1929, months before the great crash, he sold all of his holdings except for National American Insurance, netting nearly forty thousand dollars. He had doubled his money in four years and was now “beautifully liquid.”78
After the crash in October 1929, with cash in a depressed market, Howard bought Chrysler shares and searched for other bargains. He became part owner and an officer and director in Victor Oil.79 He acquired property, invested in oil, and continued to grow his insurance business.80 Between 1930 and 1935 he also acquired nearly a half million dollars’ worth of real estate. Many of these properties he later sold for four or five times what he had invested. With his increasing wealth he bought a new home at 203 North Rexford Drive in Beverly Hills.81 Having consolidated his financial position in the world, he was at last ready to formalize another longtime partnership.
A LONG COURTSHIP
Howard and Dorothy Grannis had dated for nearly seven years by 1933. It's unclear why they didn't marry earlier. Certainly it wasn't because of Howard's financial situation. Both of them were smart, headstrong people. Howard's surviving letters evidence his tendency to imperial egotism. She lashed out at him when he neglected her. They were both opportunistic, and perhaps there was a part of each that was waiting for someone more perfect to come along. But in the end, they also needed and loved each other. Howard paid attention to Dottie's feelings and fears and strove to protect her, something she longed for. Dottie supported the part of Howard's workaholic and sometimes reticent personality that embraced the sybaritic lifestyle of L.A.’s beaches, clubs, and night life.
Perhaps Howard wanted to wait until he had become a millionaire ($17.5 million in 2011 dollars). As others throughout the nation struggled to feed their children or keep from losing their homes, Howard approached this financial milestone toward the end of 1932. That Christmas he traveled to Omaha without Dottie, but he made special arrangements. On Christmas morning, a messenger delivered an engagement ring to her home. She accepted.
The subsequent wedding invitation reflected the couple's sense of humor and disdain for formality. Designed to look like a court summons, it was signed by “Dan Cupid, Clerk of the Courts.” Guests were to appear on Saturday, June 24, 1933, at the La Venta Inn at the end of the Palos Verdes Peninsula. The mission-style complex with gardens designed by the Olmstead brothers offered a commanding view of the Pacific. With a black-tie restaurant for Hollywood stars, the place was home to the Los Angeles elite. After the wedding, Howard and Dottie drove to San Pedro. Her parents and his family waved good-bye as the honeymooners stood on the deck of the Grace liner Santa Elena bound for the Caribbean.82
Despite a long and luxurious honeymoon, Howard remained committed to his pursuit of capital. He and Dottie agreed to limit their spending to 10 percent of the income they received from their personal holdings only—in other words, from Howard's side bets in real estate and the stock market. They would leave the earnings and dividends from H. F. Ahmanson & Co. in the business to grow.
With his personal investments, Ahmanson developed a conservative strategy. He put 90 percent of his reserves in cash or cash-equivalent short-term government bonds. “If you've got cash available,” he said, “your gun is always loaded.” He invested the rest “in the wildest cats and dogs. If the beasts are good,” he said, “they'll go up twenty times. If they're sour, they'll go down to two, but I'll still have the cash.”83 With the nation and the world sinking deeper into economic depression, Ahmanson's cash was king.
THREE
Undertaker at a Plague
THE LOS ANGELES TIMES BLAMED home buyers. A “careful study of conditions,” the Times reported 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, the Times conceded, the “downright dishonesty” of either the contractor or the lender was also to blame. But Times readers needn't worry. In middle-class and suburban areas, foreclosures were practically unknown.1
Despite the Times’s efforts to downplay the crisis, foreclosures affected many home owners in Los Angeles and the lenders who carried their loans. The president of the Los Angeles real estate board in 1932 called for legislation to protect home owners from rapid foreclosure and eviction. One Hollywood assemblyman asked Governor Rolph to convene a special session of the legislature “to enact laws providing for a year's moratorium on foreclosures to give homeowners a breathing spell in order to readjust themselves to the present economic condition.”2 Rolph refused, asserting that relief was better addressed at the local level.3 Meanwhile, the American Legion and local women's organizations, supported by local realty boards, launched a fund-raising effort to amass a two-million-dollar revolving loan fund to help home owners on the brink of foreclosure.4
Despite these efforts, the pace of foreclosures increased. Each time a lender took a house back and left it empty, H. F. Ahmanson & Co. had an opportunity to write an insurance policy. Sometimes, when even the lender didn't have the cash necessary for the insurance, Ahmanson paid the premium and let the lender run a tab. When these debts grew high enough, the banks gave him properties to settle the debt. While others struggled, Ahmanson amassed a small fortune in cash and property. “It was like being an undertaker at a plague,” Ahmanson said later. “The worse things got, the better I was.”5
FINANCIAL REFORM SHAPES THE MORTGAGE MARKET
While Ahmanson ran his own personal bailout program for lenders with distressed properties on their hands, President Herbert Hoover began to reframe the government's role in financial services and the mortgage industry as a way to ease the crisis of the Great Depression. The reforms he initiated were continued and deepened by his successor. They created enormous entrepreneurial opportunities for Howard Ahmanson and other lenders in the years following World War II. During the Depression, however, the presidents aimed to stem the crisis.
Throughout his years in Washington, Hoover had sought to make home ownership and housing development a federal priority. As secretary of commerce, he created a Division of Building and Housing to promote the “Own Your Own Home” movement.6 As the Republican nominee for president in 1928, he professed that the American home was the most important foundation stone in the structure of modern civilization.7 Following the stock market crash of October 1929, Hoover labored to adapt his philosophy of cooperation and associationalism to the nation's growing economic crisis and to the issues facing home owners across the country.
Early in the Depression, Hoover gathered the nation's top CEOs and persuaded them to accelerate construction and maintenance projects to stimulate spending to avert large-scale unemployment. He encouraged states to do the same. He won high praise for his activism. Within his cabinet, however, some believed that the crash was good for the country. Treasury secretary Andrew Mellon was convinced that the Depression “will purge the rottenness out of the system. People will work harder, live a more moral life. Values will be adjusted and enterprising people will pick up the wreck from less-competent people.” Mellon was joined in this perspective by the governors of the Federal Reserve, who refused to pump cash into the economy and, in fact, raised interest rates in October 1931, exacerbating the shrinkage of the money supply.8
Hoover never subscribed to the laissez-faire ideologies of these bankers. But in the early years of the Depression, he relied on presidential cajoling and corporate cooperation to promote prosperity. Initially his strategy seemed to work. In the spring of 1930, Hoover told members of the U.S. Chamber of Commerce: “We [are] past the worst.”9
In
