EIGHT
Political Economy
THROUGHOUT HIS LIFE, Howard Ahmanson flirted with the limelight. In college, he evidenced a powerful intelligence but he had no interest in becoming an academic. He liked to theorize about the world and occasionally wrote a speech offering his views on the economy or society, but he had no desire to become an intellectual leader. When he acquired control of National American Fire Insurance in 1943 and was elected president of the company, he told Gould Eddy and his brother, Hayden, that he wanted to get some publicity for this accomplishment—an unusual move given his usual preference for a low public profile—but their efforts yielded only a few minor notices in insurance industry publications. After the war, when he entered the savings and loan industry, perhaps thinking for a short time that he would follow Fletcher and Edgerton into a visible leadership position in the industry, Howard agreed to serve as president of a Los Angeles County association of savings and loan executives. But as soon as his term was over, he stepped down and never held a leadership position in the industry again. The pattern reflected a deep ambivalence in the man. He longed for recognition and admiration from the public as he had from his father when he was younger. But he clung to privacy and avoided the encumbrances and responsibilities of leadership. Circumstances combined in 1954 to offer him a new and very public opportunity to resolve his ambivalence.
POLITICAL HISTORY
Ahmanson may have become involved in Republican politics in California as early as the 1930s. He certainly knew some of the right people. His wartime friend Ed Shattuck had been a founder of the California Republican Assembly, a group of “Young Turks” who set out in the mid-1930s to wrest control of the party from its aging Progressive-era leadership. Earl Warren, who would go on to govern the state and, ultimately, lead the U.S. Supreme Court, joined the group. So did Goodwin Knight.
Knight and Ahmanson became friends around 1934, when they both had offices in a building at Seventh and Spring Streets.1 Knight, or “Goodie” as he was called by his friends and the press, was ten years older than Ahmanson. He had come to Los Angeles from Utah with his parents. After graduating from high school, he worked for a year as a miner in Southern Nevada and then enrolled at Stanford University. World War I interrupted his college career. He served in the navy aboard a sub-chaser in both the Pacific and the Atlantic Oceans. After the war, he graduated from Stanford and enrolled at Cornell University in Ithaca, New York, as a Telluride Scholar. Returning to California, he joined the state bar in 1921. Thereafter, Knight and a partner developed one of the most successful legal practices in the state. Knight added to his growing fortune in the 1930s by buying gold mines in Kern County. He also became increasingly active in politics. His support for Frank Merriam's run for governor led to a superior court appointment in 1935. From the bench, Knight presided over several famous divorce cases and became known as the “Hollywood divorce judge.” He also hosted a radio show that aired in Los Angeles and San Francisco, which helped him build a following in the two major urban areas of the state.2
Knight embarked on his first political campaign in 1946. With Earl Warren on the ticket running for reelection as governor, Knight defeated state senator Jack Shelley in the race for lieutenant governor.3 Ambitious, charismatic, and sometimes temperamental, Knight thought he had an opportunity to succeed Warren in 1948, when the Republicans tapped Warren to be New York governor Thomas Dewey's running mate in the campaign against Harry Truman for president. Truman's victory astonished the pundits and sent Warren back to California.
Knight waited. He and Warren easily won reelection two years later. With the ascent of an ambitious Southern California congressman named Richard Nixon, Knight seemed to find new support for his own bid for governor. Nixon had made a national name for himself with the House Un-American Activities Committee and his personal efforts to expose State Department official Alger Hiss as a spy. Running for the U.S. Senate in 1950, with battles raging on the Korean peninsula, he played to voter fears of communism. He also rallied conservatives, who were increasingly frustrated by Warren's liberalism. Nixon's base saw Knight as a conservative alternative to the incumbent governor. Knight hoped that these conservatives would help convince Warren not to run again in 1954.
While Knight waited, he and Howard Ahmanson corresponded occasionally on personal and political topics. Ahmanson sent a postcard from Europe in the spring of 1951 depicting the leg of a booted farmer pushing an American shovel into plowed ground. “Thought you'd get a kick out of the cards they give away in the post office for Greeks to send to the U.S.A.,” Ahmanson wrote. “We're definitely keeping them and they love it.” Knight wrote back that he was “immensely interested in your comments concerning the practical application of the Marshall Plan. We are not only keeping them, but I'll bet they enjoyed using your good American dollars and were stinging you with high prices if they got the chance.” Knight also told Ahmanson that he would be in Sacramento for the legislative session. “If there is anything I can do for you, I am as close to you as the telephone.”4
Knight's offer may have been in the back of Ahmanson's mind that July when he wrote to recommend Milt Shaw for building and loan commissioner. Sardonic as always, Ahmanson told Knight, “The only thing that makes me stand out as a duly constituted voter in the State of California is that I don't believe that I have ever written a letter to you—or the Governor, for anything.” He had “meticulously stayed away from any effort to stick my nose in the affairs of the Building and Loan Commissioner's office—or even discuss the subject with anyone in Sacramento, including yourself.” But efforts by the “recalcitrants” in the savings and loan industry to lobby for the appointment of “incompetents of the Home Loan Bank System” had aroused his ire. He characterized the work of the building and loan commissioner's office under Governor Warren and the retiring Frank Mortimer as “the most scrupulously honest government function that I was ever able to observe in operation.” “I have no ax to grind whatsoever,” Ahmanson said, “other than the fact that I am revolted by some of the names being suggested by the [savings and loan] industry.” Reflecting his genuine lack of political entrée, he told Knight that he would “like to know how and to whom I can best say what I really think—namely, the best possible candidate for the job of Building and Loan Commissioner for the State of California from every standpoint is already acting in that capacity.”5 The letter apparently had little effect. Warren waited almost two years before selecting a permanent replacement for Mortimer and did not choose Shaw. Instead, he picked a four-star general and longtime friend with no previous background in the savings and loan industry.6
Other events suggest that in politics Ahmanson boxed well below his weight. In December 1952, Home's assets broke the one-hundred-million-dollar mark. The company asked Governor Warren to pose for a publicity photo with Ahmanson and Ken Childs. The governor's staff passed the request to Acting Commissioner Shaw and asked him to offer his “appraisal of this institution and your recommendation as to whether [the governor] should participate in such a photograph.”7 There's no record to indicate whether Warren posed for the photo, but Knight showed no hesitation. As lieutenant governor, he was often on hand when Home celebrated the takeover or opening of a branch.8
Knight's opportunity to become governor finally arrived in the summer of 1953.9 Warren had not indicated whether he would stand for an unprecedented fourth term as governor. Knight was so eager that he made it clear that he would run regardless. Warren finally demurred and announced in the early fall that he would not be a candidate. Soon after this announcement, on September 8, Chief Justice Fred Vinson of the U.S. Supreme Court died. Three weeks later, Eisenhower picked Warren as the new chief justice of the United States.
“Hot diggity-dog,” Knight said, when reporters told him the news.10 He immediately began to solidify his control of the state Republican Party. He cemented his alliances with the state's two Republican U.S. senators—William Knowland and Thomas Kuchel. He sought Warren's and Nixon's endorsements for the 1954 gubernatorial race, and he began raising money.
Knight asked Ahmanson to be his finance chair and campaign manager in Southern California. Ahmanson was clearly pleased. He told reporters that Knight understood the “tremendous developments required to meet the needs of the constant stream of people coming into our state [and] to make it an even better place to live in for those already here.”11
Ahmanson worked closely with the pioneers of political consulting in California, Clem Whitaker and Leone Baxter. Taking advantage of California's cross-filing laws, Whitaker and Baxter helped ensure that Knight won the Republican primary in June by a ten-to-one margin and nearly tied the Democratic contender in the Democratic primary.
With a substantial lead in the governor's race that summer, Knight and his campaign staff began to look farther down the road. Knight hoped to convince the national Republican Party to hold its nominating convention in California in 1956. If that happened, he wanted to ensure that he was in control of the state party. That meant electing a vice chairman (who would become chairman in 1956) who would be loyal to him. Ordinarily, this was an easy task. Party leaders usually deferred to the governor's choice. But in 1954 there was too much at stake for Knight's plan to go unchallenged.
Dwight Eisenhower hadn't committed to a second term. Indeed, he seemed to be leaning against it. In a letter to his brother Milton in mid-1954, he suggested that he planned to step down after one term. Facetiously, he told his brother that if he showed signs of changing his mind, Milton should “please call in the psychiatrist—or even better the sheriff.”12 With the president's plans uncertain, a number of potential GOP candidates quietly began positioning themselves to run, including Richard Nixon.
Knight was not a Nixon fan. As lieutenant governor, he had watched Nixon undercut Warren's favorite-son bid for the presidency in 1952 and then was famously snubbed by Nixon in a photo opportunity later that year.13 Meanwhile, Nixon did not want Earl Warren's friends, including Senator Knowl-and and Governor Knight, to control the California delegation.14 He wanted those votes if Eisenhower decided not to run. And if Eisenhower did run, Nixon wanted to be sure he could block any effort to dump him from the ticket.
Knight wanted Howard Ahmanson to chair the party in 1956. He was loyal, smart, and rich. During a trip to the East Coast in July 1954, Knight tried to secure Nixon's and Knowland's reassurance that they would support his nominee. He later said that Nixon “told me any fine person the State committee might select would be satisfactory to him.”15
Reassured, Knight, a widower, turned his attention to his upcoming wedding to Virginia Carlson, a smart, charming, and unflappable writer and television producer whose first husband, an air force bombardier, had been killed in World War II. Anticipating that state party officials would do his bidding at the Central Committee meeting in August, Knight planned to be honeymooning with Virginia on a friend's yacht when the meeting took place.16
Before “Goodie” and Virginia could say their vows, opposition to his leadership team materialized.17 The Los Angeles Times reported that Lieutenant Governor Harold J. Powers supported another candidate. The paper also suggested that Nixon was not happy. Knight called Nixon, who apparently reiterated his support for whomever Knight might endorse.18 But the vice president's California friends in Congress said they were “miffed” that they hadn't been consulted.
For a week, the newspapers followed the split within the Republican Party over the Ahmanson issue. According to Representative Carl Hinshaw of Pasadena, Ahmanson was “an unknown” who lacked party experience. Northern California congressmen told the Los Angeles Examiner: "We don't know anything about Ahmanson. He hasn't passed the test of fire as far as we're concerned.” With their Southern California brethren, a number of California Republican congressmen announced their support for Ray Arbuthnot, a La Verne citrus grower who had a long track record of activism and leadership within the party and, not coincidentally, was also a Nixon loyalist, having served on the vice president's campaign staff in 1952.
Knight wouldn't back down. He pledged a “fight to the finish.” According to reporter Morrie Landsberg, he showed “a rare burst of anger” when he accused the Nixon loyalists of “breaking an agreement” over the issue. Senators Knowland and Kuchel backed Knight in this internecine battle. With Knight's wedding just five days away, Knowland tried to stop the intraparty fight by putting out a press release acknowledging his support for Ahmanson.19 One newspaper reported that Knight had even taken the issue to Eisenhower, arguing that the controversy could jeopardize the GOP's chances to hold and gain congressional seats in California.20
With the battle still raging, Knight and Carlson were married in a small private ceremony. They had a reception at Hernando Courtright's Beverly Hills Hotel. Then they boarded a private yacht bound for Santa Cruz Island off the coast of Southern California. But while Knight and his wife enjoyed their time away, Nixon's operatives continued to lobby the members of the state's central committee. Furious when he learned about these efforts, Knight cut short his honeymoon.21
Back in Sacramento only two hours after he landed, Knight called a press conference to defend Ahmanson. “Seldom has the capitol press corps seen Knight so wrought up over a political situation,” wrote one columnist. To belie the argument that Ahmanson was a newcomer to Republican politics, the governor recited Howard's political résumé: an original member of the California Republican Assembly in 1934, campaign manager for Charlie Fletcher's congressional campaign in 1946, member of Richard Nixon's congressional campaign organization in 1946, general chairman of Edward Shattuck's campaign for attorney general, active in Knight's campaign for lieutenant governor in 1950, and general chairman of Knight's Southern California primary campaign for governor. Blasting his political rivals, Knight asserted, “Some of those circulating the rumors that Ahmanson is new to GOP politics in California may not know these facts because they haven't been in the party that long, themselves.”22 After the press conference, Knight also called Republican members of the California Assembly, who made up a majority of the members of the Republican Central Committee. He made it clear that patronage for their districts would depend on their vote on the party leadership.23
With this kind of pressure, Ahmanson was elected by acclamation. The opposition was not able even to nominate Arbuthnot. In a biting speech, Congressman Patrick J. Hillings warned the Republican Party against “machine politics.” Knowland responded to this criticism by saying that it was standard practice for governors to choose the heads of their parties. Satisfied with his victory, Knight told reporters he had not backed down because “I just had to demonstrate a few things: First, that I keep my promises, and secondly, that I am the Governor. Some people lost sight of that fact temporarily.”24
Throughout this fight, Ahmanson said little publicly in his own defense. The criticisms, however, were withering to a man who had anticipated a triumphant entrance onto the grand stage of politics. Congratulating him on his election, Clem Whitaker and Leone Baxter acknowledged, “You may feel that you are entitled to commiseration, rather than congratulations, but we do want you to know that we think your election will be a great boon to the Party.”25 Shortly after the vote was taken, Ahmanson had breakfast with the governor in Los Angeles.26 If Knight offered any words of solace or encouragement to his old friend, they went unrecorded. They were both soon immersed in the governor's general election campaign, which was expected to be a cakewalk.
The growing divide within the California Republican Party, however, grew serious enough that President Eisenhower came to Los Angeles in late September to campaign for unity.27 He warned that the bickering might undermine Republican chances of keeping control of Congress and would jeopardize his own agenda.28 His remarks were prescient, but these divisions would be particularly damaging, not in 1956, but when Knight would have to run for reelection in 1958.
The results of the party election and the Knight team's confidence during the fall campaign seemed to feed Ahmanson's tendency to swagger in public. With Knight headed for an easy victory in November, Ahmanson stood before a group of insurance executives that fall, his Norwegian blue eyes cold with determination, and declared, “When the time comes to appoint the insurance commissioner, I will appoint him.”29
This bravado dismayed Knight supporter Nathan Fairbairn, the president of the California Compensation Insurance Company and Great Western Fire & Marine Insurance Company. “I have told these insurance executives repeatedly that the Governor has told me that the insurance companies should submit at least three names of the best insurance men qualified as an honest and impartial commissioner,” Fairburn wrote to Clem Whitaker. The governor had reassured him that he would appoint one of the people recommended by the industry—and not the one chosen by Howard Ahmanson. Ahmanson told Whitaker that it was Fairbairn who was out of line. Nevertheless, he wrote, “I am not sore—I am not even upset, I am a Fairbairn fan and would marry him if he wasn't one of those repulsive characters who uses a power boat instead of sails.”30
Knight stayed close to Ahmanson and to his good friend Howard Edgerton in the final months of the campaign. In the last week of August, at Edgerton's suggestion, Knight spoke at the Jonathan Club in Los Angeles to the Home Builders Committee.31 Over the next several weeks, Knight and Ahmanson met several times to go over campaign finances. In November, when Knight trounced his Democratic opponent, Richard Graves, the entire team celebrated. Two weeks later, when Howard Edgerton was elected president of the U.S. Savings and Loan League at a convention held in Los Angeles and the league acknowledged Home Savings and Loan as the new national leader in the industry, the old friends who had listened together to the first news of the attack on Pearl Harbor in 1941 no doubt felt they were on top of the world.32
With the election over, Home Savings and Loan growing rapidly under Ken Childs's extraordinary management, and Milt Shaw installed as California commissioner of savings and loans in 1955, Ahmanson plunged into political organizing with his eye on the 1956 convention. He served as the California member of the Republican National Finance Committee.33 In February, the Republican National Committee announced that the party would hold its convention in San Francisco. Asked about his role in influencing the decision, Ahmanson was coy. “I think the national party was impressed by our work in the last elections, but we can't leave out the attraction of our climate.”34
THREE FRIENDS AND THE POLITICS OF HOME OWNERSHIP
Ahmanson's deep involvement in Republican politics on the national and state levels and his close relationship with the incumbent governor were often viewed cynically by his critics and competitors. It's unclear how much he benefited from these connections. In 1955, the Antitrust Division of the U.S. Justice Department launched an investigation of H.F. Ahmanson and Home Savings. Certainly, it didn't hurt to have the ear of the governor of California or a Republican in the White House at this moment, but it also seems clear that there was hardly a case for the government to build on. Though National American Fire Insurance had become the leading residential property insurance company in Los Angeles, and Home Savings had become the largest thrift in the country, the links between these two businesses were not compelling in the context of the overall market, and the Justice Department quickly dropped its investigation. In other matters, Ahmanson, Home Savings, and the savings and loan industry didn't clearly find political or regulatory advantage. In January 1956, for example, President Eisenhower called for an end to the GI Bill's loan guaranty program. Noting that 4.5 million World War II veterans had acquired homes with help from the program, he suggested that nearly all eligible veterans had been served.35 As the nation's largest retailer of VA loans, Home Savings could hardly have been pleased with the president's initiative. Fortunately for Home, neither was Congress.
These political and regulatory challenges did little to discourage Ahmanson's political enthusiasm. In March, Knight, Nixon, and Knowland announced the names of the California delegates to the Republican National Convention. Ahmanson was listed as one of Governor Knight's “delegates at large.”36
Meanwhile, Home kept growing. In March, Howard announced that Home would acquire Pasadena Savings and Loan Association, with assets of more than $19 million, increasing Home's total portfolio to more than $395 million.37 As he prepared for yet another sailboat race off the coast of California later that month, Howard must have felt that he was already in the race of his life and pulling far ahead of the competition. But the effort was taking a toll.
SPORT, HEALTH, AND HEART ATTACK
Ahmanson had fallen in love with the ocean soon after his arrival in Southern California. He bought his first racing sailboat in 1948. To be close to the water, Howard and Dottie looked for property near Newport Beach. Orange County's principal seaside resort, with its stucco Mediterranean-style villas, Newport had long been a weekend and summer destination for wealthy Angelenos. The most fashionable parts of the community were the islands—Balboa, Lido, and Harbor—in Newport Bay. On the western end of Harbor Island stood the house of the world-famous violinist Jascha Heifetz and his wife, Florence. Recently divorced from her husband, Florence wanted to sell the home.38 In 1950, Howard and Dottie bought the property, added a large den and master bedroom, built a swimming pool, and constructed a two-story guest house on an adjoining lot.39
As his passion for sailing grew, Howard acquired a fifty-eight-foot vessel designed and built in 1933 by Johan Anker in Norway.40 The boat had been owned by Roy Hegg, the president of San Diego Federal Savings and Loan. Hegg was indicted in 1952 along with twenty-three others for conspiracy to defraud the government using VA loans.41 To pay for his defense, Hegg liquidated many of his assets.42 He owed H. F. Ahmanson a considerable sum of money for insurance premiums. Howard agreed to take the boat instead. He renamed it Sirius after the “dog star,” the brightest star in the night sky, named by the ancient Greeks, who associated it with the hot “dog days” of summer.
Whether the wind was howling or he was caught in the doldrums during a race, Howard enjoyed the company on his boat. The sun and the wind gave him a ruddy complexion with a barely noticeable tan. When he raced, he insisted on recruiting family, friends, business associates, or fellow sailing zealots from the Newport Harbor Yacht Club for his crew. “He did not want anyone saying that he bought victories,” remembers TransAmerica Cup winner Bill Ficker.43
Given Ahmanson's competitive nature, it's not surprising that sailing precipitated a health crisis tied to the way he lived and worked. Four miles off the west end of Catalina Island in March 1956, Ahmanson's furious pace caught up with him. With ideal winds, thirty-five vessels had begun the 140-mile race from San Clemente more than twenty-four hours earlier. But then the winds died and the race became a “drifting match.”44 Through the night, the skippers tacked and turned trying to find some puff of breeze that would carry them forward. Taking the tiller in the morning, Howard had worked the boat forward, trying to build on Sirius’s lead. Suddenly, his left side went numb and he struggled for breath. He asked for a taste of scotch and then, in a semiconscious state from a mild heart attack, ordered the crew to keep going.45 Sirius crossed the finish line shortly before 11:00 p.m. on Sunday night, the first of only six vessels to complete the race. Helped onto the dock, Ahmanson was quickly taken to a hospital.
For the next six weeks, he was under strict doctor's orders to minimize his activities.46 He complained that “I have had, of course, endless hours of instructions about my future life,” which all came down to the fact that he should work less.47
Begrudgingly, Ahmanson made a number of changes. He named Ken Childs president of Home Savings & Loan. As he explained to reporters, this was a move that was perhaps long overdue, since Childs had been effectively running the business on a day-to-day basis for years. Nonetheless, the gesture was appreciated. Childs's wife, Peg, wrote to Howard, “It was a generous gesture and a thoughtful one, too. Ken loves Home as if it was his own and, no matter how hard he works, I know that it will never hurt him because he takes such delight in what he is doing.”48
Ahmanson then established himself in a home office so he could swim several times a day. He stayed away from yacht racing for a year. He stopped eating meat for a while, but he did not stop smoking or drinking pots of coffee and large amounts of liquor every day. Above all, the heart attack forced him to back away from politics.
KNIGHT, NIXON, AND SAN FRANCISCO
Although he remained on the delegate list and the host committee, Ahmanson's role in the Republican convention diminished. He chose Alphonzo Bell of Los Angeles to succeed him as chairman of the party.49 Howard also passed some of his responsibilities to Charlie Fletcher, who served as treasurer for the California delegation.50
Despite his abdication of power, Howard attended the San Francisco convention as a delegate. Always quick to have his fill of crowds, he and Dottie rented a house in Atherton, a wealthy suburb south of San Francisco, for the week in addition to their hotel room in the city. In a characteristic display of sibling affection, Howard had invited his brother and sister-in-law, Hayden and Aimee, to come to San Francisco from Omaha and join the festivities.
Belying the lavish and elegant setting and the relative stability that should have been associated with the party's nomination of its sitting president, hostilities between factions in the California Republican Party continued to create drama at the convention. In the weeks leading up to the event, reporters pestered Knight to support Nixon's place on the ticket. Knight said only that the selection of a running mate was up to Eisenhower. No one was fooled. Less than two years into his tenure as governor, Knight clearly had ambitions to be president, and Nixon stood in his way.51 When Eisenhower announced his support for Nixon at the last minute, the convention renominated the vice president. But long after the Republicans won in November, the enmity between Knight and Nixon would continue to play a critical role in the future of the party in California and would influence Howard Ahmanson's increasingly pragmatic approach to political power.
THE SWITCH
Although Ahmanson was quick to tell his friends that he had sworn off politics after 1956, in reality his businesses and personal relationships were too deeply intertwined with policy making for him to remain permanently on the sidelines. When the divisions in the Republican leadership fractured wide open in 1957 and Senator William Knowland decided to challenge Knight's bid for reelection, Ahmanson and Edgerton were drawn into an intramural fight to defend their longtime friend.
The events that became known as “the switch” began in stunning fashion even before Eisenhower's second inaugural in January 1957. In an interview with CBS, Knowland, the Republican leader in the Senate, impulsively revealed that he did not intend to run for reelection in 1958. The news shocked Washington and Sacramento and fueled speculation that Knowland might run for governor as a stepping-stone to the White House.52 While Knight waited months for the senator to clarify his intentions, Knowland made several campaign-like tours through the state. Incensed, Knight announced in August that he would seek reelection and said he welcomed a primary race against the state's senior senator.53
The looming battle for governor was heavily influenced by the specter of the 1960 presidential race. Knowland, Knight, and Nixon were all obvious contenders. In the fall of 1957 it was widely rumored that Nixon intended to support Knowland for governor to get back at Knight for his efforts to dump Nixon from the ticket in 1956 and to make it difficult for Knowland, should he win the governorship, to break his faith with California to run for the presidency two years later.
There was also a deeper, more ideological quality to the looming battle. When Earl Warren was governor, many conservatives in the Republican Party were enthusiastic about Knight, thinking that he would be less amenable to New Deal–style approaches to government. As governor, however, Knight had been a disappointment to the conservatives. Knight built good relationships with labor and continued Warren's moderate, if not nonpartisan, approach. Knowland, on the other hand, was viewed as a strong fiscal conservative and an outspoken opponent of organized labor and communism. Some pundits predicted that a battle between the two of them would split the Republican Party and offer the Democrats their best chance to capture the governor's office in years.
Ahmanson proclaimed his full support for Knight. In a statement that was no doubt solicited by the governor's political team, Howard asserted that Knight's bid for reelection was “good news for Californians who place the welfare of our state above personal political aspirations.” In the same story, Howard Edgerton said: “It was my pleasure to be one of Vice-President Nixon's supporters in the U.S. Senate campaign of 1950. It is now my pleasure to offer my support to another great Californian—Goodwin Knight.”54 Weeks later, still with no formal announcement of Knowland's candidacy, Knight was in Los Angeles and stayed with Howard and Dottie in their home. Writing his thank-you to Howard and Dottie on October 2, he noted sarcastically “how hard Bill is campaigning” despite his lack of an announcement.55
The following day, Knowland made his bid for governor official. He was unapologetic about challenging the party's sitting governor. “It is my belief that our citizens welcome the opportunity to nominate and elect their own public officials. The direct primary system has been in effect in California since 1910. I do not agree with those who say it is ‘disruptive’ or ‘catastrophic’ to have primary contests.”56
Quickly it became apparent that Knowland had gathered the support of the party's leadership and primary voters. A year before the November 1958 election, polls showed Knight losing three-to-one. Through intermediaries, Nixon made it clear that if Knight ran for the Senate instead, he would find the financial support he needed; if he stayed in the race for governor, he wouldn't get any support. It's uncertain whether or how Ahmanson advised his friend at this critical moment in his political career, but Knight eventually caved to the pressure and announced that he would run for the Senate instead.57
The switch alienated many voters, who saw Knowland's run for governor as simply a self-serving step to the presidency. Knowland compounded his problems by alienating labor in a state where Democratic registrations outnumbered Republican. In the last months of the campaign, his organization fell apart.58 Staffers quit. Funders closed their checkbooks. A month before election day, Goodwin Knight announced that he would not support Knowland for governor. On election day, Knowland lost by more than a million votes. Meanwhile, Democrat Claire Engle defeated Knight for the Senate and Democrats won a majority of the state's congressional seats.
Knight's defeat contributed to Ahmanson's retreat from active involvement in politics. He would later say, “I've never put in more time and done so little good.”59 But he was also clearly uncomfortable with the rough-and-tumble personal attacks. “I always felt like a Boy Scout,” he told a reporter. “I was great at the all-citizens type of thing, but when it came to the backroom stuff, the pros had me over a barrel.”60 In reality, the Democratic victory began a new chapter in Ahmanson's political life.
The new Democratic governor, Edmund G. “Pat” Brown, had begun his political life in San Francisco as a Republican. After losing a race for the Assembly, he became a Democrat in 1934. He was elected district attorney ten years later. In 1950, he defeated Howard Ahmanson's longtime friend Edward Shattuck in the race for California attorney general. By 1958, however, Ahmanson had grown to like the gregarious attorney general, who seemed far more practical in his approach to government than Knowland and other conservatives in the Republican Party. Angry about Knowland’s treatment of Knight, Ahmanson quietly provided financial support to Brown in the 1958 race. This support would open the door to a closer relationship with powerful Democrats in the years ahead.
Detractors suggested that Ahmanson's political activities and campaign contributions were simply aimed at protecting his own financial empire. Again they called him an octopus. Howard replied, with what one reporter called “mock horror,” “Me an octopus? I'm more of the squirrel type.” Indeed, Ahmanson seemed to be happiest quietly socking away cash like a squirrel storing acorns for the winter. “I'm so happy I'm rich,” he said, “I'm willing to take all the consequences.”61 But success attracts attention, and by the mid-1950s other entrepreneurs were looking for ways to emulate Howard Ahmanson's success.