Freedom's Forge: How American Business Produced Victory in World War II

by Herman, Arthur

  And his employees sensed it. They had a habit of sticking around, in spite of the hard work and Kaiser’s sometimes explosive temper. Alonzo Ordway had been the very first man he hired when he started the company in 1914. Ordway would still be working with him forty years later. Another precious find was Joaquin “Joe” Reis, who started as a timekeeper on a road job in Vancouver and went on to become one of Kaiser’s key men in shipbuilding during the Second World War.

  Kaiser’s restless energy and obsessive commitment to perfection could rankle. Then and later, subordinates would hear doctors warning them to slow down, and watch their family life fall apart under the burden of late night phone calls from the boss and the endless amount of work. They’d quit—then months later they would be back. Life turned out to be pretty dull when you weren’t working for Henry Kaiser.

  Yet the biggest bonanza was still waiting for Kaiser and his men, in California.

  After the San Francisco earthquake of 1906, the state population grew like a second gold rush. The demand for road construction was desperate. Kaiser got his break—one that would change his life and also the state of California—by luck and accident. Alonzo Ordway had decided, after seven years of nonstop fourteen-hour days, he needed a vacation. He and his wife set out for San Francisco, enjoyed a brief but refreshing holiday, and on their return stopped at a hotel outside Redding, California.

  That morning at breakfast, Ordway heard two men in the next booth talking about plans for building a new U.S. Highway connecting Redding and Red Bluff. Ordway casually struck up a conversation, learned the details, and then rushed out of the hotel. In minutes he had a telegram off to Kaiser in Seattle, where he was supervising one of his road contracts. Kaiser phoned him immediately at his hotel. Bess Kaiser remembered they spoke for barely five minutes before her husband ordered “Ord” to meet him in Portland. That contract was going to be his.18

  In Portland, Ordway gave the rest of the details he had gleaned to his boss, who was more impatient than ever to win that job, no matter what. They looked at the train schedule and then caught the Shasta Limited south for San Francisco, planning to get off at Redding.

  As they chugged through the mountain scenery, Ordway asked when the train stopped in Redding. “It doesn’t,” the conductor told him; “we don’t make any stops on that part of the line.” The Shasta Limited just slowed enough at Cottonwood, three miles outside Redding, for the engineer to pick up his orders on a mail pole, then set off again for points south.

  Ordway broke the news to his boss. Kaiser was unfazed. “Then we’ll jump,” he said. Ordway stared unbelieving as the portly Kaiser grabbed his briefcase and headed for the end of the car.

  Sure enough, the train began to slow as they drew near Cottonwood. “He let go near the little Cottonwood station house and tumbled head over heels,” Ordway later remembered, “and skidded headfirst into a pile of railroad ties. When I jumped I rolled over my suitcase and came to a stop right in front of the station door.”

  Ordway dashed over to his boss, who was still lying on the ground. “I had to find out if he had broken his neck,” he said. But Kaiser was all right, only a little bruised and scraped. Ordway helped him to his feet as the Shasta Limited vanished out of sight.

  “I’ve ruined my brand-new suit,” Ordway exclaimed with disgust. Kaiser laughed as the pair brushed themselves off.

  The station door opened and the stationmaster stepped out. He gazed at the pair and shook his head. “You damned fools,” he said.

  But Kaiser and Ordway made their meeting in Redding. Although they looked a sight with their torn, dirt-covered suits and bleeding palms, they landed the job—$527,000 worth, the biggest in Kaiser’s history up to that time. From that point on, Kaiser and California would be joined at the hip. Neither would ever be the same again.19

  The California years consolidated Kaiser’s pattern of success, so much so that by 1923 he had moved his entire operation down to Oakland. In two years he built more roads than in his five years in Washington put together. Those were also the years that he perfected the business practices and strategies that would become the hallmark of the Kaiser way of doing things.

  Kaiser had learned to examine a bid from every conceivable angle before committing his company, and once a contract was drawn up, he insisted on checking out the construction site in person. From his earliest days in Vancouver, Kaiser had a general’s gift for assessing and judging terrain. He could tell almost at a glance how long it would take to cut a road along a deer track or through a forest, and how many men it would require.

  That number turned out to be fewer than other contractors, because Kaiser got everything he could get out of his team, and not just in terms of work. Employees dubbed him “the suction pump,” one of them would remember, “because he would extract every bit of information anyone had.” That information had to be accurate, because Kaiser was constantly checking and double-checking figures and estimates and inventories. “He wouldn’t get angry if he found you in error, but he would sure correct you.” And if he ever found an employee trying to deceive him or lie to him, “he would really raise holy hell.”20

  Kaiser felt free to drive his men hard because they knew he drove himself almost as hard. A twelve- to fifteen-hour day was usual: examining plans, surveying maps and the terrain itself to find the best and quickest route, and then spending his evening planning and assigning teams of workers for the morning. Very often all four Kaisers—father, mother, and the two boys, Edgar and Henry Jr., born in 1917—spent nights on the job sleeping in their automobile, while workers pitched tents and cooked supper around them.21

  When Kaiser won a major $19 million contract for highway building on the island of Cuba in 1927, he found an even more valuable employee. Fresh from engineering school, he was a medium-sized, rather jowly young man named Clay Bedford, whose father had worked for Kaiser in California and who came with Kaiser to find ways to cut major roads through miles of untracked, undrainable jungle.22 Kaiser liked the boy’s attitude and aptitude, and although Bedford was only twenty-five and there were plenty of more senior engineers on the project, Kaiser put him in charge of the entire operation. Bedford learned fast and brought everything to completion a full year ahead of schedule. He would become one of the inner circle of young men who, as the saying went, “keep the promises Kaiser makes.”

  Kaiser also taught his inner circle his surprisingly oblique management style. You learned never to say “do this” and “do that,” Bedford recalled. “What you do is to ask the kind of questions that will draw the response you want,” he told an interviewer, “and once you get that response you say, ‘That’s a great idea,’ never indicating that you planted the idea” in the first place.23

  Kaiser’s other secret was his willingness to look for any technical advance that might make his work easier and cheaper. He was the first contractor to attach rubber tires to the wheels of his company’s wheelbarrows—grateful workmen called it the greatest invention since the paycheck. He was one of the first to use tractors that the Caterpillar Company fitted specially for road work by putting a plow blade on the front end. Kaiser would make the name “Caterpillar” synonymous with heavy construction, as he would diesel trucks, which he preferred to gasoline ones because the fuel was cheaper: a dollar a day compared to a dollar an hour for gasoline. Kaiser tried for years to get Caterpillar to install diesel engines on their tractors, but they held out. So Kaiser told Ord Ordway, “All right, I’ll buy ’em, but I won’t use their damn engines.” Instead, as each new Caterpillar was delivered, Henry Kaiser ordered the old engine ripped out and a new diesel one put in its place.24

  Kaiser was also taken with a contraption made by an inventor named Le Tourneau, which could scoop almost ten cubic yards of earth in a minute. Le Tourneau dubbed it his “earth mover.” Kaiser saw at once how it could transform road construction, and ordered a dozen. The earthmover, like the Caterpillar tractor, became another signature piece of equipment at Kaiser site
s, along with dump trucks from Kaiser’s favorite truck maker: Mack of Cleveland, Ohio.

  The last and most essential secret of Kaiser’s business was his immense skill in building close relations with local, state, and eventually federal officials. As government dollars poured into road construction, Kaiser was quick to move as close as he could get to the stream’s headwaters. His bustling, rotund figure became a familiar sight in the state capitol buildings in Portland and Sacramento. It was Kaiser who lobbied the California legislature to pass a tax on gasoline to help pay for new roads—the first such tax in the nation.25

  Then and later, Kaiser never could understand businessmen who shunned dealing with the government. He quickly discovered that government contracts were often also the longest running. Later, as the Depression took hold, they offered a security for him and his employees that private contracts no longer could—and state governments wouldn’t default on their obligations in the middle of a project. He also grasped that government officials—local, state, or federal—all needed to get certain things done in order to please their constituents, whether it was building a road or a bridge (to complete his highway through swamp-infested Cuba, Kaiser and Clay Bedford built no fewer than five hundred bridges) or, later, dams and ships and planes.

  “You’ve got to help them get these things,” he told an audience of business executives at the National Press Club during the war, “you’ve got to come to Washington and say, ‘Here is a way. Now I know this [will work], see if I’m right,’ and if he thinks you’re right he’s tickled to death you came.”26

  One of those happy clients was the government of Cuba. When Bedford and the rest of the Kaiser team returned to the United States in 1930, they had finished their road work a year ahead of schedule—and with a net profit of $2.1 million. Meanwhile, Kaiser Construction had been building roads and dams in California, levees along the Mississippi, and pipeline operations throughout the Far West. At age forty-seven, and even as the Depression was beginning to bite, Henry Kaiser was becoming one of the legends of modern construction.

  Yet his biggest success was still to come: Hoover Dam.

  Since the time of William McKinley’s presidency, engineers and federal officials had thought about building a dam on the Colorado River. It took, however, almost thirty years of political wrangling with the legislatures of seven states before they had finally narrowed its location down to a site in Black Canyon, thirty miles south of what was then the tiny town of Las Vegas, Nevada.

  The potential of such a dam was tremendous: not only for controlling and directing the floodwaters of the Colorado, one of the most violent and unpredictable rivers in the world, but for generating what engineers estimated would be more than twice the hydroelectricity of Niagara.27

  Construction requirements of a dam this size rose to the unimaginable. It would take 4.5 million cubic yards of concrete and 19 million pounds of reinforcing steel—enough to build 575 USS Arizona-class battleships—in order to hold back a reservoir of water with a 550-mile shoreline. Thousands of tons of loose rock would have to be scraped from the canyon’s surface before massive tunnels could be dug to divert the Colorado’s waters into the great reservoir. The federal government was so wary about the costs—including the human cost of risking the lives of the thousands of workers in such a hazardous process in the middle of nowhere—that it demanded up front a $5 million performance bond (the equivalent of $48 million in today’s money) for any company that wanted to submit a bid.

  Kaiser first got wind of what was up when he was in Cuba. “I lay awake nights in a sweltering tent thinking about it over and over,” he later said.28 Still, $5 million was more money than Kaiser had. If he partnered with a couple of other western construction firms, he realized, it might be a different story.

  So began one of the most important partnerships in the history of business, and one of the most vital of the Second World War. The first man Kaiser approached was Warren Bechtel, a Kansas farmer’s son and former railway hand who had been putting up buildings and roads around San Francisco since before the great earthquake. Kaiser had first met the tall, beefy man in a slouch hat and a battered three-piece on the Redding–Red Bluff highway contract in 1921. The advantage of working with “Dad” Bechtel was not only that you got a man of vast experience whose word was his bond (Bechtel hated signing papers; if you couldn’t trust a man on a handshake, he argued, you shouldn’t be doing business with him in the first place) but his three capable and hard-as-iron sons, as well: Steve, Kenneth, and Warren Jr.29

  Kaiser went to see “Dad” with his idea for pooling a bid, and Bechtel enthusiastically signed on. He spoke to his old partners the Warren brothers, who agreed to put up half a million dollars. Then Kaiser and Bechtel learned two other veteran Bay Area construction contractors, Harry Morrison and his partner Morris Knudsen (no relation to General Motors’ William Knudsen), were planning the same thing.30 Morrison had already approached Edmund and Bill Wattis, brothers who had come out west as teenagers to work on laying tracks for the Great Northern railroad, and who owned the biggest construction firm in Utah. Another outfit, run by a tough Irishman named Charlie Shea, who smoked foul-smelling stogies and dressed like one of his workmen, had already signed on with Morrison. Now he became partners with Kaiser, Bechtel, and the rest.

  Then they approached San Francisco’s most distinguished building firm, MacDonald and Kahn. Felix Kahn was a shrewd, urbane German Jewish immigrant who also happened to be the brother of Big Bill Knudsen’s good friend Albert Kahn, the world’s most famous industrial architect. Together with his brilliant, mercurial partner, Alan MacDonald, Kahn had made a fortune constructing some of the city’s most famous landmarks, such as the Mark Hopkins Hotel on Telegraph Hill, as well as $75 million worth of buildings, storm drains, sewers, and industrial plants.31

  Felix Kahn had already been thinking of making a bid on the big dam when Harry Morrison walked into his office with their proposition. Kahn offered to put up $1 million. Years later someone wondered if some of the roughneck group didn’t want him there because he was a Jew.

  Kahn laughed. “Why, once I put up a million dollars,” he said, “it’s amazing how fast I became one of the family.”32

  So Henry Kaiser had his bond and his merry band. They would call themselves the Six Companies, although over time that number would fluctuate as new opportunities arose and new partners stepped in and old ones bowed out. The men who led it formed a personal as well as a professional bond. All of them had come west as young men in search of adventure as well as money. Most had left school early to do manual labor. Only Kahn and MacDonald had ever been to college, and MacDonald had been such a misfit that he was fired from fifteen different jobs before finding a man like Kahn, who recognized the genius behind the eccentricity.

  The men’s talents also complemented one another perfectly. Shea had spent years doing water and tunnel work, and understood the challenge of big-scale hydraulics. Felix Kahn’s fine suits and elegant manners made him the king of the boardroom, while Dad Bechtel could ride herd on a construction site like an Oregon Trail wagon master. Morry Knudsen knew mules and horses: They were going to need those to get first men, then equipment and supplies, out to remote Black Canyon.33 Utah Construction’s Marriner Eccles had a keen grasp of the numbers side of the equation. And Morrison-Knudsen had the best engineer in the business, Frank Crowe, who would go on to design not only Hoover but Shasta Dam, as well.

  As for Henry Kaiser, he understood the political players and forces involved in a big government contract, so it was not surprising that once the Interior Department accepted the Six Companies’ bid, the others immediately chose Kaiser as their point man in dealing with Washington, DC.

  It was an inspired decision. Not only would the Six Companies end up having to combat all the forces of nature in order to build their dam, they also had to fight the leading lights of the New Deal.

  The Six Companies won their bid on March 4, 1931, and immediately set
out to survey the site in person. They found a barren wilderness on the edge of the desert, where daytime temperatures soared to 120 degrees in summer, which lasted from May to late September, and plunged to 20 degrees in winter. Laborers would spend nearly a year living in tents and fighting heatstroke, dust storms, falling rocks (so much a problem that the Six Companies ordered thousands of steel helmets for safety, making Hoover Dam the nation’s first big “hard hat” construction job), poisonous snakes and Gila monsters, and a constant lack of clean water, until Kaiser and his colleagues managed to build a permanent site to house their workers (which became Boulder City).

  When work was done, they squandered their hard-won paychecks in the flyblown bars, brothels, and gambling dens that soon sprang up in nearby Las Vegas.† Radical union organizers from the International Workers of the World, or IWW, turned up to agitate and generate strikes. The worst broke out in the high-summer heat of August 1931, leading to violent clashes with Kaiser-Bechtel security men.

  The men who worked seven days a week, ten hours a day on Hoover Dam, however, proved union-resistant. The Great Depression was in full tide, with national income nearly half what it was in 1929 and unemployment at 24 percent. Although ninety-six men would die in accidents and cave-ins, the thousands who worked on the dam were grateful for a job at a competitive wage when tens of thousands of others were on relief. Later one of them expressed their feelings in a poem:

  Abe Lincoln freed the Negroes,

  And old Nero he burned Rome,

  But the Big Six helped depression

  When they gave the stiff a home.34

  Kaiser missed most of the physical drama of Hoover Dam, although one of the times he went out in the full blast of summer, Dad Bechtel caught him in his arms when he keeled over from heatstroke. Instead, Henry spent much of those three years in Washington, venturing out from his suite at the Shoreham Hotel to flatter and ease tensions with the man overseeing the entire Boulder Dam operation, Secretary of the Interior Harold Ickes—“the Old Curmudgeon,” as he was known.