In 1913, long before the baby boom and the mass exodus to the suburbs, Harry Culver made a fortune building low-cost homes for those newly arriving settlers to Los Angeles.
Half a century later, Eli Broad got rich doing pretty much the same thing with Kaufman and Broad Home Corp. Now Broad’s bundle comes mainly from SunAmerica Inc., a company that sells retirement plans.
Sure, a lot has changed over the last 100 years when it comes to Angelenos making (or losing) money. In the early days, there was no Internet, of course, no jet travel, no freeways, no cable TV. But once you put aside those obvious differences, the fundamentals for making money in Southern California have stayed relatively unchanged:
Have an idea, find an opportunity, plunk down a few bucks and away you go.
Pick most any industry and the parallels are more than striking.
? Show Business: Yesterday it was Walt Disney and Jack Warner. Today it’s David Geffen and Jeffrey Katzenberg.
? Real Estate: Yesterday it was Henry Huntington and George Hancock. Today it’s Ed Roski and Jona Goldrich.
? Manufacturing: Yesterday it was Donald Douglas and Jack Northrop. Today it’s Alfred Mann and Henry Singleton.
Then and now, the personal and professional lives of the wealthiest citizens of Los Angeles are windows into what makes the city tick. For better or worse, they embody the spirit that built Los Angeles fueled by what’s become commonly known as an “entrepreneurial spirit.”
Simply put, that’s the willingness to take a risk and to have faith in the future.
“The West was particularly attractive to people who wanted to seek opportunity,” said Gloria Lothrop, W.P. Whitsett chair of California history at Cal State Northridge. “They were experimenters and adventurers. They were more willing to take risk and the West was far more tolerant of individualists.”
Throughout the century, Los Angeles has been a mecca for those who thought outside the box. Nearly every major industry that shaped the city from transportation, energy and manufacturing in the early years to the high-tech and multimedia industries that dominate today involves innovations in thought, action or both.
“The prophets of creative destruction work so well here,” said Clark Davis, assistant professor of history at La Sierra University in Riverside. “There are new technologies that take over the established ways of thinking and newer entrepreneurial people take advantage of it. With each new technology, it’s created a new hierarchy of wealth.”
The rich in other parts of the country typically followed in their fathers’ footsteps, creating a stable and often singular economic base. Pittsburgh was the steel town; Detroit was the auto town.
But Angelenos, newcomers all, had no such traditions to cling to. They made their own way and the economy fanned out accordingly.
Lothrop calls it a “self-select process.” People came here looking for something new a fresh start, a different lifestyle in the open air, an opportunity they could not find at home. They saw in L.A.’s sunwashed skies a chance for the good life, a place to shake off personal demons and start again.
Real estate roots
Harry Chandler, a Dartmouth dropout, first arrived here suffering from tuberculosis and picked fruit in exchange for his accommodations a tent in a San Fernando Valley orchard. He dreamed of owning land while he slept under the stars.
In fact, while he and father-in-law Harrison Gray Otis who himself arrived in Los Angeles with a string of failures behind him are best known as owners of the Los Angeles Times, they played a huge role as real estate developers. Together with three other investors and 30 shareholders, they formed Los Angeles Suburban Homes Co. to buy and subdivide a 47,500-acre parcel that included what is now Van Nuys, Canoga Park, Reseda, Sherman Oaks, Tarzana and Woodland Hills. Their $2.5 million investment brought $100 million in profit.
“There were few inherited fortunes,” said Doyce Nunis, professor emeritus at USC. “Most of your fortunes in 20th century Los Angeles were self-made.”
Culver had been a civil servant and a traveling salesman before he formed Culver Investment Co. and created Culver City. Frank Meline, who developed much of Beverly Hills, was a department-store window dresser back East.
Edward Doheny was a miner who knew nothing about drilling for oil when he noticed a group of workers carrying tar to fix roofs. He had a hunch that the black goo was coming from oil deposits underground and jerrybuilt a drill to find it.
Many of the movie moguls saw in Los Angeles a second chance. Sam Goldwyn, who began life as Sam Goldfish, had a failing glove business in New York when he decided to come West with Cecil B. DeMille and Jesse Lasky. Jack and Harry Warner were apprentice butchers. Louis B. Mayer, a former rag picker and nickelodeon owner, was making $1.3 million by 1937.
Success and Socialism
For some, getting rich was the best revenge. Though born into a wealthy family, real estate developer Henry Gaylord Wilshire dropped out of Harvard and returned home to run a small mill. “He failed miserably,” wrote historian Kevin Starr in his book “Inventing the Dream. “Shamed before his father and his friends, Wilshire fled to California. There he pursued two seemingly contradictory ambitions success and Socialism (to which he converted in 1887) each intended to ease the pain of his hometown failure.”
Before he was done, Wilshire made and lost several fortunes, and even married a rich English widow to bolster his financial wherewithal but not before he had developed most of Wilshire Boulevard and named it after himself.
Building a legacy was both a personal as well as professional endeavor as the lifestyles of the rich can attest. Huntington’s San Marino home was among the most lavish in Southern California, with acres of exotic gardens, an aviary, bowling alley and a vast collection of artwork and manuscripts.
Huntington thought nothing of paying $50,000 for a Gutenberg Bible and, in 1919, broke the record for purchases at Sotheby’s, spending 110,356 British pounds sterling at the auction house.
Earle C. Anthony, who built an empire of auto dealerships and gasoline stations, built himself a castle on eight acres in Los Feliz called Villa San Giuseppe and entertained celebrity guests in grand style.
Doheny’s Spanish Gothic mansion at Adams Boulevard and Figueroa Street had a dining room that seated 100, a deer park, a swimming pool, tennis courts and a conservatory where his wife grew 10,000 orchids. That was in addition to four other ranches in Ventura County and a home in New York that he owned.
These early tycoons built their fortunes with a combination of horse sense and chutzpah, but as the century progressed, a new breed emerged. Though better educated and often more worldly, they were no less independent in spirit and deed.
Joseph F. Sartori, founder and president of Security Trust (and L.A.’s answer to Bank of America founder A.P. Giannini), wanted to free Los Angeles from the dependence on East Coast financial institutions. That way, the city could control its own destiny by investing in businesses that ultimately boosted the population even further.
Cars and planes
With its supply of sunshine and land, Los Angeles offered an unusual opportunity to nurture existing industries like real estate and to cultivate new ones like tourism, aerospace and auto making.
Year-round sunshine made L.A. the ideal place for a drive, and by the mid-’20s, when the nation averaged one automobile for every seven people, Los Angeles had one for every 2.25. The city had four assembly plants producing more than 650,000 cars a year by 1948. And Samson Tire and Rubber Co. became the nation’s largest tire manufacturer.
Adolph Schleicher, who borrowed the name Samson from the Bible to convey strength and endurance, built his company along the same epic proportions: Samson Tire, on the site where the Citadel shopping mall now sits in the City of Commerce, was anchored by a six-story administration building with friezes depicting Assyrian warriors in horse-drawn chariots. It cost $8 million to build and employed 2,500 people.
Weather also helped nurture the aerospace industry. After all, there was no fog to hamper air travel, and L.A. had vast expanses of land for runways.
“The arrival of the federal munitions and aerospace contracts at the time of the war is obviously extraordinarily important,” said Bill Deverell, associate professor of history at Caltech in Pasadena. “But one of the reasons (the government) came here is that L.A. had experience with those industries.”
By the 1920s more than 25 aerospace manufacturers had set up shop in Los Angeles, giving rise to a yet another type of entrepreneur. “They were driven with passion more than the pocketbook,” said Cecelia Rasmussen, a journalist and author of “L.A. Unconventional.”
Donald Douglas started an aircraft manufacturing business in the back room of a barber shop on Pico Boulevard with $15,000, and by 1922, he was putting out a plane a week.
Jack Northrop founded and abandoned several companies despite their success because he had a different goal in mind building a flying-wing plane that would house the pilot, power source and cargo area.
For a time, Northrop partnered with other legends of the industry, including Allan Loughhead (who simplified his name to Lockheed), and Douglas, who eventually plowed the money he made backing Northrop’s ventures into his own company, Douglas Aircraft.
The new breed
If Los Angeles focused on productivity before the Second World War, the post-war period brought an emphasis on enjoying what those early efforts had sown. That meant suburbs with swimming pools and backyard barbecues.
Sydney Mark Taper, who had already made a fortune as a builder in England, decided to retire in Southern California, but soon found an opportunity in developing homes for the returning soldiers. Beginning with two 20-acre parcels he bought in Long Beach for under $12,000, Taper built more than 35,000 middle- and low-income homes in Norwalk, Compton, Lakewood and Long Beach.
While the first wave of real estate developers diversified into various product-oriented businesses, developers like Taper steered their businesses in another direction. Believing that he could make a greater contribution by financing other developers, Taper acquired Whittier Savings and Loan and American Savings & Loan Association. Eventually, he merged his financial interests with Financial Corp. of America, making $285 million in the bargain.
The wheeler-dealer decade had begun, ushering in Kirk Kerkorian, who bought MGM and United Artists, and Lew Wasserman, who ran MCA. No one got richer than J. Paul Getty, who parlayed an inheritance from his father’s oil holdings into the single largest personal fortune in the 20th century. With five marriages and reports that he kept a harem in England, Getty also was the poster boy for the new definition of wealth in the 20th century.
But it didn’t last long.
L.A. wealth, with its heritage of entrepreneurial spirit and innovation, has come home to roost in the ’90s with the likes of Sky Dayton and Idealab’s Bill Gross.
Dayton, a 23-year-old coffehouse owner when he started up EarthLink Network in 1994, and Gross, who became an entrepreneur at the age of 12, have put many of the principles that built Los Angeles to work albeit with a modern twist.
Like the early entrepreneurs, they are self-made. And like the early inventors of aerospace, they rely on technology and make their own rules. For workers of the Idealab companies, it’s not unusual to trade salary for stock options. Dayton takes employees snowboarding when he wants to hold meetings.
They, too, are feverishly building empires, but those empires are changing. More humanistic than their predecessors, this breed appears as concerned with fashioning a new corporate culture as they are with growing larger and more powerful. And unlike those who came before them, they have hitched their wagon to a different star Wall Street.
Will they change the landscape of wealth in Los Angeles again? Probably. But that’s what the city is all about.
