in California averaged only 24.3 percent from 1940 to 1942, compared to loss ratios well over 50 percent in Colorado, Nebraska, and Minnesota.27 Meanwhile, administrative overhead in Nebraska was high because the home office supervised approximately 475 separate agencies in just two states—Nebraska and Iowa. In California, Howard worked with only 55 different agencies and wrote insurance for a very limited number of risks: fire, earthquake, and marine.28 In fact, his business accounted for a large percentage of National American's total volume and profits.
There were other management problems that also must have troubled Howard. The Nebraska Department of Insurance found that real estate assets were on the books for values far above their actual market value.29 In 1942 the company caught its real estate mortgage loan manager pocketing rent and other collections from clients that should have been paid to the company. The loan manager was fired and the company was reimbursed by the fidelity bond insurer, but the incident provided evidence that Hayden and others in Omaha were not at the top of their game.30
Howard was confident that he could turn the company around. Unfortunately, the stock was still scattered “from hell to breakfast.” Hayden encouraged Howard to be patient.31 But with the longtime executives of the company talking about selling out, Howard decided to be more aggressive.32 Fearing that if word got out the price of the shares would rise or the company's senior executives would sabotage his efforts, he kept his plans secret. “The pals . . . are determined to sell out,” he wrote Dottie, “and equally determined that I don't get control.”
The fight was complicated by a family crisis. Hayden was not in good shape “mentally, morally, spiritually and financially.” Three or more times a week, he drank too much and stayed in bed to recover. His wife, Aimee, struggled to keep her household together with one son graduated from high school and the other about to graduate. Meanwhile, Florence was beside herself and ready to “jump out a window.”33 Howard empowered Ray Stryker, a junior executive at National American who was loyal to the Ahmansons, to look after the family's interest in the business while Howard worked to find a way to ameliorate the situation.34
Howard was determined, as he wrote Gould Eddy, “that the best seventeen years’ work I've ever done” should not be ruined by either his adversaries or a few anxious stockholders.35 He recruited Ted Crane from H.F. Ahmanson & Co.’s office in Los Angeles to travel to Iowa and Nebraska to track down stockholders and buy them out. In June 1943, Crane went to eastern Iowa on the train and spent three days talking to stockholders.36 Pointing to recent reports from state insurance departments in Nebraska, Iowa, and California, he told potential sellers that the regulators “not only took issue with some of the values at which assets had been carried, but also went on record as stating that several of the later dividends paid by the company were illegal in that the company hadn't earned them.” All of this was true. Crane even told at least one stockholder that he didn't see how the company “could pay another dividend for ten years.”37 Having bad-mouthed the stock, he offered to pay $20 a share (a fifth the stock's initial value) if they were willing to sell.
Finally, a week before he was scheduled to enter the navy, Howard learned that James Foster, the man who had succeeded his father as president, was ready to retire. Foster had rivals who wanted to take over the company, but he felt this would hurt the many longtime farmer shareholders who had patiently stayed with the business since the 1920s. Foster and another executive agreed to sell their 20 percent stake to Howard if Ahmanson would protect the interests of these shareholders.38
Still “beautifully liquid,” Ahmanson was able to move quickly. When the transaction was complete, his equity in National American topped 51 percent, a stake worth $733,540 ($9.4 million in 2011 dollars). He would later say his decision to pay top dollar (about three times the market value of the shares) was “my silliest business venture.”39 He did it out of respect and affection for his father.
With majority control, Ahmanson planned to reconfigure the board of directors.40 Unable to leave Washington, he let Gould Eddy and Hayden orchestrate the fight with two remaining dissident shareholders.41 Certain that he had the shares and proxies to be successful, he focused on arranging the company's balance sheet so that results under his management would be almost guaranteed to be positive. As he bragged to a friend in Southern California, he had been “cutting the gizzard out of everything, to the point where they're carrying Government bonds at under par, real estate at half of what it's worth, unpaid losses about double of what really should have been, etc. etc. I am going to have the unusual pleasure of taking over officially with a few sprinters tucked away in the barn instead of the usual process of having to pay for dead horses.”42
Howard's financial strategy made the former management look even worse. Hayden constantly reminded him that the men in Omaha resented these moves. Howard didn't care.43 “What we're trying to sell,” he wrote, “is the fact that the new regime is different from the old.”44 The new regime would practice more conservative bookkeeping and money management and give Howard more capital to work with.45
Ahmanson wanted the world to know of his success. He asked Gould Eddy and his associates to “dream up some idea of publicizing in a big way the advent of H. F. Ahmanson as president of the National American Fire Insurance Company. The National American isn't very important and neither am I, but inasmuch as the two of us are only going to get together once, I believe this is an opportunity which should make us both better known.”46
Behind this desire for publicity lay a deeper motivation. Howard had partially redeemed his father's memory. As president of National American, he would now have the opportunity to fulfill the promise with which the promoters had saddled his father: he would make the company profitable. Those who stuck with him and the company would reap their reward. For those who wanted to sell out, he was more than happy to buy their shares—at the cheapest price possible.
GOING HOME
Bored with his work in Washington, Howard reported to Dottie in the summer of 1944 that he struggled to get up in the mornings. Charlie Fletcher had moved in with him after Jeannette and the children moved back to San Diego. The two men often had breakfast with other friends at the office. One time, after a mad dash to get Fletcher to a plane, he wrote: “Good old Charlie—he is the most delightful roommate a guy could imagine—but a little energetic for me.”47
“Getting out is the sole subject of conversation around here,” Howard wrote to Dottie at the end of August.48 While American forces in Europe and the Pacific were fighting some of the heaviest battles of the war in the fall of 1944, Howard and Charlie, like others in Washington whose lives were caught up in planning, sensed victory and began to make plans for their own futures. By the end of July, the government had begun to cut back on aircraft production and Howard and his crew found themselves with less and less to do.49 Howard wrote Dottie that men who were over the age of thirty-eight (he was thirty-eight) were getting approved to go on inactive duty, especially if they had “something special to do on the outside.”50
At first, Howard didn't think he would be able to get out until the war with Germany was over, but he was convinced that Germany's surrender would come before Thanksgiving. In fact, he was so sure that he sold all of his stock on the assumption that the market would plunge when the war ended.51
He complained about the heat, the humidity, and the rain in Washington and “perspiring buckets all night.” He was jealous of Charlie, who could fall asleep instantly, standing or lying down. Howard often lay awake much of the night planning. Longing for relaxation, he fantasized about going to Mexico with Dottie. “It's the only place in the world that's not all this war business.”52 At one point
