This week in automotive history, GM tries to acquire Ford. Here’s why it didn’t happen

Imagine General Motors owning Ford. It nearly happened, until it didn’t. TheDetroitBureau.com looks at what nearly happened, and why it didn’t.

William Crapo Durant — Billy to his friends — became President of the Buick Motor Co., after its founder, David Buick, left the company, along with $100,000. All was going well at Buick, and Durant soon left the office to have dinner with his daughter, Margery, when he was called to the phone. It was Benjamin Briscoe Jr., president of the Maxwell-Briscoe Co.

The conversation was recalled by Durant in notes for a never published autobiography and later recounted by Buick historian Lawrence Gustin in his book, “Billy Durant.”

“Hello, Billy, I have a most important matter to discuss with you and want you to take the first train to Chicago.”

Durant answered, “What’s the big idea, Ben?”

“Don’t ask me to explain; it’s the biggest thing in the country. There’s millions in it. Can you come?”

“Impossible, too busy, sorry,” Durant said. “But I can see you here. Why don’t you take the 10 o’clock Grand Trunk arriving at 7 o’clock tomorrow morning? I will meet you at the station and we will have breakfast together.”

Briscoe agreed, and boarded the train later that night.

A meeting begets a big idea

The next day, the two meet, with Briscoe telling Durant that a J.P. Morgan partner and Maxwell-Briscoe financier was toying with the idea of a large merger of automakers, nearly two dozen. Durant had his doubts.

The plan involved too many companies and would take too much to resolve any differences. Durant countered with another proposal, one involving fewer automakers that would sell medium-priced cars in large numbers, such as Ford, Reo, Buick and Maxwell-Briscoe.

Upon further discussion, they contacted Ransom E. Olds, who ran Reo, and Henry Ford, who agreed to meet with Briscoe and Durant at Durant’s suite in the Pontchartrain Hotel in Detroit. 

Briscoe opened the meeting, stating he wanted the group to formulate a consolidation plan the could be presented to J.P. Morgan. But Ford and Olds wanted cash for their companies, at least $3 million each.

This proved to be a big hurdle. With the chances of success fading, the final straw proved to be a short item in the New York Times, stating that the first large consolidation of automakers was coming, and would be named International Motor Co. and capitalized at $25 million. 

Morgan withdrew its support. The big idea was dead.

Durant carries on

Morgan may not have liked the idea, but Durant did. 

Before long, he contacted the Olds Motor Works in Lansing, Michigan about consolidating Buick and Olds, with both companies owned by a holding company to be named General Motors.

Olds had fallen on hard times after the departure of their founder, Ransom Olds, several years before, and were anxious to consolidate. On Sept. 16 1908, General Motors was incorporated, starting an acquisition spree that led Durant to acquire the Albert Champion Co., the Oakland Motor Car Co., and Cadillac Automobile Co. among dozens of others.But one prize still eluded him: Ford Motor Co

Durant tries again

In 1909, Durant approached Ford’s business manager James Couzens about General Motors’ interest in acquiring Ford Motor Co. Couzens said he would talk it over with Mr. Ford. At the time, Ford was fighting George Selden, a patent lawyer who was granted a patent for the automobile.

Selden formed the Association of Licensed Automobile Manufacturers and began collecting a 0.75% royalty on all cars sold. But automakers had to get a license from the ALAM. Having been refused one by the ALAM, Ford built cars anyway. Selden sued, and the case dragged on for years. Ford was still battling Selden when Durant’s offer arrived. With victory uncertain, and huge costs being incurred with the installation of the automobile industry’s first assembly line, Ford couldn’t help but be swayed by the offer.  

“I had reason to believe that if we were successful, General Motors would not require any more motor car companies,” Durant writes.

Ford agreed to sell his company to General Motors for $8 million. His terms: $2 million in cash, $2 million in stock, and the remaining $4 million paid during the next three years at 5% interest. But Durant’s acquisition fee left GM short on cash. Durant turned to the National City Bank of New York to ask for a $2 million loan, even as GM’s board of directors gives Durant the authority to buy Ford on Oct. 26, 1909. But the bank was unwilling to take a risk on the fledgling industry, let alone Durant’s new company. 

The answer was no.

The fallout

Ultimately, Ford would prove victorious over Selden upon appeal, and the assembly line proved a wise innovation. By the 1920s, Ford would control half the U.S. automobile market with a single vehicle, the Model T. Ultimately, through a combination of factors, GM would surpass Ford, become the top seller of automobiles in the U.S. for decades. 

However, one wonders what might have been had things turned out differently in 1909.

While those same bankers later admitted they made a mistake, Durant harbored no regrets. “I never would have built up that business the way Ford did,” he recalled. “The Ford business would never have been what it is without Henry Ford, who has done more for America than any other man — more for the world.”