Sloan knew he had received another gift. This was Knudsen himself, the quiet gentle giant who had spawned one manufacturing revolution and replaced it with another. Sloan had gotten him cheap for six thousand dollars a year, arguably the best bargain since the original sale of Manhattan Island.
On May 3, 1937, Sloan became chairman of GM and made Bill Knudsen his successor as president. The ceremony described by The Detroit News was simple and understated. Knudsen and Sloan shook hands in the directors’ room as the cameras flashed. In the background was the president’s leather-bound chair, high backed, specially upholstered, austere, and commanding. Then Knudsen sat down—in a regular chair at the foot of the table.64
Centralization equals regimentation. Decentralization equals free enterprise. By 1937 the Sloan-Knudsen formula had saved GM. In three years it would have to save the world.
* * *
* On June 28, 1904, sailing again from Copenhagen, the Norge struck rocks off the coast of Scotland and sank, killing 635 passengers.
† Success did not come easy. The Model T was Ford’s ninth attempt at producing a profitable automobile, after Models A, B, C, F, N, R, S, and K all proved relative failures.
‡ Knudsen introduced them to the Ford assembly line, getting the idea from the overhead trolley system used in meatpacking plants—hence the myth that Ford’s assembly line was inspired by observing slaughterhouses.
The Six Companies partners at Hoover Dam, 1935. Henry Kaiser is third from left. Steve Bechtel stands on the extreme left; Harry Morrison is third from right.
I’ve been dreaming about what lies ahead for us.
—Henry Kaiser, 1930
BEFORE AMERICANS COULD buy cars, they had to have roads to drive them on. That was where Henry Kaiser came into the picture.
“Picture” is the appropriate word in talking about Henry Kaiser. Born deep in upstate New York in 1882, he grew up with the dream of becoming the Thomas Edison of photography. The image of Edison for most Americans is the one left over from newsreels in the twenties: the white-haired deaf old man who invented the electric lightbulb and the phonograph.
For American boys of an earlier generation, however, there was a different and more daring Edison. This was Edison the lonely child his parents and neighbors had treated as a hopeless dummy. He was the misunderstood boy genius who had risen up, Horatio Alger–like, from his small-town background to create a thousand and one miraculous inventions with nothing more than his own talent, a pencil, and a few bent wires—and grew up to humble every adult who had once dismissed him as a dull problem child.
If being a problem child was proof of genius, Henry Kaiser filled the formula to overflowing.
He was the youngest child of a German immigrant shoemaker, a hardworking precise man who appreciated the virtues of the quiet, orderly life he had made for himself in the village of Whitesboro, New York. Franz Kaiser’s exuberant little boy embodied the opposite. When he was hardly more than a toddler, Henry would spend the day hiding under the house and then, when his parents’ fears about their missing boy had reached near panic, burst through the front door with whoops of laughter.1
At school he was worse. Henry was geared to drive his teachers crazy: restless, hilarious, relentlessly curious, always looking for ways to evade or bend the rules. Today he would be a candidate for Ritalin. Back then thirteen-year-old Henry Kaiser took destiny into his own hands. Many years later, when he was the most widely recognized industrialist in the world and stories circulated about his family being too poor to keep him in school, Kaiser was abruptly frank about what happened. “I thought I was ready to lick the world single-handed,” he told an interviewer in 1946, “so I dropped out.”2
His family wanted him to have an education. Henry Kaiser decided he wanted to make money. He borrowed five dollars from his sister Lizzie and lit out for nearby Utica, where he tramped the streets for three weeks trying to find work, to no avail. When he came back hungry and dirty, Lizzie found him a job as cash boy in the D. R. Wells Dry Goods store.3 To everyone’s surprise the unbridled schoolboy turned out to be a hardworking, reliable employee, and at sixteen Henry volunteered to be Wells’s traveling salesman. It was on one of his traveling ventures that Henry Kaiser saw an advertisement from a photography studio looking for an assistant.
He had been fascinated by cameras ever since his parents had given him a pocket Kodak, the very first of George Eastman’s low-priced products—the photographic equivalent of the Model T. Soon Henry was dividing his time between his job with Wells and developing photos for a couple of Utica studios, and the Kaiser family saw less and less of their precocious son. When his beloved mother died in 1899, he became still more distant.4 When he heard that a photographer in Lake Placid named Brownell was looking for someone to take on a share of his studio, Henry Kaiser headed north. In Stephen Brownell he found his first of many business partners, for whom he would make almost as much money as he did for himself. He was all of seventeen.
At the end of a year, Kaiser had done so well he was able to buy out his former boss and refurbish his studio, hanging out a sign that read: “Henry J. Kaiser: the Man with the Smile.”5 When the tourists went south for the winter, Kaiser and his winning grin followed them to Florida, selling tourists rolls of film and then offering to develop their snapshots. At one point he sold a chunk of his Lake Placid studio and used the five thousand dollars to try to establish his own chain of retail camera stores. He spent long, tedious days dashing between one Florida town and another, then snatching sleep on the train, stretched out on the sticky rattan seats while smoke from the engine wafted in through the open windows. “I haven’t liked railroads since,” Kaiser later said.6
The chain never worked. Kaiser became a tour guide at Daytona Beach to make ends meet before heading back to Lake Placid for the last time. At age twenty-three the talented young Mr. Kaiser was a business failure with a dwindling stake in a seasonal photography studio. But he was as charming and popular as ever, and had fallen in love.
Nineteen-year-old Bess Fosburgh was the product of a Boston finishing school and daughter of a wealthy Virginia lumberman. Mr. Fosburgh was wary when the brash young man with little education and fewer prospects asked for his daughter’s hand in marriage, but he agreed on three conditions. The first was that Henry Kaiser provide his daughter with a home; the second, that he save $1,000; and the third, that he prove he was earning a minimum of $125 a month.7
The astonished Kaiser wanted to know how he was going to do that.
By going out west, Mr. Fosburgh replied. Kaiser was wasting his talents in upstate New York. The Pacific Northwest, he urged, was where a young man could still make his fortune. It was just a matter of figuring out how. Fosburgh offered him the price of a train ticket. Whatever suspicions he may have felt that Fosburgh was simply trying to get rid of him, Henry Kaiser took it.
It was the end of July 1906. Standard Oil was just coming under fire as an illegal monopoly. Congress had passed the Pure Food and Drug Act, and not that far away from Kaiser in Buffalo, Bill Knudsen was setting up America’s first acetylene welding plant.8 Henry Kaiser sold what was left of his photography business and boarded a train headed for the West Coast. Bess returned to West Newton, Massachusetts, to await the fortunes of her fiancé.
As the train rolled along from the hills of Pennsylvania and Ohio across the prairies and Great Plains and up through the snowcapped Rockies, Henry Kaiser must have felt like his previous life was slipping away, as well. At twenty-four he was as much a foreign immigrant as William Knudsen had been when he stood on the deck of the SS Norge. Except that instead of stepping into the industrializing Northeast as Knudsen had, with its landscape of smokestacks and mills and machine shops, Kaiser was about to enter the still-trackless wilderness of the American West.
Spokane in those days was a rollicking boom town that had tripled its population in less than a decade to 100,000 people. Silver miners, lumberjacks, apple and wheat farmers, prostitutes, and
gamblers mingled and quarreled in the streets—along with every kind of businessman and real estate speculator in between. Yet there was also something about Spokane that would inspire resident Mrs. John Bruce Dodd to launch the movement that would create Father’s Day: a yearning for permanence and a hope for improvement, a sense that out of these rough streets a better, more settled life was coming.9
Kaiser knew as many people in Spokane as he knew on the face of the moon. His prospective father-in-law knew several owners of sawmills nearby, but had refused to lift a pen to help. Instead, Henry Kaiser spent fruitless weeks prowling the streets talking to some one hundred local businesses about a job, any job, only to have every door slam shut behind him.
Then one day as he stood on the street corner feeling desperate and desolate, he decided to change his tactics. “I decided to pick one fellow I most wanted to work for,” he remembered many years later, “and concentrate on him.”10
The man he chose was James C. McGowan, owner of McGowan Brothers Hardware in the heart of downtown Spokane. McGowan must have wondered what he had done to be so lucky as Henry Kaiser pestered him again and again about work, and each time McGowan said no. A fire had swept through McGowan Brothers, and thousands of dollars of hardware had been ruined. As McGowan bleakly surveyed his insurance documents and wondered what it would cost to get back in business, Kaiser again appeared at his elbow, with that look on his face. Now McGowan was really annoyed. “Don’t you see I’m almost ruined?” he shouted at the young man with the big smile. “How am I going to hire anyone new?”
“Let me see if I can salvage something from the mess,” Kaiser assured him. So McGowan did, and Henry hired a couple dozen local women to clean and polish the fire-damaged goods until they seemed almost new, then sold them. McGowan was impressed enough to hire him as a clerk at seven dollars a week—although, as McGowan remembered later, “he speedily showed at that time that he was not a $7 a week man.”11
Kaiser was at the store every day before opening, and stayed long past closing. Soon the older, more experienced clerks were asking him the location and prices of goods, and when Kaiser proposed becoming McGowan’s outside salesman, the owner was happy to agree. Kaiser turned the warehouse full of rakes, shovels, hammers, screwdrivers, hoses, saws, and barrels of nails and screws into a fountainhead of wealth. He secured major wholesale deals with construction businesses across the Spokane region, including companies in western Montana and southern Idaho. Working twelve- to fifteen-hour days on and off the road began to pay off. He purchased a house on 418 Fourth Avenue, and with a bank account of $1,000 and a salary as McGowan Brothers city sales manager far in excess of what Bess Fosburgh’s father had demanded, Henry Kaiser triumphantly took a train back to New York to claim his bride.12
It had taken him just ten months to transform his fortunes in Spokane. A year later he and Bess purchased three lots to build an even larger house, with spectacular views of downtown and the Spokane River, at 1115 South Grand Avenue. Henry Kaiser was earning $250 a month—almost $30,000 in today’s money—and on the eve of the birth of his first child, Edgar Fosburgh Kaiser, he bought himself a Model T, which he proudly drove around the freshly paved streets of Spokane—little imagining that one day he would be laying down hundreds of miles of roads just like them all across the West.
One day in 1910, a McGowan wholesale customer, Hawkeye Fuel Company, complained that a shaker screen they’d bought for sorting pieces of Sheetrock into different sizes was not working properly. James McGowan loaned them his star salesman to get the screens operating. Henry Kaiser never came back. Instead, he became the star salesman for Hawkeye, whose biggest client, a paving and road contractor, then hired him away at nearly eight thousand dollars a year—more than double what McGowan had been paying him.
Then Kaiser’s string ran out. In 1913 he got into a fight with his new employers—he would later claim that they asked him to doctor his sales records, which he refused to do—and a few weeks later he was fired.13 Henry Kaiser insisted on staying on to finish out four months’ worth of unfinished contracts for which he received no pay, but as Christmas came he faced financial ruin. He had a house to pay for, a five-year-old child to feed, very short savings, and no prospects—and just days before Christmas, Bess entered the hospital after giving birth to a stillborn daughter.
To Kaiser the only option was obvious: start his own business. Never again would he submit himself to the vicissitudes of working for someone else. Instead, he started his own company in the field that was becoming wildly popular with other would-be entrepreneurs in the West. He would build highways for motorcars.
The decision was not as strange as it might sound. His last employer had done road construction, and Henry Kaiser with his quick mind had mastered the essentials. As more and more Americans were buying Model T’s and Packards and cars from Billy Durant’s General Motors, the demand for roads safe enough to drive was becoming overwhelming, even out West.14 Municipalities like Spokane and Seattle and Vancouver were desperate for contractors who could give them suitable highways at the lowest cost.
Kaiser also knew road contracting demanded very little capital outlay—one reason it was so popular—and lots of cheap labor. A few dozen workers, some shovels and wheelbarrows and a couple of horse-drawn scrapers, and a man could find himself in business as a contractor. But competition was fierce and the profits meager. “Contractors are all alike,” Kaiser used to say, remembering his early days. “They start out broke, with a wheelbarrow and a piece of hose. Then, suddenly, they find themselves in the money. Everything’s fine. Ten years later they are back where they started—with one wheelbarrow, a piece of hose, and broke.”15 Henry J. Kaiser was determined that this would never happen to him.
Still, he would need some money to get started. He had one key contact from his earlier job, a Canadian one as it happened. Sir William McKenzie was a Vancouver banker and a director of the Canadian Bank of Commerce, and Sir William had let Kaiser know he had been impressed by Kaiser’s willingness to complete his outstanding contracts without pay. Kaiser took the train up to Vancouver and explained to the banker that the city was looking for a contractor to pave Victoria Avenue. Kaiser had already submitted a bid, and won by being the lowest. McKenzie nodded his approval.
Now, Kaiser said, all he needed was $25,000 to pay the 10 percent performance bond (standard in all government road contracts) and to hire the equipment and men he needed to do the work.
The banker was stunned. “You mean to sit there and inform me, young man, you want me to loan you $25,000 and you don’t even have a company?”
Kaiser said yes, that was about the size of it.
“All you have is a contract,” McKenzie went on, “and an idea you think might work … and you want me, on that sort of basis, to loan you this sum of money?”
Kaiser looked him in the eye and said, “Yes, sir, that’s what I’m here for.”
McKenzie sat for a moment, grabbed a pad, then wrote out a brief note. “Go down and hand this to the head cashier,” was all McKenzie said as he passed it to Kaiser. For a wild moment, Kaiser thought it might be an order to throw the bum out. Instead, it was an authorization for a $25,000 loan—the most important loan Kaiser ever got, he later said. He was now in the road construction business.16
Vancouver fell in love with him. Soon he had paved not only Victoria Avenue but other streets and roads. He would take local politicians on tours of earlier jobs in order to persuade them to give him the next one—even when he was not the lowest bidder.
Then Kaiser began chasing the biggest road builder in British Columbia, Warren Brothers of Massachusetts, who had pioneered all-weather bitulithic road paving at the turn of the century—the ancestor of today’s asphalt highways. When Kaiser and Robert Warren weren’t competing, they were partnering on some of the biggest jobs thrown their way, a strategy Kaiser would use with great skill when he brought his company back to the United States.
Because fate suddenly
intervened. The same year the thirty-two-year-old Kaiser set up his construction company, World War I broke out. Thousands of Canadians donned khaki uniforms and sailed for the battlefields of Europe. Suddenly the name “Kaiser” was no longer a business draw, but a positive liability. Reluctantly Henry shifted his business back across the border to his home state of Washington, where virgin tracts of forest and marshland were waiting for someone to punch a road through and open them up to civilization.
There was also another reason for getting back to the States. In 1916 the U.S. Congress passed a landmark highway bill, starting the spread of a national highway system.* Now money would be available in record amounts—not just at the federal but at the state and local levels, to provide thoroughfares for cars and trucks. America was about to become an enormous grid of asphalt and gravel, and Kaiser was poised to lead the way.
Between 1916 and 1921, Kaiser Paving laid some eighty miles of highway roads in Washington State, and almost the same in Oregon. He would go on to build inland canals and tunnels, set up gravel and sand facilities, and transform the face of Washington State and the Pacific Northwest. One job involved cutting no less than one hundred miles of canals across a 44,000-acre tract in northern Oregon, which became the Paradise Irrigation Project.17
Photos of Henry Kaiser in those years come from places like Snohomish, Washington, and are usually taken in front of rakes, scrapers, and other machinery, with members of his crew, some in slouch hats and others in bowlers. The famous smile is still there but the chin underneath it is harder, more set and determined. They are portraits of a man who now knows what he wants to do, and how to do it. A man on the move and on the rise, with plans and visions as yet still unfolding.
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.
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