erected at a reasonable cost. There [the wage earner] can rear his family in pure air, have a grass plot in his front yard, with its flower-beds and shrubbery. There he can have a home; there he can have true family life and comfort and see his children, away from the din, the dirt, the scenes and foul influences of the busy mart. There during the week the free school shall open to them its doors, and on Sundays, the influences of the church surround them.
In Dexter's view, the pillars of society would be solid: “true family life,” “the free school,” and “the church” would sustain the American republic.
Leaders in the savings and loan movement also believed that increased home ownership, enabled by mutual building and loans, could mediate “the growing conflict between capital and labor” that posed the most “vexing economic question” of the day and the most serious threat to the American republic. As property owners, workers would take pride in their neighborhoods and communities and be less inclined to violently oppose the interests of business owners. As members of a mutual, these workers, like stockholders, would also earn dividends on their invested capital.
The transformation of the home into the centerpiece of a new republican ideal was ironically assisted by builders and real estate agents who made the home the focus of consumer culture and consumption the ideal civic act. Modern advertising and merchandising promoted a new democracy in America—the democracy of desire—with its promise of equal access, not to power, but to consumer goods and a complicated vision of happiness based on consumption.61 As retailers plastered “Buy Now, Pay Later” banners across their store windows and developed installment plans for major purchases, debt was no longer associated with the improvident and the poor but was increasingly a marker of middle-class respectability.62 Going into debt to buy a home brought the consumer status and a sanctuary.
Building and loan officials were often ambivalent about the changing attitudes toward thrift and consumption. The rise of the consumer society and especially consumer credit threatened to undermine the basic value of thrift on which the building and loan movement had been built. “We are being educated to be a nation of spendthrifts,” some building and loan leaders complained.63 A “wave of extravagance prevails,” complained a writer in the American Building Association News in 1923, as men sacrificed the dream of owning their own home for the pleasures of an automobile.64 “When we reflect upon the comparative value of the home and the automobile to our citizenship,” another writer wrote, “we wonder if the quality of American character is deteriorating.”65
Traditionalists in the building and loan movement fought to preserve the small-scale, cooperative character of the institution. They were often dismayed to discover proponents of the new approach to consumption and credit within their own midst. These modernists embraced professional management, marketing, consumerism, and above all growth. If larger associations could achieve economies of scale that would benefit borrowers and investors alike, then “it is right, proper and our duty to enlarge our usefulness by increasing our assets.”66 To build those assets, manager L.L. Rankin suggested, building and loans should employ the tools of modern advertising.67
As some thrifts grew large enough to demand permanent, full-time staff managers, Rankin insisted that he and his peers “should give all their time, thought and energy to the companies they serve and for such services they should receive abundant compensation.”68 In essence, he argued that building and loan managers should join the growing ranks of business executives who looked upon their work as a profession with skills that could be taught and an ethic that could be cultivated over the course of a university education.69
These tensions in the building and loan movement were at their peak in the late 1920s as Howard Ahmanson visited thrift managers to convince them to place their property insurance with his company. Large fire insurance companies often ignored these local institutions. The small profits didn't seem to be worth the effort. But Ahmanson saw something different. Across the country, thrifts were enjoying unprecedented success. By 1930, they managed the savings of more than ten million Americans and underwrote two-thirds of all the residential mortgages in the country.70 In California, they were growing even faster. From 1920 through 1928, total assets climbed from $47.9 million to $297 million.71 The largest of these institutions wrote two hundred first mortgages a month, which meant two hundred fire and hazard insurance policies.72 In this market there was room for Ahmanson and the thrift managers to make a little money.
INSURANCE ON THE SIDE
Ahmanson knew that many managers of these savings and loans were paid very little. If they ran a mutual, all the profits flowed to the depositors. Quite often, however, thrift managers found a way to supplement their salaries by selling property hazard insurance to their mortgage customers.
These side insurance businesses generated controversy. While many building and loan boards of directors countenanced the practice because it meant they didn't have to pay their managers as much, independent insurance agents protested. They argued that lenders with the power of credit could strong-arm customers into paying too much for insurance. At a large meeting of the Los Angeles Fire Insurance Exchange in 1925, for example, attendees voted to deny membership to banks, building and loans, and building and loan officials.73
In direct opposition to the majority in his industry, Ahmanson chose to make it easy for thrift managers to write fire insurance policies. All the manager needed to do was create an insurance agency and staff it with a clerk or a secretary. H. F. Ahmanson & Co. did most of the paperwork. Howard's one-day turnaround on new policies helped the lender finalize the loan, lock in the customer, and build goodwill for everyone involved.74 H. F. Ahmanson & Co. frequently produced the invoices for the premium payer and recorded the payments. If the premium buyer had a particular issue that required insurance expertise, the lender/agent's secretary called the offices of H. F. Ahmanson & Co. to find out what to do. Howard's lieutenants would often go to an agent's office once a month to add up the receivables and close his books for him. No other insurance company would provide that kind of service, in part because it operated in a gray area of the law, especially regarding the qualifications of the secretaries who were the “agents” of record in the transaction. Because all of these services kept the savings and loan/insurance manager's overhead low, they stuck with Ahmanson.75
Ahmanson cultivated his relationships with the lenders to get their insurance business. When lenders brought him their insurance business, he benefited. But lenders also made him aware of investment opportunities, and at the age of twenty-three, Ahmanson was already a savvy investor.
A TIMELY EXIT
Throughout his career, Howard Ahmanson displayed an uncanny ability to observe the economic landscape and understand how trends were likely to shape opportunities. During his senior year at USC he interviewed a number of workers about their personal finances and then wrote a senior thesis titled “The Coming American Debacle.” He concluded that the average skilled worker was overspending his income by about 22 percent. This trend toward debt was likely to result in trouble for the worker and for the economy.76
After he graduated in 1927, several small events added to Ahmanson's concern. Sometimes when he traveled, for example, he empowered his secretary to trade stocks for him. After one trip he discovered that she had approved the purchase of shares in a new fire insurance company. “Now here was a business I knew a lot about,” Ahmanson later recalled, and he knew that it took several years to begin making money. So he was surprised when his $30 shares rose quickly to $50 even before the company had opened its doors. “If people were acting crazy about a business I knew about,” he thought, “maybe they were acting just as crazy about a business I knew nothing about.”77
The last straw came when an elevator boy stopped the lift midway between two floors to pitch Howard on another insurance stock. If elevator boys
