Tag: William Durant

The Fearless Spirit of William Durant

The Fearless Spirit of William Durant

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“I haven’t a dollar but I’m happy and I’m carrying on because I can’t stop. There’s much more to life than money.” – William Durant

The Rise of Durant

Durant (left) and his carriage company partner, J. Dallas Dort, in front of the Imperial Wheel Co. factory in Flint, Mich.

William Durant dropped out of school at age 17. Ignoring his family’s expectations for him to become a lawyer, Durant’s first job was piling lumber, and his second job was selling cigars. He alone sold more than three other sales people combined.

By age 24, Durant was already a successful businessman in the old lumber town of Flint, Michigan.

Durant, who went on to become a partner in a thriving insurance agency, decided to get into the vehicle business in 1886. He bought a small horse cart company with borrowed money. All he got was two completed carts and a design patent. Durant immediately took one cart to a fair and won a blue ribbon. He came home with orders for more than 600 carts even though he had yet to build one.

Within 15 years, the Durant-Dort Carriage Company had grown from a $2,000 investment into a $2 million business. It had become the largest vehicle manufacturer in the U.S., with Factory One its first plant in Flint. William Durant was heralded as the “King of Carriage Makers.”

Betting Big on the Automobile

Buying Buick

Original 1904 Buick prototype in Flint at the beginning of its test run to Detroit and back.

Durant was a millionaire at age 40, and he was eager for new adventures. With the Durant-Dort Carriage Company running smoothly, Durant was becoming bored. He liked to create organizations.

By 1900, different brands of horseless carriages were being marketed in the U.S. To maintain the title of “Vehicle City,” the city of Flint needed the automobile business. James Whiting of Flint Wagon Works bought Buick to help the city and save the company from financial ruin. Yet, he needed a sharp young businessman to take command, and Durant was the one.

Durant wasn’t interested at first. He said that automobiles were noisy, dangerous contraptions that frightened people and horses. Still, he was willing to give it a shot. He took the Buick out alone, driving it on all kinds of roads for a month or two. He was so impressed that he took over the management of Buick in 1904.

In 1908, Buick production surpassed Ford and Cadillac combined. Durant had made the transition from the largest carriage maker to the largest automobile manufacturer in a little more than three years. Durant became an inspiration to the workers of Flint.

The Birth of GM

A Company with Multiple Brands That Almost Included Ford

General Motors Building, Detroit, MI, 1924.

One night in 1907, Durant received a phone call about a large automobile merger put together by financier J.P. Morgan. Weeks later, Durant held a meeting in his room at the original Pontchartrain Hotel, together with three other automotive leaders. They were Henry Ford, Ransom Olds of REO, and Ben Briscoe of Maxwell-Briscoe. When Ford announced that he wanted money, not stock, the talks fell apart. Everyone left the sinking ship except Durant, because he knew there must be consolidation.

Durant had a plan B. He knew Oldsmobile was having a difficult time. He took a night train to Lansing, Michigan, roused the Olds officials from bed, and proposed creating a holding company called General Motors that would include Buick and Oldsmobile. They agreed, and General Motors was incorporated on September 16, 1908.

In fact, Durant almost purchased Ford in 1909. After getting GM in shape, Durant had Henry Ford agree to sell the company for $8 million. The loan committee of the bank, however, passed on this deal. If Durant had had the cash, Ford would have become a division of GM.

Size Matters

Major Acquisitions for GM

1909 Cadillac enters the fold.

By the start of 1909, Durant was ready to move in a big way. His aim was nothing less than to gain control of some of the biggest and best automobile companies in America. But he also wanted to get in on the ground floor with companies that were just starting. He wondered what their patents, products and inventions might bring.

Wrote Durant, “I figured if I could acquire a few more companies like Buick, I would have control of the greatest industry in this country. A great opportunity, no time to lose, I must get busy.”

Less than 16 months after GM’s incorporation, Durant had purchased 22 companies of all kinds. Although many were proven worthless due to a few severe liabilities, some were solid gold – Buick, Cadillac, Oakland (Pontiac), Oldsmobile, McLaughlin (GM Canada) and GMC.

While U.S. banking interests looked on cars as little more than a national fad, Durant was already seeing the automotive business as the greatest industry in the land. When Durant predicted that someday 500,000 automobiles would be built and sold in a single year, the bankers thought he was mad. Durant did not care what they thought. He knew he was right.

Down But Not Out

Ousted from GM and Back

Durant and his cohorts celebrate the first Chevrolet outside the factory, 1912.

In 1910, big problems arose. The market for large cars dried up. People were flocking to Henry Ford’s reliable and inexpensive Model T, his only model. GM, meanwhile, offered 21 different models of larger cars produced by 10 independent divisions, few of which were profitable. Durant’s image went from genius to foolish speculator. To borrow money to keep GM afloat, Durant had no choice but to accept bankers taking control of his “baby” for the five-year term of the loan, starting from September 26, 1910. But Durant was far from through. He was already starting to talk with Buick’s former racing star – Louis Chevrolet.

Chevrolet was a fearless racer and pioneering engineer who beat racing legend Barney Oldfield in his first race. His racing prowess caught the eye of Durant, and he signed up to drive for the Buick racing team in 1909. In two racing seasons, the Buick team won half of America’s road races.

Always wanting to design and build his own car, Chevrolet recalled: “Durant told me, ‘We’re going to need a car.’ So I built it.” Together they founded Chevrolet Motor Company in 1911, named after Louis Chevrolet. It launched two models in 1914 with the first valve-in-head engine, which drew many potential Ford Model T buyers. Chevrolets sold very well.

Durant had kept his shares of GM stock and continued to purchase more. Finally, at a GM board meeting in 1916, Durant announced that Chevrolet now had controlling interest of GM. Durant was again elected president of GM.

Last Empire and New Ventures

Durant Motors and More

1940 Alfred Sloan and Billy Durant celebrating the production GM’s 25 millionth car

From Durant’s return to control through the end of 1919, GM had grown into a vast enterprise. One of GM’s directors wrote, “The General Motors Corporation of today is 8 times as large as the company which the bankers were managing. This is indeed a fine tribute to your foresight.”

In 1920, the post-World War I boom ended, stocks lost 25% of their value, and 100,000 businesses went bankrupt. Durant began secretly buying stock on margin. He felt personally responsible for the thousands of stockholders who had entrusted him with the fate of their funds. Six months later, his $90 million was all gone. He was bailed out again but with a provision that he resign completely from GM. For the second time, he had lost control of the company he had founded. Durant was 59 years old and unemployed.

He wasted no time. Within six weeks of leaving GM without any money, he was back in the automotive business with a new company – Durant Motors. But the Great Depression in 1929 got in his way, and Durant Motors was liquidated in 1933. Yet, Durant, as a visionary, never lost his energy. He earned himself the nickname “Bull of the Bulls” on Wall Street and opened a bowling alley in one of the country’s first drive-in restaurants at the age of 78.

Source General Motors

The Deal That Could Have Changed History, GM tries to acquire Ford. Here’s why it didn’t happen – Larry Printz @TheDetroitBureau

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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 (Billy) Crapo Durant Founder of GM

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.

Henry Ford was mired in the Selden Patent case at the time when Durant proposed the purchase of his company

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

At the time of Durant’s offer Ford had just introduced the moving assembly line

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.”