty-six years, know year every building built, names of most architects, bored. If interested in doing a building that will look good thirty-five or forty years from now when I’m not here, call me.

    Sheets didn’t know what to make of the letter or the sender. The two men had met on...

  17. TWELVE Influence
    (pp. 181-196)

    GOVERNOR PAT BROWN KNEW people in the savings and loan industry. He also had Democratic friends who weren’t in the business but wanted to be. And why not? In 1959, when Brown took office, people like Howard Ahmanson were getting very rich. A state savings and loan charter seemed like a license to print money. With a Democrat in the governor’s mansion, political insiders, including sitting legislators, lobbied to start new associations. If Republicans were awarded charters over Democrats, party loyalists accused Brown of being disloyal. If other Democrats emerged victorious from the state’s hearing process, they accused Brown’s former...

  18. THIRTEEN Short of Domestic Bliss
    (pp. 197-207)

    HOWARD AND DOTTIE’S MARRIAGE had never followed a standard script. Childless for seventeen years, the relationship was framed by social activities and trips around the globe. By the late 1940s, alcohol was affecting the health of their marriage. Dottie joined Alcoholics Anonymous and, coincident with her relative sobriety, surprised everyone when in 1949 she announced that she was pregnant.

    The birth of a son changed everything for Howard. He now had an heir to what he called his “empire.” Like his own father, he doted on his son. And Howard junior also turned out to be a precocious learner. Nicknamed...

  19. FOURTEEN Breakdown of Consensus
    (pp. 208-222)

    PRESTON SILBAUGH HAD NEVER BEEN POPULAR with the savings and loan industry. In 1962, on the eve of the release of the Shaw report and in the midst of another good year for savings and loans, the commissioner seemed especially gloomy. “You are to be greatly commended for the role you have played in the 40s and 50s in home financing,” he told executives at a thrift industry conference. But Silbaugh was worried about the future. “I do not think you can reasonably expect to grow at such a startling rate in the 1960s. The backlog need for simple shelter...

  20. FIFTEEN Crisis of the Managed Economy
    (pp. 223-235)

    SAVINGS AND LOANS in Los Angeles and across the country suffered their first serious downturn in the postwar era in the mid-1960s. Although the fourteen counties in Southern California had close to twelve million people—more than any state except California as a whole and New York—the region was finally saturated with housing. Immigration continued, but employment growth, especially in defense-oriented industries, slowed.¹

    As demand for housing softened, the savings and loan industry in Los Angeles entered a downward spiral.² When residential construction dropped sharply in January 1964, opportunities to make good investments in mortgages diminished. Without good opportunities...

  21. SIXTEEN A New Way of Life
    (pp. 236-251)

    LIKE MANY HIGHLY SUCCESSFUL ENTREPRENEURS, Howard Ahmanson did not set out to be a philanthropist. “He got the notion that a very successful businessman ought to have great art,” Franklin Murphy explained. “From that point, he got interested in the possibility of a museum [LACMA]. Then he discovered a new dimension in life. That’s when he started becoming charitable. In all fairness, when that door opened, he walked through it.”¹

    Ahmanson was not sure this was a door he wanted to open in the late 1950s. Prior to 1958, he had made no major philanthropic gifts. With high federal income...

  22. SEVENTEEN A Personal Epic
    (pp. 252-265)

    IN THE SUMMER OF 1965 writer Stewart Alsop introduced readers of theSaturday Evening Postto “America’s New Big Rich.” They were all men. All had made their big money since the end of World War II. Alsop described them as “a different breed from the old big rich—Astors, Vanderbilts, Morgans, Rockefellers, Mellons, Harrimans, du Ponts, Carnegies, and the like.” They were not conspicuous consumers, at least not on the scale of their predecessors. Most did not seek the fame of being rich. Some even seemed to be embarrassed by their great wealth.

    Howard Ahmanson alone seemed to genuinely...

  23. Conclusion
    (pp. 266-270)

    HOME OWNERS HAD TAKEN THE PLACE of yeoman farmers as the virtuous citizens of America’s increasingly urban democracy by the early 1960s. The rhetoric of the building and loan industry of the late nineteenth century had been translated into government policies. As the yeoman farmer rose early in the morning to tend the fields and the livestock to put food on his family’s table, the suburban home owner, as Walter Russell Mead has pointed out, got in his car and went to work to pay the mortgage on his house. The mortgage and property taxes forced the citizen and taxpayer...

    (pp. 271-272)
  25. NOTES
    (pp. 273-344)
  26. INDEX
    (pp. 345-357)