Tokyo without a guide or interpreter. Howard entertained the locals by playing the piano. The memory of that trip would soon seem surreal.
After Pearl Harbor, fear seized the West Coast as newspapers speculated on whether the Japanese would bomb and strafe the mainland next. Fresh headlines hit the newsstands several times a day. With dark humor, Dottie joked that Howard was to blame for the war: the Japanese had attacked Pearl Harbor, she said, as a way to put an end to Howard's piano playing.50
REORGANIZING FOR THE DURATION
In one respect, the war came at just the right time for both Howard Ahmanson and his good friend Howard Edgerton. Both had gotten in trouble with regulators and the law. With six other men, including a prominent Los Angeles physician, Edgerton had been indicted by a federal grand jury in June 1941 for devising a scheme to defraud investors in the Railway Mutual Building and Loan Association.51 According to the charges, victims of the scheme who were Railway depositors were told that they would have to wait for some time to withdraw their money from the association. If they wanted their money sooner, they could go to a company called First Security Deposit Corporation, which would give them only eighty or ninety cents on the dollar but would give them cash immediately. Customers who chose this option sold their Railway Mutual shares (deposits) to First Security. According to prosecutors, Edgerton was the primary owner of First Security Deposit Corporation, and as soon as these accounts were transferred, Edgerton received full value for the accounts he had paid for at a discount.52
As the rest of the nation organized for all-out war, Edgerton and his fellow defendants went on trial in February 1942.53 On April 5, 1942, after thirty hours of deliberation, a jury convicted him and a codefendant on a number of counts related to mail fraud. The jury was unable to agree on the guilt or innocence of four other men. One other man was found completely innocent. All were judged innocent on the charge of conspiracy.54 Three weeks later, a federal judge sentenced Edgerton to two and a half years in a federal penitentiary.55 While the rest of the nation turned to the business of war, Edgerton was released on his own recognizance pending his appeal.56
Howard Ahmanson's brush with the censure of state government in 1942 threatened far less serious consequences, but it was troubling nonetheless. The details are sketchy. He ran into trouble with the Insurance Commission on business transactions with Thomas Mortgage Co., a business run by two brothers, H.B. and Luther Thomas, out of Los Angeles and Long Beach. The brothers, as agents for Prudential Life Insurance Company, advertised their services in the classifieds of the Los Angeles Times.57 They offered FHA Title II and Title VI loans and handled real estate sales. They also seemed to offer fire insurance through H. F. Ahmanson. At the time, Anthony Caminetti, a former judge from Amador County, was the state insurance commissioner. Appointed by Democratic governor Culbert Olson in 1939, he was known as a crusader.58 In 1940, he had seized a dozen life insurance companies, asserting that they were being mismanaged and that assets to benefit policyholders were being diverted to stockholders and directors.59 It's unclear what brought the Thomas brothers and Ahmanson to Caminetti's attention, except to quote from Ahmanson, who later blamed it all on “one careless, fiery-tempered red-head.”60 It's also unclear what actual charges were leveled against the Thomas brothers and Ahmanson. All apparently faced possible suspensions.
Ahmanson and the Thomas brothers caught a break in September 1943, when Governor Earl Warren announced that he would not reappoint the controversial Caminetti. Instead, he tapped Pasadena attorney Maynard Garrison. The thirty-eight-year-old Garrison had graduated from Loyola University Law School in 1932 and had practiced insurance law as an employee and associate general counsel for the Automobile Club of Southern California for eleven years. He had served as vice chairman of Warren's campaign in Southern California.61 He was also good friends with the attorneys handling the case for the Thomases and Ahmanson.62
With Ahmanson already in navy basic training on the East Coast, the Thomases’ preliminary hearing took place on November 29, 1943. Asked to offer a plea, the brothers asserted that they were unaware of the events that led up to the charges.63 The hearing was then postponed until December 10. Before the 10th, the attorneys for the Thomases negotiated a thirty-day suspension for the brothers, who pled guilty to several minor citations. All other charges were dropped. Gould Eddy thought this was a remarkably favorable outcome. Howard apparently received only a five-day suspension. Writing to H. B. Thomas after the decision, he gave credit to the lawyers but also concluded that the lightness of the sentence reflected “the reputation of the good old Thomas Mortgage Company and some of your and my personal acquaintances.”64
Military service offered Ahmanson and Edgerton a way to put some distance between them and the law. Even before Pearl Harbor, Congress had approved a broad military draft that eventually encompassed every able-bodied man under the age of forty-five. Edgerton joined the Air Corps as a civilian flight instructor.65 To Ahmanson and Fletcher he expressed his delight in being able to graduate from his Piper Cub to the 450-horsepower trainer aircraft that he flew “with a cadet in the other cockpit that doesn't know a damned thing about the airplane and is scared to death of its size.” Despite the bravado of his aerial exploits, however, “the shadow of the gray prison walls” followed him. In November 1943, as he waited for the oral hearings on his case before the Ninth Circuit Court of Appeals, he confessed that “this particular period before the deadline is a rather tense one and is a fitting climax to the past 3½ years during which period of time I have been investigated, indicted, tried, convicted, wooed, screwed and tattooed.”66
Despite his statements in 1941, Howard chose to enlist in the U.S. Navy rather than wait to be drafted. In his application for a commission, he included yachting among his leisure activities. Curiously, he also noted that he had performed “investigation along lines required by Naval Intelligence.”67 Perhaps this referred to information he had supplied after touring Japan. In any case, in May 1943 he was appointed as a lieutenant in the U.S. Naval Reserves with the understanding that he would go to Rhode Island for basic training and then be assigned to duty.
Before leaving for boot camp, Ahmanson reorganized his businesses to create a simplified structure. Although H. F. Ahmanson & Co. was his primary focus, he had a number of other active investments and property to be managed, including his real estate and oil wells. As the result of a winning hand in a poker game with Morgan Adams, he was also the owner of the once-famous Mayan Theater in downtown Los Angeles, where live stage performances included African American song and dance troupes, Jewish comedies, and solo performances by singers and comedians.68 Howard could easily leave the oil wells and the real estate in the hands of developers and property managers. He asked Ted Crane, the head of the Inland Marine Department at H. F. Ahmanson & Co., to keep the theater rented. H. F. Ahmanson & Company, however, was more complicated.
As he put it, H. F. Ahmanson & Company had “become involved in so doggone many kinds of businesses that my examiners and the like were going nutty trying to figure out who was doing what to who[m]—and so was I.” For the duration of the war he put the day-to-day operations into a company called Insurance Managers, which was owned by H. F. Ahmanson & Company, Inc. He turned management of the new company over to Gould Eddy. Then he began packing for basic training.69
DEPRESSION LEGACIES
War ended the long nightmare of the Depression even as it slowed all of the industries dependent on the residential real estate market. Private construction came to a virtual standstill in the face of the government's need for construction materials. Nevertheless, the institutional legacies of the Depression reflected substantial changes in the government's approach to increasing the supply of residential mortgage capital and promoting the role of home ownership in strengthening American democracy and capitalism. New government institutions brought stability to the market by diminishing risks for savers, borrowers, and lenders alike. These institutions had been formed from the coalescence of Hoover's associationalism with the strong
