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Giant of the West: Henry J. Kaiser and Regional Industrialization, 1930–1950

Published online by Cambridge University Press:  11 June 2012

Mark S. Foster
Mark S. Foster
Affiliation:
Mark S. Foster is professor of history at the University of Colorado, Denver.
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Abstract

Many entrepreneurs have contributed to the economic growth of the Far West, from the railroad builders of the nineteenth century to the modern day pioneers in Silicon Valley. In this article, Professor Foster focuses on the career of Henry J. Kaiser—an entrepreneur who was unquestionably one of the key figures in the modernization of the region. Though Foster does not slight the economic and political factors that made possible Kaiser's achievement he stresses that Kaiser's imagination, energy, and personal commitment were key elements in the maturation of the region's industrial economy.

Type
Articles
Information
Business History Review , Volume 59 , Issue 1 , Spring 1985 , pp. 1 - 23
Copyright
Copyright © The President and Fellows of Harvard College 1985

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References

1 Nash, , The American West in the Twentieth Century: A Short History of a Cultural Oasis (Englewood Cliffs, N.J., 1973): 205.Google Scholar One of Nash's central arguments is that until World War II, the West was in a state of virtual colonial dependency upon the East. See also De Voto, Bernard, “The West: A Plundered Province,” Harper's 169 (Aug. 1934): 481–91.Google Scholar

2 Details about Kaiser's early life are surprisingly difficult to obtain. Most of the sketches presented by popular writers after he achieved fame perpetuate factual errors and myths. I discovered some material concerning his early life in the Henry J. Kaiser papers, Bancroft Library, Berkeley, California. His personal files, cartons 295–315, contain good material. Other data, both factual and speculative, were obtained in interviews with several family members and twenty-five or thirty Kaiser executives.

3 Allhands, J. L., “Warren Brothers Company,” America's Builders 2, no. 7 (1954): 6.Google Scholar

4 Cutler, Leland W., America is Good to a Country Boy (Stanford, 1954): 153.Google Scholar This bid was more than $5 million lower than the nearest competitor's.

5 Kaiser to Warren Brothers Company, 2 July 1931, Kaiser papers, carton 2. There is a good overview of the Hoover Dam project in Wiley, Peter and Gottlieb, Robert, Empires in the Sun: The Rise of the American West (New York, 1982): chap. 1.Google Scholar

6 Arthur S. Bent to Henry M. Robinson, 2 Sept. 1932, Ray L. Wilbur papers, box 10, Herbert C. Hoover Library, West Branch, 1a.

7 See House Hearings 630 (1932): 18, 20, 60, 213; for account of visitors cottage, see Hyman, Sidney, Marriner S. Eccles: Private Enterprise and Public Servant (Stanford, 1976): 76–77.Google Scholar

8 See, for example. House Hearings, 630: 18, 20, 60; Ickes, , The Autobiography of a Curmudgeon (New York, 1948)Google Scholar; Ickes to Pittman, 15 March 1935, Department of Interior papers, RG 48, Central Office File, 1906–37, box 1583, National Archives. Kaiser managed to bargain the fine downward significantly, to a more manageable $150,000. Kaiser skillfully publicized the Six Companies job performance at Hoover Dam in a lengthy pamphlet which he cleared with Ickes in advance of its official release; see How Hoover Was Built (Six Companies, 1935); cover letter, Kaiser to Ickes, 26 March 1935; and Ickes to Kaiser, 23 March 1936; both in Department of Interior papers, Central Office File, 1906–37, box 1583. For data on Kaiser's drawn-out negotiations to gain permission to build the steel plant at Fontana, see Cashier, Philip F., “National Resource Management During the Second World War,” (Ph.D. diss., SUNY, Binghamton, 1980)Google Scholar; Kaiser to W. A. Hauck, 14 April 1941; Kaiser to Franklin Roosevelt, 21 April 1941; both in Kaiser papers, carton 14; Kaiser to Ben Fairless, 30 June 1941, Roosevelt papers, OF 5101, Franklin D. Roosevelt Library, Hyde Park, N.Y.; Kaiser to Hauck, 24 Dec. 1941, War Production Board papers, RG 179, container 1134, National Archives. For data on Kaiser's dealings with the RFC and Jesse Jones, see RFC Minutes, 1 Feb.–14 March 1942, vols. 121, 122; Chad Calhoun to Kaiser, 21 and 22 July 1944, interoffice memo. Kaiser papers, carton 25; and “Kaiser File,” in Hugh R. Fulton papers, box 10, Harry S. Truman Library, Independence, Mo.

9 See Lane, Frederick C., Ships for Victory: A History of Shipbuilding Under the U. S. Maritime Commission in World War II (Baltimore, 1951): 50–53Google Scholar; Connery, Robert H., The Navy and Industrial Mobilization in World War II (Princeton, N.J., 1951): 327.Google Scholar For relations between Kaiser and Nelson, Vickery, and Land, see Manly Fleischman to Nelson, 19 April 1943; and Land to Nelson, 25 Jan. 1943; both in WPB papers, box 1144; Vickery to Kaiser, 1 May 1941, Kaiser papers, carton 30; Vickery to Clay Bedford, undated; and Vickery to Kaiser, 16 April 1943, both in Kaiser papers, carton 28; and Kaiser to Vickery, 8 Aug. 1945, Kaiser papers, carton 30. For data on the Roosevelt-Kaiser vice presidential nomination courtship, see Burns, James M., Roosevelt: The Soldier of Freedom (New York, 1970); 503Google Scholar; author interview with E. E. Trefethen, Jr., 22 Sept. 1983; the following oral history interviews are on file at the Truman Library: Samuel I. Rosenman interview 51, pp. 19–22; Oscar Ewing interview 69, p. 103; Robert G. Nixon interview 265, p. 62; undoubtedly the most thorough analysis of the nomination situation is Rosenman, “Memo for the President,” 30 June 1944, attached to FBI Report with same date, Roosevelt papers, PSF 155.

10 Interview with George B. Scheer, 17 Jan. 1984.

11 It would, of course, be ridiculous to portray Kaiser as inexperienced in the cement industry. He had used the material for twenty-five years in his roadbuilding, and his sand and gravel operations in California had provided several millions of tons of materials for his own and others' construction projects (see “Permanente Prospectus: History of Permanente Cement Company,” mimeographed, dated 1946, in Kaiser papers, carton 305).

12 The risk was less dramatic than might appear to be the case. Kaiser already had leased significant limestone deposits and had formed a corporation before submitting his bid.

13 Typically, Kaiser commenced commercial delivery of cement on 31 January 1940, almost six weeks ahead of schedule. For a good account of the development of Kaiser's cement operations, see Taylor, Frank J., ‘Builder No. 1,” Saturday Evening Post, 17 June 1941, 9–11, 120–24.Google Scholar

14 Kaiser to Henry Cowell Lime and Cement Co., et. al., 17 Feb. 1933, Kaiser Papers, carton 4.

15 Grants Pass (Ore.) Daily Courier, 30 Sept. 1936; Portland Oregonian, 22 Nov. 1936; “The Earth Movers II,” Fortune 28 (Sept. 1943): 119–22; 216–26.

16 Lowitt, Richard, The New Deal and the West (Bloomington, Ind., 1984).Google Scholar

17 Grants Pass (Ore.) Daily Courier, 30 Sept. 1936; “The Earth Movers II,” 219; House Hearings, 630: 18–22, 59–60; Kaiser to Felix Kahn, 3 Aug. 1932, Department of Interior Papers, Central Office File, 1906–37, box 1583.

18 He became a millionaire as early as 1936 when a personal financial statement listed his net worth at $2.2 million. See Henry J. Kaiser, “Personal Balance Sheet, December 30, 1936,” Kaiser papers, carton 315.

19 Between July 1983 and January 1984 I interviewed about twenty-five present and former Kaiser Company executives. Each had his own vignettes attesting to Kaiser's amazing stamina. However unscientific their perceptions, several expressed the view that retirement would have shortened his eighty-five-year life by fifteen or twenty years.

20 Newsmen, and even some of Kaiser's own publicity men, originally portrayed him as a neophyte in shipbuilding when he won his first British contract late in 1940. As a partner in Six Companies, he had been involved in building ship ways and port facilities for several years, and his insatiable curiosity led him to investigate possibilities of entering the shipbuilding industry itself. See Kaiser to R. J. Lamont, 14 Oct. 1938, Kaiser papers, carton 9.

21 See “Memorandum of a Meeting Held in New York, 12 Aug. 1940, in the Office of the Todd Ship building Corporation and Continued Through Lunch at the Indian House,” Kaiser papers, carton 6.

22 After 1940 Kaiser basically controlled the West Coast yards. His older son, Edgar, ran the Portland/Vancouver yards. Another key Kaiser man, Clay P. Bedford, headed the Richmond, California, facilities. Several Six Companies partners had “silent” financial interests in Kaiser's shipbuilding venture.

23 Facts About Henry J. Kaiser (Oakland, Calif., 1946): 18.

24 “Kaiser Plan Fails,” Business Week, 24 Oct. 1942, 18; see also series of several articles on Portland/Vancouver shipbuilding bv Bob Beck and Ted Van Arsdol, in Vancouver (Wash.) Columbian 18–31 Oct 1971.

25 Several present and former Kaiser Company executives emphasized the high degree of personal interest Kaiser displayed over the products which H. V. Lindbergh and his small staff experimented with. Clay Bedford interview by Mimi Stein, 3 May 1982; Oral History Associates, San Francisco; author interview with E. E. Trefethen, Jr., 22 Sept. 1983; and author interview with Tim A. Bedford, 13 Jan. 1984.

26 A splendid account of the story of the “Spruce Goose” is provided by Barton, Charles, Howard Hughes and His Flying Boat (Fallbrook, Calif., 1982).Google Scholar Donald Nelson provides a complicated rationale for the government's decision against Kaiser's cargo plane initiative. See Nelson to Senator Harry S. Truman, 11 Feb. 1944, Roosevelt papers, PSF 192.

27 The only published account of the Kaiser venture in automobiles yet extant is Langworth, Richard M., Kaiser-Frazer: The Last Onslaught on Detroit (Princeton, N.J., 1975).Google Scholar

28 Sheehan, Robert, “Kaiser Aluminum: Henry J's Marvelous Mistake,” Fortune 54 (July 1956): 78–84, 172–75Google Scholar; “Kaiser Expands Abroad,” Business Week, 30 Jan. 1960, 114; and “Metal of the Future is Getting There,” Business Week, 24 Jan. 1967, 116–23.

29 “Kaiser Jamaica Bauxite Story,” Finance, 15 March 1960, 43–46.

30 For more data on the development of steel in the West, see Zierer, Clifford M., “Iron and Steel Production and Related Industries,” in California and the Southwest, ed. Zierer, Clifford M. (New York, 1956): 298–301Google Scholar; and Scamehorn, H. Lee, Pioneer Steelmaker in the West: The Colorado Fuel and Iron Company, 1872–1903 (Boulder, Colo., 1976).Google Scholar For an account of Harriman's early moves in southern California and arguments about the potential for success in regional steel production, see Jones, C. Colcock, “Los Angeles as an Iron and Steel Center,” Mining and Oil Bulletin (Los Angeles), May 1915, 132–38.Google Scholar For descriptions of limited steel production in the southern California region, see the January editions of Southern California Business for each year between the two World Wars.

31 Both popular writers and scholars have long argued that easterners were involved in what might almost be described as a conspiracy to keep the West in a state of colonial economic dependency. For a sampling of these views and analysis of the regions long-term response, see Bernard De Voto, “The West: A Plundered Province“; De Voto, “The Anxious West“; Pomeroy, Earl, The Pacific Slope: A History of California, Oregon, Washington, Idaho, Utah, and Nevada, (New York, 1966): 297–307Google Scholar; Nash, The American West; and Wiley and Gottlieb, Empires in the Sun.

32 See supra., footnote 8; in later life Kaiser often stated that the Kaiser health plan should stand as his most important and long-lasting monument. The health plan and hospitals did not truly occupy center stage in his life until after the death of his first wife, Bessie, in 1951 (personal interviews with Alyee Kaiser, 5 Dec. 1983; Dr. Sidney Garfield, 16 Jan. 1984; Dr. Cecil C. Cutting, 9 Jan. 1984; and Scott Fleming, 10 Jan. 1984).

33 Elliott, Robert, “Kaiser Fifty Year Book,” (unpublished manuscript in Kaiser papers, n.d.): 112–13Google Scholar, Kaiser papers, carton 295; see also supra., footnote 8. It would be highly misleading to portray Kaiser as the only farsighted member of the Six Companies partnership. In fact, several of the partners were leaders in pursuing expansion into international engineering and construction projects. For example, Stephen D. Bechtel pioneered enormous projects in Europe, South America, Oceania, and Asia; and several other partners appeared more enthusiastic about these endeavors than did Kaiser, at least during the early years. Kaiser became an increasingly enthusiastic participant in international engineering projects in the 1950s and 1960s, but others basically provided the leadership.

34 Total steel production plunged from 61.7 to 15.1 short tons between 1929 and 1933; by 1939 the industry had rebounded to produce 52.8 million shorttons, and in 1940 output reached 67 million. Historical Statistics of the United States: Colonial Times to 1970, part II (Washington, D.C., 1975): 693.

35 See Lauderbaugh, Richard A., American Steel Makers and the Coming of World War II (Ann Arbor, 1980): 3, 20–22.Google Scholar

36 Report to the President of the United States on the Adequacy of the Steel Industry for National Defense, 22 Feb. 1941. Dunn was, in fact, a consultant on the United States Steel payroll. Richard V. Gilbert, Director of the Defense Economics Section of the OPA, ripped the report. Labeling it “nothing short of irresponsible,” Gilbert was incensed at “the attitude of mind it reflects.” Calling Dunn a mouth-piece for industry, Gilbert concluded: “Playing it safe from the viewpoint of national security means calculating our maximum requirements under the most adverse circumstances and then allowing a healthy margin for safety. It is high time our requirements and capacities were estimated by people who play it safe for the country.” See Gilbert, “Comments on the Dunn Report,” (April 1941), Leon Henderson papers, Roosevelt Library, box 38.

37 New York Times, 23 April 1941.

38 Hauck reviewed the history of Kaiser's application in a letter written several weeks after final approval was given on the Fontana plant. See Hauck to C. E. Adams, 8 May 1942, WPB papers, box 1412; “Kaiser Plans a Steel Plant,” Time, 28 April 1941, 77–78.

39 Kaiser to Fairless, 30 June 1941, Roosevelt papers, OF 5101.

40 By the outset of the war, he had a well-staffed office of a dozen or so full-time operatives, headed by Charles F. “Chad” Calhoun.

41 See, for example, Melvin de Chazeau to Leon Henderson, 28 Nov. 1941, Henderson papers, box 35.

42 RFC Minutes, pt. 1, 1–14 March 1942, 122: 149; Ibid., pt. 1, 1–16 June 1942, 125: 563; Chad Calhoun to E. E. Trefethen, Jr., 21 and 22 July 1944, interoffice memo. Kaiser papers, carton 25; Hugh Fulton, “Memorandum,” 25 Nov. 1944; “Suggestions RE: Fontana Project,” 27 Nov. 1944; Calhoun to Fulton, 27 Nov. 1944; all in “Kaiser File,” Fulton papers; Paul F. Cadman to Kaiser, 27 Dec. 1944, Kaiser papers, carton 28, Kaiser had hoped to provide the basis of a steel facility which would serve civilian consumer needs of a rapidly expanding national population following the war. See ibid.

43 George Havas file memo, 11 Feb. 1942, Kaiser papers, carton 144.

44 Interview with Lou Oppenheim, 17 Jan. 1984.

45 “Henry J. Kaiser at the ‘Blowing In’ of the Blast Furnace of the Kaiser Company, Inc., Iron and Steel Division at Fontana, California, December 30, 1942,” p. 8, Kaiser papers, carton 14.

46 New York Times, 5 Dec. 1942.

47 For a detailed account of his strategy, see Chad F. Calhoun, “Facts Concerning Inception, War Function and Post War Function of Fontana (Kaiser) Steel Plant, July 25, 1944,” in “Kaiser File,” Hugh Fulton papers, Truman Library.

48 Press release, 12 Feb. 1944, in Kaiser papers, carton 28. For a superb, detailed summary of the careful presentations Kaiser interests made before the delegates, see Chad Calhoun to Kaiser, 12 Feb. 1944, Kaiser papers, carton 28.

49 When Kaiser achieved fame during World War II, most of his “fan” mail was adoring in tone. However, the Kaiser papers contain some letters from cynics, who hoped the “Miracle Man” would fall on his face when “normal” conditions returned.

50 “Editorial,” Mining and Contracting Review, 31 Jan. 1945; “Help for Henry,” Time, 2 June 1947, 83–84; J. J. Phillips to Kaiser, 21 Jan. 1946, Kaiser papers, carton 33.

51 Llewellyn White to E. E. Trefethen, Jr., et. al., 6 March 1944, Kaiser papers, carton 179.

52 See proposed letter draft from Governor Earl Warren to Governor Wallgren, 29 May 1945, in Kaiser papers, carton 30.

53 Kaiser to Lippmann, (n.d., c. 1944), Kaiser papers, carton 28.

54 The proposed Kaiser merger with Colorado Fuel and Iron is discussed briefly in Garnsey, Morris, “The Future of the Mountain States,” Harper's 191 (Oct. 1945): 333.Google Scholar

55 Kaiser to Truman, 25 Jan. 1947, Official Files, box 796, file folder 210B-misc, Truman papers, Truman Library. The Kaiser papers contain dozens of letters from Kaiser to the President, congressmen, and RFC officials concerning the same issue.

56 At least this is the assessment of such a shrewd analyst as Garnsey, “The Future of the Mountain States,” 333. For more background on the view that Congress wanted to rein in “profiteering” businessmen in general and Kaiser in particular, see Velie, Lester, “The Truth About Henry Kaiser,” Colliers, 10 Aug. 1946, 67Google Scholar; ‘The Arrival of Henry Kaiser,” Fortune 44 (July 1951): 68–73, 141–54; Pursell, Carroll W. Jr., ed., The Military-Industrial Complex (New York, 1972): 158Google Scholar; Cashier, “National Resource Management During World War II,” 465; New York Times, 8 Aug. 1946. Evidently, Kaiser perceived anger against his alleged “unconscionable” profits a sufficiently serious public relations problem that he authorized publication of a lengthy pamphlet defending the entire scope of his companies' operations since 1914. See ‘Facts About Henry Kaiser,” (Oakland, Calif.; Kaiser Company, 19 Sept. 1946).

57 “A Break for Fontana?” Newsweek, 2 June 1947, 67–68.

58 Kaiser's personal correspondence contains copies of dozens of pleading letters to high-ranking officials at U. S. Steel, Bethlehem, Inland, Republic, and others. See Kaiser papers, cartons 31, 32, 34, 36, and 182.

59 Henry Kaiser, Jr., to Kaiser, 7 June 1947, Kaiser papers, carton 34. See also “A Break for Fontana?” 67–68; “Editorial: Free Enterprise and Monopoly,” Christian Science Monitor, 21 June 1948.

60 Press release, dated 3 Nov. 1950, Kaiser papers, carton 61.

61 Kaiser to Walter J. Campbell, 9 Sept. 1952, Kaiser papers, carton 84.

62 For a poignant review of the decline and fall of Kaiser Steel and its local impact upon Fontana, see Los Angeles Times, 30 Dec. 1983.

63 These developments are beyond the scope of this essay and will be discussed in a projected full-length biography.