Giant of the West: Henry J.

Kaiser and Regional Industrialization, 1930-1950

Author(s): Mark S. Foster
Source: The Business History Review , Spring, 1985, Vol. 59, No. 1 (Spring, 1985), pp. 1-
23
Published by: The President and Fellows of Harvard College

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Giant of the West: Henry J. Kaiser and
Regional Industrialization, 1930-1950
MARK S. FOSTER

? 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 re-
gion. Though Foster does not slight the economic and political factors
that made possible Kaiser's achievement he stresses that Kaiser's imag-
ination, energy, and personal commitment were key elements in the
maturation of the region's industrial economy.

In the context of milleniums of history of civilized mankind,

industrialization of the American West might appear dwarfed by e
of greater moment, but it was one of the central forces shapin
nation's culture and economy in the mid-twentieth century. A
ago Gerald Nash, who has contributed several seminal works on
history of the American West, stated that "more than any other i
vidual person, industrialist Henry J. Kaiser was responsible fo
wartime industrial boom in the West."' If anything, Nash's claim
be too modest. The West's twentieth century industrial emer
could never have occurred without the contributions of a host of i
viduals who helped set the stage: railroad men such as James J
bankers like Amadeo P. Giannini; and countless dedicated eng
who diverted water, provided cheap power, and reclaimed milli
acres of previously exploited or hitherto useless land. Dozens of
entrepreneurs in the twentieth-century West built enormousl
cessful industries in one or two fields: agribusiness; mining; o
natural gas; aircraft and aerospace; computers; entertainment
others.
By the early twentieth century, then, the West was ripe for ind

MARK S. FOSTER is professor of history at the University of Colorado, Denver. He would like to
Paul Barrett, John G. Clark, Rickey L. Hendricks, David L. Lewis, Gerald D. Nash, Mark H. R
William H. Wilson. Support for this article was provided by the Herbert C. Hoover Presidential L
the Harry S. Truman Presidential Library, the University of Colorado, and the Kaiser Family Fou

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

Business History Review 59 (spring 1985). ?1985 by The President and Fellows of Harvard

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2 BUSINESS HISTORY REVIEW

trialization. Clearly, if Kaiser had not stepped in to play a lead

in this development, others would have. Cynics could argu
simply perceived opportunities and exploited them. Still,
butions were unique. Kaiser's career in the West spanned s
cades, from 1906 until his death in 1967. After nearly three d
hardware and general construction he turned to industry.
early years in the West, Kaiser's contributions paralleled t
nineteenth-century predecessors in emphasizing developm
region's infrastructure. He and his partners helped set th
western industrial growth by constructing thousands of mile
hundreds of bridges and tunnels, and by building many of
dams authorized by the federal government during the D
From 1939 on, Kaiser entered an ever-widening circle of i
His major endeavors included cement, magnesium, shi
steel, aluminum, mining, home-building, aerospace and el
missiles, and nuclear power plants. Kaiser's contributions
development reached beyond the Golden Gate Bridge; whe
tired" to Hawaii in 1954, he promoted tourism, built hotel
subdivisions, and entered radio and TV. Despite these achi
Kaiser hoped to be remembered for his contributions to h
At his death in 1967, he had clearly earned his reputation as o
giants in the development of the West.

KAISER S EARLY YEARS

In 1906 an energetic twenty-four-year-old, Henry J. Kaise

a train in the East bound for the Pacific Northwest. In later
he became world famous, he never really explained why
East. The son of a struggling cobbler in Utica, New York
already achieved modest success and owned photograph
Lake Placid, New York, and Daytona Beach, Florida. The
achieving his maximum potential by becoming a pioneer
in a region which until very recently had been a frontie
crossed his mind during his long journey. However, Kaise
mission was to demonstrate his ability to earn a good living
as possible. Until he did so, he would not be permitted
prospective father-in-law to marry his beloved, Bessie Fo
senior Fosburgh, a lumber man, evidently did not feel that
phy was a substantial enough business for any truly enterpr
man. As his train crossed the fields of Montana bound for his final
destination, Spokane, the youth probably thought of little but finding
steady work.

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 HENRY KAISER 3

Kaiser quickly achieved his initial objective. He establish

as an aggressive salesman for McGowan's Hardware, establ
idence, and returned to Boston long enough to claim his b
theless, Kaiser's first two decades in the West offered little p
the ultimate impact he would make on the region. After gain
able experience in hardwa"e and an introduction to cont
salesman for Hawkeye Sand and Gravel Company in Spok
formed his own paving company in Vancouver, British Colum
the help of a crucial $25,000 loan from a local banker in 1914
road building on a very small scale and promptly gained a
for performing quality work ahead of schedule. He was awar
contracts and eventually centered his operations in Califor
he located corporate offices in Oakland. By the late 1920s
firmly established as a West Coast contractor, having perfor
less jobs in paving, tunnel excavation, and bridge-building fo
state governing agencies. He was virtually unknown out
region.2
However, a major decision maker from the East, who knew Kaiser,
presented a golden opportunity. George Warren was former president
of Warren Brothers Company of Boston, one of the largest construction
operations in the nation. He had established business ties with young
Kaiser in 1912, and Kaiser had always performed jobs subcontracted
to him by Warren Brothers in a highly satisfactory manner. Late in
1926 Warren Brothers won a huge contract from the Cuban govern-
ment to pave the Central Highway. The total contract amounted to $75
million, and Warren Brothers offered Kaiser a $19 million subcontract
to improve 200 miles of highway.3
Kaiser leaped at the opportunity, and once again his work impressed
growing numbers of influential construction men. This was fortunate,
since by the time he finished his work in Cuba, the Depression had
begun. Despite the fact that private contracts were drying up, by 1931
Kaiser possessed both the reputation and confidence to join a group of
major western contractors who were bidding on the Hoover Dam proj-
ect. On 11 March 1931, the consortium, known as the Six Companies,
won the largest labor contract ever awarded by the federal government

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 ma-
terial 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 J. L. Allhands, "Warren Brothers Company," America's Builders 2, no. 7 (1954): 6.

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4 BUSINESS HISTORY REVIEW

up to that time with its bid of $48.9 million.4 Kaiser's work ea

the admiration of more experienced members of the Six C
Significantly, they elected Kaiser chairman of the executive co
and gave him the responsibility for maintaining smooth re
tween the consortium and responsible bureaucrats in Washi

KAISER AND BIG GOVERNMENT

The Washington assignment was of critical importance in de

ing the ultimate direction of Kaiser's career. From the day
the train in the nation's capital as official representative of th
panies in 1931, Kaiser assiduously cultivated cordial relation
important government decision makers. Even before Fran
velt was inaugurated in March 1933, Kaiser was recognized
nessman who knew the bureaucratic ropes in Washington.6 He
an able, articulate spokesman for his partners' interests in
sional hearings considering their performance under the H
contract. As further evidence of Kaiser's emerging sophis
dealing with government officials at all levels, it was he who
his reluctant partners to spend $25,000 to build a sumptuo
cottage" at the barren Hoover Dam site; prominent visiting di
could thus be properly entertained.7
New Dealers also marked Kaiser as a man of his word who
things done quickly. He hired Thomas C. Corcoran as one of h
neys, and he promptly courted such influential decision make
terior Secretary Harold L. Ickes and, later, Reconstructio
Corporation (RFC) chief Jesse Jones. Kaiser's relationship
was not always smooth. At one point, the self-styled cur
planned to fine the Six Companies nearly $1 million for se
sand alleged violations of overtime work regulations on th
ment contract at Hoover Dam. And Ickes grumbled to Neva
Key Pittman about Kaiser's hysterical "telegraphic bomb
when confronted with the possibility of additional investigat
activities at Hoover Dam. However, by performing jobs efficie

4 Leland W. Cutler, America is Good to a Country Boy (Stanford, 1954): 153. This bid w
$5 million lower than the nearest competitor's.
5 Kaiser to Warren Brothers Company, 2 July 1931, Kaiser papers, carton 2. There is a
of the Hoover Dam project in Peter Wiley and Robert Gottlieb, Empires in the Sun: T
American West (New York, 1982): chap. 1.
6 Arthur S. Bent to Henry,M. Robinson, 2 Sept. 1932, Ray L. Wilbur papers, box 1
Hoover Library, West Branch,' la.
7 See House Hearings 630 (1932): 18, 20, 60, 213; for account of visitors cottage, see S
Marriner S. Eccles: Private Enterprise and Public Servant (Stanford, 1976): 76-77.

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 HENRY KAISER 5

honestly, and by keeping Ickes constantly informed, Kaiser e

earned the secretary's hard-won respect; liberal doses of pers
tery from Kaiser also enhanced their personal relationship. J
helped shepherd Kaiser's effort to build a steel mill in sou
fornia through hostile bureaucratic warrens. Without th
RFC official's blessing, Kaiser's application would hav
chance. Romance even played a role in cementing Kaiser
with key New Dealers. Henry Kaiser's older son, Edga
Mead, a daughter of Bureau of Reclamation head Elwood M
ties soon connected the Kaisers to a prominent New Deale
During World War II, Kaiser continued his effective wor
tionships with other federal officials. In fact, both the War
Board (WPB) and Navy realized that they needed Kaiser
he needed them. Donald M. Nelson, head of the WPB, fo
to be one of the most cooperative members of the business c
Admirals Howard L. Vickery and Emory S. Land, key fig
U.S. Maritime Commission, often pointed to Kaiser's reco
ducing cargo vessels in his West Coast yards as a spur to
builders. President Roosevelt thought so highly of Kaiser
eted contributions to the war effort that he seriously con
industrialist as his vice presidential running mate in 1944
Despite Kaiser's best efforts, negotiations with government
did not always gain immediate objectives. According t

8 See, for example, House Hearings, 630: 18, 20, 60; Ickes, The Autobiography of
(New York, 1948); Ickes to Pittman, 15 March 1935, Department of Interior papers, RG 4
File, 1906-37, box 1583, National Archives. Kaiser managed to bargain the fine downward
to a more manageable $150,000. Kaiser skillfully publicized the Six Companies job per
ver Dam in a lengthy pamphlet which he cleared with Ickes in advance of its officia
Hoover Was Built (Six Companies, 1935); cover letter, Kaiser to Ickes, 26 March 193
Kaiser, 23 March 1936; both in Department of Interior papers, Central Office File, 19
For data on Kaiser's drawn-out negotiations to gain permission to build the steel plan
Philip F. Cashier, "National Resource Management During the Second World War," (P
Binghamton, 1980); Kaiser to W. A. Hauck, 14 April 1941; Kaiser to Franklin Rooseve
both in Kaiser papers, carton 14; Kaiser to Ben Fairless, 30 June 1941, Roosevelt pa
Franklin D. Roosevelt Library, Hyde Park, N.Y.; Kaiser to Hauck, 24 Dec. 1941, War P
papers, RG 179, container 1134, National Archives. For data on Kaiser's dealings with the
Jones, see RFC Minutes, 1 Feb.-14 March 1942, vols. 121, 122; Chad Calhoun to Kaiser
1944, interoffice memo, Kaiser papers, carton 25; and "Kaiser File," in Hugh R. Fulto
Harry S. Truman Library, Independence, Mo.
9 See Frederick C. Lane, Ships for Victory: A History of Shipbuilding Under the
Commission in World War II (Baltimore, 1951): 50-53; Robert H. Connery, The Navy
Mobilization in World War II (Princeton, N.J., 1951): 327. For relations between Kai
Vickery, and Land, see Manly Fleischman to Nelson, 19 April 1943; and Land to Nels
Ixbth in WPB papers, box 1144; Vickery to Kaiser, 1 May 1941, Kaiser papers, carton 30;
Bedford, undated; and Vickery to Kaiser, 16 April 1943, both in Kaiser papers, carton
Vickery, 8 Aug. 1945, Kaiser papers, carton 30. For data on the Roosevelt-Kaiser vice
ination courtship, see James M. Burns, Roosevelt: The Soldier of Freedom (New York, 19
interview with E. E. Trefethen, Jr., 22 Sept. 1983; the following oral history interviews
Truman Library: Samuel I. Rosenman interview 51, pp. 19-22; Oscar Ewing interview
G. Nixon interview 265, p. 62; undoubtedly the most thorough analysis of the nomin
Rosenman, "Memo for the President," 30 June 1944, attached to FBI Report with sam
papers, PSF 155.

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6 BUSINESS HISTORY REVIEW

sources, Kaiser's initial commitment to industry evolved out

to win a particularly desirable government contract. In 19
reau of Reclamation asked for bids on the construction of Sh
near Redding, California. For once, the Six Companies may
overconfident. Flushed with success from the Hoover, Bon
Grand Coulee dam projects, Kaiser and his partners submi
million bid for the Shasta job. The consortium lost out b
$236,000. Kaiser was shocked, and he and his engineers s
attempting to persuade bureau officials that theirs was, i
lowest bid.'o When these efforts proved fruitless, Kaiser d
to salvage something for their trouble. To the surprise of all
and even some of his partners in Six Companies, Kaiser su
bid to supply the cement for the Shasta project, in the amoun
million. There were two major reasons for surprise. First,
not have a cement plant." Second, his price of $1.19 per
dercut the competing West Coast cement combine's bid by 22
Although Kaiser had little more than engineers' blueprints, b
ficials decided to gamble that he could meet their terms.'2
enterprise, named Permanente Cement, was awarded the c
10 June 1939. Construction of the plant commenced immedia
the first bag of cement was presented to Kaiser on Chri
1939.113

EARLY VISIONS OF AN INDUSTRIAL EMPIRE

The national media, and even his own publicity depa

identified the Permanente Cement plant as Kaiser's ini
veloping a West Coast industrial empire. While this is tec
rect, the roots of his decision to enter industry were
erably earlier. In the late 1920s Kaiser had laid thousa
pipeline in the Southwest for petroleum and gas, and dur
he had helped build the huge federal dams. He could
failed to note that completion of these projects created id
for major industrial expansion. Irrigation and water diver

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

I It would, of course, be ridiculous to portray Kaiser as inexperienced in the
had used the material for twenty-five years in his roadbuilding, and his sand an
California had provided several millions of tons of materials for his own and others'
(see "Permanente Prospectus: History of Permanente Cement Company," mimeo
in Kaiser papers, carton 305).
12 The risk was less dramatic than might appear to be the case. Kaiser already ha
limestone deposits and had formed a corporation before submitting his bid.
13 Typically, Kaiser commenced commercial delivery of cement on 31 January 1
ahead of schedule. For a good account of the development of Kaiser's cement op
Taylor, "Builder No. 1," Saturday Evening Post, 17 June 1941, 9-11, 120-24.

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 HENRY KAISER 7

by the dams enhanced farm production and potential for expansi

urban areas. Pipelines and dams provided ample amounts of
power, with all its obvious capacity to promote growth in the re
There is some evidence that Kaiser seriously considered his
industrial ventures when building Hoover Dam. As a major contra
Kaiser had long been frustrated by what he perceived as out
prices charged for cement by a combine of West Coast produ
Kaiser's view, their virtual monopoly over production retarde
trial expansion in the region. In early 1933, he threatened to ent
industry himself if the combine did not expand production an
prices.14 In the mid-1930s, Kaiser and James Twohy presente
plication before appropriate government agencies for permiss
funding to build a $20 million railroad line between Grants P
egon, and Crescent City, California.55 New Dealers were inter
helping a prostrate region but, as historian Richard Lowitt h
onstrated, they focused their attention on reclamation and co
tion efforts.'6 Thus, neither Kaiser venture materialized, but his
foray into West Coast industry was simply a matter of time.
Kaiser naturally pursued profit, but his emerging vision of
to industrialize the West was by no means capricious or pure
serving. California's economy had not escaped the ravages o
Depression, and two of Kaiser's publicly stated motives beh
railroad proposal were to open up the thinly populated area f
oneering settlement" and to help create jobs. Even earlier, t
Companies had become a major employer in the region. The p
all sensed the desperation of the men seeking work at Hoove
Kaiser, for one, expressed enormous satisfaction at being able to
men feel useful, in addition to meeting their survival needs.'
sands of additional jobs were created by their work on the O
San Francisco Bridge, and numerous tunnel, port, and termin
ities projects all along the coast. Nevertheless, Kaiser and his p
had to scratch and claw like everybody else. Construction w
tremely competitive, and the consortium lost many more co
than it won.
The economic dark clouds showed clear signs of lifting by the
the decade, a time when Kaiser's career was at a crossroads.

14 Kaiser to Henry Cowell Lime and Cement Co., et. al., 17 Feb. 1933, Kaiser Papers, ca
"' Grants Pass (Ore.) Daily Courier, 30 Sept. 1936; Portland Oregonian, 22 Nov. 1936; "T
Movers II," Fortune 28 (Sept. 1943): 119-22; 216-26.
16 Richard Lowitt, The New Deal and the West (Bloomington, Ind., 1984).
'7 Grants Pass (Ore.) Daily Courier, 30 Sept. 1936; "The Earth Movers II," 219; House
630: 18-22, 59-60; Kaiser to Felix Kahn, 3 Aug. 1932, Department of Interior Papers, Cen
File, 1906-37, box 1583.

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8 BUSINESS HISTORY REVIEW

nearly sixty, and most of his dam projects were finished o

completion. Despite the hard times which had meant severe belt
ening for most Americans, Kaiser had become a millionaire
dinary man might simply have chosen retirement, but Kaise
was just beginning.
The casual observer might have considered Kaiser a very p
for any type of stressful activity. Standing five-feet, ten-i
packed between 240 and 260 pounds onto a portly frame. Alt
drank sparingly, he smoked numerous cigars daily and did n
cise. Doctors constantly urged him to curb his formidable appet
his even more incredible work schedule. However, Kaiser w
sumed with a passion for work. Close business associates reca
could work eighteen- and twenty-hour days for weeks at a stre
emerge from the ordeal eager for more challenges. Creative
wrought by business pressures re-energized Kaiser; he was b
contemporaries who looked forward to retirement. To him, losi
will to work was the equivalent of death.'9 Hence, as the 1940s o
he eagerly sought new opportunities.

WARTIME BOOSTS FOR KAISER AND THE WEST

Kaiser did not have far to look. The British, under sieg
bombardment from Hermann Goering's Luftwaffe and cr
marine warfare on the Atlantic, were desperate for carg
any available source. Kaiser had actually entered the sh
business in a small way even before the opportunity to supp
needs arrived.2" With thousands of construction men wrapp
Grand Coulee Dam project, Kaiser and several of his par
eagerly seeking new jobs. Several months before they s
contract with the British, they became half owners of the
coma Shipbuilding Corporation. This partnership won a cont
the United States Maritime Commission to build five car
Thus, when the British offered a $48 million contract to b

18 He became a millionaire as early as 1936 when a personal financial statement listed

at $2.2 million. See Henry J. Kaiser, "Personal Balance Sheet, December 30, 193
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 un-
scientific 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.

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 HENRY KAISER 9

freighters, Kaiser and his allies were ready. They in turn f

partnership with Todd Shipbuilding Corporation.21 It was a
of convenience. Kaiser and the Six Companies had availa
power; Todd possessed proven expertise.
By 1941, when the federal government finally geared up i
for war, Kaiser had learned what he needed from Todd pers
was ready to launch ships himself. 22Without question, his feat
building made Kaiser a national hero virtually overnight.
1940 and V-J Day in 1945, Kaiser-controlled shipyards in the P
Vancouver area, and Richmond and San Pedro, California, t
1,490 vessels. Most were unglamorous cargo ships, but the f
cluded fifty "baby flat-top" aircraft carriers and forty-five LS
craft. 23
World War II marked the "breakout" stage for Kaiser's industrial
empire. The war unquestionably created opportunities he otherwise
would not have enjoyed; but he clearly maximized their potential. In
addition, Kaiser actively encouraged new demographic trends which
profoundly changed the American West at midcentury. In order to at-
tract over 250,000 workers to his three major shipyards on the West
Coast, Kaiser sent labor recruiters throughout the nation and char-
tered special trains to bring them west. He intuitively grasped that the
"temporary" wartime population boom in the West portended far more
phenomenal growth rates in the Sunbelt after the war. Kaiser's war-
time housing projects in Portland and Richmond drew complaints
which might be expected for temporary facilities. However, by build-
ing several hospitals and day-care centers, and by offering prepaid
health insurance, Kaiser demonstrated more than the usual commit-
ment to the communities he served and to his workers as individuals.24
A key factor in the long-range success of many of his industries was
that Kaiser planned to have industrial jobs and consumer products
ready for the newly arrived millions when peace returned. Kaiser or-
chestrated his campaign to attract federal funding for a variety of new
industries primarily around the patriotic mission of winning the war.
Yet it is equally clear that while lobbying for West Coast steel and
magnesium facilities, Kaiser was thinking of their possible postwar ap-
plications in household appliances, automobiles, personal airplanes,

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.
I 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 by Bob Beck and Ted Van Arsdol, in Vancouver (Wash.) Columbian, 18-31 Oct.
1971.

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10 BUSINESS HISTORY REVIEW

, q

~ab ~k

pp~ i
~~. 6E~y"31

KAISER COURTS PRESIDENT

As one of the nation's largest wartime contractors, Kaiser assiduously cult

iticians. Here, Kaiser (left rear seat) and son Edgar (to Kaiser's immediate
tertain the president at the Portland shipyard in 1943. (Photograph from
Kaiser photo collection, Bancroft Library, University of California, Berke

and a variety of other products. Throughout the war, Kaise

tained a small experimental laboratory in Emeryville, Califo
the so-called hobby-lobby, a handful of scientists and engin
kered with a variety of consumer-oriented products. Some were
own ideas, but many evolved directly from the fertile mind
Boss" himself. 25

KAISER AND THE POSTWAR WEST

Several of the ingredients in Kaiser's grand recipe for a pos

dustrial empire in the West never jelled. In the early mon

5 Several present and former Kaiser Company executives emphasized the high degr
interest Kaiser displayed over the products which H. V. Lindbergh and his small staff expe
Clay Bedford interview by Mimi Stein, 3 May 1982; Oral History Associates, San Franc
terview with E. E. Trefethen, Jr., 22 Sept. 1983; and author interview with Tim A. B
1984.

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 -71Q

wt

NOW~

Op so '

KAISER SHIPYARDS

During World War II, Kaiser's shipyards in Richmond, California produced

assorted cargo vessels. (Photograph from Henry J. Kaiser photo collection
Library, University of California, Berkeley.)

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12 BUSINESS HISTORY REVIEW

war Kaiser made a highly publicized and widely acclaime

enter the aircraft industry and defeat Germany's submarin
proposing to build a fleet of 5,000 cargo planes. All he woun
was a small contract to help Howard Hughes build what beca
as the "Spruce Goose." Kaiser entertained a variety of pr
keeping the shipyards busy in the postwar period. As t
wound down, Kaiser negotiated with businessmen and g
officials in Nationalist China regarding possibilities of joint
passenger or freight lines. He also considered providing
facilities for the Soviets. For a few months after V-J D
crews in Portland and Richmond repaired vessels for t
Commission, but these activities were shut down in 1946.
A few Kaiser initiatives eventually provided more long
nomic sustenance for other regions than for the West. Long
end of the war he became fascinated with future prospec
tomobile industry; his engineers at Emeryville tested jee
weight, front-wheel drive models. By 1943 he talked o
dream of becoming the Henry Ford of the West by produci
man's" car for $400. Kaiser did in fact enter the automo
in July 1945 with his partner, Joe Frazer.27 He seriousl
attempting to base his automotive empire in southern Calif
ever, Kaiser quickly realized that logistical consideration
facet of his dream unrealistic. Virtually all tire manufac
parts producers, and other ancillary industries were situ
troit. Thus, although Kaiser-Frazer eventually set up a sm
plant in southern California, the partners ultimately had
but to join its competitors in the Motor City.
At first glance, it might appear that aluminum provid
foundation of Kaiser's effort to industrialize the West. He w
alone among American businessmen in anticipating the
postwar potential of the light metal in the building and con
industries. He was the only entrepreneur willing to sub
two idle government-owned aluminum plants near Spoka
ton, in 1946. Aluminum soon became Kaiser's most prof
prise, and tens of millions of dollars earned in that venture
to finance initiatives in other fields on the West Coast and elsewhere.
Deeper analysis suggests that at least in terms of financial risk and

26 A splendid account of the story of the "Spruce Goose" is provided by Charles Barton, Howard
Hughes and His Flying Boat (Fallbrook, Calif., 1982). 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 Richard M. Lang-
worth, Kaiser-Frazer: The Last Onslaught on Detroit (Princeton, N.J., 1975).

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 HENRY KAISER 13

?AI

141W: "

TOP MANAGEMENT AT KAISER

In this posed 1946 meeting, Kaiser confers with (seated, left to right) A. B. Or
Charles F. "Chad" Calhoun, George B. "Sherry" Sherwood, Eugene E. Trefe
Jr. (foreground), Tom M. Price; (standing, left to right) Donald A. "Dusty"Rh
Howard V. "Lindy" Lindbergh, and Dr. Paul F. Cadman. (Photograph from
J. Kaiser photo collection, Bancroft Library, University of California, Berkele

long-range commitment to the region, Kaiser's entry into alum

was far less important than his foray into steel. First, governmen
ficials encouraged Kaiser's bid to enter aluminum from the start. A
had operated the two plants near Spokane during the war, bu
plants had been closed. The government hoped to rid itself o
"white elephants" and at the same time create some significant
petition for Alcoa. Hence, federal officials were happy to accep
ser's bargain rate bid. Even more important, the chief focus of Ka
aluminum operations soon centered outside of the West. From the
1940s on, his major expansions in the field occurred in the Eas
South.28 In the 1950s Kaiser Aluminum and Chemicals opened
plants in Chalmette, Louisiana, and Ravenswood, West Virginia.
most of his raw materials (bauxite) cAme from Jamaica, shipping c

28 Robert Sheehan, "Kaiser Aluminum: Henry J's Marvelous Mistake," Fortune 54 (July 19
84, 172-75; "Kaiser Expands Abroad," Business Week, 30 Jan. 1960, 114; and "Metal of the F
Getting There," Business Week, 24 Jan. 1967, 116-23.

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14 BUSINESS HISTORY REVIEW

to reduction plants in Louisiana were considerably lower t

his facilities were all located in the Pacific Northwest.29 In
though Kaiser's aluminum venture originated in the acquisi
cilities located in the far West, it did not represent a fundam
mitment to regional development.

KAISER CHALLENGES EASTERN STEEL

Steel operations in Fontana, California, did represen

mitment; they become the linchpin of Kaiser's western i
pire. This by no means suggests that Kaiser was the f
large steel operations in the region. Eastern steel me
sively expanded into western states possessing adequate ir
limestone deposits; Colorado had boasted major steel facil
years, and Utah soon would. Although southern Californi
others had nevertheless anticipated Kaiser's dream. In
Edward H. Harriman began acquiring the Eagle Moun
deposits, located 140 miles east of Los Angeles; his dea
year terminated the project. However, Harriman's ini
considerable interest among mining engineers and region
who developed elaborate arguments to prove the feasibili
ing steel locally for prices lower than those charged
product. Limited steel production took place in south
prior to World War II, but it was generally limited to re
steel to pig iron, and it was controlled by eastern operat
Eastern steel men scoffed at arguments that more s
produced in the West; but if such development occur
intended to control it.31 Such eastern giants as United St
Bethlehem had no intention of allowing a brash newc
manufacturing experience and limited contacts in private
cles, into their tight-knit fraternity. In 1940 Kaiser
federal government for permission to build a West Coast

29 "Kaiser Jamaica Bauxite Story," Finance, 15 March 1960, 43-46.

`0 For more data on the development of steel in the West, see Clifford M. Z
Production and Related Industries," in California and the Southwest, ed. Clifford M
1956): 298-301; and H. Lee Scamehorn, Pioneer Steelmaker in the West: The Co
Company, 1872-1903 (Boulder, Colo., 1976). For an account of Harriman's early m
ifornia and arguments about the potential for success in regional steel production,
"Los Angeles as an Iron and Steel Center," Mining and Oil Bulletin (Los Angele
For descriptions of limited steel production in the southern California region, see
of Southern California Business for each year between the two World Wars.
31 Both popular writers and scholars have long argued that easterners were invo
almost be described as a conspiracy to keep the West in a state of colonial econo
sampling of these views and analysis of the region's long-term response, see Berna
A Plundered Province"; De Voto, "The Anxious West"; Earl Pomeroy, The Pacif
California, Oregon, Washington, Idaho, Utah, and Nevada, (New York, 1966): 297
ican West; and Wiley and Gottlieb, Empires in the Sun.

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 HENRY KAISER 15

sibly to furnish steel plate for his shipyards. Eastern steel pr

used their influence to fight his application. In the decade betwee
first efforts to induce government officials to support his steel b
1940 and the outbreak of the Korean conflict in 1950, Kaise
almost unceasing hostility from established eastern steel men.
moting his steel facilities, Kaiser waged many of his most str
battles and took some major financial risks. With the possible
tion of his conflict with the American Medical Association (AMA)
the Kaiser Health Plan, no other endeavor consumed more of h
or aroused more intense personal feelings.3"
By late 1940, when Kaiser was beginning to gear up in earn
produce cargo ships, steel was already in short supply. Kaiser
that establishing dependable sources of supply from establishe
ducers would be a chronic problem, approached his Six Comp
partners with a proposal to go into the business themselves. M
them thought he had gone mad; they were construction men, not
ufacturers. Undeterred, Kaiser launched a campaign to co
Washington officials of the basic good sense of his initiative.
typical manner, Kaiser bombarded government officials and polit
with memos, telegrams, and personal visits, trying to get the Def
Plant Corporation (DPC) to approve construction of a steel m
California.33
Big Steel did not stand idly by in response to Kaiser's lamen
that steel was in short supply and his claims that he could supply
of the West's needs. From their own viewpoint, they had good re
to resist expansion. The Depression decade had been particular
ficult. Like all basic industries, steel had experienced severe cu
in demand.:34 In addition, the Nye Committee investigation of lat
had included steel makers among the "merchants of death" wh
ited so handsomely during World War I."5 Steel producers unders

32 See supra., footnote 8; in later life Kaiser often stated that the Kaiser health plan should
his most important and long-lasting monument. The health plan and hospitals did not truly occu
stage in his life until after the death of his first wife, Bessie, in 1951 (personal interviews wit
Kaiser, 5 Dec. 1983; Dr. Sidney Garfield, 16 Jan. 1984; Dr. Cecil C. Cutting, 9 Jan. 1984; a
Fleming, 10 Jan. 1984).
33 Robert Elliott, "Kaiser Fifty Year Book," (unpublished manuscript in Kaiser papers, n.d.):
Kaiser papers, carton 295; see also supra., footnote 8. It would be highly misleading to portray
the only farsighted member of the Six Companies partnership. In fact, several of the par
leaders in pursuing expansion into international engineering and construction projects. Fo
Stephen D. Bechtel pioneered enormous projects in Europe, South America, Oceania, and A
several other partners appeared more enthusiastic about these endeavors than did Kaiser, at lea
the early years. Kaiser became an increasingly enthusiastic participant in international enginee
ects in the 1950s and 1960s, but others basically provided the leadership.
"4 Total steel production plunged from 61.7 to 15.1 short tons between 1929 and 1933; by
industry had rebounded to produce 52.8 million short tons, and in 1940 output reached 6
Historical Statistics of the United States: Colonial Times to 1970, part II (Washington, D.C.,
:35 See Richard A. Lauderbaugh, American Steel Makers and the Coming of World War II (An
1980): 3, 20-22.

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16 BUSINESS HISTORY REVIEW

ably wished to avoid even a hint of excessive eagerness to expa

production over fear of being perceived as war-mongers. Fi
though sophisticated steel men were undoubtedly aware of
tionable assumptions, the highly touted Gano Dunn Report
sued in February 1941, assured lawmakers and the general p
existing steel capacity would answer any foreseeable future dem
Established steel producers anticipated the nightmare of being
after the war with declining markets and billions of dollars
idle plants. The very last thing they needed was a pushy, i
enced interloper, telling them how to run their industry.
Although some steel producers scoffed at Kaiser's initiatives,
sensed a genuine threat. Alarmists in the industry realized tha
hoped to create the framework for an integrated steel emp
own. His original design called for much more extensive op
than the government finally permitted him to build. Early
Kaiser proposed a pig-iron facility in Mt. Pleasant, Utah; a h
steel mill at Bonneville Dam; and a fabricating plant in Los A
The Office of Production Management (OPM) sent steel cons
A. Hauck to investigate the western steel situation. What K
posed would double the West's steel output, but add only 2 p
the nation's total capacity. Hauck concluded that Kaiser's
slightly premature, and in the late spring of 1941 the OPM tur
down. :38

Kaiser had simply lost the first round. By 1941 he had learned the
value of publicity and well-placed friends even more thoroughly than
when he successfully negotiated funding for federal dams in the 1930s.
In an open letter to Ben Fairless, president of U. S. Steel, he chided
eastern producers for failing to live up to their patriotic duty.39 More
to the point, Kaiser stepped up his lobbying efforts in Washington.41)
Kaiser's Washington office publicized his far-sighted arguments for

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 Hender-
son papers, Roosevelt Library, box 38.
37 New York Times, 23 April 1941.
`8 Hauck reviewed the history of Kaiser's application in a letter written several weeks after final ap-
proval 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.
3Y Kaiser to Fairless, 30 June 1941, Roosevelt papers, OF 5101.
U- 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.

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 HENRY KAISER 17

new steel plants on the West Coast, which considered not only w
time needs but long-range requirements.41

THE RISE OF KAISER STEEL AT FONTANA

Not until after Pearl Harbor did the OPM finally give
plea for a West Coast plant of his own. Even with the en
Jesse Jones, who then headed the RFC, Kaiser was com
cept highly unfavorable terms. Although permitted to
million from the RFC, he had to guarantee the loan by
profits from his shipbuilding operations for repayment. In
was denied the right to develop fully integrated operat
ment officials took the short view, intending only to allow
vide steel plate for his shipyards and a few other specia
purposes.4 For security reasons, the government force
build his plant in a relatively remote location. Fontana, Cali
fifty miles inland from Los Angeles, slightly less vulnerab
attack than preferred sites along the southern California co
minal Island or Hueneme.43 The inland site at Fonta
calmed military jitters, but it forced Kaiser to shoulder
higher shipping costs and formidable logistical problems.
Kaiser accepted all of these restrictions, and his engi
ground for the new steel plant within days of final approv
In fact, they actually designed the plant as they built it!44
worked at their usual breakneck pace. On 30 December 1
nine months after construction began, the first blast fu
tana, named "Bess No. 1" after Kaiser's wife, was "blown
ceremony.
The government reluctantly approved the plant as a necessary war-
time measure, but Kaiser perceived it in far broader terms. Kaiser
concluded his dedication speech at the blowing in ceremony with his
own interpretation of some famous lines: "The westward movement
which began so long ago on the Asiatic plains did not come to an end
on the Pacific slope of North America. It is poised for the next great

4 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.
4a George Havas file memo, 11 Feb. 1942, Kaiser papers, carton 144.
44 Interview with Lou Oppenheim, 17 Jan. 1984.

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18 BUSINESS HISTORY REVIEW

thrust. The day of the West is at hand. 'Westward, the cour

takes its way.' "45 Although Kaiser's enterprises were produ
sands of tons of ships and other war materials, the nascent
was clearly most excited about potential peacetime uses
array of products. Just four weeks before the dedication sp
tana, he had made a controversial but influential addres
National Association of Manufacturers (NAM), in which h
American industrialists to begin preparing specific plans fo
immediately.46
From the moment the Fontana plant opened, Kaiser em
intention of creating an industrial empire which would sim
earn handsome profits and enhance western development
war he pursued several strategies designed to effect that
he attempted to attract a variety of new steel-consuming in
southern California. Second, Kaiser pleaded with reluct
ment officials to permit him to make several additions to h
cilities which would at least give him a fighting chance to r
petitive after the war. Third, he devised a carefully reasone
to induce the government to renegotiate downward the
had received from the RFC.47 In his first two endea
achieved some success. The effort to renegotiate his RFC
one of the most bitter, partisan political conflicts of the pos
Kaiser realized that in order to achieve his dream of a
dustrial empire he needed influential allies not only in W
but throughout the region itself. Whenever he could sp
from his other responsibilities, he promoted his vision b
of western businessmen, politicians, and opinion-makers
convince listeners that he could be a serious competitor in a
long dominated by eastern manufacturers. When doubte
that the Fontana plant would be shut down or taken ov
established producers, he counterattacked. Kaiser promis
keep the Fontana plant, and he expressed an interest in a
$200 million Geneva (Utah) mill which had been constru
ernment expense and operated by U. S. Steel during the
assured participants at the Inter-State Conference on Pos
trial Development of the West in Carson City early in 1
western operator, and Geneva could be a Western industr

45 "Henry J. Kaiser at the 'Blowing In' of the Blast Furnace of the Kaiser Compan
Steel Division at Fontana, California, December 30, 1942," p. 8, Kaiser papers, cart
6 New York Times, 5 Dec. 1942.
47 For a detailed account of his strategy, see Chad F. Calhoun, "Facts Concerning
Function and Post War Function of Fontana (Kaiser) Steel Plant, July 25, 1944," in "
Fulton papers, Truman Library.

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 HENRY KAISER 19

who knows anything at all about Henry J. Kaiser knows that I

the development of the West by any industrialist who is pas
and primarily devoted to its interest." He specifically appealed t
interests: "I refuse to believe that any responsible resident of t
state wants to see an Eastern corporation succeed in skilfull
westerners off against each other."48 Kaiser may have expre
appeal in general terms, but he hoped western businessme
actively support specific objectives, such as his effort to per
RFC to renegotiate the terms of the Fontana loan.

EASTERN STEEL COUNTERATTACKS

If Kaiser expected western businessmen to unite as a

his call for regional autonomy, he was soon disappointed.
firm, powerful friends such as the Gianninis, who p
funding and wise counsel, but his critics skilfully exploi
against him. Many conservative businessmen were con
Kaiser had achieved most of his major successes eithe
contracts or with federal funds. Once forced to comp
marketplace with funds raised through private channels,
what manly competition was all about.49 Others resented
he had gained a reputation as a friend of working men a
encouraging unions and agreeing to generous wage set
his competitors were still at the bargaining table, he fur
rival steel producers. For example, early in 1946, whe
dustry was engaged in a bitter fight with the CIO, Kaise
the union the entire increase it sought but chided other
their niggardliness. Finally, some businessmen and pr
sented his experiments with prepaid health care; to th
nothing short of a socialist.'5
Despite criticism and opposition from entrenched
within and outside of the region, as the end of the w
Kaiser worked unceasingly to build a coalition of deci
tent upon creating a solid industrial base for the West
public relations experts supported formation of various g
mote western enterprise: chambers of commerce; gov

8 Press release, 12 Feb. 1944, in Kaiser papers, carton 28. For a superb, deta
careful presentations Kaiser interests made before the delegates, see Chad Calh
1944, Kaiser papers, carton 28.
49 When Kaiser achieved fame during World War II, most of his "fan" mail
However, the Kaiser papers contain some letters from cynics, who hoped the "M
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.

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20 BUSINESS HISTORY REVIEW

ences; and others.51 Kaiser sent representatives to meeti

nessmen's groups when he could not appear himself. H
staff members to write suggested drafts of letters from the
California to fellow western governors concerning pote
gional industrial cooperation.52 Kaiser personally assumed re
ity for articulating the western viewpoint to members of t
Establishment. To Walter Lippman, a highly influential colu
the New York Herald-Tribune, Kaiser wrote in 1944: "We se
America out here. And across the Pacific we think we can make out
the shape of a new Continent rising from a long sleep.`53
In his drive to help industrialize the West, Kaiser soon faced prob-
lems which were far more immediate and serious than simple regional
inertia. Shortly after conclusion of hostilities, the federal government
permitted U.S. Steel to purchase the Geneva plant, valued at $200
million, for slightly more than one-fifth of the cost of construction.
Although he had been interested in acquiring the Geneva plant himself
and merging with Colorado Fuel and Iron to form his own western
steel combine, Kaiser took his defeat in good grace." His equanimity
in the face of defeat is easily understood; at the very least, Kaiser reck-
oned, such overt favoritism toward U. S. Steel might induce the RFC,
in the interests of fair play, to grant huge concessions on his refinancing
of the Fontana plant.55
Unfortunately for Kaiser, RFC officials stoutly resisted his appeals
for debt reduction. There were several reasons for their intransigence.
By early 1947 the agency was fighting for its very life. Republicans had
made major gains in both houses of Congress in the 1946 elections,
and they were pushing for deregulation with evangelical fervor. Vic-
tories over the Office of Price Administration (OPA) and other tempo-
rary wartime agencies had merely whetted the appetites of conserva-
tive Republicans. To them, the RFC symbolized the excesses of New
Deal intervention into private enterprise. In addition, Kaiser's govern-
ment dealings were prime targets for conservative lawmakers. The
Truman Committee, which thoroughly investigated his wartime activ-
ities, had given him a clean bill of health. However, Kaiser had re-
cently negotiated highly favorable terms for the purchase of the Willow

5' 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.
'5 The proposed Kaiser merger with Colorado Fuel and Iron is discussed briefly in Morris Garnsey,
"The Future of the Mountain States," Harper's 191 (Oct. 1945): 333.
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.

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 HENRY KAISER 21

Run plant near Detroit and Alcoa Aluminum operations in the

Northwest, and this simply intensified suspicion toward him
some lawmakers. Hence, RFC officials sensed that giving Kaise
he wanted on the Fontana deal could precipitate the agency's demi
Big Steel did everything it could to prevent Kaiser from thrivin
the steel business. When Kaiser announced a series of plans for ex
sion of the Fontana plant, even the most arrogant eastern ste
finally realized he was serious. He had failed to snatch the p
Geneva, but he could become a formidable competitor. U.S. Ste
sold most of the steel consumed on the West Coast and shippe
amounts from the Geneva plant. In April 1947 its managemen
able to persuade the ICC to approve a 31 percent reduction in
rates from Geneva to the West Coast.57 The result was that U
could undersell Kaiser in his own backyard.
Established steel men also attacked him indirectly. Betwee
and 1948 their basic product was in extremely short supply, an
had many more orders than they could fill. Most industries consu
steel experienced supply problems, but there is strong eviden
the established steel producers made life as difficult as possib
Kaiser-Frazer. Some steel men stated flatly that they were ob
to serve their "established" customers first . . . meaning, of
General Motors, Ford, and Chrysler. Kaiser-Frazer would have
to the end of the line and take whatever scraps remained. O
promised deliveries, yet repeatedly failed to meet their obliga
Eventually, Kaiser tried to solve his automobile company's s
problem by purchasing several dilapitated steel mills of his own i
East. He was opposed by the large steel companies even in this
venture. By the time Kaiser worked out a reasonably steady s
network of his own, the steel crisis was over.
Lower short-term prices for "eastern" steel certainly pers
some westerners to ignore Kaiser's campaign for regional auto
Steel price differentials would not matter as long as supplie

56 At least this is the assessment of such a shrewd analyst as Garnsey, "The Future of the M
States," 333. For more background on the view that Congress wanted to rein in "profiteering"
men in general and Kaiser in particular, see Lester Velie, "The Truth About Henry Kaiser,"
Aug. 1946, 67; "The Arrival of Henry Kaiser," Fortune 44 (July 1951): 68-73, 141-54; Carroll W.
Jr., ed., The Military-Industrial Complex (New York, 1972): 158; Cashier, "National Resourc
ment During World War II," 465; New York Times, 8 Aug. 1946. Evidently, Kaiser perceiv
against his alleged "unconscionable" profits a sufficiently serious public relations problem t
thorized publication of a lengthy pamphlet defending the entire scope of his companies' operat
1914. See "Facts About Henry Kaiser," (Oakland, Calif.; Kaiser Company, 19 Sept. 1946).
17 "A Break for Fontana?" Newsweek, 2 June 1947, 67-68.
" Kaiser's personal correspondence contains copies of dozens of pleading letters to high-ra
ficials at U. S. Steel, Bethlehem, Inland, Republic, and others. See Kaiser papers, cartons 3
36, and 182.

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22 BUSINESS HISTORY REVIEW

short, but Kaiser was keenly aware that the day of reck
come when competitive conditions returned. In the sprin
had two possible strategies: arrange debt reduction from
invest millions of dollars in modernization, so that his F
could produce steel more efficiently. If he did neither,
broke.
Kaiser was still optimistic about ultimately renegotiat
loan, and he attracted modest support from important
political allies in the West. However, support appeared m
sive on paper than in fact. For example, the Western St
endorsed his application for debt reduction with press
letters to politicians and RFC officials. During at least
with Kaiser officials, some members of the council suggeste
themselves should shoulder most of the actual lobbying eff
ington. Unfortunately, their efforts were desultory, and th
follow through. Kaiser executives had to take the lead in cal
ings, suggesting wording for press releases, and writing draf
of support. When the RFC once again turned down Kais
to renegotiate his loan late in the summer of 1947, west
interests expressed little collective outrage.59

CONCLUSION

In the final analysis, weak support from potential allies d

matter. Kaiser Steel and most of his other regional enterpr
for a time primarily because shifting demographic patt
headlong growth to the West. In addition, the Korean conf
huge expansion of the military-industrial complex in th
anteed markets for Kaiser and competitive producers of
trial products, at least through the 1960s.
Another factor favoring the prosperity of his enterprises
the late 1940s Kaiser had essentially outgrown his depe
government financing. He had developed private source
outside of the region. Thanks to his friends, the Gianninis
duced Kaiser to leading financiers on Wall Street, he wa
row money directly or float large stock issues with com
Late in 1950 Kaiser was able to repay the RFC loan on
plant in full. He did so by selling $60 million in first mort
borrowing a total of $25 million from the Bank of Am

" Henry Kaiser, Jr., to Kaiser, 7 June 1947, Kaiser papers, carton 34. See also "A Br
67-68; "Editorial: Free Enterprise and Monopoly," Christian Science Monitor, 21 J

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 HENRY KAISER 23

major eastern banks, and issuing $40 million in stock, which

derwritten by more than 200 securities dealers.6
Despite his survival and eventual success in the steel busin
ser remained genuinely concerned about the industrial heal
West as a whole. In a letter to the managing editor of Steel
in September 1952, Kaiser insisted: "There has never been
steel production in the West to satisfy demand." In fact, he
the gap was growing larger, and he had the figures to prove it.
the region had produced 700,000 tons and consumed 2.5 mill
1.8 million tons had to be brought in from the East. By 195
steel output had multiplied five-fold to 3.6 million tons, but th
had consumed six million tons, a net imbalance of 2.4 millio
Throughout the boom years of his own steel enterprise, Ka
trying to close the gap. During the 1950s and early 1960s Ka
consistently expanded operations at Fontana. Plowing tens of
of dollars of gross profits into steel expansion caused grumblin
part of stockholders eager to cash fatter dividend checks. Yet f
time of his retirement move to Hawaii in 1954 until his death i
Kaiser consistently encouraged his managers to pursue a poli
pansion in steel.
Kaiser did not live to see the withering of his steel empir
1970s and its eventual collapse late in 1983.62 Contemporary
analysts may overlook Kaiser's central role in the industrializat
ticularly if they emphasize the region's leadership in "new" ind
such as aerospace, "high-tech," and fashion. Significantly,
semiretirement, Kaiser provided important leadership in s
these fields, as he masterminded important innovations in
atomic research, and television.63 It seems clear, however,
Kaiser not fought lonely battles in the 1940s against entrenche
ests and formidable obstacles to help establish an industrial bas
West, the region might not enjoy so much of the robust
health that uninformed observers too often take for granted.

6 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
Los Angeles Times, 30 Dec. 1983.
63 These developments are beyond the scope of this essay and will be discussed in a p
length biography.

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 SPRING 1985

Business History R
* Henry J. Kaiser and the Industrialization of the Far West
* Recent Research on Medieval Annuities
* Eighteenth-Century Welsh Clockmaking: A Case Study
* The Gramophone Company: A British Multinational
* Business in Africa

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 EDITOR

Richard S. Tedlow, Harvard Universaty

MANAGING EDITOR

Richard R. John, Jr., Harvard University

BUSINESS MANAGER

Patricia A. North, Harvard University

EDITORIAL BOARD

Louis P. Cain, Loyola University of Chicago

Franqois Caron, The Sorbonne
Alfred D. Chandler, Jr., Harvard University
Donald Coleman, Cambridge University
Robert D. Cuff, York University
H. Thomas Johnson, University of Washington
Lillian M. Li, Swarthmore College
Diane Lindstrom, University of Wisconsin
Thomas K. McCraw, Harvard University
John J. McCusker, University of Maryland at College P
John P. McKay, University of Illinois at Urbana/Cham
H. V. Nelles, York University
Glenn Porter, Hagley Museum and Library
Stephen Salsbury, University of Sydney
Merritt Roe Smith, Massachusetts Institute of Technolo
Richard H. Tilly, Westfiilische-Wilhelms Universitiit
Paul Uselding, University of Illinois at Urbana/Champ
Mira Wilkins, Florida International Univeristy

COVER: HENRY J. KAISER AND HIS PARTNERS AT HOOVER DAM. As

Hoover Dam neared completion in 1935, contractor Henry Kaiser (third from
left) visited the site with several of his Six Companies partners. (Photograph
from Henry J. Kaiser photo collection, Bancroft Library, University of Cali-
fornia, Berkeley.) For an article on Kaiser's remarkable career, see pp. 1-23.

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