In the Antiplanner’s not-so-humble opinion, Fortune magazine made a
mistake in declaring Henry Ford to be the businessman of the twentieth
century. True, Henry Ford made a lot of cars. But Henry Kaiser built
roads, dams, houses, hotels, ships, and planes. He made cement, steel,
magnesium, aluminum, and a variety of other chemicals and building
materials. He funded and built the first and still the greatest health
maintenance organization in the world.
Plus, he also made cars. Chances are, you see a car made by one of his
former companies just about every time you go out on the street.
To show that Kaiser was the epitome of an entrepreneur, I’ll present
Kaiser’s story in four segments: through 1939, the war years, the
post-war years, and Kaiser’s Hawaii ventures, with a wrap-up segment
about his legacy.
Born in upstate New York in 1882, Kaiser quit school at age 13 to work
in a dry goods store. By the time he was 17, he was working as a
traveling salesman. Among the things he sold were photographic supplies
and among the places he traveled to was Lake Placid, NY.
He liked Lake Placid so much that, when he was 20, he approached a Lake
Placid photographer and offered to work for him for free. The catch was
that, if Kaiser could double the man’s business, they would share the
profits 50-50. Within a year, Kaiser had tripled the business, and the
photographer ended up selling it to him.
For a few years, Kaiser was content to run a summer photo business in
Lake Placid and a winter photo business in Florida. He apparently was
something of a playboy, enjoying swimming, boating, and the company of
pretty girls.
When he was 24, he was immediately smitten when a 20-year-old woman
named Bess Fosburgh entered his studio for a portrait. Within a few
weeks the two were engaged. Bess’ father, however, disapproved of
Kaiser’s peripatetic lifestyle, and made the strange demands that Kaiser
move west to establish himself in a new business earning at least $125 a
month and that he build a house.
So Kaiser traveled west and ended up in Spokane, where he went back to
work as a salesman in a hardware store. Many of his customers were
building contractors, and he quickly learned their business and soon
went to work in that field. In less than a year he earned enough to
build a large house, so he returned to the East Coast and married Bess.
Back in Spokane, Kaiser held a series of jobs until 1912, when the
company he worked for suddenly went out of business even though it had a
contract to pave streets in Victoria, BC. So he started his own company
that finished the Victoria paving and worked on paving contracts all
over the Northwest.
Kaiser gained a reputation for hard work, audacity, and finishing his
jobs well before the deadlines. His audacity showed one day when his
foreman told him that they didn’t have enough money to make payroll.
“How much do we have?” he asked. “$600.” So he took the $600, went to a
car dealer and made a down payment on a brand new Lincoln. He then
parked the Lincoln outside the office window of a bank president and
entered the bank to ask for a $10,000 loan. The banker eyed the car and
gave him the money. “Now we can make payroll,” he told his foreman.
In 1920, one of his employees happened to be in Redding, CA, and heard
that the state of California was opening bids for paving contracts.
Deciding to place a bid, Kaiser got on the fastest train south only to
find that the train didn’t stop at Redding. So he waited for the train
to slow down, opened the door and jumped off. He ruined his suit, but
got the job.
|
In 1979 a
company called Panarizon issued a Story of America series of cards. This
card available on ebay features Henry Kaiser grandstanding in front of
Hoover Dam. |
Moving to Oakland, Kaiser built roads and small dams in the California
mountains. In 1927, he won a contract to build 200 miles of road in
Cuba, which he fulfilled a year ahead of time and which earned him $20
million. However, he also learned that officials in foreign countries
often expected bribes. Kaiser absolutely refused to pay bribes and for
many years after avoided foreign projects because he did not want to
deal with such corruption.
Kaiser’s work earned the respect of many of his competitors, including
Warren Bechtel, founder of what is now the largest construction company
in the world. In 1931, Kaiser, Bechtel, and several other companies
joined to form the “Six Companies” that won the contract to build Hoover
Dam.
Kaiser’s crew supplied the sand and gravel, and Kaiser himself chaired
the Six Companies’ executive committee “in recognition of his ability to
get people to work together.” He also served as the Companies’ liaison
to the Washington, DC, bureaucracy. During the 1930s, the Six Companies
built Hoover, Bonneville, and Grand Coulee dams, three of the largest
construction projects in the history of the world. They also worked on
many other projects including the San Francisco Bay Bridge and the
Caldecott Tunnels between Oakland and Contra Costa County.
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Grand Coulee Dam is one of the largest dams in the world. |
As an employer, even when he was a contractor, Kaiser tried to treat his
employees as partners. So he was intrigued in 1938 when a young medical
doctor named Sidney Garfield proposed a new system of preventative
health care. Kaiser and the Six Companies were building the massive
Grand Coulee Dam, which required thousands of workers to live in a place
with virtually no medical facilities.
On previous construction projects, Garfield had learned that a system of
prepaid medical care would encourage patients to visit their doctors
before their sicknesses became serious. The result was that they could
often be treated at a much lower cost than if they waited until the
disease was more debilitating. Garfield proposed the system to Kaiser.
While Garfield only saw the system as a way of providing care to workers
on short-term construction projects, Kaiser immediately saw that it
would revolutionize health care in America.
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Sidney Garfield and Henry Kaiser plan some of the Kaiser Permanente clinics and hospitals. |
From then on, most of Kaiser’s workers and their families were eligible
for this care. While Garfield had invented the HMO, it was Kaiser who
made it possible and who created a Kaiser network of hospitals and
clinics.
In 1938, the Six Companies were disappointed to lose the bid for
building Shasta Dam to another group of contractors. Kaiser, however,
quickly won the subcontract to provide sand, gravel, and concrete to the
dam builders.
Kaiser happened to own a gravel mine about 10 miles from the site of
Shasta Dam. When the Southern Pacific Railroad quoted him a price of 27
cents a ton for moving gravel to the dam, he build a 10-mile conveyer
belt that moved the gravel for just 18 cents a ton.
Kaiser also happened to own a limestone quarry on Permanente Creek near
San Jose. At the time, a California cement cartel kept prices high. A
firm believer in the benefits of competition, Kaiser broke the cartel.
He had a cement kiln in operation well before the Shasta Dam needed it,
so Kaiser started selling cement to contractors throughout California.
Kaiser later said that Shasta Dam “was the best contract we ever lost.”
Up to then, he had been a contractor, with just a handful of permanent
employees. Getting into the cement business, however, turned him into an
industrialist, with first hundreds, later thousands, and — during the
war — hundreds of thousands of full-time employees.
One of the major buyers of Kaiser cement was the U.S. Navy. Since it had
the port at Pearl Harbor, Kaiser began shipping bulk cement to Hawaii.
Thus, he had a large supply on hand when it was needed to repair
airfields after the Japanese attack in 1941. Soon, Permanente was
supplying cement to army and navy bases throughout the entire south
Pacific.
Though profitable, cement turned out to be only a minor part of Kaiser’s
contribution to the war. The war changed Kaiser’s public image from a
California contractor into an American hero whose international renown
was almost as great as Henry Ford’s.
Randal O'Toole is a senior fellow at the Cato Institute and author of
the new book The Best-Laid Plans: How Government Planning Harms Your
Quality of Life, Your Pocketbook, and Your Future.
HawaiiReporter.com reports the real news, and prints all editorials
submitted, even if they do not represent the viewpoint of the editors,
as long as they are written clearly. Send editorials to mailto:Malia@HawaiiReporter.com
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