Authors:
Historic Era: Era 9: Postwar United States (1945 to early 1970s)
Historic Theme:
Subject:
June/July 2005 | Volume 56, Issue 3
Authors:
Historic Era: Era 9: Postwar United States (1945 to early 1970s)
Historic Theme:
Subject:
June/July 2005 | Volume 56, Issue 3
No economy in history has produced as many fortunes as the American economy has. Many of them came from the country’s great industries, such as railroads (Cornelius Vanderbilt), automobiles (Henry Ford), and computers (Bill Gates). Others came from real estate (John Jacob Astor) and Hollywood (Steven Spielberg), and still others from banking (J. P. Morgan) and the stock market (Charles Merrill). Surprisingly few have come from passive investments, though Warren Buffett’s altogether impressive $43 billion fortune did.
Many others, however, have come from bright but, in the scale of things, minor ideas. Bette Nesmith Graham was a secretary who was tired of having to retype letters whenever she made a mistake. So, in 1951, she whipped up a batch of what would come to be called Liquid Paper. In 1979, she sold the company she founded to Gillette for $47.5 million plus royalties. (Actually, come to think of it, she had a second bright idea: selling the company just as the computer, where mistakes are undone with a key click, was about to send the typewriter to the Smithsonian.) Or consider a man named Horace Hagedorn, who died this year at the age of 89. He made a fortune from other people’s back yards.
The back yard was, to a surprising extent, an invention of the postwar era of the late 1940s. Before the war, the country was largely divided between those who lived in rural areas and small towns and those who lived in cities. The balance had been shifting toward the cities throughout the nation’s history. In 1800, about 85 percent of the population lived on farms; the 1920 census recorded more than 50 percent of the population living in cities for the first time.
After the Second World War, however, a new trend in the distribution of the country’s population began, leading to profound change in a remarkably short period of time. The GI Bill helped finance not only college educations, but also suburban housing. It guaranteed mortgages up to $2000 or 50 percent of the mortgage, whichever was less. Banks, protected against default, were happy to offer mortgages with no money down, and entrepreneurs like William Levitt began building housing to meet the exploding new market. “The market was there,” Levitt remembered years later, “and the government was providing financing. How could we lose?”
He didn’t. Levitt acquired 7.3 square miles of what had been largely potato fields in New York’s Nassau County, on Long Island, and there he industrialized home building, using the automobile factory as his model. In a factory, of course, the automobiles move along the assembly line while the workers stand still. Houses can’t move, so Levitt had the workers move, each group doing a specific task and then moving on to do it again at the next house.
In four years, he built close to 17,500 “units,” two-bedroom houses with a living room, a kitchen, a bathroom, and an attic that could be converted into two more