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1898 - 1940: The Formative Years

Like many great American entrepreneurs, Warren A. Bechtel would take a few frightening steps toward failure before he found the path to success. In 1898, a nearly bankrupt 25-year-old Bechtel and his pregnant wife, Clara, left Peabody, Kansas, and their cattle farm, which had fallen on hard times because of collapsing beef and corn prices, and headed 100 miles south to the dusty expanses of Oklahoma Territory in search of construction work and new opportunity. Thus began an epic journey that would span a century of building, four generations of his family, and eventually much of the globe.

Beginnings: Railroad Work

Although San Francisco, Los Angeles, Seattle, Portland, and Oakland—the great cities of America’s Pacific Coast—were well established, vast stretches of the West remained raw and undeveloped. And while the transcontinental railroad connected the young nation, much of the West still lacked the population that could tap the natural resources of its undeveloped expanses and the network of railroads that could move crops and livestock from farms and ranches to the rapidly growing cities. By the 1890s, Southern Pacific Railroad had laid 8,000 miles of track from Portland, Oregon, south to Guaymas, Mexico, and from San Francisco east to Ogden, Utah, and south to New Orleans. Now, a host of smaller carriers were adding shorter branch lines to reach more remote regions, including the open plains of Oklahoma Territory.

W. A. Bechtel became part of the migration to Oklahoma, if only temporarily. He happened to be as skilled as anyone at operating the mule-drawn sled used in railroad grading work, and labored through the spring of 1898 and the following summer in the heat, dust, and tumult of building a frontier railroad. As the new century dawned, W. A. packed up his family—his wife, Clara; their two children, Warren Jr., born December 23, 1898, and Stephen, born September 24, 1900; and his younger brother, Arthur—and headed west to Oregon. There, he became a gang foreman for Southern Pacific. He didn’t stay long. When W. A. was offered a job in Wadsworth, Nevada, determining cross sections for the Southern Pacific Engineering Department, he and his family moved to nearby Reno. They didn’t have a lot of bag-gage. “I arrived,” W. A. recalled, “with a wife, two babies, a slide trombone, and a 10-dollar bill.”

In 1902, W. A. was out of work and nearly out of money, but a chance encounter changed all that. He happened upon A. J. Barkley, a manager for Southern Pacific. Barkley, impressed by the young man’s manner and bearing, hired Bechtel as an estimator in Southern Pacific’s Wadsworth office at $55 a month. Bechtel worked hard, learned quickly, and did well. He moved with Southern Pacific to Ogden, Utah, later returning to Nevada to serve as a gravel pit superintendent for a quarry in Lovelock. “He was learning all the time,” said Barkley. “He seemed to me a natural engineer.”

Barkley was not the only one to notice W. A. Bechtel’s ability. Silas Palmer, an inspector for an Oakland contracting firm, recognized it immediately when he met Bechtel at the Southern Pacific gravel pit in Lovelock in 1903. “His mastery of detail was apparent,” said Palmer. From the moment he took over the gravel pit, Bechtel had insisted on learning how to operate Southern Pacific’s latest piece of technology: a huge, huffing, clanking Marion steam shovel. Having mastered the machinery, he understood almost instinctively how to achieve the most profitable mix of men, machines, and animals. On the spot, Palmer offered Bechtel a job working for his employer, E. B. and A. L. Stone.

By the following spring, 1904, W. A. and his family were settled comfortably in Oakland, and on July 4 of that year Karl Kenneth, his third son, was born. Dad (as the young father was now universally known by family, workers, and colleagues alike) was superintendent for the Stone company in charge of building the Richmond Belt Railroad and an extension of the Santa Fe Railroad line into Oakland. Challenging though they were, his new duties were a far cry from the rough work of punching railroad lines through the wilderness. At Stone, W. A. continued his education as a construction manager, learning new techniques to add to an already extensive knowledge base. The opportunity to see how good he would be as an independent contractor came in 1906, when he and George S. Colley Sr. teamed up to land a subcontract to make a cut through limestone on a nearby Western Pacific Railroad main line near Sunol. Because the limestone broke in irregular pieces, causing a heavy overbreak, the job was a dicey one and would have been a loser had Bechtel not demonstrated yet another skill: the ability to negotiate. He persuaded Western Pacific to take the excess limestone as fill and thereby turned a probable loss into a small profit. Flush with success, he moved quickly. He had rented a Model 20 Marion steam shovel for the Sunol job. By 1909, he owned it outright. He wasted no time in painting the name “W. A. Bechtel Co.” across the side of the cab in large letters.

It would be another 16 years before Bechtel incorporated the business, but the purchase of the Marion was testimony to his determination to build a lasting organization that employed the latest technology. In the coming years, W. A. Bechtel Co. would constantly seek innovative ways to put technology to work and invest heavily in new machinery. Bechtel would lead the way in replacing horse-drawn freight teams, for example, with heavy, gasoline-powered trucks, Packards and Alcos with chain drives. 

First Contracts

In 1909, Bechtel landed his first prime contract—grading the site of Western Pacific’s Oroville, California, station on the Oakland–Salt Lake City line. Working capital was hard to come by, and the infant operation had to hustle for funds. W. A.’s finances were so thin that a friend had to guarantee his account with a wholesale grocer so he could feed his workers. He finished the job and managed to earn a small profit.

While Bechtel was working at Oroville, Southern Pacific began a construction program to capitalize on the development of new traffic in the timber-rich Pacific Northwest. One of its largest projects paid $39 million to ease grades and smooth curves on the California-Oregon line. In 1910, Bechtel won a subcontract for two sections 15 miles below Natron, Oregon. W. A. personally supervised the work, using teams of horses and his cherished steam shovel. In years to come, long after he had plenty of other things to do, he would still delight in taking his turn on a scraper or running the massive Marion.

The success of the Natron project, hewed through Oregon’s rugged terrain, left Bechtel with what he confided to one friend was more money than he had ever expected to have in a lifetime, and attracted the attention of the Wattis brothers, owners of the powerful Utah Construction Co. in Salt Lake City. For some time, W. A. had been pressing them for subcontracts and occasionally bidding against them on jobs. “We might as well ask him in,” W. H. Wattis finally grumped to his brother, “as to have him nipping at our feet.” They saw an opportunity when Ray Wattis, a son of one of the brothers, decided he was ready to take a subcontract with his father’s company. The Wattis brothers gave Ray a chance, but only on condition of a partnership with the more experienced W. A. Bechtel Co.

The collaboration proved to be transforming for W. A. He came to prefer working in partnerships, which allowed him to spread risk and avail himself of specialized resources and experience. He was also a good judge of character. In hooking up with the Wattis brothers, he sowed the seeds of a relationship that would blossom in numerous subcontracts over the years. That relationship would come to full flower as a component of the Six Companies consortium that built Hoover Dam in 1933. 

Family Involvement

W. A. Bechtel Co. was a family business from the beginning. W. A. was determined to build a company that would allow him to pass along to his children not just financial security and physical assets, but a sense of responsibility and obligation to company employees and associates, and to the enterprise. He took immense pleasure in the increased interest and involvement of Bechtel family members. His younger brother, Art, was a mainstay on numerous railroad jobs; Warren Jr., Steve, and Ken all shared their father’s enthusiasm for building.

There was never really any question about what the Bechtel boys would do when they grew up. Dusty equipment yards filled with massive trucks and steam shovels served as their childhood playgrounds. By the time they were in their late teens, the sons were well positioned to carry the business into the next generation. Each of them enrolled at the University of California at Berkeley and did well academically. But all left before graduation because their father needed them. Their country needed them, too. Warren Jr. and Steve shipped out to France in 1917 to serve in the U.S. Army, Warren Jr. with the 18th Engineers, Steve with the 20th Engineers.

When the boys came home in 1918, W. A. was counting on the rapidly expanding influence of a second generation of Bechtels to ensure continuity of family control. He would not be disappointed. Warren Jr., Steve, and Ken spent their time overseeing Bechtel projects and subcontracting small jobs on their own.

In 1923, young Warren took a subcontract with Utah Construction to extend his father’s earlier Natron work for Southern Pacific. When the horse teams bogged down in the deep Oregon mud that winter, Warren remembered the new 60-horsepower track laying tractors he had seen on large commercial farms. These machines could get traction on soft ground where horses and mules were helpless. Warren bought some of these tractors, hitched trailers behind them, and moved the heavy equipment and materials. It was perhaps a first in the construction industry and would become standard practice with contractors throughout the world.

Around this time, in 1923, Steve took a job as project chief constructing Southern Pacific’s main line extension into Phoenix. He had married Laura Adeline Peart earlier in the year, and when he went to Phoenix, Laura went with him. It was the first of many moves for the couple, and it established a firm policy of, quite simply, “no Laura, no Steve.” If Laura couldn’t travel with him, Steve wouldn’t go. Their personal commitment soon became a Bechtel policy of encouraging and paying for many wives to travel on business with their husbands.

Ken’s interests tended toward administration and financial management, although one early job would reveal a deeper passion. His supervision of bridge construction for the General’s Highway in Sequoia National Park was the start of a lifelong commitment to natural history and the environment, reflected in the austere beauty of the masonry bridges fashioned from the region’s native stone. The job lost money, largely as a result of environmental guidelines that Ken carried out to the letter. The U.S. Bureau of Public Roads required that trees be protected in blasting areas, and Ken took considerable ribbing for the metal pants he put on every tree trunk.

W. A. formally acknowledged the contribution of his family in 1925 by incorporating the company, with his sons as officers, along with brother Art. At its birth, W. A. Bechtel Co. was one of the largest and most respected construction firms in the West.

With his sons and partners overseeing much of the current business, W. A. could finally afford to devote more of his time to developing new markets. He had long had his eye on the power industry and was eager to find a showcase job that would demonstrate Bechtel’s abilities. He found it in 1921, in the mud and waste disposal challenge of the Caribou Water Tunnel in Plumas County, California, located high up in the Sierra Nevada range near Reno, Nevada. Bechtel built a two-mile-long, 12-foot-diameter tunnel for Great Western Power, which later became part of Pacific Gas and Electric (PG&E)—the company’s first job for a large power utility. Here, Steve showed his prowess, too. Working on the tunnel during a summer break from Berkeley, he devised a way to remove the waste from the excavation more efficiently and cut the project’s cost significantly. He returned to school with a handsome bonus. The job provided the company not only an entrée into the power industry, but an introduction to PG&E, which would, over the years, become one of Bechtel’s leading customers. 

At the 19th century’s end, Bechtel had hitched an entrepreneurial ride on the railroads as they stitched together the American frontier. As Europe edged toward the brink of war in 1914, the world in which Warren operated was rapidly changing. Railroads faced growing competition from automobiles, buses, and trucks. American transportation was diversifying, and in the decade to come Bechtel, too, branched out into highway construction and, eventually, into oil and gas production and transportation.

By 1919, Henry Ford’s Tin Lizzie had become the universal car. Four million Model Ts were on the road, or what passed for roads in those days—many miles of dusty rural highways, most of them built to accommodate the horse and buggy. With the passage of the Federal Highway Act of 1921, the federal government got into the road-building business. The dominance of the railroads was ending, and the nation’s lifestyle was changing. Over the next eight years, the number of miles of surfaced roads nearly doubled, providing a rich stream of projects for construction companies.

In 1919, two years before the Federal Highway Act, Bechtel won his first road-building contract: a stretch along the Klamath River in northern California. It was the first California contract issued by the U.S. Bureau of Public Roads and was followed a year later by another Bureau contract to thread a road through the San Gabriel Canyon in Los Angeles County. Art, Warren Jr., and Steve had a subcontract to do steam shovel excavation for 15 cents a cubic yard. Art ran the shovel, and Steve and Warren Jr. took turns trimming steep slopes ahead of the shovel and leading a balky mule as it pulled a four-yard western dump car. Bechtel took two more road contracts, to improve access to Sequoia and Yosemite national parks in the Sierra Nevada.

Though railroad work continued to be important for Bechtel, highway construction was becoming a substantial source of business. W. A. found the ambitious partner he needed for this booming new industry in Henry Kaiser. They first met on a road job near Redding in 1921 and later joined in the operation of a rock plant in Oroville, the forerunner of many collaborations that continued through the end of World War II.

The beautiful, arched Coos Bay Highway Bridge, a joint venture with Warren Brothers Construction Co., was Bechtel’s most ambitious highway-bridge project of this period. Completed in 1934, it was the longest of five new bridges connecting sections of the Pacific Coast Highway. 

In the late 1920s, in another important departure from railroad work, Bechtel entered a new field that would become a staple of the business for years to come: pipeline construction. Bechtel’s first pipeline, the Tres Piños–Milpitas, which carried natural gas eight miles from Tres Piños to Milpitas, California, was built in partnership with Silas Palmer for PG&E in 1929.

Perhaps more than anyone else, Steve saw the potential in pipelines, and as the business grew, he fought to convince Continental Gas to use a Bechtel-Kaiser partnership on an upcoming project. The youthful western upstart shocked staid old Continental by bidding for the entire 400-mile line from Amarillo, Texas, to a point on the Missouri River south of Omaha. As soon as they recovered their composure, the men from Continental agreed to give Bechtel a 140-mile stretch.

Initially, W. A. and Steve had a tough time convincing their old partner, Henry Kaiser, of the promise of pipelines. But soon a Bechtel-Kaiser partnership was laying thousands of miles of pipe for Standard Oil of California, Continental Gas, and PG&E. Bechtel engineers developed a number of revolutionary techniques, including using sideboom-equipped tractors to lay pipe and welding the pipelines electrically in the field to reduce construction time. 

But bigger things were in store. As the West developed, its thirst for water increased beyond nature’s supply. The mountains collected ample snow most years, but the runoff rushed downriver to the sea in the spring thaw, often with devastating speed and volume. The solution was to dam rivers and create vast reservoirs behind them. Bechtel completed its first dam in 1926, for the Nevada Irrigation District. Bowman Dam was, at the time, the second-largest rock-filled dam in the world, in addition to being Bechtel’s most remote job site, in the center of California’s rugged landscape. “We were really cut off from civilization,” Warren Jr. recalled later. “We had to get everything in there to carry us from Christmas until the end of April.” It was a forerunner of many projects to come in remote outposts. The company completed the dam, even though the district ran out of money to pay for the whole job.

Although they were building projects on a huge scale, western firms were still thought of as regional operators by the powerful, old-line eastern construction companies and their customers. The westerners longed to change that perception and had begun to lay the groundwork for an audacious undertaking. A consortium of western contractors was quietly assembling a team to undertake the most challenging project ever built in the United States—damming the mighty Colorado River, something engineers had dreamed about for decades--and would come to fruition with Hoover Dam.

Oddly, the onset of bad times would provide the impetus to go forward with the Colorado River project. W. A. Bechtel Co. was barely four years old on October 24, 1929, when the stock market crashed, plunging the nation into the Great Depression. In 1930, as the economy sank, Congress approved a public works project at Black Canyon, Nevada, the future site of Hoover Dam. The project would tame the flood-prone river, protecting cities and farms; it would generate cheap electricity to supply power to homes and industry; and it would provide work, thousands of desperately needed jobs in occupations ranging from ditchdigging to geology.

The Hoover Dam project was too big for any one company. So W. A. Bechtel helped form a consortium calling itself Six Companies, Inc. W. A. knew the heads of the consortium companies as friends and business associates, having been in partnerships with most of them. There was tall, lean Harry Morrison, head of Morrison-Knudsen of Boise, Idaho, and the man most directly responsible for bringing the group together; and the white-haired Wattis brothers of Utah Construction Co., the region’s foremost railroad builders. They were joined by the wry Felix Kahn of MacDonald & Kahn, a premier builder of office buildings, industrial plants, and hotels, including the Mark Hopkins in San Francisco. Phil Hart ran Pacific Bridge Co., one of the oldest construction firms on the West Coast, and was justly famous for his underwater work—a critical component in dam construction. Charlie Shea, the pugnacious, acid-tongued boss of J. F. Shea Co., was the best tunnel and sewer man west of the Rockies. And finally there was the legendary Henry Kaiser, whom W. A. had long valued for his enthusiasm and vision. W. A. Bechtel served as the second president of Six Companies; his son Steve was a member of the executive committee; and sons Warren and Ken served on the board.

Though dozens of firms had considered the mammoth job, only five submitted formal bids. These were announced at a raucous gathering in Denver on March 3, 1931. The first two were thrown out: one for “$80,000 less than the lowest bid you get” and a second for $200 million or “cost plus ten percent.” Lacking the required bond, the pretenders were quickly dismissed. Arundel Corp., one of the old eastern giants, put in a $53.9 million bid. The fourth bid, from Woods Brothers of Lincoln, Nebraska, was for $58.6 million. Finally, Six Companies’ bid of $48,890,955 was announced. W. A. Bechtel and his partners had bid $5 million less than the next highest bidder and just $24,000 more than the cost calculated by Bureau of Reclamation engineers. Six Companies of San Francisco would build Hoover Dam.

W. A. didn’t live to see the historic work completed. In 1933, with construction activity on the dam at its peak, W. A. decided it was “a good time to see what the rest of the world is doing.” Confidently leaving the nation’s most ambitious civil engineering project in the capable hands of his partners and his sons, he and Clara accepted an invitation from the Soviet government to visit the just-completed Dnieprostroy Dam. It was an opportunity to compare notes on men and methods on the world stage, and W. A. was determined to take it. But on August 28, 1933, 15 days before his 61st birthday, he died suddenly in Moscow. It was a great shock to his family and friends, but they took solace in the knowledge that he went as he would have wanted to go, active to the last, a construction man on a construction mission.

“There was nothing to do but close ranks,” said Steve Bechtel. “And we did.” Steve was elected to succeed his father as president of W. A. Bechtel Co.

Hoover Dam--officially dedicated by President Franklin D. Roosevelt in September 1935--represented a pivotal event in the history of Bechtel. There have been bigger projects in recent years, and there will be still bigger jobs in years to come. But never again will Bechtel be involved with a project that so profoundly shapes its sense of itself. As Stephen D. Bechtel Jr. said in 1982: “Hoover was a make-or-break proposition for my grandfather. Hoover Dam became the birthplace of many of the great traditions of the present Bechtel organization.

Beyond Hoover Dam

In 1933, with unemployment reaching 25 percent, President Roosevelt was committed to restarting the economy. Through the Works Progress Administration and other agencies, he launched billions of dollars’ worth of large-scale infrastructure projects, including the building of roads, bridges, and dams.

Bechtel, as part of the Six Companies consortium, was ideally positioned to take advantage of the public works opportunities. The consortium’s monumental work on Hoover Dam demonstrated a construction prowess that few could match. “No group of Americans in history have spread themselves out on the scale of these westerners,” asserted the editors of Fortune magazine in a 1958 series called “The Earth Movers.” “They are the instruments with which the West is progressing confidently and irresistibly toward its goal of empire.”

Between 1934 and 1938, the partnership built Parker Dam across the Colorado River; operating as Columbia Construction Co., they corralled the waters of the Columbia River behind the concrete arches of Bonneville Dam and built Ruby Dam and Grays Harbor jetties in Washington State; and as Six Companies of California, they constructed a section of the Oakland–Contra Costa highway. Utah-Bechtel-Morrison-Kaiser Co. lined the Moffatt Water Tunnel and built Taylor Park Dam in Colorado.

San Francisco–Oakland Bay Bridge

Reaching across San Francisco Bay in two sweeping spans that connect on Yerba Buena Island, the Bay Bridge, started in 1933, would link San Francisco with the city of Oakland. Not only would it make commuting between the two cities feasible, but it would also connect the West’s financial center, San Francisco, with industrial Oakland.

These were times when attempting the impossible became standard procedure, and the Bay Bridge is a perfect example—the plans called for bridge piers to be set deeper than anyone had ever attempted. And seldom had anyone confronted currents as unpredictable or winds as blustery as those on San Francisco Bay. The Bechtels formed Bridge Builders, Inc., allying themselves with Six Companies partner Henry Kaiser, one of W. A.’s most trusted collaborators.

They added several old-line eastern firms, including some of the most experienced deep-caisson builders Steve could find.

Bridge Builders won the contract for elements of the bridge’s eastern portion, and Transbay Construction, which included other Six Companies partners, won the contract for the western portion. A lively rivalry developed between the old Hoover Dam partners as they labored on opposite sides of Yerba Buena Island. Transbay at one point claimed the record for the world’s deepest pier, set at minus 246 feet. But Bridge Builders countered with one of its own. When it was over, the Bechtel combine had the world record, setting its deepest pier at minus 247 feet. The bridge was completed in 1936.

Pipeline Building and Petroleum Refining

For several years, Steve’s interest in pipelines had been growing, along with his interest in a closely associated and increasingly important field, petroleum and its by-products. Neither W. A. nor Henry Kaiser shared his interest, and Steve spent hours trying to convince them of the promise of pipelines. Finally, they came around, just in time to catch a pipelining boom.

Steve’s prescience about pipelining was no fluke, and over the years his instincts would be proven right again and again. Bechtel combined technological leadership and innovative organization to drive the company into the pipeline industry’s top tier. The company was the first to use a sideboom tractor to lay pipe, allowing it to turn the traditional piece-by-piece method into a more or less continuous process that cut costs substantially. In 1936, Steve enhanced Bechtel’s edge by setting up a subsidiary called Industrial Engineering Co. to manufacture and apply a revolutionary new pipe coating, called Somastic coating. The process reduced corrosion and extended the normal 10-year life of a pipeline to 50 years.

In 1936, Steve and Ken reorganized the company. W. A. Bechtel Co. would continue to handle the traditional earthmoving work, and a new firm, S. D. Bechtel Co., was set up to pursue other lines of business. For some time, Steve had been making inquiries among western oil refiners and discovered that, as he had suspected, all of them depended on construction firms based east of the Rockies. There was clearly a market for a broad-based firm in the West that could provide engineering, management, and construction services for petroleum refining and processing.

To tap this emerging market, S. D. Bechtel would have to hire the best talent in the field. Steve had a pretty good idea where he could find it. As director of purchasing for Hoover Dam, suppliers came to know Steve as “the man to see.” One of those who had been sent to see him was John McCone. A brilliant, hard-driving businessman, McCone had been a salesman with Consolidated Steel of Los Angeles and had successfully bid for some of the steelworks at Hoover. Steve had known him during their student days at Berkeley. “Steve and I shared a sense of imminent change,” McCone would recall, “of great projects about to break at last upon the West. We were sure we could have a place in them.” The last piece of the new company came into place in May 1937, when Bechtel and McCone brought in a 43-year-old refinery designer from Chicago named Ralph Parsons.

S. D. Bechtel Co. re-formed that year into Bechtel-McCone-Parsons Corp. (BMP) with a capitalization of $75,000. And that year, BMP built its first refinery, a hydrogenation plant for petroleum refining, contracted by Standard Oil of California in Richmond. This marked Bechtel’s move into engineering. Steve was so sure that the petroleum industry needed a complete refinery engineering and construction firm in the West that he offered to do the job for free. Construction began in the summer of 1937 and was completed the following January. By late 1941, BMP had eleven refineries completed or under way.

At the same time, Steve was pushing hard to involve Bechtel in foreign work. He succeeded in 1940, with the 75-mile, 16-inch Mene Grande pipeline for Standard Oil of Venezuela. The project included 40 miles of roads, 132 miles of telephone lines, and harbor and wharf installations for the Venezuelan government at Ciudad Bolívar.

With Steve’s thoughts focused on petroleum, it would be only a matter of time before he began looking at the Middle East. The area was awash in oil, but bringing it to market would require ocean transport. Quietly, Steve had ordered a study of shipbuilding that confirmed his suspicion that the industry was on the verge of taking off. He carried a summary of the study in his suit pocket and would pull it out whenever he lunched with one of his former partners from Six Companies. But, with the exception of Henry Kaiser and Charlie Shea, he could not get them interested. They were reluctant to sign on without a guaranteed buyer in sight. They would not have a long wait to see one appear.

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