his childhood, Howard's relationship with Hayden was somewhat distant. Eight years older, Hayden left home to attend the Kemper Military Academy just as Howard was starting school.32 By the time Howard was in his teenage years, Hayden was in college at the University of Nebraska. When Howard was in high school, Hayden was working for his father's company as an assistant underwriter. After Hayden began dating Aimee Elizabeth Tolbod, she joined the family for dinner every Sunday night, introducing another subtle distance between the two brothers.33
Later in life, Howard would idealize his childhood in Omaha. He remembered twenty maple trees for climbing in the yard of his parents’ house. He played with the neighbor kids. In the summer, the family vacationed at Lake Okoboji in Iowa. Yet Omaha, like the rest of America, was a complicated and sometimes troubled place in the first two decades of the twentieth century.
AN UNSETTLED CITY
The fourth-largest city in the trans-Mississippi West, Omaha lagged only San Francisco, Denver, and Kansas City. On the streetcars, Howard overheard the thick accents of Germans, Swedes, Hungarians, Danes, and Italians who had come to work for the railroad, the packinghouses, the distilleries, and a host of other industries that depended on the shipment and processing of agricultural products.34
In this era, the entrepreneurs of the frontier age gave way to business leaders who collaborated to promote the city and resist unionization. The city became a regional center for banking and insurance. Between 1916 and 1918, Omaha rose from sixteenth to fourteenth on the list of cities leading the nation in bank clearings.35 Nebraska led the nation in the number of banks per capita—with one for every 1,207 people, compared to the national average of one for every 4,032.36 In Nebraska, and Omaha particularly, managing and protecting capital was big business.
Despite its importance as a financial center, Omaha also had a dark side. As in many American cities, political control rested in the hands of a shadowy political boss. Gambling and saloons flourished even after national prohibition was adopted in 1919. By one estimate, Omaha had twenty-six hundred prostitutes in 1910. Providing sex and liquor to cowboys, railroad workers and other men, the city's houses of ill repute netted $17.5 million a year.37 In addition to crime, liquor, and prostitution, Omaha also experienced inter-ethnic and racial violence. A mob of a thousand men attacked the Greek section of town in 1909, looting, burning buildings, and attacking residents.38 Ten years later, as race riots flared in midwestern cities, an African-American packinghouse worker was arrested and accused of assaulting a nineteen-year-old white woman and her companion. A mob stormed the courthouse, nearly lynched the mayor, and then seized the defendant. He was hanged, mutilated, and dragged through the streets with a rope around his neck. His bullet-riddled body was burned as the crowd cheered and posed for photographers.
If he didn't witness the murder, thirteen-year-old Howard Ahmanson certainly heard about it. His neighbor and high school classmate, actor Henry Fonda, was so seared by what he saw that he became a lifelong advocate of racial equality and social justice.39 The chamber of commerce decried the violence and the breakdown in civil order.40 But the lesson that Howard seems to have taken from this event was far more practical: in investing or taking risks, avoid the fault lines of society—the boundaries between races—where friction could lead to cataclysm.
SELLING FIRE INSURANCE IN A VOLATILE COMMUNITY
Howard frequently discussed the stock market, grain prices, land deals, the insurance industry, and politics with his father.41 These conversations undoubtedly influenced Howard's thinking about risk, management, and regulation.
In the 1920s, the American economy was in the midst of a critical transition that had begun well before World War I. New technologies and organizational strategies enabled a great merger movement that concentrated economic power.42 Giant corporations like Standard Oil, United States Steel, American Telephone & Telegraph, and American Tobacco—known to many as “the trusts"—employed thousands of workers and made millions of dollars in profits. Populists resisted this economic power and called for trust-busting and regulation. Under Presidents Theodore Roosevelt, William Howard Taft, and Woodrow Wilson, the federal government's role in the economy grew significantly. In various state capitals, new regulatory commissions and agencies proliferated to protect consumers and stabilize chaotic markets.43 Fire insurance, like virtually every other industry, was affected by the increasing scope and scale of business activity and government's growing role in managing the economy.
Fire insurance companies started as mutual or cooperative organizations, and this heritage was important to the way they operated and were regulated. It would also be important to the first fortune that Howard Ahmanson would make in the insurance industry and to the second fortune he earned in savings and loans. The first associations were created after the Great Fire in London in 1666, when property owners banded together to provide financial protection to one another in case of fire. Their “mutual” property insurance concept was replicated in the American colonies by Benjamin Franklin, who organized the first association in 1735.
With a mutual, risk was managed by familiarity. Members knew one another and the properties they were covering. Excess profits were returned to the members, so the insured was less inclined to worry that shareholders or owners were exploiting the policyholder. These associations—along with savings banks and building and loan associations—were part of a fabric of cooperative community institutions that proliferated in the United States in the eighteenth and nineteenth centuries.
The success of the mutuals attracted entrepreneurs who understood that insurance companies amassed enormous quantities of capital that could be invested. Earnings on this capital that exceeded the costs of paying policy-holders’ claims could be pocketed by shareholders. Success depended on making smart investments and limiting insurance risk—especially catastrophic risks like the Chicago fire of 1871 and the San Francisco earthquake and fire of 1906.
Large insurance companies enjoyed a competitive advantage in insurance. With greater numbers of policyholders and accurate statistics, the number of claims was much more predictable. By developing networks of agents and offices in the age of the telegraph, some insurance companies enjoyed the kind of economies of scope and scale associated with large industrial companies like railroads, power, and telegraph companies at the end of the nineteenth century.44
BOOM TIMES IN AMERICA
Will Ahmanson's career developed in tandem with the insurance industry in the United States. Omaha became a major insurance center—a kind of Hartford of the Midwest.45 Most of the fire insurance companies were stock companies. By 1913, these for-profit enterprises covered nearly 93 percent of the $790 million in fire and property insurance written in the state.46 These were profitable businesses. The combined income of all Omaha insurance companies topped $23.5 million in 1917.47
In a regional center like Omaha, leading insurance men often worked as agents or managers for several companies. Will Ahmanson's various affiliations between 1906 and 1919 reflected the fluidity of the business. Between 1906 and 1914, he was the assistant secretary of the Nebraska Underwriters Insurance Company, worked for the State Insurance Company of Nebraska (which was acquired by the National Fire Insurance Company of Hartford in 1912), and then joined Columbia Fire Underwriters in 1913.48 He was also the assistant manager of the German Fire Underwriters of Omaha.49 All of this movement reflected the still-unsettled state of the industry as consumers, companies, and politicians sought to use government to strengthen their respective positions in the marketplace, ensure “fair” treatment for everyone involved, and forge a political consensus.
REGULATING FIRE INSURANCE
Like businessmen in many industries,
