Читать книгу Building Home - Eric John Abrahamson - Страница 13

FIVE

Building Home

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 night, Howard and Dottie were pampered by Howard's college friend, hotel manager Hernando Courtright. Yet the scene was strangely surreal.

The war was not over. Although the Allies were closing in on Germany, the invasion of Japan was expected to be bloody. With the military focus on the Pacific Theater, many people anticipated that Los Angeles would expand even further as it continued to serve as the major West Coast embarkation point and manufacturing center and to receive the battered bodies of the nation's heroes.

In preparation for the last phase of the war against Japan, policy makers worried about housing an even greater number of war workers. “Scores of men and women [are] sleeping in all-night or past-midnight theaters because of lack of conventional quarters,” the Los Angeles Times noted.³ Charities and government agencies appealed to home owners to open spare rooms to families desperate for shelter.⁴ Mayor Fletcher Bowron wrote to President Roosevelt to say that “more than 100,000 unfilled applications for housing are now on file with the Los Angeles War Housing Centers.”⁵ The federal government, which controlled the supply of building materials, approved the construction of six thousand new homes in areas of Los Angeles near shipyards and aircraft factories. But this allocation represented only a small step toward meeting the demand.

The need for housing reflected one of many ways in which the city and region that Howard Ahmanson returned to at the beginning of 1945 had been transformed by the war. Nearly a half-million new residents had arrived to assemble aircraft, build ships, forge steel, refine petroleum, make machine tools, and manufacture a host of other vital war matériel. At its peak, the Los Angeles area produced 10 percent of the goods needed to wage the war. Large military installations at Terminal Island, San Pedro, Long Beach, and El Toro also brought soldiers, sailors, airmen, and marines passing through on their way to the Pacific.⁶

Despite this growth, L.A.’s postwar future was not clear. When builder and developer Mark Taper tried to get a construction loan in 1942 to build government-insured FHA homes, the first bank he approached turned him down. “The bank told me they thought this would be a ghost town once the war ended.”⁷ When Howard Edgerton went to Chicago to borrow money so California Federal Savings & Loan could buy more government bonds, a senior executive from Continental Illinois eerily told him the same thing: “We do not care to invest our money directly or indirectly in any Southern California enterprise at the present time because we are convinced that when the war is over Los Angeles is going to become a ghost town.”⁸

Taper and Edgerton weren't convinced, and neither were Howard Ahmanson and Charlie Fletcher. “We already had evidence that some of the war workers who had come here during the peak production periods had decided to stay,” Edgerton recalled later. “What we didn't anticipate was that they would send for all their relatives and friends.”⁹

For those lucky enough to survive the war, the memory of Southern California was compelling. “A lot of guys had been here and seen what it was not to have snow in their ears,” remembered one local resident.¹⁰ The ocean, the mountains, the citrus groves, and the region's bustling wartime economy were all attractive.¹¹ When they returned after the war, these new residents sparked a gold rush in real estate, construction, and mortgage lending. For a handful of entrepreneurs who saw how the government had, intentionally and unintentionally, created profitable opportunities to finance that gold rush, the postwar suburban boom produced massive personal and corporate fortunes.¹²

A REGION POISED FOR GROWTH

Southern California's growth before, during, and after the war was phenomenal. More people and better wages fed a booming economy. The population of Los Angeles County alone rose more than 50 percent in the 1940s, climbing from 2,786,000 to 4,374,000.¹³ Before the war, in contrast to most other large American cities, residents had worked in trade, services, and agriculture. With the war, trade and services grew 51 and 35 percent, respectively, but manufacturing jobs more than doubled, adding nearly 213,000 positions. As citrus groves and bean fields were bulldozed to make way for factories and homes, agriculture lost nearly three thousand jobs. Meanwhile, employment in construction increased 88 percent, providing work for another sixty thousand people. The burgeoning field of aeronautics contributed substantially to the growth of L.A.’s manufacturing sector. By 1953, aviation accounted for one in four manufacturing jobs in the region.¹⁴

These new jobs came with good wages. Between 1940 and 1951, average income in the area tripled.¹⁵ Median family income in Los Angeles County in 1951 was 19 percent higher than the national median for metropolitan regions.¹⁶ And like most Americans, Angelenos had saved money during the war.¹⁷ Across the country, liquid assets of businesses and individuals had increased 252 percent; in California, they had increased nearly 300 percent.¹⁸ In short, households in Los Angeles after the war had income and savings to spend on new homes.

Demographic changes also fed the demand for housing. During and after the war, marriage rates soared. “The nation has fewer bachelors and old maids than in former years,” the Census Bureau reported in 1946. More marriages led to an increase in the birthrate. Even before the end of the war, for every soldier or sailor killed in battle, six “war babies” were born over and above the prewar birthrate.¹⁹

Los Angeles was particularly affected by the marriage and baby boom. The migration to California, and especially Southern California, was overwhelmingly youthful, with the great majority of new residents under the age of forty-five. More likely to reproduce, these young newcomers contributed to a 40 percent increase in the birthrate between 1940 and 1950, compared to an increase of 31.3 percent for the country as a whole.²⁰ In Los Angeles, the population of children ages zero to five rose 150 percent during the 1940s.²¹ All of these new families fueled an overall increase in household formation and a concomitant decline in the number of multigenerational households.

Policy makers across the country anticipated a demand for millions of new homes. In Southern California, the commission charged with planning estimated that Los Angeles County alone would need one hundred thousand family-dwelling units in the first five postwar years.²² Most of these homes would need to be modestly priced, between six thousand and ten thousand dollars, to be affordable to young families. To fill this need, a new breed of home builder emerged with experience rooted in the construction of dams, ships, and communities for farm and war workers. By catering to their need for capital, Howard Ahmanson would build an empire.

A REVOLUTION IN HOME BUILDING

American mass production, in tandem with a remarkably prolific system for industrial research and innovation, played a critical role in winning World War II.²³ With the end of the war, industrial leaders and journalists predicted that it would enhance the quality of life of all Americans, especially as increasingly flexible production systems allowed manufacturers to achieve economies of scale while producing goods for a variety of niche markets and tastes.²⁴ In housing especially, expectations were high. Insiders writing in the trade journals and even the popular press predicted that new materials and new methods of construction would speed the process of home building and lower the cost of home ownership.

Mass production depended on standardized building materials and components, which had been under development for decades. As late as the mid-nineteenth century, most homes were built as one-of-a-kind products. Highly skilled craftsmen cut or shaped materials at the site, and each was supervised by a builder or contractor who was often a former craftsman.²⁵

This system of home construction began to change at the end of the nineteenth century. Factory-made components and materials accelerated the process of construction and reduced the need for highly trained craftsmen. A premilled door simply needed to be hung. Precut and sanded floor boards were simply attached to the joists at the job site.²⁶ Soon whole facades for homes were manufactured in cities like Chicago and shipped to communities throughout the country. Catalog companies like Sears and Montgomery Ward loaded precut components of homes onto railroad flatbeds for delivery to customers hundreds of miles away.²⁷ Nevertheless, through the 1930s, the vast majority of American homes were built by their owners or by small-scale contractors who erected an average of only five to twenty homes a year.²⁸

The Depression brought new players and techniques to home construction. A handful of pioneers experimented with the idea of prefabricated homes. Foster Gunnison, who launched Gunnison Magic Homes, adapted the newly developed waterproof, plywood, stressed-skin panel created by the U.S. Forest Products Laboratory to make standardized wall panels. Gunnison offered prefabricated model homes for different income groups and hoped to become the “Henry Ford of housing.” Unfortunately, according to historian David Hounshell, “all of his houses looked very much alike, and they did not satisfy the idiosyncratic, highly personalized tastes of the American home buyer.”²⁹

In the West, innovators focused more on streamlining construction. On the Colorado River, the Six Companies, which included Henry J. Kaiser as a partner, pioneered in situ mass-production techniques when they built the Hoover Dam and housing for workers in Boulder City in the early 1930s. They later adapted these techniques to revolutionize the process of wartime shipbuilding and housing construction.³⁰ Meanwhile, planners and builders working for the Farm Security Administration in California developed new strategies for low-cost housing construction to meet the needs of migrant workers.³¹

With defense mobilization, the federal government began to finance the construction of new facilities to make tanks, airplanes, and ships. To shelter this workforce, Congress authorized the construction of seven hundred thousand public housing units in key defense industry communities, including Southern California.³² Given the urgency of the situation, Congress and federal policy makers expected that these units would be built by large-scale contractors, like Kaiser, who had political connections and extensive experience with federal projects.³³

Traditional home builders feared that they would go out of business if these large contractors won all the government work. Traveling around the country to talk to contractors, Howard Ahmanson's friend Fritz Burns helped to organize the Home Builders Emergency Committee. Their lobbying effort paid off when Congress passed Title VI of the Housing Act in March 1941. The new law offered builders direct, guaranteed loans of up to 90 percent for the construction of homes in 146 industrial areas that were deemed to be critical to the nation's defense. The success of this effort led to the creation of the National Association of Home Builders in 1942 and Burns's election as the association's president.³⁴ It also helped put Los Angeles at the forefront of mass production in home construction as Burns and other builders erected some of the first low-cost, mass-produced tract homes in communities like Westside Village in Mar Vista, Toluca Wood in North Hollywood, and suburban Westchester near aircraft manufacturing facilities owned by Douglas Aircraft, Lockheed, and North American Aviation.³⁵

With the end of the war, many people anticipated that “better and less expensive homes would be coming off assembly lines by the thousands.”³⁶ Only days after the Nazi surrender in Germany in May 1945, Kaiser announced plans to build ten thousand low-cost homes on the West Coast as soon as war restrictions on building materials were lifted. Fritz Burns would serve as president of the newly organized Kaiser Community Homes.³⁷

Kaiser and Burns represented a new kind of home builder.³⁸ In Los Angeles, New York, and other major urban areas, these “minor Henry Fords,” described as “operative” or “merchant” builders, developed assembly lines on the job site and used mass-production strategies to cut costs even below the prefabricators.³⁹ Employing vertical integration strategies to manufacture many of their building materials and preassemble components, they constructed hundreds of homes at a time. At the Kaiser plant in Los Angeles, floor and wall sections were made in the factory, along with ceilings and cabinets. Workers prepainted in spray booths before these components were trucked to the job site.⁴⁰

The operative builders also adapted the multidivisional structure of the corporate world to keep subcontractors engaged full time. These subcontractors learned the builders’ systems and provided continuity from tract to tract. These subcontractors didn't have to bid on jobs. Instead, they were offered negotiated fees. In essence, they operated as divisional managers, but they had a financial stake in the success of the project.⁴¹

With new materials, assembly-line production, and new labor arrangements, tract home builders cut construction costs dramatically. On Long Island in 1947, William Levitt built homes for around seven dollars per square foot at a time when most metropolitan builders incurred costs between ten and fifteen dollars per square foot for non-custom-built homes.⁴² By 1955, three out of four houses under construction in metropolitan America were being built in housing tracts. In Southern California, the sound of carpenters hammering housing frames together rang out in new bedroom communities in the San Gabriel and San Fernando valleys and along the path from downtown Los Angeles to the coast.

As developers and builders rushed to meet the demand for these affordable single-family homes, the scale of these new projects increased dramatically. Kaiser pledged to build a hundred thousand homes—fifty times the number that Fritz Burns had constructed during World War II, when he was one of the nation's most productive home builders.⁴³ In just two years, between September 1, 1946, and September 1, 1948, Kaiser Community Homes made an aggressive start on this goal by erecting 5,319 homes in the Los Angeles metropolitan area, including 1,295 in Westchester, 562 in Monterey Park, 471 in Ontario, 430 in Compton, and 300 in Westside Terrace.⁴⁴ In 1947, Kaiser Community Homes developed plans to build a new “City within a City” on the Panorama Ranch in the San Fernando Valley, complete with homes, factories, and shopping centers for “living, work and play.”⁴⁵

At Lakewood, developer Louis H. Boyar bought 3,375 acres of farmland near Long Beach. With builders Mark Taper and Ben Weingart, he began planning a community of seventy thousand people housed in 17,500 homes.⁴⁶ Located only a short commute from jobs at Douglas Aircraft and at the port, the project attracted twenty-five thousand people on the day the sales office opened to the public.⁴⁷ At the height of construction, Taper and Weingart and their crews built fifty houses a day.⁴⁸

Construction at Panorama City and Lakewood reflected only the most dramatic aspects of an unprecedented building boom in Los Angeles. Throughout the region, other builders and developers launched projects ranging from a few dozen to several hundred new homes. During the five years that followed the Japanese surrender, 327,598 new single-family homes were built in Los Angeles County alone, increasing the overall stock of homes by 45 percent. Few other metropolitan regions in the country rivaled this production.⁴⁹

None of these new homes would have been possible without construction loans and mortgage capital. But many lenders were intimidated by the risks associated with large projects. Prior to 1938, for example, when Fritz Burns experimented with mass production at Westside Village, no subdivision developer or builder in Southern California had ever received a construction loan for more than 40 units, much less the 788 that Burns proposed to build.⁵⁰ With the end of the war, builders rushed to follow in Burns's footsteps, but finding lenders to back them remained a challenge. In this situation, Howard Ahmanson recognized a major opportunity.

HOWARD ENTERS THE BUSINESS

Charlie Fletcher wanted to talk politics. He was running for Congress in September 1946, and Howard ostensibly was his campaign manager. With two months left before the election, they had lunch together at the Stock Exchange Club in the heart of L.A.’s financial district. With their voices muffled by the dark paneled walls of the English club room, Howard smoked and listened as Fletcher talked.

Charlie believed he was gaining on the incumbent, Democrat Ed Izak. As an officer in the San Diego Amvets organization, he hoped to win the GI vote. Given his father's twelve-year stint in the California legislature, he was sure to have good name recognition. And it helped that across the country pollsters were predicting a Republican resurgence. Howard offered his support and advice.

As they were walking back to Howard's office, Charlie casually mentioned that he knew a savings and loan manager who wanted to get out of the business. The association was for sale. He suggested Howard should buy it.

“How much is it?” Howard asked.

“Sixty thousand.”

“Where is it?”

“Highland Park,” Charlie replied.

Howard considered the area and the opportunity. Located along the Arroyo Seco just west of Pasadena, Highland Park included some of the oldest homes in Los Angeles. The thrift had been established on November 24, 1924, as the Los Angeles American Building and Loan Association by Walter Giddens Tomlinson, who had served as secretary and manager and now wanted to retire.⁵¹ For some unknown reason, the company was in the process of changing its name to North American Savings and Loan Association.⁵² Howard decided to take a chance.

“Come on up to my office,” he told Charlie.

Upstairs, Howard wrote out a check to Tomlinson and asked Charlie to make the deal for him. Characteristically, he was not interested in negotiating. If the price was fair, he paid it. If it wasn't, he walked away.⁵³

In telling this story years later, Ahmanson made it sound impulsive, as if nothing that came before had prepared him for that moment. In fact, he was anything but impulsive. As one of his longtime employees recalled, “Howard explored every facet of everything before he made a decision.”⁵⁴ In fact, Ahmanson had spent years studying the savings and loan industry. He owned more than 28 percent of one thrift and served on the board of directors of Hollywood Savings and Loan. He had also spent months thinking about the postwar future of Los Angeles.⁵⁵

Ahmanson knew the demand for housing in Los Angeles was explosive. He was already positioned to take advantage of this growth by selling residential fire and hazard insurance, but he wanted to increase his bet.⁵⁶ He bought stock in cement companies because new homes needed foundations. He continued to buy real estate because developers and builders had to have land. But he also recognized that tract builders would need financing and that savings and loans were uniquely positioned in the postwar era to provide construction loans and mortgages.

Ahmanson knew that most savings and loan managers didn't see the opportunity. For too long they had been focused on surviving. Hit hard by the Depression, nearly one in four in California had gone out of business. Those that remained carried large portfolios of delinquent loans and foreclosed properties through the 1930s. By the end of the war, only 101 state-chartered savings and loans and 73 federally chartered thrifts were still in business in California.⁵⁷ The total assets held by the industry amounted to $642 million, compared to $511 million in 1930. With this weak growth over fifteen years, the industry had failed to keep pace with the state's increase in population or the expansion of real estate lending.⁵⁸