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Don M. Larkin 


With my Compliments 

and the Autograph 

of the Author 




Atlantic Monthly Press, 1921 

Greenberg, Inc., 1926 

Macmillan Co., 1930 

Macmillan Co., 1 93 1 

Macmillan Co., 1931 


1930, and 


1931. The Notes of Clarence W . Barron, editor of THE WALL 

STREET JOURNAL. Co-editor with Samuel Taylor Moore. 

Harper & Brothers. 


Argus, Albany, 1932 


Sears, 1933 


commemorating the twenty-fifth anniversary of General Motors 






Drawings by WILLIAM HEYER 



Garden City, New York 

PRINTED AT THE Country Life Press, GARDEN CITY, N. Y., u. s. A. 




Publisher's Note 


T is probable that no invention of such far-reaching im- 
portance was ever diffused with such rapidity or so quickly 
exerted influences that ramified through the national culture, 
transforming even habits of thought and language." This 
quotation from the report of the Hoover Research Com- 
mittee on Social Trends refers to the motor vehicle. 

The commonplaceness of motor cars in our daily lives 
makes us unaware of their significance. It is almost im- 
possible to realize a present-day world without automobiles, 
and yet motor cars are little more than a generation old. 

This book, then, not only helps to make us conscious of 
the marvelously rapid development of a new art, a new 
convenience, a new means of transportation, but also, in 
giving the history of one of our important industries, it 
provides a view of the vast social consequences of inven- 
tion and enterprise. And yet General Motors is but twenty- 
five years old. 

Innumerable histories of nations, rulers, wars, and 
peoples have been published of much less significance than 
this story of a great industry. Our leading business groups 
will find here many instances and examples of enterprising 
public service. Here is a broad yet carefully written history 
of an industrial enterprise which directly or indirectly 
affects intimately the lives of our people. 

vi Publisher's Note 

In this book will be found illuminating accounts of in- 
ventors, financial geniuses, scientists, business statesmen. 
Their accomplishments have altered our lives and will affect 
those of our grandchildren and great-grandchildren. While 
making motor cars, they have also been making history. 



ENERAL MOTORS in 1933 reached its twenty-fifth mile- 
stone. Since the founding of General Motors Company of 
New Jersey in 1908, the growth of the organization has 
contributed a unique chapter to American industrial his- 
tory. From beginnings so small that its birth escaped notice 
in financial centers, General Motors has worked its way 
steadily forward to a place where its leadership in many of 
the most exacting branches of production and distribution 
is taken for granted and where it meets the public of many 
lands with a wide variety of merchandise and services. 
Scientific research, close attention to dealer and consumer 
needs, and constructive public policies are among the fac- 
tors accounting for General Motors' present strength. 

The older companies of General Motors, now known as 
divisions, go back to the early days of the automotive indus- 
try, and some of them far beyond. Their taproots reach 
down to carriage- and wagon-building, to firearms, station- 
ary and marine gasoline engines, milling machinery, roller 
bearings, bicycle gears, lathes, and even to door-bells. Their 
branch roots stretch back to the beginnings of scientific 
experiment, since the self-propelled vehicle is the child of 
physics and chemistry. Chapters n and in trace that long 
evolution. As one follows the rise of General Motors 
against the broad background of latter-day industry and 

viii Foreword 

science, he comprehends that the flowering of large-scale 
production in our day is the inevitable result of generations 
of inventiveness, organizing ability, and the willingness of 
capital and labor to pull together toward common objec- 
tives. Among those objectives are the lifting of the stand- 
ards of living, the satisfaction of old wants with less labor, 
and the creation of new wants on a higher level of comfort, 
convenience, and culture. Modern industry has conquered 
the old-time dearth of goods, and more and more it 
searches for a balance wheel through whose steadying influ- 
ence its products can remain available to all industrious men 
and women at all times. To steady economic life is perhaps 
as real an industrial need today as mass production was 
fifteen years ago, as real a need as the automobile was forty 
years ago, when men traveled at the pace of the horse over 
wretched roads. 

My acquaintance with General Motors began at its birth 
in 1908, and as a somewhat impartial observer of social 
trends I have watched its progress with keen interest ever 
since. After observing General Motors employees as work- 
men and citizens, I began, more than thirteen years ago, to 
write in Flint, Michigan, my Iron Man papers, noting some 
of the social effects of modern industrialism. The Cor- 
poration seemed then to foreshadow many of the develop- 
ments on the social side which have since come to pass. I 
welcomed the opportunity to complete a full-length study 
with access to records, believing that the story of a great 
corporation's growth through twenty-five years would be 
of more than passing value, since corporations are the most 
efficient of modern groupings and probably also the most 
meaningful from the standpoint of basic social relations: 
work and wages, production and distribution, consumption 
and investment. If it appears that approval is voiced here 
more freely than the reverse, that is because the record is 
clean and clear. 

As I review the history of General Motors in my mind, 
I think of the many thousands of men and women who 

Foreword ix 

made its present competence come to pass by their labors in 
factories, laboratories and offices, and in the field; of 
workers in all branches of production; of craftsmen and 
designers striving to combine beauty with serviceability; of 
scientists patiently attacking problems in chemistry, elec- 
tricity, metallurgy, and engineering; of foremen, superin- 
tendents, and inspectors; of dealers and salesmen in every 
land searching for the sales by which the Corporation lives 
and by means of which it pays wages and dividends. This 
book is the history of a joint effort which succeeded be- 
cause, when a long, strong pull was needed, team-play tri- 
umphed over the frictions which tend to dissipate human 
efforts and destroy institutions. 

Those who recognize in General Motors a force of the 
first magnitude in America's economic life will find here 
several references to the Corporation's policies which have 
contributed to its present standing. Some of these policies 
apply to interdivisional operations, others to employees, 
dealers, suppliers, and the public. Beyond the equities in- 
volved in strictly commercial contacts, any large corpora- 
tion which touches the lives of millions of persons here and 
abroad can scarcely escape being rated and appraised by 
public opinion. General Motors has been a leader in pro- 
viding full and detailed accounting to stockholders and in 
giving the general public accurate news of what it is doing 
and why it is doing it. 

The history of General Motors records scientific and 
commercial achievements of a high order, but this is true 
of many corporations. What makes this corporation most 
interesting is the fact that its expansion was rapid and 
yet it was marked by relatively few of the discords usually 
connected with swift industrial growth. 

In the appendices will be found historical notes on many 
subsidiaries and affiliates not treated in the text. 

The author acknowledges gratefully the assistance of 
persons too numerous to mention who have contributed in- 
formation to this work, including many formerly active in 

x Foreword 

Corporation affairs but now retired, and others whose busi- 
ness relationship with General Motors in its early days 
qualifies them to testify on the events of that period. 

Special thanks are due to Dr. Dixon Ryan Fox, Professor 
of American History at Columbia University, for his in- 
terest and encouragement, to Dr. John S. Worley, Pro- 
fessor of Transportation at the University of Michigan, 
and to Dr. M. M. Quaife, secretary-editor, the Burton 
Historical Collection, Detroit Public Library, for their aid 
in research. 




Foreword vii 


I America on Wheels I 

II The Evolution of Self-Propelled Vehicles 6 

III The Formative Period: 1879-99 27 

IV Oldsmobile: First "Quantity" Car 41 

V Buick: The Foundation Stone of General 

Motors 68 

VI Oakland and Pontiac: Old and New 91 

VII Cadillac : The Triumph of Precision 100 

VIII The Birth of General Motors in 

IX The Bankers Take the Wheel 131 

X Chevrolet : The Cinderella of Motor-Car 

History 143 

XI The Corporation Established 153 

XII The War Years 167 

XIII The Expanding Corporation 176 

XIV The New Era Under President du Pont 193 

XV Rounding Out General Motors 209 

XVI Later Histories of Passenger Car Divi- 
sions 218 





















General Motors of Canada, Limited 
General Motors Across the Seas 
Research: The March of the Open Mind 

Body by Fisher: The Motor Car as a 
Style Vehicle 

Frigidaire and Electric Refrigeration 

Commercial Vehicles 

General Motors in Aviation 

The Point of View of General Motors 

The Stockholder Interest 

Marketing the Motor Car 

Financing and Insuring the Buyer 

Cooperative Plans 

Public Relations 


Roster of General Motors Officers and 

General Motors at the Century of Prog- 
ress Exposition 

IV Short Histories of Subsidiary and Affili- 
ated Companies 

V Some Discontinued and Inactive Com- 








Chronology of Self-Propelled Vehicles 435 





Medal by Norman Bel Geddes Frontispiece 


Ancient Egyptian Wheel 2 

Simon Stevin's sailing chariot, Holland 7 

Cugnot's artillery tractor, 1769 II 

"Orukter Amphibolis" Oliver Evans' Amphibian 12 

First self-propelled vehicle to attain speed of ten 

miles per hour, 1810 14 

Sir Goldsworthy Gurney's steam carriage 16 

Richard Dudgeon's steam carriage, New York, 1860 22 

First motorcycle oil motor 29 

R. E. Olds's first horseless carriage 33 

R. E. Olds's first factory, Lansing, Michigan 35 

Horseless buggy of Charles E. Duryea, 1893 37 

"Horsey Horseless Carriage," Battle Creek, Michi- 
gan 39 

Glidden Trophy 42 

R. E. Olds 45 

First Oldsmobile, 1897 48 


xiv Illustrations 


Authorization for construction of first Oldsmobile 49 

First American automobile factory, Olds Motor 

Works 52 

Detroit to New York, Roy D. Chapin in Oldsmobile 54 

Oldsmobile curved-dash runabout, first quantity car 63 

Chauncey M. Depew, at wheel of Olds runabout, 

1904 64 

First Buick, Detroit, 1902 70 

Original Buick factory at Flint, Michigan, 1903-4 75 

First Buick car built at Flint, Michigan, 1903 77 

William C. Durant 83 

1904 Buick 88 

Henry M. Leland 101 

Cadillac "one-lunger," 1902 104 

Cadillac cars which won the Dewar Trophy, 1908 106 

Dewar Trophy 108 

C. S. Mott 112 

James J. Storrow 127 

Thomas Neal 133 

Charles W. Nash 138 

Walter P. Chrysler 140 

The first Chevrolet, April, 1913 144 

Chevrolet u Royal Mail" roadster, 1914 146 

Model 490, Chevrolet 149 

John J. Raskob 158 

Buick war tractor, 1918 169 

First home of Dayton Engineering Laboratories 171 

General Motors Building, Detroit 180 

Illustrations xv 


Fred J. Fisher 182 

Pierre S. du Pont 195 

Alfred P. Sloan, Jr. 206 

Opel Six at Shanghai, China 208 

Bob Burman at wheel of Buick racer 220 

Cadillac: first car with electric self-starter 223 

W. S. Knudsen 228 

Robert McLaughlin 236 

R. S. McLaughlin 238 

Opel car in African exploration 251 

Charles F. Kettering 270 

Research Building, Detroit 277 

Charles T. Fisher 290 

Miniature Napoleonic coach 294 

Map of General Motors Proving Ground 302-303 

Early motor fire engine 311 

Pioneer police patrol wagon, Chicago 314 

GA-43, all metal monoplane 320 

GA-43 : front view 323 

GA-43: side view 325 

Flying Lifeboat: GA-FLB 327 

Weather Bureau Station, General Motors Proving 

Ground 346 

Entrance to General Motors Proving Ground 346 

New York headquarters of General Motors 351 

Lammot du Pont 353 

Buick on steps of Summit House, Pike's Peak 358 

Night Scene: Century of Progress Exposition 366 

xvi Illustrations 


Chevrolet Assembly Line 370 

Dr. Carlos C. Booth 378 

Harry H. Bassett 410 

General Motors Institute, Flint, Michigan 412 

Albert Champion 457 

Herbert C. Harrison 468 

John Wesley Hyatt 469 

Alexander Winton 481 


Chapter I 


N A single picture are caught and recorded centuries of 
history. In the distance, ready to vanish over the hill, is an 
Indian family departing with its poor goods and beaten 
gods. A tiny pony strains between two poles, across which 
is a laden platform. The poles drag on the earth. In the 
foreground is the settler's covered wagon, drawn by strong 
horses and ready to roll westward as long as its tall, iron- 
shod wheels hang together. 

The wagon holds more wheels and the produce of wheels : 
a spinning wheel and the cloths which wheels have fabri- 
cated; a plowshare which some wheel has helped to smooth 
and point. There is a rifle fashioned on a lathe to which 
the principle of the wheel has been adapted. A continent 
is being surrendered to those who come on wheels. The 
conqueror sets his wheels in motion and moves on with calm 
assurance to occupy the empire which wheels have enabled 
him and his kind to possess. 1 

It is one of the paradoxes of history that America, where 
modern civilization runs on wheels, was a wheel-less country 
before the white man came to its shores. Other peoples, 

Bernard de Voto, Mark Twain's America, p. 24.: "That winter he 
[Marcus Whitman, the missionary] gathered a large mission. Also he found 
a wife; and she and another woman joined the caravan that took the trail 
the following spring [1836]. The caravan possessed, too, wagons and a light 
cart that were to go further into transalpine America than wheels had ever 
gone before. The western filtrate had now no boundary to its passage but 
the Pacific sea." 

2 The Turning Wheel 

no more primitive than the American Indian, had discov- 
ered and applied the wheel in the dawn of civilization; in- 
deed, it is likely that without the wheel Western civilization 
would never have emerged from its birth throes. The two- 
wheeled chariots of Nineveh broke down the barriers of 
space and the boundaries of empires built on self-contained 
river valleys. The mergings of peoples, exchange of ideas, 
tools, and goods over wide distances in short, the early 
education of the race in commerce, mechanics, language, and 
thought were destined henceforth to proceed through and 
by, and to a large extent directly on, wheels. 

Yet prehistoric America somehow missed this potent ap- 
plication of the wheel to earth. Their grave lack was early 
noted by scholars. The learned Dr. Robert Hooke, in the 
1726 edition of his Philosophic Experiments and Observa- 
tions, says that ignorance of the wheel in aboriginal Amer- 
ica indicates that its inhabitants could not have come hither 
from Europe, Africa, or Asia, since the wheel "is an in- 
vention of so great use, that it seems impossible to be lost 
by mankind, after it be once known." 

Ancient Egyptian Wheel 

The American Indians possessed marked capacities in 
many directions. They were excellent workers in stone, as 
well as hardy hunters and bold warriors. They traversed 
wide areas in both war and chase; they were essentially 
moral and lived a primitive religion of exalted concepts 
and close harmonies. In their intertribal relations they were 
capable of acute political sagacity; The Great Peace Pact 

America on Wheels 3 

of the Five Nations of the Iroquois Confederacy, which 
endured at least three centuries, is one of the most subtle 
adjustments of conflicting national political interests ever 
devised, more intricate and better balanced than the League 
of Nations. Yet the Indian gave way before the whites be- 
cause the newcomers had better tools, especially better 
weapons and vehicles. 

At one time or another the American aborigines had used 
the other five primary machines: the lever, wedge, screw, 
pulley, and the inclined plane. With these the Mayas of 
Yucatan and Guatemala and the Incas of Peru built mas- 
sive edifices. But there is no evidence that the Red Man 
ever had command of the wheel. In the meantime, through 
the centuries of recorded time and before, the Asiatics, 
Europeans, and Egyptians had not only evolved wheeled 
carts and chariots, but also they had made so many efficient 
combinations of the wheel with the other five primary ma- 
chines that they had evolved the compass to guide them to 
America, domestic tools of many sorts, the well-ground 
sword blade, and the musket which spat fire. The conquerors 
had inherited a superior technology as well as superior form 
of carriage on land and sea. Hence the aborigines gave 
way. One reason and perhaps the root reason for the 
failure of the aboriginal inhabitants effectively to occupy 
and defend North America may well have been their failure 
to master the wheel. 

But merely to put two wheels on the ground, with an 
axle-tree between them, is not enough to satisfy an artful 
folk with pressing problems to solve problems of suste- 
nance and distribution, problems of state and war. The 
fabled wheel of Ceres, the goddess of Agriculture, might 
be turned into a country cart, the scythed chariot might do 
for war, but not for long could either satisfy the eternal 
demand of a questing people for more speed, more thrills, 
more wealth. The ancients applied more power to wheels 
by harnessing eight and twelve horses to their chariots and 
as many oxen to their wagons, increasing their teams of 
draft animals up to the full limit of the wit and muscle of 
men in controlling them. Within the limits prescribed by 
flesh and blood these ambitious men of ancient days did 

4 The Turning Wheel 

what they could to increase their power in transport. They 
built gorgeous equipages of state, rode furiously in their 
hunts, developed strains of horseflesh suitable to various 
purposes chargers for war, draft horses for tillage, light 
palfreys for milady to ride, high-stepping carriage horses. 
They developed wheeled vehicles in great variety, from the 
simple cart to impressive and beautiful coaches of royalty. 
But ever and always each generation was restricted in its 
burning desire to conquer space and time by the fact that 
the horse represented at once the strongest and most flexible 
power plant he could apply to the wheels of his vehicles. 
Other animals might outdraw the horse, but no other animal 
could combine pulling power with as prompt acceleration. 
The unique conformation of the horse's leg from hoof to 
hip-joint gives him a leverage out of all proportion to his 
weight, and for centuries he was the best motive force man 
had at his disposal for transportation purposes. 

The Horse Age lasted from the dawn of history to recent 
times. In those slow-moving centuries enormous advances 
were made in other directions, but land transport remained 
keyed to draft animals. Man charted the solar system, dis- 
covered the mass of the earth by laying out a geographical 
degree on the plains of Greece, applied the arch, tenon, 
and pillar in architecture, constructed huge cathedrals of 
surpassing beauty, worked out the basic laws of physics 
and mathematics, began experiments in chemistry, developed 
marine transportation from the oar to the sail, applied the 
compass to the discovery of America and the circumnaviga- 
tion of the earth, built large and cunningly contrived vessels 
for the mastery of wind and water, and harnessed water 
power to turn looms. Laboriously he brought water trans- 
port by means of canals to assist in his problems of land 
carriage. In all the practical arts the advance of knowl- 
edge had been tremendous, but from the dawn of history 
down to modern times mankind had available in quantity 
for land transport no better motive power than the horse. 

Yet the challenge toward improvement persisted. Dimly 
the more progressive peoples have understood the truth 
laid down in the report of a Select Committee of the 
British House of Commons on Highways in 1808, that 

America on Wheels 5 

"next to the general influence of the seasons upon which 
the regular supply of our wants and a great proportion of 
our comfort so much depend, there is perhaps no circum- 
stance more interesting to men in a civilized state than the 
perfection of the means of interior communication." 

A philosophical investigator of transportation has said, 
"with the exception of land and ruins there are few things 
of any material value to man which do not derive that 
value, in part at least, from transport from their original 
position." One might go further and say that life, shorn of 
the prospect of ever improving transportation, would be 
dull, flat, and unprofitable. Truly civilization has run on 
wheels from the stone discs of the primitive cart to the 
rubber tires of the automobile. 

Chapter II 




.HE evolution of transport has been worked out by John 
Brisben Walker and others somewhat as follows : 

Floating log 

Animal's back 

Sledge down hill 

Horse-drawn sledge cart 


Ox cart 


Oared galley 

Sedan chair 

Sailing vessel 


Man-powered carriage 

Sailing chariot 

Coach and carriage 


Free balloon 

Steam carriage 




Cable car 

Electric trolley car 


Airplane and airship 

Observe, in the sequence, the progress from the simplest 
of motive powers, water running under the pull of gravity, 
to the explosions of rarefied gases in the internal combus- 
tion engine. Those in the first half of the list are shrewd 
adaptations of forces found in nature. Of special interest is 
the sailing chariot, known in China, and brought to its 
peak in Holland, where one designed by Simon Stevin, 
about 1600, covered forty-two miles in two hours, carrying 
twenty-eight persons, and was used quite regularly. 


Evolution of Self-propelled Vehicles 7 

Even before man tried to harness the wind to land trans- 
port, he endeavored to "beat the horse" by various com- 
binations of muscle and machinery. Heliodorus notes a 
triumphal chariot at Athens moved by slaves who worked 
machinery. A Jesuit missionary in China, Matthieu Ricci 
(1552-1610), declared that he had traveled there inside a" 

Simon Stevin's sailing chariot, Holland, about A. D. 1600 

great wheel, propelled by two fellow passengers who used 
levers to give the wheel forward motion. A beautiful series 
of drawings comes down from the Middle Ages, showing 
men propelling heavy and ornate carriages by worm and 
other gears. The last supreme effort in that direction seems 
to be Sir John Anderson's 1831 patent, in which twenty-four 
oarsmen provided the energy. 

We are accustomed to think of the steam engine as a 
world-shaking invention, but the fact is that for centuries 
after its first application the world wagged on without giv- 
ing the steam engine a second thought. Hero of Alex- 
andria, living in the second century before Christ (130 
B.C.), described in his Pneumatica his famous self-propelled 

8 The Turning Wheel 

apparatus known as the Aeolipile, and also a fountain, both 
operated by steam. The principle used in the engine which 
worked the fountain became highly important centuries 
later, but the scientific Hero appears to have had no dis- 
coverable successor until the forgetful Middle Ages had 
come and gone, although engines like his probably were 
used in unimportant ways and more to amuse than to per- 
form useful work. After the lapse of 1300 years, that 
bold monk, Roger Bacon (1214-94) uttered a prophecy 
to which no one listened: "It will be possible to construct 
chariots so that without animals they may be moved with 
incalculable speed." The prophecy is less remarkable than 
the revelation it gives of the complete loss of interest in 
science between Hero's time and that of Roger Bacon; so 
the latter could do no more than prophesy in a field where 
the former actually had experimented. 

With the Renaissance, interest revived in science as well 
as in art and letters. Giovanni Baptista della Porta in 1601 
began where Hero had left off sixteen centuries earlier, thus 
anticipating Savery T s first practical and productive steam 
engine by nearly a century. 

Ramsay and Wildgoose were not thinking of steam when 
they applied for an English patent, in 1619, for "drawing- 
carts without horses." However, the edge of the curtain 
was being drawn aside a little about this time for the intro- 
duction of the modern Steam Age. In 1629 Giovanni 
Branca, an Italian, came forward with a steam turbine, now 
rated superior to Hero's steam engine and also to that of 
the same type generally accredited to the great English 
physicist, Sir Isaac Newton (1642-1727), which was along 
the same line. It is likely that the Newton engine was made 
after Newton's suggestions rather than by Newton him- 
self. Both Branca and Newton suggested certain uses for 
their simple engines, among them the propulsion of a 
vehicle by a jet of steam, a means still used in cheap toys. 
A Jesuit missionary in Pekin, China Father Verbiest, 
about 1630 used an aeolipile, says Lavergne, "with jets 
of steam playing on a revolving winged wheel geared to the 
wheels of a car." In 1633, Edward Somerset, Marquis of 

Evolution of Self-propelled Vehicles 9 

Worcester, fathered a double-action steam engine, with dis- 
placement chambers, which was the first useful engine, 
though not commercially successful. 

While Englishmen and Italians were pioneering in steam, 
a Dutch scientist, Christian Huyghens, in 1680 described the 
first step in the evolution of the modern internal combus- 
tion engine, the invention of a first explosion engine. In this 
ancestor of all internal combustion engines the ignition of 
gunpowder in a cylinder produced a vacuum into which out- 
side atmospheric pressure pushed the piston. Ten years 
later, in 1690, Denis Papin, a young French doctor ac- 
quainted with Huyghens, substituted steam for gunpowder, 
thereby earning himself a place in history as the inventor of 
the earliest piston-and-cylinder steam engine, although his 
efforts fell short of practical success. 

In 1698 Thomas Savery (1650-1715) obtained a patent 
for a steam engine designed to raise water, and applied to 
it a safety valve by J. T. Desaguliers, thus realizing on the 
suggestion of della Porta, put forth nearly a century 
earlier. Raising water from coal mines seems to have been 
more of a problem at this time than swift transportation, 
and for nearly a hundred years that field was cultivated by 
inventors to the practical exclusion of others. Thomas New- 
comen, an associate of Savery, produced various atmos- 
pheric steam engines, from 1705 to 1711, which found im- 
mediate and high favor with the mine operators. Other 
engineers contributed to this development, yet none of them 
seems to have followed seriously Papin's lead toward loco- 
motion. But witty Bishop Berkeley could see further than 
the men who knew tools; in 1740 he said: "Mark me, ere 
long we shall see a pan of coals brought to use in place of 
a feed of oats." 

Soon men again began to think about power transport. 
Spring-driven carriages were made in Germany in the 
Middle Ages. The spring method of propulsion lingered for 
a long time and developed some fairly successful vehicles, 
but of course they did not solve at all the problems of speed 
and power. A step in the latter direction came a little later, 
in 1753, when Daniel Bournoulli demonstrated to the 
French Academy the point at which steam power could be 

10 The Turning Wheel 

applied to navigation, and was given a prize by that body 
which even then exercised an inspiring influence on the new 
science. The stationary steam engine had proved its useful- 
ness, and was at work daily in hundreds of places. The 
question was: how to make the steam engine portable, gear 
it to wheels, and get it on the road? 

This question tormented the learned Dr. Erasmus Dar- 
win (1731-1 802 ) , who urged Boulton and Watt, the steam- 
engine manufacturers, to produce a "fiery chariot" which 
would fulfill the startling prophecy contained in Darwin's 
poem, The Botanic Garden: 

Soon shall thy arm, unconquered steam, afar 
Drag the slow barge, or drive the rapid car; 
Or on the waving wings, expanded bear 
The flying chariot through the field of air; 
Fair crews triumphant, leaning from above, 
Shall wave their fluttering kerchiefs as they move, 
Or warrior bands alarm the gaping crowds, 
And armies shrink beneath the shadowy clouds. 

James Watt was a canny Scot who is generally regarded 
as the inventor of the steam engine, though we have seen 
that he had several predecessors. He made, however, a 
good many telling improvements on Newcomen's engines 
from 1769 on, bringing the steam engine to the point where 
others more daring than himself were willing to place it in 
carriages and vessels. 

So the scene shifts to France for the great experiment 
in which a full-sized steam carriage, designed for a special 
task, took the road. It will hardly do to say flatly that this 
was the first self-propelled vehicle, but it was certainly the 
first definitely constructed for a concrete and practical pur- 
pose in contrast to those strictly experimental and of small 
scale. Under the stern call of war Captain Nicholas Joseph 
Cugnot designed and directed the construction of an 
artillery gun tractor which, had it been successful, would 
have given Royalist France undisputed control of Europe. 
Seldom have the destinies of the world waited so directly 
upon the success or failure of a machine. 

Evolution of Self-propelled Vehicles 11 

It was a three-wheeler, with the single front wheel carry- 
ing a tremendous load in the boiler and engine, all of which 
had to be moved on a pivot in order to change direction. 
But it also had the failing, repeated over and over during 
the next century, of being underpowered for the work to be 
done. It traveled at about three miles an hour, had to be 
refueled at fifteen miles, and on the second test, upset. The 

Cugnot's artillery tractor, 1769, 
first self-propelled vehicle built for road work 

fickle Ministry, which had financed construction at great 
expense, turned upon the inventor, and he went into exile. 
When Napoleon came to power twenty years later, he re- 
called Cugnot, put him on a pension, and sought to revive 
the project, but by failing to follow up this idea of artillery 
transport, he lost a telling chance to increase the mobility 
of his artillery, just as his failure to adopt Fulton's sub- 
marine lost him his chance to invade England. 

12 The Turning Wheel 

Three years after Cugnot's daring effort, Oliver Evans 
(1755-1819) of Delaware dreamed, in 1772, of using steam 
to propel carriages, but, by his own statement, did not work 
out the plans for his engine till I784. 1 He was certainly the 
first American to apply steam to a road vehicle. It was he 
who received the first United States patent covering a 
"self-propelled carriage," dated October 17, I789. 2 

'Orukter Amphibolis" Oliver Evans' amphibian, 
driven in Philadelphia, 1804 

This extraordinary man, whose genius was better recog- 
nized abroad in his day, and still is, than at home, antici- 
pated Trevithick in applying the high-pressure principle to 
steam engines. He sent to England the drawings of his 
1787 engine; these are said to have been seen by Trevithick 
in 1794-95 and applied by him. In 1804 Evans astonished 
the mechanical world by moving in Philadelphia, partly 
by water and partly by land, a combination steam-wagon 
and flatboat, the first authentic amphibian of record. A pic- 
ture of Evans guiding his 2i-ton Orukter Amphibolis hangs 
in the Automobile Wing of the Arts and Manufactures 
Section of the Smithsonian Institution at Washington, D. C., 
facing the display of ancient motor vehicles which are in 
direct line of descent from Evans* first American self- 
propelled vehicle. He is the great American name in the 
early stages of motor vehicle development. 

Another candidate for inventor of the first American 
steam carriage is Dr. Apollos Kinsley of Hartford, who is 

*The Young Steam Engineer's Guide, by Oliver Evans. First edition, 
Philadelphia, 1805. 
Encyclopaedia Britannica, nth ed. vol. 10, p. 2. 

Evolution of Self-propelled Vehicles 13 

described in Forest Morgan's Connecticut as a Colony and 
a State as "driving the highways of Hartford in one of the 
first steam carriages ever conceived, of which he was the 
inventor at the close of the i8th century." 

Many an idea which events have shown to be sound was 
unduly delayed by the inability of inventors to find back- 
ing. A strange example of this misfortune is William Mur- 
dock (1754-1839), a subordinate of Boulton and Watt, 
who made a model of a steam carriage which was far 
ahead of its time in the simplicity of the application of 
power, but he never patented it because his employers dis- 
couraged him. 

There is something dynamic and challenging in the turn 
of a century which stirs the soul of man to fresh creative 
effort. It was so in 1800. Inventions flooded into the British 
patent office. Then Richard Trevithick (1771-1833), the 
"Captain Dick" who was destined to taste the triumph of 
placing the first locomotive on wheels, to make and lose 
fortunes, and to die at last in poverty, stepped into the field 
of the steam carriage. Wherever Dick Trevithick took his 
stand in his prime he made history. He brought forward in 
1 80 1 a steam carriage whose boiler was of American 
descent, since Trevithick was directly influenced by the 
Americans, Oliver Evans and Nathan Read. It produced 
sixty pounds pressure. Trevithick used a long-stroke engine 
coupled directly to the driving wheels. He had been at work 
on this design five years. It was put together in a black- 
smith shop. One of his friends left this lively picture of its 
initial trial : 

In the year, 1801, upon Christmas eve, Captain Dick got up steam, 
out in the highroad, just outside the shop. When we see'd that 
Captain Dick was a-goin' to turn on steam, we jumped as many as 
could, maybe seven or eight of us. 'Twas a stifEsh hill but she was 
off like a little bird. . . . They turned her and came back to the 

Merry Christmas for Captain Dick that of 1801! He 
ran this car in and out of London several times at an aver- 
age speed of five miles an hour. But there was then no 
market for such an innovation, and Dick and his partner 


The Turning Wheel 

Vivian approached the end of their slim resources. In May, 
1803, Trevithick thought he could sell one quarter interest 
in his patent for 10,000, but the deal fell through. His car- 
riage tore down a fence and was denied the road by pur- 
blind authority. The carriage was dismantled; the engine 
sold to operate a mill. Alas for dreams ! But within another 
year Captain Dick was ready to place upon the rails the first 
steam locomotive, and by so doing earn beyond cavil a 
secure fame. 

England in the first decade of the nineteenth century was 
still a rural and rustic land, full of conservatives, rich and 
poor. The roads were not generally good, but the main 
roads were kept passable by toll-roads associations in which 
considerable capital was invested. The coaching interests 
and the toll-road interests coincided on one point at least, 
that newfangled vehicles should be discouraged. 

First self-propelled vehicle to attain speed of ten miles per hour, 1810 

These interests were sure to rise against a new form of 
highway transport which drew nearer practicability year by 
year. In 1811 Blenkinsop of Leeds made a practical appli- 
cation of steam power in transport by drawing thirty coal 
cars from Middletown to Leeds, three and a half miles, in 
one hour. Interest rose until hardly a technical magazine 
appeared without mention of some new vehicle or experi- 
ment. The Monthly Magazine (London) for November i, 
1819, contains five items on self-propelled vehicles, mostly 

Evolution of Self-propelled Vehicles 15 

hand- or foot-propelled in ingenious ways, and all prob- 
ably bone-shakers. But the extent of the interest in self- 
propelled vehicles in London can be seen in this sentence: 
"A steam carriage has been invented in Kentucky, of which 
word is eagerly awaited." 

In 1821 Julius Griffiths led off, with a well made steam 
carriage, a line of these vehicles destined to become so 
numerous in the next few years that the highway problem 
they created caused a Parliamentary investigation. 

In the primitive state of the art, inventors had not yet 
learned even the primary truth that driving wheels would 
give them enough traction, and that passengers could be 
safely carried on the same chassis as the engine. Like the 
locomotive, which from the first was a "drag" pulling other 
vehicles, many of the early steam carriages made no pro- 
vision for passengers, and these were accommodated in 
stagecoaches attached as trailers. Of the latter type 
was the Patent Steam Carriage of 1824, designed by 
W. H. James and produced by him with the aid of Sir 
James Anderson, Bart. It contained several features of 
novelty and long-continuing interest. James used four 
cylinders coupled to two crankshafts. Each pair of cylinders 
and each driving wheel was independent of the other, to 
avoid a compensating gear in turning corners. In a second 
vehicle, 1829, James forsook his original principles of 
design, "mistaking failure in detail for failure in principle," 
and produced a steam tractor more in accord with common 

While England was entering into a fury of experimenta- 
tion, there appeared in France, in 1828, a steam carriage 
by Pecqueur of Paris which Lavergne says contained the 
germ of all the vital mechanisms of the modern automobile, 
chief among these being a driving wheel geared to the rear 
axle, planet gearing, spring suspension, and a competent 
steering arrangement. What English invention lacked in 
these respects it made up for in aroused feeling among 
inventors, whose search for capital and public acclaim 
lashed them into furies of controversy against each other. 
It is impossible, at this distance in time, to sift the wheat 
from the chaff in the printed evidence of these broils. 

16 The Turning Wheel 

Sir Goldsworthy Gurney occupies the chief place in this 
literature of controversy. As a boy he had seen Trevithick's 
steam carriage and followed that lead by diligently pro- 
ducing a succession of coaches known as Gurney's steam 
carriages. He is said to have made, in 1829, the first long 
sustained journey by mechanical means, from London to 
Bath and return, a distance of 200 miles, at a speed of 15 

Sir Goldsworthy Gurney's steam carriage, London to Bath, 1829 

miles per hour. This record is challenged by a rival, how- 
ever: the picturesque soldier of fortune, Colonel Francis 
Maceroni. The Colonel, with a rival machine in hand, had 
fish of his own to fry. 

This and many other jealousies were brought into the 
open at and immediately following the hearings of the 
Select Committee of the House of Commons in 1831, one 
of the important milestones in the history of self-propelled 
vehicles, because England then led the world as an indus- 
trial nation, and the state of the art was presented to the 
Committee by the leading inventors and engineers. This 
Parliamentary inquiry seems to have been an honest attempt 
to discover how far the highways were likely to be injured 
by steam vehicles, and what promise mechanical transport 
held out to the nation. We will understand its importance 
if we recall that the new departure in transportation was 
under fire from several substantial interests: the alliance 
between turnpike associations and stagecoach operators, 
the widespread antipathy of a public always conservative 

Evolution of Self-propelled Vehicles 17 

and in those years of Chartist discontent bitterly opposed 
to the introduction of machinery in all lines of work, and 
the newly arisen railroad interest. The first railroad for 
regular passenger and freight traffic, the Stockport and 
Darlington, had begun operations six years earlier. Other 
railroads had been opened; some of them were actually 
earning money, and one of them was in a position to pay a 
first dividend. With this record of earnings, capital gen- 
erally was for "clearing the track" of competition. 

Almost from the moment when Trevithick put his first 
steam engine on the rails, British railroading had marched 
ahead, until, after only twenty years of trial, railroading 
had begun to pay. Against this notable progress, steam 
travel on the highways could produce nothing comparable. 
Steam on the highways had never earned a shilling, had 
killed some persons, and thrown whole countrysides into 
terror, and both the influential and the ignorant set their 
weight to hold the highways for horses and pedestrians. Sir 
Goldsworthy Gurney, for instance, was mobbed and his 
engineer injured at a country fair. 

In the ten years from 1828 to 1838 Walter Hancock 
built nine large steam carriages, of which six were used in 
carrying passengers. His buses were safe, dependable, and 
handsome. The public liked them, and Hancock took in 
large revenues but was always under heavy expense from 
pioneering experiments and exorbitant tolls. He testified 
that one of his coaches, in three months* service on the Pad- 
dington road, covered 4,200 miles and carried 12,761 per- 
sons, without mishap or serious delay. He offered to carry 
mails at the then high speed of 20 miles an hour, the usual 
mail speed, attained through relays of horses, being 12 
miles an hour on the fastest routes. He is credited with 
being the first power-vehicle designer to use chain trans- 
mission and the first to make tight metallic joints. His 
wedged drive wheels are also considered important. 

Not far behind Hancock in the point of impressing the 
Committee with reliability of operation was Sir Charles 
Dance. Against Dance it was alleged that his steamer was 
noisy and dangerous, dropping coals and driving horsemen 
and teams into the fields. 

18 The Turning Wheel 

Another interesting development of the Committee hear- 
ings was the reappearance of Captain Dick Trevithick, to 
say that he had a new boiler with a condenser attached, so 
that the same water could be used over and over. 

With full information before it, the Select Committee of 
Commons reported that it was convinced that : 

1. Carriages can be propelled by steam on common roads at 10 
miles per hour. 

2. That at this rate they have conveyed upwards of 14 persons 
per vehicle. 

3. That their weight, including engine, fuel, water and attendants, 
may be under three tons. 

4. That they can ascend and descend hills of considerable inclina- 
tion with safety and facility. 

5. That they are perfectly safe for passengers. 

6. That they are not (or need not be, if properly constructed) 
nuisances to the public. 

7. That they will become a speedier and cheaper mode of convey- 
ance than carriages drawn by horses. 

8. That as they admit of greater breadth of tire than other car- 
riages, and as the roads are not acted on so injuriously as by the 
feet of horses in common draught, such carnages will cause less 
wear of roads than coaches drawn by horses. 

9. That rates of toll have been imposed on steam carriages which 
would prohibit their being used on several lines of road, were 
such charges to remain unaltered. 

A clear victory, on paper, for the road steamer men! If 
Parliament had seen fit to follow the findings of the 1831 
report with appropriate legislation, Great Britain would 
have led the world in motor transport, adding greatly to 
her already dominant industrial leadership. England had 
the inventors, the roads, the capital, and a clear lead in 
the practical operation of self-propelled vehicles, but she 
surrendered this advantage by placing the new industry 
under handicaps which became more and more severe until 
at last, by the Act of 1865, ^ was decreed that no power 
vehicle could use a highway unless it was preceded by a 
man on foot carrying a red flag. Sometimes the rule was 
relaxed to let the red flag be carried by a man on horse- 
back, as is still done on Tenth Avenue, New York, in 

Evolution of Self-propelled Vehicles 19 

advance of New York Central freight trains. This is a 
stock example of the restraint of speed and flexibility of 
transportation by insisting that the old methods shall con- 
trol the new. 

Arbitrary discrimination in tolls was in itself almost 
enough to drive steam carriages from English highways; 
their use decreased greatly after 1836. Britain deliberately 
had turned her back on progress in an art where she was 
once ascendant. It has been said that an English Rip Van 
Winkle, falling asleep in 1831, would have awakened sixty 
years later in a world little further advanced, as respects 
highway transport, than that in which he fell asleep. The 
price Britain paid for this unjust interference which exerted 
state influence in favor of stagecoaches and railroads has 
been enormous in loss of trade and prestige. Because of this 
interference France and America, where government and 
public opinion both favored the new idea in transport, 
forged ahead. The French Academy honored inventors, and 
the French public was favorable, though still limiting high- 
way speed for self-propelled vehicles to four miles an hour 
in the country and two miles in town. 

America at the very beginning of power transport en- 
couraged transport improvements in the highway field, 
falling into the errors of repressive control much later than 
England. Maryland early gave Oliver Evans the right to 
use its roads in his experiments. One of the first American 
steam carriages of record, which Thomas Blanchard 
brought out on the streets of Springfield, Massachusetts, in 
1825, so far commended itself to the Massachusetts legis- 
lature that Blanchard secured an official endorsement; but 
he could find no buyers. The Kentucky vehicle which Eng- 
land was eager to hear about in 1819 seems to have dis- 
appeared from history, and we have but a faint trace of 
another, which one T. W. Walker of Edgar County, Illi- 
nois, late of Vincennes, Indiana, is said to have made and 
operated in 1824 or 1825. William T. James of New York 
City produced one steam carriage in 1829 and another in 
1830. But whatever these vehicles were, we can be sure that 
they were applauded and went their way without official 
interference, because such interference would be of record. 

20 The Turning Wheel 

These American vehicles, like Evans' early efforts, en- 
countered another sort of handicap which was effective in 
discouragement bad roads. America was still in the 
pioneer stage of development; few city streets were paved; 
in the country the roads were wretched, and even in the 
long-settled East they remained almost impassable in wet 
weather. This country of magnificent distances turned to 
railroads as an easy escape from mud. 

The race for public favor and use between the steam 
railroaders and the steam highway school of transport 
ended in victory for the former in both Great Britain and 
America. There remained France, blessed with a splendid 
system of highways, a fertile inventive genius, and a sport- 
ing element both in the aristocracy with means to finance 
experiments and in a public which relished thrills. 

In England mechanical transport had been pushed into 
the fields. From Worby's tractor in 1841 clear through the 
'seventies there is a steady development of the steam trac- 
tor under the encouragement of certain great English 
landlords. There were also some notable developments in 
the highway field, but since use of the highways was so 
restricted, these were restricted to private courses or back 
roads, or else their owners were compelled to a "boot- 
leg" traffic, eluding the authorities. As might have been 
expected, various enthusiasts outwitted the authorities by 
using the roads illegally. A vehicle which has received a 
good deal of attention because of its "bootleg" operations 
was the Fly-by-Nlght, a steam carriage weighing nearly 
seven tons, built by W. O. Carrett of Carrett & Marshall, 
Leeds. After it was publicly exhibited and found of no 
legal use, Carrett gave it to Frederick Hodges of the Lon- 
don Distillery, under whose ownership it acquired its gay 
reputation and name. Filled with sporting characters, it was 
run at night in defiance of the authorities and in this way is 
said to have traveled about eight hundred miles in Kent and 
Surrey. After being summoned for excessive speeds, the 
owners equipped it with fire hose and gave their passengers 
brass helmets to wear, escaping in this way arrest at the 
hands of village constables. At length it was necessary to 
convert the Fly-by-Night into a slower-moving vehicle. 

Evolution of Self-propelled Vehicles 21 

The advance of the mechanical arts in England during 
these trying years may be briefly indicated by listing four 
quite startling innovations. In 1833 Richard Roberts of 
Manchester applied differential gearing to a steam car- 
riage, which solved, in accordance with modern practice, the 
turning of corners, thereby escaping the necessity of having 
one wheel running loose on the turn, which could hardly 
be considered safe. 

Far ahead of its time was William Barnett's contribu- 
tion to the internal combustion engine. In 1838 he invented 
a double-acting gas engine. Its single cylinder was vertically 
placed, and explosions occurred on either side of the piston. 

Another astonishing invention, considering the fact that 
the self-exciting dynamo was not invented until 1871, was 
the electric vehicle produced by Robert Anderson of Aber- 
deen, Scotland, in 1839, apparently the first electric vehicle 
in the world. His carriage was driven by a primitive 
electric motor consisting of bars of iron on a drum. These 
were drawn around by electro-magnets, "probably on the 
principle of some old toys which had a star wheel to pro- 
duce the necessary make-and-break." Gibson thinks it was 
dependent upon intermittent primary cells. 

England pioneered also, in the development of pneumatic 
tires; at least, Robert William Thompson was the first to 
make a clear patent specification of the pneumatic principle. 

In the field of the explosive engine France assumed the 
lead after 1860, when Lenoir of Paris made a gas engine 
more practical than Barnett's English effort of twenty-two 
years earlier. Lenoir made history by igniting his explosive 
mixture with a spark produced through the use of an 
electric battery and an inductive coil. His engine started 
easily and was fairly quiet. Used to drive lathes, printing 
presses, and water pumps, it was the first gas engine to come 
into commercial use. In 1862 Lenoir placed one of his gas 
engines in a vehicle and, using street gas for fuel, success- 
fully drove from Paris to Joinville-le-Pont but was always 
handicapped by low speed and a narrow range of action. 

The British, clinging manfully to steam in spite of the 
legal restrictions which pressed upon them more and more, 
created some notable machines in the decade of the 'sixties, 

22 The Turning Wheel 

being encouraged somewhat by the hope of export trade and 
the fond expectation that the road restrictions would be 
eased in their favor. Instead, however, the restrictions were 

American interest lagged through the middle period, but 
Richard Dudgeon of New York built a steam carriage 

Richard Dudgeon's steam carriage, New York, 1860 

which richly deserves notice because of its unusual span of 
life. Put into storage in 1866, it was resurrected in 1903 
and even then ran at ten miles an hour. 

The early evolution of the steam car has been traced, and 
notice taken of the creation, almost stillborn as far as its in- 
fluence on inventive activity is concerned, of the first electric 
vehicle. To these two grand divisions a third was destined 
to be added and eventually to triumph over the others in 
popular approval and use. This was the car using petroleum 
or one of its derivatives which, after many trials, developed 
into the gasoline car of the present. 

Various steps in the evolution of the internal combustion 
engine have been cited. In 1866 Otto and Langen of 

Evolution of Self-propelled Vehicles 23 

Germany opened wide the door to the evolution of the 
modern high-speed engine by inventing their famous gas 
engine, a comprehensive improvement on Lenoir's, since it 
used only one half the fuel of its predecessor. In 1867 
Otto and Langen were granted United States patents on 
improvements on three kinds of combustion engines : a two- 
cycle non-compression engine, a two-cycle compression 
engine for which the mixture was compressed outside the 
cylinders, and a four-cycle compression engine. The last 
named is the one of historic importance, as its cycle of 
charging, compression, explosion, and expulsion is still 
adopted. It was carried along from gas to oil by Gottlieb 
Daimler, an associate of Otto and Langen, whose petrol 
motor was the first to be manufactured in quantity. 3 

Nearly twenty years were required for Daimler to evolve 
his 1885 petrol engine from Otto's gas engine of 1866 but 
in the meantime inventors elsewhere were busy in other 
directions. Todd of England built a small steam carriage 
for two passengers. In the same year Charles Ravel of 
Paris attempted to propel vehicles with gas motors, and in 
this country Austin constructed a small car in Massa- 
chusetts which was exhibited along the Atlantic seaboard. 

A year later, in 1871, Dr. J. N. Carhart of Racine, Wis- 
consin, built a steam buggy, certified to by J. D. Donald, 
Secretary of State of Wisconsin, under date of December 
14, 1914. Dr. Carhart was assisted by his brother, H. S. 
Carhart, Professor of Physics at Northwestern University 
and later at the University of Michigan. Compared with 
the foreign machines of the same period the Carhart 
vehicle must be rated as a rather crude product. In par- 
ticular, it revealed the curse destined to beset American 
inventors for many years to come that of viewing the 
"horseless carriage" as the only escape from the horse 
itself. For at least twenty years more, American inventors 
in the self-propelled vehicle field would be trying to fit 
engines into carriages of the general type and style to which 

3 See Chap. Ill for a further discussion of the evolution of gas and oil 

24 The Turning Wheel 

their prospective buyers were accustomed, instead of 
evolving designs better suited to carry their power plants. 

The Carhart experiments seem to have aroused great 
local interest, for in 1875 the Wisconsin Legislature passed 
an act appropriating $10,000 as a bounty for the invention 
of a steam road wagon which would meet certain tests as 
to performance and durability. This act was amended sev- 
eral times, but $5,000 was actually awarded in 1879. 

In the 'seventies France began to move definitely toward 
assured leadership. In Paris Amadee Bollee built a number 
of steam omnibuses which enjoyed a long and profitable 
life. Other French achievements of the late 'sixties and 
early 'seventies are Tellier's ammonia engine, and the com- 
pression (not internal compression, however) motors of 
Brothier and Carre. Tellier received a United States patent 
on an ammonia engine for road work in 1871. 

Siegfried Markus of Vienna, at an isolated point as re- 
spects the art in general, constructed a petrol car, but some 
doubts are expressed by Lavergne and others that it ever 
ran. Markus is sometimes credited with building the first 
automobile in 1869; elsewhere the date is given as 1877. 
Like so many other claims to first position, this one would 
seem to rest on a narrow definition of the word "automo- 
bile," yet even that word had not yet been invented. His 
experiments, however, no doubt stimulated the activities of 
men in more favorable locations. 

In 1876 George B. Brayton, an Englishman living in 
Boston, exhibited a petrol engine at the Philadelphia Cen- 
tennial which attracted a good deal of attention, as it 
seemed to represent a distinct advance in American eyes. 
Described in the Encyclopaedia Britannica as the first engine 
to use "fuel oil under compression instead of gas," in the 
end it proved to be inferior to the four-cycle engine then 
being developed by Daimler in Germany. Its chief sig- 
nificance for us lies in the fact that George Baldwin 
Selden, a patent attorney and inventor of Rochester, New 
York, whose keen mind foresaw a demand for small self- 
propelled vehicles using oil fuel, also perceived in what way 
the basic difficulties involved could be solved. Selden sent an 
agent to Philadelphia to study Brayton's engine and, on the 

Evolution of Self-propelled Vehicles 25 

basis of using a similar engine as motive power, drew up the 
specifications which accompanied his application May 8, 
1879, for the famous Selden patent which was finally 
granted to him in 1895. 

The evolution of self-propelled vehicles has been traced 
from the first mention in history down to the year 1879, a 
dramatic date in the American automobile industry. Steam, 
the first motive power of artificial origin, came close to 
successful application on highways in England before being 
blocked by adverse legislation. The distant beginnings of 
the internal combustion engine and the beginnings of the 
evolution of the oil or gasoline engine by descent from the 
gas engine, have been noted. While it is impossible to 
allocate credit accurately, the names of the chief contribu- 
tors are here recorded. 4 

These individuals and many others worked in an atmos- 
phere beset by difficulties to an extent which moderns can 
scarcely comprehend. Under the circumstances, the wonder 
is not that it took centuries to master the art of propelling 
wheeled vehicles by power plants, but rather that the in- 
ventive spirit persevered in these men so strongly that the 
evolution of the motor car proceeded as swiftly as it did. 
Many of them sacrificed their fortunes as well as their lives 
to the great task of advancing in some degree man's mastery 
over space and time. 

The inventors of the 'seventies could see that the rail- 
roads, despite their enormous gains in mileage, speed, and 
dependability, had not solved the transportation problem. 
Tied to tracks of steel, the railway lacked the flexibility 
necessary to make rapid transit available on the highways 
leading everywhere. Away from the rails, land transport 
was still geared to the horse, as it had been from the days 
of the Pharaohs. Goods moved swiftly by rail from depot 
to depot, but away from depots to consumer they were sub- 
ject to the ancient lag of the Dark Ages. In particular, rural 
America lay in a quagmire of mud at certain seasons, and 
even under good weather conditions its beauties could be ex- 
plored by few city dwellers. Vast regions where railroading 

4 For other significant dates and names in the evolution of self-propelled 
vehicles, see Appendix I. 

26 The Turning Wheel 

could not hope to pay a dividend remained in a backward 
condition, almost untouched by the forces of progress which 
steam locomotion had brought to the more favored areas. 

The railroads also had created a serious social problem 
not foreseen in the early stages of their development. The 
advantages which they offered for residence and manufac- 
turing could be reaped only near their stations and par- 
ticularly at junction points. As a result, cities grew to 
enormous size, were densely overcrowded, and slum life 
became an appalling reality. To relieve the congestion 
which rail transport had created, other rail systems first 
cable cars and later electric trolleys were placed in opera- 
tion on city streets, but these were never entirely effective 
because they reproduced, in a small way, the same influences 
which the railroads brought into the situation in a larger 
way. Suburbs so served were strung out thinly along lines 
of transit with large open areas between them. 

The man of 1879 could see, as the man of 1829 could 
not see, that humanity needed more than ever a mode of 
transportation more flexible than anything tied to rails and 
faster than the horse. The railroad had extended tremen- 
dously the range of the individual and the productivity of 
society, but clearly it did not satisfy completely the instinc- 
tive demand of mankind for greater freedom of action and 
a wider radius of effective toil, trade, travel, acquaintance- 
ship, and understanding. 

In the Lynds's Middletown, the most complete picture of 
the evolution of an American community, an old man who 
had entered Indiana on an ox cart is quoted as saying that 
he can put the cause of social change in his day in four 
letters "A-U-T-O." The gasoline automobile in 1879 made 
its first appearance in American history, not as a practical 
vehicle, but as a definite, compelling, and driving idea under 
the spell of which many men would labor shrewdly and de- 
votedly to compass its reality. 

Chapter III 


I/THOUGH American inventors hopefully built steam 
carnages of strange design at intervals from 1800 on, it 
remained for George Baldwin Selden in 1879 to catch the 
first confused vision, on this side of the water, of the 
modern gasoline motor car. A shrewd lawyer, Selden kept 
his application alive from 1879 until 1895, when he secured 
a sweeping patent under which millions were collected from 
automobile manufacturers until, in 1911, its broad scope 
was limited and held not infringed by the actual types of 
motor vehicles then in use. (Columbia Motor Car Com- 
pany vs. C. A. Duerr & Co., 184 Fed. 493.) All General 
Motors cars until then were manufactured under licenses 
from the Association of Licensed Automobile Manufac- 
turers having been formed to exploit the Selden Patent. The 
litigation ending this monopoly is the most famous in Ameri- 
can automobile history. 

The period from Selden's application of 1879 to tne 
founding of Olds Motor Works in 1899 measures the birth 
pangs of the gasoline automobile in America. At the begin- 
ning of that period the French were leading the van of 
automotive progress; at its close America had caught up 
and was poised for adventure in quantity production. 

Economic needs have a way of permeating society, so 
that it is a commonplace of the history of invention to find 
minds far distant from one another in time and space, 
wrestling with the same problems and independently pro- 
ducing results roughly identical. In the long and intricate 


28 The Turning Wheel 

evolution of the automobile this was many times the case. 
Advances in other mechanical arts had to be tried and 
tested by time before they could be adapted to transporta- 
tion. The older industrial countries necessarily provided the 
background for the beginning of the automobile's march 
to assured success. 

Since the internal combustion engine is the heart of the 
modern automobile, its development is of prime interest. 
The chief American name is that of Drake, who in 1855 
introduced incandescent metal as an ignition agent for 
gaseous mixtures. Lenoir's double-acting gas engine, fired 
by an electric spark, came into practical use. Four hundred 
of these engines were in use in Paris in 1865. They were 
quiet and smooth in action but expensive in fuel consump- 
tion. With the year 1867, when Otto and Langen intro- 
duced their free-piston engine at the Paris Exposition, the 
gas engine approached full utility. By 1876 Dr. Otto had 
applied the cycle of operations proposed earlier by de 
Rochas; this cycle, now known as the Otto cycle, was 
worked out independently because de Rochas never brought 
his ideas to execution, and in the meantime practical dif- 
ficulties in the way of completion along his lines had been 

The affinity between gas and oil engines is, of course, 
close, the vapor being produced from oil in the latter in- 
stead of being present as constant gas as in the former. 
The first practical oil engine is credited to Hock of Vienna 
in 1870, but his product was not a commercial success. Bray- 
ton's oil engine, working on the constant pressure system 
without explosion, is said to have been the first of this type 
to use oil instead of gas. 

It seems impossible to determine precisely who first used 
an oil fuel to drive a motor vehicle. Gibson, a considerable 
authority, says that Lawson of England invented an engine 
in 1880 which was driven by the explosion of gas prepared 
from gasoline stored in a receptacle carried on the vehicle, 
which was a tricycle. Worby-Beaumont is inclined to credit 
the priority, at least as far as actual propulsion of a vehicle 
by an oil motor is concerned, to Edward Butler, who in- 
vented a three-wheeled motor tricycle, the Petrocycle, using 

The Formative Period 


benzine or benzoline. This machine was invented in 1883, 
proved in 1884, and exhibited in 1885. The motor had 
double-acting cylinders coupled direct to a single power 
wheel, and burned vapor of benzoline, which was exploded 
electrically. A three-wheeled oil motor carriage by Knight 
is said by some English authorities to have been the first 

First motorcycle oil motor 

oil motor carriage actually to run. At first benzoline was 
used as the fuel, but later the engine was adapted to ordi- 
nary lamp petroleum. 

In France the early 'eighties saw the earnest efforts of 
a few petrol enthusiasts to enter a transportation field 
where steam-power vehicles were at their highest stage 
of development under the leadership of Comte de Dion and 
his associates, Bouton and Trepardoux, later manufactur- 
ing as De Dion, Bouton & Cie. The further progress of 
steam was assured when Leon Serpollet, in 188889, in- 
vented his "flash generator," the capillary water boiler 
known by his name. This improvement gave steam a new 
lease of life on highways, and led to the use of smaller 

30 The Turning Wheel 

steam cars of which, during the next decade, the White 
and Stanley were the first American examples. 

In 1883, Delamare-DeBouteville, borrowing an idea 
from Lenoir, constructed a gas tricycle which used illu- 
minating gas. A year later DeBouteville joined with 
Malandin in building a petrol car which the French claim 
was the first to operate. 

The year 1885 furnishes material for what is still a 
bitter controversy, with traces of nationalist feeling as be- 
tween France and Germany. In that year Gottlieb Daimler 
invented his famous petrol engine in which the vapor from 
oil was burned in the same cycle worked out by Otto for 
his gas engine. 

With Gottlieb Daimler's appearance in the internal com- 
bustion field we approach the significant application of the 
internal combustion engine to the differentialized wheel- 
and-axle, which has given us the modern motor car. Until 
1883, when Daimler conceived the construction of small 
high-speed engines with light moving parts, the various oil 
and gas engines were of heavy construction, rotating at 
150 to 200 revolutions a minute. He attained 800 to 1,000 
revolutions a minute without great sacrifice of durability 
and smoothness. 

The French, however, have put forward the claim of 
Fernand Forest, a humble but excellent mechanic, who 
built a four-cylinder motor in 1885. The 1885 motors of 
both Daimler and Forest seem to have done excellent work, 
but Daimler's came into commercial use in 1890 when 350 
were manufactured and, throughout, Daimler was far more 
influential than Forest. The latter deserves, however, an 
honorable niche in the annals of automobile invention, not 
only for the work he did on motors, but also for the im- 
provements which he made in carbureters. Apparently 
without question he should be credited with the first water 
jacket constructed to warm the carbureter. 

In Germany, Daimler's chief rival was Carl Benz, who 
put out a gasoline tricycle in 1885 which, like all of Benz's 
work, was strongly built and satisfactory in use. He seems 
always to have been a little ahead of Daimler in putting 
the gasoline engine into road work, for in 1886 he matched 

The Formative Period 31 

Daimler's "bone-shaker" with a car containing several 
highly progressive features a device allowing variable 
speeds and an automatic control of the gas supply through 
a clutch lever operating a stop-cock. This car developed 
fifteen miles per hour. The Benz car of 1886 is sometimes 
spoken of as the first gasoline motor car, but this can 
hardly be taken literally, although it was certainly a great 
advance on its predecessors in design and dependability. 
Daimler soon followed with a four-wheel motor car, but 
his first efforts in that direction were not as successful as 
those of Benz. There seems to be no clear warrant for 
the statement of the Encyclopaedia Britannica that Daimler 
"ran for the first time a motorcar propelled by a petrol 
engine." Daimler certainly had the correct motive means 
well in hand by 1883, even if he did not apply it to a motor 
car until 1886. 

Daimler's light and fast engine thrust itself through the 
field of invention as an earthquake heaves a new mountain 
into view. M. Levassor, of Panhard & Levassor, secured 
the French patent right from Daimler and, in adapting it 
to highway use, fixed many of the trends which have made 
the automobile what it is today. The influence of cycle 
design on the French inventive mind freed French inventors 
from the obsession of carriage design which dominated 
early American and English efforts the stagecoach in 
England, and the buggy in America. Levassor placed his 
engine in front, with the axis of the crankshaft parallel to 
the side members of the frame. 

The drive was taken through a clutch to a set of reduction gears and 
thence to a differential gear on a countershaft from which the road 
wheels were driven by chains. With all recent modification of 
details, the combination of clutch, gear-box and transmission 
remains unaltered, so that to France, in the person of M. Levassor, 
must be given the honor of having led in the development of the 

This solemn verdict of Encyclopaedia Britannica seems en- 
tirely justified. America's early effort to use the Daimler 
engine in automobiles was made by William Steinway on 

32 The Turning Wheel 

Long Island in 1888. Steinway secured the American 
rights and spent large sums on mechanical equipment, but 
had little success. 

To this preeminence of France in the history of effective 
motor-car design certain conditions which America at that 
period lacked were contributing factors: 

1 I ) A magnificent system of highways which encouraged 
travel, especially cycling, which in turn led to an efficient 
machine-shop industry. 

(2) An open and friendly attitude on the part of the 
French population and authorities which permitted those 
highways to be used without legal restrictions such as dis- 
couraged experiment and adaptation in England. 

(3) The approval by wealthy French sportsmen and 
aristocrats, who from the beginning gave the automobile 
both financial and moral support. 

In England the development of self-propelled vehicles 
had been greatly retarded by adverse legislation and the 
hostility of the population. Here in America it was re- 
tarded by wretched highways, the indifference of finan- 
ciers, and to some extent by the hostility of the public, 
particularly of the farmers who were later to become the 
chief beneficiaries of the flexible transportation. Also, the 
hard times of the early 'nineties introduced a discouraging 
economic factor into the American situation. 

For these reasons and others, America lagged behind 
Europe during the important ten years following the 
French application of Daimler's engine to road transport, 
but nevertheless there had been substantial American prog- 
ress. Through the growing use of stationary internal com- 
bustion engines, and the design and manufacture of marine 
engines, both American inventors and a portion of the 
public worked slowly toward the predestined goal. The 
American vehicles which took the road were chiefly pro- 
pelled by steam, and down to the late 'eighties they showed 
little if any advance over English "steamers" of a much 
earlier day. 

A direct result of English influence would seem to be the 
four-wheeled steam car produced by John Clegg, an excel- 
lent mechanic, English born and trained, and his son, 

The Formative Period 33 

Thomas J., in the village machine shop at Memphis, 
Michigan, which the younger Clegg still operates. Thomas 
Clegg describes this vehicle as driven by a single cylinder, 
steam being produced in a tubular boiler carried in the rear 
of the car. It had seating capacity for four persons, includ- 
ing driver and stoker. Cannel coal was the fuel. Leather 
belts were used to transmit power, and spring adjustments on 
them provided enough play to let the car negotiate corners. 

R. E. Olds's first horseless carriage (steam) , constructed 188687 

This machine is significant as the first self-propelled 
vehicle on record as being built in Michigan, now and for 
many years the leading state in the Union in the manu- 
facture of automobiles. The reasons for Michigan's rise in 
the automobile world will be examined later. The great 
drive of the Wolverine State to leadership in the industry 
presently would begin, but the Clegg "steamer" neverthe- 
less created hardly a ripple of excitement beyond a twenty- 
mile circle of rural countryside which it disturbed with its 
journeys through its short life of six months. Built in the 
winter of 1884-85, it ran perhaps five hundred miles in 
some thirty tests during the succeeding summer, its longest 
trip being to Emmet and return, a distance of fourteen 

34 The Turning Wheel 

In 1887 Ransom E. Olds, who with his father Pliny Olds 
was engaged in manufacturing gasoline engines for farm 
use, drove on the streets of Lansing, Michigan, a three- 
wheeled steam vehicle. Two years later he brought out 
another "steamer" with a vertical boiler. The Olds steamers 
will be discussed later. 

The three-cornered struggle between oil-and-gasoline, 
electricity, and steam was being waged all over the world 
and would not be settled for another fifteen years. No- 
where was it waged more hotly than in America. Each of the 
three types had its advantages and disadvantages. Steam 
gave smooth acceleration, but it carried the handicap of de- 
lay required for generation beside the difficulty of carry- 
ing enough fuel for a long trip. Electric propulsion meant 
quiet and ease of operation but had the disadvantages of 
extreme weight, limited radius of operation, and long waits 
for battery charging. Oil or gasoline as fuel meant a quick- 
starting vehicle and large reserve power in comparison to 
weight, yet the early vehicles of this type were noisier and 
more complicated in their operation than the others. While 
they possessed a wider range of action and more adapt- 
ability to road conditions, these could not always be realized 
on because of mechanical difficulties. They did possess, how- 
ever, two supreme advantages which tended, as design im- 
proved, to give them supremacy. The fuel they used was 
rather widely distributed from the start, and this distribu- 
tion could be and was easily expanded, so that nearly every 
country store could become a supply station for motor cars 
as soon as demand increased. And, secondly, they could 
be built at a price to fit a wide range of pocketbooks, a 
fact of supreme moment in those early years when the 
measure of transportation investment was the cost of buy- 
ing and maintaining a horse and carriage. 

In 1890 the Olds Gasoline Engine Works, parent com- 
pany of the oldest unit of General Motors, was incorpo- 
rated at Lansing, Michigan, for $30,000. The experience 
of R. E. Olds in producing gasoline engines there would 
turn him soon toward automobiles so driven. For the 
present, however, Mr. Olds continued his experiments with 
steam power. In 1891 he produced the steam horseless 

The Formative Period 35 

carriage with a float boiler, which machine he sold to India, 
thereby consummating the first recorded sale of an Amer- 
ican self-propelled vehicle. 

In spite of "hard times," or perhaps because of the 
adversities of those times, inventors in transport every- 
where were busily at work bringing out novelties which 

R. E. Olds' s first factory, River Street, Lansing, Michigan 

soon were recognized as significant. In 1891 Thomas B. 
Jeffrey patented the clincher rim. In the following year 
Charles E. Duryea and his brother Frank built and ran at 
Springfield, Massachusetts, the first successfully operated 
American gasoline car. 

This car is preserved in the Smithsonian Institution. The 
date given is 189293; apparently the car received pre- 
liminary road trials in 1892 but was not definitely intro- 
duced to the public until 1893. It weighs 700 pounds, is 
propelled by a 4 horsepower motor weighing 120 pounds 
and is fittingly described as a "horseless buggy." It set a 
style, as well as inaugurating an industry. America was so 
thoroughly a horse country, back from the railroads, that 
for years American manufacturers favored carriage styles. 
It is said that the first body delivered to Packard was 
equipped with a whip-socket. 

Acutely aware that the American market did not want 
power cycles, American producers followed Duryea's ex- 
ample of the "horseless buggy," paying little heed to the 

36 The Turning Wheel 

lead given by Panhard & Levassor in Paris in creating a 
design fundamentally different from both cycle and car- 
riage. Levassor revealed the full possibilities of present- 
day automobile design in which a style carriage is moved 
by a power plant placed ahead of it on a chassis, but Amer- 
ican manufacturers for years to come would still be re- 
producing buggies as closely as possible and hiding their 
power plants in narrow spaces beneath the seats. Of course, 
Panhards were expensive; perhaps no country lacking a 
rich and sporting aristocracy such as that of France could 
have provided a broad enough market for them. In Amer- 
ica the inventors strove from the first for cheaper cars, and 
while their initial designs were faulty, their goal was one 
which has been realized so fully that the automobile is in 
possession of the common people here to an extent matched 
nowhere else in the world. 

Elwood Haynes in 1894 and R. E. Olds in 1895 pro- 
duced gasoline-powered cars, the latter the forerunner of 
the famous curved-dash runabout which in a few years was 
destined to become the first American car produced in quan- 
tity. The two-seater Oldsmobile in the National Museum, 
while highly interesting as a specimen car of the times 
(1897), lacks commercial significance, as it was the only 
one of its kind produced. 

Automobile interest the world over was tremendously 
stimulated by the first Paris Rouen race for motor cars in 
June, 1894, and the Paris Bordeaux race the following 
year. One result of these races was the filing of 500 appli- 
cations for patents on all varieties of self-propelled vehicles 
at the United States Patent Office. In the 1898 race, the 
winning Panhard covered 726 miles at an average speed of 
fifteen miles an hour. 

America owes its initiation into automobile racing and 
red-hot automobile news to H. H. Kohlsaat, publisher of 
the Chicago Times-Herald, who offered prizes for the first 
motor vehicle contest ever held in America. After being 
postponed, the race was finally run at Chicago on Thanks- 
giving Day, 1895, under road conditions which provided 
a stern test for the entrants. Snow and slush filled the 
streets, which were soon churned into "a slough of mud" 

The Formative Period 


by the narrow tires of the competing vehicles. The storm 
gave the public excellent proof of the superiority of gaso- 
line-power over horses, steam, or electricity. The winning 
Duryea "horseless buggy" covered the 54.36 miles of the 
muddy course in seven and one half hours, despite stops 
and accidents which caused sixteen miles of extra travel. 

The horseless buggy, one of Charles E. Duryea s first vehicles, l8g3 

Noteworthy is the fact that although all three motive 
powers steam, electricity, and gasoline contested, the 
gasoline cars were most numerous and finished one, two, and 
three. Morris & Salom's famous Electrobat, though given 
a prize for the best showing in. preliminary tests, could 
not cope with the harsh weather and severe going. Duryea's 
victory and the good, showing of other gasoline-type cars 
helped to fix in the American mind the truth that the most 
flexible and dependable automobile, in all weathers and on 
all roads, was the gasoline car. 

38 The Turning Wheel 

So impressed was the race's sponsor by the achievements 
of the day that he declared his faith that, in five years more, 
Chicago streets would show five automobiles for every 
horse. Thanks to the Chicago race the American auto- 
mobile had been launched as "news," and it has continued 
to be news ever since. 

In both the Times-Herald Chicago competition, and the 
French races of the 'nineties, gasoline cars had proved their 
superiority over both steam and electric automobiles in 
those qualities most suitable to the American scene. They 
started more quickly than steam cars and could deliver more 
power per pound than the electrics. Since the fuel they 
consumed could be found at almost any country store, their 
cruising radius was limited only by the condition of the 
roads, and the difficulty of making repairs when wear and 
tear proved too much for their mechanisms. All in all, the 
"horseless buggies" of the 'nineties were seen to be rough- 
and-ready performers capable of meeting the severe tests 
of wretched American roads well enough to augur their 
future ascendency. 

In England, Wallis-Tayler might say that steam would 
eventually carry the day against gasoline and electricity, 1 
but America even then was engaged in a fury of develop- 
ment destined to overturn his solemn verdict. Between 1895 
and 1900 top speed for gasoline cars rose from fifteen 
miles an hour to nearly fifty, and problems of supply and 
repair were being solved. Many companies had sprung up, 
searching for the key to market success. 

Looking backward, it is easy to see the main outlines of 
their merchandising problem, but to the pioneer companies 
the situation no doubt had its puzzles. There was an avid 
public interest in the new means of transport, but the 
country was still depressed as a result of the bitterly hard 
times of the early 'nineties. As cars one by one appeared, 
they were bought by rich folk of a sporting and adventurous 

1<( There can be little doubt that the vast majority of people would prefer 
a smooth-running, reliable steam engine for use as the propelling medium 
of a pleasure or light business carriage, to the evil smelling, dangerous, 
wasteful, and at best uncertain and unreliable engine heretofore chiefly em- 
ployed for that purpose in motors of recent construction." A. J. Wallis- 
Tayler in Motor Cars or Power Carriages for Common Roads, 1897. 

The Formative Period 


turn of mind who sometimes used them ruthlessly on the 
highways, rousing the opposition of pedestrians and horse 
drivers, whose steeds were affrighted by the noisy novelty 
of the few cars they met. Unless automobiles could come 
into common use, so that an individual of average means 
could look forward to possessing one in the future, there 
was danger that the small boy's "Get a horse" would be 
translated into restrictions of the sort which had blasted 
English enterprise two generations before. 

"Horsey* Horseless Carriage" designed by Uriah Smith of Battle 
Creek, Michigan, to keep Dobbin from shying on the road 

The extent of this hostility against automobiles in the 
late 'nineties, especially marked in the rural sections, can 
be indicated by relating the fate of the first motorcar 
introduced into South Dakota. This was a "home-made" 
horseless wagon planned and assembled by Louis Green- 
ough and Harry Adams of Pierre, using a two-cylinder 
Wolverine gasoline motor and a special Elkhart wagon, 
in which the engine was housed under the rear seat and 
power transmitted by chains to the rear axle. It could carry 
eight persons and altogether was a competent vehicle, which 
that then frontier state might well have been proud to wel- 
come as a home product. But such was the public opposition 
that Greenough and Adams were refused the right to carry 
passengers for hire at county fairs, which was their only 

40 The Turning Wheel 

prospect of securing prompt returns on their investment. 
At Mitchell they were refused permission even to bring 
their machine inside the town limits. The Press and 
Dakotan voiced the public verdict when it said: "It is a 
dead moral certainty that that infernal machine will frighten 
horses and endanger the lives of men, women, and chil- 
dren. " 2 So the checkmated pioneers of motoring gave up 
their efforts at a time when it was painfully clear to them 
that motor cars would be an unmixed blessing in that state 
of vast distances. Like hostility manifested itself in many 
other parts of the country. 

Obviously, this popular distrust of the motor car had to 
be overcome, and the way to break it down was to make 
automobiles so common that thousands could drive them 
and more thousands ride in them daily; then horses and 
humans alike would grow accustomed to their passage; 
then the farmer and the working-man alike would learn to 
look upon the automobile, not as a rich man's toy, but as a 
convenience which he might hope some day to possess. The 
conversion of the populace would begin as soon as any con- 
siderable number of car owners started taking their neigh- 
bors for rides. After even one ride the small boy would be 
on fire to own a car when he grew to be a man. 

Quantity production, it is now clear, was the key not only 
to the financial success of the industry but also to winning 
the public mind away from its traditional enmity. Only 
through quantity production of a single model would costs 
be reduced sufficiently to bring the automobile within reach 
of the average American. A car so produced had to be 
small and strong and simple. The first manufacturer who 
could bring a car of that kind to the public "at a price" 
would score an immediate financial advantage and at the 
same time clear the way for the whole industry to surge 
toward large proportions. 

The first company to take that most important step was 
the Olds Motor Works, the oldest unit of the General 
Motors Corporation, with its curved-dash runabout. The 
evolution of that car and of the company which produced 
it appears in the next chapter. 

^Encyclopedia of South Dakota. 

Chapter IV 


s THE twentieth century drew near, the prospect of 
high fortune for those manufacturers who could build 
automobiles in quantity rode scores of ambitious men like 
a witch, stirring them to extraordinary efforts, sleepless 
nights, ceaseless planning. Their customers, the devoted 
"automobiliers" as the phrase of the day ran, were scarcely 
less excited. They had endured the jibes of a prejudiced 
populace; many of them had. been denied the use of streets 
and highways and had cheerfully braved arrest to win 
freedom of movement for their fellows, as Dave Hennen 
Morris and Augustus Post had. done in Central Park, New 
York City. Bold citizens who caught a glimpse of the future 
not only braved the clutches of the law and the wrath of 
mobs; they also did volunteer publicity work for the cause 
of motordom. Mr. Post was one of the leaders in. this field, 
assisting in organizing and publicizing many historic con- 
tests, including the famous Glidden tours, carefully planned 
long-distance endurance runs, annually featured from 1905 
to 1911, for a trophy presented by C. J. Glidden of Boston. 
Foreign observers returned to praise American initiative. 
In London, John Munro describes the encouragement given 
to motor-car manufacturers in France and concludes that 
the French army will soon be motorized. With clairvoyant 
sense, he foresees the "tank": "We are in a measurable 
distance of the ironclad on shore." England was awakening 
from lethargy caused by earlier legal restraints; London, 



The Turning Wheel 

he observes, has an Automobile Club, to match those of the 
United States, France, Germany, Austria, Belgium and 
Italy; while an American, James Gordon Bennett, has pre- 
sented a cup to the Automobile Club of France, to be com- 
peted for yearly by cars representing clubs from both sides 

The Glldden Trophy 

of the ocean, the first race to be held in France in mid- 
summer, 1900, over a course of 550 to 650 kilometers, in 
150 kilometer stages. The French Academy had even in- 
vented an enduring name for the self-propelled vehicle 

American developments might be praised by foreign 
writers but the American reporters on the state of the art 
were a little apologetic. Writes Ray Stannard Baker in 
McClure's for July, 1899: 

Never before has Yankee genius and enterprise created an important 
business interest in so short a time. And yet the motor vehicle in 

Oldsmobile 43 

America is in its babyhood. . . . Here it has hardly passed the 
stage of promotion and promise. 

Notwithstanding this modesty, the achievements re- 
corded in the same article might be considered excuse for 
letting the eagle scream: 

Five years ago there were not thirty self-propelled carriages in prac- 
tical use anywhere in the world. A year ago there were not thirty 
in America. And yet between the first of January and the first of 
May, 1899, companies with the enormous aggregate capital of 
$388,000,000 have been organized in New York, Boston, Chicago 
and Philadelphia for the sole purpose of manufacturing these new 

At least eighty establishments . . . 200 types of vehicles, with 
nearly half as many methods of propulsion. 

A motor ambulance is in operation in Chicago ; motor trucks are 
at work in several cities; a motor gun carriage will be ready for 
army use in the summer. 

The Santa Fe railroad has ordered a number of horseless coaches 
for an Arizona mountain route. 

A trip of 720 miles has actually been made in a gasoline carriage 
(Cleveland to New York), and an enthusiastic automobile traveler 
is now on his way from New England to San Francisco. 

Through most of the articles of the time runs the horse 
motif. Some might lament his passing, as Chauncey M. 
Depew did in Horseless Age, 1899: "As to the ordinary, 
everyday horse, he is certainly doomed." Of course Mr. 
Depew put no time limit on his prophecy and it may yet 
come to pass, but on the record Dobbin has outlived the 
magazine containing his sentence of doom. Other writers 
rejoiced in the prospect of clean, horseless streets. The 
statisticians of the new industry worked out the compara- 
tive costs of hay and gasoline, harness and tires. Their 
general conclusions, that motors were as economical as 
horses, seem a little over-optimistic when one observes their 
neglect of depreciation and replacement, which was then 
even more of an item than at present. 

The truth that here was a new transportation tool and 
not merely an improvement on the horse, had not dawned 

44 The Turning Wheel 

even on the industry itself. Its leaders thought of the auto- 
mobile as making headway only through putting horses out 
of work, whereas the fact is that the number of auto- 
mobiles increased many times before the horse population 
showed signs of falling off. What happened was this: a 
more efficient use of human time lifted the productivity of 
the country, bettered man's economic life, and increased the 
wealth of the nation, so that the new means of transport 
more than paid its way without prematurely displacing the 
equipment already available. 

Even the motor poets were obsessed by the horse; a 
popular verse in praise of the motor-car, declared: 

It doesn't shy at papers as they blow along the street; 
It cuts no silly capers on the dashboard with its feet; 
It doesn't paw the sod up all around the hitching post; 
It doesn't scare at shadows as a man would at a ghost; 
It doesn't gnaw the manger and it doesn't waste the hay. 
Nor put you into danger when the brass bands play. 

These are virtues, but after all they are negative virtues. 
The qualities which gave the automobile a chance to enter 
quantity production, after its long experimental evolution, 
were positive virtues power to carry persons and goods 
faster than they had ever been carried on highways since 
the dawn of time, ability to overcome bad highways until 
better ones could be built, resistance to shock and stress, 
high mobility in rural areas where speed had never been 
applied before, saving precious time, widening the individual 
radius of action, making groups more effective and co- 
hesive, life more various, thrilling, and productive. These 
advantages were destined not only to substitute the auto- 
mobile for the horse on highways, but also to change Amer- 
ica into a nation of travelers moving on ever improving 
highways at an ever increasing tempo toward wider and 
wider horizons, higher and higher standards of living. 

Public interest was rising: how could it be maintained, 
exploited, brought to bank? Through lower prices, obvi- 
ously. Yet costs and prices could only be reduced by increas- 
ing volume. But who dared to commit himself to a quantity 



production program which would absorb all one's capital 
and wreck its originator if the goods could not be sold? 
There seemed no escape from that circle except gradual 
enlargement of volume, an opinion expressed by one of the 
most ardent automobile advocates, W. H. Maxwell, Jr., 
in Metropolitan Magazine for November, 1900. To grasp 


Father of the Oldsmobile 

the opportunity required high courage; to win the leader- 
ship required shrewdness as well. There was only one man 
in America who, in 1899, refused to wait any longer for 
the "gradual enlargement of the volume of business." 
While others pushed on bit by bit, Olds Motor Works made 
the leap into the dark. 

Their take-off for the great leap was Detroit. Various 
explanations have been given for Detroit's position in the 
automobile world, but the one that seems conclusive is this : 
In Detroit, the Oldsmobile early proved a money-maker; 

46 The Turning Wheel 

hence, the pioneer manufacturer could find capital support 
there easier than elsewhere. 

To accomplish quantity production under reasonably 
good management was to reap profits. Nothing else serves 
to commend an industry to a community as swiftly as a 
good earning record. Detroit early became automobile- 
minded, and for that the City of the Straits has the Olds 
Motor Works to thank, since it was the Oldsmobile which 
demonstrated before any other American car that auto- 
mobiles could be made and sold in quantity, and fortunes 
reaped from their manufacture. Once that demonstration 
had been made, Detroit put its money on the automobile, 
and in so doing began its population climb from the eleventh 
city in the United States in 1900 to the fourth city in 1930. 

Another factor in Michigan's development as an auto- 
mobile center was its location on navigable water. Olds, 
Buick, and Leland three pioneers of the industry made 
gasoline engines for marine use before turning to produc- 
tion of motor cars. 

Bringing Oldsmobile to Detroit was in itself the result of 
capital investment built upon an astonishing faith in the 
new vehicle of transportation, and in a wealthy old man's 
confidence in a young man, poor in purse, but rich in ambi- 
tion and practical ideas. 

The young man was Ransom E. Olds, born in Geneva, 
Ohio, in 1864. With his father, Pliny S. Olds, a competent 
mechanic, he came to Lansing, Michigan, and though little 
more than a lad worked in his father's machine shop in 
River Street, where among other products was developed 
a gasoline engine for farm and marine use. By the time he 
was twenty-one R. E. Olds had saved $300, and putting 
that into the business, along with a note for $800 at 8 per- 
cent interest, he became a half-owner of his father's busi- 
ness. In 1892 he bought out the balance of his father's 
interest and incorporated the Olds Gasoline Engine Works 
for $30,000, S. L. Smith being a considerable stockholder. 

Two ideas possessed Olds. One was to improve the gaso- 
line engine : to that end he invented a new type which drew 
gasoline directly into the cylinder. It has since been dis- 
carded in favor of engines using air-and-gasoline mixtures. 

Oldsmobile 47 

No matter: Olds was on his way. The other idea was that 
of putting power behind wheels. In 1887 he had produced 
and driven down the streets of Lansing a three-wheeled 
steam-power horseless carriage, arising early to avoid 
shocking the citizens and scaring the horses. Lansing was 
then the quiet capital of an agricultural state. The city's 
population was only 2,000; there were no paved streets, 
and there were those in the community who objected to 
having their roads used by horseless carriages. 

Olds went on from his three-wheeler to other steamers 
of the more practical four-wheel type, reaching depend- 
ability in that field in 1893. One of his steamers, equipped 
with a flash boiler of Olds's designing, became known all 
over the world through an article in the Scientific American, 
so that its fame reached even to India, resulting in its sale 
to the Francis Times Company of Bombay, India cer- 
tainly the first sale of an American self-propelled vehicle 
for export and perhaps the first American-made passenger 
car u sold for value." This transaction antedates by at least 
five years the Winton sale usually listed as the first Amer- 
ican sale of an American motor car, and in the meantime, 
Duryea had probably sold some of his "horseless buggies." 
As we have seen, a number of steam cars had been pro- 
duced in the United States earlier, but no authentic record 
of a bona fide earlier sale than this one is available. 

A Lansing lad, by name Roy Chapin, later a notable 
figure in the automobile world and Secretary of the United 
States Department of Commerce, running after one of 
Olds's vehicles then and there decided that he wanted to be 
an automobile man. The same decision was being made by 
thousands of the most progressive youths of his generation. 
A little later they would be found energizing the young 
industry with their superb vitality, until the "automobile 
game" became the phrase describing the business in its 
most energetic and resourceful stride. 

But after all, young R. E. Olds's experiences with steam 
were a side issue. His livelihood and his dearest dreams 
were centered in gasoline engines. After four years of 
struggle with debt, he finally stood clear with enough work- 
ing capital to feel safe. The business prospered enough to 


The Turning Wheel 

First Oldsmobile, 1897, now on display at Smithsonian Institution, 
Washington, D. C. 

afford a margin to finance experiments. While these ran 
chiefly to steam, it was inevitable that a manufacturer of 
gasoline engines would eventually abandon steam cars for 
gasoline cars. In actually selling a steam car to India, Olds 
foresaw market possibilities; but concluded that the future 
belonged to gasoline rather than steam. As he said years 
later, "The gasoline engines were our bread-and-butter 
business, and most people thought the car was just a toy, 
but I knew that the car was the big venture." 

This reasoning was built on hard experience with steam 
cars. He knew that boiler troubles would eliminate the 
"steamer" as a popular favorite, as soon as gasoline cars 
could be simplified. While inexperienced in electrics, he 
realized they could not cope with the wretched roads of 
the American countryside; and, hence, could not capture 
the market which arose in his imagination. So he set to work 
to apply the gasoline engine to road transportation, as sev- 
eral others were doing in other parts of the country. 



Facsimile of minutes of directors' meeting, August 21, 1897, 
authorizing construction of first Oldsmobile 

Olds worked hard to get a car ready for the Chicago 
race, but failed to complete it in time. However, he states 
that it was finished before the end of 1895, an d adds these 
details: "This car had high wheels with one-and-one-half 
inch rubber tires. The engine formed the reach and was 
carried on the running gear." 

The work of putting Michigan on the automobile map 
as the first quantity producer of gasoline cars began in 1895 
with Mr. Olds as the chief figure, somewhat assisted by 
Frank G. Clark, whose father owned a Lansing carriage 
factory. Mr. Clark, interviewed in 1922, states that he and 
Mr. Olds worked together on the first Oldsmobile which 
appeared in 1897 and is now in the Smithsonian Institution 
at Washington. This car was the fruit of two years of ex- 
periments conducted chiefly after their regular hours of 
labor. Mr. Clark claims to have built the body, and testifies 
that the front axle was made in the carriage shop and that 
he and Mr. Olds worked together on the spring suspension 
and drive. The correctness of this narration at all points 

50 The Turning Wheel 

is questioned by Mr. Olds, but the appearance of Mr. 
Clark's name as the owner of 127 shares in the company 
which Mr. Olds soon formed to promote the new car, in- 
dicates that there was collaboration of a fruitful kind. 
However, Mr. Clark soon left the venture, and to Mr. Olds 
goes the credit of making a commercial success of the enter- 
prise, as well as for the mechanical excellence of the early 
product, with the financial assistance of S. L. Smith. 

Once the experiment gave assurance of success, Olds 
organized, with the assistance of bankers whose good-will 
he had earned by his all around dependability, the Olds 
Motor Vehicle Company, Inc., with a capital of $50,000 
divided into 5,000 $10 shares. Ten thousand dollars had 
been paid in when the papers, dated August 21, 1897, were 
filed on September 9, following. The purpose of the com- 
pany was stated to be "to manufacture and sell motor 
vehicles." At the first meeting of the board of directors, 
as recorded in the minutes, Olds was empowered to "build 
one carriage in as nearly perfect a manner as possible." 

The 1897 Oldsmobile on display in Washington is the 
oldest General Motors car in existence. It carried four 
persons, on two seats, both facing forward. The famous 
curved-dash had yet to make its appearance, the dash on 
the 1897 model being angular and clearly of buggy origin. 
This car is the only one of that model and year, as Olds 
Motor Vehicle never reached a production basis. However, 
the car ran, and ran remarkably well considering the handi- 
caps its young inventors labored under, more than thirty- 
five years ago. 

Among the stockholders of Olds Motor Vehicle was 
S. L. Smith, a copper magnate of Detroit. Mr. Smith de- 
serves to be remembered as the first man of large means to 
peer into the future of Michigan automobile production, 
catch a glimpse of its possibilities, and finance a new venture 
in a large, vital way. When the Olds Motor Vehicle Com- 
pany was later united with the Olds Gasoline Engine Works 
to form the Olds Motor Works, S. L. Smith's name led all 
the rest in capital contributed, and he remained a power 
in the company until his death. The Olds Motor Works 
came into being as a result of his backing. 

Oldsmobile 51 

For some time Mr. Olds had realized that Lansing, as 
it stood in the late 'nineties, was not a practical location 
for a large manufacturing establishment. There were not 
enough skilled machinists and not enough houses to accom- 
modate an influx of new inhabitants. The Lansing bankers 
already interested in Oldsmobile pulled wires in the East, 
and sites were considered as far away as Newark, N. J. But 
when it came down to cases, Eastern capital still fought 
shy of automobiles. On the way home, therefore, Mr. Olds 
stopped in Detroit to discuss the situation with Mr. Smith, 
already one of his stockholders. The old but vigorous mil- 
lionaire, desirous of entering his sons, Frederic L. and 
Angus S. Smith, in business careers, advised locating in 
Detroit and backed his advice with enough cash to settle 
the issue. 

The Olds Motor Works was promptly incorporated for 
$500,000 on May 8, 1899, "for the manufacture and sale 
of all kinds of machinery, engines, motors, carriages and 
all kinds of appliances therewith." The place of operation 
was designated as Wayne County, Michigan, with offices 
in Detroit. The capital stock was $500,000; 50,000 shares 
at $10 par. The record shows that S. L. Smith held 19,960 
shares of the 20,000 originally issued and paid in, the other 
four shareholders, Olds and Sparrow of Lansing, James 
Seager of Hancock, Michigan, and F. L. Smith of Detroit, 
holding ten shares each. The new company acquired all the 
assets of Olds Motor Vehicle and the original Olds Gaso- 
line Engine Works of Lansing, Olds Motor Vehicle being 
discontinued February 29, 1900. 

In some sources the capitalization of 1899 is placed at 
$350,000 with $150,000 paid in, but the records of the 
Secretary of State must be accepted. The difference may be 
that between shares authorized and shares sold, a residue 
of $150,000 being then unissued. Later distributions of 
stock to the shareholders of the original company gave 
Mr. Olds and his associates substantial holdings. 

Mr. Smith's wealth and reputation drew in other influen- 
tial Detroiters. The Company gained the assistance of 
Henry Russel, one of Detroit's most famous attorneys, 
who became a large stockholder. The company built on 

52 The Turning Wheel 

Jefferson Avenue East, near Belle Isle Bridge, where the 
Morgan & Wright plant of U. S. Rubber is now located, 

First factory erected in United States for automobile manufacture. 
Olds Motor Works plant, Detroit, Michigan, begun 1899 

the first American factory especially designed for auto- 
mobile production. Of his early trials in Detroit, let Mr. 
Olds testify : 

It was our plan at that time to put out a model that would sell for 
$1,250. I had fitted it up with some very up-to-the-minute improve- 
ments pneumatic clutch, cushion tires, and electric push-button 
starter. We thought we had quite a car, but we soon found that it 
was too complicated for the public. That first year we ran behind 
about $80,000. 

The prospects of the industry were not very bright. Winton was 
making some cars down at Cleveland, Ohio, and Duryea, Haynes, 
and Apperson were all in the market. But the public persisted in 
the idea that it was not a practical proposition and would be a 
thing of the past within a year or two. 

Finally, after a long sleepless night, I decided to discard all my 
former plans and build a little one-cylinder runabout, for I was 
convinced that if success came it must be through a more simple 

It was my idea to build a machine which would weigh about 500 
pounds and would sell for around $500. The result was the curved- 
dash "Oldsmobile," weighing 700 pounds and selling at $65O. 1 My 

*First priced at $600; soon raised to $650. Five electric cars were built 
and sold in 1899 and 1900. 

Oldsmobile 53 

whole idea in building it was to have the operation so simple that 
anyone could run it and the construction such that it could be 
repaired at any local shop. We rushed a few of them out as fast as 
possible, and they tested out so well I decided to put them on the 
market immediately. 

We sold 400 the first year, which, was considered a wonderful 
achievement for that period. Having felt our way carefully, I 
decided that the only plan to recover from the slump we had had 
the first year would be to come out with an announcement that 
the following year we would build 4,000 machines. I thought this 
would restore confidence in the industry and I staked all on the 
success of my plan. 2 

There is an element of luck in most successes, and what 
seems bad fortune at one time may become the basis of later 
triumph. Something like that came to pass in the fire which 
destroyed the Olds plant on March 9, 1901. One of the 
workmen at the new factory pulled his forge underneath a 
gas bag; the gas caught fire, and in an hour the plant was 
in ruins. But Fate, in the person of James J. Brady, a young 
timekeeper who was later to become one of Detroit's lead- 
ing citizens, rushed in and rescued the only curved-dash run- 
about that had been built. It was the one tangible asset left. 
There was no good in going on with the other models; they 
vanished from the Olds list overnight. Most of the patterns 
for the new runabout had been burned, but new patterns 
were made from the rescued car. Just a month after the 
fire the Olds force had constructed a new runabout and 
drove it to the hospital where Mr. Olds lay ill. Before 
the end of the year, more than 400 of the famous runabouts 
had been built and sold. 

The fire crisis in Oldsmobile history had another effect on 
General Motors history. To hasten the resumption of pro- 
duction Oldsmobile contracted with the Leland-Faulconer 
Company to make 2,000 motors for the runabout, thus in- 
troducing the Lelands into the automobile business and 
turning their thoughts in a channel which led directly to the 
creation of the Cadillac. 

2 Sketch of R. E. Olds by O. D. Foster in Automotive Giants of America. 
B. C. Forbes Publishing Co., New York, 1926. 


The Turning Wheel 

The production figures of Oldsmobile one-cylinder 
curved-dash runabouts are, in round numbers: 1901, 425; 
1902, 2,500; 1903, 4,000; 1904, 5,ooo. 3 

In addition, 6,500 one-cylinder straight-dash runabouts 
were built in 1905. No other automobile production record 

Detroit to New York in seven and one half days 
ROY D. CHAPIN in Oldsmobile, igoi 

of the period approached this one, in its early achievement 
of quantity production. In 1902 when Olds was building 
and selling 3,299 cars, and when he could have sold 4,000 
if suppliers had been able to fill his orders, less than 1,000 
automobiles were registered in New York, the richest and 
most populous state in the Union. Among the leaders in the 
New York list were Oldsmobile, Locomobile, Mobile, 
Winton, de Dion, Columbia, and Gasmobile. No Fords, no 
Buicks, no Cadillacs, and no Oaklands as yet. 

figures are agreed upon by Messrs. F. L. Smith and Roy D. Chapin. 
For 1901 and 1902 they differ somewhat from figures on unit sales as fur- 
nished by Olds Motor Works, perhaps because marine and farm engines, 
made in both Lansing and Detroit, may have been included as "pieces" in 
unit sales. \ 

Oldsmobile 55 

Oldsmobile sales in New York City took a great surge 
forward after the second New York automobile show in the 
autumn of 1901, to which Roy D. Chapin, then a tester 
for Olds (he would presently be sales manager), drove a 
curved-dash runabout from Detroit. This was the first 
Detroit-New York trip made by a light car. 

Well equipped with spare parts when he left Detroit, 
Chapin needed most of them before he reached his destina- 
tion, as the wretched roads he traveled almost shook his 
light car apart. He was forced to leave the muddy high- 
ways, and drive along the towpath of the Erie Canal, con- 
testing with mule teams for the right-of-way. His night 
stops were Leamington and St. Catharines in Ontario, Ro- 
chester, St. Johnsville, Hudson, and Peekskill, New York. 
He lay up for major repairs at Peekskill, and drove into 
New York seven and one half days after leaving Detroit. 
On his way down Fifth Avenue the runabout skidded into 
the curb, damaging one of the wire wheels, in spite of which 
he made his haven at the hotel where Mr. Olds was anx- 
iously waiting. The doorman would not admit the young 
man in his greasy garments, and Chapin had to find his way 
around the building and sneak in unobserved through the 
servants' entrance to find his employer. 

A good deal of social history is compressed in that in- 
cident the contrast between the formal East and the free- 
and-easy Middle West, the tremendous urge and surge of 
young America typified in a youth of twenty-one attempt- 
ing something that had never been done and being trusted 
by his elders to "put it over." 

As a commercial venture the drive was a decisive success, 
achieving wide publicity which enabled Mr. Olds to make 
a contract with Ray M. Owen to sell 1,000 cars in New 
York City. Detroit's sales drive on the rich New York 
market had begun. 

Detroit occupied no prominence in the industry until the 
Olds Motor Works announced a production of 4,000 cars 
in 1902. In that year, Detroit's first automobile and sport- 
ing goods show was held. Olds displayed a car already 

56 The Turning Wheel 

popular while the Henry Ford Automobile Company dis- 
played a Ford-Tom Cooper racer never successfully brought 
into production. 

Mr. Ford, years afterward, stated that he had been ex- 
tremely lucky in his competitors they had left him prac- 
tically alone in the field under a thousand dollars. 

"Within a few years," said Mr. Ford, "Olds, Hupp, 
Buick, and E.M.F. got out of my way, one by one, in 
something like that order. All of them went into larger 
cars after making a success of small ones. I recall looking 
at Bobby Hupp's roadster at the first show where it was 
exhibited and wondering whether we could ever build as 
good a small car for as little money." 

The trend of early manufacturers toward large cars 
can be explained as due partly to the desire for more 
power and easier riding on the abominable roads of the 
period and partly to the desire of manufacturers to be 
represented in the market by something dignified, costly and 
well designed. At any rate, Oldsmobile production in 1903, 
the year in which the Ford Motor Company was organized, 
was 4,000 cars, by far the largest production schedule of 
any American manufacturer. A clear priority on quantity 
production belongs to Oldsmobile. 

This outstanding achievement by no means reflected 
merely good fortune. Partly, of course, it was due to the 
fact that, underneath the hostility of many persons and 
sections, there existed real need for automobiles and an 
intense interest in them. Still, the business had to be pushed 
through sales and advertising pressure, and there were 
grave manufacturing difficulties to be overcome owing to 
the imperfections of materials and the haphazard processes 
of that day. Mr. Olds was a fortunate combination of 
commercial sense and general mechanical ability, but he 
was not a precisian when judged by latter-day standards. 
His big job was to get goods to market; the whole success 
of his venture depended on that, and he took what would 
now be considered a rather rough-and-ready view of en- 
gineering research. He told Roy Chapin once that it was 
time to correct a fault when the fault made itself evident 
on the road. There was no time in those hectic days to set 

Oldsmobile 57 

up an engineering system which would refine the car in 
advance of need or consumer interest. 

Even on this dot-and-go schedule, extraordinary strength 
and durability marked the Oldsmobile curved-dash run- 
about. We have seen that in 1901 Oldsmobile was the 
first light car to make the rough passage from Detroit to 
New York. In that same year Milford M. Weigle and 
F. L. Faurote introduced into the United States postal 
service a wire-wheeled Oldsmobile runabout which is said to 
be the first gasoline car used in any postal service in the 
world. It carried mail on contract under tests so success- 
fully that a fleet of Oldsmobiles was soon being used for 
that purpose. Credit for initiating this idea of the auto- 
mobile in postal delivery belongs to H. H. Windsor, editor 
of Popular Mechanics and the R. F. D. News, who invited 
F. L. Faurote, then advertising manager of the Oldsmobile 
works, to address the annual convention of rural letter 
carriers at Indianapolis in 1906. 

Mr. Weigle's reminiscences are one of the best records 
of early Oldsmobile achievements on track and road. In 
1902 he won the blue ribbon for piloting an Oldsmobile in 
the first hundred-mile non-stop endurance race staged in 
this country. Between 1902 and 1904 he won three gold 
medals and twelve silver cups, and hung up in succession 
several world's records for light cars on dirt tracks. He 
recalls being arrested three times for driving sixteen miles 
an hour on Broadway, New York City, when the speed 
limit was fifteen miles an hour. In the endurance race of 
1902 at Chicago, any driver who made a speed greater 
than fifteen miles an hour was disqualified. 

In 1903 the Oldsmobile Pirate established a world's 
straight-away record for making five miles in six and one 
half minutes. A little later, H. T. Thomas drove the same 
car to a new mile record the first American car and driver 
to cover a mile of space in less than a minute. In that year 
Oldsmobile won the Tour de France. 

Perhaps the most successful of Oldsmobile's efforts to 
make America automobile-minded was the cross country 
race of 1905 from New York to the Lewis and Clark 

58 The Turning Wheel 

Exposition at Portland, Oregon, where the good roads con- 
vention in the United States was also to be held. The drivers 
contested for the honor of performing the first transcon- 
tinental journey across America in a light car and for a 
prize of $1,000 offered by the company. The story of that 
adventurous journey is one of the liveliest in American 
motoring records. 

The cars left New York City May 8, 1905, driven by 
Dwight B. Huss and T. R. McGargle. Each car carried 
a mechanic who assisted in the driving, Huss' assistant 
being Weigle, an Oldsmobile driver and inspector for many 
years. His log book shows Old Scout pulling into Portland 
on June 21, after forty-four days on the road for a total 
of 4,400 miles and an average of one hundred miles a day. 
Some 350,000 persons witnessed the triumphant arrival of 
the victorious car which had not only traversed rain-soaked 
stretches of gumbo and stormy mountain passes, but had 
also ploughed through trail-less wastes. When Old Steady, 
delayed by even worse conditions on another route, ap- 
peared a few days later, the staunchness of Oldsmobile was 
demonstrated beyond all doubt. 

In the same car, equipped precisely as before, Mr. Huss 
repeated his New York to Portland journey twenty-six 
years later, in 1931, this time continuing on down the 
Pacific Coast. On Old Scout's second expedition across the 
continent he found hard-surfaced highways in place of 
mud and cattle trails, supply and service stations every- 
where along the line, and a rousing welcome. Ten million 
persons, it is estimated, inspected the ancient Oldsmobile, 
which was displayed under the auspices of every major 
automobile club along the route. Old Scout continues in 
service. A feature of the opening of the building erected 
by General Motors for the Century of Progress Exposition 
in Chicago was the appearance of Mr. Huss once more at 
the tiller of this famous runabout, which he drove from 
Lansing to Chicago, carrying a letter from the Governor 
of Michigan to the Governor of Illinois. 

From overseas comes the tale of an even more ancient 
Oldsmobile owned by the famous Krupp family of Ger- 
many and still in service. Efforts to secure this veteran for 

Oldsmobile 59 

exhibition purposes in Europe have failed; Krupps keep 
it "on the job." Other distinguished patronage came as 
soon as it was seen that a quantity production and low price 
were not incompatible with quality. Among early buyers 
were the Queen of England, the Queen of Italy, Sir Thomas 
Lipton, Mark Twain, Chauncey M. Depew, Maude Adams, 
and other celebrities in all walks of life. But even more 
important was the certainty that the common people were 
being initiated into the idea that the automobile was here 
to stay. The country doctor drove an Oldsmobile on his 
rounds, giving more prompt service and extending his effec- 
tive range. The more progressive country merchant went 
to call upon his scattered customers in an Oldsmobile, and 
kept a barrel of gasoline handy to sell to other motorists. 
Farmers began to lose their hostility to the new mode of 
transportation as they saw more cars, and rode in them 
occasionally. When a single company could make and sell 
more than five thousand cars in a year, as Olds Motor 
Works did in 1904, it was clear that America was on its 
way to becoming the motorized country in which a pedes- 
trian came to be defined as a person on his way from one 
motor car to another. 

Under the conditions of the period, the infant industry 
might very well have come to grief financially, since banks 
were cautious, and some even hostile, toward the new in- 
dustry. Olds Motor Works survived by putting the first 
quantity trade in automobiles on a cash or C.O.D. basis. 
Of its firm stand on credits, John K. Barnes says: 

. . . the industry profited greatly by it. [Olds] explained to his 
agents that it was also to their advantage to get their money 
when they delivered the cars. Then the purchasers, he pointed out, 
would be more careful how they used the cars ; they would not run 
them into the ditch when something went wrong and telephone the 
agent to go get the car. That is one of the reasons why the in- 
dustry as a whole has come through past periods of business de- 
pression with little difficulty. 

The Company had a care, too, for the consumer, not 
merely as a prospect but also as a user after the sale had 
been made, a point of view then new to business but one 

60 The Turning Wheel 

that has been followed consistently by the whole automobile 
industry, with an emphasis on "service" conditioning the 
whole relationship of the manufacturer and the market. 
One of the first of these service efforts was the famous 
Oldsmobile "Don'ts." 

Finding it necessary to instruct the uninitiated, Olds- 
mobile issued these "Don'ts," the mere recital of which 
indicates the abysmal ignorance of the 1900 public on things 
motor-wise : 

Don't take anybody's word for it that your tanks have plenty of 
gasoline and water and your oil cup plenty of oil. They may be 

Don't do anything to your motor without a good reason or with- 
out knowing just what you are doing. 

Don't imagine that your motor runs well on equal parts of water 
and gasoline. It's a mistake. 

Don't make "improvements" without writing the factory. We 
know all about many of those improvements and can advise you. 

Don't think your motor is losing power when clutch bands need 
tightening or something is out of adjustment. 

Don't drive your "Oldsmobile" 100 miles the first day. You 
wouldn't drive a green horse 10 miles till you were acquainted with 
him. Do you know more about a gasoline motor than you do about 
a horse ? 

Don't delude yourself into thinking we are building these motors 
like a barber's razor "just to sell." We couldn't have sold one 
in a thousand years, and much less 5,000 in one year, if it hadn't 
been demonstrated to be a practical success. 

Don't confess you are less intelligent than thousands of people 
who are driving Oldsmobiles. We make the only motor that 

Early Oldsmobile advertising reflected the manufacturer's 
natural desire to convince a nation of horse drivers that his 
product could be used as cheaply and generally as the older 
means of transportation. Illustrations frequently showed 
automobiles passing horses on hills, and elaborate tables of 
figures were presented to prove that automobiles would 
not reduce to insolvency a buyer accustomed to the upkeep 
of horses and carriages. Gradually the automobile men 

Oldsmobile 61 

forgot the horse. Oldsmobile advertising began confidently 
to sound the message of the automobile for its own sake. 

Oldsmobile "firsts" include: 

The first steps in modern assembly line development by 
improved system of routing materials in process. 

The first automobile manufacturer's house organ 
Motor Talk. 

The first automobile dealers' house organ The Olds- 
mobile News Letter. 

The first national convention of dealers gathered by an 
automobile manufacturer, held at Lansing, 1907. 

The first comprehensive instruction books to users. 

The first sales manual to dealers. 

Among the newspaper and publicity men often at the 
Olds plant, and helpful in getting the Oldsmobile firmly 
entrenched in the public mind were Alfred Reeves, now 
general manager of the National Automobile Chamber of 
Commerce, John P. Wetmore, then automobile editor of 
the New York Mail, Joe E. G. Ryan of the Chicago Inter- 
Ocean, Edward Westlake of the Chicago Evening Post 
and C. G. Sinsabaugh, then editor of Motor Age, and 
later of Motor, Motor Life, American Motorist and Auto- 
motive Daily News. These and other automobile editors 
and advertising men organized "The Goops," an informal 
organization whose publication Goop-Talk was financed by 
the Smith brothers of Olds Motor Works. Oldsmobile al- 
ways enjoyed a good press. Several famous advertising men 
took the Oldsmobile's message to the public, among them 
A. D. Lasker, later head of the Shipping Board, George 
Batten, Charles Brownell, and E. H. Humphrey. 

In the first automobile copy to appear in the Ladies Home 
Journal a one-column Oldsmobile advertisement Olds- 
mobile is described as "The Best Thing on Wheels": 

The ideal vehicle for shopping and calling equally suitable for a 
pleasant afternoon drive or an extended tour. It is built to run and 
does it. 

Operated entirely from the seat by a single lever always under 
instant control. The mechanism is simple no complicated ma- 
chinery no multiplicity of parts. 

62 The Turning Wheel 

A turn of the starting crank and the Oldsmobile "goes" with 
nothing to watch but the road. 

Price Including 

Mudguards $650.00 

Each part of the mechanical marvel is made from thoroughly tested 
materials of the highest grade. Built in the largest Automobile 
factory in the world by the most skilled motor specialists and 
guaranteed by a firm whose twenty-three years in Gasoline Motor 
and Automobile Construction stand as the very highest guarantee 
of mechanical perfection. 

While the story is well known in the automobile trade, 
the general reader may wonder why Oldsmobile forsook its 
position as the outstanding leader in quantity production 
to enter into the manufacture of larger and finer auto- 
mobiles. Several versions are available, but the true one 
seems to be this: R. E. Olds never possessed control of 
the company bearing his name. As he explains it, the younger 
Smiths, lacking in the experience gained from hard knocks, 
wearied of making cars for the masses. They desired to 
branch out in the direction of larger and more luxurious 
cars, forsaking the humble curved-dash runabout with its 
established market, for a more ambitious program. It is 
only fair to state, however, that the Messrs. Smith foresaw 
strong competition in that field from the rising Ford enter- 
prise and also anticipated some of the trends toward the 
more elaborate engineering of the future which would soon 
render the simple Oldsmobile of the Detroit era a thing of 
the past. At any rate, a division of opinion arose as a result 
of which Mr. Olds retired. He had made "his million" with 
almost unparalleled speed once he got under way. Only 
forty-one years of age when the break came, the prospect 
of a little leisure appealed to him after twenty years of 
intense effort, and he retired gracefully in 1903, being suc- 
ceeded as general manager by Frederic L. Smith, also an 
aggressive leader. 

However, Olds's reputation had reached such heights that 
presently, merely for the use of his initials R E O he re- 
ceived a large stock interest in the newly organized com- 
pany of that name. 



The Olds Motor Works returned to the place of its 
birth Lansing. Following the fire of 1901, a Lansing plant 
had been set up to assist the Detroit operations. This be- 
came the chief seat of activity in 1905 and the nucleus of 
subsequent developments in which Oldsmobile has since 
eclipsed its earlier records. Production of the famous run- 
about continued but experiments in other directions indi- 
cated the new management's interest in larger cars. From 
1904 on Olds Motor Works pushed export trade, doing 
business in Russia, England, France and Germany, and 
becoming the first American automobile company to do a 
quantity export business through regular dealers and direct 
sales representatives. 

The trend away from the one-cylinder engine of runabout 
fame began promptly in 1905, with the launching of the 
"double-action" Oldsmobile with a two-cylinder engine, 

Famous Oldsmobile curved-dash runabout 
America's first quantity car 

which instituted a steady climb toward engineering perfec- 
tion. In 1906 Olds Motor Works exhibited the first medium 
priced four-cylinder car offered to the public. It brought 
out its first six-cylinder model in 1907 and marketed it in 
1908, but the "four" remained the mainstay of production. 


The Turning Wheel 

In 1908, when the newly organized General Motors Com- 
pany of New Jersey bought the Olds Motor Works, the 
production was 1,055 cars > f which 1,000 were "fours." 
Clearly, Olds Motor Works during the years following 
the move to Lansing had not operated as profitably as at 
Detroit. Production fell from 5,000 units in 1904 to 1,055 

Chauncey M. Depew, at wheel of Olds runabout, 1904 

in 1908. The company owed S. L. Smith more than a mil- 
lion dollars and was otherwise not in healthy condition. 
When it came time to sell, General Motors is said to have 
paid a million dollars for some road signs. But, of course, 
the names on the road signs made the value, as the buyers 
very well knew. Oldsmobile still had prestige with the pub- 
lic, almost as much in 1908 as in 1905 when Gus Edwards 
was moved to write his famous song the only automobile 
song which has come down to us in full flavor from those 
distant days, u ln My Merry Oldsmobile." A few bad years, 
in which difficulties of new designs and change of location 
had to be overcome, could not destroy the reputation Olds- 
mobile had won for itself. The new models were intrinsi- 
cally sound in design and the Olds plant was in excellent 
condition. All that Oldsmobile needed, at the lowest turn 
in its fortunes, seemed to be the magic touch of a salesman. 

Oldsmobile 65 

Oldsmobile soon speeded up to the General Motors tempo. 

Olds Motor Works was the first unit purchased by Gen- 
eral Motors after W. C. Durant formed his new holding 
company around Buick. Official negotiations began on Octo- 
ber 10, 1908, though the leaders had been talking "deal" 
for some time. 4 Mr. Durant's first proposal to F. L. Smith, 
the Olds representative, set a price of $5 a share on Olds 
stock, payable four fifths in General Motors Preferred and 
one fifth in General Motors Common, other obligations of 
Olds held by stockholders to be paid off in General Motors 
Common at par. Olds Motor Works was to have two seats 
on the General Motors directorate, and General Motors 
was to name a majority of Olds Motor Works directors. 
This was not accepted, but a counter proposal by F. L. 
Smith on November I2th, which called for $100,000 more 
than the original offer, clinched the big deal. This settle- 
ment provided for the delivery of 152,530 shares of Olds 
Motor Works and the claims of S. L. Smith for $1,044,- 
173.89, in exchange for $1,654,293.89 in Preferred stock 
of the General Motors Company of New Jersey and $i,- 
152,530 in its Common stock. Three of the five Olds Motor 
Works directors were to be designated by General Motors 
which agreed to protect endorsers of Olds paper against 
loss and to provide working capital. General Motors ac- 
quired all Oldsmobile patents, chief of which were those 
on tires, carbureters, and engines, the latter specified under 
the names of Sintz, Richards, and Scavenger. 

In the final settlement, more Olds Motor Works' shares 
"having been turned over than the number specified, the 
Olds Motor Works' stockholders received $1,827,694 in 
General Motors Preferred, $1,195,880 in General Motors 
Common, and $17,279 in cash, a total of more than 

The leadership which Olds Motor Works in its early 
days gave to the whole automobile industry may be meas- 
ured not only in the production figures of the company 
itself, but also in the school which it provided for the 
budding talents of men who since have arrived at positions 
of influence and power. Names once on the Oldsmobile pay 

4 F. L. Smith: Motoring Down a Quarter of a Century, p. 36. 

66 The Turning Wheel 

roll recall the romance of the motor car's early history in 
Detroit and Michigan. A list of graduates from the Olds 
Motor Works "would read like a roll call of the captains 
of the automobile industry." In addition to those already 
named, the early Oldsmobile circle included as employees 
or suppliers : 

Roy D. Chapin, president, Hudson Motor Car Co. 

Charles B. King, said to have been the first man to drive 
a gasoline car on the streets of Detroit. 

John D. Maxwell, who later pioneered the Maxwell car. 

Howard E. Coffin of the Hudson Motor Car Company 
and the "idea father" of the War Industries Board 
with his Council of National Preparedness. 

H. T. Thomas, later chief engineer of Reo. 

Carl Fisher, builder of the Indianapolis Speedway; de- 
veloper of Prest-O-Lite Company. 

B. F. Everitt, body manufacturer, and William E. 
Metzger, master salesman, both later in the Everitt- 
Metzger-Flanders Company. 

George and Earl Holley, developers of Holley car- 

Benjamin Briscoe, founder of the short-lived United 
States Motor Company. 

Charles B. Wilson, Olds factory manager, organizer 
and president of the Wilson Foundry Company of 
Pontiac, at one time the world's largest producer of 
automobile castings. Also his brother, David Wilson. 

Frederick O. Bezner, R. B. Jackson and James J. Brady 
who left OldsmoBile with Chapin and Coffin to found 
Chalmers-Detroit, later Hudson. 

Charles B. Rose, president, American La France and 
Foamite Industries, Inc., New York City. 

Charles D. Hastings, chairman of the Board of the Hupp 
Motor Company. 

John F. and Horace Dodge (Dodge Brothers). 

A complete list of the Olds pioneers who now occupy 
prominent places in the automobile industry would include 
at least 150 names. 

Oldsmobile 67 

Olds Motor Works was a training school for men whose 
later activities resulted in such companies as Reo, Hudson, 
Chalmers, Hupp, King, Columbia, Owen Magneto, Perfec- 
tion Springs, and others. Furthermore, Oldsmobile orders 
for material, spread through the machine shops, body 
works and supply houses, set hundreds of wideawake 
Detroiters to thinking how they could supply those wants, 
improve on their merchandise, and gather part of the golden 
stream of profits which Oldsmobile had started in their 
direction. Detroit rode to wealth and large population 
down a path in the direction which Oldsmobile had indicated. 

This determining influence of the oldest General Motors 
unit on the geography of motordom and the industrial his- 
tory of America is now clearly acknowledged. As John K. 
Barnes wrote in the Motor World of April, 1921, "It was 
Olds's success in Detroit that fixed the center of the auto- 
mobile industry in that city." In less than three years Olds 
Motor Works paid 105 percent in cash dividends and its 
capital stock had risen to $2,000,000. It is equally true that 
Olds Motor Works was the first to reach quantity produc- 
tion by applying the progressive principle of assembly to 
the manufacture of a single model gasoline-engine-driven 
vehicle, and the first to popularize the automobile with the 
American people, taking it from the classification of rich 
man's toy to that of everyman's servant. 

Chapter V 


HILE Oldsmobile was the acquisition by which Gen- 
eral Motors first challenged the attention of the country, 
Buick was the nucleus around which W. C. Durant, Buick' s 
chief and one of the dramatic figures in the history of the 
industry, built up the far-flung structure destined to become 
known the world over as the "G. M." How he acquired 
control of Buick and made it a leader is an absorbing story 
which begins with David D. Buick, man of many talents. 

David Dunbar Buick, whose name already had adorned 
the front of more than two million motor cars when he died 
in 1929, completely realized the traditional picture of the 
American inventor. He was a man of brilliantly progressive 
ideas, native mechanical ability, and little business caution. 
Time and again, he sacrificed the certainty of present 
profits to experiment expensively with new ideas. One vic- 
tory gained, he was always ready to rush on to another 
without consolidating the ground already carried, with the 
result that his finances were usually strained and his backers 
often in distress. 

Men of the lovable and creative type, who sowed more 
benefits than they could reap for themselves, bulk large 
in the history of mechanical progress. They were scouts 
on the frontier of invention in the early days of the auto- 
mobile industry; they penetrated little known territory, 
pointed out trails which others followed to their profit, but 
not infrequently they were unable to win wealth for 


Buick 69 

themselves. Life to them was chiefly an opportunity to ex- 
periment. Many men of this sort made their contributions 
and were forgotten, but Buick remains fixed in the public 

Mr. Buick already had one substantial achievement to 
his credit when he entered the automobile field. A member 
of the firm of Buick & Sherwood, manufacturers of 
plumbers' supplies in Detroit, he had developed a method 
of fixing porcelain on metal, which is the key to the low- 
priced modern bathroom. A steady-going business man 
would have realized on this manufacturing advantage by 
sticking to bathtubs, but to David Buick a bathtub must 
have seemed a dead and inconsequential thing in contrast 
with the gasoline engines which had long engaged his eager 
and inquisitive mind and which he began to manufacture 
in 1900. His partner Charles Sherwood was also of an ad- 
venturous turn. When Buick Auto-Vim & Power Com- 
pany was established in Detroit in 1901, it soon absorbed 
the resources of Buick & Sherwood in experimentation and 
sales efforts. 

"Auto-Vim," in the name, had significance, as David 
Buick hoped to adapt an L-head gasoline marine motor of 
his design to a carriage. The company made these L-head 
engines for boat and farm use with some success, but their 
slender profits were spent as fast as earned. Need for new 
capital brought about the organization of the Buick Man- 
ufacturing Company in 1902, with Mr. Buick as president, 
and it was under this name that the first steps were taken 
in the development of the "valve-in-head" motor. The 
L-head motor was soon scrapped. in favor of the new motor. 

Several excellent engineering minds seem to have con- 
tributed to the early development of this famous motor, 
but documentary evidence indicates that the first steps were 
taken by Eugene C. Richard, an engineer born in France, 
trained in Philadelphia, and connected with the various 
Buick organizations for more than a quarter of a century. 
A contract is in existence between Buick Manufacturing 
Company and Eugene C. Richard, dated May 23, 1903, 
covering his employment as "designer and inventor and 
head of the 3rafting department." Under the Richard 


The Turning Wheel 

patent No. 771095 issued to the Buick Manufacturing 
Company as his assignee, one of the allowed claims covered 

In an explosion engine, the combination of the cylinder-head, of in- 
duction and deduction valves, having their stems extending through 
said head. . . . 

The "valve-in-head" engine is usually associated with the 
name of Walter L. Marr, who entered the Buick circle a 
little later than Mr. Richard, and who rose through many 
years of service to become the chief of the Buick Manu- 

First Buick, Detroit, 1902 

facturing Company and one of America's leading auto- 
motive engineers. He it was who gave this superior motor 
its distinctive name. Mr. Marr was born in Lexington, 
Sanilac County, Michigan. Six years after he went to work 
as an apprentice, he completed a one-cylinder gasoline 
engine on the Otto cycle. He continued his experiments in 
his spare time through many years, producing six different 
types of motors. With this background he built in 1898 a 
vehicle successfully driven by a four-cylinder gasoline engine 
of his own design. It is described as having some very novel 
electric ignition fixtures, including a jump spark attachment. 
This first car of Marr's was built at Cleveland, then the 
oil center of the country, and in it he traveled to various 

Buick 71 

nearby manufacturing cities to visit other designers of gaso- 
line engines, chiefly of the marine type. He was developing 
a car of his own when he met and became associated with 
David D. Buick. 

In the early part of 1903 Buick put a single cylinder 
5 x 6" horizontal engine, designed by Mr. Richard, into a 
chassis of his own design. A little later a two-cylinder op- 
posed engine was substituted for the one-cylinder type. This 
was the car that became the famous Model F Buick, after 
certain changes were made in the crank case. The engine 
was 4- l / 2 x 5" and had its valves mounted in removable 
cages in the cylinder head. 

These early trials and tests took place in and around the 
small factory on Holmes Avenue, Detroit, and apparently 
both Mr. Marr and Mr. Richard were present. Mr. Richard 
was engrossed in the power unit; Mr. Marr, in consultation 
with David D. Buick on chassis and body construction and 
adaptations, made many alterations preceding the trial. 
Walter Marr was an extremely ingenious man in solving 
last-minute problems. By the time he came to Buick he had 
a .grasp on the practical difficulties involved in making a 
staunch and dependable self-propelled vehicle. He had 
worked diligently over the uncertain fuels of that period, 
distilling his own alcohol and petrol spirits. He had designed 
and made many ingenious tools by hand, and from raw 
material had constructed all the engine and chassis parts 
for several cars. 

Mr. Richard was Marr's technical superior under his 
contract, but it is unlikely that Richard could meet as well 
as Marr did the problems presented by the rough-and-ready 
assembly methods made necessary by the imperfect mate- 
rials and workmanship of the period. At any rate, it was 
not long before the positions were reversed and Marr be- 
came chief engineer. In that position he clung so steadfastly 
to the "valve-in-head" principles that he became the chief 
figure in its future development. 

Bringing the Buick car this far along had strained the 
resources of Buick & Sherwood, and they had borrowed con- 
siderable sums from the Briscoe Brothers, Frank and Ben- 
jamin, Jr., then manufacturing sheet metal. The Briscoes 

72 The Turning Wheel 

took an interest in the Buick Manufacturing Company and, 
assuming charge of its finances, changed the name to the 
Buick Motor Car Company, in which the Briscoe holding 
was $99,700 out of $100,000, as the Briscoes felt com- 
pelled to assume control of all Mr. Buick's various interests 
in order to protect themselves. Unable to carry the load any 
longer, the Briscoes determined to sell the Buick. 

The Buick Company was on the market. Who would buy 
it? Remember that in 1903 the American automobile indus- 
try represented chiefly hopes and dreams. A great many 
persons had lost money, and few had profited. Olds was 
the only quantity producer and money-maker in the gaso- 
line field. Leland & Faulconer had prospered, but the 
Cadillac Motor Car Company was still unborn. Henry Ford 
was just getting the Ford Motor Company started. Bankers 
looked askance upon the industry, and there was no reason 
why the investing public should risk capital on new enter- 
prises of such grave uncertainty. 

In the end the sale of Buick was effected largely by acci- 
dent, and a freakish chain of circumstances resulted in a 
startling change in the way of life for a whole section of 
Michigan. Visiting relatives in Flint, Frank Briscoe heard 
from Mr. Dwight T. Stone, a local real-estate man and son 
of one of Flint's early industrialists, of a prospect named 
James H. Whiting, who might be interested in the white 
elephant that Mr. Briscoe had on his hands. 

Flint was then a city of less than 14,000 inhabitants, a 
pleasant county seat, located on a flat plain where two 
railroads, the Grand Trunk and the Pere Marquette, hap- 
pened to cross. From the standpoint of physical geography, 
it held no advantages over the other county seats similarly 
located in central and southern Michigan. To this day 
Flint is a city whose rise to world-wide fame confounds the 
economic geographers, but to one who knows its history, the 
causes of that rise are evident. Flint was located at the ford, 
or, as the French explorers and trappers called it, the 
Grand Traverse of the Flint River, whose upper reaches 
extended for many miles through one of the best stretches 
of Michigan's superb pine forests. It was therefore a 

Buick 73 

natural site for the location of lumber mills. For a genera- 
tion its river banks resounded with the whirr of buzz saws 
and the stream was filled for miles with boom impounded 
logs. Fortunes were made, Eastern capital was attracted, 
and the citizens of Flint became accustomed to certain ideas 
of which they never afterward lost sight. They saw that big 
business had its advantages; they developed an extraor- 
dinary pride in their community and the success of their 
industries, and they stood ready to follow daring leadership. 

Before lumber vanished from the scene through the de- 
struction of the forests, there came to Flint a young 
Canadian, William A. Paterson, to establish in 1869 the 
city's first vehicle-manufacturing plant. At first Mr. Pater- 
son worked at his forge as a carriage blacksmith, but one 
day he threw down his sledge and decided to be a business 
man instead. The carriage industry which he introduced 
there grew to large proportions, as one firm after another 
was founded and gradually expanded, until Flint became 
one of the great centers of the country for the manufac- 
ture of popular-priced vehicles. Assembly methods were 
worked out which have quite a modern ring; as competition 
increased in intensity, these methods were refined, until it 
is possible that the Flint of 1895 led the country in the 
efficiency of factory assembly. Though the frontier receded 
westward and raw materials near at hand were used up, 
Flint carriage companies were nevertheless able to main- 
tain themselves down to the time when the automobile 
ended the Horse Age. 

All these vehicle manufacturers, however, saw the hand- 
writing on the wall: the automobile would drive out the 
horse. One of the first to recognize this was James H. Whit- 
ing, president of the Flint Wagon Works, whose plant, 
extensive for those days, covered part of the present 
Chevrolet site in West Flint. Mr. Whiting was a cautious 
man in most respects, but, foreseeing the eventual throttling 
of the carriage trade, he acted with what must now be 
reckoned a quite remarkable boldness. He began to look 
about for a car which might become the basis for an indus- 
try which would use part of his plant. 

74 The Turning Wheel 

Thus far Flint had had no luck whatever with automo- 
biles in a commercial sense. Two of its more enterprising 
citizens, Judge Charles Wisner and Dr. H. H. Bardwell, 
had built experimental cars for themselves, but neither of 
these gentlemen ever let business interfere with science, and 
their cumbersome vehicles merely amused a populace which 
thought in terms of wheels and hoped against hope for 
practical results. It looked to many as if young Alexander 
B. C. Hardy, who will appear in this tale later, had "hit it" 
with the dashing Flint roadster, all red paint and shining 
brass, which he had begun to make in a little factory down 
by the Grand Trunk tracks, a factory once devoted to the 
manufacture of the now almost extinct whip-socket. Mr. 
Hardy had been nerved to this great adventure by a 
visit to the Paris Exposition, where he saw how far French 
cars were ahead of American cars. Returning home he mus- 
tered a small capital and soon had a smart roadster ready 
for the market. In the end, however, Hardy was forced 
to liquidate, largely through the opposition he encountered 
from the owners of the Selden patent. While he was oper- 
ating, a frequent visitor at his shop was James H. Whiting, 
and undeterred by the young man's lack of success, Whiting 
kept looking longingly for an automobile to manufacture. 

All through the history of American automobile manu- 
facturing in its early stages, will be seen shining examples 
of the courage of ignorance. Here was James H. Whiting 
already well along in years, with no engineering experience 
and no clear conception of the problems involved in making, 
selling, and marketing automobiles. He thought that cars 
could be sold by the same salesmen who went out to sell 
buggies, road carts, and farm wagons. As for manufac- 
turing, he would buy what was necessary, put it together, 
paint and upholster the job which was practically the pro- 
cedure in carriage manufacturing. Other concerns no better 
equipped than the Flint Wagon Works were building cars 
in just that way, so why shouldn't the Wagon Works? In 
due course, carnage firms discovered that building and selling 
motor cars was an entirely different business from making 
and selling carriages. The automobile business required far 



more capital and called for standards of mechanical pre- 
cision beyond anything required in the carriage tracfe, but 
all that remained to be learned. By the time Frank Briscoe 
wanted to unload the Buick, James H. Whiting was in a 
frame of mind to consider negotiating for it. Brought to- 
gether by Mr. Stone, Whiting and Briscoe quickly made a 
deal whereby the Buick concern sent its car over the roads 

Original Buick factory at Flint, Michigan, 190304 

to Flint. These roads were so bad that, in order to nego- 
tiate the 65 miles between Detroit and Flint, Buick and 
Marr, who drove the car, had to cover 115 miles, with every 
mile a test. Machinery, patterns, and dies were brought to 
Flint and housed in a small, one-story building adjoining 
the Wagon Works. The two concerns then formed the Buick 
Motor Company. 

To bind the bargain quickly, $10,000 was borrowed from 
Flint banks on the endorsement of a number of prominent 
citizens. Though of small proportion, this deal was a strik- 
ing example of community morale in a small town. Larger 
banks and endorsers elsewhere would have been more 

76 The Turning Wheel 

cautious, but Flint took the game with a rugged confidence. 

Benjamin Briscoe, Jr., will be remembered as one of the 
colorful and energetic figures in the early days of the indus- 
try, and the daring promoter of the United States Motor 
Company. This company was put forward as an automo- 
bile merger planned to become the chief rival of General 
Motors. When United States Motor Company collapsed, 
Mr. Briscoe must have regretted his sale of Buick for a 
song, since the Buick in the meantime had become the key- 
stone of General Motors. 

The original capitalization of $75,000 in Buick was 
financed by the Flint Wagon Works' declaring a dividend 
of $75,000 which was paid into the treasury of the Buick 
Motor Company, which in return issued stock to the Flint 
Wagon Works stockholders and also* to the Buick interest. 
David D. Buick and his son Thomas received 1,500 shares 
between them. 1 The other large stockholders were James 
H. Whiting with 1,505 shares, Charles M. Begole with 
1,000 shares, George L. Walker, 725 shares, William S. 
Ballenger with 707 shares. Mr. Begole and Mr. Ballenger 
were active in the Flint Wagon Works and later in Chev- 

Buick now had a home and business management whose 
caution would be likely to restrain the optimism of David D. 
Buick himself. The skeleton of an organization was put 
together. A three-story brick building was begun, which at 
first housed all of the company's activities, but later was 
used only for motor and transmission manufacture. Old 
Buick No. i sometime later called No. 2 still has a sen- 
timental attraction for now aging employees who began 
their careers there. Greatly enlarged, the building has be- 
come part of the Chevrolet motor plant. Sixteen cars were 
built in 1903, 37 in 1904, priced at $1,200. These first 
Buicks were equipped with a storm front curtain, with a 
large celluloid window in it, to protect the driver. 

The $37,500 set aside for development had been ex- 
hausted, and loans had been made to carry on the work. 
Mr. Whiting felt that a younger man was needed to master 

a Mr. Buick left the Buick Motor Company in 1906, two years before Gen- 
eral Motors was founded. 



this new business, with its insatiable appetite for capital and 
its crying need for quick decision. By this time he perceived 
clearly that the Buicks, father and son, were neither of them 
business men and that their chief associates were likewise 
more interested in mechanics than in profits. The need of 
the moment was for a man full of energy and vision who 
also possessed a keen sense of market possibilities and the 
courage to think in large figures. 

First Buick car built at Flint, Michigan, igos. Model A 

At a meeting of carriage manufacturers in Chicago, in 
1904, Mr. Whiting told F. A. Aldrich, representing the 
Durant-Dort Carriage Company, of the difficulties he 
faced getting the Buick Motor Company swinging market- 
wise. Mr. Aldrich advised him that the man he should 
interest, the one man who fitted the specifications and was 
immediately available, was William Crapo Durant. "Billy" 

78 The Turning Wheel 

Durant was already a leader among his associates and in 
the opinion of Flint. Born in Boston, December 8, 1861, he 
was the grandson of one of Michigan's war governors, 
Henry H. Crapo, who had brought to Flint part of the 
capital amassed by his thrifty ancestors in New Bedford, 
Massachusetts, where they had followed the sea as mariners 
and shipbuilders to good purpose for some generations. 
Originally of French stock, the Crapos of New Bedford 
and Flint alike were rich, prosperous, and able. 

From boyhood. u Billy" Durant's chief interest was busi- 
ness. He might have gone East to college, but instead went 
to work early in his grandfather's lumber business, one of 
the largest of the many large lumber mills in Flint. Then, 
to get more action, he branched out before the age of 
twenty-one into insurance with an agency of his own. That 
suited him, because insurance was something you could 
go out and sell. No waiting- around for customers to 
come to you, as in. the- store. An almost feverish activity 
possessed him. "Billy" Durant above everything needed 
action. While possessed of a notable faculty for remaining 
calm in the midst of alarms, he seemed to require dramatic 
tension in business. Yet he had also the power of concen- 
trating intently on work. 

All this both Mr. Whiting and Mr. Aldrich knew, for 
W. C. Durant at forty-two was already the most talked 
of man in Flint. As they discussed his availability for the 
automobile business, they recalled the dramatic entry 
Mr. Durant had made into the vehicle field some fifteen 
years before, when he had pioneered the road-cart business 
which provided Flint with its initiation into quantity pro- 
duction and salesmanship. The young insurance hustler had 
bought, while in Coldwater, Michigan, for $50 the patent 
rights for a road cart which carried a good selling point in 
its improved suspension. He took into partnership Josiah 
Dallas Dort, a young hardware clerk, and the new firm con- 
tracted with W. A. Paterson for 10,000 carts at $8 each. 

This was an unheard-of quantity, calling upon the manu- 
facturer to adjust his plant and workers to a new system 
of assembly for such a large operation. But "Billy" went 

Buick 79 

out and made sales rapidly at $12.50. The success-, of this 
flyer in road carts induced other manufacturers to follow in 
that field and to bring to it and other fields large-scale re- 
peat operations. Durant and Dort used their earnings to 
finance the Durant-Dort Carriage Company, which swiftly 
advanced to a position of acknowledged leadership in the 
trade with an annual production of 50,000 "Blue Ribbon" 
vehicles, high earnings, and a strong cash position, which, 
as we shall see, has its bearing on the story of the Buick 
and General Motors. His success in the carriage business 
made Mr. Durant a millionaire before his fortieth year, 
placing him in a position where an average man might have 
been satisfied with both his fortune and his prestige. But 
W. C. Durant was no average man; when the carriage busi- 
ness settled down into stodgy matter-of-f actness, he looked 
for other fields to conquer. 

Thus far his natural bent toward commercial adventure 
had found expression in the sharp competitive building and 
selling of styled carriages, a trade wide open to the risks of 
fashion. If the popular note could be struck with a buggy, 
if its lines attracted rural swains or a town's social leaders, 
the manufacturer drove a thriving trade. By the turn of 
the century the fun was out of the carriage business. 
Mr. Durant went to New York City and was studying 
Wall Street and the Stock Exchange at close range about 
the time that Mr. Whiting was beginning to think that the 
Buick Motor Company needed a new management. 

Mr. Durant came back to Flint the next summer to see 
just what there was to this Buick car which the Flint Wagon 
Works and James Whiting had brought to Flint. With no 
technical experience of his own to guide him, Mr. Durant 
applied the only test he could make, but he did so with a 
thoroughness which to this day is recalled in Michigan. He 
drove that two-cylinder Buick back and forth over a wide 
range of territory devoid of good roads save for a few 
gravel turnpikes built by toll companies. He put it through 
swamps, mud and sand, and pitch-holes for almost two 
months, bringing it in for repairs and consultations and then 
taking it out again for another strenuous cross-country run. 

80 The Turning Wheel 

He had every sort of mischance chronic in the motoring of 
the period, often, of course, being stalled in out-of-the-way 
hamlets for lack of repair parts or fuel and oil. During 
these enforced waits, perhaps in a country blacksmith shop 
which some day would be a garage, this impetuous and eager 
mind wrestled with the future of transportation. 

The central idea of the motor car must have appealed to 
his temperament, for it emphasized qualities and powers 
like some of his own: speed, novelty, flexibility, the ability 
to "get there." Its possibilities for salesmanship and show- 
manship would also appeal to one who had proved himself 
already a most successful distributor of vehicles. The motor 
car, he could see, fitted the progressive American spirit like 
a glove. In addition, here was a piece of merchandise that 
could not be hid; the motor car would advertise itself on 
the street and at the curb. Probably Mr. Durant concluded 
early in these tests that if Buick was not the medium by 
which he would enter the automobile trade, he would get 
into that business in another way before long. But after 
the car had met his severe tests, Mr. Durant looked no 
further : Buick would do. 

By November i, 1904, the deal between Buick Motor 
Company and W. C. Durant was complete; on that day the 
capital was increased from $75,000 to $300,000, repre- 
sented by 3,000 shares of $100 each. Holders of the old 
stock agreed to accept Preferred stock paying 7 percent 
with a 25 percent bonus of Common stock. The contract 
covering this agreement was drawn by John J. Carton of 
Flint, for many years attorney for the Buick Motor Com- 
pany. The Wagon Works stockholders agreed to accept 
Preferred stock for their holdings. It was agreed that later 
Buick capitalization should be increased to $500,000 and 
that the Wagon Works' interest should receive $175,000. 
This was done. On September u, 1905, Buick's stock was 
increased to $1,500,000 $900,000 Common and $600,000 
Preferred. Mr. Carton relates that while the Buick business 
was sound and there was a legitimate need for this large 
capitalization, he had some difficulty finding enough assets 
to justify the increase. He says: 

Buick 81 

In the application presented to the Secretary of State, I listed all the 
assets quite generously up to the legal requirements, but neverthe- 
less we were still $60,000 short, and this was taken up by the fol- 
lowing item: 

"Ownership of invention of combustion engine construction not 
patented for business reasons $60,000." 

This schedule went through, but later attracted little attention 
so that at the next meeting of the state legislature a law was passed 
prohibiting the listing in such cases of any items intangible and 
not subject to execution. However, it was quite important that 
the company have the full amount of the stock to issue at that time, 
as Common was usually given as a 25 percent bonus with sales of 
Preferred. The fact that I was very well acquainted at Lansing, 
the state capital, may have been beneficial in getting such a hazy 
item passed. 

Mr. Durant himself sold most of the stock. It is related 
that at the outset he sold $500,000 worth in a single day to 
his Flint neighbors. There can be no doubt that Mr. Durant 
was a most persuasive salesman. An aura of success hung 
around him. For more than twenty years all his undertak- 
ings had profited; early in his selling campaign he had 
indisputable proof that Buick was making money. Produc- 
tion was steadily increasing, and he could sell every car he 
produced for cash, F.O.B. factory. So keen was the demand 
that his problem was not so much selling cars as finding 
capital with which to erect buildings, install machinery, and 
create a distributing organization so that more cars could 
be built and delivered. However loyally Flint might buy 
stock, it was too small a city to finance the expanding enter- 
prise; Mr. Durant had to go out into the highways and 
byways of Michigan for capital. In this search he was tire- 
less. He saw an immense fortune, tremendous power, and a 
lofty reputation as an industrial pioneer almost in his grasp 
if he could only find the necessary capital. 

Of course, it goes without saying that, in representing 
the golden prospects of his venture to investors, faith and 
sincerity accounted for his extraordinary success in getting 
promotion money from individuals. He would have been 
saved a tremendous amount of time and energy if he had 

82 The Turning Wheel 

been able to secure the services of a strong investment 
banking house to dispose of his securities systematically, but 
this was out of the question in that time and locality. Local 
bankers helped him all they could, and his persuasive per- 
sonality drew temporary aid from larger banks outside of 
Flint, but what he needed was a large fixed capital invested 
for a long pull, and this he could secure only through fur- 
ther personal effort. 

Meantime, as the builder and leader of Buick, he found 
a host of problems other than financial demanding solu- 
tion. Since it was early apparent that Buick's facilities in 
the western end of Flint would be inadequate, offices and 
assembly operations were transferred to a factory in Jack- 
son which had been used by the Imperial Wheel Company. 
Imperial Wheel was part of the Durant-Dort family, as 
were the Flint Varnish Works and the Flint Axle Works. 
The three companies had already been located in the 
north end of Flint, where, with a view to future expan- 
sion of these and other companies, Mr. Durant had pur- 
chased the 22O-acre Hamilton farm for $22,000. Thus he 
had in hand an excellent site for the expansion of Buick it- 
self with adequate trackage on the Pere Marquette rail- 
road, and good location as respects drainage, water supply, 
and general accessibility. He planned to sell part of this 
area as building lots, laying out for that purpose Oak Park 
Subdivision. But of course an immense amount of organiz- 
ing work had to be done on the tract and its approaches, as 
well as in plant construction, before Buicks could be pro- 
duced there. In the meantime the Jackson plant held the 
fort while Buick motors continued to be made in West Flint. 
Jackson, indeed, might have continued as the chief seat 
of Buick if capital could have been found there as easily as 
in Flint. 

This geographic division of the business increased the 
labors of the leader. We can picture Mr. Durant at this 
time as a man desperately hurried, spurred by ambition and 
responsibility to feats of almost superhuman endurance, 
driving at breakneck speed over wretched roads between 
his two plants, holding conferences, making quick decisions, 
seeking out and encouraging new dealers, scouring the 


Founder of General Motors 

84 The Turning Wheel 

country for supplies and building plants, subduing raw land 
to industrial and residential uses and feverishly seeking 
new capital. This spare, small man seemed to draw upon 
irresistible sources of energy. He worked more hours than 
any of his employees, did with little sleep, yet came to his 
labors fresh and smiling every morning. There was a gaiety 
and resilience in him which overcame all obstacles. The 
press began to speak of him as the "Little Giant." His wor- 
shipful associates might call him "Billy," but among them- 
selves they fell into the habit of calling him "the Man." 
"The Man says," was the common preface as they passed 
his orders along from one to the other. Sometimes "He 
says" would be a sufficient indication of authority. Both 
forms were proof of the loyal and willing acceptance of 
that authority. He was the first among equals rather than 
the autocrat, and no captain has ever been followed by more 
devoted troops. The camp followers, the local public, and 
the business men alike hung on his words. 

One factor in developing this amazing and truly affec- 
tionate loyalty was his lack of concern for individual gain, 
the natural ease and buoyancy with which he played the 
prince in distributing bounties. There are innumerable evi- 
dences that he cared little for money for its own sake. His 
own tastes were simple, he had no time to spend money; 
already well off, he had serene confidence that he would 
always be successful and that nothing could stop him from 
amassing an immense fortune in the automobile game. I use 
the word "game" advisedly: if he was not the man who 
invented that adventurous expression to describe the early 
activities of what has since become a most precise and 
responsible business, he at least played that great game 
most completely as an adventure of the human spirit. 

As an example of his lavish disregard of personal gain 
and his willingness to share profits with those whose back- 
ing had braced him in the past, Mr. Durant is said to have 
turned in to the Durant-Dort treasury at one time some 
$300,000 worth of Buick stock, voted to him personally in 
return for his work in promoting the company. In com- 
pleting his layout for the approaches to the Buick indus- 
trial site, he paid $4,000 for land offered at $1,800 simply 

Buick 85 

because he knew that this land as part of his grand objective 
was worth that much and more. The instances of his 
largesse could be multiplied indefinitely. He explained his 
generosity toward Durant-Dort stockholders by saying that 
he had been on the Durant-Dort pay roll during the period 
in which he was organizing Buick, though the fact is that he 
was drawing a merely nominal sum from his old company. 
Of course, the essential fact is that he enjoyed doing these 
things, and the power to do them was his compensation. 

With a swift expansion program in hand and no banking 
connections equal to the situation, there were times when 
the good-will built up so generously brought important re- 
turns in timely assistance. Mr. F. A. Aldrich, secretary of 
the Durant-Dort Carriage Company for many years, shows 
from his records that Durant-Dort furnished Buick with 
capital in its early stages. Mr. Aldrich says : 

Owing to a decreased trade in horse-drawn vehicles Durant-Dort 
Carriage Company needed less capital; both our treasury and 
credit were in excellent shape, while Buick needed assistance. 
Hence in the spirit of "team-work" proverbial as applied to Durant- 
Dort and under full recommendation of Mr. Dort, president, 
we made in one way or another large investments in Buick stocks 
and also later in General Motors stock. At first these stocks were 
held in our treasury but later on legal advice they were placed in 
my name as trustee. We made several disbursements of this stock 
to Durant-Dort stockholders as dividends. 

The records show numerous instances of our helpfulness. We in- 
dorsed Buick paper in Chicago on one occasion, and the loan fall- 
ing due at an unfortunate time, Durant-Dort had to sell Buick 
stock at distress prices to pay it off. On June 4, 1906, Durant- 
Dort bought $100,000 worth of Buick stock. There was a close 
financial relationship between the two companies then, and it con- 
tinued after General Motors was formed. On Feb. 20, 1909, 
while General Motors was still in its infancy, I was authorized to 
buy and hold 10,000 shares of its Preferred and Common stock. 
Later, when Mr. Durant took on Chevrolet as an independent 
venture, the Durant-Dort treasury furnished him funds. In fact, 
within reason, our resources were always at his disposal. 

The Flint Wagon Works also helped Buick get on its 
feet. Five of its directors loaned the Buick Motor Company 

86 The Turning Wheel 

at one time $20,000 each to match an equal sum loaned to 
Buick at the same time by the Durant-Dort Carriage Com- 
pany. Thus in one way or another, with occasional rescue 
loans and a vigorous search outside of Flint for capital, 
Buick expansion was financed. 

Even when allowances are made for the newness of the 
automobile business and the suspicion in which it was held 
by the banking world in general in those early days, it does 
not appear that Mr. Durant ever quite deserved the repu- 
tation for financial genius which at one time clung to his 
name. Certainly, in the formative years, finance was his 
weak side. While he could make money in his operations, 
and raise a good deal of money by his personal force and 
the confidence which he inspired, he never seemed able to 
budget his operations accurately in advance and build up 
reserves. His vision was always running far ahead of his 
treasury, so that there was always the possibility that his 
affairs would approach the ragged edge of necessity if a 
turn came with an unfavorable market for his goods, or 
the well-springs of capital suddenly ran dry. His inven- 
tories and commitments were usually in excess of his present 
power to pay, but he had an immense faith that by the 
time he had to pay for them he would find the money 
somewhere. Either the market would provide it or stock 
would be sold; in a pinch he could go to friendly corpora- 
tions or individuals. He kept the golden ball in the air by 
sheer dexterity and courage through six straining years of 
exceedingly rapid expansion. Looking backward upon the 
activities of a quarter of a century ago it can be seen that 
the notable human qualities behind this triumph also had 
their defects, which eventually caused Mr. Durant's retire- 
ment from the vast business which he originated. But it 
can also be appreciated that his qualities were precisely 
those needed to get a foundation laid with whatever tools 
and materials were ready at hand. Probably no other man 
could have built up Buick in four years to a point where, as 
an acknowledged leader in the industry, Buick became the 
rock on which General Motors was founded. 

Courage is the key-word for this Buick surge to market 
leadership. Buick dared to produce in large quantities when 

Buick 87 

most of its competitors were proceeding cautiously on re- 
stricted schedules. It pioneered in the development of 
attractive retail stores in large centers, and drew able, 
ambitious men into both wholesale and retail selling. There, 
perhaps, was Mr. Durant's greatest contribution to the 
technique of automobile administration. 

For a man so vastly daring it was inevitable that as Buick 
production rose, further expansion should seem not only 
desirable but indeed necessary. Vital supplies had to be 
safeguarded both as to volume and prompt delivery. Com- 
petition was then less of a wrestle for markets and more 
of a race against time. The public would take Buicks as fast 
as they could be turned out; delay in delivery of even a 
minor part might cost a tremendous sum. Even to this day, 
no automobile manufacturer controls the production chain 
of all supplies from their primary forms to their incor- 
poration in a completed automobile ready for the road; yet 
in this industry utter dependence on certain forms of goods 
was so essential that practically all the survivors in the 
stern battle for existence waged during the past thirty years 
are those who have been working toward self-determination, 
seeking positions where their operations could not be shut 
off by shrinkage of those essential supplies. 

For instance, consider engines. In the early days of the 
industry many automobile manufacturers bought all or part 
of their power units. While these units may have been 
entirely satisfactory in price and quality, nevertheless, the 
automobile manufacturer soon realized that his produc- 
tion schedule was at the mercy of circumstances beyond his 
control. A stoppage in his supplier's plant, arising from any 
one of a number of causes, tied up his own plant. This risk 
being too heavy, the tendency has been for car manufac- 
turers to take over engine manufacture. Some have gone a 
considerable distance toward controlling supplies from raw 
materials to the finished product, yet no manufacturer has 
been able as yet to process all the materials used in auto- 
mobiles, because of the wide range of those materials and 
the special skill and large capital required to bring them into 
economic use. The drift has been toward self-sufficiency, yet 
complete self-sufficiency has not been attained and probably 


The Turning Wheel 

never will be. But in this evolution nearly all those manu- 
facturers who depended altogether on assembling the prod- 
ucts of other enterprises have either perished or have been 
absorbed. The survivors are those firms which accepted the 
responsibility of making for themselves goods which others 
would have been glad to make for them, but which for 
various substantial reasons it seemed vital to control 
throughout the entire process of production and assembly. 
Mr. Durant realized the value of broad organization be- 
fore he entered the automobile field. The Durant-Dort Car- 

1904 Buick, priced at $1,250, top and lights, $125 extra 

riage Company had gone further than any of its competitors 
in organizing subsidiary, or at least dependent, companies. 
It had fathered companies for the production of wheels, 
paint, varnish, and axles; through others it owned in whole 
or in part extensive timber holdings in distant states. It was 
natural that, faced with the market possibilities of the 
automobile and the difficulty of securing supplies of the 
right sort as required in his hot haste for action, Mr. Durant 
should leap to the conclusion that he needed bmader organ- 
ization than Buick, big enough to include not only other 
motor-car producers but also makers of essential parts. 

Buick 89 

The need to control supplies was keenly felt in 1907, 
when Buick, which had concentrated successfully on two- 
cylinder cars, added four-cylinder models to the line. In 
1908 diversification was carried even further, with two two- 
cylinder models, and four four-cylinder models. One of the 
latter the famous Model Ten started Buick on the 
heaviest production it had yet known, and its success was no 
doubt one of the elements encouraging W. C. Durant to 
envision a General Motors. Frederic L. Smith's remi- 
niscences Motoring Down a Quarter of a Century indi- 
cate that his first talks were with Mr. Smith at Lansing, 
and that the very name, General Motors, was thus early 

Flint meantime was booming as Buick drew labor from 
all directions. Responding to the pull of high wages, men 
hurried there from all quarters of the compass, from other 
industrial cities, from the farms of southern Michigan and 
the forest areas further north. Tool makers came from 
Providence and Hartford. The population of the city 
doubled in five years. House-building could not keep pace 
with the flood of arrivals. While Buick factory No. 10, then 
the largest industrial building in the world, was under con- 
struction, the neighborhood resembled a mining camp. Liv- 
ing quarters were at a premium; the same bed would be 
rented to a night-worker by day and a day-worker by night. 
Shacks, hastily thrown together to provide some sort of 
shelter, housed families who were having their first taste 
of prosperity. Farms were subdivided right and left, 
townspeople built houses as fast as they could, spurred by 
rising values as well as by public spirit. One could see all 
the evidences of rapid municipal growth, the difficulties of 
absorbing a large, new population swiftly into an old one. 
Persons of foreign blood congregated in colonies Polish, 
Hungarian, Serbian. 

What one could not see as readily, unless he knew the 
Buick shops, was the terrific task which faced the Buick 
organization in molding this medley of raw and transient 
labor into an efficient working force, its members well dis- 
posed toward one another and toward management. Flint 
was an open-shop town, and that tradition, bolstered by 

90 The Turning Wheel 

high wages and the opportunities for advancement offered 
by a new industry, held firm against the few and withal 
rather weak efforts to unionize the plants. A dynamic and 
dramatic leadership helped to maintain that tradition until 
employee morale could be built up to a quite remarkable 
peak, until men began to see that Buick, springing from the 
soil of the Hamilton farm, would be an enduring institution 
in whose plants they could find steady and profitable em- 
ployment during normal times and which in fact proved for 
years more resistant to business depression than the aver- 
age manufacturing plant. 

Buick in 1908 manufactured 8,487 cars, occupied the 
largest automobile plant in the world, and had a net worth 
of $3,417,142. It had never missed a dividend on its Pre- 
ferred stock. 

General Motors, immediately after its organization in 
September, 1908, took over Buick Motor Company for 
$1,500 cash, Common stock of $1,249,250, and Preferred 
stock of $2,499,500 a total of $3,750,250, a conserva- 
tive valuation to which Buick had grown from $75,000 
within the remarkably short space of four years. 

Although its manufacturing processes would be consid- 
ered haphazard and inefficient in the light of modern tech- 
nology, they were abreast of the best practice of the 
day. Buick possessed a spirit in its personnel and a reputa- 
tion with the public which made it a tower of strength from 
which its bold organizer, after surveying wider fields, could 
advance toward his great objective the formation of the 
General Motors Company. 

Chapter VI 

ONTIAC, another great seat of General Motors manufac- 
turing, began its industrial development as Flint did, with 
the building of horse-drawn vehicles. The first Pontiac bug- 
gies and wagons were built by a blacksmith named King 
on the site of the present Fisher plant near Bagley Avenue. 
W. F. Stewart, who later went to Flint and rose to emi- 
nence there as a body-builder, bought King out and started 
his career in Pontiac, later selling his site to O. J. Beau- 
dette who sold in turn to Fisher Brothers. The site has a 
continuous history of vehicle manufacture for more than 
half a century. 

Another Pontiac pioneer was R. D. Scott, a Canadian 
from Guelph, Ontario, who established himself near the 
Grand Trunk tracks. W. A. Paterson, pioneer in the 
vehicle industry of Flint, learned his trade in Scott's shop 
in Guelph, followed him to Pontiac and then went "up 
country" to Flint. At first Scott's trade was altogether local, 
but in 1889 or thereabout, he began to branch out with 

Lee Dunlap, who went to work for Scott in 1889 and 
continued to be a factor in Pontiac industry well into the 
automobile days, explains the swing from small production 
to large in the Michigan carriage field, as follows: 

Until that time, carriages and wagons had been manufactured by 
hand, a few at a time and a few in a place, with the result that 
the costs were relatively high. In various parts of the country, it 

92 The Turning Wheel 


was discovered that through division of labor and quantity pro- 
duction, costs could be greatly reduced, with the result that within 
four or five years there was a considerable boom in the trade and 
an almost complete stopping of custom building throughout the 
country districts. An incident will serve to illustrate the trend to 
larger marketing. I sold to Sears-Roebuck, shortly after they 
organized in Minneapolis, the first buggy they sold by direct mail, 
and within a few years, at the height of the carriage industry, every 
mail brought large orders from them. 

Under the encouragement of prosperity, the entire industry pro- 
ceeded to overbuild. By the early years of the twentieth century, 
it was quite apparent that the buggy business had seen its best 
days, especially as far as Michigan was concerned. When automo- 
biles were still few and far between there were other parts of the 
country nearer the raw materials, which seemed to hav^ an ad- 
vantage over the Michigan factories. Practically every carriage 
manufacturer began to look around for some new development. 
The nearest one at hand seemed to be the automobile. 

Of course you and I know that there is no striking similarity be- 
tween the carriage and the automobile except that both of them 
travel on wheels. We had worked out a system for progressive 
assembly and a quite efficient division of labor, but none of us 
knew anything about machine operations, except in a very limited 
way. We seldom used blue prints and close measurements were 
unnecessary. Nevertheless, the automobile industry located in Pon- 
tiac, entirely because Pontiac had been a city which manufactured 
horsedrawn vehicles. In Jackson, Flint, and many other cities the 
same tendency was in evidence. That the similarity in the two lines 
was more apparent than real is proved by the fact that the car- 
riage men are not now the factors in the automobile trade that 
they were in the beginning, their places having been taken by men 
of more engineering experience. 

The largest of the Pontiac carriage factories was the 
Pontiac Buggy Company, which Edward M. Murphy, 
S. E. Beach, and Francis Emmendorf had incorporated in 
November, 1893. Although incorporated for only $25,000 
paid in, it built a factory then reckoned large on Oakland 
Avenue, where the Pontiac, Oxford & Northern tracks 
crossed that thoroughfare, on land now occupied by the 
Pontiac Motor division. 

All his old associates ascribe to "Ed" Murphy extraor- 
dinary powers of organization and business drive. Born in 

Oakland and Pontiac: Old and New 93 

Wayne, Michigan, he climbed the ladders of success largely 
by his own efforts and came early into business authority. In 
1898, after the Pontiac Buggy Company had enjoyed its 
share of the boom, he brought Lee Dunlap into his orbit by 
establishing the Dunlap Vehicle Company, to manufacture 
a somewhat lighter grade of buggies than Pontiac had built. 
Mr. Dunlap came over from the C. V. Taylor organization. 
Pontiac Buggy also formed the Crescent Carriage Company 
in 1903. In 1904 Mr. Beach sold his interest to Mr. Murphy 
and bought the latter's interest in the Crescent and Dunlap 
plants, but later went back into the Pontiac organization, 
remaining until the change from carnage to automobile 
production. When this change came Mr. Murphy was sole 
owner of Pontiac Buggy Company, but his associates had 
interests in the allied carriage plants. 

Not only was the carriage trade falling but also pro- 
duction costs were rising, owing to the automobile manu- 
facturers in Flint and Detroit drawing Pontiac's skilled 
workmen away. From its beginning the automobile trade 
paid practically double the wage rates customary in car- 
riage production. A carriage trimmer might get two dollars 
a day, an automobile trimmer four dollars for work roughly 
similar. Naturally, the automobile business drew the best 
workers, and the new wage standards dealt the declining 
carriage trade a heavy blow. 

Facing decreased production and increased cost for car- 
riages, Mr. Murphy began looking around for an auto- 
mobile to manufacture, or, to be more exact, to assemble 
from purchased parts. He had heard of a two-cylinder car 
designed for Cadillac in which the latter did not seem to be 
particularly interested. Tests proving satisfactory, on 
August 28, 1907, Mr. Murphy organized the Oakland 
Motor Car Company for $200,000; 20,000 shares of Com- 
mon stock, par $10. New money was furnished by James 
Dempsey of Manistee, Michigan, a wealthy retired lumber- 
man. The Murphy carriage plants were acquired by Oak- 
land at various times. On September 25, 1908, the capital 
stock was increased to $300,000 by the addition of $100,000 
in Preferred stock. 

94 The Turning Wheel 

The two-cylinder design not proving highly successful, 
the company brought out in 1908 Model K, a four-cylinder 
car powerful for its time and underselling all competitors. 
It became a hill-climbing champion, winning the Giants 
Despair Climb at Wilkes-Barre and other contests at Balti- 
more, Maryland; Paris, Illinois; and Jefferson Hill, Long 
Island, New York. The capital outlay being larger than 
anticipated, the close of 1908 saw the new venture peril- 
ously close to disaster. Mr. Dunlap speaks of Oakland as 
"broke" when W. C. Durant bought it early in 1909 for 
his new General Motors Company, but perhaps this is 
merely relative to commitments. Another source says that 
the cash position of Oakland was good, capital being 
doubled in a year. The production figures are 278 cars for 
1908, 1035 f r 1909^ 

Mr. Murphy explained to his group, some of whom 
objected to. the sale, that he was selling obsolete buildings. 
From Mr. Durant's side, one of the advantages was Oak- 
land's organization. Like everyone else in the Michigan 
carriage trade, he had a great liking for "Ed" Murphy and 
probably expected that Mr. Murphy, who was still a young 
man of great vigor, would become a leader in the new 
"automobile game." This prospect was defeated by the 
latter's early death. Other members of the Oakland group 
were men who have since become important figures. 

On January 20, 1909, General Motors directors author- 
ized the acquisition of a half interest in the Oakland Motor 
Car Company. By February 23d, Mr. Durant reported the 
acquisition of 15,000 Oakland shares, also that he expected 
to acquire up to 21,000 shares at $11 a share. Mr. Murphy 
took stock and notes for his interest, but others had to be 
paid off in cash and by June 5th the treasurer reported that 
he had paid out $200,856 in cash for 18,783 shares. Hardly 
was the purchase completed than Mr. Murphy passed away 
and Lee Dunlap became general manager. Production 
advanced to 4,000 cars for 1910, which required a heavy 
plant expansion program, not without its bearing on the 
financial difficulty which General Motors experienced in 
the latter year. 

figures furnished by National Automobile Chamber of Commerce. 

Oakland and Pontiac: Old and New 95 

Mr. Dunlap's narrative shows the speed at wltich any- 
one who followed Mr. Durant in those days was forced to 
travel : 

When Mr. Durant visited one of his plants it was like the visita- 
tion of a cyclone. He would lead his staff in, take off his coat, be- 
gin issuing orders, dictating letters, and calling the ends of the 
continent on the telephone-, talking in his rapid easy way to New 
York, Chicago, San Francisco. That sort of thing was less com- 
mon than it is now: it put most of us in awe of him. Only the 
most phenomenal memory could keep his deals straight ; he worked 
so fast that the records were always behind. 

On this visit of which I am thinking, early in IQIO, I expected 
he would stay several days as we were to discuss the whole matter 
of plant expansion. But after a few hours, Mr. Durant said, "Well, 
we're off to Flint." In despair I led him on a quick inspection of 
the plant. Instantly he agreed that we would have to build, and 
asked me to bring the expansion plan with me to Flint the next 
day. There wasn't any plan, and none could be drawn on such 
short notice, but his will being law and our need great, something 
had to be done. 

So I called in a couple of our draftsmen to help me and that night 
we made a toy factory layout existing buildings in one color, de- 
sired buildings in another. We drew a map of the whole property, 
showing streets and railway sidings, and then glued the existing 
buildings to it in their exact locations. Feeling like a small boy 
with a new toy, I took this lay-out to Flint and rather fearfully 
placed it before the chief. I needn't have been alarmed at our ama- 
teur lay-out. He was pleased pink. We had a grand time fitting 
our new buildings into the picture as it was spread on his desk. 
We placed those new buildings first here, then there, debating 
the situation. When we agreed as to where they should go, he said, 
"Glue them down and call W. E. Wood." 

Mr. Wood came in after a few minutes and received an order 
for their construction. In the whole history of America, up to that 
time, buildings had never arisen as swiftly as those did. Con- 
tractor Wood had men, materials, and machines moving toward 
Pontiac within twenty-four hours, and we were installing ma- 
chinery in part of the structures within three weeks. But, of course, 
we could not be equally swift in paying for them. That was some- 
thing else. But for the time being none of us worried too much 
over that; we figured the "Little Fellow" would find the money 
somewhere. Which he did, in the end, though we know there was 
plenty of trouble before the bills were receipted. 

96 The Turning Wheel 

These early years in the automobile business were marked by tre- 
mendous personal activity and a very grave shortage of capital. 
Anyone going direct from the carriage manufacture to automo- 
bile manufacture could have little conception of the large use of 
capital required in the new field ... I was with Oakland all 
through the 1910 "pinch" when the plant was frequently visited 
by members of the Creditors* Committee. 

Mr. Dunlap was succeeded as general manager of Oak- 
land by George E. Daniels, one of the earliest associates of 
W. C. Durant in the automobile business and the first 
president of the General Motors Company of New Jer- 
sey, holding office for a short time directly after incorpora- 
tion. After resigning the presidency, which he occupied 
merely as an. interim officer, Mr. Daniels remained with 
General Motors having charge of Cartercar. The bankers' 
reorganization placed him at the head of Oakland where 
he remained until 1914. 

Production rose in 1913 to a new peak of 8,618 because 
of two advanced models a fast, light "four" with an 
electric self-starter, and a "six" Oakland's first priced at 
$2,450, a moderate figure. 

As part of the change wrought by W. C. Durant's return 
to power in 1916, Mr. Fred W. Warner, who had succeeded 
Mr. Daniels as general manager, became a vice-president of 
General Motors. Under him price reductions and improve- 
ments in design brought Oakland into a swift run of pros- 
perity as reflected by these unit sales figures : 

1916 27,000 cars. The v-8 introduced 

1917 35,000 cars. The "light six" sold at $795 

1918 30,000 "light sixes." First offering of closed cars 

1919 52,000 "light sixes" sold on a rising market 

Automobile prices reached a peak in 1920, owing to 
scarcity of materials caused by war. Pioneering in the light 
car field with closed bodies, was so much of a marketing 
experiment for Oakland that dealers were required to take 
one closed car with each carload shipped from the factory. 
Now the closed car is standard and the open car the excep- 

Oakland and Pontiac: Old and New 97 

The post-war boom brought prosperity to Oakland, as it 
did to other manufacturers. In General Motors at that time 
lack of central coordination, allowing great latitude in in- 
ventories and production programs, created difficulties 
which as they multiplied brought the second Durant admin- 
istration of General Motors to an end and a change of 
management to Oakland. 

After Mr. Warner resigned in 1920, George H. Hannum 
served as president and general manager for six years, to be 
succeeded by Alfred R. Glancy who continued in the saddle 
until 1931. These were years of remarkable expansion in 
the Pontiac area, the General Motors plants spreading 
northward along the railway and an entire new factory lay- 
out being built beyond Harris Lake in what had been open 
country a few years before. During the 19201930 decade 
Pontiac grew faster than any other industrial city in its 
census classification. The acute shortage of houses, from 
1919 on, led the Corporation into an extensive housing de- 
velopment through the Modern Housing Corporation. 

The Oakland line, after a highly successful record with 
"fours," entered the u six" field in 1915, the "eight" field in 
1916, and remained a leader in quantity production down to 
1931, when it was discontinued. The Pontiac car, introduced 
as a light, low-priced "six" in 1926, received such a warm 
market welcome in the next few years that under the man- 
agement of I. J. Reuter, who took hold in 1931, the huge 
Oakland plant was concentrated on Pontiac production. 
Pontiac appeared in 1932 with an eight-cylinder motor. 
Its manufacturing operations were under the direction of 
W. S. Knudsen, president of Chevrolet, from May, 1932, to 
October, 1933. Mr. Knudsen at that time became executive 
vice-president of General Motors in charge of car and body 
manufacturing in the United States and Canada. H. J. 
Klinger, vice-president and general sales manager of Chev- 
rolet, was then advanced to general manager of Pontiac. 

Among the innovations which Oakland-Pontiac takes 
pride in originating or early adopting are oil and fuel filters, 
air cleaner, crankcase ventilation, automatic spark control, 
interchangeable bronze-backed main bearings, harmonic 

98 The Turning Wheel 

balancer, oil-tight universal joints, honed cylinders, full 
pressure lubrication, and rubber spring shackle bushings. 
Oakland was the first division to bring Duco-finished cars 
to quantity production; the year, 1924. 

The Pontiac Motor division, in succession to Oakland, 
now occupies 231 acres within the corporate limits. The 
experimental unit fronts on Oakland Avenue. The main 
division, to the north just inside the city limits, is one of 
the most advanced industrial lay-outs in the world, and 
entirely new since 1927. This huge grouping is in startling 
contrast to the modest factory building in which Oakland 
started to manufacture motor cars in 1908, when only 
50,000 square feet of space housed its initial activities. 

A breezy description of how some of the burning ques- 
tions connected with new car models are threshed out and 
what a new model in this case the Pontiac for 1932 in- 
volves financially is given in Fortune for December, 1931. 
Perhaps the account is sufficiently accurate to give one a 
general impression of what is involved in a change of 

The scene is a luncheon club in the Fisher Building, De- 
troit, where half a hundred General Motors executives are 
reported as present. The reader is supposed to be accom- 
panying Mr. Richard H. Grant : 

Mr. Grant's sales problem will begin with the oldest thing in auto- 
mobile salesmanship: namely, the automobile. Should the 1932 
Pontiac have free-wheeling? Ride control? Should the foot throt- 
tle be changed at the cost of 35 cents per car ($35,000 added to 
production costs) ? The Pontiac engineers have been maintaining 
forty experimental cars on the road to prove these things, some of 
them embodying features that will not appear until 1933 or 1934. 
In the end, during the coming ten months, Mr. Reuter will have 
spent $1,000,000 for research on the 1932 car, to which should be 
added Pontiac's share of the research done by General Motors 
Research Laboratories, by Fisher Body, by Delco-Remy (ignition) 
by Harrison Radiator, by New Departure (ball bearings), by AC 
(spark plugs, gauges, etc.) by Kelsey-Hayes Wheel, and by head- 
light, shock-absorber, tool, and die manufacturers throughout the 
land : a total research bill of $2,000,000 spent by the industry for 
this car alone. After the tireless engineers have estimated the cost 

Oakland and Pontiac: Old and New 99 

of every one of the 15,000 Pontiac parts, and after theyliave sub- 
mitted blue prints to George Christopher, in charge of Pontiac 
manufacture, Mr. Reuter will find it necessary to spend $1,400,000 
in retooling for this model, and the retooling of Fisher Body will 
cost that unit $1,000,000 more. New machinery will cost Pontiac 
$300,000 and to revamp the floor plan will add $150,000. 

All through General Motors history, groups of vigorous 
men have been making similar decisions of great import 
which affect the Corporation, its products, and the world. 
Change the names to those of other cars and persons, place 
them in other scenes, and you have a fair idea of the group 
planning which has been going on in General Motors for 
twenty-five years. All over the broad geographic range of 
the Corporation, both in the United States and abroad, 
plants have been growing, as the Pontiac plant grew, be- 
cause men who knew what they wanted could agree on 
programs and carry them through. 

Chapter VII 

.HE two most vital trends in American machine indus- 
try Middle West daring and New England craftsman- 
ship met in the founding of Cadillac, an enterprise whose 
success has had a profound effect on the whole automobile 
trade and through it upon American industrial history. The 
first of these influences has been discussed in the chapters on 
Oldsmobile and Buick; the second entered the scene with 
Cadillac, whose roots reach back into the New England 
scene of traditionally competent workmanship and native 
mechanical ingenuity. 

New England's early eminence in American industry pro- 
duced an imposing array of inventors and an army of able 
mechanics. Indeed, until almost the turn of the present cen- 
tury, New England dominated the American machine in- 
dustry, and for a time it seemed likely to capture first place 
in the rising automobile trade. The state of Massachusetts 
recognized the importance of Blanchard's steam carriage, 
built in 1825, by legislative enactment giving that vehicle 
the right to use the roads. The first gasoline "horseless 
buggy" of the modern era was also built in Springfield by 
the Duryeas. The Pope interests in Hartford came early to 
the support of the automobile, and both as manufacturers 
of vehicles and part owners of the Selden patent, wielded 
great influence through the infant years of the industry. 

With this early start, the wonder is that the automobile 
business slipped away from New England to the Middle 




West. There were several reasons for this shift, and one 
is this: New England inventors and mechanics went West 
themselves. New England was always a seed-bed of talent 
in the industrial arts; as the young men of New England 
marched West they took its best traditions with them. 


The career of Henry Martyn Leland, founder of the 
Cadillac Motor Car Company, is an outstanding example of 
the influence of New England machine shop practice upon 
the Middle West. Mr. Leland was born at Danville, Ver- 
mont, February 16, 1843. He was early apprenticed in the 
Crompton-Knowles Works at Worcester, Massachusetts. 
As a skilled mechanic he was taken into the Federal 
Arsenal, at Springfield, Massachusetts, and later worked in 
the Colt revolver factory. The New England arms factories 
were the first to apply fully the practice of assembling inter- 
changeable parts, the great Eli Whitney establishing this 
principle. By the time of the Civil War the machining and 
assembly of arms parts had been highly refined, with the 
result that Leland early became accustomed to a high de- 
gree of precision, laying the foundation for an ideal of 

102 The Turning Wheel 

accurate machine work which later distinguished the out- 
put of his Detroit factories. 

After a stay of twenty years with the famous Brown & 
Sharpe Manufacturing Company at Providence, Rhode 
Island, Mr. Leland went "on the road" in the Middle West 
where the company desired to introduce their machine tools 
to the growing mechanical industries of that section. It was 
in this way that he became acquainted with Detroit, its 
industrial leaders and possibilities. 

Moving to Detroit in 1890, he established the Leland, 
Faulconer & Norton Company which made machine tools, 
grinders, gear cutters, etc., and also did custom work 
along those lines. In 1895 the firm became the Leland & 
Faulconer Manufacturing Company, with Charles A. 
Strelinger as secretary. Mr. Strelinger was a leading hard- 
ware merchant whose immense trade in bicycles led him to 
take a keen interest in every type of rapid transport. The 
year 1896 is notable in Leland annals for the establishment 
of a grey iron foundry which scored a remarkable success 
by introducing more closely machined castings than could be 
had at that time elsewhere, so that its products commanded 
premium prices, sometimes as much as thrice the usual price. 

In its plant on Trombly Avenue the company added 
gears for chainless bicycles to its other lines, working out a 
process for grinding these case-hardened gears to closer 
standards. Another activity embraced the manufacture of 
gasoline motors of five, ten, and fifteen horsepower for 
marine uses, a line of production which inevitably brought 
the company into the newly developing automobile business. 
His experience with marine motors began in the East, and 
all through his early days in Detroit Mr. Leland was an en- 
thusiastic prophet of the almost unlimited future of internal 
combustion engines. 

Although it had made machinery and parts for other 
automobile companies earlier, Leland & Faulconer did not 
enter quantity production of automotive material until 
it began manufacturing transmission gears for the one- 
cylinder motor car designed by R. E. Olds the famous 
curved-dash runabout. After the Oldsmobile factory had 
been destroyed by fire, need to restore production quickly 

Cadillac 103 

led Mr. Olds to turn over to Leland & Faulconer part of 
his motor manufacture. This was seized upon as an oppor- 
tunity to show the world to what close standards a gasoline 
engine could be built. An associate of Henry M. Leland 
says in this connection: 

At the first automobile show in Detroit, the Olds display contained 
two cars, one powered by Olds, the other by Leland. I recall that 
Henry Ford pointed out to us as a curiosity the fact that the 
Leland motor was operating under brakes in order to bring it to 
the same pace as the Olds motor. Our motor developed 3.7 horse- 
power as against 3 for the Olds-built motor. This superiority was 
due entirely to closer machining. H. M. Leland went seriously to 
work on the Olds motor and by introducing larger valves and 
improved timing system we were able to build this one cylinder 
up from 3.7 horsepower to 10.25. On taking the improved article 
to the Olds Company, we were dismayed by the refusal to use it. 
Mr. Olds was getting all the business he could handle and I sup- 
pose such a radical change in power plant would have necessitated 
alterations in many directions. The point is significant however as 
a key to a future of accuracy methods in manufacturing. 

While Olds was rushing rapidly into quantity production 
and Leland & Faulconer were gaining their reputation for 
precision, a third group of Detroit men, with ample capital 
at their disposal, formed the Detroit Automobile Company 
in 1899, in an endeavor to pioneer a merchantable pas- 
senger car. These men were William H. Murphy, Lem 
W. Bowen, Clarence A. Black, and A. F. White, all citi- 
zens of the first rank, who had as their chief guide and 
mainstay in the mechanical department no less a person 
than Henry Ford. Mr. Ford's ideas then ran more to speed 
than to comfort, and after he had produced two racing cars 
which made quite exceptional records but were not at all 
what his backers visualized as meeting the market demand, 
the Detroit Automobile Company group came to Leland & 
Faulconer and agreed to use the latter's improved motor 
which the Oldsmobile organization had not seen fit to 
adopt. With their assistance the Cadillac Automobile Com- 
pany was organized on August 22, 1902, with a capital of 
$300,000. Thus Cadillac became established at Cass & 


The Turning Wheel 

Amsterdam avenues, Detroit, a site it continued to occupy 
for many years. 

The selection of that name was a logical one for men 
versed in Detroit history. Antoine Sieur de la Mothe de 
Cadillac was the leader of the French expedition which 
made its first settlement at Detroit in 1702, just two 

Cadillac "one-lunger" 1902 
From Duncan s World on Wheels 

hundred years before the founding of the new automobile 
company. In his high courage, enterprise, and ability the 
founders saw the very qualities which they hoped to bring 
to their fledgling corporation. His coat-of-arms became the 
emblem of the new company. 

Work on the first Cadillac automobile had been begun in 
September, 1902 a one-cylinder car known as Model A, 
of which two units were completed in March, 1903. In the 
following twelve months Cadillac built and shipped 1,895 
finished automobiles. From the completion of that first car 
the future of Cadillac has never been in doubt. 

Cadillac 105 

This famous "one-lunger" was then the last word in 
superior workmanship. The engine was located under the 
front seat; a hand crank at the side served as a starter. The 
driver sat to the right; a real steering wheel offered an 
advanced feature, nearly all the other cars of the day 
steering by tiller control. The car had no running board, but 
patent-leather fenders imparted an air of distinction. Four 
passengers might ride, two in front and two in the rear. 
Heavy brass kerosene lamps and a hand-operated bulb 
horn cost extra. 

A situation then arose which was not uncommon in those 
days. While Leland motors were giving excellent satisfac- 
tion, the Cadillac Automobile Company was unable to do 
equally well as regards chassis and body manufacture. It 
brought its troubles to the Leland organization. As the lat- 
ter could not afford to see art outlet for their motors closed, 
they accepted, with a good deal of misgiving, the proposition 
to undertake the general management of Cadillac. The 
consolidation of Cadillac Automobile Company and 
Leland & Faulconer Manufacturing Company into the Cad- 
illac Motor Car Company was completed on December 27, 
1904. Henry M. Leland became general manager. 

In 1904 the company introduced the Model B one- 
cylinder Cadillac. In all, 16,126 one-cylinder Cadillacs were 
manufactured on the two models. The one-cylinder cars 
formed the bulk of early output demand continuing after 
the "30" of four cylinders was introduced in 1905. A spec- 
tacular proof of the long life of these one-cylinder cars was 
given in 1922 when on the twentieth anniversary of the 
company, Lucien R. Burns, who had been with Cadillac 
since its organization, drove one of the first cars it had ever 
built from Detroit to New York where he had long before 
unloaded the first Cadillac shipped into the city. More than 
67,000 of the "305" were manufactured. Both the one- 
cylinder and the "30" had the notable feature of inter- 
changeability of parts. 

The proudest achievement of early Cadillac history, the 
winning of the Dewar trophy, awarded by the Royal Auto- 
mobile Club of London, England, for the greatest advance 
by any motorcar during the year, flowed directly from this 


The Turning Wheel 

achievement of parts interchangeability. Until the London 
demonstration, the world believed that English, French, 
and German workmanship stood superior to American and 
that the rise of the automobile industry in this country re- 
ceived its impetus from other factors than those involved 
design and manufacture such factors as the vast 


Cadillac cars drawn up in London, 1907, for tests which won the 
1908 award of the Dewar Trophy 

distances of America, its large population and the broad dis- 
tribution of wealth. Cadillac, practising the highest stand- 
ards of close workmanship, now revealed that automobiles 
could be made of interchangeable parts just as effectively as 
firearms could be. 

A graphic picture of that triumph and explanation of 
what it meant to the reputation of American cars abroad is 
contained in a letter in the Automobile Trade Journal of 
December, 1924, from F. S. Bennett of F. S. Bennett, Ltd., 
24 Orchard Street, London, W. I., the pioneer agent of 
Cadillac in the British Isles. A half-page Cadillac adver- 
tisement in that trade organ in 1903 led Mr. Bennett into 
correspondence with the company, which resulted in the 
setting up of an agency. He writes : 

I would not like to say just how many million dollars have changed 
hands as the direct result of this advertisement, and it goes much 

Cadillac 107 

&.~ .4 

further than this, as it can be rightly claimed to have been the 
birth of the industry of American cars in Europe. 

The early history of American cars over here might be said to be 
the early history of the Cadillac car. In the very early days a few 
American cars came over here but did not make good. The Cadil- 
lac was the first to establish itself and in doing so established the 
American-made automobile in this market. For several years I 
plowed a lonely furrow, being the only man who did not falter 
in his belief in the American car. 

It was not until what is now known as "the famous Cadillac 
standardization test" that the prejudice, still surviving, of dumped 
American bicycles and a certain number of poorly made cars, was 
successfully overcome. 

This test in 1906 consisted of three Cadillac cars being assembled 
in an open shed at Brooklands track from a medley of parts rep- 
resenting the dismembered components of three Cadillacs taken 
from the dockside by the Royal Automobile Club officials as they 
arrived from America and taken to pieces by them and jumbled 
in the shed mentioned. 

Then the Cadillac mechanics assembled the cars from the heap 
with no other tools than wrench, hammer, screw driver and ply- 
ers. The three cars were immediately put into the hands of the 
Royal Automobile Club official observers and went through a 
5OO-mile test on the Brooklands track, finishing with a perfect 

That was the first demonstration here in the art of motor car 
standardization and it created a profound impression. For this, 
the Sir Thomas Dewar trophy awarded for the most meritorious 
performance of the year was awarded by the Royal Automobile 
Club to Cadillac. The Cadillac is the only automobile company 
that has won this trophy twice. 

The effect of this test on the public mind makes it stand out as 
historic and unique, and even this morning, as I write this, I re- 
ceived a press clipping with reference to this test carried out 
eighteen years ago. I can truthfully say that during the eighteen 
years, no week has passed in which a clipping from some news- 
paper in some part of the world has not arrived referring to this 

It had the effect of giving the Cadillac car in particular, and the 
American-made car in general, a place in the sun in this country. 
On this side of the water it answered completely the adverse 
criticisms against the American-made car and opened wide the 
gate for many American manufacturers to come into this market. 


The Turning Wheel 

The result proved a triumph for Cadillac methods, also 
a revelation of the truth that quantity production and 
quality production by no means need be antagonistic. The 
lesson was plain enough : high standards of accuracy could 
be secured in a large factory geared to high production as 
well as in a small shop where each part received individual 

Cadillac won the Dewar trophy a second time in 1913 as 
a result of its pioneering in electrical starting, lighting, 
and ignition, being the first car so equipped. Mr. Leland's 
keenness to relieve the need for cranking spurred C. F. 
Kettering of Dayton Engineering Laboratories to his no- 
table experiments and eventful triumph in this revolution- 
ary creation. 

The Dewar Trophy , twice awarded to Cadillac, 1908 and 1913 

By 1908, when General Motors was formed, Cadillac 
had secured a position of unquestioned eminence in the 
automobile world. Its one-cylinder car had been a tremen- 
dous success, and the four-cylinder "30" had reached an 
annual production of between 7,000 and 8,000 with the 

Cadillac 109 

price at $1,400. The company was well managed, highly 
prosperous, and financially conservative. Although capital- 
ized for $1,500,000, this represented largely the plowing 
back of profits. It has been said that only $327,000 in cash 
went into the enterprise from all sources. Already Cadillac 
had achieved an outstanding reputation in the fine car field, 
and it was this reputation which led Mr. W. C. Durant to 
attempt adding Cadillac to his newly formed General 
Motors Company. 

Mr. W. C. Leland, who had charge of the negotiations 
for Cadillac, said that no written option was ever given 
in the course of the transaction which covered the better 
part of a year: 

Our first price was $3,500,000 good for ten days. Mr. Durant did 
not return for six months and then said he would accept that fig- 
ure. However, the situation had changed in our favor in the mean- 
time because Cadillac had been making exceptionally good earn- 
ings, the country had rallied from the slump of 1907 and we 
could see only fair weather ahead. Consequently we asked them 
$4,125,000, this to hold for another ten days. Mr. Durant was of 
course tremendously busy during all this time and I suppose he 
had difficulty in finding the money for what was then a colossal 
deal as we had asked cash. At any rate the second ten-day period 
expired before Mr. Durant again returned, whereupon he was 
given a quotation of $4,500,000 which he accepted. The transfer 
was made on that basis on July 29, 1909, in cash, the transaction 
being the largest negotiated in Detroit up to that time. 

It should be added in explanation that Cadillac was 
really purchased by the Buick for General Motors to which 
transfer followed shortly after. The net worth of Cadillac 
at the time of acquisition was $2,868,709, the difference 
between that figure and the purchase price representing 
the good-will value which Cadillac had built up in its seven 
years of life. The sales price represented slightly more 
than $300 a share because, in addition to the cash involved, 
$275,000 was paid in Preferred stocks. It is interesting to 
record that Benjamin Briscoe at one time had an option 
on 60 percent of the company's stock at $150 per share. 
But the option expired, owing to his inability to find cash, 
shortly before Mr. Durant entered the scene with his offer 


The Turning Wheel 

of $160 a share. If the latter had acted promptly on his 
first option he would have saved a million dollars. 1 

However, the price as finally fixed was not at all un- 
reasonable, viewed in the light of Cadillac's earnings at 
the time of these negotiations, for a net of $1,969,382 was 
reported for the year ending August 31, 1909. The com- 
pany's earnings continued at or above this rate for the 
next ten months during which Cadillac turned into the 
General Motors treasury $2,000,000. Both Henry M. and 
W. C. Leland remained with Cadillac until 1917. 

From its beginning Cadillac has followed this slogan, 
"Craftsmanship a Creed, Accuracy a Law." Various later 
developments of Cadillac in its evolution toward its present 
position will be described elsewhere, but as the story of 
General Motors unfolds, the reader will do well to recall 
that Cadillac standards have influenced all General Motors 
cars and products, and indeed the whole automobile industry. 

a The full purchase price was $5,669,250. See p. 223. 

Chapter VIII 


LMOST from the moment when he reorganized Buick 
and increased its output, Mr. Durant seems to have begun 
looking toward wide horizons. Hardly had he moved Buick 
assembly to Jackson than he organized the Janney Motor 
Company there. Realizing that axles were almost as im- 
portant as motors, he induced the Weston-Mott Company 
to move from Utica, New York, to Flint, allotting it a 
strategic site in his new industrial area next to Buick. With 
Weston-Mott came Mr. C. S. Mott, a future director and 
vice-president of the Corporation. Mr. Durant also drew 
to Flint the Frenchman, Albert Champion, and encouraged 
him to locate there the production of the famous AC spark 
plug. Forced at the outset to lean on local independent 
makers of springs and bodies, Mr. Durant looked forward 
to the time when those activities would be part of a larger 
picture. General Motors was beginning to take shape in his 

Mr. Durant was not the only man thinking along those 
lines. Others perceived the difficulties and dangers of in- 
dependent operations, and visioned from afar the profits 
to be garnered by a great automobile merger. On the staff 
of A.L.A.M. (Association of Licensed Automobile Manu- 
facturers) was Hermann F. Cuntz, a mechanical engineer 
who acted as contact man between the Selden patent 
licensees and the central office in New York. He was per- 
sonally acquainted with all the manufacturers operating 
under the Selden patent. He knew what they had in their 


112 The Turning Wheel 

treasuries as well as in their plants, whether their organiza- 
tions were strong or weak, and what their prospects were 
for future business. Possessed by the idea that a merger 
of certain products was both feasible and advisable, he in- 
terviewed Anthony N. Brady, one of the powers of Amer- 
ican finance, who had built a vast fortune through 
consolidating traction lines and public utilities. 


Founder, Weston-Mott Company 

Mr. Brady being favorable to the idea, Mr. Cuntz 
negotiated with a number of manufacturers who proved 
willing to sell control at favorable prices. But Mr. Brady 
held off, prophesying the panic of 1907 and saying that 
after the automobile trade had experienced a taste of the 
hard times in store for them the desired companies could 
be brought into the combine for less money. The financier 
was right about the panic, which arrived according to his 
schedule and found him prepared for it, but he was wrong 
in estimating its effect upon the automobile trade. 

American motordom weathered the storm of 1907 better 
than any other line of business. Buick, and the other com- 
panies with which Mr. Durant had affiliated himself, came 
through without a scratch. In that bad year Buick produc- 
tion actually rose by 50 percent, and Flint was one of the 
few cities in the country unaffected by panic. Its banks went 

The Birth of General Motors 113 

on paying out currency as if nothing had happened, al- 
though currency payments were suspended in many quarters. 

The effect of this immunity on Mr. Durant was twofold. 
It immensely enhanced both his confidence and his prestige, 
and it placed various other manufacturers, whose businesses 
had proved less resistant to strain, in a frame of mind where 
they would be willing to listen to him when he should be 
ready to talk merger to them. But whoever talked merger 
to them effectively would have to do so in large figures. The 
break in values which Mr. Brady had forecast for the auto- 
mobile world simply had not come to pass. Instead, Anthony 
N. Brady's opportunity to crown his business career with a 
stupendous industrial merger had passed while he hesitated. 
He still kept one eye on automobiles, however, becoming 
active in United States Motor Company and in 1910 
a director of General Motors, but his chance to play the 
leading role in the industry had departed. 

It is interesting to speculate a little on what might have 
happened if Mr. Brady, with his large resources and shrewd 
sense, had taken the lead in the industry in 1906, when 
he was considering the plan presented to him. Probably 
his entry would have been effective in bringing the auto- 
mobile business into the great financial marts under proper 
sponsorship far earlier than it appeared there. Automobile 
securities might have appeared on the New York Stock 
Exchange in 1908 instead of in 1911, when the voting trust 
certificates of the General Motors Company were the first 
automobile securities listed by the Stock Exchange. The 
whole automobile industry might have been given a definite 
and enduring trend toward the East, with the early New 
England companies growing instead of dwindling as they 
actually did, and the Middle Western companies not mak- 
ing the headway which, historically, they have made. If Mr. 
Brady had organized General Motors instead of Mr. 
Durant, the Corporation might have lost much of the 
dramatic interest now attached to it. 

With Buick standing like a rock through 1907 and swing- 
ing into 1908 at a pace which promised a strong financial 
position at the end of the year, Mr. Durant was ready 
to proceed with his merger. He planned the erection of a 

114 The Turning Wheel 

corporation which would be merely a holding company, of 
which there were many examples among the "trusts" of the 
period. We shall see how General Motors changed from a 
holding company to an operating company under the press- 
ure of economic forces too strong to be withstood, as the 
automobile made its way into large production and broad 
relations with the consuming public. In general, American 
economic history shows that while holding companies meet 
with little difficulty in the public utility field, where mon- 
opoly and state regulation are involved, they do less well in 
the manufacturing field, where large labor forces must be 
maintained and style goods sold in open competition. 

Spurned in Chicago by a shortsighted luminary of the 
Bar, Mr. Durant took himself to a young lawyer of New 
York, Curtis R. Hatheway, of Ward, Hayden & Satterlee, 
who drew up articles of incorporation for the General 
Motors Company of New Jersey. The company was em- 
powered to use its capital of $12,500,000 (authorized 
September 28, 1908) in the purchase of the securities of 
automobile and accessory companies. 

The certificate of incorporation of the General Motors 
Company was signed by the incorporators, George E. 
Daniels, Benjamin Marcuse, and Arthur W. Britton on 
September 15, 1908, and filed in the office of the clerk of 
Hudson County, New Jersey, the same day. The following 
day, it was filed in the office of the Secretary of State of 
New Jersey at Trenton. As the New Jersey statute declares 
that the filing in the latter office determined the date of the 
body corporate, the latter date, September i6th, has been 
accepted as marking the birth of General Motors. 

The incorporators met on September 22d, adopting by- 
laws under which they became the first directors and 
officers, as follows: 

George E. Daniels, president 

Benjamin Marcuse, secretary and treasurer 


Arthur W. Britton 
George E. Daniels 
Benjamin Marcuse 

The Birth of General Motors 115 

On October 20, 1908, the by-laws were changed to pro- 
vide for a board of seven directors and the original officers 
were succeeded by the following who held office for con- 
siderable periods: 

W. M. Eaton, president from October 20, 1908, to 

November 23, 1910 
W. C. Durant, vice-president from October 20, 1908, to 

November 16, 1915 
C. R. Hatheway, secretary and treasurer from October 

20, 1908, to January 26, 1911 

It will be noted that Mr. Durant appears as vice-presi- 
dent, though he was actually the founder and active head 
of the organization. By placing Mr. Eaton, an influential 
business man of Jackson, in the highest office, Mr. Durant 
left himself free for more active duties. The three incor- 
porators were all out of the directorate by the end of the 
year, Mr. Britton being succeeded by Henry Henderson, 
and Messrs. Daniels and Marcuse by Messrs. C. R. Hathe- 
way and Frederic L. Smith on December i6th, after which 
meeting the board consisted of: 

W. C. Durant elected October 20, 1908 

W. M. Eaton 

C. R. Hatheway 

Henry Henderson 

W. J. Mead 

Frederic L. Smith " December 16, 1908 

Henry Russel 

Theodore F. MacManus in Men, Money, and Motors 
gives a vivid recital of the origin and naming of General 
Motors, which exemplifies the offhand way in which the 
dashing founder arrived at his decisions: 

The automobile business was a hazardous business. Durant appreci- 
ated this. His azure dreams of power were often disturbed by 
nightmare flashes. Fly-by-night concerns with no objective save a 

116 The Turning Wheel 

skimming of the market and immediate profits for their promoters 
were everywhere. Durant realized there had to be stabilization. 
Early in 1908 he proposed to Ford, Couzens, Briscoe, and Olds a 
consolidation of Ford, Maxwell-Briscoe, Reo, and Buick. 

Ford and Couzens played with the idea, matched their wits 
against the wits of the others and when Durant appeared most 
hopefully they tossed in this stipulation : 

"We will go in only on condition that we receive three million 
dollars, in cash." 

Not to be outdone by the Ford and Couzens ultimatum, R. E. 
Olds got to his feet and pronounced sentence on the consolidation : 

"If you do that for Ford you've got to do likewise by Reo. We 
will expect three millions, in cash, also." 

Durant waved his hands. The meeting ended. The project was 

Durant, however, was not easily discouraged. Calling aside Ben- 
jamin Briscoe, he said: 

"Let's go it alone. We two." 

Briscoe was willing and the two men went to see George W. 
Perkins, of J. P. Morgan & Co. The bankers agreed to underwrite 
$500,000 of the new $1,500,000 capital required. A charter was 
tentatively drawn up and the consolidation was to be called the 
International Motors Company. 

These negotiations fell through, but since a representa- 
tive of the banker had suggested the name "International 
Motors" Mr. Durant crossed out the word "International" 
and wrote in "General." 

Mr. MacManus writes : 

"How does that look?" he asked, holding it so Briscoe could see. 

"Fine. You mean you'll call your organization the 'General 
Motors Company'?" 


Briscoe left. 1 Durant sat there, studying the sheet of paper on 
which he had written almost carelessly had written a name that 
has come to be familiar around the world. 

a Briscoe's United States Motor Company was dissolved through receiver- 
ship in 1912. Its backbone was the Maxwell-Briscoe, which Benjamin Bris- 
coe organized in 1904 with $42,000 in cash. MacManus says that Mr. Durant 
offered the equivalent of $5,000,000 in General Motors stock for Maxwell- 
Briscoe, saying that this bloc would have been worth $200,000,000 later and 
in the meantime would have paid $35,000,000 in dividends. 

The Birth of General Motors 117 

Mr. Durant considers that here and there in Men, 
Money, and Motors he is not reported with entire accuracy 
by Mr. MacManus, who is somewhat given to dramatic 
rhetoric while Mr. Durant was ever precisely polite in his 
choice of words in conversation. As to the name, General 
Motors, Mr. F. L. Smith says in his published reminiscences 
that he contributed it some time before in a Lansing con- 
ference looking toward the merger of Buick and Oldsmobile. 

Amid what seems almost a conspiracy of silence General 
Motors was born. The New York Times of September 
1 6th, conned by Mr. MacManus, revealed that: 

President Theodore Roosevelt was in a jovial mood. "Bully!" he 
cried when reporters told him that Charles Evans Hughes had 
been nominated for Governor of New York state on the Repub- 
lican ticket . . . Mike Donovan, an athletic trainer, was on his 
way to the Roosevelt home at Oyster Bay and when approached by 
newspaper men he vowed : "I am going to write a book on Teddy 
he deserves it!" 

Justice Davis decided against the city in its case against an auto- 
ist who had been arrested in Central Park the preceding December 
16: "The charge against this man is driving with skid chains and 
the law does not prohibit their use," declared the Court. 

The White Star Company announces the construction of two new 
ocean liners, the keel to one ship is now being laid and it will be 
called the Olympic; the keel to the second ship will be laid later 
and it will be called the Titanic. 

New Jersey had a flyer who was critical of the Wright aeroplane 
as compared with his own; Wilbur Wright remained in the air 
over LeMans, France, for thirty-nine minutes and broke distance 
records by flying twenty-six miles. 

Jack Johnson and Tommy Burns were matched for the heavy- 
weight championship of the world and agreed to fight in Sydney, 

But there was no mention of the incorporation of Gen- 
eral Motors, and no wonder, since the original incorpora- 
tion was for only $2,000, a nominal sum soon increased. 

Except in Flint, the fledgling corporation seems to 
have attracted little attention at the start. Horseless Age, 
then the leading journal of the automotive trade, gave no 

118 The Turning Wheel 

extensive notice until December 3Oth, when it was stirred 
by the Olds negotiations to publish the following : 


The formation of the General Motors Company as a New Jersey 
corporation, and offers of an exchange of stock made to stock- 
holders of the Olds Motor Works, of Lansing, Michigan, have 
started anew rumors of the consolidation of automobile manufac- 
turing interests. Considerable secrecy is maintained in regard to 
the new company, which is said to be capitalized at $12,500,000, 
divided into $7,000,000 Preferred stock and $5,500,000 Common 
stock, each share having a par value of $i. At present the new 
company is said to embrace the Buick Motor Company, of Flint, 
Michigan, and the Olds Motor Works, of Lansing, Michigan. 
Reports from Lansing, Michigan, state that the stockholders of 
the Olds Motor Works have been approached with a proposition 
to exchange their shares for shares of the General Motors Com- 
pany, the basis for the exchange being $400 in Preferred stock and 
$IOO in Common stock of the General Motors Company for each 
$i,OOO of the Olds Motor Works stock. There is said to be con- 
siderable opposition on the part of some Olds stockholders, al- 
though it is said that holders of three-fourths of the stock have 
assented. Attorney C. R. Hatheway, of the law firm of Ward, 
Hayden and Satterlee, is said to be engineering the deal, but re- 
fused to make any statement at present. The General Motors Com- 
pany has an office in the Terminal Building, Forty-first Street 
and Park Avenue, New York City, but the manager was said to 
be "extremely busy" and could not be seen. The plan is said to 
be to continue the different works as at present under their proper 
names, assigning to each the manufacture of certain types of 
vehicles. The General Motors Company will act as a holding con- 
cern, and appoint the directors of the subsidiary companies. 

On September 29th General Motors- bought from W. C. 
Durant 18,870 shares of Buick Common and 1,130 shares 
of Preferred at $150 a share, payable two thirds in General 
Motors Preferred and one third in Common. The new hold- 
ing company purchased the W. F. Stewart Company body 
plant, directly across from Buick for $240,000 in stock, 
and leased it to Buick. Then began the Olds negotiations, 

The Birth of General Motors 119 

detailed elsewhere, which were the first notices given the 
automobile world outside of Flint that a colossal merger 
had been begun. 

When Oakland entered General Motors within the 
month, the automobile world did not need to be reminded 
again that here was something worth watching. Buick, 
Oldsmobile, and Oakland three of the largest plants and 
three of the "best names" in the industry had been 
brought together in less than three months. Further ac- 
quisitions soon followed. A few notes amplifying the min- 
utes of the young corporation indicate how simply the three 
original companies were "digested" and more companies 

February 23, 1909, General Motors declared its first semi-annual 
dividend of $3.50 on its Preferred stock a dividend never missed 
from that day to this. This dividend was payable April I on stock 
of record, March 20. 

On June 5, the directors heard the good news that all Buick 
Common stock had been converted into General Motors stock on 
the agreed basis of $150 a share, payable two thirds in Preferred 
and one third in Common, and also all but fifteen shares of the 
5,000 outstanding Buick Preferred, a remarkable example of 
stockholder confidence in a new enterprise. On September 10 the 
directors voted to increase the capital stock to $60,000,000 
200,000 shares of Preferred and 400,000 shares of Common. 

The Olds union was completed by the purchase of the Seager 
Engine Works in September and the last of Oakland's stock 
passed to General Motors about the same time, though the price 
of the last purchase rose considerably, as the directors authorized 
the final purchase at $30 whereas the first blocks had been secured 
at $10 and $11 a share. 

In what must be reckoned a terrific outburst of corporate 
energy, the following units were added to the General 
Motors family, either through purchase of all stock or a 
substantial interest, in less than two years : 

Champion Ignition Co., Flint (later AC Spark Plug Co.) 
Weston-Mott Company, Flint 
Reliance Motor Truck Co., Owosso 
Rainier Motor Co., Saginaw 
Michigan Motor Castings Co., Flint 

120 The Turning Wheel 

Welch Motor Car Co., Pontiac 

Welch-Detroit Co., Detroit 

Cadillac Motor Car Co., Detroit 

Jackson-Church-Wilcox Co., Jackson 

Michigan Auto Parts Co., Detroit 

Rapid Motor Vehicle Co., Pontiac 

Cartercar Co., Pontiac 

Ewing Automobile Co., Geneva, Ohio 

Elmore Manufacturing Co., Clyde, Ohio 

Dow Rim Co., New York City 

Northway Motor & Manufacturing Co., Detroit 

National Motor Cab Co. 

Also stock interests were taken in Maxwell-Briscoe, the 
United Motors Company and Lansden Electric. 

By the end of 1909 General Motors had acquired or sub- 
stantially controlled more than twenty automobile and 
accessory companies. Two other prospective purchases nar- 
rowly missed fire Thomas and Ford. October 26th, A. H. 
Goss offered to sell to General Motors the entire capital 
stock of the E. R. Thomas Company of Buffalo, and on 
the same day the directors authorized the purchase of the 
entire capital stock of the Ford Motor Company of De- 
troit for $8,000,000 $2,000,000 down and the balance 
in one and two years, "if arrangements can be made to 

Fateful "if!" Apparently arrangements could not be 
made to finance. Mr. Ford held out for cash, the young 
holding company did not have the cash and bankers could 
not be found who would risk $8,000,000 on an industrial 
property which has since become one of the most valuable 
in the world. 

Henry Ford and James Couzens were at the Belmont Hotel, in New 
York City [writes T. F. MacManus in Men, Money, and 
Motors]. They were together in their room and Ford, suffering 
from lumbago, was lying on the floor because there was no com- 
fort for him in bed. The telephone bell jangled and Couzens, pick- 
ing up the receiver, heard a voice : 

"This is Billy Durant. I'd like to see you." 

"What about?" 

The Birth of General Motors 121 

"I can tell you when I see you." 

Returning upstairs within a half hour Couzens . . . said: 

"Billy Durant wants to buy the Ford Motor Company." 

"How much will he pay?" 

"Eight million dollars." 

"All right. But gold on the table!" snapped Ford. 

"How do you mean that?" 

"I mean cash." 

Durant came back the following morning, and Couzens delivered 
Ford's message. The two men shook hands on the proposition and 
Durant left to raise the necessary money. With him he had a 
resume of the Ford business and its prospects. The capital stock of 
the Ford company was $2,000,000 and it had a surplus of 
$1,180,000, exclusive of goodwill and patents. Its earnings in 
1908 were $2,684,000 on a business of $9,000,000 and it was 
planning to do a business of $15,000,000 in 1909 including an out- 
put of 21,000 automobiles. Durant had reached an agreement with 
Couzens to pay $2,000,000 in cash and the balance in one and 
two years. 

On October 26, 1909, Durant received the sanction of his board 
of directors for the acquisition of the Ford business, went back to 
his bankers and was informed : 

"We have changed our minds. The Ford business is not worth 
that much money." 

Yet, as between the purchase of Ford and the purchase 
of the E. R. Thomas Company, both of which failed to 
materialize, probably the latter would have attracted the 
more public attention in 1909. Mr. Ford had not then be- 
come the public figure he is today, and the Thomas Flyer 
was a phrase on the lips of everyone, as the nation had fol- 
lowed its victorious race from New York to Paris, three 
quarters of the way around the world, via Siberia, a contest 
waged on three continents and over wretched roads, the 
sternest test met by an American car up to that time. 

General Motors swallowed so many companies in its first 
two years that acute indigestion followed as a matter of 
course. Since the whole industry was young in engineering 
experience, Mr. Durant bought certain companies of un- 
proved productive power simply because they were believed 
to have basic patents or features which might be important 
later. Cartercar, for instance, was purchased while the 

122 The Turning Wheel 

selective transmission and the friction drive were still in 
rivalry. The possibility that the latter might develop made 
the Carter patents seem worth while. Elmore, too, was 
thought to have basic patents on a two-cycle engine which 
might prove valuable. Other "buys 11 were made to assure 
regular supplies of material and parts. 

Some of the purchases were soon seen to be untenable. 
Welch of Pontiac, for instance, entered the General Motors 
family on June 5, 1909, and was on its way out within five 
months, decision to sell being taken on October 26th. 
Welch-Detroit remained longer, though it never could be 
brought to a profitable position. The Welch brothers, both 
noted engineers, had developed a large, heavy car of ad- 
vanced design, which was expected to take place as the 
price-leader of General Motors. But Fred Welch, the driv- 
ing force in the enterprise, was drowned in Lake St. Clair, 
and without him the operation languished to the point 
where it had to be cut adrift. 

Others could not be brought quickly to the point of 
carrying themselves and required capital outlays burden- 
some to the holding company. Ewing, Elmore, Cartercar, 
Rainier, and Dow Rim Company are examples of projects 
that cost General Motors more than they returned. No 
doubt, several of these properties were "unloaded" on 
General Motors in the rush of 1909, but the sellers prob- 
ably did not wait for the enormous profits which would 
have been theirs if they had held for a long period the 
securities they then received. For instance, Dow Rim Com- 
pany was purchased on November 27, 1909, for $28,000 
in General Motors Preferred and $20,000 in notes, Mr. 
Alexander Dow electing to take notes instead of an amount 
of Common stock which later had a value, according to 
his own estimate, of several million dollars. Dow Rim was 
written down to $i on the company's books in 1911. 

Mr. Goss, whose effort to sell the E. R. Thomas Com- 
pany to General Motors came to naught, sold the Elmore 
Manufacturing Company of Clyde, Ohio, to the Company 
for $600,000 in General Motors Preferred at par. Mr. 
Goss was later active in Buick and General Motors affairs. 

The Birth of General Motors 123 

Another addition destined soon to fall by the wayside 
was the Ewing Automobile Company of Geneva, Ohio, 
purchase of which was authorized on October 26, 1909, 
and written down to $i on June 14, 1911. 

Less disastrous but nevertheless troublesome was the 
Rainier purchase. The big Rainier car not having found a 
market, the directors on March 29, 1909, incorporated the 
Marquette Motor Company in Michigan for $300,000 to 
take over all the Rainier assets, the idea being to use the 
Saginaw plant for the production of a light Marquette car. 
Some of the difficulties encountered there will be related 
in another chapter. 

Net sales of General Motors, by all its units, for the first 
year of operations, ending October i, 1909, were $29,029,- 
875, and net income available for dividends, $9,114,498, a 
truly impressive record which was the result of the com- 
bined labors of 14,250 persons. No wonder General Motors 
was hailed at the end of its first year as the lustiest indus- 
trial infant ever born in America, and a stock dividend of 
150 percent on the Common stock, declared November 
1 5th, seemed to be entirely justified. 

The directors at their memorable meeting of October 26, 
1909, found that the Company had four reliable producers. 
Buick and the newly purchased Cadillac could certainly be 
classified as dependable; Oakland was also doing well and 
Olds had excellent prospects. The situation seemed rosy in 
the extreme, but within a few months changed rapidly for 
the worse. 

In spite of substantial earnings and encouraging stock 
sales, a cool survey would have revealed the dangers of the 
situation. Because of the rapidity with which the various 
units had been gathered into the fold, there could be no 
certainty of uniform bookkeeping as yet and probably no 
exact knowledge of inventory commitments. Consequently, 
the liabilities were very likely larger than appeared and 
the surplus smaller. Furthermore, of course, plant and ma- 
terial assets could not be made liquid easily. Nevertheless, 
there was the comforting thought that the company now 
had stock to sell, the authorized capitalization having been 
increased on September 10, 1919, to $60,000,000; 200,000 

124 The Turning Wheel 

shares of Preferred stock and 400,000 shares of Common, 
all $100 par. The directors' faith in Mr. Durant's ability 
to sell stock was enough to keep the company on its way 
buying and building. 

In January, 1910, the directors authorized purchase, up 
to $400,000, of shares of the Randolph Motor Car Com- 
pany, a commercial vehicle manufacturer, and added $100,- 
ooo to its capitalization. 

At the same meeting a fateful decision was reached to 
invest in Heany electric stocks by trading in 8,290 shares 
of General Motors Preferred and 74,775 shares of Gen- 
eral Motors Common. John Albert Heany claimed to be 
the inventor of the modern tungsten filament electric light, 
which, in fact, worked a revolution in illumination. Un- 
fortunately for General Motors, his patent claims were not 
upheld by the Patent Office. Even if all had been plain sail- 
ing, buying into the Heany companies was buying into a 
lawsuit. On May 5, the Company plunged deeper into the 
Heany venture. 

One of the historic moves of the Company in 1910 was 
the incorporation in Canada for $1,200,000 (12,000 
shares) of McLaughlin Motor Car Company, Ltd. At 
Oshawa, cooperation between the McLaughlin carriage in- 
terests and Buick had brought Buick profitably into the 
great Canadian market. Of the 12,000 shares in the new 
McLaughlin company, 5,000 were taken by Buick. Out of 
this company General Motors of Canada, Ltd., would in 
time emerge. 

The faster a man or an institution travels the more seri- 
ous is a stumble. To maintain the tempo of that surprising 
period both a high ratio of earnings to sales and capital 
inflow were necessary. Michigan had supported the enter- 
prise loyally with stock subscriptions, but Michigan was 
not then a rich state in liquid resources ; the cream of capital 
had already been skimmed. Mr. Durant had to go further 
afield for money. While Buick, Oakland and Cadillac were 
making substantial earnings and Olds was being revived, 
various of the lesser companies were losing. General 
Motors was increasing its volume but not its earnings, yet 
expansion had been predicated on more profits. By May, 

The Birth of General Motors 125 

1910, Flint knew something had happened when new con- 
struction suddenly stopped at Buick and lay-offs became 
chronic. Nevertheless, the greatly daring chairman of the 
executive committee reported on June 2ist to the directors 
that he had certain negotiations with Willys-Overland 
Company under way, looking to acquisition. The directors 
must have gasped when they heard that, for General 
Motors now needed to be saved from the penalties of too 
rapid expansion rather than be expanded still farther. 

Mr. Durant rallied to the feat of saving his great enter- 
prise with his usual intrepidity. He dropped everything 
else to search for money. Until this pinch, he had perhaps 
not taken bankers quite as seriously as business leaders 
must take the guardians of public funds. It would be 
pleasant now to have behind him the inexhaustible resources 
of J. P. Morgan & Company, a connection which had been 
possible at an earlier stage. 

The situation had changed with such rapidity that ade- 
quate relief was hard to find. In talks to bankers, the 
extraordinary earnings of Cadillac were cited as con- 
tributing $2,000,000 to General Motors coffers within the 
year after its purchase. Always the reply came back that 
Cadillac could have the money if it stood alone, but as it 
could not be unscrambled from General Motors and since 
this was intended to be a loan to General Motors it was, 
therefore, not forthcoming. Even Cadillac itself was in 
danger. An emergency joint meeting of the boards of the 
First National and Old National banks of Detroit loaned 
Cadillac $500,000 a few hours in advance of a pay roll 
which otherwise could not have been met. This whole epi- 
sode reveals an astonishing degree of banking blindness 
both as to the safety of a specific loan and as to the possi- 
bilities of the industry. Modern practice accepts the earn- 
ings of subsidiaries as the element properly to be considered 
in establishing the credit of a holding company. Bankers 
now understand, also, that loans to going industries are part 
of their own social responsibility, since such loans preserve 
employment and community values. The fact that Mr. 
Durant had prophesied that 300,000 automobiles would 
be produced annually in America had been a shock to many 

126 The Turning Wheel 

conservative bankers, who began to prophesy doom for the 
Republic if that incredibility should come to pass. The 
automobile "craze" was likened to the bicycle "craze" of 
a few years before, the passing of which had brought finan- 
cial disaster to many companies. It was in the face of such 
hostility that the young General Motors Company went out 
hunting for credit. 

Buick pay rolls were also troublesome. Harry K. Noyes, 
its Boston distributor, saved the day for Buick by expressing 
to Flint suitcases full of specie and currency. Mr. Noyes also 
collected company money, banked it in his own name and re- 
mitted direct instead of through banks, so that the money 
would be available for pay rolls: otherwise it might have 
been applied on an overdraft. 

In desperation Mr. Durant went West after the East 
failed him. The West must help him, he thought, because 
the West needed motor cars; it was in the West that he had 
built up Buick trade so phenomenally. But Kansas City, St. 
Louis and Chicago bankers declined to aid. Returning dis- 
couraged from this journey, Durant and Goss picked up 
A. B. C. Hardy in Chicago. The latter relates the following 
as evidence of his hero's sunny courage under pressure: 

The train stopped in Elkhart, Indiana, in a pouring rainstorm. Far 
down the dark and dismal street shone one electric sign BANK. 
Durant shook Goss, who was dozing dejectedly in a corner. 
"Wake up, Goss," said the leader. "There's one bank we missed." 

The Chicago negotiations almost saved the day. A loan 
of $7,500,000 was arranged with the Continental and Com- 
mercial Savings and Trust Company. Then it was raised 
to $9,500,000. Then it was rescinded. The longer the 
situation waited the worse it grew, partly because decreas- 
ing confidence brought demands, partly because investiga- 
tions revealed growing liabilities, a condition easily ex- 
plainable in view of the independent operations of the 
various units and the lack of uniform accounting. One item 
in the minutes makes it quite clear, for instance, that the 
directors, on September iQth, did not know how much 
money Oakland owed. By the time $7,500,000 had been 

The Birth of General Motors 127 

borrowed, $9,500,000 was needed, and by the time $9,- 
500,000 was available, $12,000,000 was needed. 

Retrenchments were hurriedly begun; the number of 
employees declined by 4,250 to a total of 10,000. The 
irony of the situation lay in the fact that net sales were 
nearly double those of the preceding year, reaching a total 
of $49,430,179. But the business had been done at a closer 
margin, net income being only $10,225,367 or slightly more 
than $1,000,000 above 1909. The rate of profit had de- 
clined while commitments had increased; between the two, 
General Motors was caught as in a vise. 


By September nearly all those interested had given up 
hope, but Mr. Durant saw one avenue of escape. His 
previous efforts to raise money had been based on a con- 
tinuance of his management. In the East he found that he 
could save the company if he stepped out. J. & W. Selig- 
man & Company of New York and Lee, Higginson & Com- 
pany of Boston, were interested on that basis, not otherwise. 
The money centers of the East were conservative; Mr. 
James J. Storrow of Lee, Higginson, who arranged the 
rescue, represented a school of financial thought which 
could not approve the dashing methods and hairbreadth 
adventures which characterized General Motors in its 

128 The Turning Wheel 

infancy. With Mr. Albert Strauss of Seligman's he decided, 
further, that the situation had gone so far that not only 
a change of management but also a trusteeship was re- 
quired. The terms were hard, but in no other way could a 
receivership be avoided, so pressing was the need for funds. 
Mr. Durant swallowed his pride and stepped down. 

The arguments against receivership were of a sort to 
appeal to both the bankers and Mr. Durant. Times were 
good but not too good. A crash of such proportions might 
have unsettled the country, and surely would have been 
disastrous in areas where General Motors operated, espe- 
cially in Pontiac and Flint which had been growing rapidly 
on the basis of Buick and Oakland expansion, and where 
even the shadow of a shut-down already had created distress 
and political unrest. Mr. Durant was quite aware of these 
local considerations which weighed heavily on the citizens of 
Michigan who had backed his enterprise. The trusteeship 
seemed to be the only way out. 

On September yth, when the directors rescinded the 
Chicago loan, they authorized the sale of the Michigan 
Auto Parts Company and Welch-Detroit, probably on the 
hint that a disposition to trim ballast would be acceptable: 
ten days later they were willing to sell Marquette. Then, 
on September 26th, after three weeks of anxious negotia- 
tions, the board authorized the loan of $15,000,000 from 
J. & W. Seligman & Company of New York and Lee, Hig- 
ginson & Company of Boston. 

The situation proved to be better than the prospect, and 
only $15,000,000 of the $20,000,000 authorized 6 percent 
notes went out. The company executed a blanket mortgage 
of all its Michigan property through the General Motors 
Company of Michigan, a corporation set up to hold title. 
As part consideration for the loan, $4,169,200 in General 
Motors Preferred stock and $2,000,000 worth of Common, 
both at par, were delivered to the bankers. The company re- 
ceived $12,750,000 in cash in return for its notes and stock 
given under the loan contract, dated November n, 1910. 
Preparing these documents and the exchanges necessary 
under them required several weeks, but banker control can 

The Birth of General Motors 129 

be considered effective in the interim, although the new 

board of directors did not take office until November I5th. 

On that day the following directors retired from office: 

A. M. Bentley of Owosso 

E. R. Campbell of Flint and New York, son-in-law of 

W. C. Durant 

Wm. M. Eaton, also president 
Harry G. Hamilton of Pontiac 
C. R. Hatheway of New York, also secretary and 


Henry Henderson of Scotch Plains, New Jersey 
Schuyler B. Knox of New York 
W. C. Leland of Detroit 
R. S. McLaughlin of Oshawa, Ontario 
W. J. Mead of Lansing 
John T. Smith of New York City 

Thus ended, after less than two years of phenomenal 
growth, the first phase of General Motors history. The 
young giant, like so many young giants, had overreached 
and come to grief. Many thought General Motors would 
never rise again. Saddled with what seemed at that time 
an unpayable debt, and all its property pledged as security, 
there remained only the intangibles of good-will and a 
strong demand for cars, to give the Common stock any 
value whatever. To turn these factors to substantial ac- 
count was the task of a new management inexperienced in 
automobile manufacturing and merchandising, though ex- 
pert in finance and well founded in business. 

The glamor of bold dreams and brave deeds marked 
the first phase : steady aim and calm judgment were to mark 
the second. General Motors paid a stiff price for the life- 
saving funds made available by the bankers. If the latter 
had retained until 1929 the $2,000,000 worth of Common 
stock they received in 1910, its value would then have been 
more than ninety times the face value of the loan. The 
1910 General Motors loan revealed on a large scale the 
high cost of financing automobile enterprises. 


The Turning Wheel 

Viewed in retrospect, the 1910 loan seems to have been 
unreasonably costly. Where $8,000,000 might have pulled 
the Company through, the latter had to pay more than 7 
percent on $12,750,000, the bonds having been taken at 
85, with the utmost security given to the lenders under 
mortgage and trust deed by a company with substantial 
earnings and excellent prospects. In addition, General 
Motors had to repay $2,250,000 which it never received, 
and paid a large bonus in stock. The transaction is hardly 
explainable except as placed against a background of ex- 
treme banking distrust of the automobile industry in general 
and also of driving personality behind the General Motors 
expansion program. 


Chapter IX 

HE new management, taking hold in the autumn of 
1910, faced a complex task. It must sell or liquidate 
subsidiaries which seemed either hopeless or unnecessary to 
the corporate operation as a whole, set up efficient man- 
agement in weak plants worth retaining, command the 
loyal cooperation of the labor and management staffs, and 
integrate control over an organization built up on the 
basis of decentralization. When General Motors gave a 
blanket mortgage and a trust deed, its position as a hold- 
ing company was at once invalidated. Since it, and not its 
subsidiaries, owed the $15,000,000, practical consideration 
enforced the exercise of more authority from headquarters, 
which were temporarily located on Woodward Avenue, 
Detroit, across from the Pontchartrain Hotel, a site now 
occupied by the National Bank of Detroit. About the middle 
of 1911, the Company leased the upper floors of the new 
six-story Boyer building at the southwest corner of Brush 
and Congress streets, directly south from the Wayne 
County Building. 

The new board consisted of: 

Anthony N. Brady of New York 
Emory W. Clark of Detroit 
W. C. Durant of Flint and New York 
A. H. Green, Jr. of Detroit 
J. H. McClement of New York 
M. J. Murphy of Detroit 


132 The Turning Wheel 

Thomas Neal of Detroit 
James J. Storrow of Boston 
Albert Strauss of New York 
Nicholas L. Tilney of New York 
James N. Wallace of New York 

These gentlemen elected James J. Storrow as interim 
president while making up their minds as to his successor. 
Mr. Storrow, fortunately, was a man of great force and 
vigor, and, in addition, he was somewhat automobile- 
minded, continuing his interest in motors until his death 
many years later. Under him the work of reorganization 
got away to a swinging start. Almost immediately it was 
decided to dispose of Seager Engine, Welch-Detroit, Mich- 
igan Auto Parts, the National Motor Cab Company, and 
Ewing. The board acted with equal promptness to clarify 
the financial structure by purchasing stocks in various other 
General Motors enterprises which had accumulated in 
Buick's treasury during the hectic days when Mr. Durant 
was buying properties with any funds available. 

Having weighed the situation, Messrs. Storrow and 
Strauss, whose union of interests dominated the board of 
directors, selected Mr. Thomas Neal of Detroit as presi- 
dent. Mr. Neal was president of the Acme Lead and Color 
Works, one of Detroit's successful industries, and had a 
high degree of business sagacity. Standish Backus, a young 
lawyer, became secretary and James T. Shaw, treasurer. 
It was a distinctly Detroit management. Mr. Durant was 
retained on the board and given the important post of chair- 
man of the finance committee which he held for a year. 

Banker control from the Atlantic seaboard had its dis- 
couraging features for the practical men who were bear- 
ing the company's burdens in plant and field. Banker 
Strauss desired to move machinery from the Welch-Detroit 
plant to the Marquette plant in Saginaw by water, having 
discovered that both plants were near the waterfronts of 
their respective cities. It took a statistical report to demon- 
strate to him that moving cargo from shop to shore would 
cost more than the direct rail haul from one factory side- 
track to another. 

The Bankers Take the Wheel 133 

For two years expansion had been the watchword, with 
efficiency of operation a minor consideration. Inventories 
were woefully out of balance; improper storage of supplies 
had caused great waste. In one plant thousands of tires 
were found exposed to heat and sunlight; in another valu- 
able machinery lay rusting out of doors. Tons of unsaleable 
merchandise had been built to faulty specifications or of 
faulty materials. However, new managers, grappling with 
these discouragements, soon brought improved order and 
spirit into plant operations. These readjustments required, 
of course, considerable time, and an immense amount of 


patient, detail work on the part of plant managers and 
their staffs. 

During the two flush years of General Motors life, man- 
ufacturing, sales, and accounting had not kept pace with 
growth of volume. The new management accordingly began 
to coordinate policies and to put into use standardized ac- 
counting and reporting. Henceforth, at least, General 
Motors would know how its cash position stood from day 
to day. It set up the General Motors Export Company, a 
Michigan corporation with $10,000 capital, to handle all 
General Motors products in the foreign field, this being 
perhaps the first operation in which General Motors pre- 
sented a completely united front. A General Motors maga- 
zine, the Insider, made its appearance, the first of many 
corporation publications designed to spread the General 

134 The Turning Wheel 

Motors message among its own people and advance the 
solidarity of the enterprise. An experimental and testing 
laboratory was set up. New managers were installed in 
many plants. Economy became the watchword, and under 
that banner began thorough reform. 

There was plenty to be done. In the mopping-up process 
the following central office projects were wound up: 

General Motors Securities Company. 

General Motors interest in United Motors Company 
sold to United States Motor Company, the rival hold- 
ing company organized by Benjamin Briscoe. A little 
later the Company's interest in United States Motor 
Company was written down to $i. 

Efforts to sell the Company's interest in Seager Engine 
failing, that asset was also written down to $i. 

Ditto with the Maxwell-Briscoe interest. 

These decisions took some time to mature, but in 1914, 
by the process of dissolving the subsidiary corporations, 
General Motors finally rid itself of Randolph, Peninsular, 
and Welch-Detroit. It sold the Reliance plant at Owosso 
to the American Malleables Company, and the Michigan 
Motor Castings Company was absorbed by Buick. 

Elmore's capital stock was reduced from $60,000 to 
$6,000. As the spare parts business of both Elmore and 
Peninsular had been sold for $44,000, the Elmore write- 
off to $6,000 placed a bargain price on the Clyde, Ohio, 
plant. In five years the value of the Elmore investment 
had shrunk from $600,000 to $6,000 in the ratio of $100 
to $i, at a time when the automobile business was generally 
prosperous and the Elmore car was considered thoroughly 
creditable. Actually, the plant sold for $50,000 when a 
buyer for it appeared some years later. 

It will be noticed that in this period of retrenchment 
General Motors concentrated on Michigan producers, a 
trend applicable to the entire industry, as it advanced in 
age and capitalization. Although in later years the Cor- 
poration widened its activities geographically with excel- 
lent results, the great automobile producers in its orbit still 

The Bankers Take the Wheel 135 

have their chief plants and operating headquarters in 

Hopes being still held out for Rainier, General Motors 
increased its holding in the Saginaw company by $110,000 
of stock, paying about half in cash and half in surrender 
of claims. Full ownership of Rainier was completed on 
May 2Qth. Another move with enduring results was the 
incorporation of General Motors Truck Company on July 
22, 1911, as a sales company to handle the product of 
Rapid Motor Vehicle Company of Pontiac, Michigan and 
Reliance Motor Truck Company. 

The most hopeless task of all remained in the liquidation 
of the Heany assets. Mr. Durant, seeing the white light 
of truth where once he had seen only the rosy dawn of 
mythical profits, reported adversely on Heany at the meet- 
ing of May 15, 1911, and the board resolved to grant 
Heany no further advances. The Heany plant at York, 
Pennsylvania, was of small value compared with the 
prospective value of Heany's patents, now seen to be in 
jeopardy when carefully weighed in view of the General 
Electric suit. 

The Heany fiasco cost General Motors enormously, 
estimates running from $5,000,000 to $12,000,000. Its 
denouement marked the withdrawal of Mr. Durant from 
the chairmanship of the Finance Committee on November 
n, 1911, when he was succeeded by Mr. Storrow. Mr. 
Durant, although remaining on the board, was now entirely 
divorced from the management and devoted his energies to 
founding Chevrolet, on which he again rode into power 
four years later. He remained, however, a director. 

General Motors voting trust certificates, the share for 
share equivalent of the deposited Common shares, were 
listed on the New York Stock Exchange on July 31, 1911, 
the first automobile securities listed by that body. That list- 
ing meant that stockholders and the public generally hence- 
forth would have clear statements of the company's financial 
position at regular intervals, and it therefore became part 
of the management's plan to rebuild public confidence in 
General Motors' structure. At this time the net worth of 

136 The Turning Wheel 

the company was approximately $35,000,000, although the 
authorized capital was $60,000,000. 

The banker management, even at that early date, caught 
the significance of the relationship of corporate financial 
responsibility to automobile sales. The automobile buyer, 
more definitely than the consumer in other lines of mer- 
chandise in general use, seeks reassurance of the manu- 
facturer's stability, because the service he receives and the 
resale value of his car alike depend unmistakably upon the 
continuance of the manufacturer in business. General 
Motors' position in this respect suffered a body blow from 
the uncertainties reigning during the height of the busy 
selling season in the midsummer of 1910, and every effort 
to reestablish confidence was a step toward better sales. 
Banking opinion had been satisfied at once by the character 
of the new board, and this confidence worked its way down 
again to the sales staffs and the buying public. More 
efficient plant management was steadily improving the 
quality of the cars offered, and as the feeling grew that 
General Motors had escaped its Waterloo, business im- 
proved. The tide turned faster than the conservative men 
at the center of things fully realized. Although they were 
paying off the trust notes regularly and adding to surplus, 
General Motors stock was offered for sale to several of 
the officers in 1911 with no takers. But W. C. Durant 
watched the situation out of the corner of his eye, con- 
sidered the stock ridiculously undervalued, and as he could 
find the means, began to buy back toward control. 

One factor in the upturn was the growth of the export 
business. The capital of General Motors Export was in- 
creased in January, 1912, from $10,000 to $100,000. An- 
other transaction of moment was the purchase of the 
remaining outstanding shares of Weston-Mott from C. S. 
Mott. This transaction which involved also 3,000 shares 
of Brown-Lipe-Chapin stock and several notes, totalled 
more than $2,000,000. Brown-Lipe-Chapin, manufacturing 
gear differentials at Syracuse, New York, later became a 
division of the Corporation. 

General Motors of Canada, a sales unit, was born with 
a capital of $10,000 and General Motors completed its 

The Bankers Take the Wheel 137 

ownership of Cartercar. Great things were expected of Car- 
tercar, a friction-drive car. It occupied the former site of the 
North and Hamilton carriage factory in Pontiac, and had 
as president George E. Daniels, who will be remembered 
as the first nominal president of General Motors Company 
and later head of Oakland. But Cartercar, in spite of its 
early promise, soon faded from view. The friction drive 
simply could not be popularized, and the chance for it had 
passed with the rapid improvements in gear shifting. 

Engineering improvements came along swiftly, and Gen- 
eral Motors' priority in some of these hastened the recov- 
ery. Buick introduced its first closed car a limousine in 
1911. Other improvements were the electric horn, slip de- 
tachable rings, and the worm-gear drive for trucks. But 
the greatest mechanical triumph of the period was Cadillac's 
introduction of the Delco electric starter, described in the 
Insider in 1911, to become standard equipment in 1912. 
This epoch-making achievement opened a new market for 
automobiles by making motoring cleaner, safer and easier, 
and, in particular, met the driving needs of women, result- 
ing in a striking market advance. 1 

The process of shearing off disappointing properties and 
consolidating others continued. Buick's Jackson plant was 
sold to Imperial Wheel, and Michigan Auto Parts went 
to Northway. Welch-Detroit, of which the Company had 
long been weary, went to the Peninsular Motor Company. 
Into the Peninsular shell had now been poured three com- 
panies Rainier, Marquette, and Welch-Detroit. It was a 
grand property physically but had little luck until it went 
finally to Chevrolet. 

The 1911 figures reveal the young giant twisting in the 
coils of bitter circumstance but making headway. Net sales 
were off nearly $7,000,000 and net income cut to a third 
of 1910 profits only $3,316,251 was available for divi- 
dends and reinvestment. For a true comparison the latter 
figure needs enlarging by one fifth as in 1911 the close of 
the company's fiscal year was pushed ahead to July 3ist. 
Even so, the shrinkage was large. Nevertheless, the Pre- 
ferred dividend was paid promptly, and as the Common 

'See Chap. XIX: "Research: the March of the Open Mind." 

138 The Turning Wheel 

stock had never paid a cash dividend the company's credit 
held firm. Pay rolls began to creep up, the number of em- 
ployees advancing from an average of 10,000 to 11,474. 

Through this period of reorganization Buick had made 
extraordinary progress under Charles W. Nash and his 


works manager, Walter P. Chrysler. Both were extraor- 
dinary men, self-made, strong-willed yet versatile, possess- 
ing qualities of leadership, financial acumen, and shrewd 
market wisdom. 

Charles W. Nash had risen from manual labor to be 
general superintendent of the Durant-Dort Carriage Com- 
pany. In Flint they say he began his rise by mowing a lawn 
so well that Mr. Durant noticed his thoroughness and gave 
him a steady job at the factory, polishing lamps at seventy- 
five cents a day. If Durant had taken Mr. Nash into Buick 
with him in 1904, the whole history of General Motors 
might have been otherwise, but Nash remained with 
Durant-Dort. However, Durant recommended Nash to 
James J. Storrow for the Buick post in 1910. That Mr. 
Storrow accepted this suggestion proves his openness of 
mind, for Mr. Nash lacked automobile experience, and even 
those who knew and respected his ability wondered how he 

The Bankers Take the Wheel 139 

would fare in so novel an assignment. But if "Charlie" 
Nash did not know motor cars, he knew men and he knew 
factory organization. In a matter of months after taking 
hold, Buick was functioning efficiently, rolling up a record 
so outstanding that in November, 1912, he was the 
unanimous choice for the presidency of General Motors. 

Mr. Nash was fortunate in having Walter P. Chrysler 
with him during this period. Mr. Chrysler's rise is one 
which richly deserves all the notice it has received, but the 
story is so well known that it need not be repeated here. 
A product of Western railroading, he was brought by Nash 
to Buick from the American Locomotive Works at Pitts- 
burgh. A genius at plant organization, he soon lifted that 
burden from Mr. Nash's shoulders, and when Mr. Nash 
became president of General Motors, Mr. Chrysler suc- 
ceeded to the chief responsibility of Buick, there to remain 
until 1920. 

In the nearly four years of the Nash leadership, General 
Motors made a remarkable financial "comeback." Good 
earnings enabled the Company to anticipate notes, add to 
surplus and enlarge plants. For 1912 earnings held steady, 
but in the next year more than doubled on a 30 percent 
increase in sales, sure evidence that the reorganized Gen- 
eral Motors was finding itself as an efficient manufacturer. 

But an even more striking index of growing efficiency is 
to be seen in the ratio of net sales to number of employees. 
In 1913 each employee of General Motors produced on 
the average $4,236 in net sales value; in 1914, when there 
was a considerable drop in employment but only a small 
drop in sales, the average was $6,037. 

From 1913 to 1916 inclusive General Motors earned, 
available for dividends, nearly $58,000,000, doubling its 
profits each year from 1914 to 1916, as follows : 

$ 7,249,734 in I9H 
$14,457,803 in 1915 
$28,789,500 in 1916 

While this astonishing earning power reflects the general 
prosperity of the country in the "munitions boom," following 


The Turning Wheel 

the onset of the World War in Europe, it also reflects the 
outstandng fact that General Motors plants and sales 
systems had been thoroughly reorganized and were ready 
to go ahead with the general improvement of business. 


During these three busy years net sales rose from $85,- 
373,303 in 1914 to $156,900,296 in 1916 and the amount 
reinvested annually in the business from $6,201,055 in 
1914 to $17,010,437 in 1917, while the average number of 
employees rose from 14,141 to 25,666. 

At the beginning of this run of luck and good manage- 
ment combined, the price of the Common stock as repre- 
sented by voting trust certificates still hung around $25 a 
share. Common stock began to appreciate in the spring of 
1914, doubled in value before the New York Stock Ex- 
change closed at the opening of the World War, and gained 
persistently thereafter, eventually reaching a high of $852 
a share. When the present Delaware Corporation was 
formed in 1916 it exchanged five shares of the Common 
stock for one share of the Common stock of the New 
Jersey Company. Owing to stock dividends and divisions, 

The Bankers Take the Wheel 141 

each share of the old Company Common equals roughly 100 
shares of Corporation Common and was worth in Novem- 
ber, 1933, $3,000. At the peak price of 1929 one share of 
the old Company Common was worth more than $9,000. 

There was no headlong expansion, however, on the basis 
of improvement. The only substantial capital increase in 
1913 was that of General Motors Truck Company capitali- 
zation from $10,000 to $250,000. Elmore, Peninsular and 
Welch operations were wound up. With their passing the 
General Motors passenger car units had been whittled 
down to Buick, Cadillac, Oakland, and Oldsmobile, and of 
all the truck units absorbed by General Motors in its period 
of great expansion only one remained: General Motors 
Truck Company. 

General Motors had developed a clear outline by the 
time the banker reorganization was complete. It would 
grow tremendously, of course, and add many units, but they 
would be chiefly accessory and parts companies supplying 
the great automobile manufacturing establishments which 
dealt directly with the public. Never again would General 
Motors give substantial evidence of a desire to acquire a 
leadership in the industry based merely upon buying com- 
peting companies. Fear of monopoly aroused by swift early 
expansion had been allayed and never reappeared. Hence- 
forth General Motors would strive for a larger share of the 
automobile business of the country, not by buying up com- 
petitors, but by improving the output of its four great 
producers, to which Chevrolet would soon be added as a 
result of an extraordinary situation which no policy could 
foresee. This in the passenger car field; as other opportuni- 
ities developed, purchases of corporations in those fields 
were made and, of course, the whole supply and service situ- 
ation has been rounded out. 

The point is that the general plan of 1913, which ultra- 
conservative men worked out under the pressure of neces- 
sity, still stands, though still subject to revision as circum- 
stances dictate. General Motors' evolution from a holding 
company to an operating company, while not completed 
for several years, was begun under banker control, and the 
greater part of its expansion since has been through the 

142 The Turning Wheel 

growth of its leading component divisions rather than by 
purchase of rival companies. The country consequently no 
longer thinks of General Motors as a horizontal trust cap- 
able of infinite expansion until it dominates the essential in- 
dustry of vehicular transport, but rather as an organization 
with certain trust features of advantage but still subject to 
the restraints and incentives of competition. 

As it stands, General Motors is neither a vertical trust 
nor a horizontal trust, but in adapting itself to large scale 
production in a land where competition is estimated the life 
of trade, it has taken on certain aspects of both horizontal 
and vertical organization, an adjustment dictated by the 
necessities of cooperation on the one hand and by a deter- 
mination to avoid even the appearance of monopolistic in- 
tent on the other. 

For the beginnings of this sane evolution the bankers 
who ruled General Motors from 1910 to 1915 are re- 
sponsible. How that control passed, amid scenes and circum- 
stances of intense drama, will be told in the two chapters 
to follow. 

Chapter X 




HE rise of Chevrolet is one of the epics of American 
industry, with almost fairy-tale aspects. Like Cinderella, 
Chevrolet rose from the ashes, went to court, was cheered 
by the populace, married and lived happily ever after. 

We have seen that Buick began its Flint career at the 
western end of Flint in the Flint Wagon Works Plant ; also 
that while new buildings rose in northern Flint to house 
the amazing growth of that company, only one Buick 
structure stood in western Flint. Buick motors were still 
being made in this old or No. 2 Plant, while across the 
tracks Flint Wagon Works engaged in turning out a few 
of the Whiting cars. All of these buildings have since been 
demolished to make way for larger plants of Chevrolet. 

In 1909, Louis Chevrolet, bearing a name destined to 
become a household word in America, was experimenting 
on a small car in Detroit and also with a six-cylinder one. 
He was being financed by W. C. Durant who had employed 
him as a racing driver several years before. Chevrolet was 
a picturesque figure in his racing days, as he brought Buicks 
down the stretch with his huge Gallic mustache blowing in 
the wind. When Louis and his brother Arthur came to 
Flint, Mr. Durant tried them out on a small dirt track 
maintained by Buick in the rear of its factory. Louis won 
the contest, and was chagrined when Mr. Durant immedi- 
ately selected Arthur as his personal chauffeur on the 
ground that Arthur had lost by taking no chances while 


144 The Turning Wheel 

Louis Chevrolet had won by taking all chances. Both Chev- 
rolets became members of the famous Buick racing team 
which contained Bob Burman, Louis Strang and other 
celebrities. But Louis Chevrolet had talents beyond mere 
speed; he had ideas about design. He considered that 
America, with improving roads, would receive favorably 
a light car which, like the French favorites of the day, 

The first Chevrolet, built in April, 1913, has traveled 237,462 miles 

combined beauty with modest price. This idea appealed to 
Mr. Durant who accordingly backed the Chevrolet experi- 
ments in Detroit. 

In 1910, Mr. Durant lost control of General Motors. 
In the retrenchments which followed, Buick No. 2 Plant 
was abandoned and motor operations moved to the north 
end of Flint. Flint Wagon Works had discontinued man- 
ufacturing the Whiting car, and as the carriage business 
showed a steady decline under the competition of the rising 
automobile trade, Mr. Whiting was anxious to liquidate 
his company. The opportunity came. Proving that one 
setback was not enough to keep him out of the automo- 
bile industry, Mr. Durant bought the Wagon Works 
property, plant and contents, and organized the Little 
Motor Car Company to occupy the property. The com- 
pany was named for William H. Little who had been 
general manager of Buick under Mr. Durant. Mr. Little, 
Charles M. Begole, and William S. Ballenger signed the 
articles of incorporation as of October 30, 1911. Capital 

Chevrolet 145 

stock authorized was $1,200,000 $700,000 Common and 
$500,000 Preferred. Stock subscribed was declared to be 
$615,600 Common, and $207,600 Preferred. Only $4,- 
827.42 is represented as paid in cash, the balance being 
paid in real estate and materials, inventory, etc., the value 
of the Wagon Works plant being set up at $350,000. The 
Preferred stock was paid in exchange for Wagon Works 
machinery, equipment, and accounts and bills receivable. 
Little, therefore, started from scratch, with an old plant 
full of horse-drawn vehicles and mortgaged to Mr. Whiting 
for $200,000. When it is recalled that Little became the 
foundation of Chevrolet, and Chevrolet grew to larger 
volume than any other motor manufacturer in the world, 
industrial history has nothing to match the march from 
poverty to power. 

Little Motor Car Company at first built only one model, 
a small four-cylinder runabout, selling around $650, which 
placed it in competition with Ford. It was attractively de- 
signed, but weakly powered. 

The Wagon Works plant was in confusion. The problem 
facing the management was selling a large inventory of 
carriage parts and work in process at the same time that it 
rehabilitated the property for automobile production. In 
the meantime Louis Chevrolet continued in Detroit his ex- 
perimental work on four- and six-cylinder cars, the "six" 
being known as Model C which was finally accepted as 
ready for production. A plant was rented on West Grand 
Boulevard, and there the first Chevrolet cars were pro- 
duced for the market. 

On November 3, 1911, the Chevrolet Motor Company 
of Michigan was organized with Louis Chevrolet, William 
H. Little and Edwin R. Campbell as incorporators. Up to 
that time, Chevrolet had built only four or five experi- 
mental cars, and the new company's production in Detroit 
was never large. A sensation was created in Detroit real 
estate circles when vacant property was purchased directly 
across from the Ford factory and a large billboard was 
erected saying that a complete modern plant would be 
built on that location. This was never done, however, as it 
was soon seen that quantity production could be more 

146 The Turning Wheel 

economically effected in Flint where considerable strides 
had been made. 

The most important of these was the incorporation of 
the Mason Motor Company on July 31, 1911, with Arthur 
C. Mason, Charles Byrne and Charles E. Wetherald as 
incorporators. Followed by a large number of former Buick 

Chevrolet "Royal Mail" roadster, 1914 

employees, with amazing speed they began motor produc- 
tion in the old Buick No. 2 Plant rented for the purpose. 
There, as contracted for, the motors for both the Little and 
Chevrolet cars were built by the Mason Motor Company. 
Mr. A. B. C. Hardy succeeded William H. Little as gen- 
eral manager of the Little Motor Car Company at Flint on 
January 21, 1912. Mr. Hardy found the plant still full of 
everything for farm use from wagons to whip sockets. 

The Little mortgage was very tightly drawn. It had to be 
reduced in certain proportions as any building or machinery 
item was changed or moved, with the Whiting interests 
consulted at each step. Mr. Hardy says that only $36,500 in 
new cash was put into the Little Company of which $10,000 
represented the claim which the Weston-Mott Company 
had against the Wagon Works for axles. 

Mr. Mott's willingness to take our stock was a real help and gave 
us all courage. As part of the deal, we were bound to pay off all 
debts of the Wagon Works, so the problem I faced was that of 

Chevrolet 147 

turning a set of old fashioned carriage buildings into an auto- 
mobile plant on only $26,500, getting the rest of the money out 
of the sales of horse-drawn vehicles and their parts. For the first 
year we were in several kinds of business at the same time. 

Our plan was simple to the point of innocence. We took the 
small motor, had it revamped and improved by Mason and put it 
into a small roadster for sale for $650 which was somewhere 
near Ford's latest price. The Little had good lines but was under- 
powered. Nevertheless, we sold 3,500 Littles in my first year and 
also made up and sold several thousand buggies, many thousand 
sets of wheels and a raft of miscellaneous carriage parts and ac- 
cessories. All this in addition to putting the plant in fair shape for 
the production of automobiles. We made all of our bodies and 
most of our sheet metal parts. 

Mr. Little spent most of his time in Detroit where Chev- 
rolet was getting into small production. Chevrolet sales 
offices were opened in Chicago, Philadelphia and Boston, 
these three being the first of many retail stores later 
operated by Chevrolet. Its large six-cylinder car was priced 
at $2,500 and upwards. The capital for the Detroit opera- 
tion came largely from material and parts suppliers. The 
plant in which Chevrolet operated on West Grand Boule- 
vard in Detroit had been taken over from Thomas Cor- 
coran, a lamp manufacturer of Cincinnati. For those days 
it was an exceptionally good plant, even luxurious from the 
standpoint of offices, and there Mr. Durant made his head- 
quarters for a considerable time. 

The production record hung up at the Little plant in 
Flint, however, far exceeded what had been done in De- 
troit. The Flint enterprise actually was making money, 
while the Detroit operation was losing it. Consequently, 
Mr. Durant planned a much heavier schedule for Flint 
during 1913 based on a production of 25,000 four-cylinder 
Littles and the introduction of a six-cylinder Little ; but the 
25,000 figure was reduced to 5,000, and orders were placed 
for materials on that basis. A small assembly plant had 
been leased at the corner of 57th Street and nth Avenue, 
New York City, to which parts were sent to be assembled. 
The matter of financing these shipments was disputed 
between the Flint and Detroit organizations which were 

148 The Turning Wheel 

separate corporations with different sets of stockholders. 
Messrs. C. M. Begole and W. S. Ballenger of the Wagon 
Works remained active in the Little Company, which suc- 
ceeded in paying off its floating debts, reducing its mortgage 
very considerably, and building up a small surplus not 
enough, however, to finance extensive shipments to New 
York and Detroit. 

The logic of the situation indicated the advisability of 
concentrating the manufacturing at Flint. Consequently, 
the Chevrolet Motor Company of Michigan discontinued 
operation in Detroit and moved from there in August, 
1913. For a time Chevrolet occupied the old Imperial 
Wheel Company plant on property now owned by Buick. 
General management of both the Little and Chevrolet com- 
panies was given to A. B. C. Hardy. All former sales 
offices were retained. Mr. Durant further consolidated his 
Flint position by extending his interest in the allied Mason 
Motor Company. 

The year 1914, which was to inaugurate the World War 
and witness the revival of general business activities in the 
United States, found both the Little and Chevrolet cars 
in production in Flint. Chevrolet introduced its famous 
Baby Grand touring car and Royal Mail roadster. The 
organization had become highly efficient through the neces- 
sity of making its own way on very little capital. The used 
car problem had not yet developed and instalment selling 
was still in the future. Chevrolet could sell for cash every 
car it produced. So great was the demand that if a shipment 
was not taken off the railroad track promptly by the con- 
signee, someone else in the community could be depended 
upon to lift it without delay. As the money rolled in, Mr. 
Durant transferred his offices from Detroit to New York to 
push sales from that center and also to work out a plan 
which he had formed for recovering control of General 
Motors. The latter had snapped back into prosperity under 
the Nash management. Profits were large, interim pay- 
ments on its funded debt were made promptly, and large 
reserves accumulated. Yet, no one of the Eastern bankers 
seemed to appreciate the full potential value of General 
Motors as thoroughly as did Mr. Durant. 

Chevrolet 149 

Chevrolet expansion went on at top speed. During 1915 
the Little Motor Car Company discontinued production. 
Following an exchange of real estate, all Chevrolet opera- 
tions were concentrated in the western end of Flint. The 
Baby Grand touring and Royal Mail roadster, volume 
cars from the beginning, ran into large production. 

The selling force took decisive steps forward. In 1914 
a wholesaling organization had been opened in Oakland, 

I . ! ^ 

Model 490, Chevrolet the basis of the present Chevrolet 

California. In the following year wholesale offices, the first 
of the Chevrolet zones, were opened in Kansas City and 
Atlanta. Agreements were made with Russell Gardner, Sr., 
for the assembling and sale of the Model 490 in St. Louis 
territory, and with R. S. and G. W. McLaughlin for similar 
production and sale in Canada. Chevrolet had no financial 
investment in either company, but had a profit-sharing con- 
tract. Chevrolet entered the Eastern production field with 
the "490" by buying the Maxwell Motor Company plant at 
Tarrytown, New York, the New York City plant being con- 
tinued for production of Baby Grand and Royal Mail 
models. Most of the assembly operations were set up with 
the assistance of local capital, with the result that the still 
rather small Chevrolet Company bloomed into a nation- 
wide operation in a remarkably short space of time. 

150 The Turning Wheel 

Chevrolet Motor Company of Delaware, through which 
W. C. Durant regained control of General Motors by an 
exchange of stock, was incorporated in Delaware on Sep- 
tember 23, 1915, with a capital of $20,000,000, raised to 
$80,000,000 the following December. With very broad 
powers, including the right to hold, own, and deal in securi- 
ties, it acquired all the stock of Chevrolet Motor Company 
of New York, Chevrolet Motor Company of Michigan, 
Chevrolet Motor Company of Bay City, Chevrolet Motor 
Company of Toledo, Ohio, Mason Motor Company of 
Flint, with contract interests in Chevrolet Motor Company 
of Canada, Ltd., Oshawa, Ontario, and Chevrolet Motor 
Company of St. Louis. 

The officers were R. H. Higgins, chairman of the board; 
L. G. Kaufman, chairman of the Finance Committee; 
W. C. Durant, president; A. B. C. Hardy, vice-president; 
E. R. Campbell, second vice-president; W. C. Sills, treas- 
urer; J. T. Smith, secretary. Among the directors were 
H. M. Barksdale of Wilmington, Delaware, a du Pont 
representative, and L. G. Kaufman, president of the 
Chatham Phenix Bank, New York City. Mr. Kaufman en- 
tered Chevrolet financial councils through his ready accept- 
ance of Chevrolet loans at the instance of Nathan Hof- 
heimer who had been a large stockholder in the Heany en- 
terprises, and who followed Mr. Durant into Chevrolet. 

The balance sheet of December 31, 1915, showed net 
working capital of $7,368,572 and capital stock outstand- 
ing of $19,752,300, which had been increased to $23,663,- 
800 on February 29, 1916, as a result of the stock transfer 
previously outlined. 

Before demonstrating his control of General Motors 
through Chevrolet, Mr. Durant offered a proposition to 
have Chevrolet taken into the General Motors family as a 
unit. That declined, a show of strength was necessary. Cin- 
derella Chevrolet stepped forth in her new-won splendor 
to the applause of the multitude. 

Chevrolet Motor Company of Michigan took over the 
capital stock of the Mason Motor Company. The year 
1916 saw Chevrolet still expanding. A new assembly plant 
was built at Flint and another started at Fort Worth, Texas. 

Chevrolet 151 

The Mason Motor Company increased its motor manufac- 
turing space at Flint. A new axle plant was also added. Two 
notable purchases had been made of properties which 
greatly enlarged Chevrolet's manufacturing resources. The 
National Cycle Company and the National Motor Truck 
Company at Bay City, Michigan, were purchased for small 
parts production and Warner Gear Company at Toledo, 
Ohio, for transmission and gear production. Retail stores 
were opened in many cities. Chevrolet assembly began at 
Oakland, California. A profit of $278,000 was derived 
from sale to the Ford Motor Company of Highland Park 
property bought five years before. Additions to the manu- 
facturing, assembling, and sales facilities came fully in use 
in 1917 and made that year notable in spite of the difficul- 
ties which manufacturing in general encountered through 
the participation of the United States in the World War 
and the setting up of quotas on materials. 

Chevrolet leased an eight-story office building at 224 
West 57th Street (1764 Broadway), New York City, and 
moved the executive offices to that location on December I, 
1917, later exercising an option to purchase. In preparation 
for its absorption into the General Motors Company, 
Chevrolet in 1918 began to buy the outstanding stocks 
held locally in its enterprises in various sections of the 
country, and their several production and sales agreements 
were cancelled out in this way at figures highly profitable 
to the local investor. In 1918 General Motors purchased 
all the assets and assumed all the liabilities of Chevrolet 
Motor Company (Delaware). 1 

In all American industrial history there has never been 
anything to equal the rise of Chevrolet from an experiment 
in 1910-11 to the position it held when merged with the 
General Motors Corporation in 1918. It had made $6,000,- 
ooo in six years and had amazed the automobile world by 
securing control of General Motors Company of New 
Jersey. Moreover, it had worked out a broadly based sys- 
stem of production and nation-wide assembly upon which 
it could build its quantity leadership of the future. Starting 
with almost no cash and an antiquated plant, Chevrolet's 

^or later history of Chevrolet, see Chap. XVI. 


The Turning Wheel 

swift and dazzling ascent to profit and power caught the 
attention of the country. How Cinderella Chevrolet came 
to the court of public opinion unheralded and unsung, to 
ride away in her coach-and-six to the cheers of the popu- 
lace, will be told in the following chapter. 

Chapter XI 


N ITS lusty youth the automobile industry displayed 
strong resistance to the down swings of the business cycle. 
When banks were failing in 1907, and many sections had 
only scrip for a circulating medium, the automobile cities 
of Michigan hardly knew that distress was stalking the 
land. Pessimists were always talking of the "saturation 
point" but conveniently it kept receding. 

Business in general began to slow down in 1913, but 
General Motors' reorganization had given the Company 
such momentum that its earnings kept rising. Likewise, 
Chevrolet passed swiftly through infancy into assured 
earning power. The situation had all the elements of drama ; 
indeed, one could be sure of drama wherever William C. 
Durant concentrated his attention. On the one hand stood 
the organizer of General Motors, bereft of power in his 
old enterprise, but already in the field with a new, expanding 
venture, built on a "shoe string" in the sense of capital 
structure but paying its way, growing through earnings, the 
bright faith of its captain and his uncanny ability to find 
capital when it was needed. On the other hand stood Gen- 
eral Motors, directed by more conservative men, with the 
power of ultimate decision resting in bankers more inter- 
ested in getting the Company out of debt than in taking 
unnecessary risks. 

Sometimes the conservative view is really the short view, 
the optimistic, the long view. It proved to be so in this 


154 The Turning Wheel 

case. With their eyes on the ledgers rather than on the 
future, the bankers never quite comprehended the potential 
value of General Motors. Having mopped up the debris of 
the initial expansion they failed to grasp the importance of 
what remained in General Motors after the house-cleaning 
had been done. Few realized that General Motors' earning 
capacity far outran its debt commitments, and among those 
few was the man who had founded the company. W. C. 
Durant began buying General Motors. 

In his market campaign for control from 1913 to 1915, 
Mr. Durant proceeded from the firm base of a large 
personal interest in the stock. He had sold none of his 
original holdings. Members of his family held large blocks. 
Other blocks were held by old friends and business asso- 
ciates who had clung to their holdings through the period 
of falling prices for the stock. Mr. Durant's liberality in 
buying companies for stock had endeared him to bene- 
ficiaries upon whose loyalty he could rely. 

Altogether there was, both in property and sentiment, 
the basis for considerable buying, credit being comparatively 
easy. General Motors certificates trebled in price by the 
time the New York Stock Exchange closed at the outbreak 
of the World War and, when the Exchange opened four 
and a half months later, General Motors was one of the 
few stocks to have appreciated in the interval. Thereafter 
the stock rose in value rapidly as the munitions boom gath- 
ered headway. The World War played into Durant's hands 
by bringing new money and new men into the stock market, 
and by stimulating confidence in business. While it was gen- 
erally understood that Durant was buying, the Street was 
skeptical how far he could go, and the bankers in control 
never seemed to have read the danger signals. Their re- 
sources, of course, far outweighed those of the opposition, if 
they had ever been mobilized for resistance. 

General Motors in 1915 was a rich prize. The statement 
of July 3 ist, of that year, shows net working capital of 
$31,141,238, cash of $15,527,124, and net profits for the 
year of nearly $15,000,000. Only $2,328,000 of the 
$15,000,000 gold notes issued in 1910 remained unpaid, 

The Corporation Established 155 

the mortgage debt having been reduced by approximately 
$1,000,000 in the fiscal year ending July 31, 1911 ; $1,500,- 
ooo in 1912; $1,500,000 in 1913; $3,000,000 in 1914; and 
$5,500,000 in 1915. By comparison Chevrolet was still a 
pigmy yet plans were afoot to have little Chevrolet gain 
control of the General Motors giant. 

This, of course, had to be done carefully. The campaign 
was cleverly timed, and had support from sources highly re- 
spectable. Mr. Durant received substantial banking aid 
from Louis G. Kaufman of the Chatham Phenix Bank, 
New York. The open market was buying on a tremendous 
scale, as is evident from the high and low prices for the 
General Motors voting trust certificates representing Com- 
mon stock. The range of prices was : 

Year High Low 

I9H 5iM 35 

1912 42% 30 

1913 40 25 

Then the spread began, with a 1914 low of 37 }i and a 
high of 99. Buying for control took the stock in 1915 from 
a low of 82 to a high of 558. But unlike so many other 
market movements, victory was followed by only a slight 
recession and the scoring of a new high figure low for 
1916, 405; high, 850. No matter how rapidly Mr. Durant 
and his friends "bulled" the market General Motors stock 
remained worth what they paid for it. But, in all prob- 
ability, no market campaign which was nothing more than 
speculative would have resulted in the recapture of General 
Motors control by its founder. 

As part of the plan Chevrolet Motor Company of Dela- 
ware was organized for $20,000,000, but the papers were 
not filed until September 23, 1915. Chevrolet of Delaware 
was the horse Durant rode to battle. The word went out, 
quietly, that Chevrolet would be traded for General Motors 
at the ratio of five to one, 1 and those who had followed 

a The offer held until January 25, 1916, when a change was made by which 
four shares of Chevrolet Common stock instead of five were exchanged for 
one share of General Motors Company of New Jersey Common stock. 

156 The Turning Wheel 

Durant by investing early in Buick and General Motors 
began to send in or bring in their stock for transfer. 
Mr. Hardy relates how A. M. Bentley of Owosso brought 
in a large brief-case of General Motors certificates to the 
Chevrolet headquarters in New York and was willing to 
turn them in without even a receipt. Reliance had gone the 
way of many other promotions, but Mr. Bentley still had 
the General Motors stock with which it had been purchased. 
The close friendly relations Mr. Durant had established 
with the old stockholders, to many of whom he had sold 
stock personally, stood him in good stead now. With the 
value of their holdings increasing daily under his market 
generalship, with both Chevrolet and themselves rising 
richer each morning, they forgot the long wait for dividends 
and the temporary embarrassment of the company now 
happily cured. 

In the final check-up, to be absolutely certain, Mr. Durant 
was himself one of four men who passed the certificates 
from hand to hand, each one calling out the names, numbers 
and holdings. So fortified, the certificates being brought in 
in baskets, Mr. Durant entered the stockholders 1 meeting 
of September 16, 1915 on the seventh anniversary of in- 
corporation absolute master of the situation. A dividend 
of $50 a share on the Common stock was declared by the 
directors payable October I5th, one of the most substantial 
ever paid by a large American corporation. This dividend 
had been earned under the old management, and the in- 
tention had been to declare a generous distribution, but out 
of deference to the coming of the new management action 
on it had not been taken. 

The advantages of this disbursement for the victors were 
obvious, when the circumstances of the stock accumulation 
are recalled. General Motors Common had never paid a 
cash dividend, though Preferred dividends had been fully 
maintained. To the original stockholders Common had gone 
as a bonus, but many of them had bought more Common 
in the course of the campaign for control and others, 
through the years of adversity, had sacrificed Preferred to 
cling to Common with a stubborn faith in the Company's 

The Corporation Established 157 

earning power. Also, the expense of the campaign had been 
considerable, especially for brokerage on Street trans- 
actions. Heavy borrowings had gone into the stock, and 
bankers behind Durant breathed easier. As the Chevrolet 
treasury would receive a huge sum, and part of it would 
stay there, Chevrolet changed instantly from an adventure 
to a made property. 

Before maturing this coup, Mr. Durant is said to have 
proposed that Chevrolet be taken as a unit into the General 
Motors family, but this was declined. Whereupon the trap 
was sprung. 

Described as the coolest man in the room during this 
momentous meeting, Mr. Durant continued to wear the 
velvet glove over the iron hand for some time. On Novem- 
ber 1 6th the following directors were elected, representing 
the du Pont interests : F. L. Belin, Pierre S. du Pont, 
J. Amory Haskell, and John J. Raskob. Among other new 
directors were Arthur G. Bishop, president of the Gene- 
see County Savings Bank at Flint, and Louis G. Kaufman. 
The new board contained strong financial representation. 

Messrs. Strauss and Storrow, perhaps seeing the hand- 
writing on the wall, had retired from the board in the pre- 
ceding June. They were now joined in retirement by Joseph 
Boyer of Detroit, president of Burroughs Adding Machine 
Company, Robert Herrick, Edwin D. Metcalf, Nicholas 
L. Tilney, and Jacob Wertheim. Several survivors of the 
old bankers' directorate lingered on, trying to resolve in 
their minds the future of this dramatic union of Chevrolet 
and General Motors, which to many had all the earmarks 
of a corporate mesalliance, since a small, new company had 
gained control of a larger and older one, an industrial and 
financial giant of the first magnitude. 

Pierre S. du Pont was elected chairman of the board, a 
position he held for over thirteen years, from Novem- 
ber 16, 1915, to February 7, 1929. Mr. L. G. Kaufman took 
Mr. Storrow's place as chairman of the Finance Committee. 
The Central Trust Company of New York was directed 
to cremate "all of the 6 percent first lien five-year sinking 

158 The Turning Wheel 

fund notes as are hereafter received," the full amount nec- 
essary to meet the last of these having been deposited in 
advance of their maturity on October i, 1915. 

All wondered what Mr. Durant had in mind when he did 
not take the presidency immediately. Probably his hesita- 


tion in that regard flowed from two sources: his admira- 
tion for Mr. Nash both as a man and an executive, and a 
desire, noticeable from the birth of General Motors, to 
remain in the corporate background and work through 
others. During the interval in which control of General 
Motors remained vested in Chevrolet, this matter of the 
presidency remained in abeyance, but eventually it had to be 
faced, and on June i, 1916, Mr. Nash resigned and 
Mr. Durant succeeded him. 

It is said by men close to the situation, that Mr. Durant 
saw Mr. Nash go with regret and that he himself had to 
be urged to accept the presidency. There can be no doubt of 
the first. The two men had worked together for many years 
in the Durant-Dort Carriage Company. The Nash record 
in the presidency was a really superb achievement, so note- 
worthy as to recommend him. to instant backing in an in- 
dependent venture. But in the process of making that record 
Mr. Nash had grown to a point where the prospect of sub- 
ordinating himself, even in the most silken of controls, 
could hardly be attractive. Also as an intensely practical 
man who had labored tremendously to correct industrial ills 

The Corporation Established 159 

due to unrestrained optimism, he dreaded seeing optimism 
in the saddle again. Perhaps, too, he was a little chagrined 
at the ease with which Mr. Durant had overcome the man- 
agement in the recapture. Though urged to stay, Mr. Nash 
went his way to new success. 

Other members of the old board waited, in the expecta- 
tion that the Durant-du Pont alliance would not hold. 
There was at least this ground for that expectation: the 
du Pont directors, schooled in a big business of ancient 
origin and close relations with government, held steadfastly 
to certain high conceptions of corporate responsibility to 
stockholders and public. They were descendants of an 
elder American industrialism, and while intensely alert in 
technology and finance, they had never taken their projects 
to the public as promotions. The birth pangs of General 
Motors, as presided over by Mr. Durant from 1908 to 
1910, would have seemed almost incomprehensible to them 
if they had been watching closely that dynamic scattering 
of stock and accumulation of properties. Now that they 
were associated with the most daring promoter of the age, 
the question arose how long that association could last. 
Rather studied attempts were made to divide the two 
camps, but these came to nothing. The du Pont interests in 
General Motors grew until it became roughly equal to that 
of Mr. Durant and resulted in a sharing of control. In 1918, 
through direct or indirect ownership, the du Pont holdings 
were approximately 28 percent of the outstanding Common 
stock of the Corporation. 

The reasons behind the du Pont entry into General 
Motors are part of a most remarkable chapter in Ameri- 
can industrialism. For generations this gifted family, of 
aristocratic French descent, had been manufacturing powder 
and other explosives at Wilmington, Delaware, their plant 
becoming the chief reliance of the government in every 
American war from that of 1812 onward. Although de- 
veloping explosives for peace-time pursuits as well, each 
war found the du Pont plants expanding at a rate which 
rendered their full-time use in peace something of a prob- 
lem. Consequently, from the base of explosives, the du Ponts 
gradually widened their activities in the direction of general 

160 The Turning Wheel 

industrial chemistry, building up research staff organiza- 
tions which were ever peering into the future for new things 
to manufacture. 

In the peaceful years before the World War, there were 
several forces at work to limit the powder business. The 
frontier had vanished under the steady march of popula- 
tion, with an accompanying decline in hunting. While the 
use of explosives was growing in agriculture and engineer- 
ing, du Pont had to divide that trade with several strong 
competitors. The feeling grew that the future of its busi- 
ness depended upon cultivating close relations with indus- 
tries using chemical products, and preferably with the 
industry likely to grow both in proportions and in its in- 
creasing use of chemical products. The automobile filled 
these specifications. It is probable that the du Fonts would 
have entered the automobile business in some significant 
way even if there had been no World War. 

The war, of course, tremendously accelerated this trend. 
Almost from the first clash of arms in Europe, orders for 
powder and other explosives poured into the E. I. du Pont 
de Nemours Company. As the war continued, the volume 
of these orders kept increasing, and Allied needs were so 
urgent that du Pont expanded its facilities on a large scale 
in order to meet them. Large profits resulted as a matter of 
course, but always this question arose as the highly con- 
servative du Pont organization considered the future: 
What is to be done with all these plants, all these work- 
men when peace is declared? The du Ponts knew, better 
than most, that wars have a way of ending suddenly, and 
also that at the close there follows a sharp strain in read- 
justing a great industry to the requirements of peace. 
Moreover, the du Pont philosophy of employment takes 
account of the difficulties suffered by staff and labor 
through a forced change of scene and occupation. There- 
fore, they decided to make an investment in the automobile 
business, taking, as already related, the successful flyer with 
Mr. Durant on Chevrolet during his drive for General 
Motors control, with immediate recognition in the direc- 
torate. Subsequent analysis revealed a firm basis for fur- 
ther investment of surplus earnings. The du Ponts also 

The Corporation Established 161 

had products to supply; still growing, the automobile trade 
was distinctly a peace-time business, and the phenomenal 
increase in closed cars indicated an expanding market for 
paint, varnishes, artificial leathers and other du Pont 
products, either then available or in prospect. 

The alliance had equal advantage for Mr. Durant. His 
brilliant double-barrelled success, first with General Motors 
and then with Chevrolet, had commended him to everyone 
save the country's most influential bankers. With them he 
still needed conservative sponsoring, not from any sus- 
picion of his intentions, but because he was thought of as 
an optimist easily carried away from a solid footing by the 
undertow of dreams. The conservative banker-control of 
General Motors having passed in the heat of battle, the 
financial world was comforted at seeing the steady and de- 
pendable du Pont interests well to the fore when the change 
came. Their presence insured that stability would have a 
strong voice at the council table. 

In particular the du Pont connection gave reassurance to 
the financial community that General Motors would con- 
tinue, even though its control had been secured by Chev- 
rolet. The relation of the two companies for the future 
puzzled Wall Street greatly for a time. Jonah having swal- 
lowed the whale in perhaps the most startling reversal of 
form ever witnessed on the Stock Exchange, it was now 
apparent that getting the General Motors whale into the 
open again was a matter of importance to investors. 

Effecting this transformation took some time, as it in- 
volved nothing less than the dissolution of the General 
Motors Company of New Jersey. The last year of the old 
company's existence saw its Common stock on a regular 
quarterly dividend basis, with the first dividend declared 
January 5, 1916. 

The same meeting began to clear the decks with the sale 
of the old Elmore property at Clyde, Ohio, for $50,000, as 
heretofore mentioned, and the dissolution of General 
Motors of Michigan, organized in 1910 to hold the com- 
pany's real estate for the benefit of the trust mortgage. The 
Imperial Wheel Company's plant, next to Buick, was bought 

162 The Turning Wheel 

for $80,000 plus certain Detroit real estate, a transaction 
which completed Buick's holding on Hamilton Avenue, the 
"front street" of its vast plant at Flint. 

After the resignation of President Nash had been 
accepted with regrets, Mr. Durant became president on 
June i, 1916. He would have preferred remaining in the 
background as he had done before and letting someone else 
have the place of honor. There were special reasons why 
Mr. Durant did not wish to burden himself with the presi- 
dency. He disliked being tied down to one duty, and 
scarcely had he carried the General Motors battlements 
than he began assembling various accessory and parts com- 
panies into United Motors Corporation incorporated 
May n, 1916, although negotiations for some of the 
properties had been begun the preceding year. 

Other fields tempted him in this exuberant period when 
fortune and prestige rode high on the wings of success. 
Farm transport, tractors, and all sorts of mechanized farm 
implements these took hold of his imagination. Also 
gasoline-driven highway construction machinery some- 
thing might be done there. From his first entry into the 
automobile world, Mr. Durant naturally took a keen in- 
terest in pushing good roads. It was he who started state 
Senator H. S. Earle, "Good Roads" Earle, on his career of 
highway propaganda which made his name almost a house- 
hold word through the Middle West and left enduring 
monuments in magnificent highways. When Mr. Durant's 
attention riveted itself on a general idea, he seemed to 
leap around all its various facets and discover something 
practical to do about each of them. Perhaps his very un- 
willingness to assume detail executive responsibility came 
from a correct reading of his own nature; he may have 
seen himself then, as others have since, as one whose out- 
standing talent was the gift of seeing opportunities and 
starting projects which, once begun, could safely be left to 
others. One can perceive in him a creative spirit which would 
fret itself against the chains of prudence and tradition, 
building on a vast scale gigantic projects which he had 
difficulty in managing after they were built. Probably he 
would have preferred going on making mergers to being 

The Corporation Established 163 

president, but the weight of advice and his just pride in his 
accomplishment overcame his dislike for routine executive 

At the close of its last fiscal year, July 31, 1916, the 
General Motors Company of New Jersey owned the entire 
capital stock of: 

Buick Motor Company, Flint, Michigan 

Cadillac Motor Car Company, Detroit, Michigan 

General Motors Company of Michigan 

General Motors Export Company 

General Motors Truck Company, Pontiac, Michigan 

Jackson-Church- Wilcox Company 

Northway Motor & Manufacturing Company, Detroit, 


Oakland Motor Car Company, Pontiac, Michigan 
Olds Motor Works, Lansing, Michigan 
Weston-Mott Company, Flint, Michigan 

In addition it owned 62.5 percent of the capital stock of 
Champion Ignition Company of Flint and 49.85 percent of 
the McLaughlin Motor Car Co., Ltd., of Oshawa, Ontario. 

The estimated production capacity of its automobile 
plants was given as : 

Buick 100,000 

Cadillac 20,000 

General Motors Truck 6,OOO 

Oakland 30,000 

Oldsmobile 15,000 

The significant items, as a result of the year's operations, 
were as follows : 

Cash and Cash Investment. .$22,762,574.86 

Net Profits 28,812,287.96 

Net Working Capital 43,664,671.40 

Dividends Paid 1 1,779,122.99 

Paid on Debt Reduction 2,328,000.00 

On October 13, 1916, General Motors Corporation was 
incorporated in Delaware to acquire all the stock of Gen- 
eral Motors Company of New Jersey, a basis of exchange 

164 The Turning Wheel 

being established at one and one third shares of new Pre- 
ferred for one share of the old Preferred and five shares of 
the new Common for one share of the old Common stock. 
The new corporation's capital structure on October 31, 
1917, consisted of: 
Preferred stock: 6 percent cumulative $100 par, $20,- 

000,000 authorized, $19,674,800 issued. 
Common stock: $100 par, $82,600,000 authorized, 
$82,558,800 issued, of which $4,685,500 was in the 
Corporation's treasury. 

The outstanding stocks, plus their proportion of sur- 
plus, in affiliates and subsidiaries now owned by the 
Corporation, totaled $1,380,430.73. 
There was no funded debt. 

John J. Raskob became a member of the Finance Com- 
mittee on November 2ist, and a little later its chairman, in 
which position he exercised a potent influence for the next 
ten years. A man of keen vision, it is said that he took the 
lead in interesting the du Ponts in General Motors and 
many of the far-sighted plans in the next expansion era of 
General Motors may be traced to his initiative. Once more 
General Motors began to lop off properties, as in 1910, but 
there was a vast difference in the point of view of the organ- 
izers in the two periods. In 1910 all had been skepticism 
regarding the future of both the Company and the industry, 
and at that time the motive was chiefly economy with a 
view to debt payments. Now the Corporation, free and 
clear of funded debt, was in the hands of hopeful and san- 
guine men, ready to expand their business to match the 
leaping trade of a country grown so prosperous that not 
even the epochal political campaign of 1916 could reduce 
automobile sales materially. They were clearing the decks 
in order to take on more cargo, razing old structures to 
make way for new and larger ones. 

The Cartercar plant at Pontiac was sold for $35,000, a 
fraction of the sum paid for the enterprise when it seemed 
important for General Motors to own basic patents in the 
friction drive field, because motor-car design might turn 

The Corporation Established 165 

in that direction. Other dissolutions were Elmore, Oakland 
Motor Car, Ltd., of Canada, the General Motors Com- 
pany of Michigan, the three of the Heany companies 
Heany Electric, Heany Lamp, and Tipless Lamp. 

By the dissolution of the Buick, Oldsmobile, Cadillac, 
Oakland, Jackson-Church-Wilcox, General Motors Truck, 
Northway, and Weston-Mott corporations, authorized De- 
cember 1 4th, and consummated at the turn of the year, the 
General Motors Corporation stood forth as an operating 
company with the above divisions, thus completing the 
evolution from the holding company of 1908 to the oper- 
ating company of modern days. Each of the divisions named 
continued to operate independently in the sales field through 
its own sales company incorporated in the nominal sum of 
$10,000. Their general managers were: 2 

Buick Walter P. Chrysler 

Cadillac W. C. Leland 

General Motors Truck . . W. L. Day 
Jackson-Church-Wilcox .G. H. Hannum 

Northway * A. L. Cash 

Oakland F. W. Warner 

Oldsmobile Edward VerLinden 

Weston-Mott C. S. Mott 

Although the old General Motors Company of New 
Jersey no longer functioned, its legal existence continued 
for some months. On August i, 1917, its outstanding Pre- 
ferred stock was retired at $101.75, and the Company itself 
was dissolved on August 3 of that year. Its last holding, 
56,855 shares of General Motors Corporation Common 
stock, was acquired by the Corporation in connection with 
a plan worked out to interest valuable employees in the 
financial success of the enterprise. 

It is in order to review the record of the New Jersey 
Company as it passes from the corporate scene. Through it 
was effected the first automobile merger. It came on the 
scene when the industry was still young and confused and 
when the automobile itself was still on trial before the 

2 Messrs. Chrysler, Leland, Day, Warner, and Mott were vice-presidents of 
General Motors; Messrs. Hannum and VerLinden later became vice-presi- 
dents. For tenures see Appendix II. 

166 The Turning Wheel 

public. When it departed, the automobile was an essential 
part of life, a reliance in the routine of daily living and also 
a dynamic tool, as events in Europe were showing. The 
industry's permanence and importance were recognized 
alike by the man in the street, the banker, the investor and 
the statesman. General Motors of New Jersey was in no 
small degree responsible for this change of attitude. It had 
weathered as severe financial storms as ever beset a young 
industrial merger, and had staged a startlingly profitable 
"comeback." Its activities had increased the population of 
numerous towns and cities, creating fortunes in the appreci- 
ation of land values. It had been free of serious strikes; 
wages rose as General Motors grew. The Company had 
never been accused of unfair commercial practices to 
throttle competition ; through years marked by intense pub- 
lic criticism of corporations and numerous government 
actions aimed at corporations, General Motors escaped 
both attentions without question. It had been the first auto- 
mobile company to tap the great banking reservoirs of pub- 
lic credit, the first whose securities were admitted to the 
Stock Exchange. Its Preferred dividend had been main- 
tained through bad days and good and its Common stock 
had finally reached a dividend position after scoring sweep- 
ing advances as a result of high earnings. No American cor- 
poration of the period had passed through a more dramatic 
experience or emerged with a cleaner record. 

Chapter XII 


.MERICA'S declaration of war in April, 1917, forced a 
sharp readjustment of objectives on the automobile world. 
No one quite knew, at the start, what the government 
wanted from the industry in the way of goods or what quan- 
tities of raw material would be available for the production 
of cars for the civilian market. Large supplies were in 
process and storage, but after these had been assembled and 
consumed, what could the industry expect to run on? Un- 
certainty created anxiety. It was clear that the automobile 
would be used in war efforts, but how and when? The 
answers to those questions were momentous, particularly 
for the inhabitants of cities which had grown rapidly around 
the plants and were dependent upon daily work for daily 
bread. Ever since 1910 the total number of General Motors 
employees had been rising year by year, from 10,000 in 
1910 to 25,666 in 1916. The year 1917 brought the first 
break in that advance, the number of employees falling 

With as much speed as was possible in a country so un- 
prepared for war both psychologically and industrially, the 
government set up a program for war manufacturing which 
kept many automobile plants busy, but of necessity there 
was a dislocation of activity. While certain plants ran night 
and day with increased staffs, others could operate only on 
part time, using a limited supply of materials allocated by 
government agencies conserving the various goods which 


168 The Turning Wheel 

were needed or might be needed for war purposes. An 
automobile production program is an immensely compli- 
cated operation, requiring the gathering of thousands of 
parts and accurate timing of supply arrivals. Absence of 
any one of a thousand parts, or shortage of some raw mate- 
rial, may throw out of alignment an entire schedule of 
operations involving thousands of men and millions of capi- 
tal. By extraordinary efforts many of these difficulties of 
supply were overcome, and cars continued to reach the 
market with some regularity. With war activities and in- 
creased automobile production in the latter part, employ- 
ment for 1918 rose swiftly to a new peak of 49,118, nearly 
double the names on the 1917 pay roll. 

Such cars as came to market were readily sold. Sales 
rallied surprisingly after the first shock. Although millions 
of young men, the best potential buyers in the light-car 
field, were mobilized, and savings were being drawn on 
for war loans, nevertheless automobiles continued to sell. 
The purchasing power of the country was high as a result 
of war inflation and the consequent rise in wages. While 
automobile prices rose somewhat in answer to increased 
costs, they did not rise in proportion to food and clothing. 
The people had money to buy cars, and the automobile fitted 
into the high-speed picture of the war years, when time was 
the most important element in a life-and-death struggle and 
economy was a forgotten word. With millions of men with- 
drawn from employment, those at home increased their 
activities by using motor cars more freely. The incentive to 
save time would carry on long after the war was over and 
be one of the factors in the next great advance of the 
motor car in popularity. But, for the remainder of 1917 and 
the greater part of 1918, automobile production in general 
went forward under handicaps. 

All General Motors' facilities were, of course, placed at 
the government's disposal the instant hostilities were begun. 
Of the twenty-three operating units eighteen were engaged 
on government contracts. The gross value of war products 
actually completed by the Corporation approximated 
$35,000,000. War production included: ambulances and 
trucks, 5,000; officers' cars (Cadillac), 2,350; artillery 

The War Years 


tractor engines (Cadillac 8-cylinder engine), 1,157; Lib- 
erty motors for aircraft work, 2,528 actually completed and 
delivered, with orders for over 10,000 on the books when 
the Armistice was signed. The Jackson-Church-Wilcox 
division, operating an entire plant on trench mortar shells, 
reached a production of 20,000 per day. Oldsmobile built 
field kitchen trailers. Buick constructed special factories for 
the production of the famous Liberty airplane motors. Asso- 
ciated plants made shell caps and other munition parts. 

Buick war tract or f 

It was a proud moment for General Motors when the 
Cadillac stock car, as previously noted, after gruelling tests 
in the mountainous wastes of the Big Bend country in 
Texas, was selected as standard for war use in July, 1917. 
With no mechanical changes, but painted khaki-brown, 
Cadillacs were standard transport for general officers and 
their staffs in the American Expeditionary Force in France. 
Cadillacs were also used by officer personnel at army bases 
and cantonments in this country. Liberty motors were also 
made by Cadillac. 

In addition to the completed war orders, large quantities 
of war material were in process at the close of hostilities. 
Several plants had been constructed rapidly at government 
suggestion to accommodate war orders. Such was the in- 
ception of the Central Products division on Holbrook 

170 The Turning Wheel 

Avenue, Detroit, near the Northway division. There a drop 
forge plant was rushed to completion in 1918, with a 
capacity of fifty tons a day. This plant, soon expanded, be- 
came the nucleus of the present Chevrolet group in Detroit. 
The Central Foundry plant at Saginaw was also pushed 
rapidly forward, 126 acres being purchased for the site. 

Mr. Durant tells a striking war story illustrating the 
uncertainties of the war years and indicating some of the 
sacrifices General Motors made to relieve trying situa- 
tions. The Corporation was .requested by the British gov- 
ernment to prepare for the manufacture of a new airplane 
engine in large quantity. Accordingly property was pur- 
chased, construction begun and machinery ordered. After 
waiting months for the arrival of the promised sample 
engine from abroad, Mr. Durant was informed that noth- 
ing could be done. The first engine tested abroad had 
functioned perfectly, but others had failed and the plan 
was declared abandoned. "Submit your bills," said the 
Allies' representatives. "No," said General Motors through 
its president, "We will take the loss and try to find another 
use for the property. Under the circumstances our stock- 
holders are not likely to object." Eventually the commit- 
ment was worked off without serious loss to the Corporation. 

Meantime, the directors continued putting their house 
in order. The union of General Motors and Chevrolet was 
at last consummated on May 2, 1918, when General 
Motors acquired Chevrolet for 282,684 shares of Common 
stock, taking over all assets except 450,000 shares of Gen- 
eral Motors Common in the Chevrolet treasury. The orig- 
inal Chevrolet shareholders realized a very substantial profit. 

Further additions to the roster of General Motors being 
contemplated, as well as plant extensions, the certificate of 
incorporation was amended twice, raising the authorized 
stock of the Corporation to $200,000,000 on March 20, 
1918, and to $300,000,000 on August 27th. June 26, pre- 
ceding, the president and chairman of the Finance Com- 
mittee were authorized to buy United Motors for $44,- 
065,000, paying approximately three quarters of that sum 
in Preferred stock and one quarter in Common stock. 
United Motors had been organized by Mr. Durant, and 

The War Years 


under the presidency of Alfred P. Sloan, Jr., was soundly 
administered. Thus Hyatt Roller Bearings, Dayton En- 
gineering Laboratories, New Departure, Harrison Radia- 
tor, Remy Electric, and Jaxon Steel Products entered the 
Corporation, and the assets of Perlman Rim came into the 
Jaxon company. 

That the directors on July 26, 1918, were optimistic 
about the early and successful close of the war may be gath- 
ered from the fact that they voted on that day to invest 

Barn in Dayton, Ohio; first home of Dayton Engineering Labora- 
tories Company., 1909 

$1,000,000 in a 40 percent interest in the Doehler Die Cast- 
ing Company of Brooklyn and authorized J. A. Haskell to 
buy the stock of the Scripps-Booth Corporation of Detroit. 
The Scripps-Booth car, a runabout of advanced design, 
seemed a desirable addition, but other General Motors 
units soon overtook and surpassed Scripps-Booth, in ex- 
cellencies of design, resulting in its abandonment. 

Midsummer, 1918, saw the World War enter its final 
phase, marked by the last despairing German drives which 
were finally checked at the Marne. While none knew how 
long the war would last, the Corporation maintained as an 
objective the quickest possible return to large production as 
soon as quota restrictions should be removed. 

The World War gave General Motors a decisive turn of 
interest toward aviation. Production of Liberty engines 
and other essential aviation supplies in its plants emphasized 

172 The Turning Wheel 

the kinship between airplane and automobile production. 
Other manufacturers, not yet in General Motors but with 
whom the Corporation had close business relations, were 
also participating in the gigantic aviation enterprise of the 
government. Fisher Body, with a vast quantity production 
program under way, was building DeHavilands in its great 
Number 18 plant at Detroit; likewise the Dayton industrial 
grouping led by Mr. Kettering. The Dayton-Wright Air- 
plane Company, the spearhead of the Dayton aviation 
effort, turned out completed airplanes for a time faster 
than any other company has done before or since. On Sep- 
temper 25, 1919, General Motors bought all outstanding 
shares of Dayton Metal Products Company and certain 
assets of the Dayton-Wright Airplane Company, as well as 
other Dayton interests. 

The post-war situation, however, proved discouraging to 
aviation, as the chief customer, the government, severely 
curtailed its buying. The market was saturated with planes 
and materials. It seemed that years must elapse before avia- 
tion would take its place as a self-sustaining industry; in the 
meantime, development would proceed largely through the 
assistance of government buying for military purposes and 
government subsidies on mail contracts. Accordingly Gen- 
eral Motors, while still acutely aware that aviation was a 
kindred industry, felt constrained to follow the policy of 
watchful waiting. It made such disposition of its aviation 
properties as seemed wise, and settled down to wait until 
1929, when some of the "unknowns" had been eliminated 
by time from the aviation problem. 

This conservative approach reflected the changed atti- 
tude which the Corporation adopted in other respects a 
little later. The public hopefully awaited a strong lead 
in aviation; and from many sources came pressing oppor- 
tunities for General Motors to assume that leadership. But 
the cool heads in control understood that aviation was in 
for a long pull, during which investors seeking quick profits 
probably would be disappointed. While the standing of 
General Motors would have brought strong public support 
in the financing of a vigorous aviation program, it was be- 
lieved that stockholders, early following General Motors 

The War Years 173 

lead, would take losses because they would not be disposed 
to wait for long-range plans to mature. Consequently the 
Corporation refused all offers to enter airplane production 
under those circumstances, but its interest in aviation con- 
tinued and later revived, under circumstances and with re- 
sults to be related in Chapter xxni: "General Motors in 

General Motors decided to complete the United Motors 
consolidation by using a certain number of 6 percent Deben- 
tures in place of Preferred stock, and on November 7, 
1918, appropriate action was taken. On December loth, the 
certificate of incorporation was amended to increase the 
authorized capital to $370,000,000 consisting of 200,000 
shares of Preferred, 1,500,000 shares of Debenture, and 
2,000,000 shares of Common, all par $100, to provide cap- 
ital for the expansion swing which had been determined 
upon with the renewal of peace. Du Pont American Indus- 
tries subscribed for $24,000,000 of the $100 par value 
Common stock of General Motors at $120 per share as of 
December iQth, which was approved on the last day of 
1918 with the reservation that all Common stockholders 
could subscribe to the new stock at $118 a share up to 20 
percent of their holdings. At these two meetings three other 
important moves were made : 

1. General Motors bought the minority interest in 

three affiliated Canadian companies McLaughlin 
Carriage Company, Ltd., Chevrolet Motor Com- 
pany of Canada, and the balance of the Mc- 
Laughlin Motor Car Company, Ltd. for 49,000 
shares of its Common stock, thereby creating the 
foundation for General Motors of Canada, Ltd., 
whose Oshawa and other plants are among the in- 
dustrial prides of the Great Dominion. 

2. The purchase of Lancaster Steel Products at Lan- 

caster, Pa., was approved, on the basis of 500 Pre- 
ferred shares and 3,555 Common shares and 
15,660 General Motors Debentures held by Lan- 
caster for 16,175 shares of General Motors Com- 
mon and 5,000 shares of Debenture stock. 


The Turning Wheel 







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The War Years 175 

3. The purchase of United Motors, instituted earlier 
in the year, was approved on December 31, at a 
price of $45,000,000, for which purpose 99,564 
shares of Common stock and 298,692 shares of 
Debenture stock were authorized. General Motors 
already owned 106,000 shares of United Motors, 
which stock was cancelled. 

In 1918 General Motors, from both war orders and 
advancing prices on motor-cars, recorded the high net sales 
to date $269,796,829 but its margin of profit had been 
low and only $1,667,753 was left for reinvestment after 
paying dividends which had been established at the rate of 
$3 a quarter on the $100 par Common stock in the preced- 
ing year. Bonus awards for conspicuous services in 1918 
were the equivalent of 490,238 shares of the present $10 
par value Common stock. 1 

In the year of America's sustained war effort, 1918, the 
Corporation, due to government reduction of the business, 
barely earned its established dividend, but its contribution 
to employees remained high. Although resentment against 
profiteering was in the air, the record left General Motors 
free of criticism in that regard. As an essentially peace-time 
business, General Motors from top to bottom was glad to 
get back to work on its big job of making motor cars for a 
world no longer torn by war. 

l See Chap. XXVIII on "Cooperative Plans," for a full account of the 
Bonus and Investment Funds. 

Chapter XIII 


IENERAL MOTORS swung into the post-war boom of 
1919 with a spirit which matched the boldness of the coun- 
try's mood. Peace found the nation jubilant, united, and con- 
fident in its strength. New high wage levels had been 
reached, and it was hardly possible for a nation so cir- 
cumstanced to believe that they would recede. Prices were 
high, also, but it was thought that the need of Europe for 
supplies would keep them up for some time to come. The 
automobile industry, in general, concluded that it must 
make up for time lost during the war interruption in pro- 
duction. Consequently, the year 1919 records an amazing 
expansion program for the Corporation in the course of 
which the authorized capital stock was increased from 
$370,000,000 to $1,020,000,000, represented by 5,000,000 
shares of Common stock of $100 par value, 5,000,000 
shares of 6 percent Debenture stock and 200,000 shares of 
6 percent Preferred stock. General Motors became a 
billion-dollar corporation on paper, but less than a third of 
its Common stock was issued. 

General Motors of Canada, Ltd., had been organized 
November 8, 1918, and before the end of the year its 
authorized capital was increased to $10,000,000. This 
strong Canadian company, located at Oshawa, Ontario, 
succeeded several Canadian companies theretofore repre- 
senting various units of General Motors in the Dominion, 
as will be more fully explained in Chapter xvil. 


The Expanding Corporation 177 

General Motors Acceptance Corporation was incor- 
porated under the banking law of New York on January 
29, 1919, to finance instalment sales of General Motors 
products "through the proper application of the credit 
function." Twenty thousand shares of GMAC stock were 
purchased by the parent corporation at $125, enabling the 
new subsidiary to begin operations with a capital of 
$2,000,000 and a surplus of $500,000. The rise of GMAC 
is fully narrated in Chapter xxvn : "Financing and Insuring 
the Buyer." 

At the meeting of February 2yth, steps were taken to 
complete General Motors ownership of New Departure 
Manufacturing Company of Bristol, Connecticut, and Har- 
rison Radiator Corporation of Lockport, New York, two 
companies which had come into the General Motors circle 
through the purchase of United Motors. 

Two new accumulations were made, both of which bulk 
large in Corporation history, though for different reasons. 
In 1918-19 the Corporation bought into the tractor busi- 
ness, among its purchases being the Janesville Machine 
Company at Janesville, Wisconsin, and 122 acres of land 
on which a new plant was to be erected ready for operation 
in July, 1919. The Corporation's farm implement busi- 
ness is reported as 3,000 tractors and 56,400 farm imple- 
ments in Poor's Manual for 1919, which also reports the 
Corporation holdings in Samson Sieve-Grip Tractor Com- 
pany of Stockton, California, as $400,000 and in the 
Janesville Machine Company, Janesville, Wisconsin, as 
$1,000,000, both representing complete ownership of all 
Common stock issued by both companies. Later the Cor- 
poration's holdings in the Janesville Machine Company 
rose to $2,250,000, where it stood when that company was 
dissolved and its operations consolidated with the Samson 
Tractor division. The latter soon took over all the assets 
of the Samson Sieve-Grip Tractor Company. This mush- 
room expansion in the direction of motorized agriculture 
brought heavy losses. 

In February also was begun the most significant enter- 
prise the Corporation had as yet undertaken in the field of 
social research. A new spirit of brotherhood was abroad in 

178 The Turning Wheel 

the land, and General Motors was one of the first to re- 
spond to it. Owing to the uncertainties attendant upon the 
change from war activities to peace-time pursuits, the Cor- 
poration considered it necessary to have the basic needs and 
living standards of its employees studied, to the end that 
wage rates would be fair and living conditions acceptable 
to thousands of families likely to move into cities where 
General Motors was rapidly expanding its operations. 
Accordingly, the Executive Committee, consisting of 
Messrs. Durant, Haskell, and Chrysler, was directed to in- 
vestigate industrial conditions affecting the plants of the 
Corporation. These gentlemen promptly appointed a 
research committee, which met in Detroit on February I7th 
and proceeded at once with an extensive study of the labor 
situation, living conditions and other industrial problems 
of General Motors plants. An imposing body of data was 
collected on bonus plans, group insurance, employees' com- 
mittees, pension plans, etc. The findings of this Research 
Committee launched the Corporation upon a large-scale 
housing program in Detroit, Flint, Pontiac, and Lansing, 
Michigan; Bristol, Connecticut; and elsewhere, and also 
led it into other activities aimed at promoting the well- 
being and contentment of employees. 

This elaborate report, one of the most comprehensive 
social studies ever made by an American corporation, is a 
testimonial to the energetic altruism of the chairman of the 
Research Committee, Mr. J. Amory Haskell, in whose 
kindly and judicial mind the well-being of employees ever 
was a first consideration. Mr. Haskell, after a long and 
impressive career in the explosives industry in competition 
with the du Fonts, had brought his company into the 
du Pont organization, and entered General Motors as one 
of the du Pont directors. A conservative man, yet with 
broad humanitarian interests, he was a force in General 
Motors affairs until his death in 1923. 

This disposition to consider employee interests had an- 
other significant development in the founding of General 
Motors Institute of Technology at Flint, described in 
Chapter xxvin, on ''Cooperative Plans." 

The Expanding Corporation 179 

In March, 1919, General Motors bought additional 
stock in the Frigidaire Corporation for $56,366.50. Frigi- 
daire, originally Guardian Frigerator Corporation, was 
bought by Mr. Durant in 1916 and is another example of 
his power to read the future. The rise of Frigidaire to first 
place in the quantity production of electric refrigerators 
will be told elsewhere. 

Occurred then, also, the Corporation's entry into 
Muncie, Indiana, where it bought the Interstate Motor 
Company for $248,000 and paid $40,000 for additional 
land. For a brief period, the Sheridan car was made there. 
The property is now the seat of production for Delco-Remy 

On April 24, 1919, the Corporation began extensive real 
estate and construction projects destined to have an im- 
portant effect upon its history, since they diverted many 
millions of dollars from the treasury and were still un- 
completed when the prosperity of the post-war boom 
waned. The most ambitious of these was the construction 
of the mammoth office building at Detroit, planned as the 
largest structure of its kind ever built. Covering the entire 
block bounded by Grand Boulevard, Cass and Second 
avenues and Milwaukee Street, it is now the central office 
of the Corporation. The Durant Building Corporation hav- 
ing been formed, General Motors authorized subscription 
to $3,000,000 of its stock on April 24th. Before it was 
completed, this building cost approximately $20,000,000. 
From April to July the Corporation created various com- 
panies for housing construction, the authorized capital in 
each company being as follows, although considerably more 
money was spent for this purpose : 

$500,000 in the Bristol Realty Company, Bristol, Con- 
necticut, for the accommodation of New Departure 

$3,500,000 in the Modern Housing Corporation, to 
build houses in Flint, Pontiac and Detroit. 

$200,000 in the Lansing Home Building Company. 

$200,000 in the House Financing Company of Detroit. 

General Motors Building, Detroit 


The Expanding Corporation 181 

On June I2th, the stockholders ratified the increase in 
authorized stock to $1,020,000,000, the details of which 
have already been given at the beginning of this chapter. 

From August on, the Corporation expanded rapidly. The 
directors authorized the purchase of the International 
Arms & Fuse Company plant at Bloomfield, New Jersey, for 
$1,175,000 and of T. W. Warner & Company, gear makers 
of Muncie, Indiana, for $5,000,000. Both deals were de- 
layed in maturing. The Muncie property not being then 
obtainable, the Corporation took a lease as of September 
25, 1919, with the option to purchase after January i, 
1923, for $902,000 in Liberty Bonds and 31,238 shares 
of Debenture stock. This property became the Muncie 
Products division. 

Various steps in the expansion program were: 

The purchase of the Pontiac Body Company and its ad- 
dition to Oakland. 

The purchase of Domestic Engineering Company of Day- 
ton, Ohio, for 35,451 shares of Common stock, given 
in exchange for 33,070 shares of Domestic Engineer- 
ing Company stock valued at $9,000,000. 

A merger was effected with Dayton Metal Products Com- 
pany, whereby General Motors acquired all the out- 
standing shares of Metal Products (60,000 shares) in 
return for 25,338 shares of Debenture stock and 
21,457 shares of Common stock in the Corporation. 

The Dayton-Wright Airplane Company, with assets in 
excess of $1,200,000, was bought for 10,960 shares of 
Debenture stock. 

Through reorganizations and transfers all of these Day- 
ton companies have passed from the picture, and their 
plants are now used for other Corporation products. 

Of outstanding importance in the Corporation's history, 
also, is the decision taken on September 25th to buy a 
three fifths interest in the Fisher Body Corporation, which 
was effected by the purchase of 300,000 shares of Fisher 
Body Common stock at $92 a share. The purchase con- 
tract, among many other provisions safeguarding the Fisher 

182 The Turning Wheel 

interests, required these shares to be deposited in a voting 
trust. The importance of this alliance, which was later ex- 
tended to the point of complete merger, can hardly be over- 
estimated. 1 It gave General Motors first call on the pro- 
duction of the largest and best equipped body-building 
plants in the world. With the steady trend toward closed 
cars, the Fisher brothers, experienced from youth in the 

One of the founders of Fisher Body 

difficult arts of body design and construction, had pushed 
forward until they occupied a foremost position in their 
line both as to quantity and quality. The Fisher name had 
become known far and wide, and the presence of a Fisher 
body on any car recommended it to the consuming public. 
By this one decisive step the General Motors Corporation 
wrote off future body difficulties by placing that business in 
the hands of outstanding specialists in the field of body 
manufacture. With advancing complexities in design and 
manufacture, the wisdom of this alliance has become in- 
creasingly manifest. 

This date, September 25, 1919, registers the high-water 
mark of optimism during the Durant presidency. The Cor- 
poration had expanded its capital, brought under control 
many sources of supply, and on that date authorized the 

*See Chap. XX: "Body by Fisher: The Motor-Car as a Style Vehicle." 

The Expanding Corporation 183 

investment of up to $500,000 in the Common stock of 
Goodyear Tire & Rubber Company of Akron, which hold- 
ing was sold soon afterward. 

If General Motors is considered merely a manufacturer 
and seller of automobiles, the expansion from 1916 to 1920 
contains a good many inexplicable elements; but the key to 
this period can be found in the word "motors." As will be 
shown in Chapter xv, this is the key to later diversification 
of the Corporation's products, especially in the direction 
of household, office, store, and farm equipment. The Cor- 
poration was no longer interested merely in motors that 
traveled and in the vehicles they propelled. Its scope had 
been enlarged to include motors designed for a wide variety 
of specialized and stationary uses, and in the commodities 
which housed motors in motorized refrigerators, motor- 
ized farm-lighting plants, motorized fans, and other equip- 
ment. The variety of its merchandise would grow from this 
time on, but always the growth would be in the direction 
of motor products. Expansion in the passenger car field 
stopped with the acquisition of Scripps-Booth which the 
directors were ready to cut adrift in 1919, and the short- 
lived experience with Sheridan in 1920-21. There would 
be further expansion in commercial vehicles, but in general 
the trend of General Motors' growth in the post-war 
prosperity was toward rounding out an established property 
and pushing it toward an ever-improved market position 
with the consuming public. 

During the 1919 boom, with the market emphasis on 
quantity, General Motors reached its highest earnings to 
date, more than $60,000,000 net available for dividends, 
paid nearly $22,000,000 in dividends, and allocated more 
than $38,000,000 to reinvestment in the business, after 
setting aside some $30,000,000 for Federal taxes and mis- 
cellaneous items. But even that sum could not finance the 
driving expansion program under way. This prosperity was 
shared with employees through bonus awards in which were 
distributed the equivalent of 402,485 shares of present $10 
par stock and 14,191 shares of 7 percent Preferred stock. 
The number of employees had taken another upward leap, 
reaching nearly 86,000, more than four times as many as the 

184 The Turning Wheel 

Corporation had in 1913. One influence of the World War 
on America may be read in these contrasting employment 
figures for 1913 and 1919. The period included two booms 
in which well managed industrial companies expanded 
staffs, drawing population from the land to the cities and 
concentrating employment as it had never been concen- 
trated before in the United States. 

The Corporation signalized the advent of 1920 a year 
destined to end quite otherwise than it began by increas- 
ing its authorized capitalization again, this time to 56,100,- 
ooo shares divided as follows : 

200,000 shares of 6 percent Preferred, par $100 
900,000 shares of 6 percent Debenture, par $100 
5,000,000 shares of 7 percent Debenture stock, par $100 
50,000,000 shares of Common stock, no par value, of 

which upwards of 20,000,000 were issued. 
The senior securities issued stood in 1920 at slightly 
above $100,000,000. 

To these gigantic proportions W. C. Durant had seen 
his brain-child grow from the original Buick Motor Com- 
pany of $75,000. Conservative men began to wonder where 
this victorious march would end, and amazement gave way 
to some concern when falling grain prices in the spring of 
1920 foreshadowed the post-war decline. 

During the first three months of the year General Motors 
went along with its program of internal consolidations. 
Minority interests in Chevrolet of California were bought 
and steps were taken to complete ownership of Klaxon 
horn. Two companies were dissolved Samson Sieve-Grip 
Tractor and the Michigan Crankshaft Company. 

The former name, Samson, is still one to rouse lurid 
reminiscences among the old-timers in the General Motors 
family. Under the Samson banner the Corporation entered 
the farm tractor field, expanding for that purpose the 
Janesville, Wisconsin, plant, later taken over by Chevrolet. 
In the full flush of his enthusiasm for motorized farm 
transport, Mr. Durant had not only spent lavishly on the 
Samson tractor; he had also tried to tame the Iron Horse, 

The Expanding Corporation 185 

a small tractor for garden use, ordering large quantities 
of material for its manufacture. Always alert to new notes 
in sales campaigns, he undertook to revolutionize imple- 
ment selling by organizing elaborate displays in specially 
designed show places on the Pacific Coast. These displays 
were beautiful examples of advanced merchandising, but 
events showed them to be ahead of their time. Indeed, the 
whole program of farm motorization so popular then was 
too advanced, being founded upon the assumption that the 
world could use practically unlimited quantities of food- 
stuffs at high prices. The slump in farm prices which set 
in with the post-war depression was to continue for years, 
reducing operations by nearly all manufacturers in that field. 

By June, train-loads of motor cars standing undelivered 
in Western terminals gave a hint of what was coming. Live 
stock and grain prices were unsettled, and unemployment 
began to show itself. By late summer the decline reached a 
point at which General Motors could hardly look for earn- 
ings to flow in rapidly enough to meet the charges of its 
uncompleted expansion program. The pendulum which had 
been rising with but slight interruption since 1915 began 
a downward swing. 

In a retrospective vein President Alfred P. Sloan, Jr., ad- 
dressing the automobile editors of American newspapers at 
the Proving Ground at Milford, Michigan in 1927, graphi- 
cally reviewed the 1920 situation as he saw it: 

In the spring of 1920, General Motors found itself, as it appeared 
at the moment, in a good position. On account of the limitation 
of automotive production during the war there was a great 
shortage of cars. Every car that could be produced was produced 
and could be sold at almost any price. So far as any one could 
see, there was no reason why that prosperity should not continue 
for a time at least. I liken our position then to a big ship in the 
ocean. We were sailing along at full speed, the sun was shining, and 
there was no cloud in the sky that would indicate an approaching 
storm. Many of you have, of course, crossed the ocean and you 
can visualize just that sort of a picture yet what happened? In 
September of that year, almost over night, values commenced to 
fall. The liquidation from the inflated prices resulting from the 
war had set in. Practically all schedules or a large part of them 

186 The Turning Wheel 

were cancelled. Inventory commenced to roll in, and, before it 
was realized what was happening, this great ship of ours was in 
the midst of a terrific storm. As a matter of fact, before control 
could be obtained General Motors found itself in a position of 
having to go to its bankers for loans aggregating $80,000,000 and 
although, as we look at things from today's standpoint, that isn't 
such a very large amount of money, yet when you must have 
$80,000,000 and haven't got it, it becomes an enormous sum of 
money, and if we had not had the confidence and support of the 
strongest banking interests our ship could never have weathered 
the storm. 

On this occasion General Motors had strong banking 
connections. An agreement was entered into for the distri- 
bution of 3,200,000 shares of Common stock at $20 a 
share. Explosives Trades, Ltd., of London was interested 
by the du Fonts to the extent of 1,800,000 shares, the bal- 
ance being underwritten by J. P. Morgan & Company. 

The Explosives Trades passed a part of its allotment in 
this undertaking to Canadian Explosives, Ltd., a subsidiary, 
but before their subscription had been taken up, the Ameri- 
can stock market showed such signs of weakness that doubt 
arose whether the Canadians would purchase at the figure. 
On top of the general situation, General Motors had weak- 
nesses of its own, the net results of heavy commitments and 
slackening sales. These were complicated for the Corpora- 
tion by the recurrence of the malady already noticed as 
present in 1910, namely, uncertainty over inventories. Esti- 
mates furnished the Finance Committee were approximate 
rather than definite, and even the approximations did not 
hold as the returns began to roll in from the wide-flung field 
operations. Again, it was apparent that centralized authority 
had not advanced to the point of giving the central office 
full information on plant commitments ; there was still 
opportunity for plant executives to act independently enough 
to embarrass the Corporation. The initiative of plant man- 
agers, which the Corporation had always sought to pre- 
serve, and which had worked magnificently on the up-swing, 
brought complications on the down-swing. Discrepancies 
between estimates and actualities, in the matter of inventory 
commitments, ran into scores of millions. It began to look 

The Expanding Corporation 187 

as if General Motors were in for another "squeeze, " for 
another experience under banker control. 

With the stock declining on the Exchange, a serious situa- 
tion developed for Mr. Durant. His personal operations 
in the stock market had been large in volume. It was a 
common saying that he never sold General Motors but al- 
ways bought it. On the 1920 decline he kept buying until 
his "Street loans" reached a critical condition. The explana- 
tion given by his friends for the more acute phase of his 
trouble is that he endeavored, by extending his buying on 
the decline, to maintain a price above $20 in order that 
Canadian Explosives would come in at that figure and take 
the 300,000 shares allotted to them. His battle with the 
falling market, however, reached proportions far in excess 
of the $6,000,000 involved in that particular transaction. 
When his situation became known to his colleagues, it was 
found that his commitments to bankers and brokers ran to 
several times that figure. His operations had been so huge 
and hurried that not even Mr. Durant himself could be quite 
sure what he owed. With each conference the sum kept 
growing, until it is said to have approached $35,000,000. 

On a falling market, with public confidence low and Gen- 
eral Motors in a position of rising inventories and decreas- 
ing earnings, the difficulties of its president became the 
difficulties of the Corporation. If Mr. Durant were to be 
sold out by his bankers and brokers, a possibility which be- 
came more and more imminent with every point decline, in- 
volving $2,450,000 loss to him, the forced sale of his 
pledged securities on a falling market would have meant a 
wild decline in the whole stock list, perhaps even a panic, 
and a severe blow to General Motors' credit. On March i, 
1920, a ten-for-one stock split-up had been effected, and the 
new no par stock had already lost more than half its 
market value. The high and low figures for 1920 show the 
market nervousness high 42, low I2J4. 

From the standpoint of both the general welfare and 
the corporate credit, it was necessary for someone to finance 
a settlement with Mr. Durant's brokers and take his stocks 
out of the market. In the General Motors picture only the 
du Fonts had the financial strength to do this. Even with 

188 The Turning Wheel 

their resources and the strong incentives of their existing 
stock ownership, their "rescue" was an adventure of faith, 
when the general condition of the market and the country 
are considered. The transaction received the active aid of 
J. P. Morgan & Company and could hardly have been con- 
summated without the assistance of that banking house. 
While general recovery was slow, it was steady from that 
point on until returning confidence ushered in the prosper- 
ity of the mid-'twenties. 

The Durant stocks in jeopardy were taken over at a price 
which cleared his slate and left him a not inconsiderable 
margin. His friends might rate his fortune at this stage as 
far less than his deserts, considering his services and record 
through General Motors history, but on the other hand, 
the fact that something was saved for him when all might 
have been lost indicates that there was every disposition to 
deal fairly with him as far as the needs of a desperate 
situation would permit. He resigned the presidency on 
November 30, 1920, after four and a half years in office 
years of great achievement and bold expansion pushed 
at a pace so rapid that it brought difficulties. 

There is a jaunty nonchalance, a cool courage, in the 
Durant character which on more than one occasion has let 
him rise from defeat. It showed itself in 1910 when he 
turned from General Motors to found Chevrolet and 
through Chevrolet to recover control of General Motors. 
Indeed, if one were attempting a psychological interpreta- 
tion of so complex a nature, one might say that Mr. Durant 
never recognizes defeat. What might be considered by 
others an irretrievable misfortune, to be weighed in sorrow, 
is to him but a turn of the wheel on which he expects to swing 
round to the top again. So we see the founder of General 
Motors leaving its councils for the second and last time 
apparently without either remorse or wrath, and saying, as 
he put on his hat with something of a flourish, "Well, it's 
moving day." 

The story runs that immediately after his eclipse Mr. 
Durant called together his "crowd," those who had fol- 
lowed him into General Motors and out of it and back 
again. He told them that the powers left in control of the 

The Expanding Corporation 189 

Corporation were "good people/' and that if the old crowd 
wanted to help "Billy" Durant, they should stay with the 
Corporation as long as they were wanted and serve loyally, 
because what he had left was in General Motors stock and, 
consequently, he would benefit as the Corporation bene- 
fited. A few days later one of his friends went to see him 
at a small office he had opened near by, to say that he had 
been asked by the du Fonts to carry on. Mr. Durant ad- 
vised him to do so. Then, going to the window, Mr. Durant 
raised the shade full length, and said with his head high, 
"It's a new day!" No better last line could be written for 
the end of a drama. 

As the founder of General Motors leaves its history, it 
is pertinent to review his achievements briefly, not with the 
idea of passing judgment in either a laudatory or captious 
spirit, but rather to give point to lessons which the great 
army of General Motors employees and the public likewise 
may draw from his career in the Corporation. 

First, from 1904 to 1908, W. C. Durant "made" Buick. 
Given a staunch car he had improved it steadily by a rigid 
insistence on quality. Although Buick was moderately 
priced, its chief insisted on good workmanship and high- 
priced materials. Although no operating man, in the sense 
in which the term is used today, he had high standards of 
what manufacturing should be. If he heard that Amesbury 
was furnishing expensive fittings for Packard, off he would 
go to Amesbury to buy equally good fittings for Buick, re- 
lying on quantity purchasing power to bring the price down 
to reasonable levels. But all in all he was a better salesman 
than manufacturer. With Buick, Mr. Durant proved, as he 
had proved in the carriage industry, that he was a master 
salesman, building up a sales organization which was the 
marvel of its day, and copied by competitors as far as they 
could do so. Many units of this early Buick sales organiza- 
tion are still dominant in the distribution of motor cars 
over wide areas. 

In founding and financing General Motors through its 
first expansion period without first-class banking help, W. C. 
Durant demonstrated his skill as a promoter. He has been 
called America's greatest living promoter, and no exception 

190 The Turning Wheel 

has ever been taken to that. It is hardly too much to say 
that this quiet, soft-spoken man is the greatest promoter 
America has ever seen in action. General Motors is today 
the largest American corporation whose founding was the 
result of the promoting ability of a single individual, and as 
the trend is toward group rather than individual enter- 
prises, his achievement in creating General Motors may 
never be equalled in any other field. Add to that record 
Chevrolet and United Motors, now merged into General 
Motors but brought into being separately, and you have a 
three-way success which is simply colossal. Of course, vari- 
ous elements in this energetic program proved to be disap- 
pointments, but enough survived to carry the whole through 
to a stupendous success. Napoleon remains a great soldier 
in the opinion of the world in spite of Waterloo. Both 
promoters and conquerors sometimes overstay markets. 

One can call Mr. Durant a promoter without implying a 
derogatory note. There are times and situations in which 
the promoter is the indispensable man, the almost inspired 
servant of society. He may be moved chiefly by the desire 
for power and profits, and comprehend scarcely at all the 
social results of his activities; nevertheless, without his zeal 
in bringing labor and capital together along the line of his 
vision the world would have to wait longer than necessary 
for many boons. Of course, no one could foresee the full 
impact of motors on American life, but W. C. Durant did 
recognize some of the important futurities, and reacted 
toward them promptly. His early championship of good 
roads is a case in point, his keen acceptance of electric re- 
frigeration is another, and a third was his instant recogni- 
tion that this new industry could not afford to pay low 
wages, because the buying power of the masses must be kept 
active to absorb automobiles in quantity. On the personal 
side, he gave largely, paid generously for loyal or signifi- 
cant services, followed a liberal policy toward shareholders 
and in so far as he could, made sure that his friends and 
associates prospered along with himself. 

The tap-root of the Durant nature appears to have been 
an incurable optimism which was the source of both his 
driving strength and his besetting weakness. He always 

The Expanding Corporation 191 

hoped for the best, and never prepared for the worst in 
time to ward it off. In his long business career he said 
recently that he had been in business fifty-five years he 
wrestled many times with the business cycle without appar- 
ently becoming convinced of its periodicity. He could sell 
company stock, but he could never sell his personal hold- 
ings. Because Mr. Durant performed financing feats, and 
handled huge sums of money, the notion grew that he 
was a financier. Thus we find him hailed as one of "the 
Master Minds of Finance" in a Wall Street series during 
the flush period. The truth is that he was no financier in 
the sense that the term implies caution and conservatism. 
He could act boldly and daringly with money, and when 
circumstances favored the finance of courage he seemed a 
financier. But money is a two-edged sword, and when cir- 
cumstances demanded the finance of caution Mr. Durant 
was lost. 

Studied defences of Mr. Durant's responsibility for the 
vast expansion program of 1919 have been printed. From 
these it would appear that he declines to take full responsi- 
bility for some of the moves which brought the Corporation 
treasury low when the pinch in sales came. It is said that 
his plans for the office building in Detroit, and the con- 
current expansion at Cadillac, were considerably more 
modest than the expensive projects put under way; that 
he yielded to the pressure of his associates. In the history 
of an industrial enterprise motives are more difficult to 
follow than results of record; a word, an opinion, some- 
times even a gesture, may tip the scales this way or that. In 
this case all concerned were working at top speed, and it 
was inevitable that minds did not always meet when their 
possessors thought that understanding was complete. 

There is an old saying that every man has three chances 
at riches in the course of the average business career. To 
put it another way, there are usually three complete swings 
of the business cycle in each quarter-century. It is human 
nature to "go broke" in the first depression one experi- 
ences, rally and survive the second by a narrow squeak, and 
then, having learned the lesson of experience, prepare for 
the third and emerge from it in full strength. As for men, 

192 The Turning Wheel 

so also for corporations. The special circumstances sur- 
rounding the automobile industry in 1907 kept Buick from 
feeling that shock severely, but a crisis came to General 
Motors in 1910. Ten years later came another; it found the 
Corporation better prepared to weather a storm though by 
no means as fully prepared as it would be ten years later. 

With Mr. Durant's retirement, Pierre S. du Pont be- 
came president, continuing as chairman of the board. The 
new burden was one which Mr. du Pont did not seek; in- 
deed, it was thrust upon him by the dire needs of the situa- 
tion in which the Corporation found itself. In its 1910 
trouble the bankers who rescued General Motors insisted 
on all possible legal protection as embodied in mortgage 
and voting trust. Although the 1920 situation of the Cor- 
poration was not as serious as its predecessor, nevertheless 
a receivership might have been asked for except for the high 
degree of confidence in which the new management was held 
by the banking fraternity. Mr. du Pont began his presi- 
dency by telling his associates that the Corporation was 
now operating under the most delicate and honorable re- 
lationship known to industry, "a receivership of our own," 
and in this spirit the Corporation carried on. 

The totals for 1920 were relatively high because of the 
excellent earnings of the early months of the year, so the 
full force of the blow would not be of record until 1921. 
In 1920 General Motors earned $22,000,000 less than in 
1919, and after dividends could reinvest only $14,000,000. 
The worst was still to come from the accounting stand- 
point, but by the close of 1920 the situation had been faced 
and the restoratives applied. 

Chapter XIV 


ITH the presidency of Mr. du Pont, General Motors 
history entered a new phase. A calm, solid man, accustomed 
from youth to large affairs, and with the family habit of 
taking broad, far-reaching views, he brought to his new 
responsibility a poise the Corporation had never quite 
known before. He had a keen sense of fiduciary responsi- 
bility, and yet he was perfectly aware, as many conservative 
men are not, that by no means all the values of an organiza- 
tion can be listed on a balance sheet and appraised in dollars 
and cents. General Motors had had one experience of that 
sort, from 1910 to 1915, and it had ended abruptly with 
the Durant recapture through Chevrolet, as previously de- 
scribed, precisely because Mr. Durant knew the hidden 
values better than the bankers did. 

On the other hand, Mr. du Pont was never driven by the 
devils of haste and expediency. The bright face of danger 
had no allurement for him. His attitude toward the vast 
property committed to his care was that of a conservator 
rather than a promoter. His faith in the future of General 
Motors and of the automobile industry in general held as 
firmly as that of his former associate, but he saw clearly that 
his job lay in reorganization, not expansion. General Motors 
was now a "made" property, and as such in need of long 
views and continuing policies. True, it had been made by 
desperate daring as well as by steady toil, but in 1920 it 
needed balance rather than daring. The emergency problem 


194 The Turning Wheel 

was to save the structure intact, certain that the swing of 
business would restore buying, and that General Motors 
would come up with the country if the weaknesses recently 
revealed were courageously met. 

Mr. du Font's personality was not long in making itself 
felt. At the beginning he faced a difficult problem in re- 
establishing employee morale shaken by the sudden change 
of management. Remember that General Motors was a 
Middle Western creation. Important posts were filled by 
men who looked upon Mr. du Font's predecessor with 
adoration. Many of them had followed him into Chevrolet 
and back into General Motors. Now they were disposed to 
stick with the Corporation, realizing that General Motors 
was here to stay and that their futures were at stake. 
Nevertheless, accustomed as they were to the Durant pro- 
cedure, they anticipated difficulties for themselves under 
du Pont management. Changes in personnel were necessary 
in many cases; and events indicated a need for a wholesale 
realignment of relations between the plants and the central 
offices. Whether that could be done seemed for a time doubt- 
ful; the situation was so tense, for instance, that in the case 
of one new manager there was grave doubt whether he 
might be allowed access to his office without interference 
from men who were being replaced. 

This nervousness applied not only to managers but to 
labor staffs as well, and through them spread to whole com- 
munities. In no small degree the high morale of General 
Motors labor had been due to the dramatic leadership of 
the former president. To his old employees Mr. Durant 
had been both boss and friend, and while thousands of the 
later comers in his labor ranks had never seen him in the 
flesh, they knew him by hearsay. Years ago he had taken on 
for them the attributes of myth and story. He was their 
hero, their superman, doing the things they would like to 
do if they could. Particularly they had rejoiced when, like 
a Lochinvar out of the West, he had stolen the General 
Motors bride from the Eastern bankers in 1915. Now they 
began to grumble about absentee ownership and Eastern 
control, and wonder whether their jobs and houses would be 
worth anything a year hence. Even the substantial business 


President, General Motors Corporation, 192023 

196 The Turning Wheel 

men of the Michigan cities with General Motors plants 
grew panicky at the thought of what might happen to them 
and their investments if, under the aegis of the du Fonts, 
plants were to be moved from West to East. Absurd rumors 
to that effect gathered headway; Chambers of Commerce 
grew excited and wrote in to plead consideration for their 
communities in the pending changes. 

As soon as bandages had been applied to the sorest of 
the many sore spots on the corporate body, President du 
Pont took a statesmanlike swing around the General Motors 
circle. He visited plants and talked to groups of employees 
and associations of citizens. Everywhere he went he had 
the benefit of what the diplomats call a "good press." Local 
interests, from banks down to laborers, were reassured 
when they beheld this kindly, steady man and heard him 
tell them to be of good cheer. General Motors, he said, 
would stand by its investments in their communities as long 
as those communities stood by General Motors. There 
would be changes, of course, since not to change at the 
challenge of events was to risk corporate dry-rot, but the 
changes would benefit rather than injure the workers and 
the communities sustained by General Motors pay rolls. 
Opinion in Michigan completely reversed itself as soon as it 
heard that message : real estate values began to regain their 
buoyancy; labor, its morale; and plant executives, their 

As on two previous occasions in the Corporation's history 
there were unfortunate accumulations to sweep away while 
reorganization efforts went forward. Liquidation of the ex- 
pensive Janesville tractor experiment began. The Doyles- 
town Agricultural Company, bought as part of the farm 
motorization program, went for $48,500, a loss of almost 
$100,000. The unfortunate Heany venture was finally wiped 
off the Corporation books when $1,205,000 in cash and 
securities was received from General Electric in return for 
General Motors interests in the electric light business. 

An action most reassuring to the city of Flint was a Gen- 
eral Motors subscription to $300,000 worth of capital 
stock in the Durant Hotel erected there and named for the 
founder of the Corporation. 

New Era Under President du Pont 197 

Meantime, the Corporation undertook a comprehensive 
study of its inter-relationships. As we have seen, General 
Motors' early growth was swift and chaotic. In that stage 
it was a hybrid rather than a unified organization. Attempts 
to organize it had been partially successful, but never wholly 
so, and for obvious reasons. Here was an enormous 
ganglion of highly active units, each of which faced prob- 
lems peculiar to itself, each of which made its own approach 
to the public in the market place, and each of which had 
its own distinctive pride. Too much concentration of 
authority might very well reduce the initiative of plant man- 
agers and the efficiency of their staffs. On the other hand, 
since many of these units were dealing with one another, 
were buying similar goods and services, and all of them in 
the last analysis were taking their goods to the same market, 
the intelligent cooperation of the units was desirable up to 
the point of diminishing returns. Where to locate that point 
could be determined only by experiment, and preferably by 
cautious rather than rash experiment. Consequently various 
inter-divisional bodies were set up to integrate policies with 
respect to products, sales, purchasing, advertising, etc., thus 
initiating a program of close coordination but preserving 
decentralized administration. 

One of the practical reforms of this period deserves 
especial attention since the danger which it corrected had 
twice played a destructive role by bringing General Motors 
into financial straits. This was a reasonable control of in- 
ventories. During the boom days when supplies were rel- 
atively scarce, plant managers had fallen into the habit of 
ordering in excess of need, sometimes to double or triple 
their requirements, merely to be assured that they would 
receive enough to let them fill their production programs. 
This had its obvious result. When business slackened, sup- 
plies were pushed out and sent forward faster than they 
could be used, and cancellations were not always applied 
in time to check the flow. Sometimes these cancellations 
did not hold, particularly if the order had been started on 
its production process. The new management met this by 
limiting the independent buying power of plant managers 

198 The Turning Wheel 

to the requirements of a four months' forecast. Control of 
inventory was the great lesson learned from the troubles of 

Another weakness, in effect the other side of the inventory 
shield, was the lack of information regarding retail sales 
and stocks of cars in dealers' hands. None of the Corpora- 
tion's automobile producers knew with even approximate 
accuracy how fast their cars were being taken out of the 
market by consumers; consequently they had no yardstick 
immediately available by which to regulate production. A 
first step was taken when General Motors encouraged R. L. 
Polk & Company to gather and make available to the 
entire industry, regular and frequent statistics of motor-car 
registration as fast as the figures could be gathered. 

While real control of the production cycle, based on 
definite information, required some years in working out, the 
thought impulses in that direction began early in the re- 
organization. By 1923 each manufacturing division was 
obtaining from dealers ten-day reports on sales and cars in 
stock; by 1925 a degree of control over production pro- 
grams had been achieved through a system suggested by 
Donaldson Brown, then vice-president in charge of finance. 
The essence of this improvement lies in control of produc- 
tion in line with retail demand as forecast on the basis of 
accurate and regular reports from the field, the final con- 
trolling calculations being worked out with reference to all 
calculable factors in the changing economic situation. Major 
errors of calculation have since been few and usually on the 
side of conservatism, so that at no time since this system 
was developed has General Motors been seriously threat- 
ened by unwieldy frozen inventories of either finished goods 
or parts in process. The decisions in this field are arrived at 
by consultations between headquarters and local managers 
with accurately gathered facts, usually bringing the con- 
ferees into agreement. 

General Motors' outstanding contribution to industrial 
organization has been made along this and similar lines. 
Even a brief survey of the anatomy of industry reveals that, 
in general, industry is either autocratic or feudal in its set-up. 

New Era Under President du Pont 199 

Mr. Durant's rule over General Motors during his in- 
cumbencies may be accepted as a fair example of the second. 
Mr. Durant relied on trusted lieutenants and trusted some 
of them too far, their capacities sometimes being unequal 
to their responsibilities. In attempting to find a steady base 
somewhere between these different ways of expressing in- 
dustrial authority which, of course, is a sine qua non of 
dependable production General Motors set up a system of 
liaison and control for which corollaries must be sought 
elsewhere than in industry. 

This system has been likened in some respects to the staff- 
and-line organization of an efficient army, with the staff as 
the planner and coordinator of line activities, the former 
mapping the strategy of the campaign, the latter applying 
the tactics most likely to carry out the strategy. But if Gen- 
eral Motors' organization has certain military aspects, it 
has others which are quite the reverse of military. Indeed, 
to the limited extent to which central control functions, it 
does so through a system of coordination seen to resemble 
the activities of a government rather than that of an army, 
while local managers, within the frame of consultative co- 
ordination described above, retain administrative jurisdic- 
tion over and responsibility for their divisions, each of 
which is an operating unit. Some concessions were made to 
the economic pressure of 1931-33, but these were not con- 
sidered ideal relationships and were discontinued as soon 
as the need for them passed. The inter-divisional set-up of 
1927 is thus described by Mr. Donaldson Brown: 

Serving in the direction of crystalizing the important Corporation 
policies and making them effective, and to facilitate the adapta- 
tion of engineering improvements and operating methods, there are 
various so-called inter-divisional relations committees. They have 
suitable representation from the most important divisions, and are 
as follows: 

General Purchasing Works Managers 

General Technical General Sales 

Institutional Advertising 

200 The Turning Wheel 

These committees meet separately once a month. The President 
of General Motors is a member of each one and besides, there is at 
least one other member of the Executive Committee. The work 
of the committees clears through various central office staff organ- 
izations, maintained so as to perfect the flow of information back 
and forth and to facilitate the orderly consideration of common 
problems of important policy and procedure. . . . Where there is 
a question at issue on the score of Corporation policy, the Presi- 
dent of General Motors makes the decision or refers it to the 
Executive Committee. Cases of this kind are rare. 1 

The inter-divisional relations committees named above 
occupied themselves only with the policies in their respec- 
tive fields, which required consideration from the stand- 
point of the Corporation as a whole, rather than from the 
standpoint of any single division. 

If one thinks of these various committees as conducting 
investigations and taking the evidence of experts as Con- 
gressional committees do, and within a definite range of 
authority making decisions which are either put into effect 
immediately or referred to some higher committee for ap- 
proval, then one will have a rough idea of how General 
Motors functions. An illustration, taken from the same 
address, will show how a committee works on a specific 
problem that of prices : 

The question of pricing product from one division to another is of 
great importance. Unless a true competitive situation is preserved, 
as to prices, there is no basis upon which the performance of the 
divisions can be measured. No division is required absolutely to 
purchase product from another division. In their interrelation they 
are encouraged to deal just as they would with outsiders. The in- 
dependent purchaser that is buying product from any of our divi- 
sions is assured that prices to it are exactly in line with prices 
charged our own car divisions. Where there are no substantial sales 
outside, such as would establish a competitive basis, the buying 
division determines the competitive picture, at times partial re- 
quirements are actually purchased from outside sources so as to 
perfect the competitive situation. 

1 From Vice-President Donaldson Brown's address to the American Man- 
agement Association, February, 1927. 

New Era Under President du Pont 201 

After the date of Mr. Brown's speech the status of inter- 
divisional relations was changed. The Operations Com- 
mittee was no longer inter-divisional but did all the routine 
work of the Executive Committee. The roster of inter- 
divisional relations committees was then reduced to four 
General Sales, General Purchasing, General Technical, and 
Works Managers. Several advisory committees were 
formed, as the Public Relations Committee, Advertising 
Committee, and the like. Somewhat further simplification 
in the direction of greater divisional autonomy occurred in 
October, 1933, when W. S. Knudsen became executive vice- 
president of the Corporation in charge of car and body 
manufacturing in the United States and Canada. 

The acute financial pressure of 1921 had stirred the Cor- 
poration to another reform of lasting consequence both to 
itself and to industry at large. This was the better mobiliza- 
tion of its cash resources through the use of the fiscal trans- 
fer machinery which had been set up by the Federal Reserve 
system. In October, 1920, General Motors owed to banks 
$82,700,000. The strides made by General Motors in ten 
years from 1910 to 1920 can be measured by its borrowing 
power. In the former year it had to mortgage all its 
properties to borrow $15,000,000; in 1920 it could borrow 
more than five times this sum without recourse to unusual 
expedients. Yet during this stringency many of the divisions 
had more money than they needed. Clearly, one reform im- 
mediately necessary was the pooling of financial resources. 
This was accomplished in a way which has historical inter- 
est, as it was the first occasion in which the machinery of 
the Federal Reserve system was used to facilitate the fund- 
transfers of a large corporation active over the whole 
United States, and the plan so set going has been studied 
and adopted in principle by many other corporations. 

There were two elements in the problem. One was the 
rigidity of General Motors cash under divisional control, 
which forced Corporation borrowing when division funds 
were tied up by managers most concerned with being on 
the safe side in their own operations; the other was the 
time involved in transferring funds from city to city and 
from plant to plant, involving a "float" of ten million 

202 The Turning Wheel 

dollars at a time when every dollar could be used to ad- 
vantage. Furthermore, the Federal Reserve system, hav- 
ing established means of practically instantaneous transfer 
by telegraph, desired to have those facilities tested in use. 

Three plans were submitted by General Motors to the 
Federal Reserve officers, one of which was accepted as work- 
able. It involved the automatic transfer of General Motors 
balances from its banks of deposit whenever the maximum 
agreed deposit to be retained by that bank had been ex- 
ceeded. These remittances accumulated in eleven large banks 
as central reservoirs. In place of slow remittances by mail, 
telegraphic transfers shifted funds almost instantly. 

This change involved visits to banks all over the country 
and many consultations with division executives to convert 
them to the idea of central financial control. As a means of 
meeting their natural concern to have abundant working 
capital promptly when needed, a system of disbursing funds 
to divisions upon requisitions was set up which operated as 
swiftly as the inflow. 

As the plan became effective over the entire country, 
with all divisions and their banks cooperating through the 
Federal Reserve system, it was seen to have decisive bene- 
fits for all concerned. The Corporation benefited by reducing 
its "float" from $10,000,000 to $4,000,000, and also by in- 
creasing its potential borrowing power from $82,700,000 
to more than $100,000,000. The banks cooperating in the 
plan benefited by having more stable General Motors de- 
posits, and by having the interest rate on those deposits 
uniform for the entire country for several years after the 
plan went into effect. They were able to use General 
Motors deposits to better advantage than formerly. The 
Federal Reserve system benefited by demonstrating to the 
industrial world the efficiency of its service, the demonstra- 
tion being so complete that many other large industries 
studied the plan and adapted it to their needs. 

The financial stress of the post-war era soon passed. By 
June 30, 1922, the Corporation was out of debt, and for 
the balance of that year carried no bank loans, yet its cash 
had been so mobilized that it had a large potential borrow- 
ing capacity. 

New Era Under President du Pont 203 

The Corporation marched out of the post-war depression 
on a pair of seven-league boots. One of these was the in- 
ternal reorganization already discussed. The other was the 
fruit of an energetic development of automobiles partici- 
pated in by many companies but in which General Motors 
played no small part through the activities of its research 
department and those of affiliated companies. These im- 
provements induced enough buying to make 1922 notable 
for the largest volume of business in units to date. Two 
years after General Motors had approached bottom in 
1921 it was again riding the crest in 1923. 

Whereas in 1921 the Corporation lost $38,680,770 the 
only deficit recorded in the history of General Motors, 
yet the following year saw a complete reversal with 
$54,474,493 net income available for dividends. Dividends 
were paid at the rate of $i a share through 1921, but the 
quarterly dividend of 25 cents due February i, 1922, was 
passed as a matter of precaution. Prompt recovery, how- 
ever, permitted the payment of a special 50 cents dividend 
in December. During the 1921 slump the average number 
of employees decreased by 35,000 but 1922, with 65,345 on 
the pay roll that year, saw the beginning of another up- 
ward swing in employment. 

Among the timely acts of the period were : 

Sheridan at Muncie, Indiana, and Scripps-Booth at De- 
troit, were discontinued. During its short life Sheridan 
was produced at the former Interstate plant. 

The Samson tractor plants at Janesville, Wisconsin, were 
switched to automobile production. 

General Motors Building Corporation was formed to 
hold and operate the $20,000,000 office building in 

Saginaw Malleable Iron Company was acquired. 

The outstanding shares of the Klaxon Company were 
acquired by exchange. 

The Janesville Electric Company was sold to Halsey, 
Stuart & Company, acting for power interests. 

Modern Housing Corporation shares were reduced from 
17,500 to 1,750, $100 par. 

204 The Turning Wheel 

The Corporation subscribed for 8,000 shares of the Gen- 
eral Motors Acceptance Corporation at $125 a share, 
in the sum of $1,000,000. 

Another sale of this period, indicative of the Corpora- 
tion's efforts to forsake the real estate and home-building 
field where possible without distress to employees, was the 
sale by Harrison Radiator of 875 shares in the Lockport 
Homes Company. 

Perhaps more significant for the Corporation than any 
other activity of the period was the drive which began in 
1921 to improve the quality of its cars. Buick and Cadillac 
were in no need of overhauling, but the low-priced cars 
Chevrolet, Oldsmobile, and Oakland revealed weaknesses 
which flowed naturally from the post-war conditions. Then 
the cry had been for more and more production, with the 
result that engineering improvements had been postponed 
or overlooked entirely. As trade slackened, weak mechani- 
cal units began to affect both sales and reputation. One by 
one these problems were grappled with firmly. Under 
President du Pont began the long struggle to rehabilitate 
Chevrolet and establish it as the Corporation's leader in 
quantity production and earnings, which has finally made 
that subsidiary the world's leader in the low-priced field. 
Oldsmobile and Oakland, in their respective price ranges, 
were put under similar treatment. This farsighted policy 
proved immensely beneficial in after-years, bringing the 
Corporation to new levels of earnings and efficiency. In- 
deed, it may be held as the chief determining factor in lift- 
ing the Corporation to the impressive totals it reached from 
1925 onward. Moreover, the lessons learned and remedies 
applied from 1920 to 1923 were to prove invaluable in the 
greater stress of 1930 to 1933. 

On May 10, 1923, Pierre S. du Pont retired as president. 
The two and a half years of Mr. du Pont's presidency saw 
the Corporation rise swiftly from a perilous position to new 
levels of profits and financial stability. Dead wood had been 
cut away, and the weak properties brought to increased 
efficiency. One by one the Corporation's great producers 
had been taken in hand, tuned up, and placed in a position 

New Era Under President du Pont 205 

of market leadership. Progress had been made toward 
integrating a key control at headquarters. This eased inter- 
plant relations without reducing too greatly the responsibili- 
ties of plant managers, whose interest was to be further 
roused by the creation of the Managers' Securities Com- 
pany a little later. Employee morale had been achieved by 
the maintenance of high wages, generous bonuses, and the 
highly successful conclusion of the first Employee Savings 
Fund program. 

With the Corporation in this favorable condition, Presi- 
dent du Pont, certain that the situation he went in to 
remedy had been fully cured, laid down the responsibilities 
of the presidency to return to his other large affairs. He 
was to remain chairman of the board for six years more. 
It is not too much praise to say that he saved General 
Motors by taking the helm in bad weather and effecting 
such reforms that it could not fail to reap the rewards of 
many of the policies he formulated. The long-range policies 
and forward views which Mr. du Pont took are still effec- 
tive in Corporation thought and practice, and will continue 
to be influential there for many years to come. On leaving 
the presidency he attributed a large measure of the Cor- 
poration's successful development to Mr. Alfred P. Sloan, 
Jr., vice-president in charge of operations, who succeeded 
him in office. 

Mr. Sloan entered the Corporation as a director on 
November 7, 1918, incident to the merging of United 
Motors, of which he had been president, and at first had 
charge of the operation of the United Motors group. With 
Mr. Durant he had been an important figure in the creation 
of United Motors, bringing into that organization the 
Hyatt Roller Bearing Company, with which he had long 
been associated. Combining technical training with executive 
experience, he was widely known throughout industrial 
America even before he assumed a high place in General 
Motors councils, and this acquaintanceship later brought 
into the General Motors family several of its present units. 

That Mr. Sloan also possessed sales insight and had been 
a force in working out the coordinating reforms described 
in this chapter may be gathered from a tribute reported 


President, General Motors Corporation, 1923- 


New Era Under President du Pont 207 

by B. C. Forbes in the New York American, September 21, 

When he was selected president, in 1923, to succeed Pierre S. du 
Pont, the latter made this public announcement: "The greater 
part of the successful development of the Corporation's operations 
and building up of a strong manufacturing and sales organization 
is due to Mr. Sloan." 

As General Motors integrated its policies and undertook 
a systematic supervision of its extended operations under 
Mr. Sloan as vice-president in charge of operations, he 
proved his fitness for the higher office so well that, when 
Mr. du Pont laid down the reins, there was never any ques- 
tion who would be chosen to succeed him as president. In 
him the Corporation secured an operating head possessing 
a combination of technical training, executive experience, 
and financial sense. 

By 1923 General Motors had gained an important part 
of a trade already of gigantic proportions and destined to 
grow to even greater heights. America was just beginning 
to realize what the motor car meant to it economically and 
socially. The magnitude of the ever-growing industry is 
revealed in these statistics drawn from the 1923 census of 
manufactures : 

Three hundred and fifty-one factories were operated by the automo- 
bile industry in the United States and the District of Columbia 
54 being in the state of Michigan. 

More than 318,000 persons were directly employed in the manu- 
facture of vehicles in that year and 3,105,000 were benefited in- 
directly by the industry. 

A billion dollars was being spent on highways and more than 
$142,000,000 in the transportation by rail of completed vehicles. 

Eighty-five percent of the gasoline consumed in the United 
States during that year was used in cars and trucks. 

More than 10 percent of the products of the steel and iron 
industry were used in the production of motor cars or of their 
parts and accessories. 

One hundred and sixty establishments were engaged in the 
manufacture of tires and inner tubes while a total of 528 manu- 
factured rubber products. 


The Turning Wheel 

Of the thriving automotive trade General Motors al- 
ready enjoyed a large share. After fifteen years of growth, 
punctuated by two stressful periods, General Motors in 
1923 had reached unquestioned financial stability, had dis- 
covered the formula by which decentralized operations 
could be correlated and controlled within limits of efficiency, 
and had acquired the good-will of millions of satisfied 

Opel Six at Shanghai, China 

Chapter XV 


FTER the initial speed of accumulations had been 
checked and balanced by the banker reorganization of 
1910-15, General Motors expansion came from two 
sources. By far the most impressive elements in the growth 
of the Corporation since 1923 have been written into the 
record by the internal growth of various divisions, chiefly 
the great car divisions and the accessory divisions supply- 
ing them, accounts of which will be found elsewhere under 
divisional heads. Another source of growth has been the 
purchase and adaptation of manufacturing units and service 
organizations which it seemed eminently desirable and nec- 
essary to control in the interest of industrial competence. 

Strong reasons began to develop soon after 1923 im- 
pelling the Corporation to fortify itself wherever possible 
for a future which obviously would be considerably different 
from its past. Evidence began to accumulate that the in- 
dustry as a whole was approaching stability. The phenom- 
enal popularity of the motoi* car in its early stages had 
provided such large profits that many errors of judgment 
had been written off almost without notice. That era of 
"easy come, easy go" had passed, and with its passing the 
business of manufacturing motor cars became concentrated 
in fewer hands. 

This "sweating-out" process had been going on all 
through the life of General Motors, and had in fact threat- 
ened various of its units at one time or another. The more 


210 The Turning Wheel 

than 300 manufacturers of 1908 had been reduced to 189 
by 1914 and to 143 by 1923; these figures including pro- 
motions and other short-lived efforts. Of these hundreds, 
twenty-five manufacturing units would do more than 98 per- 
cent of the business in 1931. 

The continued progress of the leaders created the im- 
pression that the entire industry was proceeding at the 
earlier rate of growth, whereas the truth was, as Mr. Sloan 
told the automobile editors in his Proving Ground address 
in 1927, in discussing the so-called saturation point, that 
"The industry has not grown much during the past three or 
four years. It is practically stabilized at the present [1927]. 
What has taken place is a shift from one manufacturer to 

The trend from 1923 to 1927 meant a basic shift of the 
industry's attitude to the market. Henceforth the motor 
cars would have to be sold, instead of merely demonstrated. 
They must be advertised more and serviced better. Research 
and improved methods of manufacturing would have to be 
constantly speeded up to produce better and better cars for 
a market ever growing more sternly competitive. Precision 
methods, long applied in factory production, were equally 
needed in other branches of the trade in the calculation 
of logical production programs, in the accounting systems 
of dealers, etc. The industry had come of age and, with 
maturity, competition brought new responsibilities for 
management. Such increase in volume as developed would 
have to come from three sources : replacements, population 
growth, and the increased use of automobiles. Moreover, 
the share of business received by any producer would have 
to be secured by hard work and careful planning rather 
than through luck, boldness, or blind reliance on general 

Consequently, it was time to insure unquestioned control 
of certain essential supplies and to adopt, with relation to 
those sources once they were in hand, such improvements in 
their processes as would bring their goods into the Cor- 
poration's productive cycle as efficiently as possible. 

A number of these additions merely registered the Cor- 
poration's completion of ownership in properties partly 

Rounding Out General Motors 211 

owned before and already an essential part of the pro- 
duction chain. In this category was Brown-Lipe-Chapin 
Company of Syracuse, New York, which had been making 
differentials for General Motors cars almost from the 
latter's birth, and in which General Motors had been in- 
fluential for years by reason of a large stock ownership. On 
December 19, 1922, the famous Syracuse company became 
a completely owned division of General Motors. 

Armstrong Spring Company of Flint, though under vari- 
ous corporate ownerships during the period, had been 
making springs for General Motors for many years, work- 
ing closely with the chief car divisions. It was purchased by 
the Corporation in December, 1923, becoming a wholly 
owned division. 

In the field, perhaps the outstanding development of 1924 
was the purchase and initial improvement of the Proving 
Ground near Milford, Michigan. Within easy reach of the 
Corporation's automobile plants at Detroit, Pontiac, Flint, 
and Lansing, the site was selected after an intensive search 
for a tract where surfaces and contours would provide the 
greatest variety of tests for motor cars. Here were heavy 
grades, sand and gravel hills, marshy lanes, and muddy 
bogs. Since the purchase, concrete and gravel roads, and 
a wide range of other road surfaces have been added and 
shops erected, where cars are taken down and examined 
after being put through their paces on long, stiff journeys 
over these varied highways. At the Proving Ground, which 
is really a great outdoor laboratory, all General Motors 
models are tested with the utmost rigor before they are 
placed in production by the various car divisions. 

In the first year of General Motors' history, W. C. Durant 
used to tell his racing and test pilots to drive until their cars 
broke down under the strain, in an effort to locate weak- 
nesses and indicate where improvements should be made. 
Now, sixteen years later, this idea materialized in a mam- 
moth undertaking in which that exacting work could go on 
under scientific supervision, as part of a broad research 
program. The Proving Ground is a large-scale enterprise 
in fact-finding for the protection of the buying public. 

212 The Turning Wheel 

Into the corporation field in 1924 also came the new 
Ethyl Gasoline Corporation to market the "knockless" fuel 
which General Motors chemists had evolved through years 
of alert and adventurous research. The story of Ethyl will 
be told in detail elsewhere; 1 it is one of the characteristic 
triumphs of the open mind in industrial research. To market 
this new fuel a $5,000,000 corporation was formed, and 
$1,150,000 was subscribed in 1924, with Standard Oil of 
New Jersey and General Motors each having a 50 percent 

Fisher Body, with large earnings and the prospect of 
more, expanded its capital stock to 2,400,000 shares of $25 
par value to take the place of 600,000 shares outstanding. 
Shortly after, Fisher began, with the acquisition of Fleet- 
wood Corporation, an important growth cycle of its own, 
narrated in Chapter xx: "Body by Fisher." 

Negotiations had been in progress for some time with 
the Hertz interests of Chicago looking toward the acquisi- 
tion of an interest in the Yellow Cab Manufacturing Com- 
pany of Chicago. On August 13, 1925, the directors 
approved the offer of that company relative to the transfer 
of the General Motors Truck Division to a new company, 
the Yellow Truck & Coach Manufacturing Company, a 
holding company in which General Motors Corporation ac- 
quired a majority interest. In addition to General Motors 
Truck, with large plants at Pontiac, Yellow Truck & Coach 
Manufacturing Company owns all or part of several other 
companies. 2 

October 21, 1925, marks the proposal by Vauxhall 
Motors, Ltd., of Luton, England, of a plan whereby Gen- 
eral Motors entered the field of British automobile manu- 
facture under excellent auspices. 3 This plan, which was 
consummated on November 24th, required a total outlay 
by General Motors of 510,000, or roughly $2,500,000 at 
par of exchange, for which the Corporation secured a con- 
trolling interest in an established British company with a 
possible production of 25,000 cars a year. Since the 

*See Chap. XIX: "Research: the March of the Open Mind." 

*See Chap. XXII: "Commercial Vehicles." 

3 See Chap. XVIII: "General Motors Across the Seas." 

Rounding Out General Motors 213 

McKenna duties increased the tariff on American cars enter- 
ing British markets, and preferential duties were in force in 
other parts of the Empire, the advantages of this coalition 
have been amply manifested. 

Another expansion of General Motors Acceptance Cor- 
poration capital occurred in December, the Corporation 
subscribing for 45,000 shares of GMAC stock at $125 a 
share, or $5,625,000. Instalment sales had grown tremen- 
dously in volume with the growing confidence of the 
country, and the country was approaching the point at 
which more than half the automobile output would be 
bought on credit. 

General Exchange Insurance Corporation, with a capital 
of $500,000 and surplus of $1,000,000, was formed by 
General Motors Corporation to handle the vast insurance 
business arising through sales financed by General Motors 
Acceptance Corporation. The timeliness of this innovation 
was soon demonstrated, for within two years GEIC made 
profits of $676,000.* 

After making a step toward retrenchment by author- 
izing the liquidation of the Lancaster Steel Products 
Company in 1926, the directors authorized two other large 
investments. Yellow Truck & Coach Manufacturing Com- 
pany, in order to provide for expansion of its operations, 
sold additional capital stock, for the proceeds amounting to 
$14,000,000. General Motors underwrote the entire issue 
and secured its pro rata share. The other was the inaugura- 
tion of a plan to buy up to $35,000,000 worth of Common 
stock before the close of 1930 for the second Managers 
Securities Company. 

Following this important move the Fisher group was also 
greatly expanded by the construction and acquisition of new 
properties and companies making necessary supplies 
among them the Flint plant, the largest in the Fisher en- 
semble. Also, the Fisher structure was simplified by the 
purchase of the affiliated Ohio company. The "Golden 

*A full account of General Exchange Corporation and its successor, Gen- 
eral Exchange Insurance Corporation, will be found in Chap. XXVII: 
"Financing and Insuring the Buyer." 

214 The Turning Wheel 

'Twenties" were busy years for Fisher, with four incorpora- 
tions or acquisitions in 1923, two in 1924, two in 1925, five 
in 1926, two in 1928, and one in 1929. The complete 
Fisher set-up will be found in Chapter xx. 

August, 1926, marked the merger of selling efforts on 
certain important lines of the Corporation's electrical 
products in the formation of the Delco-Remy Corporation 
of Delaware, which was followed presently by the transfer 
of the starting, lighting, and ignition business of Delco, 
from Dayton to Anderson, Indiana, the seat of the present 
Delco-Remy division. 

On November n, 1926, General Motors Acceptance 
Corporation stock was increased to $25,000,000, since it 
was clear that the country had overcome its hesitation of 
the spring and was confidently going forward, giving every 
promise of availing itself of time-payment plans to the full 
in automobile purchases. Another $10,000,000 increase in 
GMAC stock was ordered in June, 1927, and later GMAC 
acquired the General Exchange Insurance Corporation at 
its net asset value as of June 30, $2,176,702, the original 
cost to the Corporation having been only $1,500,000. 

During these busy and prosperous years interests were 
also acquired in Bendix Aviation of Chicago; Fokker Air- 
craft Corporation of America, the latter becoming the Gen- 
eral Aviation Corporation; Winton Engine of Cleveland, 
Ohio, makers of marine and stationary engines for rail- 
way use; McKinnon Industries of St. Catharines, Ontario; 
the Guide Lamp Company of Cleveland, Ohio; North East 
Electric of Rochester, New York; and others. 

All through this period also there was an unceasing flow 
of changes in plant utilization. The union of Delco and 
Remy at Anderson, Indiana, has resulted in a large industry, 
although not all Delco activities were moved. There re- 
mains in Dayton the Delco Products Corporation, making 
Lovejoy Hydraulic shock absorbers, small motors, and a 
wide range of other appliances. North East Electric at 
Rochester, New York, bought in 1929, soon became Delco 
Appliance Corporation, and to it were transferred the 
Delco Light business and other electrical lines chiefly in 
the household appliance and radio fields. This shift of 

Rounding Out General Motors 215 

functions toward a more efficient alignment, both geograph- 
ically and technically, has become more marked since the 
year 1930. 

General Motors thus has become a large producer of 
motor-driven household equipment. The Frigidaire Cor- 
poration manufactures electric refrigerators, beverage and 
water coolers, refrigerating apparatus for households, 
hotels, restaurants, and apartments, air conditioning equip- 
ment for homes, offices, shops and railway cars. Delco 
Appliance Corporation makes electric light and power 
plants (Delco Light), electric motors and blowers, gas- 
producing units (Delcogas), and Delco oil burners, vacuum 
cleaners and water pumps, and electric fans. Small motors 
are made by Delco Products at Dayton. Gas refrigerators 
for household and apartment use are produced by the 
Faraday Refrigerator Corporation, also at Dayton. 

The process of growth by purchase and development still 
goes on, though purchases of other properties are naturally 
at a reduced rate. A recent acquisition, in 1932, was the 
Packard Electric Corporation of Warren, Ohio, manu- 
facturers of automotive cable products. The name has early 
connections with the industry, as the Packard car originated 
there. It will be noted that the Corporation in its twenty- 
five years of history has withdrawn from several activities 
for substantial reasons, and the motives making for aban- 
donment have, of course, been especially strong from 1930 
to 1933. The most important of these recent changes was 
the removal of Muncie Products activities from Muncie, 
Indiana, and the transfer of Brown-Lipe-Chapin activities 
to Buick and other plants. 

With the exception of 1918, the war year in which ma- 
terials could not be secured to satisfy the public demand, 
and in 1921, when the post-war slump reduced production 
by one quarter, the automobile industry had marched 
steadily forward in the quantity and value of its products 
for a quarter of a century. In the ten years from 1912 to 
1922, the annual production had risen from 378,000 units 
with a wholesale value of $378,000,000 to 2,646,229 units 
with a wholesale value of $1,793,022,708. In 1923, the 
totals bulged to 4,180,450, valued at $2,592,033,428. 

216 The Turning Wheel 

A definite periodicity marks automobile production 
through the whole decade of the 'twenties. The trade began 
a succession of three-year cycles, apparently as a result of 
its own circumstances and enthusiasms, as follows : 

1921 Black year 1924 Black year 1927 Black year 

1922 Goodyear 1925 Goodyear 1928 Goodyear 

1923 Banner year 1926 Banner year 1929 Banner year 

The descriptions are, of course, merely relative, as new 
heights were being scaled all through the period, so that the 
good year of 1925 produced a larger volume than the 
banner year of 1923, and the good year of 1928 brought 
more business than the banner year of 1926. The figures 
on units manufactured, in the United States and Canada, 
and their wholesale value for the period are: 

Units Value 

1921 1,682,365 $1,261,666,550 

1922 2,646,229 1,793,022,708 

1923 4,180,450 2,592,033,428 

1924 3,737,786 2,367,413,015 

1925 4,427,800 3,015,163,562 

1926 4,505,661 3,214,817,491 

1927 3,580,380 2,700,705,743 

1928 4,601,141 3,162,798,880 

1929 5,621,715 3,576,645,881 

Owing to conditions which may be considered special, 
General Motors entirely escaped the 1927 reduction in 
volume common to the industry. Net sales for the Corpora- 
tion rose by more than $200,000,000 over the 1926 figure, 
reaching $1,269,519,673, or, on the basis of units sold, 
nearly 44 percent of the entire output for the United States 
and Canada in 1927. 

The trend is upward but not constant; after every banner 
year as noted, there is a dip, and then begins a two-year 
rise to new highs. To those aware of this swing of the 
pendulum it seemed likely that 1926 would be another 
banner year, unless there should be a general slackening of 
trade. For five years there had been a steady appreciation 
in urban real estate and security values, but farm produce 
had never recovered fully from the post-war price slump, 

Rounding Out General Motors 217 

and the condition of the farmers could not be considered 
good. The disparity between the farmer's dollar and the 
urban dollar was marked enough to cause some disquietude; 
only in automobiles and tires, owing to manufacturing im- 
provements, could the farmer buy to advantage compared 
with the pre-war ratio. Moreover, while automobile prices 
had dropped steadily from 1912 to 1917, and again from 
the war peak of 1918 to 1924, they had shown a rising 
tendency in 1924 and 1925. Students of automobile eco- 
nomics were asking themselves whether the upward swing 
could continue; the Stock Exchange drop of March, 1926, 
enough to call forth a reassuring interview from President 
Coolidge, indicated a gathering tension. 

The country, however, gathered courage and went on. 
The year 1926 rolled up the record figures of nearly 
$3,215,000,000 in wholesale value of the automobile in- 
dustry's output, and the automobile cycle swung through 
another three-year period to even larger figures. 

Economic historians will be debating the long continuance 
of the prosperity of the 1920*8 for many years to come. All 
precedents indicated that the boom should have reached 
its zenith before 1929. Evidently there were new factors 
in the equation. Among them were: increased efficiency in 
industrial production, growth of export trade, the nation's 
increase in gold holdings, and the wider distribution of 
wealth. Still another, of special moment to the automobile 
industry, was the enormous extension of instalment selling. 

The amazing totals of 1928 and 1929 can only be ex- 
plained by boom conditions confounding all calculations. We 
have seen how firmly Mr. Sloan, with all available data on 
hand, considered in 1927 that the industry as a whole was 
approaching stabilization, in which continued demand would 
be largely for replacement purposes, with some allowance 
for growth due to increasing population and gain in 
motor-mindedness. Yet in the next two years the automobile 
industry swept aside all these conclusions of conservatism 
under the lash of a demanding market. 

Chapter XVI 


HE early histories of the four of the five passenger car 
divisions of General Motors have been carried down in 
previous chapters to the time they joined General Motors 
of New Jersey, and that of Pontiac from its origins in 
Oakland down to the present time. This chapter presents 
briefly the stories of Buick, Cadillac, Chevrolet and Olds- 
mobile after they were merged into General Motors. 

These compressed histories necessarily omit many inter- 
esting details and pertinent facts, as each of the car 
divisions is in itself an important, large-scale industrial 
operation deserving of more extended treatment. All have 
compiled historical material in considerable amount, some 
of which has been circulated widely in pamphlets and 
through press releases. 


When Buick became the foundation stone of General 
Motors in 1908, it had already won leadership in the 
medium-priced field, and in volume of business it ranked 
first in the American automobile field. Ever since it has been 
one of the chief pillars of Corporation strength. From an 
output of only sixteen cars in 1903 Buick has reached a 
total production of more than 2,500,000 units, more than 
half of which are still in operation, including models of 
every year except the first. Its largest year, in unit sales, was 
1926, when 280,009 Buicks were sold. 


Passenger Car Divisions 219 

During its life-span of thirty years Buick has held closely 
to the medium-price range. In only six of those years has 
the average Buick the middle-priced car of all its models 
for the year exceeded $2,000. Only one model has been 
sold below $1,000. One result of this consistent price 
policy has been the creation of a very large body of buyers 
who continue to order Buicks year after year. While many 
makes of cars have found new price levels in the history 
of the industry, a few rising and more dropping in the 
scale, Buick has kept its original position, compensating the 
customer as costs declined by adding to the value of the 
product year by year. 

When Buick began, it was a manufacturing policy, com- 
mon to the entire industry, to sell a bare car at a listed 
price and then furnish, as extra equipment at set prices, 
many appliances necessary to comfortable motoring which 
today's buyer looks upon as essential. For instance, the 
famous Model F two-cylinder Buick sold at $1,250, F.O.B. 
factory, but unless the customer bought and paid for a top 
he would ride in the rain; unless he bought lamps he would 
ride only by day; unless he bought a windshield he sat ex- 
posed to the blasts of Boreas. Extra equipment lists often 
included such essential elements as tires, horn, and gauges. 
Consequently a comparison of automobile prices, histori- 
cally, means very little until manufacturers reached the point 
of selling their cars completely equipped. What one gets for 
his money is quite as important as what he pays. 

Through this development from the skeleton car of the 
old days to the fully equipped car of the present, Buick was 
usually to be found somewhat to the fore in the matter of 
shifting extra equipment to standard equipment, rather than 
following the policy of pushing the price down and keeping 
the charges for extras up. For that reason a year-by-year 
statement of additions to Buick equipment is an interesting 
exhibit of the stages through which the American automo- 
bile industry advanced toward the present practice of equip- 
ping a car completely. 

In the evolution of the automobile, both as a machine 
and as a style vehicle, Buick has always been consistently 
progressive, originating many improvements and applying 

220 The Turning Wheel 

others as soon as they developed reliability. For that reason, 
if one desires to see the steps by which the automobile has 
reached its present appearance, he can find some of the 
stages of that progress in the comparison of Buick speci- 
fications. One can see the automobile growing through addi- 
tions like these: 1903-04, folding celluloid wind-breaker; 
1905-06, side curtains; 1907-08, Presto-lite headlights; 

1911, first closed car, a limousine, folding seats in tonneau; 

1912, mohair top; 1913, clear vision windshield, electric 
lights, nickel trimmings instead of brass; 1914, first sedan. 

On the mechanical side the progress can be charted by a 
few of many thousands of transitions: 1903-04, safety 
cranking device; 1904-05, disc clutch, steel drive shaft; 
1907-08, aluminum crankcase, magneto, spark and gas 
control sector on steering wheel; 1909-10, pressed steel 
frame; 1911, oil splash system; etc., etc. 

Bob Burman at wheel of "Old 41" famous Buick racer, 1909 

Buick pioneered in glass fronts, fore-doors, internal ex- 
panding brakes and four-wheel brakes, and in the develop- 
ment of the rear axle assembly with differential. 

In order to test its cars at high speed, Buick built a pri- 
vate track on its Flint property, where such speed and 
endurance were developed that its cars were soon entered in 
the more important races and hill-climbing contests. The 
sporting interest has already been referred to as develop- 
ing automobile enthusiasm in the public. While amateurs 

Passenger Car Divisions 221 

might start these competitive events, the manufacturers, 
noting both their news value and test value, provided the 
competition, spending large sums to secure famous drivers. 
Buick's most famous racing team consisted of seven pilots, 
among whom were four of the first rank Bob Burman, 
Louis Strang, and the Chevrolet brothers, Louis and Arthur. 

Among the more famous events of the many won by 
Buick during its first eight years were : hill climbs at Eagle 
Rock, Mt. Washington, and Pike's Peak'; the Vanderbilt 
Cup road race of 100 miles; the French Grand Prix; the 
595-mile Elgin, and the 482-mile Los Angeles-Phoenix; 
track victories at Brooklands, England; St. Petersburg, 
Russia; and the Indianapolis Speedway. The Russian vic- 
tory brought to Buick the Imperial trophy. 

At the Indianapolis race appeared two odd cars, like big 
June bugs, with the name "Buick" on the side of each body. 
These two "Buick Bugs" were piloted by Bob Burman and 
the Chevrolets, Arthur and Louis. In the next two years 
they broke more records than any other team. In 1911 at 
Jacksonville, Florida, Bob Burman driving a "Buick Bug" 
established two straightaway records regardless of class: 
50 miles in 35 minutes and 52.3 seconds, and two days later, 
20 miles in 13 minutes and 11.92 seconds. Both records 
stood for more than ten years. 

Victories like these were the result of careful organiza- 
tion and training, but if one retreats into the past as far 
as the car which is still affectionately called "old Model F" 
he finds amateurs at the wheel, and an informality like that 
of a country fair. When his little two-cylinder Buick first 
won the Eagle Rock hill climb, cutting the existing record 
almost in two, Walter L. Marr was asked how his small 
motor could develop the power to defeat much larger and 
more highly powered cars. He replied, quickly: "It's a 
Valve-in-the-head' motor." The phrase caught on and has 
been retained. 

With the complete professionalizing of the sport, and the 
evident trend toward specially designed racing cars, Buick's 
interest in racing ceased while its great racing team was 
still at the top of its success. Although the records estab- 
lished by the non-stock racing- cars of the present are being 

222 The Turning Wheel 

bettered year by year, some Buick records still stand in the 
stock classification. 

From 1910 to 1920 Buick production rose from approxi- 
mately 20,000 cars to more than 120,000 a year. Only three 
of those years show a recession from the preceding one, 
that of 1911 reflecting the conditions which brought on the 
banker control of General Motors, and that of 1918 being 
explained by the difficulty of securing material in a war 
year. During that decade the closed car came into its 
own, each year showing a larger percentage of production 
until the open car, except in sport models, has become a 

Mr. Harry H. Bassett became president of Buick in 
1919. His was a personality which endeared him to men of 
all positions both inside and outside the organization, his 
interest in the welfare of his workmen being particularly 
keen. 1 He had been with the Remington Arms Company 
for fourteen years when, in 1905, Mr. C. S. Mott per- 
suaded him to enter the Weston-Mott Company at Utica. 
The Weston-Mott plant at Flint being established in the 
meantime, in the next year Mr. Bassett went there as 
assistant factory manager. By 1913 he was made general 
manager, later also vice-president. On consolidation of 
Weston-Mott and Buick in 1916 he became the assistant 
general manager of Buick, the same year it was made a 
division of General Motors. In 1919 he became general 
manager, also a vice-president of General Motors, and then 
assumed the presidency of Buick Motor Company. In 1924 
he became a member of General Motors' Executive Com- 

In Mr. Bassett's first year with Buick, capacity was in- 
creased to 750 cars per day, and in 1924 to 1,200 cars per 
day. The millionth Buick appeared in 1923. Upon his death 
Mr. E. T. Strong, who had been sales manager, became 
president in 1926 and was succeeded by Mr. I. J. Reuter in 
1932. In October, 1933, Mr. Reuter resigned and was suc- 
ceeded as general manager by Harlowe H. Curtice, who 
had been president of AC Spark Plug Company since 1929. 

*See Chap. XXVIII for an account of his influence on General Motors In- 
stitute of Technology, etc. 

Passenger Car Divisions 


In 1928 Buick Motor Company celebrated its Silver 
Jubilee, the twenty-fifth anniversary of the organization, 
producing at that time its Silver Jubilee model. 

During 1933 Buick's functions have been enlarged by the 
addition of the former Armstrong Spring division of Flint 
and the transfer to Flint from Syracuse, New York, and 
Muncie, Indiana, of differential and transmission manu- 


In 1909 General Motors Company acquired the entire 
Common capital stock of the Cadillac Motor Car Com- 
pany consisting of $1,500,000, par value, paying therefor 

Cadillac: the first car equipped with an electric self-starter 

$5,169,200 in General Motors Company Preferred stock 
and $500,050 in cash or a total of $5,669,250. 

In 1910 battery ignition was placed on Cadillac. The 
same year the first "big" order for closed cars (150 bodies) 
was given to Fisher Body Company. In 1912 the first 
electric self-starter was installed in Cadillac as standard 
equipment, as related in Chapter XIX: "Research: The 
March of the Open Mind." Mr. C. F. Kettering, the in- 
ventor of the starter, drove to the opening of the General 

224 The Turning Wheel 

Motors building at the Chicago Century of Progress Ex- 
position in 1933, in one of these 1912 Cadillacs. For this 
contribution, Cadillac in 1912 won for the second time the 
Dewar trophy, awarded by the Royal Automobile Club of 
London for the greatest advance in automobile construction 
during the preceding year, its first victory having been 
awarded for interchangeability of parts five years earlier. 2 

Cadillac introduced, in 1914, the 9<D-degree v-type eight- 
cylinder engine, the first eight-cylinder high-speed automo- 
bile power plant built in this country. This achievement of 
Cadillac was honored by the Smithsonian Institution which 
placed one of the first Cadillacs of this type in its museum 
in Washington. Every Cadillac built from 1914 to 1927 
was powered by this same type engine. Even the bore and 
stroke, piston displacement and S. A. E. horsepower rating 
remained the same. In this period refinements in the power 
plant included thermostatic carburetion, the compensated 
shaft, and a positive system of crankcase ventilation. 

Other honors which came to Cadillac are treated in 
Chapter xn: "The War Years." 

In 1917 Mr. Henry M. Leland resigned as president. He 
remained active in business and civic affairs until shortly 
before his death in 1932, at the age of eighty-nine. He was 
succeeded by Mr. R. H. Collins, who was president of 
Cadillac until 1921, during a period of rapid expansion. 
Mr. H. H. Rice then became president, remaining until 
1925 when Mr. Laurence P. Fisher assumed the position. 

Soon afterward Cadillac began a $5,000,000 expansion 
program. In 1927 the La Salle v-8 was introduced to a 
market which absorbed nearly 60,000 La Salles in the next 
three years^ a sales record unparalleled for a new car in its 
price and quality class. 

Both Cadillac and La Salle appeared in 1928 with non- 
shattering glass, the first cars to leave factories with that 
safeguard. Later in the year they were also equipped with 
the famous synchro-mesh transmission, in its day a decided 

Synchro-mesh, the silent gear shift, was brought to per- 
fection by Cadillac. Some ten models of this "silent shift" 

*See Chap. VII: "Cadillac: The Triumph of Precision." 

Passenger Car Divisions 225 

transmission were tried experimentally on twenty-five cars, 
which were driven 1,500,000 miles on the General Motors 
Proving Ground. Synchro-mesh was then introduced to the 
public, on Cadillac and La Salle in 1928, and later became 
standard equipment for General Motors cars. 

Synchro-mesh marked a step forward in the direction of 
safety of operation with the driver in complete control of 
the car at all times, since it allows him to take advantage 
of the braking power of the engine in either high or second 
gear. Direct acceleration, a desirable feature in traffic, is 
also hastened by synchro-mesh. This transmission is de- 
signed to eliminate the clashing of gears and provide silent 
shifting at all car speeds. 

Synchro-mesh is thus explained from the mechanical 
standpoint : 

The transmission consists basically of a small friction clutch which 
causes the two spinning members of the gears to revolve at iden- 
tical speeds. When the driver moves the gear shift lever from the 
neutral position into second or high, one or the other of the two 
clutches, actuated by the lever, is engaged long enough to syn- 
chronize the gears. Since the gears are revolving at the same speed 
they engage with complete ease and without the possibility of 

After three years' experimental work, Cadillac announced 
America's first sixteen-cylinder automobile, January, 1930. 
Its favorable reception led to Cadillac completing the 
series of multiple cylinder power plants by bringing out the 
v-12 later in the year. More than 450,000 Cadillacs and 
La Salles had been produced by the end of 1932. 

Cadillac's evolution has been toward size and quality. 
From the one-cylinder engine which made its early reputa- 
tion, Cadillac has risen to sixteen cylinders in its largest 
models. Even its one-cylinder engine was a precision job, 
giving more power than its pioneer competitors because of 
closer machining. The degree of precision has been in- 
creased steadily, reaching a high stage of refinement. In an 
industry which as a whole leads all others in combining large 
output with close work, Cadillac ranks as a leader. A 
master-set of precision gauge blocks, guaranteed to be ac- 
curate to the one millionth part of an inch, lies carefully 

226 The Turning Wheel 

guarded in a velvet-lined case as a talisman of measurement 
accuracy in the Cadillac plant. 

More than a dozen similar sets, accurate to three mil- 
lionths of an inch, are regularly used in the tool and gauge 
department to check other master gauges. There are more 
than 27,000 Cadillac and La Salle clearances which must be 
accurate to within one thousandth of an inch; there are 
37,000 that must be accurate to less than two one thou- 
sandths of an inch; there are 800 operations carried out 
with such vigilance as to allow only one fourth to one half 
of one thousandth of an inch. 

As one passes through the Cadillac plant he sees mate- 
rials being tested with cameras which multiply their struc- 
ture one thousand times; he sees diamond-pointed weights 
determining their mass hardness; he sees torsion machines 
and vibratory machines subjecting them to every kind of 
strain; his eyes fall on row upon row of scales and gauges 
in the hands of skilled workers; he witnesses each individual 
part of the car both before and after assembly being in- 
spected; and he leaves with the feeling that he has been in 
a temple of precision where quality dwells. 

Cadillac now offers eight-, twelve- and sixteen-cylinder 
cars and La Salle on two wheel-bases. Cadillac v-8 appears 
in sixteen body styles, Cadillac v-12 in sixteen, while 
Cadillac v-i6's are built only to order and limited to 400 
a year, buyers having a practically unlimited choice in body 
design and finish. La Salle, with eight cylinders, is produced 
in seven models. 

Cadillac's pioneering achievements were summarized 
effectively in the Founders Section of the Automobile Trade 
Journal of December i, 1924, as follows: 

First to produce a car with parts sufficiently standardized to be inter- 

First to introduce a complete electrical system of cranking, light- 
ing and ignition. 

First to develop and incorporate thermostatic control of engine 

First in the United States to adopt Johansson gauge system of 
fine measurements. 

Passenger Car Divisions 227 

First to build a truly high-grade car in quantity production, and 
to sell at a moderate price. 

First American car to win the international Dewar trophy, 
awarded annually to the automobile making the greatest engineer- 
ing advance. Won twice by Cadillac. 

First in the United States to develop v-type, high speed, high 
efficiency engine. 

First in thermostatically controlled carburetion. 

First to build an inherently balanced v-type eight-cylinder 
engine the vibrationless v-63. 

To which might be added at this date : 

First to build a sixteen-cylinder engine for stock use, and 
First to install the silent synchro-mesh transmission. 

Cadillac's record in the technical history of accurate 
craftsmanship as applied to large production, which is the 
most distinctive feature of America's contribution to ma- 
chine practice, is unsurpassed by any automobile manu- 


Chevrolet's spectacular entry into the General Motors 
family has been described. It was then a lusty child, seven 
years old, but already giving evidence of gigantic stature 
to come. 

The seal had been set on decentralized operations by the 
sale, in 1916, of the Detroit property opposite the Ford 
Motor Company in Highland Park. If this, planned as the 
seat of a great plant, had been used as the site of a great 
central factory, as anticipated, Chevrolet's activities 
would have been concentrated there instead of being spread 
over the country, with Chevrolet manufacturing going on in 
six American cities and assembly in ten. 

Chevrolet received its present corporate form on Decem- 
ber 24, 1917, when it was incorporated in New Jersey as a 
sales company for $10,000, all issued and all owned by 
General Motors Corporation. Henceforward Chevrolet 
would rank as a division of General Motors, the largest 
on the roster. 


The Turning Wheel 

After General Motors absorbed the Chevrolet Motor 
Company of Delaware on May 2, 1918, Chevrolet em- 
barked on a policy of acquiring its affiliates in which local 
capital had been interested. Chevrolet Motor Company of 
St. Louis was purchased on August ist, and Chevrolet 
Motor Company of Canada on November ist. This policy 
also brought Chevrolet of California under ownership in 


Executive Vice-President, General Motors Corporation 

1920. Meantime, assembly and sales, outlets were greatly 
expanded. A new assembly plant was built in St. Louis. As 
evidence of the driving power toward expansion, 500 re- 
tail stores for direct distribution of product to customer 
were authorized, and of these forty-eight had been opened 
by August i, 1920. On December 22d, following, Karl W. 
Zimmerschied became president of Chevrolet, succeeding 
W. C. Durant. 

General Motors of Canada took over all of Chevrolet's 
Canadian operations January i, 1921. Various steps in re- 
trenchment were taken to meet the adverse conditions of 
the post-war slump. 

Passenger Car Divisions 229 

In March, 1922, Mr. Zimmerschied retired and was suc- 
ceeded in authority by W. S. Knudsen, who, however, 
ranked only as vice-president until 1924. Mr. Knudsen's 
administration has seen the advance of Chevrolet to first 
place among quantity producers. Almost immediately Chev- 
rolet began to march. On October i, 1922, it took over 
from General Motors the Central Products group in De- 
troit, comprising the present gear, axle and forge plants; 
also the Janesville, Wisconsin, plant of the former Samson 
Tractor Company which was converted into an assembly 
plant. New assembly plants were built at Buffalo, New 
York, and Norwood, Ohio. Body-building activities of the 
St. Louis Manufacturing Company were transferred to the 
Fisher Body Corporation in 1923. A pressed metal plant 
was placed in production in Flint in June. 

When Mr. Knudsen became president of Chevrolet on 
January 24, 1924, this great subsidiary of General Motors 
had manufacturing plants in four cities Detroit, Flint, Bay 
City, Michigan; and Toledo, Ohio six assembly plants 
and sixteen regional sales organizations blanketing the 
entire country. 

The onward march continuing, new sales zones were 
opened in many of the leading cities of the country. These 
additions raised the total of zone offices to fifty-two, where 
it remained until reduced to thirty-six in 1932. 

Manufacturing facilities of the company were also in- 
creased by these additions: 

1925 Acquisition of the Bloomfield, New Jersey, plant 
for export boxing operations. 

1926 Acquisition of General Motors Truck Company 
plant, No. 7, as of March 31, 1926, to increase the 
production of front and rear axles. This plant had been 
originally the home of Northway Motor & Manu- 
facturing Company, one of the early purchases of 
General Motors Company of New Jersey. 

A new building was erected in Hamtramck, Michi- 
gan, a suburb of Detroit, for the experimental depart- 
ment of Chevrolet. 

230 The Turning Wheel 

1927 Large expansion program completed. On Sep- 
tember i, Chevrolet took over the Grey iron foundry 
at Saginaw. 

1928 Production began in the new assembly plant at 
Atlanta, and construction started on the Kansas City 
assembly plant which entered production early in 1929. 

Including Canada and export, Chevrolet built 1,188,053 
cars and trucks in 1928, becoming the world leader in pro- 
duction for the second consecutive year. Production on the 
four-cylinder National model was discontinued in Decem- 
ber, and the six-cylinder International model introduced on 
January i, 1929. This change set a new price level for 
six-cylinder cars, and in view of its novelty the public reac- 
tion was eagerly awaited. The "six" was favorably received 
from the start and in 1929 Chevrolet recorded its highest 
output 1,333,150 cars and trucks, a quantity more than 
400 times as large as those produced in its first year, 1912, 
when the total fell just short of 3,000. The six millionth 
Chevrolet left the factory on July i, 1929 ; by the end of the 
year 6,504,583 Chevrolets had been produced in the seven- 
teen years of the company's life. 

Only one considerable property has been added to Chev- 
rolet since 1930, when the Martin-Parry Commercial Body 
Company was purchased, for the purpose of building truck 
bodies of types in general demand to be distributed through 
Chevrolet zone offices. Reference is made to Chevrolet 
truck sales in Chapter xxn : "Commercial Vehicles." 

While total automobile sales for 1931 were off 29 per- 
cent, Chevrolet's decline was only 9 per cent. All through 
the depression Chevrolet's proportion of total automobile 
sales has been rising. 

For its second year as a "six," Chevrolet took rank as 
the world's greatest producer of motor cars. For four of 
the last six years 1927,' 1928, 1931 and 1932 it has led 
the entire American automobile industry in number of units 
sold in this country. 

On April i, 1932, an important realignment of func- 
tions between and among four of General Motors great 

Passenger Car Divisions 231 

producers brought to the Chevrolet organization increased 
responsibilities, Pontiac manufacturing, service and account- 
ing being put in charge of Mr. Knudsen in addition to his 
former duties, while Mr. Reuter was placed at the head 
of Buick and Oldsmobile. 

On October 16, 1933, Mr. Knudsen became executive 
vice-president of General Motors Corporation at Detroit 
and chief executive officer there, with general supervision 
over all car and body manufacturing operations in the 
United States and Canada. M. E. Coyle, formerly vice- 
president, succeeded to the presidency of Chevrolet. 

With its vast production plants and its strategically 
located assembly plants, with its own highly developed 
engineering staff and the resources of General Motors be- 
hind it, Chevrolet has made its way to sales leadership, and 
in this Anniversary year of General Motors, is the best sell- 
ing motor car in the world. 


As the oldest of the General Motors car divisions, Olds 
Motor Works takes a just pride in its history. In 1931 it 
prepared a history of the company which contains this sum- 
mary of its long career: 

Olds Motor Works was not only the first organization to produce 
passenger cars commercially, but it also pioneered many of the 
important advancements made in the industry. The introduction 
of the assembly line and of quantity production steps which revo- 
lutionized all existing automobile manufacturing methods and 
which established a system that the majority of manufacturers 
today are following were instituted by Olds Motor Works in 
the very early days of its career. Olds Motor Works produced the 
first two-cylinder and four-cylinder cars revolutionary designs 
for that time. The early achievements of Oldsmobile established 
public confidence in the automobile and made possible its further 
development. Olds Motor Works has continued its pioneering 
activities without cessation during the thirty-four years of its 
existence, nearly every year bringing forth some new and valuable 
development. The story of the Olds Motor Works is, in reality, a 
cross-section of the history and progress of the automotive industry. 

232 The Turning Wheel 

General Motors bought Olds Motor Works in 1908, 
three years after the latter's removal from Detroit to Lan- 
sing, and immediately reorganized it. Production ran up to 
1,690 cars in 1909, 150 of them being "sixes" of a model 
developed in 1907 and first sold in 1908. Thus, within a 
year after General Motors acquired a property which at 
the moment seemed to many without a bright future, Olds- 
mobile regained a good market position, standing as a 
leader in the four-cylinder field and being a pioneer in the 
six-cylinder field. 

The celebrated Oldsmobile Limiteds, with their 5-inch by 
6-inch motors and 42-inch wheels, appeared in 1910, when 
310 were sold. This most distinctive automobile of the day 
gave Oldsmobile the prestige of extreme luxuriousness. In 
all, 825 of these huge six-cylinder cars were built in the 
space of three years. Although highly successful from an 
engineering standpoint, the market for them was neces- 
sarily restricted, and the company's market reliance was the 
special "four." Sales of the latter model dropped to 1525 
in 1910, reflecting the difficulties into which General 
Motors fell. The next four years were years of reorganiza- 
tion and readjustment to market needs. Not until 1915 was 
Oldsmobile again a market leader from the standpoint of 
quantity production. 

During this interval Oldsmobile began its course, still 
continuing, as a manufacturer of cars light in weight but 
high in quality. As compared with its larger predecessors, 
the new Oldsmobile was planned to have equal finish and 
material, size only being sacrificed. Consumers have since 
become accustomed to high quality in small cars; but the 
program was then novel and received such firm support 
that Oldsmobile production leaped ahead, rising from 
nearly 8,000 in 1915 to more than 22,000 in 1917. After 
the lag of a war year in which supplies could not be obtained 
for a large passenger car schedule, Oldsmobile scored an- 
other marked advance in 1919 with 39,000 units. Of this 
total more than 11,000 units were "eights." The first Olds- 
mobile "eight," and the first offered to the American pub- 
lic in its price class, appeared in 1915. 

Passenger Car Divisions 233 

When the United States entered the World War, Olds 
Motor Works was one of the first automobile plants to get 
into production on government work. During 1917-1918, 
2,000 kitchen trailers were produced. A new motor plant 
was built for the manufacture of Liberty Motors, although 
never used for that purpose. This plant was completed and 
considerable machinery installed by the time the Armistice 
was signed in 1918. A swift change in plans was necessary. 
By January i, 1919, machinery and tools had been moved 
into the new plant from the Northway Motor Company at 
Detroit, and production started on the eight-cylinder engine 
which up to that time had been made at the Northway plant 
under the supervision of the Oldsmobile engineering de- 

On May 18, 1921, A. B. C. Hardy became president 
and general manager. In years of service he was the eldest 
of the General Motors executives. From 1892, when he 
was made superintendent and secretary of the Wolverine 
Carriage Company, to May, 1921, when he came to the 
Olds Motor Works, he held practically every office of 
responsibility in the carriage and automobile industry of 
Michigan. In 1898 he was elected president of the Durant- 
Dort Carriage Company, and in 1902 he organized Flint's 
first automobile concern, the Flint Automobile Company. 

Another round with carriage manufacturing, this time 
in Iowa, and Mr. Hardy was ready to concede that the day 
of the horse-drawn vehicle was nearly over. In 1914 he 
became vice-president and general manager of the Little 
Motor Car Company of Flint, and then of the Chevrolet 
Motor Company, later going to New York as assistant to 
Mr. Durant. In 1918 he was made assistant to the presi- 
dent of the General Motors Corporation. 

While at Chevrolet he had shown ability in plant reor- 
ganization, now needed at Oldsmobile after the weaknesses 
caused by the interruptions and turmoil of the war period 
had been revealed by the post-war slump. After the black 
year of 1921, which registered a 40 percent drop in out- 
put for Oldsmobile, the company resumed its upward march 
with a 21,216 production in 1922. In the first twenty-two 

234 The Turning Wheel 

years of the century Oldsmobile had produced upward of 
200,000 cars. 

Following the post-war period there was a noticeable 
trend toward the "sixes." Oldsmobile had been building six- 
cylinder cars since 1908, but this type of automobile was 
relatively high-priced, enough so to be out of reach of the 
majority of automobile buyers, and "fours" had been Olds- 
mobile's dependence in reaching the masses. Work was now 
begun on a six-cylinder car to sell below $1,000. The first 
model of this light Oldsmobile u six" was introduced in 
September, 1923, and Oldsmobile left the four-cylinder field. 

In 1926 Oldsmobile engineers designed another six- 
cylinder car, which brought a new high production record. 
In 1928 Oldsmobile sold more than 86,000 cars and in 
1929 more than 100,000, which included the Viking model. 
From 1927 to 1929 twelve large buildings were erected and 
several additions were made to the Lansing factories. Olds- 
mobile brought out its first "straight eight" in 1932. 

Olds Motor Works has been one of the chief factors in 
the growth of Lansing from 2,000 in 1890 to 79,000 
in 1930. Employment rose from 3,700 in 1920 to 7,500 in 
1930, the latter number including employees of the Fisher 
Body plant, located at the Oldsmobile factory, and devoted 
wholly to the construction of Oldsmobile "six" bodies. 

Mr. I. J. Reuter succeeded Mr. Hardy as president and 
general manager. Mr. Reuter went to Opel in Germany in 
October, 1929, returning to Olds in 1932. In October, 1933, 
Mr. C. L. McCuen became general manager of Olds Motor 
Works with which he had been associated in an engineering 
capacity since 1926. 

Chapter XVII 



IENERAL MOTORS OF CANADA, LTD., like many other 
organizations in the automobile field, had its beginnings in 
the carriage industry. The founder of the business was 
Robert McLaughlin, whose father came to Canada from 
the British Isles in 1835, and in 1867, tne Y ear f Con- 
federation of the scattered Canadian provinces, produced 
the first McLaughlin carriage at his primitive forge in the 
cross-roads village of Enniskillen, Ontario. Transportation 
was rudimentary it was eighteen years before Canada had 
a transcontinental railroad. The McLaughlin vehicles there- 
fore found a ready market, particularly since they were 
built with thoroughness and craftsmanship. 

His reputation established, Robert McLaughlin moved 
in 1878 to Oshawa, and began making carriages for the 
wholesale trade. A destructive fire late in 1899 caused 
temporary removal to Gananoque. The next year, the com- 
pany reoccupied new and larger premises at Oshawa, which 
became the nucleus of the present large and modern plant 
in that city. 

In the meantime, his two sons George W., and R. S. 
McLaughlin became associated with their father in the 
carriage business which, before it entered the motorized 
field, produced over 270,000 horse-drawn vehicles car- 
riages, buggies, and sleighs. 

The trend in transportation led to the formation of the 
McLaughlin Motor Car Company, Ltd., in 1907, with 


236 The Turning Wheel 

R. S. McLaughlin as president, Oliver Hezzlewood, vice- 
president, G. W. McLaughlin, treasurer, and Robert 
McLaughlin, the elder, in an advisory capacity. A survey of 
the entire automotive industry convinced the new organiza- 
tion that Buick was the ideal car to meet Canadian con- 
ditions. Thereupon the company made a fifteen-year 
contract with Buick Motor Company for sole manufacturing 
rights of Buick in Canada. The McLaughlin-Buick before 
long became Canada's standard car. At the close of 1914, 


General Motors Corporation owned $500,000 of the cap- 
ital stock of the McLaughlin Motor Car Company, Ltd., 
and McLaughlin Carriage Company, Ltd., had $503,000. 

The McLaughlins gave up the carriage business in 1915 
to make way for Chevrolet Motor Company of Canada, 
Ltd. Under them Chevrolet met with instant success in 
the Dominion. 

On November 8, 1918, the McLaughlin and Canadian 
Chevrolet companies were merged into General Motors of 
Canada, Ltd., of which R. S. McLaughlin became president 
and G. W. McLaughlin, vice-president. The father was no 
longer active, but took a keen interest in the new organ- 
ization until his death in 1921. 

On December 19, 1918, General Motors Corporation 
bought the remaining interest in McLaughlin Carriage, 
Chevrolet of Canada, and McLaughlin Motor Car com- 
panies for 49,000 shares of Common and $550,000 cash. 
Capitalization of General Motors of Canada, Ltd., was in- 
creased to $10,000,000 soon afterward. 

General Motors of Canada, Limited 237 

General Motors of Canada, Ltd., is a manufacturing 
company, with authorized capital stock of $10,000,000, par 
$100, of which $6,940,000 has been issued. Its sales and 
service subsidiaries are : 

Cadillac Motor Car Company of Canada, Ltd. 
Chevrolet Motor Company of Canada, Ltd. 
McLaughlin Motor Car Company, Ltd. 
Pontiac Motor Company of Canada, Ltd. 
Olds Motor Works of Canada, Ltd. 
General Motors Products of Canada, Ltd. 

Mr. R. S. McLaughlin, now one of the older General 
Motors directors in point of service, heads the various sub- 
sidiaries of the Canadian company. Mr. McLaughlin was 
first elected to the board in 1910, and again in 1918, since 
which time he has served continuously. 

General Motors Products of Canada, Ltd., is a selling 
organization with eight zone offices in the cities of Van- 
couver, Calgary, Winnipeg, Regina, Toronto, London, 
Montreal, and Moncton. Parts depots are also maintained 
in the principal cities, and there are 1,000 strong individual 
dealerships in Canada. 

General Motors products are financed in the Canadian 
market by General Motors Acceptance Corporation, with 
headquarters in Toronto, and branch offices in the eight 
zone cities mentioned. Insurance service is furnished by 
General Exchange Insurance Corporation, also at Toronto. 
Manufacturing operations are centered in four cities. 

The works at Oshawa are the largest ; having a floor space 
of 2,200,000 square feet and a production capacity of 750 
cars a day. Employees, at the peak period, numbered 7,000. 

The works at Regina, Saskatchewan, were opened in 1928 
for assembly of Chevrolet and later, Pontiac. They have a 
floor space of 370,000 square feet and a capacity of 30,000 
cars a year. 

At Walkerville, engines are produced for Buick, Chev- 
rolet, Oldsmobile, and Pontiac automobiles and front axles 
for Chevrolet, providing employment for as many as 2,000 

238 The Turning Wheel 

An associated factory, though independently operated, is 
that of the McKinnon Industries unit of General Motors 
at St. Catharines, Ontario, where generators, starters, dif- 
ferentials, spark plugs and other parts are made. 

Domestic shipments of cars from the Oshawa plant 
amounted to 9,915 in 1916, and had grown to 22,408 in 
1920. The high point for domestic shipments was reached 
in 1928 with 75,000 cars. In the seventeen years of pro- 
duction from 1916 to 1932, more than 725,000 Canadian- 
made General Motors cars were manufactured. During 


1932, sales of General Motors of Canada passenger car 
lines were 39.3 percent of all the sales in Canada, and com- 
mercial cars accounted for 41 percent of all commercial 
car sales. 

Export shipments from Oshawa have been made to as 
many as sixty-five overseas countries in a single year. In 
1932 and 1933, Buicks for the British Isles were all shipped 
by General Motors of Canada, Ltd. (McLaughlin-Buicks). 

Cars are manufactured, not merely assembled, in the 
plants of General Motors of Canada, Ltd., even bodies for 
most of the lines being made at Oshawa. It has been the 
policy of General Motors Corporation to provide as much 
employment as possible in the countries where sales oppor- 
tunities are enjoyed. Canada is in a remarkable position in 

General Motors of Canada, Limited 239 

this respect, inasmuch as General Motors cars are built 
there almost completely "from the ground up," not simply 
put together with parts imported from the United States. In 
the early days, strictly speaking, there was very little auto- 
mobile manufacturing in Canada, but in recent years there 
has been a steady development until today the Canadian 
automobile industry may be regarded as a manufacturing 
industry in the true sense, with General Motors of Canada, 
Ltd., playing an important role. General Motors cars 
made in Canada have a high percentage of Canadian con- 
tent, to which the Canadian motor-car user reacts very fa- 
vorably. Naturally, too, General Motors cars exported from 
Canada to other parts of the British Empire in a finished 
state are highly British in content, and this also is helpful 
in view of the recent emphasis on the Empire slogan "Buy 

The evolution from assembling to manufacturing in the 
case of General Motors cars in Canada has been accom- 
panied by frequent alterations in the tariff as it affects the 
Canadian industry. These alterations group themselves into 
two or three periods of varying duration. 

From 1907 to 1926 the Canadian customs tariff on all 
imported automobiles was 35 percent. The degree of pro- 
tection offered by this impost was sufficient to give the 
Canadian industry a good start. Leading companies in the 
United States, including General Motors, established large 
plants there for assembling and for such manufacturing as 
could then be carried on, in view of the limited supply of 
Canadian parts and material. It was during this period that 
General Motors built the large Walkerville plant, which is 
now a part of General Motors of Canada, Ltd. At first, 
this plant supplied some engines and parts of axles. At 
present, its contribution to finished Canadian cars is much 
larger and the plant has sufficient capacity to supply engines 
for Chevrolet, Pontiac, McLaughlin-Buick, and Oldsmobile 
in whatever quantities required. 

The next alteration in Canadian tariff structure was 
downward. In 1926, the customs duty on small cars was 
reduced to 20 percent and that on large cars to 27.5 per- 
cent. At the same time a "drawback" of 25 percent was 

240 The Turning Wheel 

allowed on material to be used for cars of 40 percent Can- 
adian manufacture, and in the following year this "draw- 
back" was only to apply on cars of 50 percent Canadian 
manufacture. The reduction from 35 percent to 20 percent 
duty was made effective in the face of general protests from 
almost the whole Canadian automotive industry, and the 
figures showing imports of small cars for the next three 
years were striking enough to justify those objections. Im- 
ports in 1926 were 28,000 cars; in 1927 they reached 
36,000; the following year they totalled 47,000; and in 
1929, 44,000. 

The ultimate effect on manufacturing process of this par- 
ticular tariff period was to increase the number of Canadian 
parts and the Canadian content of finished cars. At first it 
was difficult with the complete factory output to qualify for 
the customs "drawback" on cars of 50 percent Canadian 
content, but before many years had passed this was easily 
accomplished. With the idea of providing the entire motor 
trade of Canada, including General Motors, with necessary 
parts, General Motors Corporation in 1929 purchased 
McKinnon Industries at St. Catharines, Ontario, which, in- 
terestingly enough, was a survival of the old-time carriage 
trade, as was the case with so many existing motor-car 
industries. At that time, McKinnon Industries was con- 
verted to the manufacture of differentials and rear axles. 
Development was very rapid, and many other parts have 
since been added, including steering gears, shock absorbers, 
and ignition parts. Recently, also, the making of spark 
plugs for the trade and for General Motors cars was com- 
menced under the direction of the AC Spark Plug Company. 
In addition to supplying the whole Canadian trade with 
many motor parts, this plant also produces the unit for the 
Canadian-built Frigidaire refrigerator. 

Entering a more recent period of tariff history, it is 
noticed that the motor-car schedule was completely rewrit- 
ten in 1930. In the case of small cars, the customs duty was 
set at 20 percent (up to $1,200 trucks included) ; on cars 
from $1,200 to $2,100 duty was 30 percent; and on cars 
from $2,100 up, the duty was 40 percent. Moreover, the 

General Motors of Canada, Limited 241 

"drawback" was eliminated on a specified list of parts, and 
was made 25 percent for most of the remaining parts and 
60 percent on a very restricted list in the case of cars of 50 
percent Canadian content. A noticeable effect of this change 
was a reduction in the number of car imports. While the 
change came at a time when sales generally were decreasing 
heavily, yet the reduction in the number of imports was 
more than proportionate. 

Imports between 1930 and 1931 declined much more 
heavily than did Canadian production. In 1931, another cus- 
toms duty alteration took place. On imported cars the valu- 
ation for duty was fixed at a flat 20 percent discount from 
the list price. Inasmuch as discounts on many cars had been 
claimed at a much higher figure, the effect of the change 
was to increase the amount of duty paid on most cars. At 
this same time the importation of used cars was prohibited, 
except in a few cases, such as settlers bringing in effects. 

The immediate result was a further decline in all car im- 
ports. The year 1932 saw a reduction of more than 80 
percent in units imported, while Canadian production at the 
same time declined only 26 percent. 

In addition to customs duties, there has been, since the 
war years, an excise tax of varying rates on cars either 
imported or made in Canada. The excise tax until 1926 was 
5 percent on cars not more than $1,200, and 10 percent on 
cars valued in excess of $1,200. In 1926 this was changed, 
to allow complete exemption from the excise tax in the case 
of cars valued at not more than $1,200, if they were 40 
percent Canadian content (50 percent Canadian content in 
1927 and thereafter). The excise tax was also eliminated in 
the case of cars imported from Great Britain if they were 
of similar British content. The same rates of excise tax 
apply at the present time. 

The final outcome of this evolution in tariffs and manu- 
facturing is that General Motors cars in Canada are very 
largely Canadian-built. Examining the Chevrolet automo- 
bile, for example, it is found that all parts of the Dominion 
contribute. Chassis springs are purchased from firms which 
make them at Gananoque, Ontario, and Oshawa. Front 
axles are manufactured by the General Motors plant at 

242 The Turning Wheel 

Walkerville, forgings being supplied by a Canadian com- 
pany in the same city. Third member assemblies, including 
differential, are made by McKinnon Industries at St. Cath- 
arines. The body is completely built at Oshawa. Since the 
Oshawa factory, from its earliest days, had an extensive 
woodworking establishment for manufacturing bodies, no 
Canadian division of the Fisher Body Corporation was 
formed. Instead, the operation was amalgamated with the 
general manufacturing. All General Motors of Canada 
cars, of course, bear the Fisher insignia. Engines are built 
at Walkerville and radiators at Oshawa, material in both 
cases being supplied by Canadian companies. Factories in 
many cities supply castings, bumpers, glass, wiring, paint, 
trim, hardware, and wheels. 

Evolving to its present proportions under a Canadian 
management of long standing, which has coped successfully 
with manufacturing and sales problems rendered more 
intricate by tariff changes, General Motors of Canada 
stands today as one of the leading industries of the great 

Chapter XVIII 


N THE early 'nineties R. E. Olds, as previously related, 
made the first sale of an American automobile for export, a 
chance sale resulting from a description of the Olds steamer 
published in the Scientific American of May 21, 1892. Since 
then the overseas trade in motor cars has become a leading 
factor in America's foreign commerce. 

World trade in General Motors products is a business of 
great complexity and extent. The Overseas Operations are 
divided into three major divisions, Vauxhall Motors, Ltd., 
which manufactures and sells its products in the British 
Isles; Adam Opel, A. G., which manufactures and sells its 
products in Germany; and the General Motors Export di- 
vision, which is the assembling and merchandising organiza- 
tion responsible for the distribution of all products from 
whatever source in the world markets outside of the United 
States, Canada, Germany, and the British Isles. 

The Export division consists of four great territorial 
regions, each under the charge of a regional director, who is 
responsible to the general manager in New York. These 
major territories under the control of the regional directors 

Europe, with six plants located in France, Belgium, 

Sweden, Denmark, Spain, and Egypt. 
South America and South Africa, with three plants, in 

Brazil, Argentina, and Cape Colony, South Africa. 


244 The Turning Wheel 

Australasia, with assembly plants and a complete body 
manufacturing plant in Australia and an assembly 
plant in New Zealand. 

Far East, with assembly plants in Japan, India, and Java. 

The regional directors of those vast areas maintain 
headquarters at the home office but spend most of their 
time traveling far and wide over their territories. 

But a goodly portion of the planet lies outside of these 
wide jurisdictions, and the trade originating there is 
handled by General Motors Export Company from New 
York City. This far-flung task embraces such distant and 
diverse areas as China, Mexico, all of Central and South 
America except Brazil, Uruguay, and Argentina, vast 
sections of Africa, and also the Caribbean and Pacific 

The sun never sets on General Motors. Its Japanese 
workmen in Osaka are putting on their sandals to go to 
work while its South African workmen are starting home- 
ward from the factory at Port Elizabeth. Its salesmen know 
what it is to compete with the indigenous transport on 
wheels and otherwise some of it most unusual, as exampled 
by the carabao (water buffalo) pulling a sled in Malaysia; 
horse-drawn carts with seven-foot wheels in Argentina; 
coolie-carried chairs in a Chinese bridal party procession; 
camel trains of the Sahara and camel-drawn wagons loaded 
with wool in Australia. In these globe-spanning operations 
and contacts General Motors representatives have met all 
manner of men and all varieties of problems in manage- 
ment, transportation, and human nature. 

This peaceful penetration of the near and remote parts 
of the w r orld has appealed to men willing to go forth, adapt 
themselves, and carry their message with the zeal and con- 
viction of the missionary of old. In so doing, they have come 
upon all the colorful scenes of this earth from the narrow, 
crooked lanes of Java lined with thatched huts, to over- 
crowded tropical harbors and the long reaches of desert 
and river, each environment calling upon their ingenuity, 
resources of patience, good-will, and perseverance. Their 
lot is one of hard work, against a background of novelty, 

General Motors Across the Seas 245 

with always the duty of learning the manners and customs 
of each foreign field and tactfully seeking to understand 
its people and their needs. 

The life appeals to adventurous men who are at home 
anywhere. There are General Motors families who answer 
a call to move with little more concern than if they were 
moving to the next block. One such family contains four 
children, each born in a different country, each speaking the 
language of his or her early environment better than Eng- 
lish. All over the world a mobile force continues an unre- 
mitting drive for sales. 

This vast organization began humbly enough on June 19, 
1911, when the General Motors Export Company was 
incorporated in Michigan for $10,000, under the banker 
management then in control of General Motors. The presi- 
dent of General Motors Company, Mr. Thomas Neal, be- 
came its president. Export started operations with a staff 
of only three persons, but, even so, it was in a sense the 
most complete expression of General Motors because it 
was the first selling organization in which all the various 
General Motors units joined to carry a common objective. 
Hitherto, foreign sales, chiefly of Buicks and Cadillacs, had 
been made by the divisions' staffs acting independently; 
henceforth for many years all foreign trade would pass 
through the Export Company. During Mr. Neal's presi- 
dency and up to 1916, Mr. O. A. Bennett was the guiding 
spirit of Export. Mr. Bennett became president in 1915. 

At first the Company pushed foreign sales along mail- 
order lines and made no really intensive effort to develop 
sustained activities in foreign selling. Capital was increased 
to $100,000 in 1912. Soon afterward Export brought its 
more important activities to the natural seat of foreign 
commerce, New York City, where sales for the entire world 
were handled by a staff of fifteen or sixteen people working 
in a three-room office on Park Avenue. 

World War needs developed large orders, but the entry 
of America so reduced production that the Export Com- 
pany found itself with a limited allotment of cars at its dis- 
posal, which it had to allocate as judiciously as possible 
among its distributors throughout the world. 

246 The Turning Wheel 

When Mr. Bennett resigned the presidency because of ill 
health in 1916 (he died in 1917), he was succeeded by 
R. H. "Trainload" Collins, the vigorous sales manager of 
Buick. Mr. Collins held the office until Mr. J. A. Haskell 
became president to remain at the helm until 1922. Head- 
quarters were moved to n Broadway in 1917, and to 224 
West 57th Street in 1918. 

On June 27, 1918, General Motors Export was combined 
with General Motors (Europe), Ltd., with a capital of 
$212,932.75. General Motors (Europe), Ltd., had begun 
life in 1909 as Bedford Motors, Ltd., of London, England, 
making Bedford Buicks, the chassis being Buick. It became 
General Motors (Europe), Ltd., in 1912, but down to 1914 
handled only Buicks. Reference will be made later to Gen- 
eral Motors, Ltd., London, which succeeded to the Eng- 
lish representation, and imported cars and trucks into Eng- 
land, independent of the Export Company. 

What may be called the modern development of General 
Motors Export dates from the end of the World War, 
when demand for rapid transport rose rapidly. Export sales 
advanced from 6,004 units in 1918 to 14,665 in 1919. In 
1919, Overseas Motor Service Corporation was organized 
to service and distribute motor-car parts and accessories in 
the export market. These include - not only well known 
General Motors products such as AC spark plugs, AC 
speedometers, Delco products (except in the British Isles; 
Hyatt also excepted from Continental Europe), but also 
parts and accessories of other makers. 

Up to 1920 the backbone of the overseas business was 
Buick. Plans were made to give it wider distribution and 
push its sale. The Export Company, now due for permanent 
expansion overseas, made studies of the export organiza- 
tions of several other large American concerns doing busi- 
ness abroad. It also established a training school in the 
Buick Building, 1737 Broadway, to provide intensive train- 
ing for Company employees who were to serve in the over- 
seas field, and to aid those in the home office to improve 
themselves in their knowledge of the conduct of the Com- 
pany's business. In 1920 unit sales reached a volume of 

General Motors Across the Seas 247 

29,772 (Export 1927 annual report). Need for more room 
led the Company to move its offices from 224 West 57th 
Street to the Wurlitzer Building at 120 West 42nd Street. 

In 1921 Mr. J. D. Mooney became a vice-president of 
the Export Company. The next year he succeeded 
Mr. Haskell as president. The new president had been 
general manager of the Remy Electric Company, another 
General Motors division. The management outlined an in- 
tensive sales campaign, the fruits of which appeared in the 
years of the "Golden 'Twenties." For this campaign six 
sales divisions were set up: Caribbean, South American, 
Australian, African, European, and Far Eastern. 

While the United States and Canada absorbed cars at a 
rate which demanded constant expansion at home, other 
fields could have only the attention they insisted on having; 
the real effort toward intensive cultivation of these fields 
followed shortly after the post-war slump of 1920-21 
when the domestic market failed to absorb its customary 
volume of cars. 

By 1922 the Company employed 300 persons, including 
field men, but still the Export division had not taken on 
definite shape. In that year the Export Company returned 
to the General Motors Building at 224 West 57th Street. 

In 1923 the Corporation began to advertise in overseas 
motor and other publications, reaching the public in as 
many as fifty-five publications in sixteen different countries. 
The senior field personnel was increased by one third in the 
same year, and new zone offices continued to be added, 
situated in strategic positions to take immediate advantage 
of any improvement in political and economic conditions. 

Outside of the United Kingdom and Ireland, which was 
controlled directly by General Motors, Ltd., with head- 
quarters in London, General Motors overseas offices were 
located in Paris, Soerabaia, Calcutta, Manila, Melbourne, 
Sydney, Johannesburg, Sao Paulo, Copenhagen, Bombay, 
Shanghai, Honolulu, Wellington, Madrid, Mexico City, 
and Buenos Aires. General Motors cars were being sold in 
125 countries, giving coverage almost world-wide. General 
Motors World, organ of the Overseas Group, reports that 

248 The Turning Wheel 

leading markets in 1923, the first of a series of record- 
breaking years, were Australia, United Kingdom, Mexico, 
Sweden, Argentina, Spain, Cuba, Belgium, and Japan. 

Chevrolet, steadily making a better reputation for itself, 
was now a factor in the low-priced field, and it seemed 
advantageous to assemble Chevrolets abroad. Accordingly, 
in 1924, plants were established in London and Copen- 
hagen. The London venture soon came under the handicap 
of a horsepower tax. However, as there seemed to be a 
place for a satisfactory truck of the Chevrolet model, com- 
mercial body-building was started at General Motors, Ltd. 
The trend in the British Isles was toward a smaller, lower- 
powered and lower-priced product. The search for a satis- 
factory passenger car to supplement the truck led to the 
Vauxhall purchase, completed November, 1925. 

Copenhagen, on the other hand, operated successfully 
from the start and furnished inspiration for assembly activi- 
ties elsewhere. The original Company of 1911, primarily 
a sales company, and known by its old name of General 
Motors Export Company, still functions as such, finding its 
territory in those fields not covered by the self-contained, 
locally-operated organizations. As an operating concern, the 
Export Company has a managing director and a sales or- 
ganization and a place in line with other operating compan- 
ies of the overseas group. But in general, reference to the 
Export Company herein means the corporate organization 
rather than the operating one. More will be told about the 
plan of organization. 

The focal points of General Motors assembly, manu- 
facturing, warehousing, and distribution overseas are: 

New York City, New York; Luton, London, and Birming- 
ham, England; Copenhagen, Denmark; Stockholm, Sweden; 
Antwerp, Belgium; Riisselsheim and Berlin, Germany; 
Puteaux, France; Barcelona, Spain; Alexandria, Egypt; 
Buenos Aires, Argentina; Sao Paulo, Brazil; Montevideo, 
Uruguay; Port Elizabeth, South Africa; Woodville, Aus- 
tralia; Wellington, New Zealand; Osaka, Japan; Batavia, 
Java, D. E. I.; Bombay, India. 

The assembly plants at Buenos Aires and Sao Paulo date 
from 1925, also that at Antwerp, Belgium, the seat of 

General Motors Across the Seas 249 

General Motors Continental. General Motors assembly 
operations in Spain began in 1925 with a plant at Malaga, 
operations being later transferred to Madrid and recently 
to Barcelona. 

Outside of the Export division staff, but part of the 
General Motors Overseas Operations group under Mr. 
Mooney's jurisdiction, appeared at this time General 
Motors, Ltd., London, England, whose beginnings have 
been previously noted. The plant at Hendon, eight miles 
from London, was expanded in 1925. A conveyor system 
took the crates arriving from the Oshawa, Canada, plant 
and turned out the car ready for road tests and distribu- 
tion in the United Kingdom. The commercial body-building 
plant heretofore noted began operations in 1925, and 
straightway proved itself one of the most successful of 
the overseas operations. 

In 1929 General Motors, Ltd., took over the selling and 
general distribution of all Vauxhall cars. The arrangement 
was continued until 1932, at which time all products of 
Vauxhall Motors, Ltd., were sold, as well as manufactured, 
by the latter company. In 1932 Hendon had completely re- 
versed its early procedure; cranes that once swung crates 
inward now swung them outward, so that instead of being 
an import, unboxing plant it became an export, boxing plant 
for the Vauxhall products which had been developed in the 

Vauxhall Motors, Ltd., manufactures the Vauxhall, an 
English car of long-established reputation, with plant and 
offices at Luton; also the Bedford truck, an outgrowth of 
the Chevrolet truck activities in England, the change in 
name having occurred in 1931. Vauxhall then employed 
2,000 men and made 1,700 cars a year, with a possible 
production estimated at 25,000 a year. The Corporation's 
initial transaction in Vauxhall, requiring 510,000, was con- 
summated November 24, 1925. The Corporation has since 
enlarged its interest, and now owns a substantial propor- 
tion of the shares of Vauxhall. Three new directors repre- 
senting General Motors were added to the board. The man- 
agement and personnel remained British, while Vauxhall 

250 The Turning Wheel 

gained capital, a selling organization, and the benefit of re- 
search. More recently Vauxhall began to manufacture low- 
priced models of low horsepower to meet special English 
needs. Sales activities of General Motors, Ltd., have been 
taken over by Vauxhall. 

In the German development were two concerns, known as 
General Motors, G.m.b.H., and Adam Opel, A.G. During 
the period of German import restrictions, the former com- 
pany acted as a sales office placing its orders with the Ex- 
port Company or with either General Motors Continental 
at Antwerp, or International at Copenhagen. When the 
German import restrictions on motor cars were lifted, in 
1925, a warehouse was secured at Hamburg, and a manu- 
facturing base opened in Berlin. In April, 1926, the first 
Chevrolet truck came out of the assembly. This expansion 
was accomplished in the fact of discouraging conditions in 
Germany which led to a severe crisis the following winter. 

Adam Opel, A.G., represents the largest single invest- 
ment of General Motors overseas, having grown to its 
present proportions through a long history of diversified 
manufacture. The Opel workshop was founded at Riissels- 
heim, Germany, in 1862, for the manufacture of sewing 
machines. Opel began to build wine-making machinery in 
1883, high-wheeled bicycles in 1886, low-wheeled bicycles 
in 1892, passenger motor cars in 1899, motorcycles in 1901, 
and motor trucks in 1907. 

In developing their plant the Opels drew on American 
experience. Wilhelm von Opel, the present head of the 
works, studied advanced production methods in the United 
States in 1909 and on his return to Russelsheim directed a 
tremendous plant expansion. Fire destroyed the works in 
1911, leading to the end of sewing machine production. 
Larger plants were soon erected and by 1912, 4,500 per- 
sons were at work in Opel factories. In 1924, the conveyor 
system of production was installed, following the best 
American practice. Another extension occurred in 1926 
when Opel reached a production of 43,500 cars. 

As an industrial layout, Opel approaches Krupp's in 
completeness. Its equipment includes 7,000 working ma- 
chines and automatics, more than seven miles of standard 

General Motors Across the Seas 251 

gauge railroad, six locomotives and 1,800 tip cars, 30 lift- 
trucks on eighteen transport lines, 700 loading platforms, 
40 elevators, and 30 cranes. 

From 1926 to 1929, Opel enlarged its Russelsheim plant 
by more than a million square feet to a total area of more 

Opel car in African exploration Schomburgk Expedition 

than 7,500,000 square feet, with a daily capacity of 500 
motor cars and trucks and 3,000 bicycles. Shortly after 
General Motors acquired its interest in Opel, in 1929, 
"Blitz" was adopted as the trade-name for Opel trucks. 
Export sales for all Opel automotive products are handled 
by the General Motors Export division. 

252 The Turning Wheel 

Opel is unique in the Corporation in total amount of car 
fabricated in one plant : body, radiator, shock absorbers, 
fuel pump, clutch, valves^ and universal joint. Exports in 
1932 were only 4 percent below those of the year preced- 
ing, and Opel cars accounted for slightly more than 68 per- 
cent of German car exports. Geheimrat Wilhelm von Opel 
is chairman of the board of Adam Opel, A.G. 

While the Export Company was distributing cars in Aus- 
tralia, a new tariff of nearly three hundred dollars on every 
car body imported pushed prices of General Motors cars 
skyward. Faced with a complete loss of its Australian trade, 
the Export Company made a contract with Holden's Motor 
Body Builders, Ltd., which already did the bulk of body- 
building for the Commonwealth, besides handling a large 
part of General Motors' requirements, practically all body 
work being done by hand. Cooperation between General 
Motors and Holden's brought forth a new plant, con- 
tiguous to the existing one at Woodville. In the milling de- 
partment a progressive line for all mill operations was set 
up, including Linderman and other modern machines new 
to the Commonwealth. The General Motors staff, in an 
emergency, built a hydraulic press, obviating the former 
method of shaping body panels by hand. These and other 
machines, also wood kilns, nickel-plating and Duco depart- 
ments, were beyond the experience of workers there, and 
it took some persuasion to change their attitude regarding 
labor-saving devices. Also, they had to be instructed in the 
use of the new machinery. Results were highly beneficial. 
Before the end of 1925 several thousand employees were 
added for the production of General Motors bodies ex- 
clusively. In this General Motors-Holden's enterprise the 
Corporation acquired a majority of the Common stock 
in 1931. 

The expansion of overseas business depended on the 
coordination of the Export group and other Corporation 
groups, many of which had goods to sell in that market. 
Field personnel gradually imbued foreign dealers with the 
spirit of American merchandising methods, adopting the 
policy of "Volume turnover service." While the total 
number of automobiles a given territory could absorb in a 

General Motors Across the Seas 253 

year was a matter of economics, "the percentage of General 
Motors products to that total was a question of representa- 
tion and salesmanship." 

A world survey of the automotive industry was under- 
taken in 1925, with three main questions to be answered: 
Where were the motor cars of the world to be found? 
How many were there? Who sold them? Through 1926, 
the spotting of other assembly plants and warehouses on 
the world map continued. The plants in Australia at Bris- 
bane, Sydney, Melbourne, Adelaide, and Perth date from 
this time, also those at Wellington, New Zealand, and Port 
Elizabeth, South Africa. 

These formative years reveal some of the motives actu- 
ating the Corporation in extending its overseas interests 
and in creating its assembly plant structures. At first, of 
course, it had an eye to savings in freight and duty. Other 
advantages made themselves felt in time and proved of no 
less importance. There was the advantage of being able to 
ship cars and trucks abroad at a rate not possible under 
the old distributor system: heavy consignments could be 
taken, delivered, and financed at the points of distribu- 
tion as part of ordinary procedure. Another advantage en- 
tered with the invention and development of Duco, by which 
it became possible for assembly plants to finish their own 
bodies, with reference to local demands in color, finish, and 

At first the Color division of the Export Company con- 
fined its activities to complete cars being shipped abroad 
(Single Unit Packing) ; then the assembly plants took it up; 
at length the Color division took over the work of the color 

Selection of optional colors for each model of car is made 
and finalized six months in advance of any color change 
becoming effective in overseas plants. Wide tolerance in 
colors is permitted, but those are selected which are funda- 
mentally correct from the standpoint of harmony and good 
taste, and which in addition meet local preferences. The 
latter are many and important. Red is taboo in some coun- 
tries because of its Bolshevist connotation. In Japan 
maroon cannot be used, because it is the color of the 

254 The Turning Wheel 

Imperial Household, and in China yellow is taboo because 
it signifies mourning for death. 

Until 1925, a financial service was available to overseas 
distributors generally from the General Motors Acceptance 
Corporation only through the Foreign Department located 
in New York City and, in the British Isles, through the 
London Branch established in 1920. 

In 1925, at Antwerp and Copenhagen, General Motors 
Acceptance Corporation began the establishment of 
branches in foreign fields to conduct a financing service for 
overseas distributors and dealers in General Motors 
products and also their retail purchasers. This service, so 
valuable to the Export organization, has since been ex- 
panded to include the following General Motors Accept- 
ance Corporation branch offices: Alexandria, Egypt; Ba- 
tavia, Java, D.E.I.; Bombay, India; Buenos Aires, Argen- 
tina; Honolulu, Hawaii; Osaka, Japan; San Juan, Porto 
Rico; South Melbourne, Australia; Wellington, New Zea- 
land.- In addition to the above direct branch offices, sub- 
sidiary corporations have been organized to offer similar 
services at: Copenhagen by General Motors Acceptance 
Corporation, Continental; Mexico City, Mexico, by Gen- 
eral Motors Acceptance Corporation de Mexico, S.A.; 
Russelsheim, Germany, by Allgemeine Finanzierungs Ge- 
sellschaft m.b.H. ; Sao Paulo, Brazil, by General Motors 
Acceptance Corporation, South America ; London, by Vaux- 
hall and General Finance Corporation, Limited; Port Eliza- 
beth, S.A., by General Motors Acceptance Corporation of 

Effective as of February i, 1926, a definite plan of organ- 
ization and management for the Export group of General 
Motors was adopted, on the principle of staff and line 
control. While there had been previous charting of activi- 
ties, necessarily rapid expansion had precluded any con- 
tinuous set-up clearly revealing inter-relations, lines of 
contact, and division of authority. The Export group had 
taken on four general functions : manufacture, sales, supply, 
and finance, for each of which a departmental manager was 
now appointed. The president of the Export Company was 
given charge of all operations of the Export division as well 

General Motors Across the Seas 255 

as the manufacturing operations; on him was placed re- 
sponsibility for the entire Overseas Operations group to the 
Corporation, of which he is a vice-president. In general this 
relationship still holds. The vice-president of the Export 
Company who served as its general manager was designated 
also as general manager of the entire Export division (not 
including the manufacturing activities in Germany and 
England). To him the four departmental vice-presidents of 
the functions stated above look for authority, each becoming 
responsible for the control and development of his particular 
function in all operating units throughout the group. The 
respective operating units were placed under managing 
directors directly responsible to their regional directors, 
who in turn are responsible to the general manager of the 
Export division in New York. At Opel and Vauxhall, each 
self-contained in a single territory, no such far-flung world 
organization exists, but the functional set-up internally is 
practically identical. The General Manager of each of these 
three major operating divisions the Opel, the Vauxhall, 
and the Export division reports to the president of Gen- 
eral Motors Export Company, who is also vice-president of 
General Motors Corporation in change of overseas oper- 

By the end of 1926 General Motors overseas had rounded 
itself out. The situation was then outlined as follows: 

It becomes quite apparent that we have come, for 1927, to the next 
phase of our operation, for we are faced very definitely with the 
necessity of consolidating the advances we have made, and of 
developing the machinery we have set up to the degree of efficiency 
that will bring the permanent result we are seeking. ... As a 
group, we have just about reached the limits of our growth; few 
markets of worthwhile potentiality are now left without individual 
companies, largely self-controlled, installed on the ground to carry 
the tremendous resources of General Motors out directly to the 
retail dealer and the public. We can no longer look for the impetus 
to increase in volume that the creation of a new assembly plant 
provides. We have established our line organization on practically 
every battle front. Any growth, any expansion hereafter, must 
come from within these operating companies, and as a direct result 
of their increased activity. . . . 

256 The Turning Wheel 

This crystallizes directly to a definition of our objective in 1927: 
"Ratio to total American volume, return on investment, and car 
inventory turnover." 

Wherever General Motors cars go, other benefits go in 
their turn. Group life insurance is carried on all American 
overseas employees of the Corporation. General Motors 
Acceptance Corporation participated in the financing of 
nearly 50 percent of the Export division's 1926 volume, 
employing one hundred workers solely on overseas activi- 
ties. Its wholesale and retail plans of financing were in 
operation in fifteen countries, with nine other countries 
added in 1927. 

The year 1927 saw assembly manufacturing started at 
Batavia in Java and Osaka in Japan, followed soon after, 
early in 1928, at Warsaw, Bombay, and Stockholm. The 
three South American plants in Brazil, Uruguay, and 
Argentina were placed in communication with one another 
by radio. In the development of the line and staff organiza- 
tion in 1927, the Export Company, as an operating unit, 
was put on the same basis as other individual plants in the 
Export division, although it remained the source from 
which the officers and directors derived their corporate 

All through this period advertising has been pushed by 
methods well known at home and by others keyed to char- 
acteristics of foreign publics and especially to their degree of 
motor-mindedness. Motion-picture films are effectively used. 
The automobile show is one of the main reliances for put- 
ting General Motors products before the eyes of populous 
centers; the one at Brussels always constitutes a main event 
in Continental's advertising program. Sao Paulo, which is 
the third largest city in South America, was treated to a 
special General Motors exhibition, which proved successful 
as a result of painstaking preliminary and follow-up ad- 
vertising, although, as pointed out in General Motors 
World, March, 1927, previous shows at Sao Paulo and Rio 
de Janeiro had not been productive of sales. This show suc- 
ceeded in bringing the closed car into favor with the 
Brazilians is never before. Europeans, Asiatics, and South 

General Motors Across the Seas 257 

Americans have developed as keen an appetite for auto- 
mobile shows as have North Americans. 

Overseas the "show" frequently takes the form of a 
caravan. Local advertising precedes the appearance of the 
fleet of cars and trucks at the various points scheduled. To 
the inhabitants of undeveloped countries perhaps the most 
exciting of these are the caravans organized to push their 
way into new or partially exploited territories. Cavalcades 
of General Motors cars, gayly decorated, start from Ant- 
werp, Copenhagen, Osaka, or Melbourne, or some other 
base, for a long tour of the hinterland. They carry, in addi- 
tion to service men and electricians, show troupes, stage 
and motion-picture equipment, loud speakers, field kitchens, 
and cafeterias. They are really sales and advertising expedi- 
tions, painstakingly equipped to maintain themselves in the 
field and to entertain large audiences gathered with the co- 
operation of local dealers. 

Perhaps the most imposing cavalcade was that which 
started from New York to show the new v-i6 Cadillac to 
Europe, a feature of the journey being the ceremonial 
Cadillac visit paid to the ancient seat of the Cadillac family 
in France. In Palestine and other Near East areas the motor 
cavalcade has been especially effective in bringing scat- 
tered dealers into touch with new models and sales ideas. 

Impressive endurance runs have been made by General 
Motors cars for the same purpose, the most famous one 
being the Cape-to-Cairo run by Chevrolet. After crossing 
Africa from south to north, this sturdy car went on across 
Europe to Stockholm, welcomed all along the line and visit- 
ing all the principal General Motors centers. Chevrolet, of 
course, is the great volume producer in the export field as 
in the home market. 

Other special features of export publicity, such as the 
round-the-world trips of Buick and Frigidaire, have united 
the whole export organization in synchronized publicity 
campaigns on an international scale. 

Direct-mail advertising is a method used by the Export 
company extensively, the sales organization in New York 
serving those countries not covered by assembly plants. In 
some parts of the world it may be necessary to begin a 

258 The Turning Wheel 

sales campaign by offering proof that the Corporation 
actually exists and makes cars that can be bought locally. 
Witness the experience of a sales representative : 

I had thought, previous to going to West Africa, that we were so 
large and important that we must be universally known. Therefore 
it was a bit of a shock to find that many people were in complete 
ignorance of our products. To sell these people the idea of General 
Motors as a great and unique institution was my primary job and 
I found that after telling them about our size and strength, our 
multifarious manufacturing, sales and financing activities, showing 
them pictures of the Proving Ground and Research Laboratories, 
it was very much easier to develop an interest in the actual selling 
of our cars and trucks. 

While publicity is as much a part of a selling campaign 
abroad as at home, objectionable propaganda is taboo. The 
following incident may be taken as an indication of how 
General Motors adapts itself in a foreign country to custom 
and tradition. In 1927 General Motors Japan took over 
premises at Osaka, where its predecessors in business had 
established a Shinto shrine. Though there was no obligation 
to do so, the company restored it to use and now maintains 
it. Each year a ritual service is held and the mother temple 
has named the shrine, "The White Chrysanthemum." 

By May 2, 1927, the home offices were finally quartered 
in the General Motors Building at 1775 Broadway. The 
goal set for 1927 overseas operations was reached, and a 
policy of plant expansion began. It was stated at that time 
that u we shall have to work definitely toward identifying 
ourselves with each market." Further explained, General 
Motors as an institution had already assumed an interna- 
tional character. 

In many countries General Motors is coming to be looked upon as an 
integral part of the basic industrial life of those countries. There 
is not one American in the entire organization of Vauxhall Motors, 
Ltd., in London. The daily business in the office in Osaka is con- 
ducted by Japanese, and the native workmen are carrying on their 
jobs under native foremen. The tendency to employ local per- 
sonnel, and to promote this personnel into a position of responsi- 
bility and authority as fast as it qualifies, is present everywhere. It 

General Motors Across the Seas 259 

is definitely General Motors' policy to award the job to the man 
who merits it, whatever his nationality. 

Altogether there were nineteen manufacturing and assem- 
bly plants in the Export division at the close of 1928, in 
which year the employees of the Company averaged 
eighteen thousand in number. 

General Motors Export volume was greater than the volume of any 
group of export products going out from the United States with 
three exceptions. . . . The General Motors Export division also 
did a greater volume of business abroad than the Corporation did 
domestically seven years before. General Motors had become the 
biggest automotive concern doing business in Europe. 

Sales abroad of American-source products by the export 
organizations of General Motors for a second four years of 
the modern development were : 


Year Number Value 

1926 118,791 $98,156,088 

1927 193,830 171,991,251 

1928 282,157 252,152,284 

1929 256,721 243,046,031 

Since many overseas representatives usually come back 
to the United States in the spring, a regional conference of 
the Overseas group, attended by representatives from 
twenty-eight different countries, was held at Shawnee-on- 
the-Delaware, Pennsylvania, May 2230, 1929. 

Before 1929 closed, the story of another pioneering effort 
came out of the Near East. There are twenty languages in 
General Motors Near East territory. The Parts division 
translated the Chevrolet Parts Book into each of the chief 
languages used in its territory: French, Italian, Arabic, and 
Turkish. The Turkish and the Arabic versions represented 
a monumental task. Arabic lacked an automobile vocabu- 
lary or even the root words upon which to build. The 
translator's book was praised by the Arabic press and found 
favor with government officials, such as those of the 
Egyptian customs. 

260 The Turning Wheel 

Constructive helps to overseas dealers in General Motors 
products are extended in three different forms: Service 
School, Dealer Accounting, and Retail Sales School. When 
dealers failed to send their service men to the plant school, 
the Rolling Service School was established and first took 
the field on wheels into Brazil in 1926. By 1930 most of the 
Overseas group had established similar schools on wheels. 

General Motors 5 stake in world trade had become 
enormous by 1928, when its sales overseas amounted to 15.6 
percent of its total business. General Motors' share of all 
American and Canadian motor-car business abroad was 
12.4 percent in 1922, 24.3 percent in 1926, and 47.1 per- 
cent in 1928. 

The peak passed. Danger signals began to fly abroad in 
1929. By July the decline in the sales of automobiles abroad 
set in. This was to continue steadily through 1932, and 
for the first two months of 1933. This decline was accel- 
erated in the latter half of 1929 by the fall of international 
exchange and increasing disruption of world trade. In the 
Export division's affairs, those markets termed neutral, i.e., 
those where there was no major car manufacturing, as there 
was in England, France, Germany, and Italy, felt the ad- 
verse effects most severely, in reduced buying power as well 
as in increased competition from other than American 

The sales account of Export in these three years of de- 
cline shows: 


Year Number Value 

1930 164,112 $155,728,304 

1931 125,606 110,525,817 

1932 77,159 64,722,593 

The attainment of these relatively satisfactory sales in 
1930 to 1932 can be attributed to a substantial increase in 
the sales of the Corporation's German- and English-source 
product in the world markets. In 1930, the first year in 
which these sales were included, they accounted for 20.7 
percent of the Corporation's overseas volume, in 1931 this 

General Motors Across the Seas 261 

ratio was increased to 31.0 percent and further increased 
in 1932 to 47.7 percent. 

As early as 1926, difficulties some already noted 
hindered expansion of the American export business. These 
might take the form of political alliances and loans, import 
quotas, and rising tariffs. The United States failed to im- 
port in volume sufficient to permit other countries to pay 
for our exports, and when American investors ceased to 
take foreign loans, a decided swing away from American 
goods began. By 1929 this trend threatened to become an 
avalanche which the Overseas Operations found it could 
meet best by capitalizing even more heavily on the manu- 
facturing sources it possessed in Europe to protect its 
investment of approximately $68,000,000 in overseas busi- 
ness and to safeguard its distribution system with its thou- 
sands of employees and its 1,800 dealers in the event that 
its American cars, for one reason or another, should be shut 
out of these consumer markets. 

There was also another good reason for foreign manu- 
facturing. While American cars were being improved in 
quality, they were also being increased in size and weight, 
in contrast with European evolution toward small and light 
types, more economical to own and operate in countries 
where gasoline is expensive, and horsepower taxes are high. 
Differences in the tastes of foreign consumers could be 
satisfied by a flexibility of production not possible at home. 
Better geographic relation to some of the major volume 
markets also had its influence. 

These considerations had led the Corporation to become 
interested in Great Britain as a manufacturing source, not 
only because the British Isles afforded an important and 
stable market in themselves, but also because the threat 
against American cars in foreign export fields, especially 
in Australasia, worked to favor British products. If the 
Corporation were handicapped in those fields, its invest- 
ment would suffer. German manufacture was equally ad- 
vantageous, both for the Reich and for many sections of 
Continental Europe. 

With the arrested growth of American-source volume 
creating many investment problems, plans were made for a 

262 The Turning Wheel 

realignment of the Corporation's world-wide distributing 
structure. Reduced to a sentence, the problem resolved itself 
largely into one of "earning on the investment made by 
selling, in each market and from each source, the kind of 
cars the people in those markets want and can afford to 
buy." Such a policy demanded, in order to achieve the 
proper balance, as keen an interest in Vauxhall and Opel 
as in any of its American manufacturing companies. 

Handicaps against American-made cars abroad reduced 
America's share of overseas sales from 52 percent in 1929 
to 21 percent in 1932. In his report for the Overseas Opera- 
tions group for 1932, the president commented as follows 
on the changing situation: 

The swing . . . represents a change in the popular demand for 
motor cars which is of profound significance to General Motors 
and to all companies engaged in international trade. Its causes 
. . . include the basic economic disadvantages which confront 
America in her present international economy; the growing senti- 
ment of nationalism; the increased duty advantages and, in some 
cases, exchange advantages, which have come to prevail in favor 
of foreign products; the rather normal trend toward a smaller and 
more cheaply operated type of car arising out of the depression ; 
and most important of all, the more serious effects of the economic 
depression itself upon those "Neutral markets" throughout the 
world where the American car has always been strongest, as com- 
pared with the effects in the manufacturing markets, where the 
American car has never, actually, accounted for a very considerable 
proportion of the business. 

With English and German production sources as its de- 
fence, General Motors was able to "soften the drop" in the 
total volume, and in the later months of 1932 these sources, 
including the products consumed domestically in England 
and Germany, were exceeding the American-source volume 
in General Motors' total overseas trade. Despite these bul- 
warks, however, General Motors unit sales abroad fell 38 
percent below those for the preceding year, but at a decreas- 
ing rate as 1932 went along. 

Of the total American-source business General Motors 
held its own in 1932 with 33.9 percent, while its German 

General Motors Across the Seas 263 

and English sources as against the volume from all foreign 
sources tended to increase their percentage, and amounted to 
7.1 percent. Adam Opel, A. G., in 1933 marked up its first 
operating profit. In England, following Britain's departure 
from the gold standard, Vauxhall realized its greatest 
volume and profit, through putting out a low-powered car 
more in line with English demand. 

The source-distribution of General Motors unit sales in 
the three Territorial divisions of the Overseas Operations 
showed the following percentages for 1932: 

American English 

Source Source 

Percent Percent 

Export Division 
English Division 
German Division 

Total Overseas 




10. 1 







1 00.0 


In the early months of 1933 the Export pendulum 
started its up-swing. Overseas shipments of General Motors 
American-source cars were 45 percent greater in the first 
six months of 1933 than in the corresponding period of 
1932. June shipments were 133 percent greater in 1933 
than in June, 1932. Sales of foreign source products by 
Opel and Vauxhall also advanced during this period. 

General Motors' export selling reflects careful choice of 
distributors and dealers and a study of local needs; for each 
country, having its own peculiar methods of doing business, 
must be handled separately, although a casual survey might 
class it with some other country on the basis of like volumes 
of sales. In most territories General Motors products are 
sold on an exclusive basis. Building up the reputation of 
products is found to be slow work, and the quality of the 
retail outlet no less important than the quality of the 
product. Withal, it must be recognized that the first con- 
sideration of the car buyer in many overseas areas, and 
especially in Europe, is economy of operation. 

264 The Turning Wheel 

The world contains eighteen times the population of the 
United States yet only 28 percent of the motor cars are 
outside the United States, which has a car per 5.1 persons 
as against one for about two hundred people over the 
planet. America's opportunity to sell motor cars abroad 
seems still large, but there are limitations. An extract from 
a brochure, The Export Organization of General Motors, 
1929 revision, sets forth some of these limiting factors over- 
seas, where 

. . . the motor car has not been generally accepted as an essential 
utility as in the United States. Tariff and cost of freight and 
handling add on the average 33 percent to the retail delivered price 
of the car, compared to the delivered price in the United States. 
... A Buick owner overseas is in the price class of the Cadillac 
owner in this country. . . . Taxes are high and the cost of 
gasoline, oil, tires and other items make the operation of a car 
expensive by comparison with what it costs to operate in America. 

The idea of the auto is an expanding factor, breaking 
the barriers. The new countries of European settlement 
which have developed exportable surpluses stand in the 
first rank as regards cars per capita of population; those 
of primarily British stock are sometimes spoken of as being 
saturated: United States, Canada, South Africa, Australia, 
and New Zealand. Their use of motor cars is not likely, 
for some time to come, to be approximated by countries on 
other standards of living, and under less favorable eco- 
nomic conditions. 

By comparison with her neighbors to the west, the Ger- 
man Reich has only a half to one third the cars that might 
be expected. Latin Europe, except for France, is not even 
that well off in motor cars and, outside of Scandinavia, 
central and eastern Europe are poorly supplied. Yet there 
are bright spots the world around where the automobile 
has come to be regarded as the necessity it is in the United 
States, although the hinterlands even of these countries have 
comparatively few cars. These areas are hopeful territories 
for cultivation in the future. 

In February, 1933, a policy of more fully decentralized 
management went into effect. Four regional directors for 

General Motors Across the Seas 265 

Europe, for South America and South Africa, for the Far 
East, and for Australasia became responsible for all 
operations in their respective areas. They maintain head- 
quarters at the home office in New York. 

Through its far-flung organization, General Motors 
meets all the civilized peoples of the earth. Into many and 
varied social settings it has introduced its products through 
representatives carefully selected from the standpoint of 
character and understanding of the peoples among whom 
they are to work. In extensive manufacturing and assembly 
operations employing domestic labor, the Corporation ap- 
plies both the factory technique and the labor policies de- 
veloped at home. Care is taken to train native staffs, to the 
end that General Motors' overseas operations may become 
a part of the local scene to as large an extent as possible. 

While the motor car is a tool which inevitably hastens 
social changes by enlarging the radius of human action and 
expanding the vistas of mankind, an attempt has been made 
to effect its entry into new scenes without affront to existing 
manners and customs. The result is that General Motors 
has escaped difficulties due to nationalist feeling, and can 
count citizens of all governments among its valued friends. 
As highways are gradually improved and lengthened, as 
international trade resumes, General Motors Export will 
press on to more and more mutually helpful contacts with 
all sorts and conditions of men who, whatever their sur- 
roundings, have in common the desire for rapid transport 
and the conveniences of a motorized civilization. 

Chapter XIX 



.HE automobile, as we have seen, came to pass as the re- 
sult of a long evolution. At every stage the pioneers were 
handicapped by faulty materials, lack of capital, adverse 
public opinion and man's general ignorance of the forces of 
nature. Some of their efforts appear almost childish today, 
when the laws of matter and force have been tested and 
recorded in an imposing body of knowledge which grows 
day by day. But before we indulge in a pitying smile for 
their makeshift arrangements, let us recall that the book 
of science is by no means closed, and that at some distant 
day the very achievements on which modern man so prides 
himself will no doubt be considered inconsequential. 

When the history of America is written centuries hence, 
it will be noted that in the first quarter of the twentieth 
century business began to subsidize scientific research. That 
resounding fact may then be considered more important 
than any of the political or military events of our era. The 
laboratory, where trained men work quietly amid controlled 
conditions, is a seed-bed of social and political change as 
well as of scientific experiment. 

Until recently, science was usually described as of two 
sorts: pure science and applied science. Pure science was 
held to be the fruitage of a disinterested search for truth 
into which no profit element entered and from which no 
practical benefit was expected. Work of this nature depended 
for support upon university or other foundations, or upon 


Research 267 

the private means of investigators. The purest of the pure 
scientists sometimes congratulated themselves on the pros- 
pect that what they discovered could never be of the slight- 
est use to anyone. In this respect, at least, the pure 
scientists are defeated men, despite their triumphant con- 
tributions to knowledge. 

There is a driving force in human nature which makes 
the pure science of yesterday the applied science of today. 
Even celestial research sometimes comes down to earth. 
Helium was discovered in the sun, through spectrum an- 
alysis; thereupon its presence on the planet was assumed, 
and after many years helium gas was found in such quan- 
tities on earth that it is today a commercial product and a 
factor in aviation and world politics. Years of pure scientific 
research on energy waves preceded the practical application 
of that knowledge through radio, with the result that every- 
man's home now shares in the results of what was once pure 

Application of scientific knowledge to everyday life pro- 
ceeded for several generations largely through the training 
which the colleges and universities gave in their professional 
courses. Once a man was graduated, he was cut off from 
laboratory opportunity and association with minds keyed 
to research. The tendency was for him to consider that 
scientific progress ended as of the day he lost contact with 
it. Of course there were notable exceptions to this gen- 
eralization in all the learned professions, especially in medi- 
cine and chemistry. But a mind of unusual resiliency marked 
the man who, faced with practical problems in engineering 
day after day, continued to peer behind the veil which hid 
the unknown. Lesser minds might make minor innovations 
as they coped with novel tasks, but a long and steady drive 
on an objective which might never be found was usually 
beyond the resources of the individual worker or his em- 
ployer. Meantime, the independent inventor and investiga- 
tor struggled along by himself, without backing, living 
largely upon hope of developing something patentable. 
After securing a patent, he had to look far and wide for 
someone with capital enough to bring it to market. Great as 
the achievements of these men were, industries growing in 

268 The Turning Wheel 

volume year by year could hardly depend upon such random 
activities to produce the continuous improvements in tech- 
nique upon which both earnings and market leadership de- 
pended. Consequently General Motors, in common with 
other large corporations, undertook the financing of scien- 
tific research. 

It should be noted, however, that while this research con- 
cerns itself with long-reach problems involving many 
branches of science and which may be years in process of 
solution, the engineering staffs of the various subsidiaries 
attack with equal energy the problems involved in improv- 
ing models from year to year. Not only do the divisional 
staffs commercialize research findings and ascertain their 
practical applications, but they also originate and put 
through important innovations on their own account, either 
independently or in concert with other staffs. Among the 
outstanding contributions of General Motors in the re- 
search field are the following, some of which have been the 
work of the Research Laboratories, some the work of 
divisional staffs, and others the result of joint efforts be- 
tween the Laboratories and the divisions : 

1909-10 Battery ignition (Delco and Remy). 

1911 One-piece spark plug shell ( AC ) . 

1911-12 Self-starter (Delco). First used on Cadillac. 

1915 Tilt-beam headlights. First used on Cadillac. 

1920 Cellular type radiator, of ribbon stock (Har- 

1923 V-type fan belt (General Motors Laboratories) 

first used on Frigidaire and Chevrolet. 

1923-24 Perfecting four-wheel brakes for quantity pro- 
duction (Buick). 

1923-24 Ethyl "knockless" gasoline, developed by Gen- 
eral Motors Laboratories. 

1924 Harmonic balancer, to eliminate difficulties 

caused by torsional crankshaft vibration. 
Duco lacquer finish. 

1925 Crankcase ventilation. First used on Cadillac. 
Thermo-control of water-cooling system 


Research 269 

1926 Balancing crankshafts in quantity production. 

1927 Chromium plating. First used on Oldsmobile. 
Engine-driven fuel pump. 

1928 Synchro-mesh transmission (Cadillac). 
1930 Silent poppet valve mechanism (Cadillac). 
193031 Carbureter intake silencer (AC). 

1932 Automatic choke. First used on Oldsmobile. 

Super-safe headlights. First used on Cadillac. 
1932-33 Fisher no draft ventilation. 
1933-34 "Knee-action" front springs, and improved 
weight distribution. 

General Motors' first move toward the creation of a re- 
search laboratory serving all constituent companies was 
taken by President James J. Storrow in January, 1911, 
when he conferred with Arthur D. Little, Inc., of Cam- 
bridge, Massachusetts, on the advisability of setting up a 
centralized testing and research laboratory and technical 
department. The Little company's plan was accepted on 
February 7, 1911. Until November of that year, the re- 
search organization was known as the Engineering De- 
partment; thereafter as the General Motors Research 
Department. After one year this department was placed 
on its own feet, the Little connection being changed from 
management to consultation. 

Among the problems studied by this early research staff 
in Detroit were painting, lubricating and cutting-oil prac- 
tices in various plants, tests of materials for purchasing 
departments, and investigation of new parts and accessories 
submitted to General Motors by outsiders. The original 
research staff consisted of nine technicians and their as- 
sistants. It was in this small laboratory, according to 
Arthur D. Little, Inc., that the electro-dynamometer was 
first made use of in the automobile industry. 

The World War stimulated industrial research by lifting 
technical and scientific problems to the importance of life- 
and-death matters. Germany hitherto had led the world in 
the close cooperation of industry and science, a partnership 
encouraged by the government. Suddenly the rest of the 
world realized that it had been laggard in this respect. 

270 The Turning Wheel 

Everywhere in America the man of science took on a new 
importance, and nowhere did he find a warmer welcome 
than among alert industrialists. This enthusiasm outlived 
the war and continues unabated. 

It was in this period that General Motors undertook 
seriously the organization and financing of scientific re- 
search, by taking over the Dayton Engineering Labora- 
tories Company and organizing on that base, as of June 12, 
1920, the General Motors Research Corporation, incor- 
porated in Delaware for $100,000, with all the stock owned 
by the General Motors Corporation. In that way it took 
a short cut to a desired objective, as the Dayton Engineer- 
ing Laboratories Company, long active in the scientific side 
of the automobile industry, possessed a competent equip- 
ment and tested staff. 


When one speaks of General Motors Research, the pic- 
turesque character and record of "Boss" Kettering leap to 
the mind. Charles Franklin Kettering was born on a farm 
in Ashland County, Ohio, near Loudonville, on August 29, 
1876. He passed in turn through district school, Loudon- 
ville High School, the Normal School at Wooster, Ohio. 
Determined to work his way through all available institu- 
tions in the neighborhood, he was graduated from Ohio 
State University in 1904, at the age of twenty-eight, his 
education having been interrupted by outside work. 

Research 271 

After teaching school as a teacher he must have been 
full of surprises he entered the telephone business at 
almost its lowest rung, as installation man for the Star 
Telephone Company of Ashland, Ohio. To this day, by way 
of illustrating the need for efficiency in humble tasks, he is 
apt to tell his hearers how he discovered there is a right 
and a wrong way of digging post-holes. It is of record that 
he almost bankrupted his company by installing what his 
directors thought was too large a switchboard, but events 
showed he was right, business flowing in to use the plant 
once it was installed. Looking far ahead is a Kettering 
habit and characteristic. 

From telephones and Ashland he went to cash registers 
and Dayton, the city where he found opportunity to reach 
full stature. National Cash Register was then the last word 
in specialty manufacturing and sales promotion. Its general 
manager was E. A. Deeds, who recognized Kettering's 
genius, and promoted him to head of the Inventions De- 
partment. There Kettering developed and patented a num- 
ber of improved cash registers, including one operated by 
electricity which did not come into full use until several 
years later. 

With Colonel Deeds's backing, and that of other Dayton 
capitalists, the Dayton Engineering Laboratories Company 
was organized in 1911. While Delco, as it was called, stood 
ready to tackle any problems in electrical or mechanical 
engineering, its chief point of attack was Kettering's long- 
considered and epoch-making idea of an electric self-starter 
for automobiles. He believed that the same power which 
switched on an automobile's lights and ignited its gasoline 
also could be used to start the engine, thereby eliminating 
the nuisance of hand-cranking. 

Starting an engine by hand was difficult and often 
destructive of temper and clothes. It required, usually, a 
combination of physical vigors not always found in the same 
individual the strength of Ajax, the cunning of Ulysses, 
and the speed of Hermes. Ulysses had to adjust the spark 
and throttle just so; Ajax had to turn the engine over, some- 
times over and over; and Hermes had to dart back like a 
flash to the controls to advance the spark and regulate the 

272 The Turning Wheel 

gas before the engine went dead again. Not everyone 
possessed all these qualifications; many an ardent motorist 
of today despaired of ever learning the difficult art of 
cranking, and the whole back-breaking operation was quite 
beyond the powers of all women save those of Amazonian 
proportions. This was a serious matter for the industry; 
serious, too, were the physical accidents incidental to 
cranking. The commonest of these was the broken wrist 
caused by the back-firing of the engine; but more serious 
hurts, sometimes even deaths, followed the forward charge 
of the car upon the cranker when, as often happened, the 
engine had been left in gear. It was an accident of that sort 
which gave Delco its first commercial opportunity. 

Mr. Kettering says Delco's greatest obstacle was the 
closed mind he encountered nearly everywhere he went. 
First, the battery manufacturers said his idea of self-start- 
ing was absurd, for the simple reason that no electric 
storage battery could be built with enough capacity to turn 
a motor over. Why, they did not say; the fact that no such 
battery had ever been built was enough to convince them 
that it never could be done. They accepted their frame of 
experience as final. In effect, they said, "There ain't no such 
battery," and let it go at that. Finally Kettering had to 
explain, cajole, and bully them into making bigger and 
better batteries. 

Meantime, Delco was trying to sell its self-starter idea 
to manufacturers. They, too, had the closed mind. The 
thing might work for a while, but it would soon exhaust 
the battery. Then how about the lighting and ignition? And 
what if it wasn't positive? "Positive" was a great word in 
those days. If a thing wasn't positive, it might be a bad 
buy; it often was. Finally Kettering got his chance, directly 
as a result of one of those accidents common to hand- 
cranking. An elderly friend of Henry M. Leland, founder 
of Cadillac, was driving a Cadillac on Belle Isle bridge when 
the motor stalled. Forgetting to throw out the clutch before 
cranking the car, he sustained serious injuries. Mr. Leland's 
grief over this accident drove him to encourage Kettering, 
and to give the Delco starting, lighting, and ignition system 
a chance. On February 27, 1911, the first Delco starter was 

Research 273 

installed on a Cadillac car. It worked so well that in 1912 
Delco was standard equipment on all Cadillac cars. Self- 
starting had arrived. 

Other self-starters soon appeared on the market; in fact, 
more than one man was working along that line when Ket- 
tering was doing his pioneer work. Various systems of self- 
starting had been worked out before Kettering applied 
electricity to the task among them compressed air, springs, 
and acetylene gas. Other electrical manufacturers, notably 
the Halbleib brothers at Rochester in their North East 
plant, had worked out ways of doing the job about the same 
time as Kettering did. But in the ensuing litigation, the 
Delco patents held firmly enough to establish the priority 
of self-starting with Kettering and Delco. 

With men of the Kettering stamp one thing leads to an- 
other with almost lightning rapidity. This has hardened into 
a code based on experience. Among the Kettering apho- 
risms, the value of time and the need for swift mental 
change are emphasized again and again. "Unless we 
progress from year to year we lose ground." "Today's 
dream is tomorrow's actuality." "Changes are born in men's 
minds and worked out in laboratories." Against a mental 
background of that kind, standing pat with the Delco start- 
ing, lighting, and ignition system, no matter how successful 
it was, would be merely standing still. The new idea came 
from a customer who had used his Cadillac to light his 
summer cottage in an emergency. He wrote in to buy a 
Delco system for domestic use. The result was Delco-Light, 
an electric power plant especially designed for farm and 
rural residences, another company being formed for its 
manufacture by the swift-moving Daytonians. From Delco- 
Light they went on to other electric-power adaptations for 
the rural market, establishing the Domestic Engineering 
Company. Another of their corporate creations was Dayton 
Metal Products Company. The Dayton-Wright Airplane 
Company, manufacturing airplanes during the war, was an- 
other important development established by this enterpris- 
ing group of Ohio industrialists. 

In 1916 W. C. Durant took over the Dayton Engineering 
Laboratories Company as part of his United Motors 

274 The Turning Wheel 

merger, and with that group it became part of General 
Motors in 1918. The associated companies in which Mr. 
Kettering was a leading factor followed the Laboratories 
into the General Motors fold within the next few years. 
Meantime Mr. Kettering had been commissioned to set up 
and direct research operations for the Corporation at Day- 
ton, under the name of General Motors Research Labora- 
tories. This was incorporated as General Motors Research 
Corporation, June 12, 1920, and transferred to Detroit in 
1925, where it now occupies a specially constructed build- 
ing directly back of the central offices of the parent cor- 
poration. General Motors Research Corporation is now 
inactive, the operation being conducted as a department of 
the Corporation under the title, "Research Section, General 
Motors Corporation." 

The Research Building houses all the Laboratories' 
equipment under one roof. It contains chemical and physical 
laboratories, shops, drafting rooms, library, and all other 
necessary facilities. An eleven-story building, it is the third 
occupied by the Laboratories, the others being outgrown 
by the expanding enterprise. 

To clarify the story of research, the Laboratories re- 
cently issued a booklet prepared by its engineers and 
scientists. It states : 

The greater part of the engineering and research, which makes 
General Motors cars better, is carried on by the engineering 
departments of its car manufacturing divisions. But, in addition, 
the divisions have the Research Laboratories to help them when- 
ever and however possible. 

The Research Laboratories act in a consulting capacity to the 
divisions, and are continually searching for new principles and 
ideas of a more fundamental and scientific nature than would be 
possible for any of the individual engineering departments, which 
must be more concerned with immediate production problems. 

How the various departments and sections of the Re- 
search Laboratories work out specific problems may be seen 
with reference to some of the more important contributions 
of General Motors research. Take, for instance, crankcase 

Research 275 

ventilation one of the meritorious achievements in motor- 
car advancement during the last decade. Complaints from 
motorists each spring showed a seasonal tendency toward 
balky motors and stretched timing chains. These early 
spring troubles attacked cars which had been conservatively 
driven, rather than those pushed at top speed with accom- 
panying high engine temperatures. The affected parts, upon 
examination, showed a reduction in size beyond that to be 
expected from ordinary wear and tear. 

In the Chemical section, undersized and heavily pit- 
marked parts were analyzed. The chemists found sulphate 
of iron in unusual quantity, and immediately recognized 
that sulphur was the villain in the piece. They set out to 
determine the relation of sulphur in the fuel to the weather 
conditions of winter and early spring. The explanation was 
eventually found. When a gasoline engine is cranked again 
and again in cold weather, as it frequently must be, water 
condenses on the cold cylinder walls and trickles down into 
the crankcase. This water comes from the burning of the 
fuel and air in the engine about one gallon of water for 
every gallon of fuel. During the process of fuel consump- 
tion, the sulphur in the fuel is being burned, forming oxides 
of sulphur which, united with the water, condensed in the 
engine to form sulphurous or sulphuric acid. This acid was 
corroding the metal parts, wasting away the chains, and 
eating the piston pins and camshaft. Even in diluted form, 
the acid slowly etched nearly all moving parts of the engine. 

It is one thing to find trouble; another to correct it. Water is a 
by-product of the process of getting power from fuel. It was not 
possible to keep out the water, nor was it practical to eliminate 
sulphur entirely from the fuel. 

The chemists reasoned that since they could not stop the acid 
from forming, they must prevent the acid from coming into contact 
with the metal parts of the engine, for the trouble arose only when 
acid touched metal. . . . Open-minded toward the application of 
the commonplace to the intricate, the chemists put this to the test. 
To keep the air in the engine continuously clean and free from 
acids, why not open the windows? 

So they put windows, so to speak, in the crankcase. And crank- 
case ventilation put an end to "spring fever" in the automobile. 

276 The Turning Wheel 

This is a shining example of the work done in the chem- 
istry of automobile progress. From first to last, from proc- 
essing of raw materials to the last gallon of gasoline 
consumed before the car goes to the junk yard, the auto- 
mobile is a chemical device. As the Laboratories put it: 

. . . The materials entering into its construction, the fuel that makes 
it go, and the oil that lubricates it are chemicals. Iron, Copper, 
Lead, Tin, Carbon, and- Tungsten are used in the electrical system. 
Iron and Steel make the chassis strong and durable. Babbitt and 
Bronze are used for bearings. Wood, Glass, Cotton, Wool, Nitro- 
cellulose, and Rubber go into a body. Oxygen unites with the 
Hydrogen and Carbon of the gasoline and furnishes the power to 
propel the car. The Chemical Section of the Research Laboratories 
finds ways to improve and make better use of these chemical 

Fuel is so important an element in the motoring problem 
that it receives the undivided attention of a special section. 
There goes on the steady search for more economical fuel 
consumption. Fuel research is marching toward greater 
power and more miles per gallon, a fact which is reassuring 
in view of the frequent announcements of dwindling oil 
supplies and prophecies of future oil famines. 

In the field of fuel research, an outstanding develop- 
ment has been the creation of Ethyl gasoline. One of the 
first barriers to progress in fuel research was the "knock." 
The knock had to go before fuel research could proceed 

After years of research, a specific cure for the knock was 
discovered. The story of the discovery of Ethyl illustrates 
how a great laboratory feels its way along from one stage 
to another, applying the old method of trial and error but 
with greater speed and precision, until at last by process of 
elimination it evolves a specific remedy for particular ail- 
ments even though it may not have discovered the funda- 
mental cause of the trouble. 

Chemists noticed that ordinary combustion of gasoline 
produced a bluish flame, while knocking combustion pro- 
duced yellow or orange flame. They thought that if the 
gasoline were darkened the knocking might be prevented, 



because darker color might absorb more of the radiated 
heat from cylinder walls. Trying one coloring matter after 
another, they concluded that certain coloring agents were 
effective on knocks because of their chemical properties and 
not because of their colors. Effective knock suppressors were 
found to be closely grouped from the standpoint of atomic 
weights. So it was decided to try the neighboring elements 
in the atomic scale. 

Research Building home of General Motors Research 
Laboratories, Detroit 

One of these, tellurium, gave Thomas Midgeley, Jr. the 
key to the riddle. By eliminating other possibilities he con- 
cluded that the best available anti-knock agent was tetra- 
ethyl lead. Although composed of cheap elements, lead, 
carbon and hydrogen, the compound was rare, because it 
had little commercial use and was not produced in quantity. 
Other chemists aided in bridging this gap. Now it costs little 
to use knock-proof gasoline. In recognition of his success, 
Mr. Midgeley was awarded the Nicholas Medal by the 
American Chemical Society. 

278 The Turning Wheel 

The commercial rewards from this research activity have 
been large. In order to achieve a wide market for the new 
fuel in the shortest possible time, General Motors Corpora- 
tion joined with Standard Oil Company of New Jersey to 
form the Ethyl Gasoline Corporation which was incor- 
porated in Delaware, August 18, 1924, with $5,000,000 
Common stock. Of this only $1,500,000 has been issued, of 
which General Motors took one half. Its investment has 
since been more than repaid by dividends, and Ethyl has 
become a household word to indicate anti-knock motor fuel 
obtainable on practically every highway. Under a liberal 
licensing policy, the Ethyl compound is now used by nearly 
all of the leading refiners. On the board of the Ethyl Gaso- 
line Corporation, General Motors is represented by 
Donaldson Brown, Irenee du Pont, Charles F. Kettering, 
and Alfred P. Sloan, Jr., while Mr. Midgeley serves Ethyl 
as vice-president. 

Six years after Ethyl gasoline was introduced, its effect 
upon the industry was described as follows by C. F. Ketter- 
ing and Allen Orth in The New Necessity : 

The car manufacturers have not hesitated to take advantage of the 
possibilities offered by this new fuel. They have raised the com- 
pression ratio of their engines until now the average ratio is a 
little over 5 to I as compared to the 3j^ to I ratio usually encoun- 
tered fifteen years ago. Piston speeds have jumped from 1,000 feet 
per minute to over 3,000. The ultimate result is that from an 
engine of 250 cubic inches displacement, we now obtain over 80 
horsepower instead of the 30 horsepower of 1915. Of course this 
cannot be attributed solely to the change in fuels. Engine designers 
have accomplished unheard of things during this period. They have 
done the seemingly miraculous with combustion chambers, valves, 
and the design of the rapidly reciprocating and rotating engine parts. 

Both the Laboratories and the General Motors Proving 
Ground possess exceptional facilities for testing completed 
automobiles and the parts from which they are constructed : 

It is difficult to observe how the various parts of a car are operating 
when the car is traveling one hundred miles an hour over the 

Research 279 

road. The research engineer, confronted with the problem of 
finding out what might be happening under these and other driving 
conditions, had to devise other methods. 

The alternative was to make the road run under the car. The 
chassis dynamometer was designed to accomplish this. The rear 
wheels of the car rest on two large rollers, connected to a dyna- 
mometer or power-absorbing and measuring machine. Thus, the 
engine and chassis behave as if they were speeding down a road, 
yet the car stands still ; and the engineers are enabled to stand by 
the car, taking measurements and studying performance in a way 
that would be impossible otherwise. 

Weather conditions have to be manufactured to meet the de- 
mands of research, for a group of engineers, seeking facts about 
the operation of an automobile under varying temperatures, would 
find it both impractical and inconvenient to be traveling constantly 
between the arctic circle and the tropics. 

So the equipment in the Engineering Tests Section of the Re- 
search Laboratories includes a cold room 2,000 times as large as the 
average household refrigerator. The temperature inside this room 
falls as low as 50 degrees below zero. 

The room is large enough to hold two automobiles, and the en- 
gines may be operated with the air at any desired temperature. 
With this equipment, research engineers are checking the opera- 
tion of carburetors, starting equipment and lubrication, as well as 
checking the action of materials and parts under extreme weather 

The engine is viewed as a problem in mechanics and 
thermodynamics, the object of research being to find the 
best use of heat. The Laboratories define the automobile 
as a self-contained factory using gasoline and air as raw 
materials and producing chiefly water, carbon dioxide, and 
carbon monoxide, with power produced as a by-product. 
The engineers in this section follow the course of cooling 
air into the combustion chamber, into the exhaust pipes, 
and through the mufflers. At one end of the line is the spark 
plug, at the other end is the muffler, between them lie the 
cooling system and the engine. Along this line are also 
the gears, transmitting power from the engine to the 
wheels; consequently the Dynamics Section studies clutches, 
universal joints, propeller shafts, differentials, axles, and 
steering devices. These involve many varieties of gears. 

280 The Turning Wheel 

The gear is a mathematician's paradise. It entails the study of 
involute, cycloidal, epicycloidal, and hypocycloidal curves. There 
are spur gears, worm gears, helical gears, and spiral bevel gears, 
all with their own individual problems which bring up all sorts of 
technical questions, such as the pressure angle, diametral pitch, 
circular pitch, line of action, addendum, and dedendum. Few 
mechanical parts seem so simple when finished, yet involve so 
much detailed study as a gear. 

Engineers cooperate with those of the manufacturing 
divisions in the continuous effort to improve the perform- 
ance, quietness, smoothness, and durability of automobile 
power plants. This work is never-ending, as models are 
being redesigned all the time, and every change has to be 
studied with an eye to its effect on the entire car. 

The crankshaft, the backbone of the engine, furnishes an interesting 
example of the number of factors influencing the design of various 
parts. The power and speed of the engine, the weight of its moving 
parts, the number and arrangement of its cylinders, all play their 
parts in determining the size and strength of the crankshaft and the 
size of its bearings. Balance and smoothness must not be over- 
looked. To eliminate the roughness inherent in conventional recip- 
rocating engines the crankshaft is usually counterbalanced to offset 
the forces arising from the up-and-down motion of the pistons and 
part of the connecting rod. 

The valves and valve gear bring up their own peculiar problems. 
The intake valves must open and close at the proper time to give a 
full charge of fuel to the cylinders, and the exhaust valves must be 
timed properly to rid the cylinders of the burned gases. These 
valves must open and close several thousand times a minute, noise- 
lessly and without variation, and at red heat. The engineers must 
know materials which can withstand the heat and continuous 
hammering of the valve on its seat. They must calculate proper 
sizes, seat angles, lifts, and timing of the valves to allow a full 
charge of gas to be taken in, and to permit all of the exhaust gases 
to be expelled. The spring must be of correct size and tension, and 
the camshaft must give correct timing without noise. 

An enduring element in this work has been the creation 
of machines for statically and dynamically balancing such 
parts as fly-wheels, crankshafts, clutches and propeller 

Research 281 

shafts. Here was achieved the "harmonic balancer. " This 
device balances out the torsional vibrations in the crank- 
shaft, eliminating an annoying source of noise and undue 
wear as cumulative explosions give periodic blows to the 

A code of General Motors Laboratories might be com- 
pressed into fault-finding and fact-finding. Its engineers are 
paid to find fault with everything about a car. It is the 
spirit of research to be dissatisfied with anything as long 
as improvement remains possible. Dissatisfaction by itself 
is not enough. Knowledge must be extended. New facts 
must be found, in order to help manufacturing divisions 
improve their cars. A Laboratory spokesman has stated 
the case in these words: 

One might think that engineers could design a mechanism perfect 
once and for all if they gave it study enough, but they can't. 
Everyone is changing. Change is the watchword of a progressive 
people and new experience brings new knowledge. 

Research is insurance the General Motors manufacturing di- 
visions take out to help them keep just ahead of the calendar. 

Sooner or later and usually with all possible dispatch, the 
economies developed through research affect prices, giving 
the consumer more value for his dollar. Research is one 
reason why the automobile dollar has brought more values 
in automobiles and tires, consistently, through the past 
fifteen years than the general merchandise dollar. During 
the boom days, when the cost-of-living dollar was worth 
only 68 cents as compared to the dollar of 1914, the auto- 
mobile purchasing dollar was worth $1.28. For many years, 
automobiles and tires were practically the only goods which 
the farmer could buy to advantage, when farm prices were 
compared with those of manufactured goods. For this, 
quantity production and consistent research are jointly re- 

Probably no piece of research has saved the consuming 
public more money than that which resulted in the wide- 
spread use of Duco and other quick-drying finishes for 
motor cars. The costs of painting and varnishing auto- 
mobiles on the old system were high, because fifteen to 

282 The Turning Wheel 

thirty days were required to paint a car. On a heavy pro- 
duction program in a large plant, this meant that as many 
as fifteen thousand cars might be in process of painting at 
one time. "Twenty million dollars in automobiles sitting in 
warehouses waiting for the paint to dryl" A month might 
be required to finish a high-grade car. Regular varnish finish 
which the automobile industry had inherited from the car- 
riage trade was a slow process. A black enamel finish could 
be completed in a few hours, but it was used chiefly for 
fenders, except on cheap cars which might have black- 
enameled bodies. 

In 1921, a 'Taint and Enamel" committee was appointed 
to consider the whole problem of painting and finishing cars. 

The industry absolutely had to have a finish that would decrease the 
time . . . from days to hours; it must not require temperatures 
beyond those wood could stand; it must be as inexpensive as the 
varnishing process yet it must be applicable in all colors and last 
the lifetime of the automobile ... it must have all the advantages 
of enamel and varnish without any of the disadvantages. 1 

These requirements daunted the paint and varnish trade. 
Their representatives said: "You can't change nature." Just 
as the battery people years before had declared that no 
battery could be built strong enough to start a gasoline 
engine, so paint manufacturers, in 1921, considered as im- 
possible whatever was outside of their experience. How- 
ever, in various factories, cellulose nitrate was being sprayed 
on toys. Tests proved that this product dried even too fast 
for motor cars, but this demonstration neatly bracketed the 
research problem. Varnish was too slow; existing lacquers 
too fast. Between these extremes there must be some suit- 
able chemical combination. What was it? 

General Motors Laboratories worked out this particular 
problem with the help of other research staffs, notably that 
of the du Fonts. When the paint manufacturers upheld the 
old methods by saying they produced the best finish in the 
world, he thought, "What they mean is: it's the best finish 
they know anything about." 

lettering and Orth : The New Necessity, pp. 87-8 ff . 

Research 283 

To follow Mr. Kettering and his many associates through 
all the mazes of their inquiry in chronological sequence 
would be too long a story. The riddle was finally solved 
after this manner. About a century ago, a French chemist 
discovered a brilliant, varnish-like coating by dissolving 
potato starch in concentrated nitric acid. A fellow country- 
man of his, using cotton instead of potato starch, called the 
resulting nitro-cellulose "Pyroxylin." Later a German 
chemist treated cotton with a mixture of sulphuric and nitric 
acid result, gun-cotton. After the Spanish-American War 
military and naval needs brought forth cellulose nitrate for 
smokeless powder, and incidentally revived interest in 
cellulose-nitrate lacquers. Low-viscosity cellulose nitrate 
today forms the basis of automobile finishing lacquers. 

Another constituent of automobile lacquer is butyl 
alcohol. With efforts to make synthetic rubber about 1910, 
a microorganism was discovered which converted field corn 
into butyl alcohol, acetone, and ethyl alcohol in the ratios 
of 6 13 : 1. Acetone had commercial use in the manufacture of 
smokeless powder. The common source of acetone was char- 
coal, but when the World War increased the demand for 
smokeless powder there was not enough charcoal available 
for the acetone process. So the greatest of the naval powers 
fell back on the assistance of the humble microorganism 
which devoured corn and turned it into the chemicals men- 
tioned above. Mars' tiny assistant refused to make acetone 
without producing twice as much butyl alcohol; the latter 
was a cumbersome by-product; for years it was thrown away 
as fast as made. The demand for acetone, continuing after 
the war, moved American distilleries, closed by the Eight- 
eenth Amendment, to use their plants in its manufacture. 
One distillery, hoping that some day a use would be found 
for butyl alcohol, stored that liquid in a large swimming 
pool. Eventually they found that butyl alcohol was a good 
substitute for amyl alcohol, long used as raw material for 
making amyl acetate or "banana oil," an important in- 
gredient of certain lacquers. So the cycle of investigation 
and experiment was completed by utilizing a by-product, 
then of almost no value, and which could be made in any 
desired quantity at low cost. 

284 The Turning Wheel 

Today practically every car has a lacquer finish a finish that can 
be applied in less than eight hours; one that is more durable, more 
easily applied, and more attractive than either varnish or black 
enamel. However, the use of this material has not been confined to 
the automobile. It has invaded the home and with it has come 
color furniture, radios and refrigerators are now lacquer-finished. 
. . . this development is a reassurance that nature is still on the 
job and always will be, operating through human agencies to meet 
the ever-increasing and broadening needs of people, providing a 
new substance to replace a disappearing one. There is no waste in 
nature. What we regard as waste is merely a dormant substance 
awaiting the hand of research to start it serving some practical and 
valuable career. 2 

When anyone says that a desired goal cannot be reached 
because the process is contrary to nature, he is referring 
merely to that small segment of nature which he compre- 
hends. To explore that which is at present beyond compre- 
hension is the whole duty of science. 

Industrial science, as pursued under commercial auspices, 
must concentrate upon problems likely to have practical re- 
sults within a reasonable time. Economics enters the scien- 
tific investigation at this point. There must be a nice balance 
between vision and practicality. General Motors has been 
fortunate in preserving that balance. One of the Kettering 
advices which has been taken to heart by the Laboratories 
organization is this: "Engineering must partake as much 
of economic horse-sense as it does of scientific principle." 

The truth of this is revealed in the vast number of patents 
which never reach the market. Like all manufacturers, Gen- 
eral Motors welcomes engineering ideas which come to it 
from outside, but, after these have been thoroughly tested 
from all angles, the verdict is apt to be disappointing to 
the inventors. Statistics show that out of 35,000 inventions 
submitted to a certain manufacturer, only one out of 5,000 
had merit. The inventors of the others apparently had 
wasted their time and money. Obviously, industry cannot 
wait for such random aid. If the tests through which out- 
side inventions must pass are considered to be too severe, it 
must be remembered that millions are at stake in every 

2 Kettering and Orth: The New Necessity, pp. 92-3 ff. 

Research 285 

change introduced into a manufacturing program based on 
quantity production. 

Practical considerations are also behind the work toward 
standardization in which the Laboratories join through 
their association in the Society of Automotive Engineers. In 
the early days of the industry, all automobile parts were 
made by hand or on simple machines. The result was such 
variety that repairs were unduly expensive. Even the manu- 
facturers had difficulty in securing standardized parts. Ac- 
cording to J. K. Barnes, 800 different kinds of lock washers 
were made to fit three or four bolts of varying sizes. Auto- 
mobile makers used 1,600 sizes of steel tubing; one manu- 
facturer alone using 80 sizes. Standardization has now 
brought lock washers down to 16 sizes and steel tubing 
to 17 sizes in 13 thicknesses. Two hundred and thirty alloy 
steels have been reduced to 50 varieties. More than 200 
parts and materials used in automobile manufacture have 
been standardized since 1910. 

On the subject of standardization, Mr. Kettering has this 
to say as to the benefits automobile owners have received 
as a result: 

That word "interchangeable" is the sum and substance of all stand- 
ardization. It is the key to mass production. Fabrication has 
become a matter of timed operations rather than of individual 
ingenuity in getting mismatched pieces together. There are specified 
tolerances that are rigidly adhered to. Pieces are no longer antag- 
onistic. They are interchangeable they fit. And the owner now- 
adays, when a plug fails him, goes to an accessory shop or maybe 
to a corner filling station, and asks for a spark plug. In about the 
time it takes to replenish the water in the radiator, it has been 
installed and he is on his way again. The owner and the manufac- 
turer both profit by this new form of simplicity. It has been 
estimated that the annual saving to the automobile industry alone 
amounts to three quarters of a billion dollars. 8 

There are constants in the automobile business, plenty 
of them; but, paradoxically, the greatest constant of all is 
change. He who stands still is lost. The public must be 
wooed through change as well as through quality; science 

3 Kettering and Orth: The New Necessity, p. 100. 

286 The Turning Wheel 

and art provide the material for beneficial change in such 
abundance that the timing of change becomes an all- 
important factor; hence the question which management 
faces is not so much, "Shall we change?" but rather, "How 
and when shall we change?" Mr. Kettering calls his re- 
search workers "economic-change men." They provide the 
management with changes from which it can choose those 
for which it considers the public is ready. 

Not all beneficial changes can be introduced drastically 
as soon as they have been developed. While the public in- 
sists on change, it prefers evolution to revolution. Millions 
can be lost by being too far ahead of the times, just as they 
can be lost by being too far behind the times. The average 
man likes to move forward by short steps on firm ground 
rather than by long leaps into what he considers the dark. 
Scientists may be quite aware that the fancied darkness is 
really broad daylight, but there is nothing gained by argu- 
ing against a public prejudice in expensive advertising space. 
In a year or two, the public may have caught up, and then 
may accept gladly what would have been rejected before. 
The findings of the economic-change men of General 
Motors must consequently be winnowed through the sieve 
of public acceptances. 

In acting as a general staff for the engineers of all the 
Corporation's manufacturing divisions, the Research Labo- 
ratories are not confined to the automobile field. As the 
Corporation grows in the diversity of its products, the Re- 
search Laboratories also tend to become more diversified. 
Various of its members have done effective work in re- 
frigerants; others are likely to give keen attention to the 
future of aero-dynamics. General Motors has recently be- 
come a large factor in aviation, and the Research Labora- 
tories henceforth may consider aviation as well as auto- 
motive problems. 

Back of the whole research program is the progressive 
philosophy that one change leads inevitably to another, that 
new goods produce new wants, and that through innova- 
tions in the conveniences of life both man and society reach 
higher levels of comfort and efficiency. The director of the 

Research 287 

Research Laboratories has quoted approvingly this state- 
ment of Thomas A. Edison, and the Laboratories staff 
will do its part to raise what Mr. Edison calls the "think- 
ing capacity of society," by applying its cumulative experi- 
ence and specialized wisdom to more and more fields of 
applied science : 

... the automobile has done more to make America a nation of 
thinkers than any other invention or agency. The great value of 
the automobile is not the fact that it has made it easier and quicker 
and cheaper to go to places, but the fact that it has inspired several 
million people to go. It has set their gray matter to work. It has 
revealed to them how petty and meaningless their lives were 
becoming. . . . Most of us view the automobile principally as a 
great business and manufacturing achievement. It is but it is a 
greater educational achievement. In the beginning we were a 
pioneer people a restless people. But when things came easier for 
us we began to lose our restlessness. The automobile is helping to 
restore it. And that is one of the most healthful signs of the present 
generation. Restlessness is discontent and discontent is the first 
necessity of progress. Show me a thoroughly satisfied man and I 
will show you a failure. The wheels of progress especially those 
of the automobile have worked results which may be called 
miracles. But their service has been to raise the thinking capacity 
of society. 

This statement by the great Edison is one of the most 
penetrating tributes ever paid to the automobile industry; 
and, beyond that, it is a stirring declaration of the spirit 
which moves General Motors Research Laboratories a 
reasoned dissatisfaction with what is, a reasoned certainty 
that what it does will improve the lot of mankind. 

Chapter XX 




.HE year 1908 seems to have been a lucky one for indus- 
trial beginnings, particularly in Michigan and the automobile 
trade. In that year General Motors was born and also 
Fisher Body, destined to become one of its larger subsid- 
iaries and of such proportions that, standing by itself, it 
would be one of the nation's most important industries. 

Six Fisher brothers, all craftsmen, were led to Detroit 
and fortune by the eldest of them, Fred J., who came 
to the hub of the automobile world from Norwalk, Ohio, 
in 1901, where their father, Lawrence Fisher, made car- 
riages and wagons. The brothers, learning their trade 
under the father's watchful eye, were vehicle craftsmen of 
the third generation, the grandfather Fisher having been 
skilled in that art in Germany, though in this country known 
as a merchant in Peru, Ohio. His son, Lawrence, lived to a 
ripe age and, before his death in 1921, had the satisfaction 
of seeing six of his sons rated among the masters of their 
craft in America. These six brothers Fred J., Charles T., 
William A., Lawrence P., Edward F., and Alfred J., are 
today actively associated in General Motors, Fisher Body, 
and many other large enterprises. 

Going to work in Detroit for C. R. Wilson Body Com- 
pany, then the largest firm in the automobile body business, 
Fred J. Fisher rose to be superintendent. Within four 
years he and Charles T. Fisher, who had been associated 
with him at Wilson for two and a half years, formed Fisher 


Body by Fisher 289 

Body Company, incorporating in Michigan in July, 1908, 
for $50,000, with slightly more than $30,000 paid in. 

A few months later Louis Mendelssohn and Aaron Men- 
delson became associated with the Fishers, obtaining a sub- 
stantial financial interest, and also became actually engaged 
in the business, the former as treasurer and the latter as 
secretary, remaining in these positions until the time Fisher 
became a part of General Motors Corporation. 

The venture looked hopeless to many. The country was 
still shaken from the effects of the 1907 panic. Money was 
tight; general business slow. For those who have courage, 
however, a "bad" time is the best time to start a business 
then a bold man can rent real estate cheaply, and can get 
his pick of the labor market. If he knows his business bet- 
ter than his competitor, he is safe in starting at scratch, be- 
cause his costs will be lower than those of his competitors. 

The business prospered from the start, since these Fisher 
brothers the younger brothers soon joined the older ones 
in Detroit knew how to build automobile bodies superla- 
tively well. There was plenty of room for improvement in 
body building. The older concerns had been builders of 
carriage bodies, and they brought the simple arts and 
machinery suitable for carriage bodies over into the auto- 
mobile business with as few changes as possible. Hence, 
they were a little slow to realize that far greater strength 
and resilience were required for powered vehicles than for 
drawn vehicles. As a result, early automobile bodies soon 
became loose and noisy under road shocks. Even relatively 
simple open bodies did not give continuous satisfaction. 

The Fishers kept their eyes on closed car possibilities 
from the start. They saw that motoring would remain a 
summer sport until drivers and owners could be com- 
fortable in the winter months. Women would never be really 
pleased with the automobile so long as their gowns and hats 
were at the mercy of wind and weather. After pressing 
these points on car manufacturers for two years, they were 
at last rewarded in 1910 by an order from Cadillac for 150 
closed bodies, the first "big order" for closed car bodies 
ever placed in America. Seeing more business ahead in 
this line, the Fishers organized the Fisher Closed Body 


The Turning Wheel 

Company in December, 1910, thus initiating the march of the 
closed car to a position where it now dominates the market, 
with approximately 95 percent of all American cars carry- 
ing closed bodies. In 1912 Fisher entered Canadian produc- 
tion with Fisher Body Company of Canada, Ltd., at 

These plants turned in combined profits of $369,321 
in 1913-14, $57^,495 in 1914-15* and $i,39>59 2 in 


One of the Founders of Fisher Body 

1915-16, profits based on increasing quantities and de- 
creasing unit costs. Indeed, one of Fisher's greatest difficul- 
ties was inducing manufacturers to place reasonable prices 
on closed cars, consonant with the prices Fisher charged for 
their closed bodies. At this period the company contem- 
plated entering the automobile business in order to break 
the deadlock and bring closed cars to the public at fair 
prices. Finally one manufacturer broke away from the old 
practice; others followed, and closed cars became popular. 

Body by Fisher 291 

The vigorous organization, pushing on, merged its three 
companies into the Fisher Body Corporation, incorporated 
in New York, August 22, 1916. Authorized stock was 
$6,000,000, par $100, 7 percent cumulative Preferred 
stock, of which $5,000,000 is shown as issued, and 200,000 
shares of Common stock, no par, but valued at approxi- 
mately $10 a share in an early statement. Starting with 
little more than $30,000, in 1908, Fisher Body had climbed 
in eight years to the point of owning land and buildings 
worth more than $2,000,000, and machinery worth nearly 
$1,500,000. Its capacity was 370,000 bodies a year, the 
largest in the industry. 

In 1919, after three successful years in which the Fisher 
name had become established, the Fishers sold to General 
Motors Corporation a three fifths interest in the Fisher 
Body Corporation, 300,000 of the then outstanding 
500,000 Fisher shares at $92 a share, for $27,600,000, on 
a series of five-year notes. General Motors agreed to pur- 
chase all its automobile body requirements from Fisher for 
ten years. The management remained with the Fishers. 

Both parties reaped substantial advantages from this 
arrangement. General Motors placed its body business with 
the leading producer. On the other hand, Fisher Body 
solved a problem which had been growing in proportions as 
Fisher increased in size. With a $20,000,000 property to 
conserve, it became a matter of prudence for Fisher to safe- 
guard its future by seeking an assured outlet. There were 
several ways in which greater security might be obtained. 
One way was for them to manufacture automobiles, a plan to 
which serious thought was given. Two other manufacturers 
were in the market for the Fisher connection when the Gen- 
eral Motors union was being considered. General Motors 
was accepted partly because of the Corporation's stability, 
partly because its cars occupied a wider price range than 
those of any competitor. While Fisher was interested in 
quantity production, it was also interested in continuing to 
build high-priced bodies for cars with quality reputation. 
General Motors offered the connection under which the 
Fishers could best maintain their leadership which had been 

292 The Turning Wheel 

firmly planted in the public mind by their consistent build- 
ing of quality bodies. 

With this important transaction completed, Fisher ex- 
pansion went on swiftly, the whole automotive world being 
then in an expansive mood. National advertising began to 
carry the craftsmen's name to the public. Fisher Body Ohio 
Company was incorporated October 17, 1919, in Ohio, to 
produce bodies in a Cleveland plant. The capitalization 
was $10,000,000 of 8 percent cumulative Preferred stock, 
par $100, and 100,000 shares of Common, no par. Control 
was in the Fisher Body Corporation but Cleveland capital 
was largely interested. The plant erected there, with 
1,500,000 feet of floor space, was then the largest body 
plant in the world, with capacity for 7,000 employees. It is 
now the second largest of the Fisher plants, having been 
surpassed by Flint No. i. Fisher Body Corporation 
eventually acquired the entire stock of the Ohio company. 

To insure its threatened glass supply, Fisher made a 
$4,000,000 investment in National Plate Glass Company, 
acquiring control. This leading plate glass producer had 
been incorporated in Maryland, January 17, 1920, to 
acquire three large and well known glass factories : Colum- 
bia Plate Glass Company at Blairsville, Pennsylvania, 
organized 1901; Federal Plate Glass Company at Ottawa, 
Illinois, organized 1903; Saginaw Plate Glass Company, 
Saginaw, Michigan, organized 1900. These companies had 
a combined annual capacity of 11,000,000 square feet of 
plate glass, and under a ten-year contract with Fisher Body 
dated January i, 1920, they obtained an assured outlet for 
their product in the growing closed car trade. 1 

General Motors made a further investment of approxi- 
mately $4,500,000 in Fisher Body in the up-swing of 1923. 
Fisher prospered greatly in the next three years, a period 
marked by the acquisition of Fleetwood Body Corporation, 
dating from 1919, and the purchase or building of large 
properties in many parts of the country. On June 30, 1926, 
the outstanding minority interest in Fisher Body Corpora- 
tion passed to General Motors Corporation on the basis of 

1 Part of Fisher interests in National Plate Glass Company have since been 
acquired by other companies. 

Body by Fisher 293 

one and one half shares of Fisher for one of General 
Motors, 664,720 shares of General Motors Common being 
paid. In the following year General Motors completed 
acquisition of Fisher Body Ohio Company. Since 1926 
Fisher Body Corporation has functioned as a division of 
General Motors, but remains under Fisher management. 
Fred J., Charles T., Lawrence P., and William A. Fisher 
are directors of General Motors. Mr. E. F. Fisher is vice- 
president in charge of production in the far-flung Fisher 
manufacturing activities, and Mr. A. J. Fisher is vice- 
president in charge of engineering, a responsibility em- 
bracing the creation and development of as many as seventy 
individual body types and styles annually for General 
Motors cars. 

Before Fisher Body Plant No. i at Flint, Michigan, now 
the largest in the world, was taken over from Durant 
Motors, Buick bodies had been completed in Detroit and 
were hauled to the Buick plant by truck and trailer over 
the Dixie Highway. These long, box-like vehicles moving 
on the Dixie were familiar sights for many years to 
Michigan motorists. Fisher's decision to build Buick bodies 
in Flint started that city on another wave of growth, since 
the plant employed in normal times 5,500 men in its more 
than 2,000,000 feet of floor space. Large as this plant was 
when Fisher took it over in 1926, it was further expanded. 
Fisher Plant No. 18 in Detroit employs almost as many 
men as Flint No. i. Were it not for new handling methods 
originated to conserve floor space, labor and materials, still 
larger factories would be required for the huge production. 

Fisher Body is the world's Largest user of steel for auto- 
mobile body construction, its requirements reaching 335,- 
000,000 pounds a year. On all models, from the lowest in 
price to the highest, the sturdy body is encased in steel, 
electrically welded into a single unit. Strength and safety 
body-tests applied to the lowest priced Fisher-equipped car 
have shown resistance to 12,000 pounds (six tons) diagonal 
pressure without appreciable damage to any part of the car 
or body structure. 

Among the many advances achieved in these bodies is the 
extensive use of solid steel panels. Special steel had to be 


The Turning Wheel 

developed flexible enough and strong enough to endure 
tremendous strain. Years of patient work on the part of 
Fisher engineers and steel mill experts finally produced a 
metal which could be drawn large enough for a body panel 
under a pressure of 800 tons. The typical Fisher Body of 
today incorporates the strength of some 200 basic parts, on 
which more than 1,200 distinct operations are performed 
to make certain of their accuracy and quality. All the body 
parts for a given model are as interchangeable as machine 

Miniature Napoleonic coach, winner in one of the competitions of 
the Fisher Body Craftsman's Guild 

The Fisher No Draft Ventilator system, applied in 1933 
to all General Motors cars, provides a solidly built-in ven- 
tilator pane for each side window. The ventilator and the 
window can be regulated, independently of one another. 
Fresh air can be drawn in without causing drafts, and any 
individual passenger can get as much fresh air as he likes 
without disturbing his companions. Smoke and stale air are 
drawn out by the vacuum created by the motion of the 
car. After the division engineers designed the system, its 
subsidiary, the Ternstedt Manufacturing Company, was 
called upon to produce it in tremendous quantities, for the 
system was no sooner perfected than it was decided to use 
it on all models. Twenty-five hundred men were put to work, 

Body by Fisher 295 

days, nights and Sundays, and in thirty days had all the 
necessary machines, tools, dies, plating units, punch presses, 
polishing machines, etc., designed and produced and were 
turning out 2,000 sets or 6,000 "ventipanes" a day. 

Another advanced contribution is safety glass. All wind- 
shields and ventipanes are made of laminated glass which 
under impact may be broken without shattering. Polished 
plate glass is used in all Fisher Bodies, in such volume that 
the National Plate Glass Company, which they then owned, 
became one of the world's largest glass manufacturers. 

The metal fittings which are used in Fisher Bodies are 
made by the Ternstedt Manufacturing Corporation of 
Detroit, a Fisher subsidiary which takes its name from the 
late Alva K. Ternstedt. Ternstedt became nationally known 
to motorists in 1920-21, when Fisher introduced the Tern- 
stedt window regulator, the first dependable built-in and 
concealed window control for closed cars. In developing 
Ternstedt to its present proportions, Fisher merged into it 
three companies : International Metal Stamping Company, 
Shepard Art Metal Company, and England Manufactur- 
ing Company. In the Ternstedt organization, Fisher 
gathered, for the first time in the history of the industry, 
a complete staff of appointment engineers, designers, artists, 
and modelers, prepared to fill the modern demand for 
artistic harmony of design in body hardware, interior 
fittings, and similar appointments. 

One of the important elements to which the Fishers have 
always devoted unsparing attention in the building of 
bodies is the quality of quiet. When they began to build 
bodies, closed cars were the rich man's toy, ridiculed as 
"show cases," and seldom driven outside of cities. Even 
open bodies rattled and creaked. The central problem of 
body-building all along has been to increase strength and 
quietness without increasing weight. Progress to the present 
degree of excellence has called forth the best efforts of a 
large staff of engineers. 

Finally, there is the decisive quality of style. Its pursuit 
begins of course with initial designs. After these have been 
discussed with the car manufacturer and a choice made, a 
one quarter size clay model of the car is built in the Art and 

296 The Turning Wheel 

Color section by skilled sculptors. This model is also care- 
fully considered and changed until it suits the fastidious 
tastes of all concerned. Then another model is made, and if 
found satisfactory, a full-sized wood and clay model is con- 
structed in the exact dimensions of the complete car, the clay 
being rubbed down to the smoothness required for a perfect 
finish. This is then finished inside and out according to 
color schemes worked out by the Color section. In the lac- 
quered body, the upholstered interior with its hardware 
trimmings, one sees an exact reproduction of the car as it 
will appear on the sales floor. Months pass in these elabo- 
rate preparations for manufacturing the automobile as a 
style vehicle. 

Color has dominated automobile styling since about 1925, 
when the Duco finishes made it possible to meet a public 
demand for color which had already been roused by manu- 
facturers in other lines. In his book, . . . and then came 
Ford, Charles Merz says of this period, 

. . . The invention of pyroxylin finishes had changed the raiment 
of the fashionable car from dark blue or black to hues as delicate 
as the pale tint of an Easter egg or as ruddy as a sunset. "The tend- 
ency toward a more varied color-scheme was apparent in 1925," 
the New York Times observed, "but with the beginning of 1926 
the trend toward color was seen to be a stampede." 

The color obsession led to bizarre effects in motordom 
for a while; later tendencies are more restrained and re- 
fined. More than 800 colors were taken on by the industry 
after 1923, and as a result one of the chief tasks has been 
to simplify color schemes. This has been done through 
analysis of the spectrum, breaking up the rainbow into its 
nine steps; white, black, red, yellow, orange, green, blue, 
indigo, and violet, each hue with its accompanying tints and 
shades. By this means "off colors" are sorted out and thou- 
sands of possibilities reduced to 450. Of these 150 are un- 
suited for automobile use. The remaining 300 are possibili- 
ties. By the use of Maxwell's color wheel, to which colored 
discs are adjusted with certain areas exposed, it is deter- 
mined just what proportion of the various primary colors is 

Body by Fisher 297 

required to produce a desired blend. By this means blended 
colors are fixed so accurately that each can be reproduced 
faithfully on each new shipment of cars. All these refine- 
ments come to market in General Motors cars with Fisher 

From antiquity down to the present, style and decora- 
tion have been influential in vehicle design. Excavations in 
the strata of buried civilizations bring forth evidence that 
the chief's chariot was as elaborately ornamented as his 
shield and helmet. All through the coach-and-four period, a 
man's carriages indicated his rank and fortune. The coaches 
of royalty and aristocracy received the attention of noted 
artists as well as of skilled craftsmen. In recognition of 
their beauty, Fisher adopted as its emblem a silhouette 
derived from the designs of two coaches used by Napoleon 
Bonaparte, one at his coronation and the other at his mar- 
riage to Marie Louise. These are among the finest examples 
of coach work of the pre-automobile days and the emblem 
drawn from them is one of the most significant symbols of 
quality in modern workmanship. It represents the artistry 
of an unhurried age which Fisher, in spite of its mechanical 
prowess, holds as a standard before its staff and extends as 
a pledge of quality to the users of Fisher Bodies on General 
Motors cars. 

The growth of Fisher Body has been phenomenal. In 
fifteen years after its founding, the muster roll of Fisher 
employees had grown from 300 to 40,000. Fisher built 
105,000 bodies in 1914, and more than five times that num- 
ber in 1924. In its twenty-five years of existence, Fisher 
has produced more than 9,000,000 automobile bodies im- 
pressive as emphasizing the recognition of Fisher crafts- 


No review of the growth and character of the Fisher 
Body Corporation would be complete without attention to 
the Fisher Body Craftsman's Guild. 

The purpose of the Guild is to foster the ideals of true 
craftsmanship among boys of high school and college age 


The Turning Wheel 



















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300 The Turning Wheel 

in the United States and Canada. In form and spirit it is a 
revival of the picturesque workers' guilds of the Middle 
Ages. Its membership today numbers 750,000 boys, in all 
parts of the United States and Canada, and in the three 
years since it was organized (1930), the Guild has earned 
international recognition. 

Fourteen leading personalities in academic and practical 
engineering training serve on its honorary board of judges. 
An advisory board, made up of the heads of secondary 
public school systems and of leaders in manual arts teach- 
ing, gives the Guild the benefit of its members' experience 
in dealing with boys from twelve to twenty years of age. 

In more than 2,000 high schools, in nearly 600 major 
cities of the United States, the Guild is now an accepted 
and approved educational activity for boys. The Y.M.C.A. 
endorses and encourages it. The only recognition which the 
National Headquarters, Boy Scouts of America, has ever 
extended to another activity among boys is given to the 
Guild. Daniel Carter Beard, National Commissioner, Boy 
Scouts of America, is honorary president of the Guild. 

The President of the United States, presidents, premiers, 
ministers of public instruction, such personalities as Gen- 
eral Baden-Powell, founder of the world Boy Scout 
movement, the Governors of all the states in the Union, and 
the Lieutenant-Governors of all the provinces of Canada, 
commend the ideals and purposes of this institution. 

The Guild for the last three years has provided an an- 
nual competition in craftsmanship, in which any boy in the 
United States or Canada over twelve years old and not 
more than nineteen may enter. The principal awards for 
excellence in this competition have been a series of four- 
year university scholarships valued at $5,000 each. This 
year's competition (193334) provides twenty-four uni- 
versity scholarships, ranging from $500 to $5,000 and with 
a total value of $51,000. 

The subject of competition is the reproduction of a mini- 
ature model of the Napoleonic coach. This tests skill, per- 
severance, and patience. It also offers the widest opportunity 
for skill in metal-craft, wood-craft, paint-craft and trim- 

Body by Fisher 


The Guild today has ten of its alumni, winners of first 
awards, in American and Canadian universities. Five others 
are fitting themselves to enter universities. In addition, the 
Guild has distributed 3,220 other substantial awards for 
excellence in craftsmanship. 

The president of the Guild for the United States is 
Mr. William A. Fisher, president of Fisher Body Corpora- 
tion; for the Dominion of Canada, Mr. R. S. McLaughlin 
is president. 




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Chapter XXI 


RIGIDAIRE entered the General Motors family as a result 
of one of W. C. Durant's lightning intuitions. The Murray 
Body Company, long established in Detroit as automobile 
body builders, organized the Guardian Frigerator Company 
in 1916 as a pioneering project in the then almost virgin 
field of electric refrigeration. The head of the firm told 
Mr. Durant that all was not going well with Guardian. 
There seemed to be a little family friction, since the Murray 
boys had none of their father's faith in the enterprise. This 
is scarcely to be wondered at, as the whole concept of elec- 
tric refrigeration in small units for household use was still 
untried, and Guardian had scarcely crept beyond the stage 
of rather discouraging experiments. 

Mr. Murray took Mr. Durant to the fourth floor of an 
old factory building, where he found several refrigerators 
in various stages of manufacture, and a most inadequate 
machine equipment two lathes, a shaper, a hand milling 
machine, drill press, tool grinder, and hand tools. Three 
quart-bottles sufficed for the distillation of the sulphur 
dioxide used as the refrigerant. Only fifty Guardian refrig- 
erators had been made and sold during the year; the con- 
cern was losing money, and the elderly Mr. Murray could 
see heavy losses present and to come. 

It was Mr. Murray's idea that Mr. Durant should put 
in new money and let Guardian continue, but this did not 
suit Mr. Durant's purposes. Negotiations held fire for some 


Frigidaire and Electric Refrigeration 305 

time. Even before 1918, when he made a personal invest- 
ment in Guardian, Mr. Durant told a gathering of General 
Motors executives and their financial friends that here was 
a babe-in-arms destined to rapid growth and likely before 
many years to earn enough to pay the salaries of all the 
staff at General Motors headquarters. His listeners looked 
at him with amazement, yet it came to pass within ten years. 

The naming of Frigidaire is thus described by Mr. 
Durant. He recollects that he wrote to various of his 
friends describing the new article of merchandise and asked 
for suggestions. Lists of names came in from many sources 
and Frigidaire, the creation of an Ohioan, was selected. It 
has since become a household word in all parts of the world. 

Guardian became the Frigidaire Corporation on the 
eighth of February, 1919, taking the name previously given 
to the product. On March 2ist following, the directors of 
General Motors authorized the purchase- of the capital stock 
of Frigidaire for $56,366.50, which represented the amount 
Mr. Durant had invested in it, his intention from the first 
having been to link it with the Corporation as soon as it 
showed promise. Manufacturing continued in Detroit un- 
til 1920, when the business was turned over to the Delco- 
Light Company of Dayton, Ohio, created out of Domestic 
Engineering Company. 

The rapid growth of Frigidaire dates from this change 
of base and management. Delco-Light, making individual 
electric light plants for homes and farms, had already 
mastered the difficult art of specialty selling. In the rede- 
signing of Frigidaire, Delco-Light was fortunate in having 
available the services of C. F. Kettering, now General 
Motors' vice-president in charge of research, and also vice- 
president of Frigidaire Corporation. Already Mr. Ketter- 
ing had developed Delco equipment for automobile 
lighting, starting, and ignition. For years he had been 
keenly interested in electric refrigeration for rural homes, 
as an adjunct of Delco-Light plants. Ever since Frigidaire's 
move to Dayton he has taken a leading part in its engineer- 
ing councils. 

Selling at a relatively high price $750 and up in a 
skeptical market, Frigidaire had to be pushed with 

306 The Turning Wheel 

determination until costs could be brought down by quantity 
production. The early years developed these figures in 
units sold : 

1921 365 

1922 2,000 

1923 4,700 

1924 20,000 

These jumps in production reveal the influence of mass 
production methods, lower prices, improved sales methods, 
and the development of overseas markets. Frigidaire had 
to carry the novel message of electric refrigeration directly 
to the consumer, breaking down the household habits of 
centuries. As the product improved, the market became 
more receptive, and sharp price cuts kept public favor from 
lagging. Sales mounted with dizzy speed. Meantime the fac- 
tories at Dayton, operated on triple shifts, were being con- 
stantly enlarged and improved by the installation of special 
mass-production machines and systems. Today Frigidaire 
occupies fifty-three acres of factory space. 

By 1926 Frigidaire had so far outstripped Delco-Light 
in sales that a separation was advisable. The present Frigi- 
daire Corporation was formed, and in 1930 Delco-Light 
was transferred to the North East plant at Rochester, 
New York, and rechristened Delco Appliance Corporation. 

In 1926 Frigidaire abandoned the wooden cabinet in 
favor of sheet metal built on a wooden frame. Porcelain 
was applied first to the inside of the refrigerator, but its 
superiority over paint for inside finish soon brought porce- 
lain to the exterior of the new metal cabinet Frigidaires. 
In the present factory layout is located the largest porcelain- 
enameling plant in the world. 

Export sales multiplied amazingly, taking one seventh of 
total production, and employing an overseas staff of 2,000 
persons. Every civilized country in the world had its staff 
of Frigidaire salesmen, and many lands which would hardly 
be considered civilized in the ordinary sense of the word 
have seen Frigidaires installed at the instance of aggressive 
representatives. The export trade is still predominantly 

Frigidaire and Electric Refrigeration 307 

commercial, while in the United States the bulk of installa- 
tions is for household use. 

Household refrigeration was the first concern of Frigi- 
daire, but in 1923, at the request of ice cream manufac- 
turers, the company undertook to supply them with special 
cabinets for their retail outlets. Since that time, partly as 
a result of its ever-improving compressors, Frigidaire has 
entered appropriate machines in many other fields of retail 
business groceries, meat markets, restaurants, dairies, and 
florists' shops. 

Electric water coolers for office buildings and factories 
were added in 1926. Frigidaire builds six types of individual 
water coolers and three tank types, and cooling equipment 
for draught and bottled beer and other beverages. The en- 
tire Frigidaire line consists of 155 different models in 19 
various lines. Among these are 12 models of household 
refrigerators, de-humidifiers and several types of air con- 
ditioners for domestic and commercial uses as well as com- 
plete air conditioning equipment for railway cars. 

The last two lines represent Frigidaire's entry, in 1932, 
into the new and growing business of air-conditioning, a 
logical move in view of the Corporation's long experience 
with electric refrigeration and its advance from small 
wooden refrigerators for household use to the cooling of 
large rooms for fur storage, and other extensive installa- 
tions. Frigidaire engineers have already installed air- 
conditioning equipment in hundreds of homes, offices, and 
stores, sometimes under difficult conditions due to the fact 
that the buildings were not properly designed for the pur- 
pose. Their experience indicates that air-conditioning offers 
possibilities fully equal to those already realized in electric 

Frigidaire air-conditioning equipment was selected to 
provide the requisite conditions and controls for the 
comprehensive allergic tests conducted at Johns Hopkins 
University, Baltimore, Maryland, by Dr. Leslie N. Gay, to 
determine whether high altitude conditions favorable to 
hay fever and asthma victims could be reproduced in homes 
and offices for the relief of sufferers. 

308 The Turning Wheel 

In summarizing his results, Dr. Gay reported: 

The experiments in the treatment of pollen hay fever and asthma 
with air-conditioned atmosphere represent a new method of attack. 
Complete relief was given to patients suffering with symptoms of 
hay fever, whether they occupied the room for several hours or for 
longer periods of time. Striking relief was given to patients suffer- 
ing with pollen asthma within twelve hours after admission to the 
room. For individuals who can make provision for such atmosphere, 
whether in their homes or offices, great relief can be offered. 

A new refrigerant at a lower cost, Freon, odorless, non- 
corrosive, non-inflammable and non-toxic under ordinary 
conditions, lately developed in the research department of 
Frigidaire, is expected to be a factor in all the branches of 
temperature control. 

At the peak of production Frigidaire employs more than 
11,000 persons in its Greater Dayton plants, uses thirty- 
five carloads of steel a day, consumes more silver solder 
than any other manufacturer in the world, and is one of the 
world's largest copper consumers. Eighteen porcelain fur- 
naces operate continuously, 300,000 pieces being given 
three burns each and consuming 400 tons of porcelain frit 
each month. Four production lines creep through the 
Moraine City plant, and there are two conveyors, each a 
mile and a quarter in length, carrying materials to the 
thousands of workmen stationed along the assembly lines. 
The impressive technique of material movement worked out 
in the automobile industry had been applied fully by 
Frigidaire in its building of electric refrigerators. Refrig- 
erators are given tests for temperature, in which ther- 
mometer readings are taken inside the food compartment 
while the cabinet stands in a room at 90 degrees, a running 
test of three hours, and a noise test in a room arranged to 
amplify sound hundreds of times. 

The public has purchased more than half a billion dollars' 
worth of Frigidaires. The 2,5OO,oooth Frigidaire left the 
factory at Dayton on July 8, 1932, for a cruise around the 
world and was displayed by a Frigidaire dealer in every 
port of call. 

Within fourteen years, the period of General Motors' 
association with Frigidaire, electric refrigeration has come 

Frigidaire and Electric Refrigeration 309 

to be standard equipment. The evolution has been from 
wood to porcelain, from complexity to simplicity of opera- 
tion and repair, from small units to large, until in modern 
air-conditioning one finds entire buildings under tempera- 
ture control. Costs have steadily been reduced, dropping 
from a minimum price of $750 in 1921 to $96 in 1933 for 
a much superior but smaller refrigerator. This represents a 
turnover for quantity production and intelligent sales effort 
unsurpassed in any field of American enterprise. 

Frigidaire is General Motors' largest producer in the 
non-automobile field. Mr. E. G. Biechler has been president 
and general manager since 1926 when the present Frigi- 
daire Corporation was incorporated. 


Chapter XXII 


ENTION has been made of the steam "drags" built in 
England and France from 1821 on, some of which were 
used alternately in towing both goods and passengers in 
trailers. In America, the first power road vehicle especially 
designed for goods transport was a huge steam traction 
engine begun in New York City in 1858, shipped West, and 
assembled there to haul goods from the Missouri River 
to Colorado. It broke down on its first trip seven miles after 
starting, the spot being marked by a monument at Nebraska 
City, Nebraska. 

Better luck attended the self-propelled "steamers" built 
for fire-fighting purposes by the Amoskeag Mills at Man- 
chester, New Hampshire, one of which was bought by the 
City of Boston after it had been rushed there to help fight 
the great fire of 1872. Hartford, Connecticut, bought a 
steam fire fighter, the Jumbo, in 1876. Many other less suc- 
cessful attempts to develop self-propelled fire-fighters are 
on record, one having been built by the famous Captain 
Ericsson as early as 1840. 

Gasoline delivery wagons began to appear shortly after 
the light gasoline cars proved their superiority over steam 
and electric vehicles in the Chicago race of 1895. The 
Langert Company of Philadelphia entered one in the Cos- 
mopolitan race of 1896. An interesting early variant was 
a sightseeing stage built by C. S. Fairchild of Portland, 
Oregon; this carried eighteen passengers and was powered 
by a kerosene engine. 


Commercial Vehicles 311 

Among the pioneers in commercial vehicles were : 

Charles E. Woods of the Woods Motor Vehicle Com- 
pany of Chicago, builder of light electric delivery 

Hiram P. Maxim, then connected with the Pope Com- 
pany at Hartford, Connecticut. 

Early motor fire engine, then largest in the world, owned by Hart- 
ford, Connecticut. From Cosmopolitan Magazine, 1896 

L. F. N. Baldwin, who converted a Boston horse van into 
a steam wagon with a 6 horsepower engine and a side 

Alexander Winton, whose Winton delivery wagon was 
the first gasoline commercial vehicle produced for sale 
in any quantity, eight being under construction in 
October, 1898. 

Charles E. Duryea, also in 1898, with a three-wheel gaso- 
line delivery wagon, weight 1,000 pounds. 

A. L. Riker, who built for B. Altman & Co., New York 
City, in 1898, electric delivery wagons which were 
the first to be operated regularly by a large metro- 
politan store. 

312 The Turning Wheel 

Electric vehicles, with the Pope and Whitney millions 
behind them, had the better of their gasoline and steam 
competitors in the late 'nineties, not only in the matter of 
city goods deliveries, but also in cabs for hire. Electric cab 
service began in New York City in 1 897, and soon after was 
extended to other cities under the same financial auspices. 
Electricity held the advantage for some years against the 
challenge of steam and gasoline; but its prestige was 
weakened in 1900 when Altman's, after three years* trial of 
electrics, switched to gasoline delivery wagons. However, 
only three gasoline cars were exhibited in Madison Square 
Garden at the 1900 show, the first exclusive automobile 
show held in America. In that year Detroit Automobile 
Company, predecessor of Cadillac, introduced a most 
advanced gasoline delivery wagon, unusual for its 
aluminum, gun metal, and nickel axles. No market seems 
to have been found for it, however. The year 1900 saw also 
the founding of the Autocar Company of Philadelphia and, 
in Detroit, the first step in the evolution of General Motors 


In 1900 Max Grabowsky built and sold to the American 
Garment Cleaning Company a commercial vehicle, pow- 
ered by a single-cylinder horizontal engine. In 1902 he 
organized the Rapid Motor Vehicle Company which put 
out 200 units in its first year. Moving to Pontiac in 
1904, Rapid erected there the first building in America 
for the exclusive manufacture of self-propelled commercial 
vehicles. In 1908 General Motors acquired a majority of 
Rapid Motor Vehicle stock. Shortly afterward Reliance 
Motor Truck Company of Owosso, organized in 1905, also 
came into General Motors, and a sales company was organ- 
ized to handle the output of both truck companies under the 
name of General Motors Truck Company. This company 
took over manufacturing operations in 1912, and moved 
Reliance to Pontiac in 1913. 

Between 1900 and 1910 the gasoline commercial car 
developed a decided supremacy for all-round use, but the 
electric delivery wagon had made a place for itself in cities 

Commercial Vehicles 313 

and for light merchandise. The rout of the steam cars, 
however, was complete. The light steam delivery wagon 
disappeared from the market by 1905, the heavy steam 
truck by 1910. Except for a few pioneers, like Rapid, which 
staked everything on truck specialization, most of the trucks 
produced from 1900 to 1910 were adaptations of com- 
mercial bodies to stock passenger car chassis. In the next 
five years of fast and furious evolution the commercial 
vehicle manufacturers had settled down more or less to a 
standard type "distinguished by a pressed or rolled steel 
frame, four-cylinder vertical engine mounted in front, 
water-cooled, with magneto ignition, three-speed selective 
gear transmission, shaft and worm-gear drive to rear-axle 
differential, seat back of hood and dash, left-side drive with 
wheel-steering and center-control levers." 

Having led in establishing some of these fundamental 
principles of design in gasoline commercial vehicles, Gen- 
eral Motors Truck in 1912 recognized the usefulness of 
electric delivery wagons for city use by building a full line 
of electric delivery wagons, which it continued until 1916. 
By that time refinements in the construction of light gaso- 
line cars had reached a* point at which the electric delivery 
wagon business might be expected to show diminishing re- 
turns. The small, light delivery wagon, adapted to a 
passenger car chassis, had shown its possibilities early. Both 
Cadillac and Oldsmobile had offered such delivery wagons 
in 1904, the latter carrying off first prize in its class against 
stiff competition in the Automobile Club of America tests. 
These two manufacturers soon after went into the produc- 
tion of larger cars, the light delivery wagon business going 
elsewhere. But in 1917, after General Motors and Chev- 
rolet came together, Chevrolet began the manufacture of 
commercial units, a decision which may have had a bearing 
upon the abandonment of electric delivery wagon manu- 
facture by General Motors Truck. 


The light-weight commercial car production of Chev- 
rolet, which has since grown to tremendous figures, began 


The Turning Wheel 

modestly with the manufacture of 437 chassis and 40 light 
delivery wagons. The commercial chassis, one-half ton with 
open body, was priced at $595 f.o.b. Flint. A one-ton truck, 
known at the Model T, and powered with the FA four- 
cylinder motor, was introduced in 1918 at from $1,125 to 
$1,320. Prices on comparable units rose with the advancing 


Pioneer police patrol wagon, Chicago. From Scribner's Magazine, 
February, 1913 

price levels until the latter part of 1920 and then began to 
drop with increasing quantity production. In 1933 the half- 
ton chassis, much more powerful than the original of 1917, 
and powered with a six-cylinder motor instead of a four, 
sold for $330, and the larger truck, capacity increased to 
one and one half tons, sold for $480. During the interven- 
ing period production of Chevrolet commercial units rose 
steadily year by year to a peak of 344,963 in 1929, when 
commercial cars represented more than 25 percent of total 
Chevrolet unit production. Through the entire Chevrolet 
truck experience, its commercial units have been roughly 17 
percent of total production, more than 1,500,000 units hav- 
ing been manufactured since 1917. 

In 1927 Chevrolet undertook on a small scale to build 
part of its commercial bodies, especially closed cabs; and in 
1929 added a high-grade body known as the Sedan Delivery. 
In 1930 it introduced single and dual wheels as standard 

Commercial Vehicles 315 

equipment on the heavy duty truck, and brought out a one 
and one half ton truck with 1 57-inch wheelbase. 

Owing to the large production necessary, securing proper 
bodies for installation of Chevrolet commercial bodies had 
become a major problem, leading to the acquisition in 1930 
of the Martin-Parry Corporation plants in Indianapolis, 
then one of the largest commercial car body builders in the 
world. The formation of the Chevrolet Commercial Body 
division followed, with emphasis upon advanced design, 
volume production, improved material, sales control, and 
GMAC financing. Since this acquisition Chevrolet's partici- 
pation in the total commercial car market has steadily in- 
creased from 32.7 percent of the 1930 business available in 
the weight class in which it sells trucks to approximately 
50 percent of the business available in 1933. The latter 
figure means that Chevrolet sold approximately as many 
cars in this class as all its competitors combined. In the 
account of the General Motors Fleet Sales Corporation in 
Chapter xxvi, reference is made to Chevrolet's sales to fleet 
owners and to the government, in both of which classifica- 
tions it leads all competitors by overwhelming margins. 


Yellow Truck & Coach Manufacturing Company, a 
Maine corporation, succeeded the Yellow Cab Manufac- 
turing Company, which was incorporated in the year 1910. 

Yellow Cab grew out of the Walden W. Shaw Auto 
Livery Company, operating taxicabs at loth and Wabash 
streets, Chicago. Mr. Shaw was president, and Mr. John D. 
Hertz, vice-president and general manager. Mr. Hertz 
described their condition, after a disastrous strike, as bank- 
rupt, $97,000 in debt and with nothing but forty battered 
cars as assets. The Shaw Company and another taxicab 
company, the City Motor Cab Company, were merged into 
a Maine corporation on August 25, 1910. 

After a year's work, the first specially designed taxicab 
was completed on Christmas morning, 1914, and it was 
manufactured in 1915. With its service record of 600,000 
miles appended, this famous cab was shown at the Century 
of Progress Exposition in Chicago in 1933. 

316 The Turning Wheel 

Forty cabs of this model were built during the first seven 
months of 1915, and placed in service on Chicago streets 
on August 2, 1915. In 1916 a small factory at 310 East 
Huron Street, Chicago, with eighty workers, was turning 
out one car a day. Sole ownership of the company was 
acquired by the Walden W. Shaw Corporation, a New 
York organization, in 1916. Three years later the Auto 
Livery Company ceased operating taxicabs, confining its 
activities entirely to manufacturing commercial vehicles. 
Taxicab operation was continued by the Walden W. Shaw 
Corporation which in 1919 became Chicago Yellow Cab 
Company, Incorporated. 

In evolving a sturdy taxicab, a nation-wide demand there 
had been uncovered. Orders for cabs began to come in from 
other cities, and production rose to twenty-five cars a day. 
In 1920 the Yellow Cab Manufacturing Company was 
formed to succeed the Shaw Livery Company, and a further 
separation of the Yellow and Shaw interests followed in 
1921. The branching-out process which we have seen so 
often in automotive history began, resulting in the forma- 
tion of Yellow Motor Coach Company in November, 1922, 
and Yellow Sleeve Valve Engine Works at East Moline, 
Illinois, within the following month. Yellow Manufacturing 
Acceptance Corporation was formed in December, 1923, to 
finance sales. 

A merger of the General Motors Truck properties and 
the Yellow interests was effected in September, 1925, when 
Yellow Truck & Coach Manufacturing Company, formerly 
Yellow Cab Manufacturing Company, acquired all the stock 
of both General Motors Truck Corporation and General 
Motors Truck Company from General Motors Corporation 
in exchange for a controlling interest, now above 50 per- 
cent, in the Yellow Truck & Coach Manufacturing Com- 

The Yellow Truck & Coach Manufacturing Company, 
through its subsidiaries, builds and sells trucks, motor 
coaches, and taxicabs of a wide variety, thoroughly adapted 
to the complex needs of the commercial world. The merger 
brought together General Motors Truck, which had 
been active in its field for seventeen years, and the leading 

Commercial Vehicles 


manufacturer of motor coaches and taxicabs. This company 
continues to be one of the largest builders of commercial 
vehicles, with practically all of the leading coach operators 
in the United States using its equipment. A special type of 
omnibus developed for the purpose was selected to provide 
transportation within the grounds of the Worlds Fair of 
1933. The company's products include a complete line of 
trucks from one and one half tons to fifteen tons, as well as 

Manufacture of these vehicles is centralized at Pontiac, 
Michigan. The General Motors Truck plant in Pontiac 
which was completed late in 1927 is the largest plant in the 
world devoted exclusively to the manufacture of commer- 
cial vehicles. 

Mr. P. W. Seiler has served as president of Yellow 
Truck & Coach Manufacturing Company since 1927. 

Chapter XXIII 


ENERAL MOTORS made its first effective contact with 
aviation during the World War, when its plants delivered 
more than 2,500 Liberty engines for airplanes. 1 More than 
10,000 Libertys were on order from the government when 
the war ended. This experience, and the Corporation's 
habit of looking ahead, naturally led it to consider the 
future possibilities of aviation as a peace-time industry. 

An enviable record in war-time production of air- 
planes had been established by the Dayton-Wright Airplane 
Company of Dayton, Ohio, a 1917 offshoot of the Dayton 
Metal Products Company, one of the several Dayton com- 
panies already referred to as being established in rapid suc- 
cession in the Ohio city by Messrs. Kettering and Deeds 
and their associates. As the home of the famous Wright 
brothers, first to fly a heavier-than-air machine, Dayton 
had excellent reason for a keen interest in aviation. When 
the war demand for planes developed, the industrial leaders 
of the city promptly organized to take the lead in produc- 
tion. Neither before nor since have airplanes been manu- 
factured at the speed and in the quantity at which Dayton- 
Wright produced them for the United States Government 
during October, 1918, when an average of forty completed 
planes a day were turned out. In all, Dayton-Wright pro- 
duced more than 3,000 of the famous DeHaviland (DH) 
fours, and 300 Standard JI training planes. 

*As shown in Chapter XII: "The War Years." 

General Motors in Aviation 319 

During this period the liaison between the United States 
Army Air Service and Dayton-Wright Airplane Company 
was very close. One of the latter's Hying fields was taken 
over by the Air Service, renamed McCook Field, and as 
such became famous in American aviation history. 

Airplane production fell rapidly through 1919, but the 
long view held that eventually aviation would take its place 
as a major industry. General Motors purchased substantial 
interests in several Dayton companies, and acquired on 
September 25, 1919, all the outstanding shares of Dayton 
Metal Products Company, and Dayton-Wright Airplane 
Company. The latter was re-incorporated as the Dayton- 
Wright Company on December, 24, 1919, until recently a 
wholly-owned subsidiary of General Aviation Corporation. 
Various of its properties were turned over to other uses as 
the other Dayton interests of General Motors developed, 
notably Frigidaire, and Inland Manufacturing. Until the 
move to Detroit in 1925 General Motors Laboratories 
occupied one of the former Dayton-Wright buildings. The 
Dayton-Wright Realty Company, wholly owned by Gen- 
eral Aviation Corporation, was formed in 1933 to hold 
title to the largest tract of land used as a flying field during 
the war. 

General Motors' interest in aviation revived and a con- 
nection was made with Anthony H. G. Fokker. The Ameri- 
can market for Fokker planes having been developed 
through importations, American manufacture was begun 
through the Atlantic Aircraft Corporation of Hasbrouck 
Heights, New Jersey, in 1926. Atlantic Aircraft Corpora- 
tion, incorporated December 14, 1923, retained its separate 
status as a corporation and, until recently, was a wholly- 
owned subsidiary of General Aviation Corporation. 

A second manufacturing plant was established at Glen- 
dale, West Virginia, Fokker Aircraft Corporation being 
incorporated December 3, 1927, as a holding company cov- 
ering both operations. From 1926 to 1930, 211 commercial 
airplanes of nine models were manufactured, the most 
popular being the Super Universal of which eighty were 
delivered from January to October, 1929. There were 


The Turning Wheel 

delivered also forty-five service airplanes, all trimotor, to 
the Army and Marine Corps. With these, army pilots hung 
up many notable records among them : 

1. San Francisco Honolulu, non-stop flight in a United 

States Army c-n trimotor piloted by Lieutenants 
Maitland and Hegenberger. 

2. A one-stop flight by Major Bourne in the Marine 

Corps TA-I trimotor from Washington to Man- 
agua, Nicaragua. 

3. In an Army C-II-A trimotor, Major Carl Spatz 

established the first endurance refueling record by 
remaining in the air over 150 hours. 

GA-43 climbing. This low-wing, all metal monoplane is made by 
General Aviation Manufacturing Corporation at Dundalk, Maryland 


Shortly after the formation of Fokker Aircraft Corpora- 
tion, General Motors acquired 400,000 shares of the 
Fokker Common stock. In payment, General Motors turned 
over all of the capital stock of Dayton-Wright Company. 
The assets of the latter company consisted of McCook 
Field located in Dayton, Ohio, a large number of aviation 
patents, and additional cash assets of substantially $6,500,- 
ooo. On May 24, 1930, the name of the Corporation was 
changed to General Aviation Corporation, and operations 

General Motors in Aviation 321 

were consolidated in a plant at Dundalk, Maryland, leased 
from the Curtiss-Caproni Corporation. On August 29, 
1931, the manufacturing operation was incorporated as 
General Aviation Manufacturing Corporation, wholly 
owned by General Aviation Corporation, which also owned 
Atlantic Aircraft, the Metalair Corporation, and the Day- 
ton-Wright Company. 

General Aviation Corporation was a holding company 
organized under the laws of Delaware, with authorized 
capital, as of June 21, 1930, of 5,000,000 shares of no par 
Common stock and $1,000,000 in $25 Preferred shares. In 
July, 1932, capitalization was reduced to 1,000,000 shares 
of stock without par value. In April, 1933, the capital stock 
was changed to $i par value per share. General Motors 
owns approximately 50 per cent of the 980,900 shares of 
Common stock issued by General Aviation, the balance be- 
ing widely held over the country. 


In April, 1933, General Aviation Corporation sold its 
manufacturing interests and certain other assets to North 
American Aviation, Inc., in return for approximately 43 per- 
cent of the Common stock of the latter which, through 
various stock holdings, reaches down to transport and 
manufacturing companies in various parts of the country. In 
the merger between General Aviation and North American 
Aviation, ownership of General Aviation Manufacturing 
Corporation, Atlantic, Metalair, and Dayton-Wright (ex- 
cept as to real estate already noted) passed to North 
American Aviation. As the latter already owned the B/J 
Aircraft Corporation, another property located at Dundalk, 
Maryland, near Baltimore, this company has been merged 
with General Aviation Manufacturing Corporation. North 
American Aviation owns completely Eastern Air Transport 
and has substantial interests in two other transport com- 
panies Transcontinental & Western Air, Inc., and Western 
Air Express as well as in Douglas Aircraft, Inc., a manu- 
facturing company. Atlantic Aircraft has since been dis- 

322 The Turning Wheel 

Through the merger of April, 1933, General Motors 
extended its aviation interests, until it is now one of the 
leading factors in both manufacturing and transport, since 
North American Aviation, Inc., is one of the three largest 
aviation groups in the United States. 

North American Aviation was incorporated December 6, 
1928, as an investment trust specializing in aviation 
securities. Its authorized capital stock was 6,000,000 shares 
of which 2,000,000 shares were offered for sale. On 
March 9, 1932, the stock was changed from no par to 
$5 par value. Later, North American Aviation became 
a holding company. Its shares were changed to $i each 
in 1933. In order to insure control, General Motors Cor- 
poration bought an additional interest in North Ameri- 
can Aviation, making the total amount of North American 
Aviation stock owned by General Motors and General 
Aviation Corporation in excess of 5 1 percent. 


In the transportation field, Eastern Air Transport, Inc., 
formerly Pitcairn Aviation, Inc., which was formed in 
1927, is a wholly-owned subsidiary of North American 
Aviation. Eastern Air operates mail and passenger lines 
between New York and Southern cities. On the fifteenth 
anniversary of the first regular air mail contract, estab- 
lished May 15, 1918, between Washington, D. C., and 
New York, the New York Times cited Eastern Air Trans- 
port's present competence as an example of progress in the 
period. The first air mail made 75 miles an hour for 200 
miles once a day, while over the same route Eastern Air 
Transport now operates 18 passenger planes every hour 
on-the-hour over this first route and then proceeds for 
2,268 airway miles more on regular schedule. 

In Transcontinental Air Transport, Inc., North Ameri- 
can Aviation also owns a substantial interest. T.A.T., in- 
corporated in Delaware, May 14, 1928, operated the first 
combined air and rail service from New York City to Los 
Angeles and San Francisco in conjunction with the Pennsyl- 
vania Railroad. It ceased operations in October, 1930, con- 
tinuing in existence as a holding company, owning 47.6 

General Motors in Aviation 323 

percent of Transcontinental and Western Air, Inc. T.A.T. 
has a small holding in Western Air Express Corporation. 

In Western Air Express Corporation, North American 
Aviation, Inc., owns a controlling interest. Organized in 
1926, Western Air Express operates mail, passenger, 
and express service from San Diego to Los Angeles to Salt 
Lake City, and from Cheyenne to El Paso and to Amarillo, 
Texas, via Denver and Pueblo, Colorado. Western Air 
Express Corporation also owns a 47.6 percent interest in 
Transcontinental and Western Air, Inc. 

Transcontinental and Western Air, Inc., was formed in 
October, 1930, to take over as one transcontinental air 
route the lines formerly operated by Western Air and 
Transcontinental Air Transport, forming the shortest 

GA-43: front view 

coast-to-coast air route. T. & W. A. is the operating com- 
pany with which Colonel Charles A. Lindbergh is identified 
as chairman of the Technical Committee. Colonel Lind- 
bergh laid out in 1928 for T.A.T. the line now operated 
by Transcontinental and Western Air from New York to 
Los Angeles. 

Over the three transportation systems brought together 
under North American Aviation control, 43,576 miles are 
flown daily on regular schedules. 

Eastern Air Transport, Inc., flies 13,500 scheduled miles 
daily over the 2,493-mile airway, serving twenty-eight 
cities. This company operates ten round trips daily between 
New York and Washington, five of them fast non-stop ex- 
press schedules and all flown by air liners carrying fifteen 
to eighteen passengers. Planes of Eastern Air Transport, 
Inc., and its subsidiaries have covered 18,000,000 miles. 

324 The Turning Wheel 

Transcontinental & Western Air, Inc., familiarly known 
as "TWA," operates 23,298 miles daily over a 4,401- 
mile airway from New York to Los Angeles and San Fran- 
cisco via St. Louis, Kansas City and Albuquerque and via 
Springfield, Missouri, Tulsa and Oklahoma City, serving 
twenty-three cities on this Mid-Transcontinental airway. 
Its planes have flown a total of more than 20,000,000 miles. 
A fast New York-Chicago service is maintained. 

Western Air Express, Inc., is one of the oldest air trans- 
port lines in the United States. It flies 5,016 miles daily 
from Cheyenne to El Paso via Albuquerque, to Amarillo 
via Pueblo, and from Salt Lake City to Los Angeles and 
San Diego, a total of 1,762 airway miles. Twelve cities are 
served, and the company's planes have flown millions of 
miles on schedule. 

These three systems have flown more than 40,000,000 
miles, carrying more than 475,000 passengers and more 
than 10,000,000 pounds of mail. 


The wholly-owned manufacturing plants of North 
American Aviation are located within easy reach of each 
other at Dundalk, Maryland, a suburb of Baltimore, where 
commercial transport planes, as well as military and naval 
planes, are manufactured. The plants are modern and close 
to flying fields, and front directly on the new municipal 
airport now being developed, which makes the plants avail- 
able to both land and water craft. 


One series in which General Aviation Manufacturing 
Corporation takes especial pride is the GA-FLB type Flying 
Lifeboat of the Coast Guard. Five of these staunch seaplanes 
are on duty on the Atlantic Coast, bearing the names of 
stars Antares, Altair, Acrux, Acamar, and Arcturus. After 
experiments with various amphibians, the Coast Guard 
decided that life-saving on the high seas made imperative 
the creation of a seaplane to fill the following requirements : 

General Motors in Aviation 325 

An aerial "eye" capable of extended search, radio-equipped to main- 
tain constant contact with surface, thus saving hours and possibly 
days of delay of search ; an aerial ambulance capable of a speed of 
100 miles per hour, able to land in rough sea, equipped with 
hatches large enough to admit of stretcher cases and to be able to 
take off in rough water ; a demolition outfit to effect the destruction 
at sea of derelicts and obstructions to navigation within a few 
hours after the report of location; a high speed flying patrol for 
observation, landing and returning with rescued crews of distressed 
small craft and capable of taking aboard fifteen or more passengers 
from distressed craft and standing by for lengthy periods on the 
surface, maintaining in the meantime radio communication with 
surface craft until transfer can be made of its passengers. 

GA-43: side view 

In the United States Naval Institute Proceedings for 
January, 1933, Colonel Harold C. Reisinger of the United 
States Marine Corps says : 

These specifications were turned over to the General Aviation Cor- 
poration of Baltimore, Maryland, and the flying lifeboat was 
constructed there. The finished product has by test and in actual 
service lived up to the fondest hopes of its most ardent advocates. 

Captain Reisinger gives several stirring accounts of 
rescues effected by these ships near Cape May, which would 
have been impossible without them. Perhaps the most 
thrilling of the many rescues by the flying lifeboats was 
that of Paul Long, saved by the Arcturus of the Miami 
Station in a sea so high that its left wing was unavoidably 
damaged. Thereafter the Arcturus taxied thirty miles to 
shore through waves eight to fifteen feet high. The whole 
record of the two flying lifeboats on the Miami Station is 
one to arouse admiration and establish the utility of this 
craft in its special field. In fifty-three days the two ships at 

326 The Turning Wheel 

Miami received twenty-seven calls, and answered all of 
them successfully. 

At the former B/J plant General Aviation Manufactur- 
ing Corporation is also producing military and naval air- 
planes. This plant is equipped with a wind tunnel with the 
aid of which the aerodynamic forces on a model can be ac- 
curately measured through a system of electrically driven 
balance arms. From these data, predictions on the per- 
formance and flying characteristics of the actual airplane 
can be made. 

Following the decline in demand for commercial planes, 
B/J concentrated successfully on fighting craft and supplies 
for the national services. In May and June, 1929, orders 
were received for three experimental planes a single- 
seater Navy Fighter, a two-place Navy Observation plane, 
and a two-seater pursuit ship for the Army Air Corps. 

Following the building of experimental models, B/J re- 
ceived production orders for twenty-five army pursuit 
planes known as Yp-i6, and twenty-seven Navy observa- 
tion types called oj-2 land and seaplanes, the former go- 
ing to the army air base at Selfridge Field, Michigan, and 
the latter to the naval air station at San Diego, where they 
are being used on cruisers of the Pacific fleet. 

In process of development in 1933 were a new two-place 
combined fighter, and long-distance scouting plane desig- 
nated as XF-2-J, all metal except for covering on the wing 
and control surfaces; also an experimental single-seater 
fighter known as XF-3-J, embodying the latest features in 
aerodynamics and structural design, and powered with the 
newest military engine. 

In addition to its construction work the company con- 
ducts research in aerodynamics, design and structures, its 
wind-tunnel services being in demand by other manu- 
facturers lacking that equipment. 


North American Aviation, Inc., also has a substantial 
interest in Douglas Aircraft Company, incorporated in 
Delaware, November 30, 1928, to take over the assets of 

General Motors in Aviation 327 

the Davis-Douglas Company (the Douglas Company from 
1921), a partnership active in Western aviation since 1920. 
Douglas has developed an extensive European business, 
building planes specially designed for foreign use. It manu- 
factures commercial and military aircraft at Santa Monica, 
California, being one of the nation's leaders in military 
aircraft, and owns 5 1 percent of the Common stock of the 
Northrop Corporation organized in 1932. 

Before General Aviation bought into North American 
Aviation, Inc., the latter had become the second in point of 
transport by 1932, and also held a good position as a pro- 
ducer of planes. Hence, with 43 percent of North American 

Flying Lifeboat of the Arcturus Class GA-FLB 

Aviation stock in its treasury, General Aviation becomes 
one of the largest factors in both the manufacturing and 
operating branches of aviation. Through its controlling 
interest in General Aviation, the General Motors Corpora- 
tion is in position to cooperate fully in the anticipated 
progress of aviation, and expects to assist that development 
by placing its research facilities and manufacturing experi- 
ence at the disposal of its aviation affiliates. For these 
reasons the recent enlargement of General Motors activity 
in aviation has been hailed approvingly by the press. It 
seems to be generally recognized that aviation has reached 
a stage at which scientific and business assistance on a large 
scale will mean accelerated progress. 

328 The Turning Wheel 

The New York Herald Tribune for April 27, 1933, thus 
sums up the Corporation's present standing in aviation: 

The broadening of this phase of General Motors activities, it is 
believed, will bring to the public and to the aviation industry, both 
from a manufacturing and a transport operating standpoint, the 
organization, technical efficiency and experience which General 
Motors has thus far given in main part to the automotive industry. 
It is hoped that through the acquisition, control and coordination 
of these individual units in the aviation field General Motors 
Corporation will play a part in that field comparable to its devel- 
opment in the motor industry. 

Mr. Ernest R. Breech is president of North American 
Aviation, Inc. 

Chapter XXIV 




,HE most complete statement of the point of view of 
General Motors in its broad relations with stockholders, 
employees, dealers, suppliers, and the public is contained in 
the speech which President Alfred P. Sloan, Jr., delivered 
to representatives of the automotive press at the Proving 
Ground on September 28, 1927, and previously referred to 
in this volume. The occasion was a three-day visit to the 
Proving Ground by the automobile editors of American 
newspapers, and this important gathering occurred at one 
of the most interesting junctures in the history of the auto- 
mobile industry. 

It was a time of rising trade and yet of considerable un- 
certainty, since no one could quite foresee the boiling busi- 
ness thermometer of the next two years, and there were 
plain indications that the industry as a whole had reached 
a condition of relative stability as compared to previous 
eras in which facilities for manufacturing motor cars had 
been generally too small to meet the ever-growing demand. 
Consequently, there was need to review the past, analyze 
the present in the light of lessons learned, and restate the 
principles and policies under which the Corporation would 
grapple with the future: 

President Sloan's speech follows, in part:. 

"You of course appreciate that this industry of ours 
the automotive industry is today the greatest in the world. 


330 The Turning Wheel 

Three or four years ago it passed, in volume, steel and 
steel products, the next largest industry. This means, ex- 
pressed otherwise, that upon its prosperity depends the 
prosperity of many millions of our citizens and the degree 
to which it has become stabilized in turn has a tremendous 
influence on the stabilization of industry as a whole, and 
therefore on the prosperity and happiness of still many 
more of our citizens. Directly and indirectly, this industry 
distributes hundreds of millions of dollars annually to those 
who are connected with it, in one way or another, as 
workers. It also distributes hundreds of millions of dollars 
in the aggregate to those who have invested in its securi- 
ties. The purchasing power of this total aggregation, as 
you must appreciate, is tremendous. 

"I believe that if you questioned many of your readers 
as to the present position of the automotive industry, they 
would tell you that it is growing by leaps and bounds. I 
believe further you would sense uncertainty as to what is 
going to happen in the industry when the so-called state of 
saturation is reached. I do not know whether you appre- 
ciate it or not, but the industry has not grown very much 
during the past three or four years. It is practically stabi- 
lized at the present time. 

"What has taken place is a shift of business from one 
manufacturer to another, and the announcements in the 
press as well as the general publicity of those manufacturers 
who have succeeded in increasing their business give, I 
think, the impression that this is true of the whole industry. 
If we could assume, for the sake of argument, that we will 
reach the point at which twenty-five million cars and trucks 
will be registered in the United States an assumption that 
from what we have accomplished so far is certainly per- 
fectly reasonable then I think we could safely say that 
the replacement demand, plus the export demand which 
will increase for many years yet, plus the normal growth, 
would amount to something like four to four and one half 
million vehicles a year and would require the manufacture 
of a number of cars equal to or greater than has yet been 
produced in any year in the history of the industry. . . . 

"I am sure that I do not need to elaborate what the 

The Point of View of General Motors 331 

automotive industry consists of, its influence on the pros- 
perity of the United States, the influence that it has had in 
many other industries which contribute to its production 
necessities. General Motors is an important part of this 
great industry of ours and as my contribution to your visit 
with us I would like to tell you in a brief way something 
about General Motors ; how we are thinking, what we are 
doing, and our ambitions for the future. 

"Let me deal here with what General Motors includes 
and with the responsibility that rests on its management. 

"First. We have approximately 60,000 stockholders. 1 
The market value of the securities that these stockholders 
hold at the present time exceeds $2,000,000,000 a very 
tidy sum. This enormous sum and the responsibility of act- 
ing as trustees throws a very great responsibility on Gen- 
eral Motors' organization. In 1926 these stockholders 
received, in dividend disbursement, an amount in excess of 
$100,000,000. The purchasing power of this $100,000,000 
has an important influence on our general business situation. 

"Second. We have 180,000 people in our own organiza- 
tion on our pay rolls and directly concerned in our pros- 
perity. I believe it can be conservatively stated that allowing 
four dependents to each worker, we have approaching 
three quarters of a million people whose prosperity and 
happiness is directly concerned with ours. 

"Third. We have our dealer organization. There are 
in the aggregate something like 18,000 dealers. If we 
assume, and I think we have a right to assume, that each 
dealer would average twenty-five employees, I really think 
it is much higher than that, we have something like 500,- 

000 dealers and members of their direct organization, with 
their dependents a total of over 2,000,000. I estimate these 
dealers are employing a capital of over $500,000,000. 

"Fourth. Next we have over 4,600 suppliers of material. 

1 haven't any idea how many workers are involved in the 
organization of those suppliers applicable to General 
Motors production, but as you can well appreciate, it is 
very large. 

"Fifth. We have the enormous aggregation of people 

number of stockholders increased to 372,000 from 1927 to 1933. 

332 The Turning Wheel 

whose prosperity depends, in turn, upon the prosperity of 
those I have mentioned above their purchasing power, in 
other words. As a matter of fact, there are several cities of 
importance in the United States whose prosperity is abso- 
lutely linked up with the prosperity of General Motors. 

"I have estimated that a very appreciable percent of the 
total population of the United States is directly affected by 
the prosperity of General Motors. Expressed otherwise, 
the happiness of an enormous group of citizens is dependent 
upon the establishment of sound principles of administra- 
tion in General Motors and the development of sound 
thinking in the formation of its programs and policies. 

"I mention all the above to give you some appreciation 
of what General Motors includes, and a better appreciation 
of what our whole industry includes because, naturally, the 
whole must be larger than any part. The responsibility is 
tremendous, and although it is, necessarily, more or less 
divided, yet the fact remains that upon a very limited num- 
ber of individuals must rest the responsibility of formulat- 
ing policies and principles upon which this vast enterprise 
revolves and upon which its future depends. 

"Recognizing the responsibility that rests upon us, I want 
to deal next with certain things that we are doing that, in 
our judgment, have not only contributed much to our prog- 
ress, but which, in my opinion, if fully appreciated, should 
add a sense of great security to those whose prosperity and 
happiness is so intimately linked up with us. 

"To illustrate my point, I want to tell you a true story 
of what happened in General Motors in 1920. 

"In the spring of 1920, General Motors found itself, as 
it appeared at the moment, in a good position. On account 
of the limitation of automotive production during the war 
there was a great shortage of cars. Every car that could 
be produced was produced and could be sold at almost any 
price. So far as any one could see, there was no reason 
why that prosperity should not continue for a time at least. 
I liken our position then to a big ship in the ocean. We were 
sailing along at full speed, the sun was shining, and there 
was no cloud in the sky that would indicate an approaching 
storm. Many of you have, of course, crossed the ocean and 

The Point of View of General Motors 333 

you can visualize just that sort of a picture yet what hap- 
pened? In September of that year, almost over night, values 
commenced to fall. The liquidation from the inflated prices 
resulting from the war had set in. Practically all schedules 
or a large part of them were cancelled. Inventory com- 
menced to roll in, and, before we realized what was hap- 
pening, this great ship of ours was in the midst of a terrific 
storm. As a matter of fact, before control could be obtained 
General Motors found itself in the position of having to go 
to its bankers for loans aggregating $80,000,000 and 
although, as we look at things from today's standpoint, that 
isn't such a very large amount of money, yet when you must 
have $80,000,000 and haven't got it, it becomes an enor- 
mous sum of money, and if we had not had the confidence 
and support of the strongest banking interests our ship could 
never have weathered the storm. 

u Now, as a result of that experience, which was at the 
time the present administration came into the picture, we 
recognized that our first duty was to obtain a proper con- 
trol over the operations of this big ship. We should not be 
satisfied to go along, unconcernedly, when times were good, 
with no thought of the future. We should first devise 
scientific means of administration and control whereby we 
should be able to project ourselves as much as possible into 
the future and discount changing trends and influences and, 
second, that we should be prepared at all times to alter the 
course of this ship of ours promptly and effectively should 
circumstances develop that required us to do so. This has 
all been accomplished and I feel at the present time, dealing 
again with this great responsibility that falls upon our 
management, that no matter what the future may bring 
forth or no matter what changes may take place, irrespec- 
tive of how suddenly they may take place, we have at all 
times the organization and- machinery to deal with them in 
such a way that the adverse effect upon the great interests 
that we represent will be reduced to^a minimum. 

"At the time specified, General Motors, and I think the 
same applies to other manufacturers, never had any regard 
for the number of unsold cars in the field. The sole idea 
was to make as many cars as the factory could possibly 

334 The Turning Wheel 

turn out and have the sales department force the dealers 
to take and pay for those cars irrespective of the economic 
justification of so doing I mean, irrespective of the 
dealers' ability properly to merchandise such cars. That 
was wrong and it is just as wrong in other industries as it 
was in ours. The quicker merchandise can be moved from 
the raw material to the ultimate consumer and the less mer- 
chandise, of whatever it may consist, is involved in the 
'float,' so to speak, the more efficient and more stable in- 
dustry becomes. 

"To my mind, one of the strongest factors influencing 
continued prosperity, or expressed otherwise, one of the 
strongest influences operating against a sharp reaction in 
industry, is the fact' that American business today is largely 
conducted on that basis. As a matter of fact, the war taught 
us that lesson. The automotive industry is particularly 
fortunate in dealing with large units of relatively large 
value and of having direct contacts with the retailers from 
whom proper statistics can be developed. In General 
Motors, we receive reports from our 18,000 dealers three 
times a month. These reports inform us as to the number 
of cars they have on hand usually the models they have 
on hand. Also as to the number of used cars on hand as 
well as the number of forward orders booked for future 
delivery. Upon these reports the manufacturing schedules 
that involve our 180,000 direct employees, our 4,600 sup- 
pliers, and each and every one of our operations, at home 
or abroad, are developed. 

"The movement of merchandise into the hands of the 
ultimate consumer is our fundamental index, and it should 
be the fundamental index of every business to the fullest 
degree possible. It is absolutely against the policy of Gen- 
eral Motors to require dealers to take cars in excess of the 
number they properly should 'take. Naturally, once in a 
while in the closing out of a model, our dealers must neces- 
sarily help us. They appreciate their responsibility, and 
never object to doing so. Our policy in formulating our 
production schedules is to err, if we must err, on the con- 
servative side. Naturally, errors of judgment will occur, as 
it is difficult to forecast the consumer demand, five months 

The Point of View of General Motors 335 

ahead, as we have to frequently, but we are able to come 
remarkably close. 

"We publish each month, in order that the whole world 
may know, exactly what the movement of cars to the ulti- 
mate consumer is in order that those interested in the 
statistical side of American industry may take that for 
what it is worth as a measure of the general business trend. 

"We have developed a system whereby we forecast each 
month for the current month and three succeeding months, 
every detail of our operations production, sales, overhead, 
profits, inventory, commitments, cash, and all the other ele- 
ments that are involved in an operation like ours. We have 
developed this procedure to a remarkable degree of accu- 
racy. I think it would be safe to say that all of these indices, 
with the procedure we now have, are forecast within a very 
close percentage. We are able, therefore, to look forward 
and provide for the future with the assurance that we know 
very closely at all times where we will stand four months 

"After all, everything I have told you can be expressed 
in two words proper accounting, and I now come to the 
point where I want to outline to you what I believe to be a 
great weakness in the automotive industry today and what 
General Motors is trying to do to correct that weakness. 

"I have stated frankly to General Motors dealers, in 
almost every city in the United States, that I was deeply 
concerned with the fact that many of them, even those who 
were carrying on in a reasonably efficient manner, were not 
making the return on their capital that they should. Right 
here let me say that so far as General Motors dealers are 
concerned, from what facts I have, I realize there has 
been much improvement during the past two or three years, 
but interested as the management of General Motors must 
be in every step, from the raw material to the ultimate 
consumer, and recognizing that this chain of circumstances 
is no stronger than its weakest link, I feel a great deal of 
uncertainty as to the operating position of our dealer 
organization as a whole. I hope that this feeling of uncer- 
tainty is unwarranted. I am sure that with a responsibility 
so great, all elements of uncertainty must be eliminated 

336 The Turning Wheel 

and that our dealers should know the facts about their 
operating position as clearly and as scientifically as we feel 
that we know the facts about General Motors operating 
position, just outlined. 


"We consider our dealers partners in our business. It is 
true they operate on their own account, but they are, never- 
theless, partners in the sense that their prosperity is linked 
up with our prosperity, and all good partners should recog- 
nize the necessities of each to the other and they should co- 
operate so that all weaknesses can be eliminated. This is 
exactly what General Motors is doing in this connection. 
We have organized a subsidiary whose sole function will 
be to establish proper accounting systems wherever desired 
by our dealers. We will audit such accounts periodically in 
order that our dealers may have the assurance that their 
records are properly established, and that the facts that 
come to them are facts rather than fiction. We feel that 
with the great amount of specific knowledge we have, in- 
volving all phases of the automotive business, and with an 
organization that specializes in this particular branch of 
accounting, with nothing else to think of, we can, through 
evolution and with the cooperation of our dealers, place 
before them facts and figures that will indicate to them 
very clearly what they should do and what they should not 
do. I do not think there is anything that will contribute more 
to our complete stabilization than an accomplishment of 
this kind. I do not think there is anything that will establish 
greater confidence in the minds of the banking interests 
whose cooperation we must have in carrying on. Some time 
ago I saw it stated, and I believe it is absolutely correct, 
that if business, using that term in its broadest sense, were 
equipped with proper accounting, a very large percentage 
of the failures and losses incident thereto could be elimi- 
nated. We hope to be able, in due course of time, to place 
before our dealers 'bogeys/ I might say, showing the 
proper relationship of each expense item to the business as 
a whole with the result that if a dealer will conduct his 

The Point of View of General Motors 337 

affairs along the lines that we can ultimately outline to him, 
he will, in a sense, take the straight and direct course to 
a reasonable and fair profit. 

"I have told my associates time and time again, that with 
this program of ours accomplished to the degree that I am 
hopeful that it can be accomplished, it will be the greatest 
achievement of General Motors. 

"Every once in a while my attention is called to items in 
the papers that you gentlemen are publishing statements 
to the effect that this General Motors line or that General 
Motors line is going to be discontinued. That is unfair to 
your readers who have invested in those particular cars; 
it is unfair to the dealers handling those lines, and it is 
unfair to General Motors. It is unfair to you because you 
want to tell the facts. I will take a few minutes to tell you 
exactly what our policy is in this regard. 

"It is our hope and ambition to develop a complete line 
of motor cars from the low-priced group to the high- 
priced group within the limitations of reasonable quantity 
production. It is our hope and ambition to make each of 
those lines of cars represent a greater value than anyone 
else can offer. It is our hope and ambition so to develop 
the confidence of the buying public in our policies and pur- 
poses, as to have it feel that whatever price car may be 
needed, the most outstanding value, from every point of 
view, is in the General Motors line. Much has been accom- 
plished in. that direction, but no one appreciates more than 
I do that much more can and will be accomplished. It was 
in the development of this program that we added the 
Pontiac, and it was also in the development of the same 
program that we added the La Salle. 

"Should we feel that our line of cars at any time is, for 
any reason, incomplete, we will add other lines to the end 
that, from the highest price group to the low price group 
there will be a General Motors car with reasonable differ- 
ence in price, to fit the purse and purpose of all, and they 
will all be quality cars you may be sure of that. We will 
never make the fatal mistake of sacrificing quality for 
price. All that I have said means, expressed otherwise, that 
there is no possibility or probability of any of the present 

338 The Turning Wheel 

lines being discontinued. On the other hand, they will be 
expanded and improved and made more effective and more 
efficient as the ability of the General Motors organization 
makes this possible. 

"As a result of the policy just outlined we have already 
made substantial progress; we have increased the propor- 
tion of General Motors' new cars registered in the United 
States from one in six to better than one in three. We have 
increased our retail sales during the past three years to 
the point where, this year, we expect to sell at retail, in 
excess of one and one half million motor cars. We have ex- 
panded our business in volume during the past three years 
to over $1,000,000,000 annually. Our organization recog- 
nizes that there is much to be accomplished, and I am sure 
that it will be accomplished. We are on our way. 

"General Motors profits, like its business, have increased 
rapidly during the past two or three years. In 1926 they 
were something like $190,000,000. If the balance of 1927 
continues along our forecast, the earnings of General 
Motors during the last six months should be as good as the 
last six months of 1926. I am in hopes they will be a little 
better. Now, this aggregation of profits is the largest that 
any corporation has ever made in times of peace and, as a 
matter of fact, has ever made in the whole history of in- 
dustry with the exception of a single instance in times of 
war. Unfortunately, this has led to a false impression due 
to a lack of understanding of the facts, that General Motors 
must be making a very large profit per car. This is abso- 
lutely not true. General Motors profit per car is less today 
than it has been at any time except the one year in which 
we made no profit or, as a matter of fact, made a loss. 

"The statement that I made as to the increase in our 
profit account and the statement I have just made as to re- 
duction in profit per car, may appear to you to be somewhat 
contradictory. I think, therefore, that I should perhaps 
explain the statement a little more in detail. It is not 
realized that General Motors profits come from many dif- 
ferent sources. As a matter of fact, not more than half 
the Corporation's profits come from the manufacture of 
motor cars in the sense that other manufacturers produce 

The Point of View of General Motors 339 

motor cars. Our motor-car operations are, I think, equally, 
if not more completely self-contained than those of com- 
petitors and yet, as I said before, they contribute less than 
one half to our profit account. 

"You will agree with me, I am sure, that when we are 
charged with the responsibility that I so thoroughly out- 
lined to you, when we invest our stockholders' money as 
trustees, we must do it in the firm belief that the capital is 
safely invested and that the return to the stockholders, as 
a result of the investment, will be fair and equitable ; other- 
wise we have no right to make the investment at all. The 
stockholders' investment during the past three years has 
increased roughly $400,000,000. This investment carries 
with it an obligation as to a return. Part of this money has 
been invested in the expansion of our motor-car operations 
directly in increasing capacity of existing lines and in the 
establishment of the Pontiac and the La Salle, but very 
large sums of money have gone in entirely different direc- 
tions, viz., in expanding and establishing new activities en- 
tirely independent of the motor-car operations, and some 
even outside the automotive industry. 

"We have $50,000,000 invested in the General Motors 
Acceptance Corporation, the functions of which I will men- 
tion to you later. This $50,000,000, being stockholders' 
money, is entitled to make a fair return consistent with a 
normal banking operation. We have tens of millions of 
dollars invested in accessory operations which contribute 
a reasonable return to the stockholders and, naturally, add 
to the profit account. We manufacture roller and ball bear- 
ings for all purposes including railroad cars; and electric 
light plants for farm lighting. Through our Fisher Body 
division we build our own bodies from beginning to end. 
We own timber tracts and saw-mills. We carry the opera- 
tions all the way from the forest to the dealer. This takes 
capital, and that capital is entitled to a return, and the 
return increases the total profits. 

"We operate the Frigidaire, having about $40,000,000 
invested. We believe the electrical refrigeration industry 
is destined to be a very great industry. It goes without 
saying that that has nothing to do with the automotive 

340 The Turning Wheel 

industry, and its contribution to the stockholders' profits 
has nothing to do with the profits per motor car, yet the 
support of the Frigidaire Corporation to the stockholders' 
profits is very substantial, and it is increasing. 

"We have employed at the present time, something like 
$50,000,000 in overseas operations; in assembly plants and 
in merchandising operations abroad. The stockholders are 
entitled to a return on this as well as they are on other 
investments I have mentioned. It is not necessary that we 
should do this. We could sell our cars f.o.b. New York 
for cash and have them distributed by others. In that way 
we would employ less capital, but our stockholders, of 
course, would not get the return. The advantage of doing 
it our way is that we can do a bigger and better business. 
We can reduce the price of the cars in overseas countries. 
We therefore sell more cars and we can make all the 
cars at a lower cost in consequence. We can also paint and 
trim the cars more to the liking of the people in those 
countries. We employ labor and purchase material in those 
countries, and in that way we make ourselves more a part 
of the industrial life of each country. What is the result? 
A good return on the additional capital employed for the 
stockholders; an increase in the volume of business, mean- 
ing additional profits; a lowering of the cost of all cars 
produced, hence greater value at both home and abroad. 
All concerned are benefited. 

"I might go on further and point out to you many other 
activities that we have that are very seldom thought of, 
all of which must make a return. Still in addition to this, 
and it is an important consideration, through our growing 
production necessities we are required to make more and 
more of our own parts. We can usually make them better 
and at a lower cost. It is not, however, our policy to do 
this unless we can get such results, but where we can add 
value to our cars and make a reasonable return, we feel it 
is our duty to the responsibility we carry to do this. For 
all additional capital General Motors employs in extend- 
ing its operations, other things being equal, there must be a 
proportionate increase in profits. Each dollar must make 
a showing for itself. If, for illustration, $100,000,000 were 

The Point of View of General Motors 341 

left in the business out of a given year's earnings, and a 
reasonable return on that $100,000,000 is 15 percent, then 
the next year's profits should increase, all things being 
equal, by $15,000,000 or we will not have done a con- 
structive thing. 

"A few words about our organization itself. We operate 
on the principle of what I might term a decentralized 
organization. I mean by that, each one of our operations 
is self-contained, is headed by an executive who has full 
authority and is responsible for his individual operation. 
We, naturally, think that this is the best scheme of organ- 
ization or we would not adopt it. Our responsibilities are 
so great, the necessity of quick action and prompt decision 
is so great and contributes so much increased efficiency and 
effectiveness, that it is about the only way a business of the 
magnitude of General Motors could be conducted. It also, 
I think, has the very great advantage of developing 
executive ability and initiative on the part of a greater 
number of individuals. All the members of our organization 
appreciate what is absolutely true that they have a real 
function to perform and that upon their initiative, their 
industry, and the constructiveness of their decisions as a 
whole, depend the success of the institution as a whole. 
Coordination is effected through what we call Inter- 
Divisional Relations Committees, where those interested 
in the same functions of the important divisions meet to- 
gether and discuss their own problems as well as the same 
problems from the standpoint of Corporation policy. For 
instance, our purchasing agents meet together in the form 
of a General Purchasing Committee, presided over by a 
vice-president of the Corporation. If it is found that one 
or more of the divisions can profit by purchasing as one 
unit, then we purchase as General Motors and all profit. 
If it is found that there is nothing gained, we do not do so. 
In that event the purchase is by the individual operations 
as their judgment may determine. In that way we get in- 
dividual initiative, and at the same time we do not overlook 
anything from the Corporation standpoint. 

"In addition to this, the Corporation maintains an or- 
ganization in Detroit as an advisory service for the benefit 

342 The Turning Wheel 

of all. General Motors Research which you have visited, 
acts in a consulting capacity for the engineering depart- 
ments of all the divisions s and IR addition to this, is con- 
stantly searching for new principles and ideas of a more 
fundamental and scientific character than would be pos- 
sible for any of the individual engineering departments, 
which must be more concerned with immediate production 
problems. Legal and patent problems, as well as account- 
ing and financial control, are handled in a similar manner. 
Sales research is also a very important activity. In no case, 
however, is the responsibility taken away from the head 
of each division. When differences of opinion arise, and 
differences of course do arise, they are discussed and con- 
sidered from every standpoint. In every case that I can 
remember since I have been operating in the past three 
years, as a result of such discussion, everybody was agreed 
as to the proper course to pursue. 

"Some months ago, I sent a message to our stockholders, 
entitled, 'How Members of the General Motors Family 
Are Made Partners in General Motors/ In this I explained 
the attitude of General Motors toward its organization 
those who make it what it is, and what it will be in the 
future. I shall be glad to send any of you a copy of that 
message. After all, the tens of millions of dollars we may 
have in banks, the hundreds of millions of dollars invested 
in various ways, our plants and their equipment through- 
out the world, all are of comparatively little value without 
an intelligent and effective organization. It is easier to re- 
place all the former than it is the latter. We have recog- 
nized that principle by developing plans whereby the 
organization itself profits through its own endeavors as 
partners in other words, receives something in addition 
to a daily wage. This applies to one and all. Time will not 
permit me to go into detail. I just want to say that I believe 
that this principle of the organization's participation in the 
result that they themselves accomplish is not only sound 
economically and equitably, but is the best kind of business 
from the stockholders' standpoint. 

"A word about our policy of telling the facts about Gen- 
eral Motors. We believe in frankly telling our stockholders 

The Point of View of General Motors 343 

and the public all the things that we can consistently. As I 
have already said, we report monthly our retail and whole- 
sale sales so that everybody may know. We send quarterly, 
to our stockholders, detailed statements of the financial 
position of General Motors as well as its operating posi- 
tion. I make it a point to send messages several times a 
year to our stockholders, telling them of things that we are 
doing and why we are doing them so that they will get a 
complete understanding of our viewpoints. In our annual 
report we try to state all the facts the stockholders should 
know. We knowingly hold back no information that they 
are entitled to as partners in the business. I feel that this 
policy on the part of General Motors has contributed much 
to the feeling of good-will that exists toward the Corpora- 
tion, not only throughout this country, but throughout the 
entire world. 

"The story I told you about the position of General 
Motors in 1920 and my viewpoint of the greatest necessity 
in our dealer situation, leading up to the two words 
Proper Accounting might be expressed in still another 
way, this time in three words : Get the Facts. 

"There is a very fundamental principle, the importance 
of which I am continually trying to impress upon our direct 
organization as well as our dealers; viz., Get the Facts. 

"I would now like to tell you some of the things we do 
in General Motors to get the facts. 

"Let me tell you about what we call our field trips. It 
may surprise you to know that I personally have visited, 
with many of my associates, practically every city in the 
United States from the Atlantic to the Pacific and from the 
Gulf of Mexico to the Canadian border. If any of you 
has done this, you realize what a big country it is. It has 
taken weeks and weeks of the hardest kind of work and 
continual travel to accomplish this. I wish that my duties 
were such that I could do more of it; and I am trying to 
arrange my affairs so that I can. In these trips I visit from 
five to ten dealers per day. I meet them in their own places 
of business, talk with them across their own desks and 
solicit from them suggestions and criticisms as to their re- 
lations with the Corporation; the character of the product; 

344 The Turning Wheel 

the Corporation's policies; the trend of the consumer de- 
mand; their viewpoint as to the future, and many other 
things that such a contact makes possible. I solicit criticism 
of anything and everything. I make careful notes of all the 
points that come up that are worth while, and when I get 
back home I study and develop those points and capitalize 
them so far as possible. The reason for all this is that 
irrespective of how efficient our contact through our 
regular organizations may be, our men in the field are 
charged with doing specific things and that takes all their 
time and effort. I go out from the standpoint of general 
policies and get the facts in a very personal way without 
the intermediary of an organization, which is apt to over- 
look the most important points and inject its own personal 
views on such points as it does get. I believe that this work 
that we have done has contributed much more than any of us 
appreciates to the progress that General Motors has made. 

"You have gone through our Research Laboratories and 
have some idea of what it is all about. It is no different 
from our field trips, in principle. We are searching for the 
facts that we may know more about the fundamentals and 
be able to add value to the performance and effectiveness 
of our products, just the same as in the field work we are 
trying to learn more about the distribution of our products. 
We send representatives abroad to study foreign methods 
and foreign cars. We have an engineering office in London 
with representatives in other countries to keep us advised 
at all times as to what progress there may be along Euro- 
pean lines that General Motors can capitalize. Again, we 
are seeking the facts. 

"The Proving Ground here is also dedicated to the prin- 
ciple of getting the facts. As you see, we not only operate 
our own cars, but all competitive cars, both those made at 
home and abroad. We are seeking the facts about all of 
them to the end that General Motors cars are better cars. 
We are seeking in our sales activity here at the Proving 
Ground to impress upon our dealers the facts about our cars 
so that they may more intelligently present them to the con- 

The Point of View of General Motors 345 

"I wish I could get a definite measure of the relationship 
of the various things we have done, one to the other, and 
their contribution to the whole, but, naturally, a thing of 
that kind is impossible. I feel, however, that certain prin- 
ciples which we have developed are important factors in 
the progress we have made. One of these is that we have 
tried to treat everybody fairly and squarely. We have tried 
to recognize that our organization, which is contributing 
everything to the success of the Corporation, is entitled to 
participate in that success our partnership idea. We have 
also tried to recognize the position of our suppliers. Of 
our dealers I have already spoken. As to the public, you 
only have to compare any General Motors product of to- 
day and its price with the corresponding product of even 
two years ago and the price at that time: more beauty in 
design; more luxury in appointment; more comfort and 
convenience; increased performance at, in nearly all cases, 
a lower price. In other words, greatly increased values. We 
have worked conscientiously and intensively, always with 
the interests of our stockholders as our guide. Naturally, 
we are not perfect in carrying out these policies and 
ambitions of ours, but we do the very best that we can and 
feel that we are continually making improvement. There- 
fore, the first factor I believe should be trying to treat 
everybody fairly and squarely. Then we are trying, as I 
said before, to get the facts. My experience in business is 
that facts are too little considered in making decisions. It is 
difficult to get the facts to get all the facts, but it is worth 
every effort and we put forth that effort. Then, with the 
facts before us, we try to approach the decision with an 
open mind. 

"We recognize that we must be conservative. Our re- 
sponsibilities are too great to be otherwise. We cannot take 
chances, yet we must progress. We try to recognize that 
what we do today, whatever measure may be placed upon 
it, must be improved tomorrow; next week's performance 
must beat tomorrow's, and next month's and next year's 
must beat that of the previous month or year. Therefore, 
to sum up, we get these factors : a recognition of the equities 
of all concerned; getting the facts; analyzing the facts 

Weather Bureau Station, General Motors Proving Ground, 
Milford, Michigan 

Entrance to General Motors Proving Ground, Milford, Michigan 


The Point of View of General Motors 347 

with an open mind. These, to my mind, are the principles 
which have contributed most to the present position of Gen- 
eral Motors and to the progress that it has made during 
the past few years. This leads me to the last point the 
necessity of capitalizing the principles that we elected to 
guide us forward. This can only be accomplished in one 
way: hard work. 

"It seems sometimes each one of you has seen such 
cases that results are accomplished without hard work, but 
I think you will agree with me that in the long run it does 
not work out that way. In any event, I hope that General 
Motors will never attempt that sort of an experiment. 

"Therefore, our principles completely expressed, as I see 
them, and they apply to every other business as much as 
they do to that of General Motors, are: Get the facts. 
Recognize the equities of all concerned. Realize the neces- 
sity of doing a better job every day. Keep an open mind 
and work hard. The last, gentlemen, is the most important 
of all. There is no short cut." 

Chapter XXV 


N DISCUSSING the purchases of interests in other com- 
panies, it was noted that in most cases General Motors 
followed the practice of buying all or part of the agreed 
shares in the open market, with the result that a number of 
purchases were completed without changing the stock struc- 
ture of the Corporation even though the purchase agree- 
ment was stated in terms of stock. 

After the General Motors Corporation succeeded the 
General Motors Company on October 13, 1916, only in the 
following cases was Common stock originally issued in the 
acquisition of properties : 




May 2, 1918 282,684 Chevrolet Motor Co. of Delaware 

Nov. I, 1918 49,000 Canadian Units 

Dec. 31, 1918 99,401.7 United Motors Corporation 

Dec. 31, 1918 16,175 Lancaster Steel Products Co. 

Oct. 31, 1919 35,451 Domestic Engineering Co. 

Mar. 25, 1920 21,457 Dayton Metal Products Co. 


The Stockholder Interest 349 


On March 25, 1920, 140,000 shares of no par stock were ex- 
changed for all capital stock of the Chevrolet Motor Company of 

As of June 30, 1926, 638,401 new no par shares of the Cor- 
poration were issued as part payment for the minority interest of 
Fisher Body Corporation. 

In the foregoing, and other purchases, there were issued 
390,708 shares of 6 percent $100 par Debenture stock and 
60,000 shares of 7 percent $100 par Debenture stock. The 
last instance of this nature was in October, 1929, when 
40,000 shares of 7 percent Preferred stock were issued as 
part payment in the acquisition of the North East Electric 

The era of prosperity began for the Corporation in 
1923, when net sales reached a new high level, nearly 
$700,000,000 earnings on which left $65,121,584 avail- 
able for dividends on Common stock, the largest earned for 
Common stockholders up to this time. Of this $24,772,026 
was paid in dividends, and more than $40,000,000 re- 
invested in the business. The dividend on the Common no 
pa'r stock had been raised to 30 cents a quarter on March 
15, 1923, and was continued at that rate through the year. 

This increase in dividends reflected both the growing 
prosperity of the country and its increasing acceptance of 
the automobile as a commonplace, a piece of property so 
widely owned that to be without one was to be out of 
fashion. All trades catered to the motorist. Dry-goods 
stores had added motoring accessories, sport clothes, and 
blankets. Hardware stores carried flashlights and tools. 
Automobile supply stores were growing in number and 
size a new development in merchandising. Hotels found 
a new and profitable business in the motor traveler. The 
farmer started wayside markets to reach the city dweller. 
A parts and accessory business had brought by 1923 a turn- 
over in excess of $1,750,000,000 through retail trade, when 
clothing and other motorist supplies are included. 

Also, an intense stimulus had been given to the search 
for substitutes, for new sources of raw materials and the 

350 The Turning Wheel 

development of by-products. A particularly noticeable in- 
stance was gasoline, which was originally the by-product of 
petroleum, while kerosene was the mainstay. The motor 
industry reversed their positions and built a far greater 
industry out of the formerly unimportant by-product. 
"Countless similar situations might be added by a detailed 
and careful analysis, all weaving closer and closer the vital 
and mutually advantageous relationship of the automo- 
bile and allied trades and industries." The motor car had 
become an essential of life for the American masses. 

On June 16, 1924, the certificate of incorporation was 
amended to provide for a reduction in the number of no par 
Common shares, one share of new no par value Common 
stock being given for each four shares of no par Common 
stock then outstanding. This reduced the number of shares 
outstanding from 20,646,397 to 5,161,599. At the same 
time holders of the 6 percent Debenture and 6 percent Pre- 
ferred stocks were given the right to exchange their stocks 
for a new issue of 7 percent Preferred stock, on payment of 
$10 per share in cash. The new Common stock after the 
exchange of one new share for four old shares, registered 
high and low prices of 66% and 55 ^4 in 1924, but the next 
year saw it rise to a high of 149^4. This stock soared to 
282*4 m X 9 2 7> becoming the leader in the remarkable 
"bull" market of that hopeful year. 

Both sales and earnings dropped somewhat in 1924. An 
initial dividend of $1.25 on the new Common stock, each 
share of which represented four shares of the old no 
par Common, was paid December 12, 1924. More than 
$19,000,000 was reinvested in the business. The Corpora- 
tion's solid position, the greater market appeal of the new 
and higher-priced stock, and the flourishing condition of 
the country, all combined to focus attention on General 
Motors Common. When it was seen that the disposition of 
the directors was to pay in dividends roughly two thirds of 
earnings to Common stockholders, the market hesitation on 
the stock ceased. From 1924 through 1929 disbursements 
to Common stockholders ranged from 56.4 percent of avail- 
able earnings to 65.6 percent. With the decline of earnings 
in 1930, the ratio rose because of the Corporation's decision 

New York headquarters of General Motors, 7775 Broadway, as seen 
from Central Park across Columbus Circle 


352 The Turning Wheel 

to maintain dividends as part of a policy to reinforce the 
general buying power of the public, a determination which 
increased the number of its stockholders all through that 
discouraging period. 

Mr. Raskob, as chairman of the Finance Committee, 
exercised a great influence on the Corporation's dividend 
policy. A hopeful and sanguine man, he firmly believed that 
prompt and liberal distribution of earnings to stockholders 
not only tended to maintain general prosperity, but also 
that it made future markets for General Motors cars by 
increasing directly the buying power of those already well 
disposed to the Corporation's products by stock owner- 
ship. The various stock "split-ups" and stock dividends 
were motivated by the reasoning that the more persons 
financially interested in General Motors, the greater the 
number of potential customers, since, other things being 
equal, they would be disposed to prefer General Motors 
products to those of other manufacturers. 

Sales for the year 1925 showed a decided increase, net 
income available for dividends exceeding $100,000,000 for 
the first time in General Motors history. Accordingly, 
extra dividends were paid on Common stock, $i on Sep- 
tember 12, 1925, and $5 on January 7, 1926, and the 
regular quarterly dividend rose to $1.50. Notwithstanding 
these disbursements, the then record sum of $46,441,065 
was reinvested in the business. The liberal investment 
policy being based on a financial position of increasing 
strength, the investing public pushed the price of the new 
no par Common stock from a low of 64^, to a high of 
149^4 during the year. 

A Common stock dividend was declared on August 12, 
1926, at the rate of one half share of Common for each 
share outstanding. This change in the capital account 
raised the outstanding shares by 2,900,000 to a new high 
of 8,700,000 for the no par issue of 1924. Cash dividends 
for the year reached the then record of $103,930,993. Not- 
withstanding, almost $75,000,000 from earnings was re- 
invested in the business. It is noteworthy that in 1926 
General Motors paid in dividends a sum in excess of its 
net sales in 1915. 


Chairman of the Board of Directors, General Motors Corporation, 



354 The Turning Wheel 

An important change in the Corporation's capital 
structure, approved by the directors on August n, 1927, 
was adopted by the stockholders on September I2th, in- 
creasing the authorized Common stock from 10,000,000 
no par shares to 30,000,000 shares of $25 par value. Two 
shares of the new $25 stock were issued for each of the no 
par shares, which resulted in increasing the number of out- 
standing Common shares from 8,700,000 to 17,400,000. 

During 1926 the Corporation had put upwards of $100,- 
000,000 into plant extensions and improvements, and in 
permanent investment in subsidiary companies. A portion 
of these expenditures was now permanently financed by the 
issue of 250,000 shares of 7 percent Preferred stock at 
$120, the marketing of the issue being taken over by 
J. P. Morgan & Company. Both the premium paid and the 
favorable rate at which the famous Morgan house under- 
took their distribution reflected the Corporation's favor- 
able financial position. 

From earnings of 1927 more than $90,000,000 was re- 
invested in the business. Cash dividends on the Common 
stock reached a new high at $134,836,081, $8 being paid 
on the old no par stock through the medium of three 
quarterly $2 dividends and an extra of $2 on July 5th. An 
initial quarterly dividend of $1.25 on the new $25 par 
Common was paid on December I2th with an extra of $2.50 
on January 3, 1928. This was the equivalent of $15.50 on 
the old no par stock which closed its extraordinary market 
history on October 8, 1927, with a high record of 282%, 
after being quoted four years earlier at 55%. Since the 
number of shares had been doubled, the market price of 
new stock was reduced, but during the next three years ran 
from a low of 1231/2 to a high of 224^. 

In 1928 when the American motor-car industry as a 
whole reached the new high of 4,601,141 units in produc- 
tion, General Motors sold 1,810,806 cars and trucks. Total 
sales were $1,459,762,906 and net income available for 
dividends $276,468,108, the highest in the Corporation's 
history. Its percentage of the total passenger car business 
was 41.4. Dividends reached an all-time high, with a dis- 
bursement of $165,300,002 on Common stock, and more 

The Stockholder Interest 355 

than $100,000,000 the largest sum to date was rein- 
vested in the business. The stock reflected these tremendous 
earnings and disbursements by reaching a new high of 224^4. 

As prices in that elevated range were rather beyond the 
reach of small investors whom the Corporation desired to 
attract, stockholders were asked to approve an amendment 
to the certificate of incorporation effecting the exchange of 
their $25 par stock for a new issue with a par value of $10, 
thus increasing the number of outstanding shares two and 
one half times. This was done on December 10, 1928, the 
exchange of stock beginning on the January yth follow- 
ing. On the completion of the exchange, the Common stock 
outstanding was 43,500,000 shares of $10 par value and 
no further change has been made. The highest quotation 
on these shares was 91 J4 m 1929. 

The year 1929, indeed, recorded new highs in many 
aspects of the Corporation's activities. In that year the 
Corporation made these records: 

Unit Sales 1,899,267 passenger and commercial cars 

Sold $1,504,404,472 worth of merchandise 

Earned $248,282,268 available for dividends 

Paid $156,600,007 in dividends on Common stock 

to 198,600 stockholders 

Reinvested $82,203,580 in the business 

Pay Roll $389,517,783 

Employees 233,286 

Bonuses 167,378 shares of Common stock 

Its employees had $56,560,310 balance in the Employes' Savings 

Funds, and 

$38,762,678 balance in the Employes' Invest- 
ment Funds 

Its car divisions made unit sales to dealers as follows: 

Buick, 199,414; Cadillac, 15,416; La Salle, 21,498; Chevrolet, 
988,191 passenger cars and 344,963 commercial cars; Pontiac 

356 The Turning Wheel 

(Oakland), 224,448; Oldsmobile, 99,435. Including all cars and 
trucks, total unit sales were: 

Passenger cars 1,554,304 

Commercial cars 344,963 

Total unit sales 1,899,267 

From 1930 to 1933 the Corporation's record was one 
of meeting adverse circumstances as effectively as possible, 
maintaining a strong cash position in the face of shrinking 
volume and, through improvements in the design and 
workmanship of its products, striving to stimulate consumer 
interest. Declines, sharp when compared with the figures of 
1922-30, appeared in sales and earnings. The latter years, 
however, do reflect a rise in the percentage of the total 
automotive trade enjoyed by the Corporation. 

Also in gratifying contrast to declining sales, was the 
rise in the number of stockholders in the Corporation. The 
year 1929 witnessed a notable increase in stockholders, the 
number rising from 71,185 in the last quarter of 1928 to 
198,600 in the last quarter of 1929. Since then the gains 
have been large. The figures for the last quarters of the 
past four years are: 

1930 263,528 stockholders 

1931 313,117 stockholders 

1932 365,985 stockholders 

1933 351,761 stockholders 

The rise may be explained partly by the Corporation's 
strong cash position, the evident determination to maintain 
it, and the policy of paying out of surplus such dividends as 
did not threaten that position. Large blocks of stock became 
broken up under the financial pressure of the period and 
passed into small and scattered holdings. 

By rigid economy the Corporation has escaped record- 
ing a loss from operations. Although margin of profit de- 
clined, cash and cash investments increased, reduction of 
inventories accounting largely for this increase in cash. 
Decisively the Corporation grappled with the problem of 
readjusting its idle real estate, plant and equipment account 
to salvage value, thereby eliminating the need for charging 

The Stockholder Interest 357 

depreciation against this property. Consequently, the annual 
depreciation charge is reduced by some $7,000,000 a year. 

The Corporation's forecasting experience stood it in good 
stead as was shown fairly early in the depression, when 
the necessary steps in retrenchment were taken and produc- 
tion was effectively controlled. 

On May 26, 1930, the stockholders, to simplify its senior 
security structure, voted to replace outstanding senior securi- 
ties by a new $5 series Preferred stock, exchangeable on 
the basis of 1.35 shares of the new $5 Preferred for each 
share of the 7 percent Preferred, 1.15 shares for each 
share of 6 percent Debenture stock, and shares for 
each share of 6 percent Preferred stock. General Motors 
enjoys the unique record in the twenty-five years of its 
existence of never having passed a dividend on any of its 
senior securities, of which 1,875,366 shares of its $5 Pre- 
ferred stock are all that are presently outstanding. 

As the business skies began to clear in the spring of 1933, 
elements of strength at once appeared. Stocks of cars were 
so low that even a limited new demand caused factory 
activity. For the first time in the history of the Corpora- 
tion, June sales exceeded May sales, and the period of brisk 
summer buying continued longer than usual. Moreover, by 
maintaining dividends to an ever increasing body of stock- 
holders, without sacrifice of internal strength, the Corpora- 
tion had commended itself to a large and important public. 
The essential soundness of its management and the solidity 
of its financial position had been demonstrated under the 
most severe financial strain ever experienced by modern 

Buick on steps of Summit House, Pike's Peak, 1913. First car to 
climb the mountain entirely on its own power 


Chapter XXVI 

J7 ROM its birth the automobile has been a public spectacle, 
a self-advertising piece of merchandise, performing in the 
gaze of all. Whenever a new car took the road in the old 
days, a crowd gathered to praise or criticize. Even yet a 
new model at the curb attracts passers-by. Thousands pay 
admission to automobile shows, and changes in design in 
well-known makes are accepted by press and public as out- 
standing news. But even so, automobiles have to be sold; 
the salesman has to get his order signed. 

Old-timers say that for the first fifteen or twenty years 
of this century, automobiles sold themselves. That is true 
only in the sense that fewer cars were being built than the 
public was ready to buy. Nevertheless, there were sales 
problems. One was the early timidity of the public; an in- 
dividual might want to buy and be quite able to buy, but his 
fears had to be overcome. Would the car run, and could 
he operate it? In such cases, salesmanship was largely a 
matter of demonstration. The salesman took his prospect 
for a ride, selecting a course on which excellencies would 
show and faults be overlooked. If the car was a good hill- 
climber, hills would be negotiated; otherwise the talk would 
be of speed on level stretches. With cars of substantial 
reputation, like Buick, demonstrating the car remained the 
central effort down to about 1918. Once the car had been 
demonstrated successfully, the prospect paid a deposit and 
the dealer entered his name on a waiting-list for future de- 
livery. Many buyers were willing to pay premiums for early 


360 The Turning Wheel 

But even in those years the manufacturer had his selling 
problems. First in the quantity field, R. E. Olds had to meet 
the problem of credit sales. Nearly everything hitherto 
manufactured for the public and sold through middlemen 
had been purchased on credit. Retailers did business partly 
on the capital of manufacturers and wholesalers, and in turn 
sold to many of their customers on open account. There 
were special reasons why this practice could not be fol- 
lowed with regard to automobiles. Manufacturers could not 
find capital enough to finance their trade on that basis. Each 
unit represented so much money that credit risks could 
hardly be taken. Cars depreciated rapidly in use, and at the 
start could hardly be considered as dependable, standard- 
ized merchandise. Consequently, Mr. Olds insisted upon 
shipping with sight draft attached to bill of lading, a cash 
transaction as far as the factory was concerned, since banks 
would finance goods in transit upon bona fide orders. That 
practice has been generally followed, though liberalized, as 
will be described later. 

Under this system the dealer had to furnish all the capi- 
tal and credit required to stock the car pending sale, and 
finance his deals. If a man of some means and substance, he 
could usually use local bank capital to pay his drafts and 
take over his cars from the railroad, but in many places 
banking facilities were meager, and bankers timid. So the 
manufacturer had to choose his dealers with an eye to their 
general credit as well as their selling ability. The seasonal 
character of the business made the dealer's ability to finance 
in advance of sale highly important to the manufacturer. 
March, April, May, and June were the best months for 
deliveries, but with limited facilities for manufacture, pro- 
duction had to proceed at a steadier pace. Unless the 
waiting-list was extra long, the factory could operate 
profitably only if dealers had credit enough to take cars in 
the winter months for storage in a reasonable quantity. In 
a vast marketing area like the United States, the inability 
of even 10 percent of the dealers to do this might be em- 
barrassing. Therefore, although cash was the rule, credit 
qualifications had to be considered by the manufacturer. 

Marketing the Motor Car 361 

Various efforts were made to take short cuts to the 
market when not enough strong dealers could be found to 
give a manufacturer adequate representation in all sections. 
The factory branch store was one method which has been 
tried by nearly every leading manufacturer. At one time 
Chevrolet had over fifty of these stores, but found it ad- 
visable to abandon all but a few. The Buick branch in New 
York City outlived all its comrades. Also, distributorships 
were set up for large territories, a natural evolution in view 
of the time involved in rounding out a system of national 
representation on the basis of contracts with individual 
dealers. Some manufacturers operated sales zones on their 
own account; others allocated territories to independent 
individuals and firms. Some of the latter have been highly 
influential in the history of General Motors. An excellent 
example is Harry K. Noyes of Boston, Buick branch man- 
ager and distributor for New England for more than 
twenty-five years. In several other parts of the country con- 
tinuity records of almost equal impressiveness have been 
made. Successful distributors often reinvested their profits 
with their dealer-customers, acquiring part ownership, and 
in some cases full ownership of important retail outlets in 
their territory. 

In a trade of rapid growth and immense vitality, dealer 
arrangements are necessarily flexible, adjusting themselves 
to the needs of the territory and the business and financial 
capacity of the dealers. Hence sales policies which were too 
rigid to let the human element expand and flourish on the 
local side have usually come to grief. One of the early prob- 
lems was to find and secure as dealers and distributors men 
who would keep on growing as the industry grew. 

Despite the policy on the manufacturer's part to con- 
tract with substantial parties, the early dealers were usually 
men of more courage than capital. They had to be cour- 
ageous, since they were staking everything on their faith in 
a new business geared to a scale of values beyond anything 
else ever taken to the market in quantity. In 1908 a good 
automobile cost as much as a small house; the difference was 
that banks, building and loan associations, and mortgage 
companies were solidly behind real estate, while the 

362 The Turning Wheel 

automobile dealer had to finance his operations on his own 
responsibility. At the start he usually operated "on a shoe- 
string," until profits gave him a firmer base and longer line of 
credit. As a result, the survivors of these adventurous begin- 
nings, now well along in years, still have the hearty air of men 
who in their youth grappled gayly with fortune, taking good 
luck with a grin and bad luck with a smile. They fought for 
public acceptance of the automobile ; upon their ability to con- 
vince all classes of buyers the new industry depended for the 
introduction of its products into areas as yet unprepared for 
it by advertising, good roads, or service facilities. 

In New England Harry K. Noyes would break a trail 
over a mountain, sell his car, establish a dealer, and make 
his way back to the railroad in an ox cart. In Minnesota, 
Harry Pence would lead a string of Buicks westward 
through the mud and never think of returning until the last 
one had been sold. He might take wheat or potatoes in 
trade, but he sold the caravan and returned to Minneapolis 
for more. As one veteran said : 

We were business buccaneers on uncharted seas; we would gamble 
with anything except the good name and fame of the cars we were 
selling. I have risked my life more than once making demonstra- 
tions on hill roads and hairpin curves that I had never seen before. 
There wasn't the same uniformity in cars that there is now, and 
because one performed well that was no guarantee that the next one 
would. If it failed and we survived, we always had plenty of 
reasonable explanations on tap, made repairs at the nearest black- 
smith shop and returned for another try. I made it a point of honor 
for years never to let go of a man who seemed to me to be the 
best dealer material in his community. Sometimes I had to wait 
years to get him, taking someone else in the meantime. But if the 
second choice didn't make good after giving him every chance and 
encouragement, back I would be after number one. 

We didn't know so much about General Motors then. We were 
Buick men or Cadillac men or Oldsmobile men, whatever the 
hook-up. That is still pretty much true in the field, but then we 
were treading on each other's toes all along the line, since less 
attention was paid then to keeping General Motors cars out of 
direct price competition with one another. That was just as well, 
for it kept us on our mettle at a time when our futures depended 

Marketing the Motor Car 363 

upon building the best dealer organizations possible, and our 
dealers likewise needed to reach and cultivate the best clientele in 
their neighborhoods. Later on, when our expenses of doing business 
were larger, and the market was less demanding, we welcomed the 
effort of headquarters to keep General Motors cars in price classi- 
fications where competition between them became marginal rather 
than general. 

The first motor cars were offered to the public without 
top, windshield or lamps, and were serviced by black- 
smiths or buggy builders. Dealers had to stock necessary 
equipment, create service organizations, and organize 
supply stations. A pioneer salesman invading new territory 
made it his business to talk country storekeepers into stock- 
ing gasoline, and to urge upon the livery-stable keeper the 
wisdom of providing accommodations for motor cars as 
well as for horses and carriages. 

Fairs bulked large in the early sales efforts. The first 
motor cars were denied admittance to these gatherings, but 
that prohibition soon passed, and presently whole buildings 
came to be set aside for automobile displays. To Bar- 
num & Bailey goes credit for breaking down the barrier 
against automobile showmanship in many backward parts 
of the country. During the entire 1896 season, Barnum & 
Bailey street parades were led by an automobile, and the 
public applauded its appearance in the ring twice daily. 

Within a few years the automobile industry would be 
putting on its own shows or fairs in all the large centers. 
As the trade developed, this practice spread downward until 
the automobile show has become an annual feature in most 
county-seat towns. New York and Boston led off with auto- 
mobile shows in 1900, following the precedents set by 
annual cycle shows. In showmanship, as well as in mechanics, 
the automobile trade owes a considerable part of its early 
momentum to the bicycle trade. By an easy transition firms 
making bicycles and bicycle parts began to make automo- 
biles and parts. One of General Motors' chief accessory 
producers New Departure began its industrial career 
making doorbells and bicycle bells ; then it passed to coaster- 
brakes and latterly to ball bearings. Another started with 

364 The Turning Wheel 

bicycle gears. Hundreds of the most effective of the early 
automobile salesmen came directly into the new field from 
the bicycle trades; it was a commonplace to see an auto- 
mobile in one show window of a store while the other 
window continued to display bicycles. And, of course, the 
"bicycle craze" of the early 'nineties brought the public 
around to the automobile as the next step in highway travel 
and rapid movement. 

The bicycle craze was fast and furious while it lasted. 
It began with velocipedes and high-wheel boneshakers, and 
ran rapidly through to the "safety" and elaborate multiple 
cycles. Chief of these was the tandem, now remembered 
chiefly as "the bicycle built for two" of the famous "Daisy 
Bell" song. Those were the days of famous bicycle racers, 
of Tom Cooper, Eddie Bald, Harry Elkes, and Jimmie 
Michaels, paced by three-, four-, five-, and six-man machines. 
Probably the largest cycle ever built was a ten-seater upon 
which Boston belles used to take the air to the wonder and 
applause of pedestrians. To meet the demand for bicycles, 
some of America's most famous precision manufacturers 
the sewing machine and firearms makers turned part of 
their plants into production of cycles and parts, and so pre- 
pared themselves for similar attention to the coming auto- 
mobile needs. 

The swift rise and fall of the bicycle business caused 
many bankruptcies which prejudiced investors and bankers 
against the motor-car industry from the start. This preju- 
dice remained active for years and had its influence on the 
early history of General Motors. When the then young 
Company needed capital in 1910 the old refrain was still 
being chanted, "See what happened to the 'bicycle craze.' ' 
The automobile business had to live down the difficulties 
of its predecessor. 

Other established businesses which furnished large quotas 
of dealers and salesmen for the new automobile trade were 
the carriage and farm implement trades. The carriage 
trades, indeed, had developed the distributorship angle of 
vehicle selling before the automobile entered the American 
scene in quantity; in placing Buick distribution on that 

Marketing the Motor Car 365 

basis, Mr. Durant followed time-tested precedents at the 
outset, and of course improved on them, building by that 
means a staunch and comprehensive selling organization 
covering the whole country. The West, with its magnificent 
distances, especially required to be handled in this way, in 
great blocks rather than piecemeal, and Mr. Durant's early 
success there may be counted as chiefly responsible for his 
pushing Buick into first place in sales volume by 1908. 

The "saturation point," one of the major delusions of the 
early period, kept conveniently receding as each year 
brought larger and larger sales. Prophets of doom were 
always talking about the mythical point where everyone 
would have all the motor cars he wanted. This opinion was 
based upon carriage and bicycle precedents and its disciples 
quite overlooked the fact that the automobile was an 
unprecedented development. Everyone wants a new motor 
car; production is limited only by buying power. Owners of 
bicycles and carriages were less keen for new bicycles and 
new carriages; and, in addition, persons who had never 
possessed earlier modes of transport came eagerly into the 
automobile market. So the "saturation point" remained in 
the realm of rhetoric for many years. 


The big business of showing automobiles has developed 
new features of late. Dealers in the larger centers present 
what may be considered perpetual shows of all models in 
handsome showrooms. "Automobile Row" is usually the 
brightest spot in a city's mercantile section, though the 
tendency of dealers to herd together is perhaps a little less 
marked than it was. Nearly every sizable city now has its 
annual show in the late winter or early spring, with New 
York for years starting the schedule early in January. The 
New York show has grown steadily in color and popu- 
larity, drawing attendance from all parts of the country, 
and being always well patronized by a public willing to pay 
to view the new models. 

In 1932, from April 2d to 9th, General Motors held 
national exhibitions of its products simultaneously in the 


The Turning Wheel 

following fifty-five cities, located in thirty states and the 
District of Columbia : 

Albany, New York 
Atlanta, Georgia 
Baltimore, Maryland 
Billings, Montana 
Birmingham, Alabama 
Boston, Massachusetts 
Brooklyn, New York 
Buffalo, New York 
Butte, Montana 
Charleston, West Virginia 
Charlotte, North Carolina 
Chicago, Illinois 
Cincinnati, Ohio 
Cleveland, Ohio 
Columbus, Ohio 
Dallas, Texas 
Davenport, Iowa 

Dayton, Ohio 
Denver, Colorado 
Des Moines, Iowa 
Detroit, Michigan 
El Paso, Texas 
Grand Rapids, Michigan 
Houston, Texas 
Indianapolis, Indiana 
Jacksonville, Florida 
Kansas City, Missouri 
Los Angeles, California 
Louisville, Kentucky 
Memphis, Tennessee 
Milwaukee, Wisconsin 
Minneapolis, Minnesota 
Nashville, Tennessee 

Night Scene: General Motors Building at the Century of Progress 
Exposition, Chicago, 1933 

Marketing the Motor Car 367 

New Haven, Connecticut St. Louis, Missouri 

New Orleans, Louisiana St. Paul, Minnesota 

New York, New York San Antonio, Texas 

Newark, New Jersey San Francisco, California 

Oakland, California Seattle, Washington 

Oklahoma City, Oklahoma Spokane, Washington 

Omaha, Nebraska Springfield, Massachusetts 

Philadelphia, Pennsylvania Syracuse, New York 

Pittsburgh, Pennsylvania Toledo, Ohio 

Portland, Oregon Tulsa, Oklahoma 

Rochester, New York Washington, D. C. 

There was also a special showing in connection with the 
General Motors exhibit at Atlantic City. This nation-wide 
selling effort received favorable publicity as the most de- 
termined effort made by any corporation to revive buying. 
The trade of approximately 2,000 of the largest and 
strongest General Motors dealers located in metropolitan 
areas was directly affected by the exhibits, and about 18,000 
dealers benefited by the advertising and sales promotion 
campaigns. In Boston alone 240,000 persons, by actual 
count, visited the six-day Exposition with no other attrac- 
tion than General Motors products. 

General Motors products are displayed at all leading 
automobile shows in America and elsewhere, except in those 
foreign shows restricted to national products. In the case of 
the Chicago and New York shows, special General Motors 
exhibits are held during the period, the Hotel Astor in New 
York City and the Stevens Hotel in Chicago being the 
usual locations. In 1932 and 1933, the New York General 
Motors special showing was moved to the Waldorf-Astoria. 


All the Corporation's price calculations come under re- 
view in a competitive market, which is the court of last 
resort, so that dealer welfare cannot be the only yardstick 
in fixing prices. The industry as a whole strains for reduced 
costs as the basis of appeal to the customer's desire and 
pocketbook. With the increase in manufacturing efficiency, 

368 The Turning Wheel 

General Motors has followed the plan of building more 
value into its cars year by year, adding to low-priced cars 
the features introduced on higher-priced cars. But there 
are evidently limits to this evolution, and the new Stand- 
ard Chevrolet, with several features of the Master Chev- 
rolet omitted, was a move toward a lower price level. 

How much further manufacturers can go in this direc- 
tion depends upon many factors, but obviously they cannot 
go on indefinitely without reaching such a point that cheap- 
ness fails to include the essentials of safety and de- 
pendability to which the public has become accustomed. In 
the meantime, the higher-priced cars tend to come down the 
price scale, partly through economies in production, partly 
through the introduction of smaller models bearing names 
which have achieved a reputation at high levels. Altogether 
the problem of price setting is one of many complications 
and cross-currents upon which the Corporation concentrates 
full attention, seeking to find each year a solution satisfac- 
tory alike to its customers, its dealers, and its stockholders. 
At best its decision must always be a compromise arrived 
at after considering all these interests. 

The darker the night the brighter shines the light. There 
have been times in General Motors history when business 
rolled in with comparatively little sales and advertising 
effort, when the cry was for more cars in a seller's market, 
and the public took eagerly whatever was produced. These 
halcyon days had their satisfactions, of course, but they also 
had their disadvantages. Temptation reigned then to let 
well enough alone, to delay factory changes, and innova- 
tions in design. Under the stern challenge of depression 
General Motors has revised its processes in the interests of 
economy and efficiency, and its major products have been 
rigidly scrutinized in order to increase their appeal in a 
buyer's market, which demanded not only lower prices, but 
also higher quality and better workmanship. 

In the United States the total number of automobile 
dealers has been decreasing steadily, due partly to decline in 
the number of manufacturers, and partly to the growth of 
combination dealerships, in which one firm handles two or 
more lines. The number of dealers declined from 50,868 in 

Marketing the Motor Car 369 

1926 to 38,092 at the end of 1932. Exclusive dealership 
suffered heavily, while multiple-line dealerships increased 
44 percent from 1926 to 1932. 

One third of all dealers in 1932 handled more than one 
line of cars, while seven years earlier less than one fifth did 
so. In many localities General Motors contributed to this 
changing status by teaming Oldsmobile and Cadillac to- 
gether, and Buick and Pontiac, a selling program facili- 
tated by the temporary organization of the B-O-P Sales 
Company in 1932, (discontinued 1933). In 1932, Buick 
dealers handling only Buick cars decreased by 26 percent, 
while those handling one or more additional lines increased 
by 24 percent. Pontiac and Oldsmobile moved in a similar 
direction, but to a less degree. B-O-P in September, 1933, 
announced 6,883 direct dealer outlets, the largest number 
in five years divided as follows Buick, 2,105; Olds- 
mobile, 2,448; Pontiac, 2,330. 

Of the 53,437 passenger car representations reported 
by Automotive Industries as in business at the close of 1932, 
General Motors passenger car divisions were credited with 
16,000, or a little less than 30 percent of the total for the 
entire industry. 

In the beginning automobile makers were financially 
assisted by their suppliers and their distributors. The for- 
mer sold their goods on liberal datings, the latter made 
large deposits in advance. With these aids the manufacturer 
managed to produce a large volume on small working 
capital. Both the dealers and supply men were naturally 
consulted in planning a new model. Gradually, as engi- 
neering advanced and manufacturing companies came into 
large capital and controlled more of their supplies, the auto- 
mobile makers advanced toward uniform control of dis- 
tribution. Their contracts usually contained a thirty-day can- 
cellation clause: in a "seller's market," with dealerships in 
demand, this clause was the "ace in the hole" through pos- 
session of which manufacturers could impress their will on 
dealers in the direction of adequate servicing, display, local 
advertising, and many other merchandising activities. Re- 
pair charges were fixed by the factory, and at one time 
dealer accounting was under direction. 


The Turning Wheel 

In no retail trade is the dealer so closely controlled. 
Mr. W. C. Durant advertised one of the early Chevrolets 
to dealers in these words: U A little child can sell it." By 
systematizing retail efforts, and taking their message 
directly to the public through advertising, the manufac- 
turers are sometimes accused of reducing automobile sales- 
men to the status of "order takers." This trend, especially 

Chevrolet Assembly Line at Century of Progress Exposition, 
Chicago, 1933 

strong in the sales programs of great quantity producers of 
the industry, reached its height in 1929. With the develop- 
ment of a "buyer's market" after 1930, selling became more 
difficult, and good salesmen were more appreciated. Conse- 
quently, the stronger dealers little by little have insisted on 
more leeway. Even though control aimed at, and usually 
resulted in, better merchandising and higher dealer profits, 
human nature even dealer human nature sometimes 
resents being "scheduled and programmed" too openly and 
too often. A good deal depends on the tactfulness with 

Marketing the Motor Car 371 

which the program is preserved. The new note in automo- 
bile salesmanship, and one which marks the eclipse of the 
high-pressure, mass-campaign methods, is emphasis on 
manufacturer-customer relations based upon consumer re- 
search, and a close study of markets. 

Chevrolet since the end of 1928 has supplied more retail 
outlets than any other automobile manufacturer. Chevrolet 
has no distributors, as is the case with nearly all manufac- 
turers, but deals directly with all its outlets, a situation 
making for coordinated action in the direction of a central 
program. Chevrolet's success in this regard is one of the 
reasons for its great strides, but changing conditions of the 
past three years have brought revisions even in Chevrolet's 
selling plans. With the discontinuance of B-O-P Sales Com- 
pany, the direction of selling activities was returned to the 


No consideration of automobile marketing would be com- 
plete without reference to used cars. The year 1911 may be 
considered as marking the period in which used cars began 
to receive special consideration. In that year the Glidden- 
Buick Corporation was organized in New York City to 
sell used cars taken in exchange by the metropolitan branch, 
the conclusion being reached that in that area, at least, it 
was well to keep the merchandising of new and used cars 
in separate hands. Other areas operated on other plans. 

In 1914, or thereabouts, used cars began to accumulate 
to the point of clogging trade. In that year the Curtis Pub- 
lishing Company, after a searching investigation reported: 

Of all the problems that vex the automobile industry, probably the 
most serious and difficult of solution is that of the used cars. The 
second-hand car problem is likely to become more acute as the 
number of cars increases. 

With the revival of prosperity the glut decreased some- 
what, and little more was heard of it until the end of the 
war. Then with increased production of new cars and the 
strides taken in production methods, the used car problem 
began to assume serious proportions. 

372 The Turning Wheel 

The truth of certain shrewd observations which the 
Curtis company had made in its 1914 report began to be 
revealed. Many dealers proved to be better salesmen than 
they were buyers. The truth is that their buying experience 
had been somewhat limited, due to the fact that they took 
their cars at regular discounts from list prices fixed by the 
manufacturer. Also, hosts of dealers were weak in account- 
ing, in common with most local merchants. Many of them 
thought that when they sold a used car for $100 less than 
they had allowed on a new one, they were making money, 
the commission on the new car being large enough to take 
up the slack. They overlooked the fact that in all prob- 
ability they would have to furnish some service without 
charge, and the overhead cost was often completely dis- 
regarded. Dealers began to lose money without knowing 
quite why, until gradually their capital was either dissipated 
or frozen in the form of slow-moving merchandise on a 
used car lot. Two sales had to be made to produce one 
normal profit or, to be accurate, less than one normal profit, 
for interest and depreciation on cars carried over the 
winter cost the dealer heavily, and each spring he was likely 
to find himself with a carry-over of cars which had to be 
re-priced downward because they were a year older. 

Destructive competition set in under the name of allow- 
ances, one dealer bidding more than the other. Instead of 
cutting the established prices on new cars, dealers effected 
the same result by allowing extravagant values on old cars, 
throwing in tires and other equipment, and guaranteeing 
extended free service. The used car surplus became the 
cause of price-cutting, direct or indirect. 

Counsels of perfection, excellent advice to dealers, could 
make small headway against this condition. Various rem- 
edies were applied by the more progressive dealers; concen- 
trating on the problem, they began to set up used car 
lots, which had the advantage of goodly space at small 
rentals. They organized and trained special staffs of sales- 
men and attendants to dispose of used cars. Manufacturers 
adopted various courses in assistance. They increased their 
advertising appropriations in an effort to bring the buyer 
to the dealer so convinced of a certain car's merit that he 

Marketing the Motor Car 373 

could not be moved away by competitors offering a little 
more for his old car. A determined effort developed to 
circulate among all dealers a fair price list on used cars, 
arrived at by expert calculation of depreciation a 
practice previously found effective by progressive distribu- 
tors. General Motors entered upon a study of dealership 
costs, worked out comprehensive accounting systems for its 
dealers and installed them at reasonable expense through 
the General Motors Management Service, Inc. This activity 
has recently been discontinued, the reason for its existence 
having passed largely through the survival, under economic 
pressure, of those dealerships with sound accounting sys- 
tems, competent staffs, and full reports from every part of 
their territories. 

Notwithstanding all these efforts, used cars accumulated 
to the point at which manufacturers began considering the 
advisability of assisting dealers to clear the streets and lots 
of the more enduring and least valuable specimens. 

Chevrolet was the first to act, setting up a Used Car 
Disposal Fund, financed by a specific levy against each new 
car manufactured. From this fund local dealers received 
credits of $25 each on certification that cars had been de- 
stroyed. Under this plan approximately 650,000 cars were 
junked from 1927 to 1930 inclusive. Later the National 
Automobile Chamber of Commerce issued a re'port advising 
action along this line, and several other companies estab- 
lished financial incentives for junking. Chevrolet's disburse- 
ments form a total sum not reached by any other manufac- 
turer. The idea of the Used Car Disposal Fund originated 
with a Wyoming dealer who advanced it in a trade magazine. 

Four out of every five sales of new cars now involve a 
trade-in. With used cars the percentage is lower, 40 to 50 
percent. The percentage of trade-in deals has been rising in 
the case of both new cars and used cars for several years, 
but 1931 saw a slight drop in trade-ins of used cars. One 
of the chronic evils of the used car business is that to dis- 
pose of a used car taken in trade for a new car, the dealer 
in almost half his re-sales must take in another and less 
valuable used car as part payment for number one. Several 

374 The Turning Wheel 

deals may be necessary, each involving less reliable mer- 
chandise before the dealer can clear the transaction. 

The partial paralysis of the market for cars in the past 
two years brought almost complete stability at a low level 
of production, as may be seen by comparing the number of 
cars scrapped and replaced with sales in the domestic 
market in 1931 and 1932. In 1913 three out of four sales 
represented additions to the whole number of motor cars in 
use, while the fourth took the place of the car previously in 
service. By 1924 this ratio had dropped from three-to-one, 
to two-to-one; by 1926 nearly half the cars produced went 
into replacements, and in 1927 replacements accounted for 
about three quarters of total production. 

General Motors escaped almost entirely the pressure 
which this situation exerted on the industry in general in 
1927. There were two reasons. One was the partial sus- 
pension of Ford activities coupled with the rapid rise of 
Chevrolet; the other was the favorable reception of 
the new Pontiac, 60,000 more Pontiacs having been sold in 
1927 than in 1926. These two factors resulted in General 
Motors percentage of the industry's total business rising to 
42.5 in 1927. Only once has this figure been exceeded for a 
full year's business: in 1931 the ratio was 43.3 percent. 

In 1930 the American automobile industry approached 
a dead center, and in 1931 it passed that center, 755,000 
fewer cars being produced than the number scrapped, re- 
placed, or kept in storage by owners. In 1932 this situation 
was even worse due to the low new-car volume of that year. 
With practically no new buyers available, the strain on 
dealers naturally became acute, but for General Motors 
dealers it was somewhat relieved by the operations of the 
Used Car Disposal Fund, the combining of sales representa- 
tions in many localities, and the Corporation's policy to 
prevent overloading dealers with cars for stock. 


Elsewhere has been related the growth of control over 
General Motors schedules in line with regular reports of 
dealers' stocks. Cars on hand, both with the divisions and 

Marketing the Motor Car 375 

dealers, were at peak in 1924. One must go back eleven 
years to 1922, to find as low a stock of cars as that of 
1933. This reduction measures both the effectiveness of the 
Corporation's control program and the desire of the Cor- 
poration to avoid pushing its dealers into difficulties by sell- 
ing them too many cars. 

Along with a detailed program of sales promotion went a 
continuing effort to improve the financial status of dealers 
wherever weaknesses appeared, the inquiry being pursued 
tactfully, and remedies being proposed in a spirit of coop- 
eration. Of course, where dealers who consistently fell 
below "bogey" the national average for dealers in the 
appropriate price class failed to avail themselves of the 
advice and assistance offered, changes in representation 
were made. 

Another reform instituted was distinctly in the dealer's 
interest. It had been the habit, in the early days of the 
industry, for dealers to contract with the factory for a 
year's requirements, taking cars whenever the factory 
shipped them, a fact which contributed to the dealers' over- 
stock of 1924. The new plan, which has been used since, 
called for firm orders from dealers for one month in 
advance and tentative orders for three months in advance, 
efforts being continued to turn the tentative orders pro- 
gressively into firm orders. This has had the effect of reliev- 
ing dealers of uncertainty, and in practice goes far to offset 
the statements often heard to the effect that factory domi- 
nation has decreased dealer initiative. In this vital matter of 
control of shipments, dealers are freer and safer than they 
were ten years ago. 

Until fairly recently nearly all manufacturers, with an 
eye to production totals, were disposed to crowd cars upon 
dealers in quantities likely to prove embarrassing in a fall- 
ing market. In the early days of the industry this was 
necessary, because manufacturing and storage facilities and 
financial capacities were insufficient to meet the seasonal 
demands of spring and early summer. A beneficial change in 
this regard came with the rise of closed cars to favor. At 
present the market takes approximately 44 percent of its 

376 The Turning Wheel 

automobiles in March, April, May, and June, and the first 
six months of the year develop 60 percent of the annual 
sales. The business is still seasonal, but slightly less so than 
it used to be. However, with mass production methods to 
the fore, the temptation arose to force cars on dealers faster 
than they could sell them, using a "floor plan" loan to 
finance all or part of the transaction. A turn of the 
economic pendulum soon revealed the danger. Overloaded 
with new cars which must be sold soon after receipt, a 
dealer becomes vulnerable to the point where he must accept 
at uneconomic valuations more used cars than he can dis- 
pose of quickly and profitably. After one experience of this 
nature General Motors has set its face against overloading 
dealers, in the confident belief that the Corporation should 
not seek to improve its position at the expense of, or to the 
embarrassment of, its dealers, upon whose continued sol- 
vency and aggressiveness so much depends. 


Another effort of the Corporation to assist dealers goes 
forward under the General Motors Holding Corporation, 
formed on June 22, 1929, to invest in dealerships where 
more capital seemed to be required. The Holding Corpora- 
tion maintains six regional offices: in New York City, 
Chicago, San Francisco, Dallas, Atlanta, and Detroit. After 
four years of operations it has invested Corporation funds 
in dealership companies, in circumstances and under con- 
ditions which seem at once to safeguard the investment and 
promote effective representation. 

Applications for the Holding Corporation's cooperation 
come through the sales offices of the car divisions which base 
their recommendations upon a careful investigation of the 
dealer's situation, character, and prospects. A check-up by 
the Holding Corporation is then made. Usually the Holding 
Corporation's capital is used either to retire silent partner 
interests and/or bank loans, or to increase facilities where 
they seem inadequate to the potential market. Holding 
Corporation investments are not regarded as permanent, 
the expectation being that the dealer's share of the profits 

Marketing the Motor Car 377 

will retire the Holding Corporation's investment. The 
Holding Corporation is regarded as operating a revolving 
fund to be used capital-wise to improve sales representation 
which, except for under-capitalization, is healthy and well- 
managed. While General Motors' interest remains in the 
investment, the Holding Corporation exercises a consider- 
able measure of control, and endeavors to reduce expenses 
and increase profits. 


The special problem of fleet sales to large users resulted 
in the incorporation of General Motors Fleet Sales Cor- 
poration in 1930. Deliveries were handled through dealers, 
under a special contract, but Fleet Sales Corporation dealt 
directly with national and state governments. The fleet 
users' agreement applied only to operators of at least 100 
cars who agreed to buy a minimum of $20,000 worth of 
General Motors cars and trucks annually. 

In 1933 the minimum Fleet sales contract was reduced 
to $15,000; also dealers began to deal directly with national 
and state governments. 

With the formation of this corporation, the entire fleet 
activities of individual General Motors divisions were taken 
over by the General Motors Fleet Sales Corporation. This 
consolidated plan of selling resulted in better sales coverage 
of large national fleet users at a lower sales cost, due to a 
reduced total personnel. In addition, it made it possible 
for one General Motors organization, specializing in a 
particular field, to sell the entire line of cars and trucks to 
the large fleet user, and thus better fit General Motors 
products to each of the transportation needs of the user. 

This corporation also handles the sale of General Motors 
cars and trucks to the United States government, the vari- 
ous states, and the District of Columbia. During 1932, 
2,101 General Motors cars and trucks were sold to the 
national government, for $1,404,330. In the first seven 
months of 1933, government awards to General Motors 
totaled $5,730,634, representing 11,917 cars and trucks. 
This large increase is principally due to the Reforestation 


The Turning Wheel 

program, and the motorizing of certain sections of the Na- 
tional Guard. Awarding of government orders proceeds 
under strict competition both as to price and quality, yet 
General Motors secured 78 percent of this business on the 
basis of units, and 75 percent on the basis of dollar volume. 
The outstanding item in 1933 government awards was 

Dr. Carlos C. Booth, first American physician to use an automobile 
in his practice. Car designed and assembled by himself, 1896 

Even in the automotive industry itself, relatively few 
persons comprehend how the fleet business has expanded. 
Within five years General Motors divisions have sold 
64,339 units to 232 companies. Each of 84 companies has 
purchased an average of 567 Chevrolets during this period, 
the heaviest buyer taking 3,665 units. In the same period, 
3,905 General Motors trucks have gone to 41 fleet users, 
the average buyer taking 95. Truck business, including both 

Marketing the Motor Car 379 

Chevrolet and General Motors trucks, runs at about 25 
percent of total fleet sales, passenger cars for business pur- 
poses, 75 percent. 

Through its studies of mass transportation problems and 
the special needs of large users, General Motors Fleet 
Sales Corporation has brought elements of strength into 
dealer relations with the larger purchasers of automobiles. 

It has been said that the first automobile was bought, 
not sold. That was probably true, also, of the io,oooth 
automobile; a demonstration sufficing to convince the cus- 
tomer, but the car had to be sold to the dealer. Today, 
with dealer organizations spanning the world, automobiles 
have so increased in quality and numbers that there must be 
a closer relation between output and potential sales, between 
manufacturer and consumer, between dealer welfare and 
producer's prosperity. In the enlightened merchandising of 
the future, the indirect approach based upon consumer 
research and close knowledge of market needs is likely to 
replace the former emphasis on high-pressure salesmanship. 

Some of the glamor of the pioneer days has vanished as 
the automobile trade has become established as a huge and 
stable business, operated on scientific lines with all the safe- 
guards which can reasonably be set up for the protec- 
tion of its representatives in a freely competitive market. 
But the marketing of automobiles still attracts large num- 
bers of keen, driving men, full of confidence that the auto- 
mobile will reward their efforts amply as the years roll on. 

Chapter XXVII 


UTOMOBILES, as we have seen, went from factory to 
dealer on a cash basis in the early days of the industry, and 
were generally sold by the dealers for cash. Dealers soon 
discovered, however, that some excellent sales required 
credit, and they began to accommodate purchasers with 
good credit or satisfactory records under special circum- 
stances. As they found more sales could be made where 
credit was available, the more daring of them began to 
work out plans for instalment selling, getting a substantial 
down payment, and holding title to the car until it had 
been completely paid for. It is said that the first systematic 
use of instalment selling in the automobile field occurred 
in San Francisco in 1913, but this priority is disputed by 
those aware of similar early arrangements elsewhere. A 
trade growing vigorously, with so many keen, driving men 
at work over so wide an area, was certain sooner or later 
to find ways of using credit in large sums. 

The basis of these instalment transactions was, of course, 
the dealer's knowledge and vital interest in the collectibility 
of his account; this element is continued under the recourse 
or full endorsement plan wherein the dealer's responsibility 
remains behind the obligation until it is paid in full. 

There grew up, naturally, finance companies willing to 
purchase automobile paper from dealers at a discount 
on well-sold and well-insured cars. Bankers might not feel 
able to take automobile paper in quantity, but they were 
quite willing to lend money to sound finance companies so 
that the latter could do a large volume of business on 


Financing and Insuring the Buyer 381 

comparatively small capital. In general, these specialized 
finance companies prospered, because their differentials or 
charges (the difference between the cash and the time or 
instalment purchase price) were relatively high, and the 
risks comparatively low. As experience accumulated, it ap- 
peared that a good, insured automobile in the possession 
of an honest man or woman, and under the complete legal 
protection with which all states surround property held 
under lien, was a fairly safe investment, provided that 
down payment and schedule of payments anticipated the 
depreciation of the security in use. 

The finance companies developed another line of automo- 
bile investment that of financing dealers' stocks. The day 
had passed in which one sample car represented the only 
large investment the dealer had to carry. As the factories 
enlarged their lines, the dealer could provide adequate rep- 
resentation only by showing each model in its various body 
styles. His own capital and earnings were usually absorbed 
in his growing business, providing more floor space for 
showing and stocking cars, a larger supply of parts, better 
service facilities, and of course used cars taken in trade. 
Arrangements were made for stocking new cars under a 
variety of agreements which were generally known as 
"floor plans." When these cars were sold for cash, the 
liens on them were quickly released. At first it was neces- 
sary for the dealer to pay and secure title to the car before 
he sold it at retail on instalments, but as the business de- 
veloped many transactions consisted of merely accepting 
the retail contract in part or full payment of the wholesale 
obligations. The dealer, of course, remained liable for all 
unpaid balances, so that the finance company always had as 
security back of the transaction the merchandise itself ade- 
quately insured, the credit of the purchaser, and the general 
credit of the dealer. 

The keen financial mind of John J. Raskob began to work 
on this financing problem shortly after he entered General 
Motors. Need for a finance service for the dealer as well as 
the retail purchaser at moderate time-price differentials, and 
functioning uniformly as to policies and rules, was most 
apparent and was urged upon the Corporation from many 

382 The Turning Wheel 

quarters. If General Motors could set up the machinery to 
provide such service at reasonable profit, the result would 
be increased sales, improved dealer earnings, and greater 
consumer satisfaction. Accordingly, on January 29, 1919, 
after a thorough study of the situation, and weighing both 
the advantages and hazards of the innovation, General 
Motors Acceptance Corporation was incorporated under 
the investment section of the banking law of the State of 
New York, with 20,000 shares of Common stock, $100 par. 
General Motors Corporation bought this stock at $125 per 
share, enabling the new subsidiary to start life with a capi- 
tal of $2,000,000, and a surplus of $500,000. The Corpora- 
tion's subsequent purchases of GMAC stock have been at 
that average price, and the sums involved were distributed 
between capital and surplus in that proportion. 

GMAC'S purpose has been condensed to this statement: 

Briefly the aims and purposes of the Corporation are to assist, 
through the proper application of the credit function, in the orderly 
distribution and sale of the products of the General Motors Cor- 
poration in such a manner as will make for a sound and healthy 
manufacturing and merchandising condition. 

It being foreseen that credit would inevitably play a most im- 
portant part in the development of the automobile market, it was 
the aim of General Motors Corporation to keep within its con- 
trol, to the greatest extent possible, every factor of importance in 
its development. At the same time it was understood that the Cor- 
poration (GMAC) was to function quite independently and be 
free from any pressure of expediency which might impair its char- 
acter and purpose, and so defeat the very aims which brought it 
into existence. 

In order to fulfill these functions the organizers of GMAC 
developed complete plans for financing sales of General 
Motors cars and products. It set up also a Financial Sales 
Department, through which the obligations of the Accep- 
tance Corporation were offered independently to banks 
and investors throughout the country, thus creating a stable 
source of accommodation through the use of which ad- 
ditional business would be possible beyond the extent of 
GMAC'S own capital. In this department u are centered all 

Financing and Insuring the Buyer 383 

operations through which the Corporation (GMAC) finances 
itself, including not only its sales activities, which parallel 
somewhat the lines of operation employed by commercial 
paper brokers, but all its bank relations and day-to-day bor- 

Under the GMAC wholesale plan, General Motors dis- 
tributors and dealers, after credit has been established, may 
purchase new passenger cars, commercial vehicles, and 
other products of the Corporation directly from the sales 
Companies of General Motors by paying a small amount 
in cash; the balance as the cars or products are released 
from trust, or at an agreed date after shipment. Merchan- 
dise so financed may be stored in the dealer's showroom 
for display, in warehouses under the control of the dealer, 
or in public licensed warehouses under pledge of warehouse 

General Motors Acceptance Corporation retains title to 
the products financed until full payment is made. The plan 
provides that a dealer may pay the amount due on a car, 
and secure immediate release. After release the dealer has 
full title to the car. 

The GMAC wholesale charge includes insurance protec- 
tion for the dealer for the full laid-down price of the car 
against loss or damage arising through fire or total theft. 

Under the GMAC retail plan, General Motors dealers 
are urged to sell the products of the Corporation to cus- 
tomers in good credit standing upon terms properly suited 
to the purchaser's income. The buyer pays a portion in cash, 
and/or trade-in (usually from 30 to 50 percent, depending 
upon his circumstances) and gives an obligation for the 
remainder payable in equal instalments adjusted to his in- 
come. If the transaction is in accordance with sound credit 
merchandising policy, and the resultant obligation is suit- 
able, GMAC purchases the time sales contract from the 
dealer, and carries it to maturity. 

General Motors Acceptance Corporation has recourse 
to the dealer on all obligations of purchasers which are 
bought by the Corporation. The deferred payments are 
made by the purchaser direct to the Acceptance Corpora- 
tion, relieving the dealer of routine collection details. 

384 The Turning Wheel 

Adequate reserves are set up to protect the dealer as well 
as GMAC against loss. 

The GMAC retail plan provides fire and theft insurance 
supplied by the General Exchange Insurance Corporation, 
protecting the purchaser and dealer as their interests may 
appear. A policy is issued to each purchaser so that he may 
be properly informed of the exact nature of his protection. 
The purchaser may secure, at his option, collision, or all 
property damage insurance. 

The total retail GMAC financing differential varies 
according to territory for the reason that insurance protec- 
tion is included as part of the differential, and insurance 
premiums vary according to territory and type of car. Low 
differentials are made possible by large volume and efficient 
and economical operation. 

In contrast with other forms of instalment sales, the 
amount of the differential in the time price paid by the pur- 
chaser depends upon the term and amount of his obliga- 
tion. He pays only in proportion to the accommodation he 
receives. The larger the down-payment, and the fewer the 
number of monthly payments, the less the differential be- 
tween the cash and time prices. 

GMAC recognizes no fixed terms GMAC believes that 
the sale of cars on deferred payments as well as for cash 
should be based primarily upon the quality of the car at 
the price, and not on the lure of so-called "easy terms, " 
terms being regulated to the income and circumstances of 
the purchaser, and its financing operations are carried on in 
accordance with this principle. 

In The Economics of Instalment Selling? Professor 
E. R. A. Seligman describes the recourse, the non-recourse 
and the repurchase system of adjusting the difficulties 
arising from delinquencies: 

The recourse system is so called because the customer's notes, which 
are handed over to the finance company by the dealer, are endorsed 
by the dealer so that the finance company, in case of the purchaser's 
failure to pay, will have recourse against the dealer. The dealer, 

Carper & Brothers, New York City, 1927. 

Financing and Insuring the Buyer 385 

therefore, in order to discharge his liability to the finance com- 
pany, is compelled to take steps looking to the repossession of the 
car (unless, indeed, as is sometimes done, the finance company re- 
lieves him of this responsibility and repossesses the car for him) 
which he may then sell as a used car to meet his liability to the 
finance company. The dealer thus assumes the responsibility in- 
volved. If he sells the used car for more than the balance of un- 
paid instalments, he makes a profit; if he sells it for less than this 
balance, he undergoes a loss. The important factor, therefore, is 
the difference between the actual value and the amount of unpaid 

Opposed to the recourse system is the non-recourse system, or 
in other words, the system whereby the finance company has no 
recourse against the dealer. The finance company here assumes all 
of the responsibility. It not only makes the original advance to the 
dealer and receives the instalments as they become due but, in 
case of default, institutes its own methods for securing repossession 
of the car; and subsequently, after salvaging and reconditioning 
the car, the finance company itself disposes of the used car in the 
market. Under this system the dealer becomes to all intents and 
purposes the agent of the finance company for selling a new car. 
The decision, and frequently the investigation, as to whether the 
individual purchaser is a good risk is relegated to the finance com- 
pany; and virtually all that remains for the dealer to do is to dis- 
play the car, and to arrange with the purchaser as to terms, which 
in most cases are the standard terms fixed by the finance company. 

The third or intermediate plan is the repurchase method. Under 
this plan the finance company has no recourse as such against the 
dealer, but enters into a contract with him whereby he agrees, in 
the case of repossession by the finance company, to repurchase the 
car. In this way the finance company is saved the necessity of at- 
tempting to dispose of the used car, and limits itself, in a large 
measure at least, to its purely financial function. 

In principle, GMAC has held firmly to the recourse 
system, continuing the dealer's responsibility in the trans- 
action until it is finally closed. This is considered highly im- 
portant, since it means that control of credit sales is thus 
primarily in the hands of the dealer, his judgment being 
supplemented by the broad experience of a highly trained 
credit organization. It follows that losses therefore will be 
kept to a minimum, because the dealer will exercise care in 

386 The Turning Wheel 

selecting his instalment customers. This fundamental differ- 
ence between recourse and non-recourse companies accounts 
for the higher differentials generally charged by the latter, 
since they are not in a position, as the recourse companies 
are, to reduce risk by keeping the dealer back of the paper 
originated by his sale. 

Under a strict recourse plan, no losses could theoretically 
be sustained by the finance company except through dealer 
insolvency. From inception until August i, 1925, under the 
GMAC plan the dealer had to meet all losses up to the limit 
of his ability on certain risks against which he could not 
well protect himself cheaply and efficiently. These risks of 
conversion, confiscation, and collision being insurable, GMAC 
covered the risks by insurance and relieved the dealer. 

From 1919 to 1932 inclusive, GMAC purchased in the 
United States and Canada instalment contracts on 3*775,- 
777 new General Motors cars, or 32.6 percent of all Gen- 
eral Motors dealers' sales to users, and 3,564,468 used 
cars. Under the wholesale plan it "floor planned" for 
dealers 3,777,703 new cars or 32.7 percent of General 
Motors sales to dealers. 

The record reveals a sudden rise in GMAC contract pur- 
chases from 1925 to 1926. Before 1925, approximately 20 
percent of new General Motors cars were sold in the United 
States and Canada on the retail GMAC plan. Since 1925 the 
average has been about 40 percent. General Motors pro- 
duction turned sharply upward in 1926. Furthermore, 
GMAC'S service had been augmented in 1925 by the crea- 
tion of an insurance company; and by the inclusion in its 
financing plan of protection for the dealer against the 
hazards of conversion, confiscation, and collision. As time 
sales became more popular the percentage of a dealer's 
business represented by instalment sales increased and, like- 
wise, the repossession risks in relation to his resources. 
Therefore GMAC instituted a reserve for the dealer to 
protect him against the costs and losses involved in han- 
dling repossessions; this dealer-reserve probably was a big 
factor in the increase in GMAC'S volume after 1925. 

Since, in addition to the moral factor involved, the 
security and liquidity of any instalment contract is definitely 

Financing and Insuring the Buyer 387 

influenced by the size of the down payment and the schedule 
of instalments, the effort has been to avoid long commit- 
ments and small down payments. The most inclusive cate- 
gory is that which has one third to one half of cash value 
paid down with the balance spread over twelve months. 

It must not be inferred that the comparatively small 
losses result altogether from the relatively safe character 
of the business; on the contrary, they are kept in control 
by good management exercised at many points in the 
transaction. By no means is every car paid for on schedule, 
and when payments fall behind it is a nice problem whether 
to extend or renew the paper or to repossess the product. In 
all such cases the GMAC policy is to permit the product to 
remain with the purchaser whenever it is reasonably safe to 
do so, and whenever it appears that with considerate and 
helpful service the purchaser can and will pay. The result is 
that retail renewals, in consideration of unusual circum- 
stances, became necessary at times. The Corporation's 
policy in this regard is regulated by conditions, with due 
thought given to both the interests of the dealer and the 

To finance the growing volume of business, GMAC sold 
$50,000,000 of 5 percent serial gold notes, dated March i, 
1926, and maturing at the rate of $5,000,000 annually, 
through a banking syndicate composed of J. P. Morgan 
& Company, the First National Bank, the Bankers Trust 
Company, and The National City Company, all of New 
York. Before this sale GMAC had been depositing its 
domestic receivables under a trust deed, against which 
security collateral gold notes were issued. From 1919 to 
August, 1925, the trustee holding the documents as security 
for GMAC collateral gold notes was the Irving Bank- 
Columbia Trust Company. A personal trusteeship was 
arranged in 1925 as a matter of economy. The $50,000,000 
long-term loan of March, 1926, was not secured by col- 
lateral in trust, but an indenture in behalf of the holders of 
the notes was executed to the Bankers Trust Company. 
Since April i, 1926, GMAC has not pledged its domestic 
and Canadian collateral. 

388 The Turning Wheel 

The previous trustee then became comptroller; receiv- 
ables were segregated under his control. The comptroller 
certifies to the possession of live receivables and/or cash 
equal to GMAC'S obligations. 

Short-term borrowings were further funded on February 
I, 1927 when through the same banking syndicate $50,- 
000,000 of ten-year sinking fund 6 percent gold debentures 
were sold to the public. 

The Financial Sales Department, handling domestic bor- 
rowing operations, has established a national market for 
its short-term paper through banking institutions in every 
state in the Union. More than 10,000 banks have purchased 
these notes, this clientele standing at 7,200 on December 
31, 1932. Other customers are insurance companies, cor- 
porations, and individual investors. Notes are offered in 
denominations of $500 to $1,000,000 at prevailing discount 
rates for commercial paper and are payable in many of the 
principal cities of the country. 

Canadian business is financed, primarily, by bank credit 
obtained in Canada. Financing of overseas branches is 
handled through the Overseas Bank Relations Department, 
the funds coming from both domestic and overseas banking 

In addition to automobile paper, which forms the bulk of 
its business, GMAC has retail sales plans for the purchase 
of paper arising out of sales of other General Motors 
products, including : 

Delco farm-lighting and power plants, oil burners, 
radios, Delcogas machines all manufactured by Delco 
Appliance Corporation of Rochester, New York; Frigi- 
daire household electric refrigerators, electrical refrigera- 
tion for commercial establishments, water coolers, ice 
cream cabinets, bottle coolers, and air conditioning equip- 
ment manufactured by the Frigidaire Corporation, Day- 
ton, Ohio. 


The financing of motor-car purchases has always in- 
volved the question of adequate insurance protection. 

Financing and Insuring the Buyer 389 

Serious damage to the automobile, from any cause whatso- 
ever, affects in many cases the willingness and even the 
ability of the buyer to pay out what is still due on the con- 
tract. Prior to August, 1925, GMAC did not require insur- 
ance, but left the matter of proper insurance entirely up to 
the buyer and the dealer. General Motors, through General 
Exchange Corporation, maintained a service which assisted 
and advised dealers in their insurance problems, counseled 
with the manufacturing divisions on matters of construc- 
tion, and assisted buyers and dealers to secure adequate 
insurance protection through reliable sources. It reached a 
volume of $1,200,000 in annual premiums in 1924, writing 
policies on 250,000 cars. Its experience resulted in the 
extension of such coverages as confiscation, conversion, and 
single-interest collision, and other forms of protection to 
meet the needs of the dealer in connection with his time 
sales. Analysis of many claims resulted in recommending 
changes in construction and led to the improvement of anti- 
theft locks, better wiring, and other improvements built into 
each General Motors car. 

Until succeeded by General Exchange Insurance Cor- 
poration, GEC built up a body of experienced insurance per- 
sonnel and statistical knowledge which was of great value 
to its successor. Its general manager was W. A. Edgar 
from 1920 to 1922, when he was succeeded by Livingston L. 
Short, who later became president of the General Exchange 
Insurance Corporation. Curtis C. Cooper was president of 
GEC and chairman of GEIC'S board during his service as 
president of GMAC. 

Accumulating experience left no doubt that insurance 
was urgently needed to protect the various interests of the 
buyer, the dealer, and the purchaser of the contract in all 
instalment sales of automobiles. Only 57 percent of buyers 
were voluntarily insuring their cars for their own protec- 
tion. Thousands of instalment buyers suffered heavy losses 
without recovery, and of these many were financially unable 
to replace or repair their cars. As a result General Motors 
and its dealers lost many customers, and both the dealer 
and GMAC were in a position to lose directly, since sums 

390 The Turning Wheel 

payable on seriously damaged, stolen, or destroyed cars 
were frequently left unpaid. 

Once the situation had been thoroughly canvassed, it 
appeared evident that the buyers of General Motors 
products, the dealers and General Motors itself had so 
much at stake in the provision of adequate automobile insur- 
ance that it became necessary to go beyond the service 
offered by General Exchange Corporation. Accordingly, 
the formation of General Exchange Insurance Corporation 
was authorized on June n, 1925, with a capital of 
$500,000, and surplus of $1,000,000. GEIC began to func- 
tion in August, 1925, being chartered under the insurance 
laws of the State of New York. Within a few months it was 
admitted to do business in all the states, the territories of 
Alaska and Hawaii and the Dominion of Canada, offering 
insurance coverage in each policy protecting the interests of 
the buyer, the dealer, and GMAC. The success of this enter- 
prise was immediate. On June 30, 1927, after little more 
than two years of operation, the net worth of the company 
had grown to $2,176,000 from the original investment of 
$1,500,000. The capital of GEIC has since been increased to 
$1,000,000, and the surplus to $1,500,000. 

The insurance company has gone on expanding. In prac- 
tically every year since it began operations it has written 
more automobile insurance than any other company. In 1929 
there were 495 stock insurance companies in business writ- 
ing all lines of fire insurance. During 1928 the General 
Exchange Insurance Corporation stood tenth as to divi- 
dends paid, twenty-second as to volume of premiums writ- 
ten, thirty-ninth as to assets, and forty-ninth as to capital 
funds, although many of the other companies insure classes 
of merchandise which are not included in GEIC coverages. 
Furthermore, GEIC solicits neither renewals on fully paid 
for cars nor policies on cars sold for cash, although a small 
volume of this class of business is written which comes to it 

Field experience showed the necessity for prompt settle- 
ments. Coverage had to be dependable and loss-settlements 
very prompt, in order that the buyer of the car could have 
his car repaired as soon as possible after a loss occurred. 

Financing and Insuring the Buyer 391 

Ill-will quickly develops in the case of delayed settlements, 
the owner's impatience turning into criticism of the car 
itself, the dealer, and the Corporation which stands behind 
both. Slow settlement of claims is a blow to the prestige of 
an insurance company, for delay in securing service or 
needed parts keeps the buyer out of his car, on which his 
pleasure, and frequently his business, depend. Obviously, 
these considerations require special treatment, and are 
largely responsible for the policy which GEIC follows in 
settling claims; namely, to give the insured exactly that to 
which he is entitled under his insurance policy, and to make 
it available as quickly as possible. 

The speed of settlement is quite remarkable. More than 
7,000 claims are settled in an average month by GEIC'S 
own personnel in the field. Although settlements are made 
in distant areas and with motorists away from their place 
of residence, only 15 percent of claims against GEIC 
(other than total thefts) remain unsettled more than thirty 
days after date of loss. This includes suspicious and con- 
troversial claims. Total thefts, however, are subject to 
the usual sixty-day waiting period, a procedure followed by 
all insurance companies in order to let the police act toward 
recovery of the stolen car. Unless the car is recovered with- 
in sixty days, the claim is paid on a total loss basis, the pur- 
chaser receiving a sum equal to the value of his car at the 
time of loss. GEIC acts so promptly in these cases that 
within five days after the waiting period 95 percent of the 
owners receive checks covering their losses. 

In settling 85,000 insurance claims a year for a gross sum 
of $5,000,000 GEIC comes in contact with many pur- 
chasers under conditions making directly for building of 
good-will. The staff adjuster, who is a GEIC employee, 
visits the assured in his home or office promptly, and 
arranges a fair settlement without delay. Where repairs are 
necessary, the work is done wherever possible by the dealer 
who sold the car, assuring the purchaser in this way the use 
of genuine parts, and authorized General Motors service. 
Upon completion of the work, payment for the repairs is 
usually made by GEIC directly to the dealer. A satisfactory 
claim settlement and satisfactory repairs assist the dealer 

392 The Turning Wheel 

in cementing his relationship, and that of General Motors, 
to the buyer. 

Among the coverages which were added to the GEIC'S 
service in 1930 with the approval of both dealers and buyers 
is the Accidental Physical Damage (A.P.D.) policy covering 
damage to automobiles from all the usual causes, and some 
most unusual ones, including floods, tornadoes, riot, civil 
disturbances., and airplanes. In the A.P.D. policy collision 
insurance is included. The advantage to the buyer of 
this type of policy is apparent, since it results in the almost 
automatic recovery of his means of transportation with the 
least possible delay. The advantage to the dealer is also 
evident, since this insurance provides cash for the payment 
of repairs. The Accidental Physical Damage policy is regu- 
larly offered by GMAC as an integral part of its plan. 
Buyers may waive the collision feature if they so desire, but 
more and more are availing themselves of it. 

When General Motors entered the insurance business, 
the wisdom of the move was questioned by many insurance 
men, even though the Corporation made clear its intention 
to operate only in one highly specialized field. It was said 
that GEIC'S business would be at the expense of other com- 
panies. This has not been the case. Through the united 
efforts of GMAC, GEC, and GEIC, the education of the 
motoring public to the benefits of automobile insurance has 
been pushed decisively, with the result that the business of 
other companies has increased along with that of GEIC. 
Other companies have benefited by writing policies on re- 
newals after GMAC has been paid out, and on cars sold 
for cash to persons initiated into the merits of automobile 
insurance by GMAC requirements on a former purchase. 

The growth of the General Motors Acceptance Corpora- 
tion since 1919 follows the upward curve of the industry 
and the Corporation's business in an accelerated tempo as 
the popularity of instalment buying has increased. Due to 
purchases of its stock by the General Motors Corporation 
year by year until 1929, plus a transfer of $13,750,000 
from undivided profits to capital and surplus, GMAC capital 

Financing and Insuring the Buyer 393 

and surplus rose from the original figure of $2,500,000 in 
1919 to $70,000,000 in 1929. In the same period time sales 
transactions, both wholesale and retail, originating with 
General Motors dealers, and financed by GMAC, increased 
from $20,881,000 in 1919 to $1,133,117,000 in 1929, the 
peak figure of GMAC history. 

Starting with six branch offices in 1919, and 336 em- 
ployees, it grew to 107 branch offices in 1930, with seventy- 
three in the United States, nine in Canada, and twenty-five 
overseas. The maximum number of employees was reached 
in 1929, with 5,532. During 1931 and 1932, twenty-one 
branches were closed, and the personnel stood at 3,128 on 
December 31, 1932. 

Under the most adverse conditions of the depression, loss 
ratios on automobiles have been kept down to a point at 
which the discounting of an automobile sale is demon- 
strated to be one of the safest forms of business developed. 
The advantages to General Motors resulting from this 
large financial operation, and the insurance business of its 
subsidiary, are not confined to its balance sheet. By offering 
to dealers plans which provide reasonable accommodation 
and adequate protection to themselves and to the buying 
public, GMAC has assisted the parent corporation to reach 
new high levels of production, built good-will for the Cor- 
poration's products, and strengthened the morale of its 
selling force the world over. 

General Motors Acceptance Corporation and General 
Exchange Insurance Corporation have both prospered. 
GMAC'S rate of earnings depends, of course, upon the 
general volume of trade and the amount of money it can 
use. Since trade declined in 1930, GMAC borrowings 
from banks have declined simply because it could find no 
use for the money freely offered to it at low rates. The Cor- 
poration called for redemption on August i, 1932, $5,000,- 
ooo of its 6 percent Debentures, and on February I, 1933, 
it redeemed all of the remaining $30,000,000 of its 6 per- 
cent Debentures. 

The present chairman of the board of General Motors 
Acceptance Corporation is Mr. Alfred H. Swayne, elected 

394 The Turning Wheel 

in March, 1921. The president of GMAC from its incorpora- 
tion in 1919 until March, 1921, was J. Amory Haskell, 
C. C. Cooper then being general counsel. The latter suc- 
ceeded Mr. Haskell in the presidency and remained there 
until October, 1929, when he was in turn succeeded by John 
J. Schumann, Jr. 

Chapter XXVIII 


EHIND all cooperative plans is the desire to arouse, for 
mutual benefit, the individual interest of all who share in 
the work. General Motors has fostered several plans 
which, after close study, promised to be beneficial both to 
the Corporation and to its employees. The extra rewards 
of General Motors have been based on a desire to meet, as 
far as could be foreseen, and within the frame of other 
primary corporate interests, the needs of each of several 
well-defined groups. 


In 1918 the Bonus Plan was adopted. This plan provided 
for annual awards of General Motors Common stock, 
or its equivalent, to employees who had contributed to the 
success and prosperity of the Corporation in some special 
degree by reason of their ability, industry, and loyalty. Dur- 
ing the first four years of this plan, awards were made in 
two divisions (i) Senior Awards to employees earning 
$2,400 and over, and (2) Junior Awards to all other em- 
ployees. The plan at this time provided for a bonus fund 
equal to 10 percent of the net profits of the Corporation 
after deducting 6 percent on the net capital employed. Be- 
ginning in 1922 the amount set aside was 10 percent after 
deducting 7 percent on the net capital employed, and em- 
ployees with salaries of $5,000, and over, were eligible for 


396 The Turning Wheel 

bonus awards. Although other features have been changed, 
the 10 percent deduction of net profits after capital service 
has been maintained for bonus purposes. In 1931, em- 
ployees earning $4,200, and over, were eligible for bonus 
awards. Beginning in 1923, at which time the Managers 
Securities Company was organized, the amount set aside for 
the bonus plan was 5 percent of net earnings, after 7 percent 
on net capital employed, which amount was distributed in 
the form of Common stock through the Bonus Plan, the 
other 5 percent being paid under contract to the Managers 
Securities Company. Beginning in 1930, the contract with 
the Managers Securities Company having been terminated, 
the full amount of the Corporation's bonus provision of 
10 percent of the net profits of the Corporation, after the 
deduction of 7 percent on the net capital employed, was 
paid to the General Motors Management Corporation. One 
half of this payment takes the form of a subscription by 
General Motors Corporation for Class A stock of the Gen- 
eral Motors Management Corporation. The Class A stock 
so acquired is distributed to employees in accordance with 
the Bonus Plan. Class A stock received by employees is 
equivalent share for share to General Motors Common 
stock, and is convertible into the Common stock of General 
Motors Corporation at the option of the recipient. The 
General Motors Common stock so used for bonus purposes 
is purchased in the open market. 

Since the inauguration of the Bonus Plan, it has received 
the commendation of economists and other authorities as 
being one of the best plans as yet developed. Perfection, 
however, has not been attained; changes have been made, 
and more will be made. It is worthy of note, however, that 
the bonus plan is entirely based on rewarding employees 
with stock, not cash, thereby setting the stage for a continu- 
ing property interest in the Corporation, and also that a 
real effort is made to discover meritorious performance. 

Bonus stock is delivered to employees in four lots, one 
fourth at the time of the award, and the remaining three 
fourths is held in trust to be delivered in equal instalments 
at the end of each of the three following years. As 7 percent 

Cooperative Plans 


was not earned on the capital employed in 1932, there were 
no bonus payments in that year. 
A record of the awards follows : 

Number of 

Shares of 





Stock (b) 

























Number of 

Shares of 





Stock (b) 

























(a) No bonus was available for the years 1921 and 1932. 

(b) Equivalent number of shares on basis of $10 par value Common 

(c) In addition to the Common stock awarded in 1919 and 1920, 
18,934 shares of 7 percent Preferred stock were awarded, 
of which 14,191 shares applied to the 1919 awards, and 4,743 
shares to the 1920 awards. 

(d) Awards in 1930 and 1931 in Class A stock of General Motors 
Management Corporation equivalent share for share to General 
Motors Common stock. 


The Managers Securities Company, as the name implies, 
was an effort to reward, consistent with their responsibili- 
ties, those holding the more important managerial positions. 

Decentralized organization, the term applied to General 
Motors system of management, presents a problem of effec- 
tive control as between the several operating units and the 
Corporation as a whole. In the decentralized system the 
manager of a unit is the chief executive, the equivalent of 
the president of a separate corporation. Conceivably he 
could conduct the affairs of his unit with little regard for 
the other units of the group, if he thought that in this way 
his own unit would most benefit. The Corporation on the 

398 The Turning Wheel 

other hand cannot well have one unit reap advantage at the 
expense of another; also it is desirous that the benefits 
obtained by one unit shall be made available to the others, 
so that each one may be advancing not only its own but the 
common good of all, which, of course, is the Corporation 
itself. These benefits of counsel, cooperation, and team- 
work are necessary for effective control, and it was apparent 
that they could be secured best by enlisting individual self- 

The tendency for management to become divorced from 
stock ownership in large enterprises is a commonplace of 
industrial evolution. Both advantages and disadvantages 
of this trend have been noted. Among the advantages fre- 
quently cited are these : creation of broader public interest 
in the Corporation through wide distribution of its stock, 
of especial moment to a manufacturer whose goods are in 
everyday use by millions of persons; the greater freedom 
which management enjoys, in its dealings with the market 
and its employees, when personal participation in profit 
by management is relatively small compared to the whole 
stockholder interest. The point has been made that a cor- 
porate management so circumstanced can develop a bal- 
anced policy based on long-range views toward the 
well-being of each of the three main interests toward which 
it is responsible: toward the market into which it brings 
goods and services to the public; toward its employees to 
whom it supplies the means of life and improving status; 
toward the stockholders for whom it earns dividends pro- 
portionate to their investments in the property. 

On the other hand, it has been noted that too complete 
a separation of ownership from management may result 
in loss of interest and wasteful administration, since one of 
the direct incentives to efficiency is lacking when manage- 
ment's share in profits is too small to stimulate to utmost 
efforts. This feature received unusual attention in the 
autumn of 1923. Mr. Pierre S. du Pont had retired from 
the presidency of General Motors with E. I. du Pont de 
Nemours & Company owning directly, or indirectly through 
its affiliate General Motors Securities Company 7,500,- 
ooo shares of General Motors Common stock, or more than 

Cooperative Plans 399 

one third of the total issue of 20,646,397 shares then out- 
standing. This represented a higher percentage of the 
Common stock than the members of the great Delaware 
family and their various corporations have held since. The 
block of 7,500,000 shares represented not only what the du 
Pont interests had bought as a matter of settled policy, but 
also their purchase in the 1920 emergency. 

In 1923 the time seemed propitious to reduce this great 
block by permitting senior executives of General Motors to 
secure holdings, thereby insuring keen personal initiative, 
and continuity of management. Accordingly General Motors 
organized the Managers Securities Company of Delaware 
with an authorized capital stock of $33,800,000, divided 
into three classes: $28,800,000 7 percent cumulative non- 
voting convertible Preferred stock; $4,000,000 Class A 
stock; and $1,000,000 Class B stock. The du Pont Com- 
pany agreed to sell through its affiliate, the General Motors 
Securities Company, which held as its sole asset 7,500,000 
shares of the Common stock of General Motors Corpora- 
tion, 30 percent of its holdings to Managers Securities Com- 
pany. Therefore 2,250,000 shares of General Motors Com- 
mon stock were sold to the Managers Securities Company, 
on October 15, 1923. Payment for this stock was made with 
$28,800,000 7 percent Preferred stock of the Managers 
Securities Company, and $4,950,000 in cash, making a total 
of $33,750,000, or $15 per share. 

General Motors subscribed for all the Class A and 
Class B stock of the Managers Securities Company, paying 
$5,000,000 in cash, and entered into a contract with the 
Managers Securities Company, agreeing to pay to the latter 
each year from 1923 to 1930, inclusive, 5 percent of its 
earnings in excess of 7 percent on the net capital employed. 

Under the trust indenture the Managers Securities Com- 
pany agreed to pay to the trustee annually a minimum 
amount of $1,750,000, and such portions of the remaining 
amounts earned under its contract as were in excess of 
normal income taxes, dividends on outstanding 7 percent 
Preferred stock, and dividends on the Class A and B stocks 
limited to 7 percent as long as there were outstanding 7 per- 
cent bonds or Preferred stock. 

400 The Turning Wheel 

General Motors Corporation thereupon sold to certain 
managers of the General Motors Corporation, and sub- 
sidiaries, such amounts of Class A and Class B stock as 
were determined by a special committee of the board of 
directors of General Motors Corporation. 

The plan was a significant example of Corporation 
thought and practice. It provided for all the contingencies 
which could be foreseen, such as changes in personnel 
through resignation, dismissals and death, with provision 
that the determination of the Finance Committee should 
prevail in all matters of discretion. 

In all, eighty men were selected, to whom Class A and 
Class B stocks were sold in varying amounts. A unit of 200 
shares of Class A stock, and 200 shares of Class B stock 
cost $25,000. The number of units allotted to an individual 
depended upon his significance to the Corporation. 

Cash dividends approximating $350,000 were paid to 
each unit of Class A and Class B stock during the seven 
years of the company's contractual life. At the start, the 
holder of one unit received dividends of only $600 a quar- 
ter, the balance of earnings going to debt service. As the 
debt was reduced, the quarterly dividends paid to the man- 
agers rose. The sums devoted to debt service reduced the 
company's obligation to such a point that in 1926 the bal- 
ance of the purchase price was financed at a lower interest 
rate. The original indebtedness of $28,800,000 was fully 
paid by 1927. 

The rapid rise in earning power of General Motors 
Corporation during these years brought a phenomenal in- 
crease in the value of these units. Each beneficiary of the 
plan receives eventually, for each original unit bought, 
22,545 shares of $10 par value Common stock; and even at 
the low price prevailing in 1933 the value of an original 
unit was more than ten times its original cost. 

It has been said that General Motors made many men 
independently rich through its Managers Securities plan. Of 
course, heaping up wealth for them so abundantly and 
swiftly was not contemplated when the proposal was made 
and the plan drawn. At that time the prospect was that the 
managers, with good luck and the best of team-work, would 

Cooperative Plans 401 

reap perhaps a fraction of what they actually received. No 
one could anticipate the rosy future which was destined for 
the Corporation and the country at large during the six 
years that followed. To what extent the stimulation of 
managerial interest added to profits cannot be determined 
accurately, but this was probably a very considerable fac- 
tor in the strides which the Corporation took. To some ex- 
tent, the managers rewarded had created their own for- 

The Corporation's contract with the Managers Securities 
Company was to have expired on December 31, 1930, but 
was terminated by agreement on December 31, 1929, in 
order to organize the General Motors Management Cor- 
poration along somewhat the same lines as the Managers 
Securities Company. 


With the termination of the contractual relationship with 
the Managers Securities Company as of December 31, 1929, 
the advantages of the plan were so manifest that the Gen- 
eral Motors Management Corporation, organized in 
March, 1930, consolidated the Corporation's two previ- 
ously mentioned profit-sharing plans. 

The General Motors Management Corporation was 
formed in Delaware with an authorized capital of $10,500,- 
ooo, consisting of 50,000 shares of Common stock, 500,000 
shares of Class A stock, 500,000 shares of Class B stock, 
all of $10 par value. 

This capital was authorized to cover the functions previ- 
ously carried on under the Managers Securities Company 
and the Bonus Plan, to carry both profit-sharing arrange- 
ments forward for seven years, to March, 1937. 

General Motors Corporation sold to the Management 
Corporation 1,375,000 shares of General Motors Common 
stock at $40 per share. This stock had been purchased from 
time to time in the open market by General Motors Cor- 
poration in anticipation of a profit-sharing plan to replace 
the Managers Securities Company. The Management Cor- 
poration financed this purchase by the sale of 50,000 shares 

402 The Turning Wheel 

of Common stock at $100 per share, and by the issuance of 
$50,000,000 of seven-year 6 percent serial Debenture 
bonds. General Motors Corporation subscribed to the 50,- 
ooo shares of Common stock, and in turn sold the bulk of 
the shares to some 220 of its executives at $100 a share. 

General Motors entered into a contract with the General 
Motors Management Corporation, agreeing to pay the 
latter yearly on or before March loth of the succeeding 
year for a period of seven years ending December 31, 1936, 
a sum equal to 5 percent of the net earnings of General 
Motors during the preceding calendar year after deducting 
7 percent on the capital employed. In addition, General 
Motors agreed to subscribe an amount equal to an ad- 
ditional 5 percent of its earnings to the Class A stock of 
the Management Corporation, at the book value thereof, 
based upon the cost of the General Motors Common stock 
which the Management Corporation was to purchase from 
time to time in the open market. 

The payments on account of earnings, under the contract, 
after making provision for income taxes, accrue exclusively 
to the benefit of the Common stock. These net earnings are 
capitalized and paid to the Common stockholders as a 
dividend in Class B stock. There is allocated to each share of 
Class B stock one share of General Motors Common stock. 


One of the most significant, comprehensive, and inter- 
esting plans in the history of industrial relations is the Em- 
ployes' Savings and Investment Plan, established by the 
Corporation in 1919. As the Corporation grew, and the 
number of employees increased, many plans were considered 
for providing for them in their later years when they were 
retired or to tide them over times of need. Instead of fol- 
lowing a more conventional corporate plan, John J. Raskob 
conceived the idea of enlisting the interest of employees 
throughout the organization (in 1919 numbering 85,000) 
in a plan of systematic saving and the building up of in- 
dividual estates through these savings, aided by propor- 
tionate contributions on the part of the Corporation these 

Cooperative Plans 403 

contributions being made in such a manner as would give 
employees an opportunity of sharing in the development of 
the business. It was felt that, by helping those who helped 
themselves, they could attain positions of individual inde- 
pendence that would enable them to care for themselves 
and their families in later years. Since the inauguration of 
the plan, experience has brought out the values of various 
features in it, additional to those with which it was origi- 
nally and chiefly concerned. 

The plan provided for the establishment of two funds, 
a Savings Fund and an Investment Fund, a new class to be 
started at the beginning of each year, and to mature in five 
years. As indicated previously, the plan originated with the 
class of 1919. Into the Savings Fund of each class, as it was 
formed, any employee who had been in the service of the 
Corporation for three months or more was allowed to pay 
10 percent of his earnings, not to exceed $300 for the year. 
The limit in 1927 was increased to 20 percent but, begin- 
ning with the current class of 1933, it has been revised to 
10 percent, as it was originally. Payments into the fund were 
facilitated by having the employee designate the amounts he 
wanted to save periodically, and then deducting such 
amounts from his regular wage or salary. For each dollar 
thus paid into the Savings Fund by the employee, and re- 
maining to his credit at the end of the year, the Corporation 
contributed a given amount to the Investment Fund for the 
account of such employee. 

The Corporation's contribution, under the plan operative 
.for the classes of 1919, 1920, and 1921, ran as high as 
dollar for dollar; for the classes, 1922 to 1932, inclusive, 
the contribution was fifty cents for each dollar; and, under 
the new plan beginning with the 1933 class, twenty-five cents 
for each dollar will be paid. The monies thus paid in by 
the Corporation are invested in Common stock of General 
Motors Corporation, as is also the income therefrom dur- 
ing the life of the class, and accrue to the benefit of the 
employee. On payments into the Savings Fund, the em- 
ployee is credited with interest at the rate of 6 percent 
per annum, compounded semi-annually, except for the last 

404 The Turning Wheel 

four classes, in which interest was compounded annually. 
Beginning with the current class of 1933, in view of the 
lower prevailing interest rates, the rate in Savings Fund 
payments has been changed to 5 percent, compounded 

As a new class is started at the beginning of each year, 
it is possible for each employee to have at one time 10 
percent of his annual wage, up to $300, invested in each 
of six consecutive savings classes, or a total maximum 
investment of $1,800. Means are provided whereby the 
employee may withdraw his funds with accrued interest any 
time he wishes. In the event of his leaving the Corporation, 
he must withdraw his funds except in special discretionary 
cases. If he makes such withdrawals, he receives back not 
only his original savings, with accrued interest, but a certain 
portion of the Investment Fund which has been credited to 
his account, in relation to the length of time his savings 
payments remained in the fund. Under the plan governing 
the first three classes, 1919, 1920, and 1921, the unaccrued 
portion of the Investment Fund of the withdrawing em- 
ployee was distributed to the surviving participants at 
maturity, but this tontine feature was eliminated beginning 
with the class of 1922 the forfeited Investment Fund por- 
tion subsequently reverting to the Corporation. 

Nine classes have matured since the plan was inaugu- 
rated, and receipts by employees in the various maturities 
have ranged from a return of more than two-to-one on their 
original investment to more than nine-to-one, the average 
for the nine classes being better than five-to-one. An em- 
ployee who saved in these nine classes, $300 in each class, 
$2,700 in all, has received $4,204.80 in cash and Common 
stock equivalent to 367^2 shares of the present $10 par 
value stock. 

In connection with the plan, the Corporation permitted 
an employee to have his payments in the Savings Fund ap- 
plied on the purchase of a home and, at the same time, 
receive the full benefits from the investment fund at 
maturity. Over 43,000 employees have been assisted in buy- 
ing homes through this arrangement. 

Cooperative Plans 405 

In 1929 the participation in the Employes' Savings and 
Investment Plan reached the highest point, with 185,000 
employees participating in one or more classes. 

At the beginning of the industrial depression, the par- 
ticipating employees of the Corporation entered 1930 with 
a reserve of approximately $75,000,000. In addition to this, 
there was an equity of approximately $15,000,000 which 
had been diverted to the purchase of homes or, in other 
words, an accumulated fund of approximately $90,000,000 
was available as a result of the previous five years payments 
and of the contributions to the Employes' Savings and In- 
vestment funds. 

There were further payments made into the funds by 
both the employees and the Corporation, from January i, 
1930, to April 30, 1932, at which time the plan was 
suspended. During the three-year period, 1930 to 1932, in- 
clusive, there was disbursed a total of $78,000,000. At the 
end of 1932 there was still available, in both funds, ap- 
proximately $47,000,000, to which should be added $13,- 
000,000, remaining equity in the purchase of homes, or a 
total of $60,000,000. 

The largest disbursement in any one year took place in 
1932 when approximately $44,000,000 was distributed. 
This total distribution represented the amount received by 
participants in the matured class of 1926, and the amount 
withdrawn from the fund by employees whose services with 
General Motors were terminated, or who required money 
to meet their various needs. Of the total disbursement, 
$30,719,705 constituted the employees' own original sav- 
ings, and the balance of $13,421,913 interest and Invest- 
ment Fund benefits (cash and securities) paid by the Cor- 

As can be readily appreciated, the plan has proven of 
incalculable benefit, particularly during periods of stress. 
It has given a large measure of security to employees 
who were laid off or put on part time, as well as to those 
who, though working, have had to meet various emergen- 
cies. It has enabled large numbers to go back to farming; 
has provided money to many to engage in small business 
enterprises of their own; and has assisted thousands to make 

406 The Turning Wheel 

adjustments to new conditions. In many communities, 
through the distribution of these funds accumulated during 
better times, it has relieved public and private welfare 
agencies of a tremendous burden. 

During the fourteen years the plan has been in operation, 
up to January i, 1933, cash in the sum of $105,439,122 was 
paid in interim settlements, that is, settlements made prior 
to maturity. In addition, there was paid, through the nine 
matured classes, $51,7375237, representing $30,406,661 in 
cash and 1,624,414 shares of General Motors Common 
stock; valued at the market prices prevailing at the different 
maturity dates, this figure would be $75,912,990. If the 
market value of the securities at the time they were dis- 
tributed is taken into account, the total value to employees 
was $232,455,35 1. 

This large figure indicates to some extent the size and 
scope of the Employes' Savings and Investment Plan. Fur- 
ther payments into the fund were temporarily suspended 
after April 30, 1932, because of the economic situation. On 
August i, 1933, in view of improved conditions, the Sav- 
ings and Investment Plan was resumed with certain modi- 
fications, as previously explained, to meet the new situation. 


Related to the Employes' Savings and Investment Plan, 
the Corporation had another plan, the Employes' Preferred 
Stock Subscription Plan, which was in operation from 1924 
to 1930, inclusive. 

Any employee who wished to invest could buy propor- 
tionately to his salary 7 percent Preferred stock of General 
Motors in amounts from one to ten shares, each year, at a 
price fixed annually. The cash proceeds in the Savings and 
Investment classes, as they matured, could be applied to the 
payment for the stock or payment could be made out of 
salary or wages over a period of a year. 

To make the plan more attractive, there was made each 
year, for five years (provided the employee remained with 
the Corporation) an extra payment of $2 a share, in addi- 
tion to the regular $7.00 a share dividend. 

Cooperative Plans 407 

This plan was discontinued at the close of 1930. No fur- 
ther Preferred stock offering has been made to employees 
since, but the $2 extra payment was continued during the 
life of present classes. 


In order to encourage employees to protect their de- 
pendents, General Motors Corporation arranged with the 
Metropolitan Life Insurance Company for the issuance 
of an employees' cooperative group insurance policy, effec- 
tive December i, 1926. Under this plan all applying em- 
ployees of General Motors, its subsidiaries, and affiliates 
may be insured without medical examination, provided they 
had been employed for three months or more. The cost is 
shared by the employees insured and the General Motors 
Corporation. In addition to regular life insurance, em- 
ployees who become totally and permanently disabled be- 
fore the age of sixty receive the face value of their policy 
in twenty equal instalments, the first monthly payment being 
made three months after proof of the disability. If death 
occurs during such disability, the remaining value of any 
instalments unpaid will be paid in full to the beneficiary. 
Any insured employee leaving General Motors may obtain 
from the insurance company within thirty days, without 
medical examination, an equivalent amount of life insurance 
at rates applicable to his age and class of risk. 

In 1928 the insurance plan was enlarged to include in- 
creased death and total disability benefits, and in addition, 
health and non-occupational benefits were added at a small 
increase in the cost. Under the new plan an employee could 
receive sick benefits for several different disabilities during 
the same year, each benefit covering a period of not more 
than thirteen weeks. Furthermore, in the case of permanent 
and total disability an employee could receive temporary 
sick benefits for thirteen weeks, and then be eligible for 
total and permanent disability benefits for a period of forty 
months. Thus the combined benefits for a totally and per- 
manently disabled employee might cover a period of three 
years and seven months. 

408 The Turning Wheel 

In 1931 the total and permanent disability benefits were 
restricted to those individuals who had been continuously 
employed by the Corporation for two full years. At the 
beginning of 1933, it was deemed advisable to eliminate 
the total and permanent disability benefit because the ex- 
perience of the insurance company, along with that of all 
other companies, had been such that this benefit could not 
be continued without an appreciable increase in contribu- 
tions by the employees. Under the new arrangement a group 
policy provides that if an employee becomes permanently 
disabled after he leaves employment, and dies prior to his 
sixty-fifth birthday, and within twelve months after leav- 
ing, the amount for which he is insured will be paid in full 
to his beneficiary. Under the old plan an employee must 
have been insured for two years before becoming eligible 
for the benefit under the total and permanent disability 
clause. The provisions in regard to regular death benefits 
remain the same, while temporary disability benefits have 
been reduced slightly. 

During 1932 the Corporation lost 1,048 of its employees 
through death or permanent disability, on account of 
which, payments totaling $2,273,306 were approved for the 
benefit of such employees or their dependents, and, in addi- 
tion, there were 9,834 employees who received benefits 
amounting to $827,739 on account of temporary disability 
resulting from sickness or non-industrial accidents. Under 
the group insurance plan approved claims for the benefit 
of the Corporation's employees and their families have 
totaled $16,491,080 from the inception of the plan on 
December i, 1926, up to and including December 31, 1932. 

At the end of 1932 over 99 percent of eligible employees 
were participating in this plan. 


Any list of activities of mutual benefit to employees and 
the Corporation should include the pioneer work that has 
been done by the Corporation in the field of employee edu- 
cation and training, which is now largely centralized 
through the General Motors Institute at Flint. 

Cooperative Plans 409 

The General Motors Institute itself developed out of a 
plan suggested by Mr. J. Dallas Dort of the Durant-Dort 
Carriage Company about twenty-five years ago, to secure 
cooperation between management and wage earner. Flint's 
first effort in this direction was the Flint Vehicle Workers' 
Mutual Benefit Association, which began as a mutual insur- 
ance society and gradually developed social, athletic, and 
entertainment features. This grew into the Industrial 
Mutual Association, huge in membership, occupying large 
clubrooms, and sponsoring a broad program of recreation 
and education in addition to maintaining its insurance and 
welfare features, managed by directors elected by the mem- 
bers of the Association, most of whom are General Motors 
employees. The I.M.A. auditorium in Flint is the largest 
assembly hall there, and the scene of the city's popular con- 
certs, athletic contests, and mass meetings. As an employee- 
managed enterprise, I.M.A. has been remarkable not only 
for its size and success, but also for its public spirit, humani- 
tarian leanings, and educational enterprise. 

The educational program originated by the association 
was based upon the principle that the best way to help an 
individual is to help him help himself. It began as an eve- 
ning school, with convenient short-unit courses closely re- 
lated to the requirements of the automotive industry, and 
of such a nature that they could be arranged in flexible 
sequences to meet the needs of individual employees from 
the plants for further training. 

As its courses of instruction increased both in popularity 
and number, particularly in technical lines, a closer union 
with the factories seemed advisable, since students were 
preparing themselves for increased usefulness in the auto- 
motive trades. Thus the educational activities of I.M.A. 
came to be organized into the Flint Institute of Technology. 
Mr. Harry H. Bassett, then president of Buick and since 
deceased, took an active interest in the school, and in 1926 
enlisted the support of General Motors, after which it be- 
came General Motors Institute of Technology. Suitable 
buildings and grounds were secured for the school to meet 
the requirements of divisions and subsidiary companies of 
General Motors. There are facilities for 2,800 day and 

410 The Turning Wheel 

evening school students; the faculty has numbered forty- 
two members giving full time, besides sixty part-time in- 

To this institution then fell the task of providing a 
means through which the effort and experience of the Cor- 
poration might be pooled in the development of a sound 
training program for the various divisions and their em- 
ployees. It also provided an agency for types of training 
which could best be conducted for the Corporation as a 
whole through a central program. 

Harry H. Bassett (1875-1926}, President and General Manager, 

Euick, 1919-26 

The training program, as it developed, divided itself into 
two main branches : first, that designed to contribute to the 
development of employees of the existing organization and, 
second, foundation or apprenticeship training of young men 
for beginning connections with the company. The first is 
conducted through spare time and extension courses, the 
second through full-time and cooperative training courses. 

In the extension program, a major emphasis has been 
placed upon executive training for foremen and prospective 
executives. Here the wide pioneer experience of the entire 
Corporation from the very inception of the movement was 

Cooperative Plans 411 

pooled in the development of the executive training pro- 
gram. There was thus provided a uniform program rep- 
resenting the best experience and executive policies of the 
Corporation in form available to all divisions in Canada and 
overseas, as well as in the United States. During the years 
of 1928 and 1929, this program reached as many as 5,000 
employees of the Corporation, representing practically all 
of the divisions. 

In the instruction of young beginning employees, the 
major emphasis has been placed upon cooperative training 
the General Motors Cooperative Training Program for 
manufacturing units, and a corresponding Dealer Coopera- 
tive Service Training Program for the service field. These 
programs combine with a practical experience in the plant 
or service station an intensive, related program of technical 
instruction given at the Institute through the cooperative 
plan of alternate periods of work and study. The program 
thus gives the young men both the practical and technical 
equipment needed to meet the requirements of the field for 
which they are being trained. 

The Institute, because of its central position, thus be- 
comes practically a research laboratory in training. It con- 
ducts certain types of training through a central program 
for the entire Corporation, and in addition, in cooperation 
with the divisions of the Corporation promoting an interest 
in personnel development, it develops methods and tech- 
niques, collecting and correlating the experience of the en- 
tire Corporation, and bringing to each division the advan- 
tage of the knowledge thus gathered. The single objective 
is that of developing more effective means of personnel 
training for the Corporation. 

During the later stages of the depression, in common 
with most educational efforts, the work of "General Motors 
Tech" has been somewhat curtailed, and its program re- 
vised to correlate more closely with the changing require- 
ments of the industry. The Institute, and the program which 
is centralized through it, have been recognized by educators 
and industrial executives as one of the best managed in- 
dustrial educational training programs in the country. 


Cooperative Plans 413 


Reference has been made to General Motors' extensive 
housebuilding programs in a number of the cities where its 
large manufacturing plants are located. Back of all these 
construction projects was a definite desire to provide better 
housing for employees in swiftly growing cities where 
private building operations lagged behind the needs of the 
wage-earning population. Large subdivisions were plotted, 
streets opened, sewer systems installed, and connections 
made with public utilities. In some cases community halls 
were erected for public and social gatherings. The projects 
were carefully planned from the standpoint of attractive 
street layouts, open spaces, and landscaping. The best pos- 
sible house was built for the money, with all benefits of 
large-scale buying inuring to the purchasing employee. Com- 
plete in all respects, the houses were sold to employees on 
reasonable deferred payments which might be deducted 
from wages. Through the operations of the Savings and 
Investment Fund, from which deductions could be made on 
house-buying account without diminution of the employee- 
interest, the Corporation considerably eased the lot of 
thrifty employees in their progress toward house owner- 


In the past few years some of the units of the Corpora- 
tion have fostered cooperative gardening for the benefit of 
employees, both those on the pay roll and those temporarily 
laid off. As a general practice, the unit provides the land, 
renting it if necessary; attends to the plowing; provides the 
seeds and plants, and competent direction. As instances 
along this line may be cited the Harrison Radiator Corpora- 
tion, Lockport, New York, and the particularly successful 
experiment of the McKinnon Industries, Ltd., St. Cath- 
arines, Ontario. 


Nearly all General Motors plants maintain various 
services for their employees. These are under the direction 
of plant managers, and are of so many sorts that no 

414 The Turning Wheel 

adequate description can be given of them here. Historically, 
Chevrolet seems to have been the leader of General Motors 
in developing work of this nature, and many of its pioneer- 
ing welfare activities have been widely copied both inside 
and outside of the Corporation. 

In the Corporation's annual reports various of these 
plans and programs have been discussed in great detail, with 
emphasis on the fact that they have been inaugurated "for 
the purpose of promoting the effectiveness and well-being 
of the Corporation's operating personnel." The 1932 re- 
port says : 

It has been stated that the fundamental objective in all these plans 
has been to help the individual to help himself ; to make him a bet- 
ter citizen; to give him the opportunity to become independent. 

In the main this objective has been gained, and in those 
particulars where the greatest measure of successful co- 
operation has been achieved, it is to be expected that the 
Corporation will go considerably farther in the direction 
of employee-benefits. 

The oldest and most important of General Motors co- 
operative plans have been revised freely under the influence 
of changing circumstances. 

Chapter XXIX 

UBLIC RELATIONS arise out of a corporation's policies 
in its dealings with actual and potential customers. Good 
public relations make for confidence in an institution. Yet 
mere good-will that leads nowhere is not enough. What a 
corporation wants is the expression of a belief in its in- 
tegrity through the purchase of its products or services; 
and the confidence of those whose capital it uses and those 
with whom it transacts business while producing those goods 
and services. 

Good products and good services are a fundamental ob- 
jective of good management. So also are satisfactory public 
relations, which have a direct bearing on earnings and em- 
ployee morale. General Motors has defined the scope of its 
activities in this field as follows: It is the task of Public 
Relations to "represent and interpret General Motors to 
the public in such ways as will favorably dispose the public 
toward the purchase of its products." 

As a corporation grows in size its operations inevitably 
take on more social significance. Any vast industrial organ- 
ization in which large numbers of persons use the capital of 
the public in the production of goods becomes a factor of 
importance in the life of the nation. General Motors opera- 
tions in a vital way touch, directly or indirectly, people in 
all parts of the world. Its products bear intimately on the 
daily lives of all members of the family in countless homes 
and in every walk of life. 

416 The Turning Wheel 

Historically, the automobile industry evolved swiftly 
toward a manufacturer-consumer relationship. The nature 
of the product a machine whose effective operation de- 
pended upon skilled servicing required that the manu- 
facturer stand behind his wares beyond the general practice 
of the time. His goods were style goods, not staple goods; 
as such they had to be advertised and sold, not merely as 
automobiles, but as Buicks, Cadillacs, Oldsmobiles, and the 
like, since their styled identity persisted through the life- 
time of each car. This had been true also of the carriages, 
and agricultural implements that preceded the automobile, 
but the automobile manufacturer had to carry consumer 
service to an unprecedented point. His products were more 
complicated and more mobile. The ease with which the 
public could secure repair parts and skilled service almost 
from the beginning was a vital element in maintaining 
popular favor, and had definite good-will value for the 
manufacturer. No other industry of equal magnitude stands 
in quite the same position with respect to the public. 

Organized as a holding company, the pressure of events 
converted General Motors naturally into an operating com- 
pany. The identity of manufacturing groups was main- 
tained, each with its selling organizations, so that General 
Motors products were, and are still, sold, in the main, under 
division names. But since General Motors had made itself 
responsible for divisional operations, the old law of the 
industry, early recognized and never for long disregarded, 
that the maker must stand behind his wares morally as well 
as financially, manifested itself anew. General Motors found 
it expedient to show, through institutional advertising, that 
it stood behind divisional products, because the man in the 
market-place had been taught to look, not only at the mer- 
chandise offered, but also at the character, resources, and 
policies of its markers. The Corporation found that an 
important part of all the influences which cause people to 
buy General Motors cars consists in what they believe about 
the Corporation as a whole rather than what they believe 
about each car in itself. From the beginning the Corpora- 
tion's concern for its public relations has been a logical 
growth, in the course of which its position has been clarified 

Public Relations 417 

by specific events and expressed many times in both word 
and deed. 

In the twenty-fourth annual report for the year 1932, 
this statement appeared: 

It is recognized that the Corporation's most vital relationship is with 
the public. Its success depends on a correct interpretation of the 
public's needs and viewpoints as well as on the public's under- 
standing of the motives that actuate the Corporation in everything 
it does. 

In order to formulate its policies in harmony with this basic 
principle, no effort is being spared to analyze and evaluate the 
public forming the Corporation's actual and potential customers, 
in its thinking with respect to all things in which the Corporation 
plays a part. 

This represents, however, but one phase of the Corporation's 
public relations policy, for, while it is essential that the Corporation 
understand the public, it is equally essential that the public under- 
stand the Corporation. Good-will is established and maintained 
not alone by excellence of product and service, but by a combina- 
tion of this with public knowledge and acceptance of the policies 
of the Corporation. 

The correct interpretation of such policies to the public is re- 
garded as a primary function of management. Progressive industry 
today places the formulation of sound public relations policies on a 
parity with the formulation of other major policies. In fact, it goes 
further and recognizes that every forward step in procedure should 
be subjected, whenever possible, to advance appraisal from the 
standpoint of the public interest in order to ensure any contem- 
plated action meeting with public acceptance. 

The Corporation is keenly alive to the importance of this re- 
sponsibility to the public. 

One way in which this responsibility has been met fully 
has been through reports to stockholders. General Motors 
was one of the first American corporations to issue com- 
plete quarterly statements. Though addressed particularly 
to stockholders, these and other statements reach the public 
through the press. On a scale which draws favorable com- 
ment from serious students of corporate affairs, the Cor- 
poration seizes upon the opportunity offered by its annual 
reports to stockholders to make a detailed accounting of its 

418 The Turning Wheel 

stewardship. In these reports will be found not only statistics 
revealing the Corporation's financial position, but also ex- 
planations of procedure and policy. These reports go also 
to banks and trust companies; the information they con- 
tain becomes part of the back-log of confidence upon which 
rest the Corporation's relations with thousands of sup- 
pliers and a multitude of financial concerns through which 
General Motors transacts its world-wide business. The 
stability of the Corporation's security structure is in part 
due to the frankness and completeness of its published state- 

As an example, let us consider the 1932 annual report, a 
booklet of thirty-six pages distributed to 372,000 stock- 
holders, many financial institutions, and the press. 

The statistical body of the report includes, in addition to the annual 
statement with appropriate comparisons for the various items, a 
complete record of net sales, earnings, and dividends from 1909, an 
analysis of unit sales for eight years, statistics and charts covering 
total automobile registrations, overseas sales, Employes' Savings 
and Investment Funds, pay rolls, and number of employees, bonus 
awards, number of stockholders, and a roster of the Corporation's 
divisions, subsidiaries, and affiliates. 

In addition the report carries the following explanatory 
features : 

A Financial Review of four pages on earnings; dividends; net 
working capital ; real estate, plant and equipment account ; and in- 

An Operating Review of two pages, not only giving facts but 
elucidating them. 

A Report on The Industrial Depression: Its Economic and 
Operating Influences, five pages. 

Operating Reports on General Motors Overseas, and General 
Motors Acceptance Corporation, one page. 

Cooperative plans, including General Motors Management 
Corporation, Bonus Plan, Employes' Savings and Investment Plan, 
Group Insurance Plan, Housing for Employees, two pages. 

Good-will and Patents, Public Relations, one page. 

This consistent policy of frankness has won both public 
confidence, and expert approval. In the April, 1933, issue of 

Public Relations 419 

Scribner's Magazine, Anderson F. Farr has a compre- 
hensive article on the public relations of large corporations 
entitled "Give the Stockholders the Truth." It deals with 
"restoring confidence in American finance," and makes the 
following significant statements about General Motors' 
annual report to its stockholders: 

Then there is the outstanding example of clearness, sincerity, and 
reliableness as reflected in the twenty-third annual report of the 
General Motors Corporation covering the year 1931. The General 
Motors Corporation is one of the very great business enterprises 
of the world, with 313,117 stockholders. Its importance is tre- 
mendous in many lines of business activity. Its capital and surplus 
amount to $926,000,000, and its employees are measured by the 
tens of thousands. It behooves a concern of such power, and with 
such ramifications, to set an example of positive integrity and 
rugged simplicity in giving an accounting to its stockholders so 
that when a report gives a figure for profits there is no chance 
whatsoever of misinterpretation. Such an example has been set. The 
report for 1931 is one of the most complete reports issued to stock- 
holders, containing a wealth of interesting facts and information, 
put together in a manner to indicate that the officials recognize a 
duty to stockholders, and a high degree of conscious moral and 
financial responsibility. 

The consolidated income account is given in comparison with 
the income account for the preceding year, and every item repre- 
senting a loss is charged to income fully as much as any of the 
usual charges of expense. There is even an extraordinary and non- 
recurring charge of $20,574,514, largely representing revaluation 
of net working capital abroad to a dollar-value basis, and including 
a revaluation of security investments to market value. The account 
is clear from beginning to end, edited as far as possible, which is 
far at that, in non-technical language. Moreover, no part of the 
accounting exhibits is at variance with figures or implications con- 
tained in the message to stockholders. That also is as it should be. 

Communications to stockholders are not confined to 
printed documents. The president writes a letter to each 
incoming stockholder, and also a letter to each outgoing 
stockholder. These bring many replies, each of which is an- 
swered. This correspondence gives evidence that contacts 
so established are influential in encouraging new stock- 
holders to regard their General Motors investments as 

420 The Turning Wheel 

permanent, and in influencing them to become actively in- 
terested in the progress of the Corporation. 

Through the newspapers General Motors acquaints the 
public with important new developments as they occur, and 
provides the nation with a business barometer on the eighth 
day of each month, when it publishes the unit sales and 
deliveries of its car divisions for the foregoing month. 
These figures are accepted as one of the more dependable 
indications of the business trend, comparable to the figures 
on tonnage shipped put out for so many years by the 
United States Steel Corporation on the tenth of each month. 
They are published on the earliest possible date consonant 
with careful compiling without waiting for a circulation of 
the figures first within the organization, on the theory that 
the public is entitled to news which by common consent is 
deemed to possess a peculiar barometric value in the inter- 
pretation of economic events. 

The Corporation maintains a public relations staff in its 
New York and Detroit offices, to make effective the broad 
policies of the Corporation in its widely ramifying relations 
with the public. It answers inquiries concerning the Cor- 
poration and its activities which pour in from all parts of 
the country, the schools being especially prolific sources of 
correspondence. However, while the Public Relations de- 
partment acts mainly in a staff capacity on matters affecting 
the Corporation's public relations, General Motors stresses 
the fact that the duty of establishing and maintaining good 
relations with the public rests upon every division and de- 
partment and every employee and dealer. 

President Sloan expanded this theme forcefully in a cir- 
cular letter to all the Corporation's executives and general 
staff officers on July 6, 1933, as follows: 

I call attention to the fact that General Motors, while a private 
Corporation, nevertheless is so broad in its ramifications that both 
our thinking and our action become a matter of more or less pub- 
lic concern. This is particularly true because we are different in 
the sense that we deal directly with the public, and the public is, 
therefore, concerned with our operations on account of their direct 
use of our products. 

Public Relations 421 

The greatest asset that any organization like ours can have, is 
public good-will . . . every individual, however unreasonable he 
may be, has a certain sphere of influence, and ... we must re- 
member that such influence is tremendously effective because it is 
looked upon as unprejudiced even as against facts that we might 
present contrariwise. . . . 

With the above introduction to the subject, I urge upon every 
executive to keep this matter prominently in mind, and would ap- 
preciate every executive transmitting to those under his jurisdic- 
tion, such observations as he might see fit to make on the subject 
that I am now presenting, for their information and guidance. 
Let us give particular attention to that phase of the general ques- 
tion which finds expression in prompt and courteous replies to sug- 
gestions, criticisms, and everything of similar nature, whether di- 
rectly or indirectly concerned with our immediate problems, which 
arise in the voluminous correspondence that our executives must 
necessarily carry on with individuals, both without and within the 
Corporation's activities. 

I appreciate that it takes a little time to do these things. I ap- 
preciate that when we are worried and have so much to do, it 
seems foolish to divert our energies in this direction. I only want 
to point out that in my many years' operating experience I have 
found that it is more than worth while. 

The common sense of this policy will scarcely be disputed 
as a practical matter. In fact practicality, instead of a blind 
groping after prestige, dominates General Motors' work in 
this field. For itself, General Motors has defined its Public 
Relations purposes in the frankest possible terms as quoted 
at the beginning of this chapter. Even though this definition 
is eminently businesslike, it is nevertheless so broad that not 
all the various ways in which Public Relations work goes 
forward can be described here. A few outstanding cases will, 
however, be cited. 

Among the many notable instances of Public Relations 
activities initiated and maintained by divisions of General 
Motors is the Craftsmans' Guild of Fisher Body Corpora- 
tion, which thereby comes close to many thousands of 
ambitious youths and, indirectly, to their families and friends 
in the United States and Canada, as described in Chapters. 

422 The Turning Wheel 


Perhaps the most unusual step that the Corporation has 
taken to meet a pressing public need was its action in par- 
ticipating with the United States Government in the forma- 
tion of the new National Bank of Detroit in early 1933, 
to relieve the paralysis which overtook that great industrial 
city following the Michigan banking moratorium which be- 
gan on February 14, 1933. This was the first moratorium 
of the period effective over the entire area of a great in- 
dustrial state, and banking troubles spread far and wide 
over the country until the national moratorium of March 
6th closed all American banks. When the national mora- 
torium ended, Detroit was still without the services of its 
two largest banks, and remained without a major banking 
institution to serve the needs of that great industrial city 
until March 24th, when the General Motors Corporation 
and the Reconstruction Finance Corporation brought relief 
through opening by their joint efforts the National Bank 
of Detroit, a unique financial institution, in that it repre- 
sented a great industrial Corporation and the United States 
government in partnership to alleviate a distressing situa- 

As one of Detroit's large manufacturers and employers, 
that city being the seat of divisional administration as well 
as of some of its large plants, the Corporation realized how 
demoralizing the abnormal situation had become to the 
public and the business interests of the nation's fourth 
largest city. While adequate banking facilities were lack- 
ing, trade stagnated, enterprise languished, thrift was dis- 
couraged, industrial morale declined. In this emergency, and 
only for the emergency, General Motors entered the bank- 
ing business in Detroit as an equal partner with the United 
States Government, itself keenly aware that what Detroit 
needed more than anything else at the moment was a large 
commercial bank commanding enough capital and confidence 
to reassure the community and provide large-scale credit 
facilities for industry and trade. 

Public Relations 423 

After various plans had been abandoned, General 
Motors arranged with the Reconstruction Finance Corpora- 
tion for the creation of the National Bank of Detroit, with 
$25,000,000 capital, to which General Motors Corpora- 
tion and the Reconstruction Finance Corporation each sub- 
scribed $12,500,000. 

President Sloan expressed the Corporation's motives 
behind this unusual move in an open letter to the people of 
Detroit dated March 24, 1933, in which he said, in part: 

I am sincerely happy that after nearly six weeks the people of De- 
troit again are provided with banking facilities. I feel that it is a 
privilege to be able to take a small part in a matter so vital to the 
people of this city. 

In the business with which I am so intimately associated I have 
seen many big things done but never in my experience have I seen 
so many difficult obstacles overcome in so short a time as has been 
the case in the past few days in making banking facilities available 
to the capital of motordom. At ten o'clock on Friday, March 24th, 
Detroit will again have banking facilities which indeed is a credit to 
all of those people in government offices, those in responsible capa- 
cities in Detroit, and those of responsible position in my own organ- 

In bringing about the opening of the National Bank of Detroit, 
my principal concern has been to accomplish this with a minimum 
delay. The people of Detroit have needed a depository for their 
currency. They have needed the usual checking facilities afforded 
by a bank. This to my mind has been the first need in Detroit. 
These facilities will be provided on the opening of the National 
Bank of Detroit which for the present will be limited to commer- 
cial deposits including personal checking accounts. Whether savings 
deposits will be accepted will be determined by the permanent 
organization later. 

I would like to make clear several important facts: 

1. This bank is an entirely new institution. 

2. It will be the most liquid bank in the United States. 

3. It will be a Detroit institution owned, directed, and man- 
aged by Detroit people. 

It may well be that some of the Detroit people will raise the 
question as to why General Motors has interested itself in the 
Detroit banking situation. I am sincerely anxious that the people 

424 The Turning Wheel 

of Detroit appreciate that the only interest which General Motors 
has in this connection is to be of service to the people of Detroit. 
In the joint statement which I issued in conjunction with the 
Reconstruction Finance Corporation, I endeavored to make clear 
to the public just exactly what position General Motors occupies in 
relation to the banking situation in Detroit. Perhaps I can do no 
better than to paraphrase here the statement which I made a few 
days ago in this connection. 

In underwriting the Common stock of the new bank General 
Motors Corporation was doing so as a contribution for the set- 
tlement of a very serious situation. It had no desire to enter in 
any way the banking business in Detroit or elsewhere. It was en- 
titled to and had every reason to expect the support of the deposi- 
tors and the stockholders by subscribing to the Common stock. 
An offer will be made by General Motors Corporation to all 
depositors and stockholders of the First National Bank and the 
Guardian National Bank of Commerce for subscription to the 
Common stock of the new bank, at the same price as paid by 
General Motors Corporation, that is, fifty dollars per share. 

It was hoped that as soon as the situation was stabilized it 
would be possible for General Motors Corporation to withdraw 
entirely, transferring its investment to others to carry on this 
particular responsibility and duty to the community. 

We were happy to cooperate with the government, the Presi- 
dent of the United States, the Secretary of the Treasury, the 
Reconstruction Finance Corporation, and other sincere and able 
representatives of the government in helping to establish sound 
banking facilities in Detroit. 

In my various contacts with you people of Detroit I feel that 
you understand the position which General Motors has taken, and 
that you will lend your support to those men who will be desig- 
nated to carry on for you a sound type of banking which has been 
made possible through the sympathetic and financial cooperation 
of the United States Government. 

This position was reaffirmed by Mr. Donaldson Brown, 
chairman of the Finance Committee of General Motors 
Corporation, in a statement published on July 6, 1933, giv- 
ing the background of the negotiations resulting in General 
Motors entering the Detroit banking situation. Mr. Brown 
made it clear that General Motors stood willing from the 

Public Relations 425 

first to cooperate proportionately in any plan to reopen the 
two large closed banks ; and, after the decision had been made 
by the United States Government not to reopen them, to 
subscribe to other sound plans which would permit the 
liquidation of those banks and the relief of their depositors. 
When other efforts had reached the stage of protracted 
delay, with the Detroit situation growing more difficult 
daily, it was decided to confer with Washington to learn 
whether General Motors could do anything constructive 
toward a solution of the problem. Of those negotiations, 
and the considerations involved in them, Mr. Brown com- 
ments, in nart, as follows: 

During the time prior to the expiration of the originally stipulated 
period of the Michigan bank holiday we attended meetings of 
various depositors, directors, and officers of the two large Detroit 
banks; at which meetings it was stated by government authorities 
that the old banks would not be allowed to reopen. Following 
these meetings as well as previously we made known our position 
of readiness and anxiety to cooperate with the officers and directors 
of the old banks in any plans deemed to be constructive, and in- 
sisted at all times that it was not within our province to take any 
initiative in the direction of determining the course that should be 
taken. In course of time we were informed that in the case of each 
of the old banks the decision had been reached, carrying approval 
of their boards of directors respectively, to attempt the formation of 
new banks through the procurement of the necessary capital 
from important depositors, looking forward to each of such new 
banks respectively undertaking to purchase certain liquid and sound 
assets from the old banks together with a suitable assumption of 
deposit liabilities. After plans in this direction were duly approved 
and authorized by the respective boards of directors, General 
Motors Corporation, together with numerous other important de- 
positors, undertook to subscribe to capital stock of proposed new 

The solution of the problem in the interest of gaining the great- 
est possible benefit to the old depositors, together with the supply- 
ing of suitable augmentation of banking facilities in Detroit, 
seemed to the government to call for a new bank or banks having 
aggregate capital of at least $25,000,000. Government authorities 
took the position that R. F. C. could not subscribe capital beyond 
matching the amount of capital that could be derived by private 

426 The Turning Wheel 

or local contribution, and thus it was made apparent that 
$12,500,000 of private capital must be forthcoming. 

Recognizing the serious importance of avoiding undue further 
delay in dealing with the situation, General Motors Corporation 
undertook to supply initially the full $12,500,000 required, feeling 
that under the circumstances other depositors who had been co- 
operative, and who had expressed willingness to supply capital 
incident to the creation of new banks, should be relieved of any 
feeling of obligation to supply capital under the new program. 
General Motors Corporation therefore was in a position to con- 
summate plans in collaboration with R. F. C., and to expedite the 
culmination thereof, by reason of being free from the necessity of 
collaboration with other depositors in arriving at agreement upon 
various important details as to the constitution of the articles of 
association and understanding as to the principles upon which the 
project should be carried forward. 

Subsequent events amply prove that Detroit benefited by 
this bold step. From its opening day the National Bank of 
Detroit was thronged with depositors, many of them re- 
turning hoarded gold and currency. Even the most timorous 
were reassured by the stability of a bank jointly owned by 
the Federal Government and General Motors. The Com- 
mon stock representing the Corporation's interest was 
offered to the public at cost in accordance with the Corpora- 
tion's promise, soon after the bank opened. About 25 per- 
cent of the stock was sold to the public in 1933. 


Another instance of General Motors' attitude toward 
public events of importance was its early decision to par- 
ticipate to the extent of upwards of a million dollars in the 
Century of Progress Exposition at Chicago, with results 
which are described in Appendix II. Upon the occasion of 
the dedication of the General Motors Building at the Ex- 
position, the president of the Exposition, Mr. Rufus C. 
Dawes, told his hearers that, but for General Motors' 
encouragement at a critical juncture, the World's Fair of 
1933 could hardly have gone forward to a successful con- 

Public Relations 427 


In the chapter on "Marketing the Motor Car," the trend 
away from "high-pressure" salesmanship, and toward con- 
sumer research, has been noted. Through investigations by 
trained staffs General Motors endeavors to learn as nearly 
as may be discovered the needs and wishes of its customers, 
to the end that those wants can be filled as promptly and 
fully as possible. The small merchant learns these needs 
directly from his customers day by day; a large merchant 
has to take specific steps in order to secure the essential 
information in all parts of the vast territory served. 

General Motors has been conducting consumer research 
for many years, as part of its settled policy, in acquainting 
itself with the attitudes of the public, in line with those other 
essentials of General Motors policy to preserve an "open 
mind" on all matters, and "find the facts." Under the urge 
of adverse selling conditions, consumer research lately has 
been receiving more and more attention. Another investiga- 
tion, with a definite business objective, that of determining 
the present wants of the American public with regard to 
motor cars, is now going forward in the United States, 
along lines of effort which produced excellent results when 
tried out by the Corporation in the Dominion of Canada. 

In a letter to stockholders, dated September n, 1933* 
calling their attention to the twenty-fifth anniversary of 
General Motors, President Sloan described this phase of 
consumer research as a "Proving Ground of Public 
Opinion" and part of a definite program of fact-finding. 
He said, in part: 

Through modern technique, products undreamed of by our fore- 
fathers have been brought into being, and placed within reach of 
everybody. But as a result of large-scale operations and world- 
wide distribution, producer and consumer have become more and 
more widely separated, so that the matter of keeping a business 
sensitively in tune with the requirements of the ultimate con- 
sumer becomes a matter of increasing importance. 

Through Consumer Research, General Motors aims to bridge 
this gap and provide guidance not only with reference to details 

428 The Turning Wheel 

of design but as regards public relations, advertising, sales, service 
in fact, everything affecting our customer relations, directly, and 

For a number of years past General Motors has maintained a 
central staff to conduct various types of market surveys, and the 
findings of such surveys have contributed in no small measure to 
the progress of the Corporation. During the past two years this 
activity has been pursued along more exhaustive lines than for- 
merly, constituting what might be termed a "Proving Ground of 
Public Opinion," devoting itself to the finding of facts as regards 
the attitudes of the practical motorist toward various aspects of 
merchandising and service all of which are vitally important as 
bearing on customer good-will, and continued patronage. The 
work is concentrated in a central department known as the Cus- 
tomer Research Staff, which operates in close cooperation with 
General Motors Research Laboratories, Fisher Body's Art and 
Color section, the General Motors Proving Ground, and the vari- 
ous divisional engineering, sales, and service organizations, sup- 
plying them with data which are constantly flowing into the Cen- 
tral Office directly from owners of cars of all makes and ages all 
over the country. 

The activities of the Customer Research Staff involve sending 
out questionnaires, calling on owners, and digesting customer re- 
actions flowing into the Corporation through miscellaneous chan- 
nels. During the past year well over 1,000,000 motorists have 
been invited to "pool their practical experience with the technical 
skill of General Motors engineers and production experts." But 
it would be a mistake to think of consumer research as an isolated 
department. Sending out questionnaires, calling on people and 
compiling statistics these are only incidents, or tools; very im- 
portant tools, to be sure, but tools, nevertheless. 

To discuss Consumer Research as a functional activity would 
give an erroneous impression. In its broad implications it is more 
in the nature of an OPERATING PHILOSOPHY, which, to be fully 
effective, must extend through all phases of a business weighing 
every action from the standpoint of how it affects the good-will of 
the institution, recognizing that the quickest way to profits and 
the permanent assurance of such profits is to serve the customer 
in ways in which the customer wants to be served. 

Of course there is nothing really new in this. It is the funda- 
mental basis upon which all successful business is founded, but as 
stated above, modern industry, with its large-scale operations, tends 
to create a gulf between the customer and those responsible for 

Public Relations 429 

guiding the destiny of the institution. We can no longer depend 
upon casual contacts and personal impressions our business is too 
big; our operations too far-flung. 

Furthermore, we are passing through a kaleidoscopic era char- 
acterized by swift movements social as well as economic and 
such conditions cannot fail to bring more rapid changes in the 
tastes, desires, and buying habits of the consuming public. So it 
becomes increasingly important that we provide the means for 
keeping our products and our policies sensitively attuned to these 
changing conditions. 

And, irrespective of what these changes may be regardless of 
what the new economic and social order may hold I am confi- 
dent that a more intimate, detailed, and systematic knowledge of 
the consumer's desires will afford the Corporation a sound and 
progressive basis upon which to meet the new conditions as they 

Speaking of the General Motors consumer research pro- 
gram, Printers' Ink for July 13, 1933, indicates with discern- 
ment the point at which public relations and sales merge : 

The policy of any consumer research department is to take the people 
just as they are found; without any attempt to reform them, no 
desire to change them, but to study them instead and give them 
something they should have. 

The General Motors consumer research is based upon the same 
purpose which actuates the advertising and selling of its product, 
namely: to stimulate business and broaden good-will, "by bringing 
to the buyer information that will aid him in spending money 

This method of going ahead on facts instead of hunches might 
well be made a guiding principle for many a small business today; 

The truth is that General Motors, in so far as it is 
physically possible, tries to conduct its huge business with 
its large public as the small business does with its public. 
Just as the essence of courtesy is the ability to put oneself in 
another's place, so consumer research is the courteous 
approach to sales. As a buyer of merchandise in enormous 
quantities, General Motors has learned to appreciate those 
suppliers who seriously study its needs and bring forward 
new products meeting its problems. With the Corporation 

430 The Turning Wheel 

on the selling end and the public on the buying end, the 
situation is reversed, but the principle still holds good. Gen- 
eral Motors is still going to school. It wants to learn, and 
within the limits of prudence is willing to take mass opinion 
as a guide in planning its production and sales programs. 

In the quarter century of General Motors' existence, the 
irresistible march of science, revealing itself most effectively 
in swifter transportation and communication, has had two 
effects of the most profound import. On the one hand, the 
planet has shrunk in size as compared to the reach of the 
human will; on the other hand, the effective groupings of 
human energy have greatly expanded in size. Corporations 
have grown tremendously, both by mergers and by expan- 
sion from within; and trade associations are now common- 
place features of the business landscape, accepted by the 
public and vested with certain broad responsibilities by 

In this relatively new industrial order, geared so directly 
to communications through which mind meets mind over 
vast distances and in bewildering numbers and complexity, 
the use of media for all the senses becomes a necessity with 
any business enterprise that wants its message to reach all 
the public. Though the message itself may be simple, the 
means of spreading it are many and complex, including all 
variations of communication through the printed word, the 
spoken word, an appeal to the eye through color, form and 
motion, and to the reason through logical presentation and 
detailed information. 

To discover, test and apply new methods of using the 
varied communication facilities of the modern age is part 
of the task of a public relations staff. It exists, in a sense, 
to do the things which have not yet been reduced to a 
system, to meet the unexpected, to anticipate where pos- 
sible the individual query, to cultivate the human side of 
business contacts, to act constructively on the mass mind. 

This picture, then, reveals itself as one of the many 
placed before the reader in this history of General Motors. 
It is a picture of men thinking not alone of the immediate 
exigencies of production and distribution, but also of the 
enduring values of human relations, standards of living, and 

Public Relations 431 

the myriad factors of interdependence which are at the root 
of community life as well as of trade and manufacture. A 
search, if you please, for the keys to human behavior, for 
the remedies which assuage discord, for the understandings 
which, if they can be brought to pass, will be of value in 
ushering the future serenely out of the past, unpredictable 
though that future may be. In this search all the hard-won 
tools of science, all the arts of grace and beauty, all the 
systems of idea-distribution are thoughtfully marshalled. 

That is the method of public relations, but the method is 
really of less purport than the motive. How well the 
arteries, veins, and nerves work is chiefly a matter of tech- 
nical interest for experts to consider. What the public has 
a right to know is how the head and heart of General 
Motors work, whether the ideas and policies thus sent on 
their way into the thought-stream of the nation are sound, 
valid, and constructive, and to what extent the incentives 
of both commerce and the public well-being can be served 
from the same source. 

This question has already been answered in the quoted 
words of others. The primary motive is to win patronage 
for General Motors by building for it a foundation of 
public good-will. There remains merely to register the con- 
viction that in pursuing that objective, General Motors 
already has created by-products of public opinion and under- 
standing worthy of the notice of sociology and that, in the 
very nature of things, having in mind both the Corpora- 
tion's past and present, these indirect influences of its public 
relations policy will grow more apparent in the future. 


ROM its adventurous beginning in the dawn of the in- 
dustrial age, the self-propelled vehicle has swept on until, 
as the gasoline motor car of the present, it is a factor in all 
civilized countries and is helping to civilize others. In the 
United States, where a broad continental area of fertile 
land is occupied by an ingenious people with high stand- 
ards of living, automobile transport has found its widest 
market, being accepted so completely that the very face of 
the country has been and is being made over for its wider 
use year by year. Social life in all its aspects family, school, 
church, business has been accommodated to the automobile, 
changing day by day as this flexible mode of transport has 
proved its ability to move human beings and their goods 
into new areas and relationships. Under the asgis of the 
automobile and the rapid communications which are its com- 
panions on the modern stage, sectionalism is fading away, 
population is being redistributed, and new groupings are be- 
ing formed. The future of America is beyond foreseeing, 
but at least in that future the automobile will be more highly 
developed and even more commonly used than it is today. 

The position already attained by the automotive trade in 
America is truly remarkable when the speed of its growth 
is considered. From a few hundred dollars to millions, from 
shops in back alleys to the largest and best equipped fac- 
tories, from an infant under suspicion to a giant universally 
acclaimed, from an occasional sale to a grand total of 
$4,774,822,000 retail value of new car sales in 1929 or 
nearly 10 percent of the total retail trade of the United 


Conclusion 433 

States such is the sweeping saga of thirty-five years in 
this industry which has so successfully put power behind 
space-conquering wheels. 

In this advance of the American automotive industry, the 
experience of General Motors has been unique. It was the 
first automobile merger, and as such had plants in many 
localities. Other large automobile companies have grown up 
around individuals in complete authority; this one from the 
first has had many bases for widely scattered operations, 
and in the main has functioned through the meeting of 
many minds rather than at the word of a single person. Its 
ownership has become widely diffused over the whole coun- 
try, a testimony to the general acceptance by investors of 
the fact that conservatism has definitely succeeded the vig- 
orous slap-dash optimism of youth. The contrast between 
the General Motors of today and the General Motors of 
its years of storm and stress, reveals the ground won and 
held by steady and efficient management. 

Only a generation ago the descendants of the original 
settlers who went West in their covered wagons and beheld 
the wheel-less red man driving his poor travois over the hill 
toward oblivion were still as dependent upon horses as their 
grandfathers were. Their trading range remained the 
distance a team could travel from farm to town and back 
in a day; now, within half of an average lifetime, that range 
has been increased gradually to ten times the old distance. 
The vehicle which passes over the hill toward oblivion is 
now an outworn and outmoded automobile ready for the 
junk heap, while the man of destiny, watching its departure, 
stands beside a new and superior car, which gives him a 
better command of time and space than has ever before been 
at the disposal of millions. 

Aboriginal America, the land without wheels, with its 
trackless woods and plains, is in startling contrast to the 
America of motor cars and concrete highways; yet the most 
dynamic elements in that picture are the creation of only a 
few brief years in which the motor car has been the prime 
mover of progress. A colossal trade, with a romantic past 
and a driving spirit of enterprise, has developed swiftly from 
the early efforts to give the public all the cars it wanted. 

434 The Turning Wheel 

The part which General Motors and its older subsidiaries 
have played in the early history of the American automobile 
is full of drama. Later developments of the Corporation's 
twenty-five-year history are full of meaning for the serious 
student of American society, whether it be studied from the 
standpoint of science, finance, or sociology. General Motors' 
industrial research will probably be remembered long after 
its extraordinary earnings are forgotten, but perhaps the 
historian of the future will look most of all at the sense of 
high responsibility with which this Corporation has for 
many years managed its vast and growing business under 
the eye of the public. 



A Chronology of Significant Dates and Achievements in the 

Evolution of Self-propelled Vehicles and in the History 

of General Motors Corporation 

c. 130 B. c. Hero of Alexandria built first steam engine of record. 
c. 1250 A. D. Roger Bacon prophesied the coming of horseless carnages. 

Grand Canal of China constructed. 

1487. Lock canal constructed at Milan, Italy, on Leonardo da Vin- 
ci's plan. His geared wheel belongs to a slightly earlier period. 
c. 1560. "Carriages without horses shall go" prophecy of Mother 

c. 1600. Simon Stevin of Holland built a sailing chariot. 

1601. Delia Porta described how a steam engine like Hero's could 

be used for pumping water. 

/d/5. Solomon de Caus improved on the steam pumping engine. 
1619. English patent granted to Ramsay and Wildgoose for "draw- 
ing carts without horses." 

1629. Giovanni Branca constructed a simple steam turbine. May 
have put it in a carriage. 

1630. A wooden road laid at Newcastle, England. 

c. 1630. Fr. Verbiest in China applied steam to propulsion of a car- 
riage, by applying a steam jet to a small windmill mounted on 

164.4.. Jean Theson granted a French patent on horseless carriage 
propelled by two seated men. 

1648. Wilkins' Mathematical Magic appeared, summing up mechani- 
cal transport to date and propounding ideas for its development. 

1649. Hutsch in Germany and Richard in France made autocars pro- 
pelled by passengers. 


436 Appendix 

1663. Potter of England built a mechanical cart, propelled by mov- 
ing legs, and Dr. Richard Hooke presented to the Royal So- 
ciety a plan for a machine with which one could walk on water 
or land with "the swiftness of a crane." 

1676. Parallel wooden rails were laid down at Newcastle, England, 
to speed horse travel. 

1678. Jean de Hautefeuville of France suggested a piston-and- 
cylinder engine using gunpowder. 

1680. Christian Huyghens described the first explosion engine (gun- 

1689. Model steam engine produced on lines suggested by Sir Isaac 
Newton ; resembled Hero's in principle. 

i6go. Denis Papin invented earliest piston-and-cylinder steam en- 
gine ; applied this to a carriage and made it move. 

1695. Sir Humphrey Mackworth applied sails to his wagons on the 
trainway at his colliery at Neath, South Wales. 

1698. Thomas Savery obtained a patent for a steam engine to raise 
water: safety valve applied to it by J. T. Desaguliers. 

1705. Thomas Newcomen constructed his atmospheric steam engine, 
which came rapidly into use for pumping water from coal 
mines, making the steam engine a practical success. 

*7 2 5* Jacob Leupold described a non-condensing engine in his 
Theatrum Machinarum. 

1736- Jon- Hulls received a patent from Parliament for a steam 
boat to use a Newcomen engine. 

1738. Iron rails first used at Whitehaven, England. 

1748. Vaucanson drove before Louis XV a carriage propelled by 
clockwork springs. 

Benjamin Franklin's successful electrical jump-spark experi- 

^753- Daniel Bournoulli given prize by French Academy of Science 
for demonstrating the point at which steam power could be 
applied to navigation. 

1765. Dr. Erasmus Darwin penned a remarkable prophecy of steam- 
boats, motor cars, and flying machines. 

/7<57. Cast-iron plate rails used for coal haulage. 

1769. Capt. Nicholas Joseph Cugnot built a steam tractor for 
French artillery use, the first self-propelled vehicle constructed 
for definite use as contrasted with experimentation. 
James Watt patented, after experiments beginning in 1764, his 
separate condenser for steam engines, and other improvements 
increasing the effectiveness of steam power. 

1772. Oliver Evans, "The American Watt," began experiments in 
steam transport. 

Appendix 437 

1784. William Murdock, associate of Watt, successfully tested 
a small steam carnage now in the British Museum. 
James Rumsey began steamboating experiments on the Potomac. 

7 7#5- John Fitch began steamboating experiments on the Schuykill. 

1786. William Symington of Scotland patented a road for a steam 
carriage; not followed up. 

1787. Oliver Evans secured right to use Maryland roads for a steam 

1789. Nathan Read drove a paddlewheel steamboat at Danvers, 

Oliver Evans took out first American patent on a self-pro- 
pelled road vehicle. Patent issued by State of Maryland. 

17^4. Street patented an explosion engine in England. 

1798. Robert R. Livingston received right to navigate New York 
waters with steam vessels. 

1800. Sir George Medhurst patented an explosive (gunpowder) en- 
gine and proposed to apply this to a carriage. 

1801-02. Richard Trevithick built and drove successfully a steam 
carriage (London, England). 

1804. Oliver Evans moved through the streets of Philadelphia and 
on near-by waters a scow with wheels, the first amphibian, 
and the first American vehicle to move under its own power 
for a practical purpose. 

1804-05. John Stevens petitioned New York Legislature to encourage 

1807. Fulton's Clermont, paddle-wheel steamship, began to ply be- 
tween New York and Albany. 

1811. Blenkinsop of Leeds made the first practical application of the 
steam locomotive in transporting coal. 

1814. George Stephenson's locomotive made successful trial run, 
July 25th. 

1818. Rudolph Ackermann patented in England a tangential steering 
device originated in Munich by George Lankensperger, the 
first to work the modern principle of rounding corners. 

1819. Notice given in a London magazine of steam carriage invented 
in Kentucky. 

1820. Parish and Cecil built explosion engines using hydrogen gas. 

1821. Julius Griffiths of England patented a steam carriage, which 
was well constructed by the famous mechanic, Bramah. 

1824. W. H. James produced his first steam carriage, which aroused 
wide interest in the mechanical world. 

Burstall and Hills's steam "drag." 

1825. Two American steam carriages appeared, one by T. W. 
Walker, in Edgar County, Illinois; and one in Springfield, 

438 Appendix 

Massachusetts, by Thomas Blanchard, who received the en- 
dorsement of the Massachusetts Legislature. 
First railroad in regular operation for freight and passengers 
Stockport and Darlington, England. George Stephenson, 

London amazed by a carriage drawn by kites. 

1826. Samuel Morey patented two-cylinder poppet valve engine, 
water cooled, with some compression. 

Gridley Bryant, of Quincy, Massachusetts, ran steam-propelled 
cars on rails from his quarry to tidewater. 

1827. England entered actively into the building of steam carriages, 
with Walter Hancock and Sir Goldsworthy Gurney leading. 
Hancock is credited with being the first to use chain transmis- 
sion and to make tight metallic joints capable of withstanding 
high steam pressures. 

1828. First successful use of planet gearing Paris. 

Delaware & Hudson built first railroad track in United States. 

1829. First locomotives imported into United States. 

1830. James said to have applied the rotary principle to road work 
for the first time. 

1831. Select Committee of British Commons held hearings to review 
the progress of mechanical transport; decided steam carriages 
were not harmful to roads. Nevertheless, power vehicles were 
discriminated against for the next sixty years in England. 
First railway locomotive built in United States. 

First link of present New York Central Railroad system opened 

between Albany and Schenectady, New York. 
1833. Richard Roberts of Manchester, England, applied differential 

gearing to a steam carriage. 

Maceroni and Squire used in a steam carriage a high pressure 


Heaton Bros, famous "drag" appeared. 
1835. Dietz credited with being the first to use solid india rubber tires. 

Comte d'Asda drove a Maceroni and Squire steam carriage 

from Brussels to Paris. 

1837. Thomas Davenport brought out his rotary armature electric 

1838. William Barnet of England invented a double-acting gas engine. 
Jump coil made by Dr. C. G. Page. 

1839. Robert Anderson of Aberdeen, Scotland, drove a carriage pow- 
ered by a primitive electric motor. The first electric carriage. 

1841. First tractor, or steam "cart horse," by William Worby of 
England, appeared. 

Appendix 439 

F. Hills's steam carriage did 25 miles per hour and covered 
128 miles in one day over heavy roads. 

1844. S. Perry patented air and water cooled engines; tube ignition. 

1845. Robert William Thompson of England patented the pneu- 
matic tire. 

Dr. A. Drake's engine, the result of experiments begun in 1835, 
placed on exhibition. 

1846. The caterpillar tractor appeared. 

1848. The sedan chair, one of the oldest forms of transport, last 
publicly offered for hire in Edinburgh. 

1851. W. M. Storm patented an engine in which gas was com- 
pressed before ignition and fired by a jump spark. 

1&53' J- K. Fisher of New York built a steam carriage which ran 15 
miles per hour and remained in service two years. 

1855. Drake (United States) introduced incandescent metal as igni- 
tion method for gaseous mixtures. 

1856. Single front steering wheel first mentioned Lotz. 

Richard Dudgeon of New York City built his first steam car- 
riage; destroyed in the Crystal Palace fire, London, England. 
Duplicate, built in 1860, carried owner many miles over the 
space of several years. Still run occasionally by his son. 

1860. Lenoir of Paris perfected the gas engine, using electric spark 
ignition. Placing one in a carriage, he made a three-mile trip. 

1862. Beau de Rochas suggested the four-cycle motor. 

186$. Important patents granted to Mackenzie in England covering 
intermediate clutch or "disconnecting device," etc. 
Brothier in Paris demonstrated a compression type motor. 
Great Britain, after a long series of restrictive laws, placed on 
the statute books a law requiring a self-propelled vehicle to be 
preceded by a man carrying a red flag. 

1866. Otto and Langen brought out their improved gas engine using 
the four-cycle sequence ; patented in United States the next year. 

1867. Thompson placed pneumatic tires on steam carriages. 
Robert McLaughlin, founder of McLaughlin Carriage Co., 
predecessor of General Motors of Canada, Ltd., began car- 
riage manufacture. 

1868. Charles Ravel of Paris produced a steam tricycle with direct 

1869. Manufacture of vehicles begun in Flint, Michigan, by W. A. 
Paterson, one of the first vice-presidents of Buick Motor Com- 

1870. Julius Hock of Vienna produced a practical but very low- 
powered petroleum engine no compression. 

440 Appendix 

Todd of England brought out a small steam carriage for two 
persons which might have become a commercial success except 
for legal restrictions on use of roads. 

1871. Dr. J. M. Carhart built at Racine, Wisconsin, a steam buggy. 

1872. George B. Bray ton, an Englishman living in Boston, applied 
for a patent on a two-cylinder gasoline engine, "earliest to use 
fuel oil instead of gas." (Enc. Brit.) 

1873. George B. Selden of Rochester, New York, began experiments 
on fuels for internal combustion engines. 

In Paris, Amadee Bollee built the famous steam omnibus, 
L'Obesiante, which 22 years later entered the Paris-Bordeaux 
race and covered the route. 

1875. The State of Wisconsin offered a bounty of $10,000 to the in- 
ventors of a successful steam carriage. 

1877. Siegfried Markus of Vienna placed a petrol engine in a car- 
riage. Sometimes dated as early as 1869. 

1878. Robert McLaughlin began operations at Oshawa, Ontario. 

1879. Pioneer patent of American automobile industry applied for by 
George B. Selden. 

Wisconsin paid a $5,000 bounty (see 1875). 

1880. Lawson of England invented an engine driven by the explosion 
of gasoline. 

1881-82. In France and England, electric tricycles were brought out. 

1883. Delamare-Debouteville in France and Edward Butler in Eng- 
land came forward with motor tricycles. Butler's was driven 
by the explosions of benzoline vapors; the Frenchman's by ex- 
plosions of illuminating gas. 

De Dion, Bouton, and Trepardoux began the manufacture of 
steam cars, one of which won the Paris-Marseilles race of 
1897. By 1889 one of their steam drags had hauled heavy loads 
at 24 m.p.h. 

1884. John and Thomas Clegg built the first self-propelled vehicle in 
Michigan a four-wheeled steamer. In operation, 1885. 

The first oil motor car took the road, by Delamare-Deboute- 
ville and Malandin, Paris. The car carried a carbureter by 

1885. Gottlieb Daimler (Germany) invented his famous petrol- 
vapor engine on the Otto cycle, the first motor to be manu- 
factured in quantity. 

Fernand Forest (France) built a four-cylinder motor and in- 
stalled improved carburetion. 

Carl Benz brought out a three-wheeled motor car, using vapor 
of benzine. 

Appendix 441 

1886. Daimler applied his engine to a bicycle and developed novel 
features, notably the bubbling carbureter. 

Bcnz developed a car with improved devices for variable 

speeds, reaching 15 m.p.h. 

L. E. McKinnon, founder of McKinnon Industries, Ltd., St. 

Catharines, Ontario, began manufacturing at Buffalo, New 


1887. Daimler brought out his first car. 

Ransom E. Olds's first steamer appeared, steam being generated 
by burning gasoline. 

Radcliff Ward's electric cab appeared, followed shortly by his 
electric omnibus. 

1888-89. Leon Serpollet placed his flash or instantaneous generation 
boiler in a tricycle, then in a carriage. This boiler gave steam 
cars a new lease on life. 

1889. First American electric built by William Morrison of Chicago. 
New Departure Mfg. Co. organized at New Britain, Connec- 

1890. Olds Gasoline Engine Works organized at Lansing, Michigan, 
for $30,000. 

Leland, Faulconer & Norton Co. organized in Detroit. 

1891. Clincher rim patented by Thomas B. Jeffery. Scientific Amer- 
ican records the sale of a R. E. Olds steam carriage to the 
Francis Times Co., Bombay, India. First American self-pro- 
pelled vehicle sold for export. 

1892. Charles E. and Frank Duryea built and ran successfully the 
first gasoline car made in America. A "horseless buggy." 
Hyatt Roller Bearing Company organized, Harrison, New 

1893. Henry Ford built and ran his first car in Detroit. 

First importation of an automobile into the United States 

a Benz shown at the World's Fair, Chicago. 

Pontiac Buggy Company incorporated at Pontiac, Michigan. 

1894. First gasoline automobile driven in Detroit by Charles B. 
King, later with Olds. 

Olds began work on his first gasoline car at Lansing, Michi- 
gan, and Elwood Haynes at Kokomo, Indiana. 
Panhard and Levassor, Paris, with French rights on the Daim- 
ler motor, led the industry in design, placing the motor under 
the hood and otherwise creating a car along modern lines. 
First road-race, Paris to Rouen, 78 miles. All of the starters 
finished. Won by de Dion with an average speed of 12 m.p.h. 

1895. Olds brought out its first car powered with an internal combus- 
tion motor. 

442 Appendix 

Leland & Faulconer Mfg. Co., forerunner of Cadillac, formed 
in Detroit by Henry M. Leland. 

First American Automobile race, organized by the Times- 
Herald, Chicago, won by Duryea. 

American Motor League, first association of Automobile en- 
thusiasts, completed its organization in Chicago, on eve of 
above race. 

Three hundred cars in production in United States. 
Paris-Bordeaux race, 732 miles, won by Peugeot on a techni- 
cality. Panhard finished first. 
Selden Patent granted. 

1897. Olds Motor Vehicle Company organized. 

Application made to British Patent Office for electric self- 
starter by E. J. Clubbe and Alfred W. Southey. 
First Oldsmobile produced on display in Smithsonian Institu- 
tion, Washington, D. C. 

Reliability run from Cleveland to New York made by Alex- 
ander Winton. 

1898. Chambered spark plug patented by Frank W. Canfield, Michi- 
gan lumberman. 

Aluminum alloy introduced by Haynes. 

Electric taxicabs placed in service in New York City. 

First American sale of gasoline car delivered to purchaser 


1899. Olds Motor Works organized and began building, in Detroit, 
first factory for automobile production. 

Automobile Club of America founded. 

i goo. First automobile advertisement placed in the Saturday Eve- 
ning Post. 

First automobile show held in Madison Square Garden, New 
York City. 

National Automobile Chamber of Commerce formed. 
First American car mounted power plant in front Columbia. 
Connecticut enacted the first automobile traffic law. 
Olds Motor Works begins production of famous curved-dash 
runabout, first American car to be manufactured in quantity. 
First long-distance automobile race, New York City to Buf- 
falo, 500 miles. Of 80 cars, 42 reached Rochester, where tour 
was abandoned. 

Roy D. Chapin (Secretary of Commerce, 1932) drove Oldsmo- 
bile curved-dash runabout from Detroit to New York City 
first light car to make the trip. 

First appearance of five-passenger body designs in United States. 
David D. Buick established Buick Auto-Vim & Power Co., 

Appendix 443 

1902. Cadillac Automobile Company organized. 
Chrome-nickel and tungsten steels introduced. 

David D. Buick adapted his marine motor to a "horseless 

1903. Buick Motor Company organized; capital, $75,000. 
One-cylinder Cadillac appeared 1,895 s ld the first year. 
Ford Motor Company organized. 

Windshields, front radiators, tilted steering columns, and 
canopy tops appeared. 

A. O. Smith & Company made the first pressed steel frame. 
Association of Licensed Manufacturers formed to manufac- 
ture under Selden patent A.L.A.M. 

Oldsmobile production of curved-dash runabouts reached 
4,000. Automobile production in U. S. reached $6,250,000, 
nearly half of it being Olds. 
Packard moved from Warren, Ohio, to Detroit. 

1904. Cadillac Motor Car Company organized by merger of Cadil- 
lac Automobile Company and Leland & Faulconer. 
Oldsmobile production reached 5,508. Reorganized August, I, 

First Vanderbilt cup race, October 8th. 

Innovations: straight-eight engine, shock-absorbers, pressure 

engine lubrication, automatic carbureters. 

1905. Buick production rose to 750 cars. 
First Glidden endurance contest. 

Gus Edwards wrote his famous song "In My Merry Olds- 

The Cadillac "30" introduced. Total production of this model 
over several years, nearly 68,000. 

American Motor Car Manufacturers Association organized. 
Knight invented sleeve-valve engine. 

Innovations included magneto ignition, ignition locks, roadster 
and touring bodies. 

1906. Buick produced its first four-cylinder engine and first sliding 
gear transmission. 

Weston-Mott Company moved from Utica, New York, to 
Flint, Michigan. 

Introduction of front bumpers, vibrating horns, asbestos brake 
linings, high tension magnetos, drop steel frame, and air brakes. 

1907. Fifth Avenue coach service inaugurated, New York City, and 
metered taxicabs also appeared there. 

Oakland Motor Car Company incorporated, Pontiac, Michigan. 

444 Appendix 

Multiple-disc clutch introduced. 

Demountable rims appeared; also magnetic drag speedometers. 

McLaughlin Motor Car Co., Ltd., organized at Oshawa, 


1908. July 22d, Fisher Body Company organized. 

September i6th, General Motors Co. of New Jersey organ- 
ized by W. C. Durant and incorporated. Capital increased to 
$12,500,000 on September 29th. 
General Motors bought Buick and Oldsmobile. 
In 1908 Buick produced nearly 8,500 cars. 
Appearance of motor-driven horns, sleeve-valve engines, silent 
timing gear chains, left-hand steering, unit power plants, and 
baked enamel finish. 

Cadillac won the Dewar Trophy, London, for greatest con- 
tribution to motoring for the year interchangeability of parts. 

1909. General Motors acquired Oakland, January 8th, and Cadillac, 
July 27th ; also control of AC Spark Plug. 

General Motors paid first dividend on Preferred stock. 
Selden patent sustained by Judge Hough, United States Dis- 
trict Court. 

Here entered electric head-lights, electric generator, four-door 
bodies, oil gauges on instrument board, etc. 

IQIO. Barney Oldfield cut automobile speed record for the mile to 
40.53 seconds from a standing start at Daytona, Florida. 
Buick brought out its first six-cylinder car. 
General Motors borrowed $15,000,000 from J. & W. Selig- 
man & Company and Lee, Higginson & Company. New officers 
and directors elected. 

Harrison Radiator Co. organized at juockport, New York. 
Cadillac installed battery ignition. 

1911. Selden patent declared invalid in United States Court of Ap- 
peals, Second Circuit, Judge Noyes writing the decision. 

Burman set a new speed record at Jacksonville, Florida, in a 
"Buick bug" 20 miles in 13 minutes, 11.92 seconds. 

W. C. Durant bought Flint Wagon Works, present site of 
Chevrolet home plant. 

Little Motor Car Company formed to build a light car at 
Flint, Michigan. 

Chevrolet Motor Company of Michigan organized by W. C. 

General Motors Export Company organized, June I4th. 
Electric starting device, by C. F. Kettering, installed on Cadil- 

Appendix 445 

lac. Other innovations of the year: detachable rims, worm 
gear drive for trucks, improved electric horns. 
First automobile securities listed on New York Stock Ex- 
change, General Motors voting trust certificates, July 31, 1911. 
Buick produced its first closed car a limousine. 

/p/2. Cadillac pioneered in installing electric self-starter as standard 
equipment. Won Dewar Trophy, London, for the second time 
for this contribution, the greatest of the year. 
General Motors of Canada organized. 

Chevrolet absorbed Little and concentrated manufacturing at 

/p/J. National Automobile Chamber of Commerce organized. 

Instalment paper first used in financing automobile sales 

San Francisco. 

November i8th, C. W. Nash became president of General 

Motors in succession to Thomas Neal. 

Wire wheels first used on stock cars. Bendix drive. 

Chevrolet took over Tarrytown, New York, plant. 

1914. Cadillac pioneered the v-type, 8-cylinder high-speed engine. 
One of the early Cadillacs so equipped is on display at the 
Smithsonian Institution, Washington, D. C. 

Vacuum fuel tanks made their appearance. 
191$' Chevrolet Motor Company organized in Delaware. 

Buick brought out its first "six" and Packard, a "twelve." 

Innovations included aluminum pistons, torsional vibration 
damper, and self-locking differential. 

September i6th, General Motors declared first dividend on 
Common stock $50 a share. 

General Motors Voting Trust wound up. 
Jp/d. W. C. Durant became president of General Motors. 

October 13, General Motors Corporation was organized under 
Delaware law, to acquire all assets of the General Motors 
Company, a New Jersey corporation. 
Fisher Body Corporation organized under New York laws. 
United Motors Corporation incorporated, May i6th, a merger 
of Hyatt Roller Bearing Company, Dayton Engineering 
Laboratories Company, Remy Electric Company, New De- 
parture Manufacturing Company, Perlman Rim Corporation. 
December 31, the subsidiaries were set up as divisions of the 
General Motors Corporation. 

/p/7. Cadillac adopted as standard for war use after exhaustive tests 
at Marfa, Texas, in July. 

446 Appendix 

Buick capacity enlarged to 750 cars a day. 

General Motors Company of New Jersey dissolved, August 13. 

Steel disc wheels and steel felloes for wooden wheels appeared. 

1918. May 2d, General Motors Corporation bought Chevrolet Motor 

Capital of General Motors Corporation rose during year to 


Ethyl gasoline developed by General Motors Laboratories. 

General Motors acquired United Motors Corporation, also 

completed ownership of McLaughlin Motor Car Co., Ltd., and 

Chevrolet of Canada. 

E. I. du Pont de Nemours & Company announced acquisition 

of 27.6 percent interest in Common stock of General Motors 


Stream-line bodies and adjustable three-piece windshields ap- 

General Motors of Canada, Ltd., incorporated, Oshawa, Ont. 

1919. General Motors Acceptance Corporation organized. 
Employes Savings and Investment Fund inaugurated by Gen- 
eral Motors. 

Authorized capital stock of General Motors Corporation in- 
creased to $1,020,000,000. 

Construction of General Motors Building begun in Detroit; 
completed 1922, at cost of more than $19,000,000. 
Three fifths interest in Fisher Body purchased by General 

General Motors Institute of Technology opened with 300 
students; has grown since to 2,000 students. 

1920. General Motors Research Corporation incorporated. 
Pierre S. du Pont became president of General Motors. 

1921. Executive offices of General Motors moved to New York City. 
W. C. Durant retired from the directorate of General Motors, 
of which he had been a member since 1908. 
Inter-divisional bodies set up by General Motors to integrate 
policies and practices. 

Nickel-plated radiators and lamps. 

1922. Balloon tires introduced. 

1923. Alfred P. Sloan, Jr., became president of General Motors. 
General Motors completed its ownership of Brown-Lipe- 
Chapin Co., Syracuse, New York, manufacturers of differen- 

Cadillac adopted two-plane compensated crankshaft. 

Appendix 447 

Duco lacquer finish became standard for Oakland. 
Alemite high-pressure chassis lubrication introduced. 

1924. General Motors Proving Ground purchased near Milford, 

Four wheel brakes perfected by Buick in 1923, appeared on its 
1924 models. 

Ethyl Gasoline Corporation formed by General Motors and 
Standard Oil Company of New Jersey to market "knockless" 
motor fuel component developed by General Motors Re- 
search Laboratories. 
Oil filters introduced. 
W. S. Knudsen became president of Chevrolet. 

1925. Yellow Truck & Coach Manufacturing Company established. 
General Motors Truck transferred to it, August I3th. 
Electric transmission used on buses. 

Fisher acquired Fleetwood. 

1926. Ownership of Fisher Body Corporation completed by General 

The Pontiac car made its appearance. 

Safety glass introduced. 

Capital of General Motors Acceptance Corporation increased 

to $25,000,000. 

1927. General Motors Corporation distributed to Common stock- 
holders $134,836,081, largest sum paid to date in one year by 
an industrial enterprise. 

La Salle introduced by Cadillac. 
Chromium plating used on stock cars. 

1928. Synchro-mesh transmission introduced by Cadillac. 
Mechanical fuel feed pump brought out by AC Spark Plug Co. 

1929. General Motors sold 1,899,267 cars and trucks. 

Pierre S. du Pont retired as chairman of the board of directors 
of General Motors Corporation after service from November 
16, 1915. 

1930. Cadillac introduced America's first sixteen-cylinder engine. 
Oil cooling systems; also increased use of stainless steel. 
General Motors had outstanding 43,500,000 shares of Com- 
mon stock. 

1931. Buick brought out its first eight-cylinder engine. 
*933> No Draft Ventilation built into all Fisher bodies. 

"Knee Action" individual front wheel suspension by means of 
soft springs installed on General Motors cars. 


List of Officers and Directors of General Motors Company 
(New Jersey) and General Motors Corporation (Dela- 
ware) from time of commencing business to date. General 
Motors Corporation succeeded General Motors Company 
as of August I, 1917. In preparing this list the two com- 
panies have been treated as one. 

* indicates still holding office (December 31, 1933.) 

Thomas Neal Nov. 19, 1912 Nov. 16, 1915 

Pierre S. du Pont Nov. 1 6, 1915 Feb. 7, 1929 

Lammot du Pont Feb. 7, 1929 * 


George F. Baker, 1 July 15, 1920 * 

H. M. Barksdale June 27, 1918 Nov., 1918 

H. H. Bassett May i, 1919 Oct. 17, 1926 

F. L. Belin Nov. 16, 1915 Aug. I, 1917 

A. M. Bentley May 12, 1910 Nov. 15, 1910 

A. G. Bishop Nov. 1 6, 1915 * 

Joseph Boyer May 15, 1911 Nov. 16, 1915 

Albert Bradley Nov. 9, 1933 * 

Anthony N. Brady Nov. 15, 1910 Sept., 1913 

Arthur W. Britton Sept. 22, 1908 Oct. 20, 1908 

Donaldson Brown Dec. 30, 1920 * 

Arthur P. Bush Nov. 15, 1910 Nov. 23, 1910 

E. R. Campbell April I, 1910 Nov. 15, 1910 

Herbert L. Carlebach Nov. 15, 1910 Nov. 23, 1910 

Walter S. Carpenter, Jr. Feb. 10, 1927 * 

Arthur Chamberlain May 13, 1920 Jan. I, 1923 

(accepted 4-11-23) 

W. P. Chrysler June 27, 1916 Mar. 25, 1920 

Emory W. Clark Nov. 23, 1910 June 27, 1916 

R. H. Collins July 27, 1916 June 30, 1921 

Curtis C. Cooper Aug. n, 1927 Apr. 30, 1930 

a Son of George F. Baker, Sr. (1840-1931.) 


George E. Daniels 
W. L. Day 
H. F. du Pont 
Irenee du Pont 
Lammot du Pont 
Pierre S. du Pont 
W. C. Durant 

William M. Eaton 

Charles T. Fisher 
Fred J. Fisher 
Lawrence P. Fisher 
William A. Fisher 

Andrew H. Green 

Harry G. Hamilton 
Geo. H. H annum 
A. B. C. Hardy 
J. A. Haskell 
C. R. Hatheway 
Henry Henderson 
Robert Herrick 
F. W. Hohensee 

L. G. Kaufman 
Charles F. Kettering 
Schuyler B. Knox 
William S. Knudsen 

W. C. Leland 
W. C. Leland 
Richard Lukeman, Jr. 

J. H. McClement 
Sir Harry McGowan 
Benjamin F. McGuckin 
R. S. McLaughlin 
R. S. McLaughlin 
William McMaster 

Benjamin Marcuse 
W. J. Mead 
Edwin D. Metcalf 
James D. Mooney 
Junius S. Morgan, Jr. 
C. S. Mott 
M. J. Murphy 


Sept. 22, 1908 
June 27, 1916 
Feb. 21, 1918 
Feb. 21, 1918 
Nov. 17, 1918 
Nov. 16, 1915 
Oct. 20, 1908 


Sept. 25, 1924 
June 30, 1921 
Sept. 25, 1924 
Feb. 10, 1927 

Oct. 19, 1909 
Apr. 19, 1922 
Apr. 19, 1922 
Nov. 16, 1915 
Oct. 20, 1908 
Oct. 20, 1908 
Nov. 18, 1913 
June 27, 1918 

Nov. 16, 1915 
Dec. 30, 1920 
May, 12, 1910 
Apr. 1 6, 1924 

May 12, 1910 
June i, 1916 
Nov. 15, 1910 

Nov. 15 1910 
May 13, 1920 
Nov. 15, 1910 
May 12, 1910 
Nov. 7, 1*918 
May 13, 1920 

Sept. 22, 1908 
Oct. 20, 1908 
Mar. 9, 1911 
Nov. 8, 1923 
Sept. 30, 1925 
Nov. 18, 1913 
Nov. 23, 1910 

Dec. 1 6, 1908 
May 13, 1925 



Apr. 20, 1921 
Oct. 20, 1908 Nov. 23, 1910 

Nov. 23, 1910 Nov. 18, 1913 

March 20, 1910 

May 13, 1925 

May 13, 1925 

Sept. 9, 1923 

Nov. 15, 1910 

Nov. 15, 1910 

Nov. 16, 1915 

Jan. 13, 1921 



Nov. 15, 1910 


Nov. 15, 1910 

July 23, 1917 

Nov. 23, 1910 

Apr. 28, 1920 

Nov. 23, 1910 

Nov. 15, 1910 


May 5, 1930 

Dec. 16, 1908 

Nov. 15, 1910 

Nov. 16, 1915 



Nov. 16, 1915 

450 Appendix 

C. W. Nash Nov. 19, 1912 Sept. 26, 1916 

Thomas Neal Nov. 23, 1910 July 27, 1916 

Fritz Opel May 8, 1929 * 

DeWitt Page Apr. 18, 1923 * 

John L. Pratt Apr. 18, 1923 

Seward Prosser July 15, 1920 * 

S. F. Pryor Nov. 16, 1915 June 27, 1916 

Arthur B. Purvis June 2, 1930 * 

J. J. Raskob Nov. 16, 1915 * 

George Reichert, Jr. Nov. 15, 1910 Nov. 23, 1910 

H. H. Rice Apr. 19, 1922 May 13, 1925 

Henry Russel Dec. 16, 1908 Oct. 19, 1909 

C. H. Sabin Nov. 16, 1915 Jan. 8, 1917 

Alfred P. Sloan, Jr. Nov. 7, 1918 * 

Fred L. Smith Dec. 16, 1908 Aug. 10, 1909 

John T. Smith Oct. 19, 1909 Nov. 15, 1910 

John T. Smith Mar. 25, 1920 * 

Edward R. Stettinius, Sr. July 15, 1920 Sept. 3, 1925 

Jas. J. Storrow Nov. 15, 1910 June 27, 1916 

Albert Strauss Nov. 15, 1910 June I, 1916 

A. H. Swayne Jan. 13, 1921 * 

Nicholas L. Tilney Nov. 15, 1910 Nov. 16, 1915 

Edward VerLinden Aug. 22, 1917 Apr. 19, 1922 

James N. Wallace Nov. 23, 1910 Nov. 12, 1912 

F. W. Warner June 27, 1916 Sept. 22, 1921 

Jacob We rtheim Mar. 9, 1911 Nov. 16, 1915 

George Whitney Sept. 25, 1924 * 

A. H. Wiggin Nov. 16, 1915 Nov. 21, 1916 

Wm. H. Woodin July 15, 1920 Aug. n, 1927 

C. M. Woolley July 15, 1920 * 

Owen D. Young July 15, 1920 * 

K. W. Zimmerschied Dec. 30, 1920 Apr. 18, 1923 


George E. Daniels Sept. 22, 1908 Oct. 20, 1908 

Wm. M. Eaton Oct. 20, 1908 Nov. 23, 1910 

Jas. J. Storrow Nov. 23, 1910 Jan. 26, 1911 

Thomas Neal Jan. 26, 1911 Nov. 19, 1912 

C. W. Nash Nov. 19, 1912 June I, 1916 

W. C. Durant June I, 1916 Nov. 30, 1920 

Pierre S. du Pont Nov. 30, 1920 May 10, 1923 

Alfred P. Sloan, Jr. May 10, 1923 * 

Appendix 451 


H. H. Bassett May I, 1919 Oct. 17, 1926 

A. G. Bishop Nov. 16, 1915 May i, 1930 

Albert Bradley May 9, 1929 

Donaldson Brown Dec. 30, 1920 * 

W. P. Chrysler Dec. 14, 1916 Mar. 25, 1920 

Emory W. Clark Nov. 21, 1911 June 27, 1916 

R. H. Collins Aug. 3, 1917 June 30, 1921 

W. L. Day Dec. 14, 1916 Aug. 13, 1925 

W. C. Durant Oct. 20, 1908 Nov. 16, 1915 

Charles T. Fisher May 12, 1927 * 

Fred J. Fisher Feb. 9, 1925 * 

Lawrence P. Fisher Feb. 9, 1925 * 

William A. Fisher Feb. 10, 1927 * 

A. R. Clancy May 9, 1929 May 6, 1931 

R. H. Grant May 9, 1929 * 

George H. Hannum June 30, 1921 Aug. 13, 1925 

A. B. C. Hardy June 30, 1921 Aug. 13, 1925 

J. A. Haskell June 27, 1918 Sept. 9, 1923 

F. W. Hohensee May i, 1919 Jan. 13, 1921 

0. E. Hunt May 9, 1929 * 

Charles F. Kettering Jan. 13, 1921 * 

William S. Knudsen Apr. 22, 1924 Oct. 16, 1933 

Exec. Vice-Pres. Oct. 16, 1933 * 

W. C. Leland Dec. 14, 1916 July 23, 1917 

R. S. McLaughlin Dec. 31, 1918 * 

W. J. Mead Oct. 20, 1908 Nov. 18, 1913 

James D. Mooney Nov. 16, 1922 

C. S. Mott Nov. 21, 1916 * 

C. W. Nash July 12, 1912 Nov. 19, 1912 

Thomas Neal June 27, 1916 July 27, 1916 

DeWitt Page Apr. 19, 1923 * 

John L. Pratt Nov. 16, 1922 * 

J. J. Raskob Dec. 31, 1918 May 9, 1929 

1. J. Reuter May 9, 1929 Oct. 21, 1933 
H. H. Rice July 10, 1919 Aug. 13, 1925 

Alfred P. Sloan, Jr. Dec. 31, 1918 May 10, 1923 

Fred L. Smith Dec. 16, 1908 Aug. 10, 1909 

John T. Smith Mar. 25, 1920 * 

452 Appendix 

E. R. Stettinius, Jr. 2 May 6, 1931 Dec. 31, 1933 

E. T. Strong Feb. 10, 1927 May 4, 1932 
Alfred H. Swayne Jan. 13, 1921 * 

Edward VerLinden Aug. 23, 1917 Apr. 25, 1922 

F. W. Warner Dec. 14, 1916 Sept. 22, 1921 
C. E. Wilson May 9, 1929 * 

K. W. Zimmerschied Dec. 30, 1920 Apr. 19, 1923 


Benjamin Marcuse Sept. 22, 1908 Oct. 20, 1908 

C. R. Hatheway Oct. 20, 1908 Jan. 26, 1911 

Standish Backus Jan. 26, 1911 Nov. 21, 1916 

T. S. Merrill Co. Nov. 21, 1916 Aug. 3, 1917 

T. S. Merrill Corp. Aug. 3, 1917 * 


Benjamin Marcuse Sept. 22, 1908 Oct. 20, 1908 

C. R. Hatheway Oct. 20, 1908 Nov. 21, 1911 

James T. Shaw Nov. 21, 1911 Nov. 21, 1916 

H. H. Rice Nov. 21, 1916 July 10, 1919 

M. L. Prentis July 10 1919 * 


James Hall Nov. 3, 1910 Jan. 12, 1911 

C. A. Magee Jan. 12, 1911 July 12, 1912 

W. H. Alford July 12, 1912 Sept. 26, 1916 

M. L. Prentis Sept. 26, 1916 July 10, 1919 

Frank Turner July 10, 1919 May 10, 1928 

E. W. Proctor May 10, 1928 * 

2 Son of E. R. Stettinius. (1865-1925) See p. 450. 

General Motors at the Century of Progress Exposition 

As THE Century of Progress International Exposition at Chicago coin- 
cided with the twenty-fifth anniversary of General Motors, the Cor- 
poration decided upon active participation in the Exposition, where it 
became the largest exhibitor. The official Exposition folder, issued in 
advance of the opening, contained a picture of the General Motors 
Building erected there, and this description: 

General Motors' quarter of a century of important participation in 
the industrial and economic progress of America will be dramatized 
and typified by the Corporation's exhibit at the Exposition. The Gen- 
eral Motors Building, designed by Albert Kahn, noted Detroit archi- 
tect, and decorated by artists and sculptors of international fame, 
dominates the brilliant skyline of the Exposition with its 177-foot 
tower. The building will be filled with displays which adequately pic- 
ture the extent to which the products of General Motors reflect its 
life-long adherence to the ideal of progress. 

This building, boldly modern in architecture, was the tallest in the 
Exposition grounds, the tower reaching an elevation of 177 feet, while 
the ground dimensions of the steel-and-armor ply structure were 454 
by 306 feet. It contained more than 950 tons of steel. The armor ply 
was composed of five thicknesses of wood covered on both sides by metal 
sheets. The walls were almost entirely glass, the semi-circular front of 
the building consisting of huge plate glass show windows. Each of these 
bays was n feet high and 48 feet long, and was formed by three sec- 
tions of plate glass. Over each bay appeared the name of a General 
Motors division. 

The interior was divided into seven main rooms: the entrance hall, 
two large display rooms on either side, the Chevrolet assembly room, 
the truck display room, the accessory display room, and the Little 

In the central entrance hall, which was 118 feet long, 55 feet 
wide, and 50 feet high, art objects were exhibited in a dignified set- 
ting on a scale worthy of the largest art museum. There stood the heroic 
statue of a workman by Carl Milles, the famous Swedish sculptor, who 
caught in this impressive work the spirit of the precision worker. Scenes 


454 Appendix 

depicting various manufacturing processes occupied the spaces on the 
side walls between the huge columns, serving as backgrounds for life- 
sized figures of workmen in action. Carl Hallstammer is the famous 
artist who carved these figures out of huge blocks of laminated pine. 
Nine mural marquetries in wood inlay by Matt Faussner, of Munich, 
decorated the display room. Each of these marquetries measures six by 
twelve feet, the largest area ever covered by workers in this delicate art. 

Around the gallery of the Chevrolet assembly room were hung painted 
panels on which were depicted scenes from the industrial activities of 
various states. In this assembly room, factory operations proceeded as 
practised by Chevrolet in its assembly plants in many cities. Onlookers 
saw here, for the first time in any exposition, the elaborate synchroniza- 
tion of effort through which the automobile takes its finished shape, until 
from a multitude of parts a complete automobile is ready to run on its 
own power. This exhibit contained an automobile and body assembling 
plant, the latter revealing the exquisite work of the Fisher organization. 

The opening of the General Motors Building at the Exposition on 
May 24, 1933, struck a new note in the adaptation of modern ideas of 
form and decoration to the requirements of industrial construction. The 
architect, Albert Kahn of Detroit, will be long remembered for his 
work on the structures of that city, including the golden Fisher Tower 
in Detroit and those which he did for the University of Michigan group 
at Ann Arbor, Michigan. At Chicago Mr. Kahn had to meet new prob- 
lems, providing for the utilitarian housing of operating exhibits as well as 
the display of General Motors products, ranging from automobiles and 
Diesel engines to the smallest ball bearings. Among the special installa- 
tions was a Little Theater with a capacity of 235 persons, where visitors 
were entertained with General Motors films. Another unusual feature 
to be accommodated was a research laboratory exhibit where General 
Motors engineers revealed some of the scientific aspects of automobile 
production. Here the most vivid display was an artificial rainbow, illus- 
trating on a grand scale the use of the spectroscope whose sensitivity in 
minute measurements contributes to the long life and easy operation of 
the modern motor car. 

In designing a building for these requirements, the architect had to 
remain within the general architectural and landscaping plan specified 
for all the structures in the Exposition, under which all the buildings 
were kept in harmony with one another. The location, between Lake 
Michigan and Leif Erikson Drive, was one that loaned itself excep- 
tionally well to the elaborate landscaping undertaken. 

The color scheme for the whole Transportation Group, of which the 
General Motors Building was a member, followed a daring use of 
gray, bright orange, red, blue, and silver. Flood-lighting in changing 
colors made the Joseph Urban color scheme as vivid by night as by day. 

The Craftsman's Guild awards of the Fisher Body Company took 
place at the Exposition in August. 

When the General Motors Exposition Building was dedicated, Rufus 
M. Dawes, president of the Century of Progress, told the assembled 

Appendix 455 

notables that but for General Motors encouragement the work could 
hardly have gone forward. Mr. Dawes said, in part: 

I cannot tell you what encouragement we received when we came 
into contact with the General Motors Corporation through W. S. 
Knudsen, president of Chevrolet. Instead of surrendering in the face 
of difficulties, General Motors saw in them only opportunity. Instead 
of extending a casual and careless support, it announced in July, 1931, 
its intention to erect a great building, and to establish a modern 
assembly line on our exposition grounds. From the moment of this 
announcement, there has never been a doubt of the success of the 
Century of Progress Exposition. 

Mr. Dawes added another high compliment when he stated that 

So far as I can learn, we hold this meeting in the greatest tem- 
porary building ever erected by a private corporation in any world's 
fair, and shall witness exhibits more expensive and more informa- 
tive than have heretofore been made by any company as part of a 
great exposition. 


Here are grouped short histories of a number of General 
Motors subsidiaries and affiliates not treated in detail else- 
where. In Appendix V are brief accounts of certain com- 
panies now inactive or discontinued. 


IN THE Gay 'Nineties the question, "What is a spark plug?" had no 
answer, for the internal combustion engine was still being fired by means 
of a hot tube, a bolt of metal, one end extending into the gas chamber 
of the cylinder, the other, outward, so that it could be heated. One can 
well imagine the difficulties of heating the tube and keeping it hot. The 
first spark plugs were intended of course to deliver an igniting spark to 
the fuel at just the right time, but they fell short of their purpose, so 
far as to compel the sardonic query, "Why is a spark plug?" The 
querist, no doubt, was one of those who had tasted experience with these 
early contraptions, "bought by the peck and thrown away by the bushel." 

The AC Spark Plug Company was founded by W. C. Durant and 
Albert Champion at Flint, Michigan, in 1908, with Mr. Champion as 
president. It became a subsidiary of General Motors when Mr. Durant 
sold his interest in it to the Corporation in 1910-11. Mr. Champion 
was a tireless worker, constantly improving his product and adding new 
ones. From boyhood he had been connected with transport. He had raced 
on bicycles, and other foot-driven cycles, motorcycles, and automobiles, 
having also acquired a mechanic's training in the case of the automo- 
bile. In bicycling he stood as world's champion, contesting both in Eu- 
rope, and the United States, while in automobile racing he ranked among 
the foremost, his last feat being nothing less than the winning of 18 
races in France. After this he returned to America and began making 
spark plugs at Boston in 1905. Three years later he removed to Flint. 
His greatest pride was that his product had played an important part 
in making safe the flights of Lindbergh, Chamberlin, Byrd, and other 
long-distance flyers. 

The company started its operations in a corner of the Buick build- 
ing with 15 employees turning out a few hundred spark plugs per day. 
The original quarters in Flint were soon outgrown, and a two-story 
building was erected, the first on the present site. In 1912 the company 
had a production of 2,000 spark plugs a day and was working at 
capacity. Car and truck production in the United States that year was 
only 378,000, and the total number in the country but 902,000. As the 


Appendix 457 

business grew, new buildings were added and increased effort made to 
meet changes in engine design. The research department kept pace with 
requirements and went ahead to develop new products. The AC air- 
craft plug was one of these products, ready when the need came. It 
anticipated the entry of the United States into the World War in 1917, 
was soon available, and subsequently was furnished the government at 
the rate of 50,000 a day for Liberty, Wright, and Hispano-Suiza engines. 
The Flint Faience & Tile Company was organized in 1921 by AC 
because of the relations of its products to the porcelain industry. 


In 1922, after previous trial and error, followed by two years of 
research, the model B speedometer was put on production. Within three 
years AC became the world's largest makers of speedometers. 

The growth of the plant continued as new products were made avail- 
able until the buildings covered sixteen acres of the twenty-acre site. 
Employees increased to 4,000, the output of spark plugs to more than a 
quarter million daily, and of other units to more than seventy thousand 
representing nineteen newer products. AC became the largest business 
of its kind anywhere. 

AC spark plugs are made also at St. Catharines, Ontario; abroad at 
Clichy, in Paris; and at Birmingham, England. The start of the overseas 
business was made in France in 1922 by the acquisition of a spark plug 
company operating a plant near Clichy. Within six months AC spark 
plugs were being made there with machinery and clay shipped from 
Flint. A modern plant was then built at Clichy. Here the clay from 
Flint is made into insulators by the same processes as used in the home 
plant; shell and electrode operations, assembly and inspection are similar. 

458 Appendix 

In 1928 there were about 200 employees, with M. Edouard de May as 
chief engineer in charge of manufacturing. This French company, the 
Societe des Bougies AC Titan, now a unit of General Motors 
(France), supplies spark plugs and several other AC products to auto- 
mobile owners in a score or more of European and French-controlled 
countries, in addition to supplying AC products as original equipment 
for over two dozen foreign makes of automobiles. In the countries be- 
ing served, there were above 1,640,000 car registrations. 

The organization in Birmingham is known as the AC Sphinx Sparking 
Plug Company, Ltd. Whether spark plug, bougie or sparking plug, it is 
all the same to AC. The English company, also acquired in 1921, was 
immediately reorganized and the plant was rebuilt. In 1928 there were 
about 200 employees under the management of Mr. Norman F. Stock- 
bridge. From this plant AC products are supplied to wholesalers and deal- 
ers in the British Isles, Germany, the buffer states on the east, the 
Scandinavian countries, Holland, Egypt, Iraq, Turkey, Persia, and 
Australasia. Some thirty-odd manufacturing companies also specify AC 
equipment. There were over 2,560,000 car registrations in the countries 
being served. 

On the death of Mr. Champion in 1927, Mr. Basil W. de Guichard, 
long associated with him, succeeded to the presidency and Mr. Harlow 
H. Curtice to the vice-presidency. Two years later Mr. Curtice became 
president and general manager. He was then only thirty-six years old, 
but his service with the company dated from 1914, shortly after which 
he had become an executive believed to have been the youngest in the 
industry. In October, 1933, Mr. Curtice became general manager of 
Buick Motor Company, being succeeded as president and general man- 
ager of AC by T. S. Kimmerling, formerly general manager of Guide 
Lamp and more recently assistant to C. E. Wilson, vice-president of 
General Motors Corporation, in Detroit. In 1927, Mr. Taine G. Mc- 
Dougal, ceramic engineer of the company, was made a vice-president, 
with supervision over the AC plants in France and England. 

Manufacture of all AC products, aside from plugs themselves, is now 
concentrated at the company's East Side plant in Flint (formerly the 
Dort Motor Car Company plant), resulting in increased manufacturing 
efficiency and production economies. From a production as well as an 
engineering basis, therefore, AC is now virtually divided into two units, 
the spark plug division, and the equipment group. 

During the past decade as new products were added, manufacture 
was carried on in what at the time was the location least likely to inter- 
fere with other products in process. On an over-all plant basis, however, 
the arrangement left much to be desired as production rates increased. 

The complete re-arrangement of AC's facilities recently, under the 
direction of Mr. Harlow H. Curtice, has corrected these conditions. 
One of the most important results is that manufacturing operations, 
which formerly were scattered through three plants with a total floor 
space of some 424,000 square feet, are now occupying only 251,050 
square feet, a net saving in floor space alone of better than 40 percent. 

Appendix 459 

At the same time production capacity of individual product set-ups 
has actually been increased by the addition of new equipment, better 
handling methods, etc., and production capacity in most cases has vir- 
tually been doubled, as a result. 

In developing the spark plug and keeping abreast of development of 
the engine, the company has made many noteworthy contributions to 
automotivation. Among these are listed: 

One-piece patented spark plug and patented machinery used in its 
construction. A big advantage of the one-piece spark plug is that 
it is permanently sealed against compression leakage. 

Welded side electrode, a patented process, which ensures perfect heat 

Isovolt electrode, made of a special alloy developed by the company. 
Contributes to easier starting, and longer electrode life. Manufac- 
turers of radio appliances find use for this material in radio tubes. 

Unglazed insulator tip. An exclusive AC provision against encrusting 
a common cause of spark plug trouble. 

A "heat range" line of spark plugs, in which each plug has its indi- 
vidual heat characteristic. This makes it possible to choose the 
precise type spark plug that will function best for any particular 
driving or engine condition. One of the most important develop- 

A spark plug of only 1 4-millimeter thread size. 

A spark plug tester for mechanics the only "shop" tool that will 
accurately indicate the condition of a spark plug. 

Surface combustion principle in firing electric insulators in tunnel 
kilns, an invention which permits equal and controllable heat to 
every unit. 

Only spark plugs were made until the year 1919. Besides the spark 
plug development recited, the company is credited with other contribu- 
tions to the industry, among these, the fuel pump, first introduced by 
AC about 1927, and now found as standard equipment on most cars. 
It has improved fuel feed systems from the standpoint of better operat- 
ing performance and has enabled car manufacturers to effect a material 
saving in the cost of their product. Some eight million of the AC pumps 
are now in use. 

Among later developments is the AC carbureter intake silencer, also 
standard equipment, developed in 1930 and since brought to a high 
state of perfection. It is built in combination with the air cleaner. 

In the manufacture of instruments and instrument board panels for 
the automobile, AC is a leading factor. 

In the research and control laboratories both manufacturing and con- 
trol processes are worked out. Chemical, metallurgical, and ceramic re- 
search go on continually. The ceramic laboratory has direct control of 
every stage in the manufacture of porcelain insulators, from the re- 
ceiving of the clay and other raw materials, through the stages of core- 
making to the removal of the finished product from the tunnel kiln. The 

460 Appendix 

materials first pass through machines for mixing and grinding and are 
hydrated to a pulp called slip. The slip is pumped to filter presses, where 
a cake is made under high pressure in the course of three hours or so 
and then laid aside to age. In time the cakes are cut up and worked with 
a wedging machine, or kneading table, into the form of a circular clay 
column. A drying process then turns the column into a loaf of clay, 
which is fed to a press and packed into metal cylinders. Another type of 
press, the throwing machine, receives the cylinders, and through a die 
forces them out, giving them their first appearance as an insulator, the bottle 
shape. The "bottles" move along in trays to a dryer, come out, and are 
loaded into metal boxes, either for storage or for transfer to the turning 
lathes upstairs. The lathes make all the different styles of spark-plug 
cores. After drying and reaming, the plugs go to the glazing machines 
to receive not only the glaze but to be stenciled with the label AC. 
Special trays then come into use, holding the glazed cores en route to 
the firing. Mention has been made of the tunnel kilns as an AC develop- 
ment. They were designed by Mr. McDougal and have various heating 
and cooling zones. The cores from the kilns are conveyed to the proper 
departments to receive the work necessary to complete and assemble the 
spark plug, which includes the insertion and cementing of contact wires, 
fitting in a metal casing, packing, etc. 

Products: AC spark plugs, AC Miko aviation plugs, radio plugs, 
spark plug testers, spark plug cleaning machines, speedometers, oil- 
pressure gauges, ammeters, thermo gauges, gasoline gauges, techometers, 
instrument board panels, locker doors, carbureter intake silencers, oil 
filters, air cleaners, crankcase breather air cleaners, mechanical wind- 
shield wipers, fuel pumps, vacuum pumps, combination fuel and vacuum 
pumps, gasoline strainers, air-pressure gauges, ride-regulator controls, 
lubrometers, die castings, die-cast machines, flexible shafts and cables, 
Remo gum solvent injectors and fluid, Reflex warning signals, Flint 
Faience, Flintcraft, and Vitocraft tiles. 


Before the purchase of the Allison Engineering Company by General 
Motors Corporation early in 1929, the company had been owned and 
operated by Mr. James A. Allison, with Carl G. Fisher, a founder and 
original owner of the Prest-O-Lite Company. They also built the In- 
dianapolis Motor Speedway in 1913 and for the purpose of encouraging 
automobile racing, organized the Indianapolis Speedway Race Team. 
Out of whose activities grew the present company. 

Allison Engineering Company was organized in 1915 as Allison 
Experimental Company for the principal purpose of manufacturing fine 
racing automobiles and to experiment in automotive design and con- 

The first president of the company, James A. Allison, has been suc- 
ceeded by N. H. Gilman, who also serves in the capacity of general 

Appendix 461 

manager and chief engineer. The name was changed to Allison Engineer- 
ing Company in 1920. 

With the entry of the United States into the war in 1917 the facilities 
of the Allison Experimental Company were offered for war purposes. 
The first Liberty Motor was constructed in this plant for one of the 
principal contractors on the production of these engines after which a 
complete complement of tools was supplied them. 

Several contracts were entered into with the War Department on 
experimental tractor work with a drafting force of two hundred em- 
ployees under the supervision of Army engineers. At the close of the 
war, the Navy Department desiring to carry on some of the projects 
which had been contemplated for the Bureau of Aeronautics, this com- 
pany designed and built a number of special reduction gears for air- 
craft engines. Several modifications of the Liberty engine were also made 
in the years following the war, among them the inverted engines which 
were used on the "Good-Will" flight through South America. More 
than two thousand motors were re-worked in this plant for the Army 
Air Corps and some of the earlier transport companies. 

For the past fifteen years the company has confined itself entirely to 
the aeronautical field with the exception of development work now being 
conducted in connection with some of the automobile divisions toward 
the adoption for car use of Allison steel-back bronze-lined bearings. 
This type of bearing was originated by the company several years ago 
for aircraft engines and constitutes one of the outstanding achievements 
in the aeronautical field of endeavor. 

Various types of aircraft engines have been designed and built by the 
Allison Engineering Company for both the Army and Navy air services. 
In the airship field this company designed and built the propeller reduc- 
tion and reverse gears for the Navy airship Shenandoah, also the drive 
units for the Akron and Macon. 

At present a new series of liquid cooled v-type engines of 750-1000 
h.p. is being developed. 

Products: Aircraft power plant engineering, aviation engines, bear- 
ings, superchargers, gears and mechanical equipment. 


ON OCTOBER 22, 1908, Mr. Edward A. Halbleib and his brother Mr. 
Joseph C. Halbleib organized the Rochester Coil Company. They be- 
gan business with three employees, manufacturing coils and repairing 
electric motors. The next year they undertook the manufacture of 
generators for automobile lighting systems, in which the prospects were 
so bright that the company was reorganized September, 1909, as the 
North East Electric Company, capitalized at $125,000. The first North 
East system, consisting of a combined starter and generator, was placed 
in production in 1911. Growth of the company was rapid. The capital 
structure was increased from $1,000,000 to $3,000,000 in 1919, and to 
$6,000,000 the next year. 

462 Appendix 

One of the most important of North East's patents was applied for in 
September, 1910, and issued on July 30, 1912, for an electric pneumatic 
starting device. A most successful self-starter built by North East was 
the single unit starter-generator used on Dodge from 1913 to 1925, and 
also on Reo, Franklin, and other cars. 

In 1926 the company produced more than 2,000,000 units of various 
kinds. In 1929 its operations occupied 700,000 square feet of floor space, 
and it had become the third largest employer of labor in Rochester. 
The service organization under North East Service, Inc., formed in 
1921, included eleven branches and 1,800 service stations throughout the 
world, the company maintaining a service school to train salesmen and 
service men for promoting the sale and installation of its products. In 
conjunction with this training it developed the use of films in industrial 
educational work, using animated technical pictures from 1917 on. The 
line of products had enlarged to include starters, generators, ignition 
systems, horns, speedometers, cowl-board attachments and novelties, and 
an electrically operated typewriter. Besides its Rochester properties, the 
company operated the manufacturing branches in Toronto and Paris 
and distributor)' branches in principal centers in the United States and in 
London and Antwerp. 

On October n, 1929, the North East Electric Company was acquired 
by General Motors Corporation, and a year later was consolidated 
with Delco-Light Company to form Delco Appliance Corporation. The 
Delco line of farm power and lighting plants was transferred to Roches- 
ter, and certain lines of automotive production were withdrawn from it 
and transferred to Anderson, Indiana. Mr. Edward A. Halbleib became 
president and general manager of Delco Appliance. 

From that time there has been a new stage of the development of prod- 
ucts at Rochester, no less rapid than the preceding. Delco fans, Delco 
vacuum cleaners, Delco radio, and Delco heat oil burner products fol- 
lowed rapidly; also new lines of Delco-Light plants, and electric pumps. 
These show how the Corporation has expanded to supply urban dwellers 
at the same time as it improves on well established products in the rural 
field, giving added emphasis to the phase, "Delco Appliances for homes 

Products: Delco-Light electric power and light plants; Delco water 
pumps and Delcogas individual gas-producing units for domestic use ; 
Delco electric fans; Delco radios; Delco vacuum cleaners; Delco and 
North East blowers and small motors for commercial purposes; Delco 
Heat oil burners and Delco Heat automatic oil furnaces; North East 
speedometers and automobile heaters; Delco radio speakers and "B" 
power units; Delco radio dynamotors; Delco steam automobile heaters. 


THE present Delco Products Corporation is the outgrowth of an 
organization founded in 1909 by Edward A. Deeds and Charles F. Ket- 
tering. These two men, with a small barn on Central Avenue in Dayton, 

Appendix 463 

Ohio, for a workshop, constructed the first practical self-starter for use 
on automobiles. 

The first order for the starters was secured before the two men had 
even thought about a name for the organization; it was then that they 
decided to call their new shop the Dayton Engineering Laboratories 
Company. Later in the same year Mr. Kettering decided that the name 
was too long, so he shortened it into the trade name of DELCO. 

In 1911 Delco was moved to the Beaver Power Building, located at 
Fourth and St. Clair streets. Later the two men moved their growing in- 
dustry to the present location on First Street. 

In May, 1916, the Dayton Engineering Laboratories Company became 
a subsidiary of the United Motors. By this time Delco had become a 
well established trade name and Delco starters and ignition systems 
were used on nearly all of the leading automobiles. On December 31, 
1918, the United Motors group was purchased by General Motors Cor- 
poration. Delco has continued as a part of the General Motors family 
since that date. Mr. B. D. Kunkle is president and general manager. 

On the removal of the automotive electrical equipment work to the 
Remy plant at Anderson, Indiana, in 1926, Delco Products Corporation 
was formed. Efforts were then directed to the manufacture of a shock 
absorber; the result has given Delco a preeminent position in that new 
line, as well as in its older lines of fractional horsepower motors for re- 
frigeration, pump, and washing-machine use. 

The plant has 851,000 square feet of floor space and occupies nearly 
20 acres of ground. Over 3,000 employees are regularly engaged in the 
production of electric motors and hydraulic shock absorbers. 

Products: Delco-Lovejoy hydraulic shock absorbers for automobiles, 
trucks, and busses; electric motors for refrigerators, pumps, washing 
machines, ironers, oil burners, and air-conditioning equipment; coil 
springs for engine valves, clutches, refrigeration unit mountings; or any 
applications where coil springs are required. 


THE above name of this organization was adopted when the starter and 
ignition work done by the Dayton Engineering Laboratories Company 
was transferred to the Remy plant at Anderson, Indiana, in 1926. The 
Remy Electric Company then took the new corporate name. The manu- 
facture of the Delco battery was begun in 1928. The next year, by con- 
solidation of the Butler Manufacturing Company plant at Indianapolis 
with Delco-Remy plants, the manufacture of Bu-Nite pistons was 
brought to Anderson. Delco-Remy for a time made Delco-Lovejoy shock 
absorbers, since taken over by Delco Products Corporation. Its lamp busi- 
ness was taken over by Guide Lamp Corporation. Delco-Remy operates 
a battery plant in Muncie, Indiana. Mr. F. C. Kroeger is president and 
general manager of Delco Remy and its allied companies. 

The Dayton Engineering Laboratories Company was organized in 
Dayton, Ohio, in 1909 to build ignition and generating equipment for 

464 Appendix 

automotive and marine uses but one of the most important dates in the 
history of Delco-Remy Corporation is 1912 for in that year the first 
cars were placed on the market equipped with the Delco Starter, an 
electric starting motor which was to do away, for all time, with hand 
cranking. During the World War, Delco did notable work on ignition 
for the Liberty Motor and other government projects. From the first, 
Delco had established an enviable reputation for building quality prod- 
ucts. And out of the Delco and Remy organizations have come men to 
take high position in other General Motors undertakings. 

Products: Accelerator pedal-starter controls; coincidental locking de- 
vices; dash choke, spark and throttle controls; generators; ignition sys- 
tems; lock coils; starting motors; starter drives; switches; valve tap- 
pets; vacuum controlled ignition systems; wiring harness; Delco bat- 
teries; Klaxon horns; Bu-Nite pistons. 

Remy Electric Company, Anderson, Indiana 

THE ignition systems of several pioneer automobile manufacturers were 
made by the founders of this company, B. P. and Frank Remy. In 1895, 
one was a young man doing an electrical wiring and shop business at 
Anderson, the other helping his brother after school. That year the 
older brother produced his first practical electric dynamo. The early 
dynamos were used as ignition equipment for stationary and marine en- 
gines. By 1899 the brothers had a working force of fifteen and occupied 
the first building in the old plant site. A little later, they started making 
the permanent magneto type, and then the oscillator. During this time 
Mr. I. J. Reuter went with the Remy brothers. They incorporated as 
Remy Electric Company in 1901. They brought out the high-tension 
magneto about 1904-05, and then the HB machine, which was used on 
several of the early makes of cars, including the Winton, Marmon, 
Pope-Hartford, Haynes, Apperson, and Stearns. The plant was moved 
to its present site in 1906. 

Mr. B. P. Remy had previously worked on the inductor and, in 1908, 
made contracts with Overland and Buick for it. The magneto business 
expanded in 1909-10 and then gave way to the first of the combination 
lighting and ignition generators. 

From 1911 to 1916 the company was owned by Stoughton Fletcher, 
banker of Indianapolis. The magneto business was good, with Overland 
and Buick contracts. The "O" generator came out in 1912, and starting 
and lighting were taken up in 1913. A contract with Reo was secured 
by the organization in 1914. 

Remy Electric Company was purchased by United Motors in 1916, 
and through it entered General Motors in 1918. In 1919 it built 163,000 
generators, 163,000 motors, and 315,000 ignition systems. In 1924 the 
plant consisted of 61 buildings, with floor space of 425,000 square feet, 
on a site of 26.71 acres. Employees numbered 3,672. The manufacture 
of Klaxon products was transferred from New Jersey to this plant in 
1924. Delco starter and ignition work was brought from Dayton in 

Appendix 465 

1926, at which time the organization took the name Delco-Remy Cor- 
poration. F. C. Kroeger is president. 

Klaxon Company, Anderson, Indiana 

IN 1905 Mr. Lovell and Mr. R. A. McConnell organized the Lovell- 
McConnell Manufacturing Company, making marine electrical special- 
ties and fittings at Newark, New Jersey. In 1908 patents were pur- 
chased from Mr. M. R. Hutchinson covering an electrically operated 
sound-signal device. Until 1913 the company occupied the field alone 
with these devices of the diaphragm type but on the entrance of others 
was not able to sustain its patents against competitors. Despite this, its 
business increased with rapid strides. 

The Lovell-McConnell Company was bought by the United Motors 
Corporation in August, 1916, and the name changed to Klaxon Com- 
pany. The trade name "Klaxon" has proved a valuable business asset. It 
was coined by Mr. F. Hallett Lovell, Jr., from the Greek verb klaxo, 
meaning to roar or to shriek, and was registered at the United States 
Patent Office, July 14, 1908. 

In 1920 the plant was moved from Newark to Bloomfield, New Jer- 
sey. By 1923 production totaled 1,317,547, having tripled in two years. 
Floor space amounted to 175,410 square feet. There were about 500 
employees. Under General Motors operations the manufacture of 
Klaxon products was undertaken by Remy Electric Company (now 
Delco-Remy Corporation) in 1924, and machinery and equipment trans- 
ferred to Anderson, Indiana. F. C. Kroeger is president and general 

Products: Electric and hand-operated automobile and industrial warn- 
ing horns and loud-speaking telephones for limousine and industrial use. 

Delco-Remy & Hyatt, Ltd., London 

THE business was begun in 1907 by the Walter H. Johnson Company, an 
automobile-selling company, principally retail. In 1914 it secured rights 
from Remy Electric Company for the British Isles. When the latter and 
Delco went into United Motors in 1916, it represented both in London. 
Mr. Johnson took in Mr. W. O. Kennington, an electrical engineer, 
formerly with Remy. These two, and General Motors Corporation, 
became the original incorporators of Delco-Remy, Ltd., July 23, 1920. 
When General Motors acquired the stock of Messrs. Johnson and Ken- 
nington, in 1921, they were made managing directors, respectively, of 
General Motors, Ltd., and Delco-Remy, Ltd. 

The present company is an amalgamation of Delco-Remy, Ltd., and 
Hyatt, Ltd., formerly a subsidiary of Hyatt Roller Bearing Company. 

Functions: Sales and service on all Corporation accessory products in 
the British Isles; technical and service headquarters at London. 

466 Appendix 


THE Fleming Realty Company was incorporated in Michigan on March 
26, 1919, to purchase all parts and parcels of real estate now covered 
by the General Motors Building in Detroit. This is the block bounded 
north by West Grand Boulevard, south by Milwaukee Avenue, east by 
Cass Avenue and west by Second Boulevard. 

The name was changed from Fleming Realty Company to Durant 
Building Corporation on April 30, 1919. Preliminary sketches had been 
drawn by Mr. Albert Kahn, architect of Detroit, and the Thompson- 
Starrett Company had been selected to erect the building. Ground was 
broken on June 2, 1919. The building was to be completed and ready 
for occupancy in one year, but a change of program prevented this. Pur- 
chases of additional parcels were made for the power house and rail- 
road siding and tunnel sites. In the course of operations forty-eight 
entire buildings and part of another were removed or wrecked, including 
a three-story brick office building transferred to a new site without in- 
terruption to the business of its tenants, even telephone and electric light 
service being maintained. The first tenant of the new building was 
Harrison Radiator Corporation, which moved in on November 18, 1920. 

The name of the corporation was changed on February 24, 1921, to 
General Motors Building Corporation and the building under construc- 
tion received its present name. The original contract was finished by the 
Thompson-Starrett Company in November, 1921, and a new contract 
with the same firm for finishing the west half of the building was under- 
taken in February, 1922, and completed the following January, with the 
exception of certain items taken over by General Motors Building Cor- 
poration. At the time of its erection, this structure was the largest office 
building in the world. Mr. C. E. Wilson heads the Building Corporation. 


WHEN the automobile first began to go out at night, it was provided 
with oil or gas lamps. Of the latter type was an acetylene gas lamp 
made at Kenosha, Wisconsin, by the Badger Brass Company. Three of 
the Badger employees, Messrs. Hugh J. Monson, William F. Persons 
(1868-1926), and William Bunce, decided to strike out for themselves. 
They chose Cleveland, Ohio, as the place for their business, and in 
1906, with $100 apiece, formed the Guide Motor Lamp Company. 
Cleveland was then the center of the automobile accessory trade and 
the location of Royal, Winton, and Stearns car manufacturing, but was 
without a lamp-making concern. 

The partners did a good business in the repair of lamps and radiators. 
In 1910 they were employing twenty-five persons, and in this year made 
their first electric lamps for automobiles. Mr. T. A. Willard, the bat- 
tery man, by the development of his product, furthered the new activity 
of the firm. A patent was taken out on a reflector arrangement fitted 
onto the old lamps. The firm made its screw-type sockets by hand. 

Appendix 467 

In 1911 the partners secured orders from the Rauch & Lang and Baker 
companies, and the next year from Reo and from the Detroit Electric 
for electric side lamps, which were also made by hand. 

Guide Motor Lamp Company was incorporated in 1913 with a capi- 
tal of $40,000. Mr. Monson was its president until 1928. A plant was 
built on West Madison Street, Cleveland. Guide Motor Lamp made its 
first automobile contract in 1913, to furnish the Glide Automobile Com- 
pany with headlights complete, and batteries, switches, and wiring, to 
the amount of 500 sets. 

Tungsten filament dates from 1914. Mr. Persons introduced the bulb, 
frosted in the lower part, in 1916. In 1917 Guide took over Emerson 
Clark's patent, obtained four years earlier on the parabolic reflector of 
two separate foci. Mr. C. A. Michel, vice-president in charge of en- 
gineering of the present Guide organization, developed its Guide Ray 
reflector. In 1922 the company brought out a bifocal reflector in which 
the vertical angle of light is controlled in the reflector. 

The two-filament bulb came out in 1924, and Guide then developed 
the Tilt Ray head lamp with which Buick, Pontiac, Oldsmobile, and Reo 
were equipped. 

General Motors Corporation bought out the company in 1928 and 
formed the Guide Lamp Corporation. Mr. F. S. Kimmerling became 
president and general manager, Mr. Monson, vice-president in charge 
of sales. At the end of 1929, Guide Lamp Corporation was located in 
Anderson, Indiana. To its own lamp operations were added those of 
Delco-Remy Corporation. Mr. F. H. Prescott is now president and gen- 
eral manager. 

Products: Automobile-lighting equipment. 


ONE of the chief difficulties encountered in popularizing the gasoline 
automobile was the tendency of the motor to overheat. Following the 
primitive and awkward attempts to increase the radiating surface, 
a steady advance set in which resulted in the cellular or "honeycomb" 
type of radiator. An outstanding step in this advance was the designing 
and patenting of the "Harrison Hexagon" by the late Herbert Champion 
Harrison, founder of Harrison Radiator Company, which he estab- 
lished at Lockport, New York, in 1910. Harrison Radiator Corporation 
succeeded the company in 1916. 

Mr. Harrison was of English stock. Born in Calcutta, India, he was 
educated at Rugby School and Oxford University, England, being gradu- 
ated as an electrical engineer. He came to the United States in 1907, 
organized the Susquehanna Smelting Company, and later became con- 
sulting engineer of the Union Carbide Company. From 1910 to 1927 he 
served as president and general manager of Harrison Radiator. 

The other officers associated with Mr. Harrison in the founding of 
Harrison Radiator Company were B. V. Covert, vice-president and 
treasurer, and Fred D. Moyer and Oscar A. Loosen, directors. Mr. 



Covert deserves particular notice. His Covert Gear Company made 
bicycle gears, and Mr. Covert himself experimented in motor-car de- 
sign. An early contact was established between Mr. A. P. Sloan, Jr., 
and the Covert Motor Vehicle Company, since Hyatt made bearings 
for the latter. Six years after the founding of Harrison Radiator Com- 
pany, Mr. Sloan brought Harrison into the newly organized United 
Motors, and in 1918 it entered the General Motors group. Mr. Frank 
M. Hardiman is president and general manager. 


During the interval of independent operation the Harrison company had 
grown from small beginnings, moving from narrow quarters in an inade- 
quate building on a main street of Lockport to a commodious plant built 
by the American District Steam Company, which was judged ample for 
many years to come. Expanding business, however, called for more 
room, and in 1917 a two-story building was added which covered more 
than half a city block. This was later increased to three stories. By 
1923 the original plant of the steam company had been demolished to 
make way for another building completing the present modern plant. 
It now contains more than 420,000 feet of floor space, with a potential 
capacity in excess of 3,000,000 radiators a year. In 1929 the Corpora- 
tion produced 2,310,440 radiators, sinoe which time various layout 
changes have been made to accommodate a larger production. The 
record for 1929 was accomplished by a force of about 2,000 persons. 

On the technical side, some of the more important of the Corpora- 
tion's innovations are: automatic temperature control of the soldering 
process (1917); dipping of tanks and cores in one operation fi923); a 
special machine for multiple core strip soldering (1924); the folder 
header which gives an air- and water-tight joint in the core without the 
use of solder (1914); rotary crimping machine (1915); the removable 
anchorage (1916), and the intermediate spacing strip (1913), a radical 

Appendix 469 

departure in cores from all previous cellular cores. This intermediate 
spacing strip has been the subject of further development within the past 
two years, with the result that the hexagon form of radiator, in pro- 
duction from 1914 to 1932, has been changed in appearance, made 
stronger and more efficient, and radiator leaks are now very rare. Prac- 
tically all radiators now made by Harrison Radiator Corporation are 
of the new design. 

Harrison also promoted materially the evolution of the vapor cooling 

From rolling mill to loading docks, the Harrison plant manufactures 
radiators completely, with a beautifully coordinated system of accurate 
manufacture and efficient handling. Its research enters three important 
fields of physics air, water, and metals, since an automobile radiator 
is a metal container in which water is cooled by air. 

Products: Automobile radiators, radiator shutters, oil temperature 
regulators, thermostats, and hot water car heaters. 


THE name Hyatt occupies a place of importance in transportation, agri- 
cultural, industrial, and production equipment wherever shafts and 


wheels are turning, to make their work more efficient, to reduce their 
maintenance, and to prolong their operating life. 

Back of the name Hyatt is the name of its inventor, Mr. John Wesley 
Hyatt, pioneer in more fields than one, who in the year 1914 received 
the Perkins Medal of the New York Chemical Society for distinguished 
services in the field of applied chemistry and engineering. That service 
included experiments which led to the invention of celluloid. He spent 
much time on experimenting, and secured over 250 patents, the first 
(1861) was for a knife grinder with a solid emery wheel. By trade he 
was a printer. He settled in Albany, New York, in 1863, where he was 

470 Appendix 

led into numberless experiments with compositions which might make a 
billiard ball as a substitute for the ivory one. It was not until 1865 that 
he found the right composition and took out a basic patent on it. Dur- 
ing the course of this work he accidentally discovered the fundamentals 
on which the celluloid or pyroxylin plastic industry was later established. 

A fuller account of this discovery is given in News and Views, Sep- 
tember, 1929, and in The Celluloid Mirror, February, 1930, as derived 
from an interview with Charles S. Lockwood at the experimental 
laboratories of the Hyatt plant, Harrison, New Jersey. Mr. Lockwood 
had come into contact with Mr. Hyatt through the Celluloid Manufac- 
turing Company in 1874. In 1888 he was again at work with Mr. Hyatt, 
who was perfecting a mill for crushing sugar-cane. The difficulty Mr. 
Hyatt had to contend with in the disintegrators was that he could not 
find any bearings which would stand up under the loads imposed on the 
journals. There was trouble with a slanting bearing. He needed some- 
thing better than a solid bearing to make a line contact with the jour- 
nal, something touching at every point. Rollers of hardwood, paper, and 
pressed wood had been found to work on a countershaft, but no one 
wanted wooden rollers. His inventive genius was straightway brought 
into action, and in time he developed a roller bearing, the rollers made 
of flat strips of steel, formed into a coil, or helix. By this means he in- 
creased the load-carrying ability, effected a considerable saving in power, 
and minimized lubrication. 

The anti-friction journal bearing was patented that year, and the 
roller bearing was entered at the patent office May 20, 1890. The first 
form consisted of a series of loose rollers in a brass cage, from which 
the roller bearing evolved as a complete assembly in a self-contained 
cage. Later, raceways were added, and the bearing at present is com- 
posed of three parts: the inner race or shell, the cage containing an 
assembly of rollers, and the outer race. The distinctive feature is the 
type of roller used, which is made up of hollow cylinders formed by 
helically winding strips of alloy steel. 

The successful results achieved in the sugar-cane mills persuaded Mr. 
Hyatt that there was a large field for his invention. Accordingly, the 
Hyatt Roller Bearing Company was founded, in 1892. Its products 
already bore a high reputation when the automobile industry was born. 
Here was a new mechanism, subject to heavy loading at certain points, 
and calling for the least possible loss of power from engine to wheel. 
Hyatt Roller Bearing Company began production of automobile bear- 
ings in 1896, and its product was used in Mr. Haynes' first car, the 
Haynes-Apperson, also in Mr. Olds's first cars. Mr. Ford became one 
of the best customers. The automobile of today uses roller bearings on 
wheels, rear axle, transmission, pinion shaft, power take-off, valve rocker 
arms, fan, brake shaft (Buick), steering shaft, propeller shaft. 

Mr. Hyatt died in 1920, having passed his eighty-second year. With 
him for many years was Mr. Lockwood, now well past eighty years of 
age. He took out over eighty patents, and assisted Mr. Hyatt in experi- 
menting. Besides Mr. Lockwood, also early associated with Mr. Hyatt 

Appendix 471 

in the manufacture of roller bearings, were Messrs. A. P. Sloan, Sr., 
and A. P. Sloan, Jr. The latter came into the Hyatt drafting room in 
1897 an d was made general manager two years later. He received 
patents for shafting hangers, hanger boxes, and improvements thereon. 

In 1917 Hyatt Roller Bearing Company passed into United Motors 
at $13,000,000, or $3,300 per share of stock, later becoming a division 
of General Motors along with all other United Motors units. 

During the World War the company extended its regular production; 
it made small shells and Holt tractor parts and employed as many as 
5,000 men. The plant at Harrison, across the Passaic from Newark, 
New Jersey, consisting of 21 buildings, covers some 900,000 square feet 
of floor space and normally employs about 2,000 men. 

The Hyatt Company from its very beginning has always prided itself 
on the quality of its product. A typical example of how deep-rooted this 
is may be found in this interesting side light. A few years ago, an instal- 
lation of lineshaft bearings of almost unknown origin aroused consider- 
able curiosity because they had run so long and so well. Hyatt engineers 
were called in, and it finally proved to be boxes equipped with Hyatt 
bearings and set up by Mr. Hyatt himself in the early 'nineties. Nearly 
two-score years had passed, and the bearings were still performing their 
work satisfactorily. 

With quality and precision production the keynote of Hyatt manufac- 
ture, naturally the equipment which produces, and the methods em- 
ployed, are of the highest caliber. Likewise, the men who operate the 
machines and supervise the work are specially selected and trained for 
their respective functions. 

A trip through the Hyatt plant will reveal the most modern grinding, 
heat-treating, assembly, and other operating equipment. Many of the 
manufacturing devices employed are of Hyatt's own exclusive design. 
They are the pioneers of centerless internal and external grinding and 
the exponents of many unusual devices in heat-treating. 

The Hyatt method of production control assures a uniform product 
from the raw steel to finished bearing. Every step of manufacture is 
carefully checked and rechecked. Special analysis steels are made by 
leading mills to Hyatt's exact specifications. At the Hyatt physical and 
chemical laboratories the raw products are carefully analyzed before 
fabrication and are tested during every manufacturing operation to be 
sure of their finished quality. The precision machines all along the pro- 
duction line turn out a perfect product, but even here nothing is taken 
for granted, and a corps of inspectors, with the very latest precision 
gauging equipment, pass on all work in process as well as finished bear- 
ings before they are passed on for final cleaning, wrapping, and ship- 
ping. Among Hyatt's gauging instruments are many modern develop- 
ments in optical measuring devices, one of which is used for checking in- 
spection gauges and tools down to 1/200,000 of an inch. 

Hyatt Roller Bearings are extensively used in mining, oil field, textile, 
steel mill, road building, power transmission, and all other kinds of in- 
dustrial equipment; likewise in farm tractors, farm machinery, railroad 

472 Appendix 

cars, and, as previously stated, they were the first anti-friction bearings 
used, and continued to be used, in large quantity by the automotive in- 

Thus, on every genuine Hyatt Roller Bearing the die stamp "HYATT 
U.S.A." is more than just a maker's mark. It means a guarantee of 
dependable bearing performance, correct design, quality materials, pre- 
cision manufacturing, and engineering knowledge. 

Mr. H. J. Forsythe is president and general manager. 

Products: Hyatt anti-friction roller bearings. 


THE Inland Manufacturing Company was organized in 1923 to take 
over the steering-wheel activities of the Dayton-Wright Company. During 
the years 1920 and 1921, experiments had been conducted by Dayton- 
Wright Company on the construction of a steering wheel with a rim 
manufactured from a continuous strip of veneer wrapped upon itself. 
This new type of rim had the advantage of increased strength and lower 
manufacturing cost. Actual production was commenced on this product 
at the Dayton-Wright Company in 1921, and by 1923 the steering-wheel 
business had developed so rapidly that it was found advisable to separate 
it from the other activities of the Dayton-Wright Company. 

The Inland Manufacturing Company was organized and occupied one 
of the former plants of the Dayton-Wright Company. Mr. Whittaker 
succeeded Mr. Talbot as head of the enterprise. 

During the first year of its operation, Inland Manufacturing Com- 
pany produced 479,000 steering wheels, and within a few years became 
the largest producer of wood steering wheels in the world. 

Anticipating the gradual obsolescence of the wood-rim steering wheel, 
the Inland Manufacturing Company, within the years 1929, 1930, and 
I93i> was completely transformed from a wood-working plant to a rub- 
ber plant. During this period a well equipped rubber laboratory was 
established with a highly skilled technical staff, and modern equipment 
for the handling and manufacturing of rubber products was installed. 

Constantly increasing appreciation on the part of the automotive in- 
dustry of the importance of the use of rubber in the refinement of the 
modern automobile rapidly broadened the field of service of the Inland 
Manufacturing Company, so that at the present time steering wheels 
constitute but 25 percent of the volume of this plant. 

Products: Steering wheels, metal-rubber running boards, Inlox and 
other motor supports, Inlox spring eye bushings ; Quickube, Du-flex, 
Flexotray and Flexogrid, rubber ice trays, and grids for automatic re- 
frigerators, battery containers, and battery container covers, hard and 
soft rubber, and molded products. 

THE McKiNNON INDUSTRIES, LTD., St. Catharines, Ontario 

THE McKinnon Industries, Ltd., now a subsidiary of General Motors 
Corporation, is the outgrowth of a hardware store started at St. Catha- 

Appendix 473 

rines in 1878. The business has since undergone many changes in name, 
ownership, location, and lines of activity. At the start, Mr. L. E. Mc- 
Kinnon and his partner, Mr. F. F. Mitchell, had $2,000 cash invested. 
Gradually they took on the manufacture of hardware, including sad- 
dlery and wagon hardware and hames. Mr. McKinnon received patents 
on carriage dashes and fenders, which were made at St. Catharines, and 
at a branch established in Buffalo. On the expiration of the partnership 
in 1888, he took charge of the manufacturing end known as McKinnon 
Dash & Hardware Company. The business at Buffalo grew through a 
merger of like concerns in 1898. There was also increased business at 
the Canadian plant, resulting in a move to a new location in 1901 and 
the construction of a malleable iron foundry. 

The advent of the automobile then made advisable the addition of 
other lines of manufacture. A drop-forging department was opened, and 
the making of chains begun in 1905. The new line was incorporated the 
year following as the McKinnon Chain Company, with plants at Tona- 
wanda, New York, and at St. Catharines. Merger in 1917 produced two 
companies, Canadian and United States, the latter at Columbus, Ohio. 
Control of these two companies passed from the Dash & Hardware 
Company in 1922 to the United States concern, the Columbus-McKin- 
non Chain Company. 

The St. Catharines plant, equipped to make saddlery and harness, did 
a thriving business during the World War. Large additions were made to 
the plant in 1916 for the purpose of increasing facilities to handle con- 
tracts from the British government for shrapnel bullets, time fuses, and 
high-explosive shells. The end of the war made it necessary to find new 
lines to replace war contracts. Selecting the automobile field as offering 
the greatest promise, the company began the manufacture of automobile 
radiators at the St. Catharines and Buffalo plants, undertaking also, 
for the first time in Canada, the manufacture of auto differential and 
transmission gears. The venture exacted years of development work, 
which ultimately crowned it with success. 

Mr. McKinnon died in 1923. Two years later the company was dis- 
posed of and reorganized as The McKinnon Industries, Ltd. In 1925 it 
acquired the Canadian division of J. H. Williams & Company of Buf- 
falo, makers of hammers, wrenches, and other small tools. In 1929 the 
radiator business of the St. Catharines plant was sold to make room for 
a more profitable activity, a branch of the gear division of General 
Motors, which corporation assumed control of the two plants March I, 
1929. Considerable expenditures were made for improvements including 
a new building for the purpose of manufacturing Delco-Remy automo- 
tive electrical equipment, theretofore brought into Canada from the 
Anderson, Indiana, plant. Canadian activities of North East Electric 
Company of Canada, subsidiary of the Rochester, New York, Company 
were also taken over late the same year. The Buffalo plant has since 
been sold. McKinnon Industries manufactures a wide variety of goods 
and sells 40 percent of its output outside of the General Motors Cor- 
poration. Mr. H. J. Carmichael is general manager. 

474 Appendix 

Products: Automobile rear axles and differentials; steering gears; 
axle shafts; Delco-Lovejoy shock absorbers; Delco fractional commer- 
cial motors; AC spark plugs; Delco-Remy starting, lighting, and igni- 
tion systems; tool kits; malleable castings; stampings; drop forgings and 
saddlery hardware. 


THE Moraine Products Company is the largest producer of self-lubri- 
cating bearings in the country. These bearings are sold under the trade 
name of Durex, and rolled bronze bearings, also made in quantity, under 
the name of Moraine. 

Durex bearings are the result of three years of research. They are 
made in large variety for use in automobiles, electric refrigerators, elec- 
tric motors, electric clocks, musical instruments, food mixers, washing 
machines, ironing machines, casters, electric fans, adding machines, coun- 
ters, cash registers, moving-picture cameras, airplane pulleys, textile 
machinery, conveyors, farm implements, toys, and shoe machinery. 

Mr. James H. Davis is president and general manager. 

Products: Durex oil impregnated metal bearings; Moraine rolled 
bronze bearings. 

Bristol, Connecticut 

THE New Departure is one of the largest accessory units of the General 
Motors Corporation. It makes nearly three fourths of all the ball bear- 
ings used in the United States, and more than one half of the require- 
ments of the world. Yet, perhaps no unit had more modest beginnings. 

Two boys, Edward D. and Albert F. Rockwell, of New England 
ancestry, left their home in Illinois in the late 'seventies and started a 
hardware store at Jacksonville, Florida. Albert, the younger, conceived 
the idea of a doorbell with a clockwork mechanism and operated by a 
push button. This, he claimed, would give "electrical results without the 
use of a battery." 

Manufacture of the new device was let to the H. C. Thompson 
Clock Company, Bristol, Connecticut. It was so revolutionary in type 
that it was called the "New Departure Bell." The boys and their store 
janitor peddled these bells in Florida and later elsewhere: Edward, in 
Binghamton, New York, and Albert, in Michigan. Success led them to 
form the New Departure Bell Company in 1888, which began assem- 
bling, packing, and shipping in a single room at Bristol. The next year 
they were incorporated for $50,000 and took larger quarters in what is 
the No. I building of the present company. 

The bicycle craze, then at its height, led Edward Rockwell to invent 
a bell with a rotary mechanism actuated by a thumb lever. This ven- 
ture was successful, and the mechanism was adapted to various types 
of bells for trolley cars and fire apparatus, as well as for bicycles. Other 
products such as bicycle lamps, plumber supplies, and trolley harps were 

Appendix 475 

added to manufacture, but later dropped. Between 1891 and 1895 tne 
business grew rapidly, during which time Edward left to establish the 
Liberty Bell Company in East Bristol, specializing on bicycle bells. 

In 1898 the New Departure Bell Company made its controller, a free- 
wheel mechanism which permitted coasting without movement of the 
pedals. It necessitated a separate hand brake applied against the front tire. 

Later, an employee of the company developed an improvement of this 
device, permitting the rider to brake as well as to drive and coast. This 
device, when perfected, became the original New Departure Coaster 
Brake, the broad basic patents for which were assigned to the New De- 
parture Bell Company. Bicycle manufacturers were quick to see the 
value of the coaster brake, and it was not long before several companies 
were manufacturing under the New Departure patents. The brake gave 
such an impetus to bicycle riding that the New Departure product be- 
came known as "the brake that brought the bike back." 

In 1901 the state approved a change of name of the company, sub- 
stituting the word "Manufacturing" for "Bell." Sales of the brake were 
extended overseas. The company began marketing its product through 
its own sales organization in 1906. From 1904 to 1907 the company 
operated a plant in a suburb of Berlin. In 1907 the Rockwell brothers 
united their interests, New Departure absorbing Liberty Bell. Edward 
Rockwell, the former owner of Liberty Bell, was placed in charge of 
the East Bristol plant and in time took over all bell operations. Sale 
of bells grew apace and reached 1,000,000 a year. About 1921 the East 
Bristol plant was vacated and operations were transferred to the New 
Departure plant. 

The new automobile industry was a natural field to engage the atten- 
tion of the bicycle and parts manufacturer. New Departure officials 
formed the Bristol Engineering Company, and in a plant across the 
street made the original Allen-Kingston and Houpt-Rockwell automo- 
biles; also the Rockwell Cab, the original "Yellow Taxi" which was 
first operated in New York City. 

From his experience with coaster brakes and automobiles, Albert 
Rockwell conceived the idea of the first two-row angular contact ball 
bearing which in one integral unit combined the functions of a strictly 
radial bearing and two pure thrust bearings. New Departure sponsored 
this bearing type and in 1907-08 started its development of ball bearings, 
later extending the scope to Single Row radial and Single Row angular 
contact or one-direction thrust bearings. They were first used by the 
Bristol Engineering Company and Apperson Brothers Company as well 
as by Weston-Mott, makers of complete rear axles. Driggs-Seabury 
Ordnance Company, of which Mr. F. G. Hughes was the chief engineer, 
was among the first to use New Departure Double Row ball bearings. 

These bearings were first made of carburized steels, case hardened. 
Today they are made of electric furnace, high carbon, chrome alloy 
steel. Bearing manufacture calls for precision workmanship, and until 
recently one tenth of a thousandth of an inch was the extreme limit. This 
was made possible by a system of gauging wherein, by amplification, the 

476 Appendix 

dimension is readily visible. Today, by perfection of the gauges, accuracy 
down to one hundredth of a thousandth of an inch is obtained. 

Ball bearings are now found in many points in the automobile, com- 
monly as follows: front wheel, generator, fan and water pump, steering 
gear, clutch, pilot and throwout, transmission, free wheel unit, pinion, 
differential, and rear wheels. 

In 1933 there were 32 makes of American passenger cars and 62 
makes of American commercial cars using New Departure Ball Bear- 
ings as regular equipment. Some thirty manufacturers of farm ma- 
chinery also applied these bearings to their products. Airplanes, motor 
boats, construction equipment, industrial machinery use them in fact 
they are applicable wherever a shaft revolves or power is transmitted. 

The company has two plants, situated at Bristol and Meriden, Con- 
necticut, with the main office at Bristol, and branch engineering and sales 
offices at Detroit, Chicago, and San Francisco. The plants include the 
world's largest steel ball manufactory, the largest grinding department 
housed in a single building, and the largest upset forging plant in the 
East. Floor space exceeds two million square feet or approximately fifty 
acres. Normally there are 7,000 employees. Its plants rank first in the 
world in consumption of quality steel and of grinding wheels, and also 
perhaps in the number of specially designed machines in use. Equipment 
includes 26,000 precision gauges. Daily capacity of the plants amounts to 
225,000 ball bearings, 9,000 coaster brakes and front hubs for bicycles, 
20 tons of precision steel balls, and 300,000 high carbon chrome steel 

The Single Row ball bearing has four principal parts inner race, 
outer race, separator and balls, requiring 106 major operations in its 
manufacture. The Double Row, with two separators and two rows of 
balls, requires 149 operations. 

The company, starting in 1889 with $18,000 cash and $32,000 good- 
will, increasing its capital by $25,000 cash in 1893, $25,000 in 1902, 
$100,000 in 1903, $300,000 in 1904, $1,000,000 in 1909, $500,000 in 1912, 
$500,000 in 1913, and $500,000 in 1915, brought the capital to $3,000,000, 
represented by $500,000 Preferred and $2,500,000 Common stock. Mr. 
DeWitt Page, president, has been connected with the company since his 
entrance as an office boy in 1894. Mr. Hughes, vice-president and gen- 
eral manager, has been with New Departure since 1911. 

The company has taken much interest in the welfare of its employees. 
Its institutions for their benefit includes Endee Inn, Endee Club, and 
Endee Manor. The last is a residential section developed by the com- 
pany and handled by the New Departure Realty Company, organized 
June 20, 1916. There were 102 houses built by 1924, which were offered 
to employees practically at cost, with a 10 percent payment, half of 
balance on first mortgage with the bank, and the other half on second 
mortgage with the company. In the later established Bristol Realty 
Company, New Departure owns a majority of the stock. 

Products: Ball bearings for machinery and automobiles; coaster 
brakes, front hubs, and bells for bicycles. 

Appendix 477 

Bristol Realty Company, Bristol, Connecticut 

THE New Departure also owns 63 percent of the stock in the Bristol 
Realty Company, which was founded in May, 1913. Like the New 
Departure Realty Company, this organization assists people in the pur- 
chase of homes. Nearly two hundred houses, mostly of the two-family 
type, have been purchased through this plan. 


THE Packard Electric Company, now Packard Electric Corporation, 
was originally incorporated in 1890 by J. W. and W. D. Packard, for 
the purpose of manufacturing incandescent lamps and transformers. In 
1898 the company designed and brought out the Packard automobile. 
Because they were unable to purchase satisfactory cable in this country 
or in Europe, they took up the manufacture of automotive cable as a 
matter of necessity. 

In 1903, the automobile division was sold to the Packard Motor Car 
Company of Detroit and the lamp department was sold to the General 
Electric Company. 

Automotive cable production, however, was continued at the Warren 
factory, supplying the many car manufacturers. About 1910 the re- 
placement end had its start as a natural outgrowth of the demand for 
such service on the part of the car owners. The manufacturing facilities 
for automotive cable were added to from time to time to take care 
of the increasing demand for replacement service as well as for original 

In the meantime, transformers had also been made by the Packard 
Electric Company. However, in 1919 the Small Transformer division, 
comprising bell-ringing, toy and radio transformers, was sold to another 
Warren concern. Large central-station transformers were continued 
until in 1929 when this division was sold outright and the Packard 
Electric Company devoted its efforts exclusively to automotive cable and 
automotive cable products. 

The Packard Cable Company of Canada was established in 1931. An 
assembly plant is maintained in Toronto. Early in 1932 negotiations 
were begun which resulted in the sale of the Packard Electric Com- 
pany, effective March ist, 1932, to the General Motors Corporation. 

The basic product of the company is automotive ignition, lighting, and 
starting cable. There are many sizes, with hundreds of variations as to 
the number of strands of fine wire used in the core, rubber thickness 
over the core, and the various kinds of insulation used, including rub- 
ber, tape, etc. 

Cable is supplied directly to the car manufacturers and this original 
equipment runs into many millions of feet annually. The maximum 
capacity of the Warren plant is about forty million feet per month. 

478 Appendix 

Automotive cable is made complete from the copper rod to the finished 
product. A quarter-inch rolled copper rod as received from the copper 
mills is passed through several drawing processes until it reaches the 
required sizes. These range from number thirty-six to number eleven 
gauge. The wire progresses to the stranding department where it is 
bunched or stranded on twisting machines. Thus a core is formed over 
which the rubber insulation is placed, after which it is cured and then 
sent to the braiding department for covering of the various colored 
braids as seen on the finished wire. 

Other departments include the lacquer department where the secret 
Lac-kard finish is put on high tension cable and where the lighting 
cable is given a protective coat of lacquer. There is also a fabricating 
department where battery cables and ignition cable sets are prepared to 
fit any of the hundreds of makes and models of cars on the road. 

Mr. F. C. Kroeger is president of the organization. 

Products: Automotive ignition, lighting and starting cable. 


THE Saginaw Malleable Iron Company was organized in January, 
1917, with a capital of $250,000 Common and $150,000 Preferred 
stock. Mr. C. F. Drozeski was president, and Mr. G. H. Hannum, 
treasurer. Its purpose was to supply malleable castings, which were 
demanded by the large automotive concerns in the vicinity of Saginaw. 
A plant was erected, and production begun before the end of 1917. 
Initial melting capacity was about 80 tons daily, doubled the next year, 
capital being increased by $250,000 on that account. Additions and ex- 
pansions called for a further increase of $500,000 in capital stock in 
1919. In July that same year the board considered the offer of General 
Motors to buy the Common at $125 per share and accepted it. The 
company thereupon became affiliated with General Motors and was 
placed under the management of Saginaw Products division. It was at 
the company's plant that the Dressier kiln or tunnel-over method of 
annealing was worked out and perfected, having been installed in 1920. 
Four tunnel kilns are in use at the present time. In 1926 the plant was 
entirely revamped, molding conveyors were installed to replace the indi- 
vidual floor method and the duplex method of melting, consisting of 
cupolas and electric furnaces, was installed to replace the hand-fired 
air furnaces. As a result the daily melting capacity is in excess of 600 
tons as compared with 80 tons in 1917. All of the above tonnage is con- 
sumed by the various divisions of General Motors Corporation. 1500 
persons are now employed. Mr. D. O. Thomas is general manager. 
Products: Malleable iron castings for passenger cars and trucks. 


THE parent company was the Jackson-Church-Wilcox Company, organ- 
ized April 21, 1908, by John L. Jackson, E. D. Church, and Melvin L. 
Wilcox, with a capital of $25,000 of which $15,000 was paid in. The 

Appendix . 479 

purpose of the organization was to manufacture automobile parts, but 
for the first two years it was engaged principally on machining parts 
for the Buick Motor Company and others. Then it obtained control of a 
British patent covering the double-thread screw and half-nut type of 
gear, which was made and sold to Buick. This gear was improved and 
put on the market under the trade name of "Jacox." 

The history of the company is one of rapidly increasing production. 
Under constant pressure from the Buick Motor Company for greater 
output, the original capacity of twenty gears per week was rapidly ex- 
panded until 1909, when it was planned to produce twenty thousand. 
Before the year of 1909 was far advanced, it became evident to the 
Buick Company that their steering gear source must be increased in 
capacity. Their demands were backed by an order for 60,000 gears. 

The views of the owners of the Saginaw Company were not in accord 
with the Buick Company as to the future of the motor car and they 
declined to expend the money for the additional plant and equipment; 
the result was that negotiations were opened for the purchase of all the 
capital stock of the Jackson-Church-Wilcox Company by the Buick 
Motor Company and this was accomplished in January, 1910. 

The Jacox plant continued to grow along with other General Motors 
units, and in 1919 all the General Motors operations in Saginaw were 
consolidated under one management known as the Saginaw Products 
division, General Motors Corporation. This larger unit was composed 
of the original Jacox plant, the Motor plant, the Grey Iron Foundry, 
the allied plant of the Saginaw Malleable Iron Company, and the Crank- 
shaft plant, which was an outgrowth of the National Engineering Com- 

By 1928 the Saginaw Products division had grown to such an extent 
that it seemed wise to decentralize the activities. This was done, and the 
following organizations were set up to function as independent units: 
Chevrolet Grey Iron Foundry Division of Chevrolet Motor Co. 
Saginaw Malleable Iron Division of General Motors Corp. 
Saginaw Steering Gear Division of General Motors Corp. 
Saginaw Crankshaft Division of General Motors Corp. 

During 1931 the Crankshaft division's operations were transferred 
to the individual car manufacturers, and this plant was closed. 

During the years of 1929 and 1930 two new types of steering gears, 
known as the worm and sector gear and the worm and roller tooth gear, 
were developed and marketed under the trade name of "Saginaw Gear," 
and the "Jacox" name was dropped. These designs have been improved 
upon and today are used on all General Motors cars. 

At the present time the Saginaw Steering Gear division has approxi- 
mately 180,000 square feet of floor space with a capacity of 7,500 gears 
daily with 800 employees. 

In 1932 and 1933 the Saginaw Steering Gear division produced more 
steering gears than the combined output of all other exclusive steering 
gear manufacturers. 

480 Appendix 

A complete line of steering gears is produced for all sizes of passen- 
ger cars, trucks and busses. Mr. Max L. Hillmer is general manager. 


THIS organization arose from the needs of certain automotive equip- 
ment makers for a distribution organization which would carry com- 
plete stocks of replacement parts and provide adequate service facilities 
everywhere, in the performance of a nation-wide service of uniform 
character. The manufacturers represented in it at the outset were Day- 
ton Engineering Laboratories Company, Remy Electric Company, and 
Klaxon Company. It was originally a subsidiary of United Motors Cor- 
poration (1916-19) and since then has been a subsidiary of General 
Motors Corporation. 

Beginning with a small office in Detroit, the company in a few years 
expanded to twenty-five branches in principal cities, in general each 
branch consisting of office, stock room, shop, and garage. Supplementary 
to this, it appointed authorized service stations in each branch territory. 

The company became the national field organization of Harrison 
Radiator Company, in 1918, and has since added to its service and distri- 
bution until today it represents the following units of General Motors: 

AC Spark Plug Co. Harrison Radiator Corp. 

Delco Appliance Corp. Hyatt Roller Bearing Co. 

Delco Products Corp. Klaxon Co. 

Delco-Remy Corp. McKinnon Industries, Ltd. 

Guide Lamp Co. New Departure Mfg. Co. 

Its authorized service stations and dealers exceed five thousand. 

United Motors Service deals with all classes of the automotive trade 
except car manufacturers, whose equipment sales are handled directly 
by the factory organization. From a service standpoint, the activities of 
the company cover not only cars of General Motors production but, 
with few exceptions, all domestic makes of cars, trucks, and tractors. 
Mr. F. A. Oberheu is president and general manager. 

Services: Through its twenty-five branches in the United States and 
Canada, United Motors Service provides authorized national service 
for Delco-Remy and North East starting, lighting, and ignition systems; 
North East and Harrison hot water heaters; AC and North East speed- 
ometers; Delco batteries; Delco-Lovejoy hydraulic shock absorbers; 
Delco commercial motors; Automotive radio; Klaxon horns; Harrison 
radiators; New Departure ball bearings; Hyatt roller bearings; AC 
air cleaners, oil filters, gasoline strainers, fuel pumps, gauges, spark 
plugs, guide lamps. It also provides authorized national distribution and 
service for Delco-Light electric plants, and Delcogas systems for rural 
homes; Delco electric pumps and water systems; Delco fans, vacuum 
cleaners, and household appliances. 

Appendix 481 


TWENTY-ONE years ago, Alexander Winton, the famous pioneer auto- 
mobile manufacturer, was in the market for the best marine gasoline 
engine power plant obtainable, to be used in his motor yacht La Belle, 


then under construction. He visited various yachts equipped with gaso- 
line engines, but was disappointed in their performance, so after ex- 
haustive investigation of different types of marine gasoline engines then 
in use, he decided to design and build the La Belle's power plant him- 
self. This decision was the foundation upon which has been developed the 
Winton Engine Corporation of Cleveland. When the La Belle was 
launched, her power plant consisted of three six-cylinder type Winton 
marine gasoline engines, of 9" bore, 12^4" stroke, each rated at 150 h. p. 

In its uniformly satisfactory performance, its smoothness, quietness, 
cleanliness, and dependability, this new Winton power plant proved a 
revelation to marine architects and engineers. Many of them pointed out 
to Mr. Winton the broad field for such an engine, and, consequently, 
he began seriously to consider designing and building marine gasoline 
engines for the market. 

Early in 1912, the Winton Gas Engine & Manufacturing Company 
was organized and incorporated under the laws of the State of Ohio, 
and in July of that year began to develop the first Winton marine gaso- 
line engines for the market. In the meantime, prior to the formation of 
the new company, Mr. Winton had devoted considerable attention to 
the possibilities of the Diesel type engine, which was then coming to the 
front rapidly in Europe. During this time he also developed a stationary 
gas engine electric generator set which was used successfully as an indus- 
trial power plant for many years, until, in fact, the cost of fuel, natural 
gas, became prohibitive. This was a six-cylinder engine, with 9" bore, 

482 Appendix 

14" stroke, developing 150 h. p. at 350 r. p. m. The high cost of fuel, of 
course, prevented further development of this type of power plant. 

Shortly after the formation of the company, late in 1912 and early in 
1913, three Winton marine gasoline engines of remarkably advanced 
design for their time were brought out. These were Models n, W5 and 
W6. These three models, without major change in design, are still 
being built, sold, and used successfully, more than twenty years after 
they were designed and built for the first time. They are today modern 
high-class power plants, and afford convincing proof of the advanced 
design characteristic of the Winton line of engines. All of them are six- 
cylinder engines of the four-cycle type. The Model n was a develop- 
ment of the La Belle's engines, with an increase in the bore to 9^" and 
stroke to 14", and such other refinements as experience in the La Belle 
and additional research work suggested. This engine develops 200 h. p. 
at 450 r. p. m. 

The Models W5, and W6, which are smaller engines, came along 
about the same time, the former with a bore of 8" and stroke of n" 
developing 125 h. p. at 450 r. p. m. and the latter with 6^2" bore and 
9" stroke, developing 80 h. p. at 500 r. p. m. While these engines were in 
process of construction, the company developed a six-cylinder, 7^ k. w. 
generator set, known as Model W2, which was the forerunner of the 
present-day line of Winton auxiliaries. 

In the fall of 1913 the first Winton Diesel engine was completed. 
This engine was the first all-American Diesel ever built, and its success- 
ful use as an industrial power plant for many years has fully justi- 
fied Mr. Winton's early decision to strike out along original lines in 
developing Diesel engines for the American market, instead of following 
practices then prevailing in Europe. 

During the war, two new Winton gasoline engines made their appear- 
ance. These were the Models W28 and W29. The W28 was a six- 
cylinder unit, with fr/z" bore, 9" stroke, developing 150 h. p. The W29 
was an eight cylinder, with the same bore and stroke as the W28, and 
developing 200 h. p. A large number of these two models were sold to 
the American and Russian governments for use in mine-layers and river 
vessels. The company at this time also developed a Diesel engine known 
as Model W35. This was a six-cylinder unit, with n" bore, 14" stroke, 
developing 225 h. p. A number of these engines were sold to the Italian 
government for war service. In 1915, the company produced what was 
probably the first V-type twelve-cylinder Diesel engine ever built. This 
was known as the Model W3O. Two of these engines were installed in 
the La Belle, replacing the three six-cylinder gasoline engines with which 
she was originally powered. In 1916, the Model W24, a six-cylinder 
Winton Full Diesel type marine engine was produced. This engine had 
a bore of 12-13/16" and a stroke of 18", and developed 225 h.p. 
This was the first Winton engine designed strictly for workboat service, 
and was installed in such ships as the auxiliary freight schooners 
Esperanca, Pecheney, Adrien Badin, Charles Gawthrop, Sherewog, and 
Erris, ranging from 230 to 255 feet in length. Shortly thereafter followed 

Appendix 483 

the Model W4O, an eight-cylinder Diesel, with the same bore and stroke 
as the Model W24, and developing 500 h. p. Engines of this type were 
installed in the Mt. Baker, Mt. Hood, Mt. Shasta, and James Simpson, 
all freighters, ranging from 286 to 393 feet in length. 

Since these early installations, the company has enjoyed a steady, sub- 
stantial growth and today is a recognized leader in its, field. From the 
beginning of 1918, the Diesel end of the business has increased greatly 
from year to year. Today, many of America's finest yachts and work- 
boats are propelled by Winton Diesel engines, and their range of use- 
fulness is constantly broadening. The gasoline engines, too, have kept 
pace, not only in the development of the units themselves, but also in 
their highly successful application to the diversified classes of service for 
which they are designed and built. One of the most important factors 
is a liberal service policy. Users of Winton engines are assured of com- 
petent, willing assistance when needed, to the end that their Winton 
power plants may be, in every sense, a complete success. 

The company has also found it desirable to engage in the manufac- 
ture and sale of auxiliary equipment, such as generator sets, air, fire, 
and bilge pump sets, and air compressors, as well as rail car engines, 
tender engines, and industrial engines of various kinds. 

Winton Engine Company and the Electro-Motive Company, also of 
Cleveland, the latter manufacturing power plants for railway cars, etc., 
were consolidated into the Winton Engine Corporation on January I, 
J 933- General Motors acquired both companies in 1930. 

This consolidation followed upon close relations maintained between 
the two companies since 1923, when Electro-Motive was incorporated, 
becoming a pioneer in gas-electric transportation and one of the chief 
outlets for Winton power plants. Four hundred and fifty-six Winton- 
powered cars now operate on forty-two railroads in the United States, 
Canada, Mexico, and Australia, having been accepted as dependable by 
the leaders of the railway world under all conditions. On some of the 
most difficult of its runs the Santa Fe operates huge passsenger and 
mail cars, seventy-five feet in length, driven by Winton engines. The 
types of Winton engines used in Electro-Motive installations run from 
220 to 800 h. p. In addition to use in transportation on sea and land, 
Winton Diesel engines drive the latest Marion steam shovels, develop- 
ing 150 h. p. at 150 r. p. m. 

George W. Codrington was president of both Winton and Electro- 
Motive at the time of the merger. He joined the Winton organization 
in 1917 and became general manager in 1918 and president in 1928. 

Products: Marine and stationary gasoline engines, marine and station- 
ary oil engines, rail-car oil and gasoline engines, and locomotive oil and 
gasoline engines. 


IN 1888 Mr. J. B. Armstrong of Guelph, Ontario, founded the J. B. 
Armstrong Manufacturing Company at Flint for the manufacture of a 
single-leaf spring for carriages and wagons. Later a full line of car- 
riage and wagon springs was made. The company had already made 
some automobile and truck springs before 1904 and thereafter turned 
all its equipment to their manufacture. The plant had an output of about 
2OO tons per month in 1909, when the company was merged with the 
Western Spring and Axle Company of Cincinnati, and this was gradu- 
ally increased to 550 tons per month. On the merger of Western Spring 
and Axle with Standard Parts Company of Cleveland in 1909, the Flint 
plant operated as the Armstrong division. Ten years later Standard Parts 
erected the modern spring plant at the request of Buick Motor Company. 

Before the plant was finished, Mr. R. T. Armstrong, son of J. B. 
Armstrong, organized the Armstrong Spring Company, in March, 1920. 
They purchased the plant and began operating it. The volume of busi- 
ness in 1923 exceeded 30,000 tons and some 300 men were employed. 

The company was purchased by General Motors, December 31, 1923, 
for $1,623,186 and became a division, Mr. Armstrong remaining for a 
time as general manager and being succeeded by Mr. James Parkhill, 
formerly plant manager. 

The division became part of Buick Motor Company in 1932. 

Recently production has been as high as 70,000 tons, consisting of 
4,500,000 automobile springs or about one third of all the country's 
production in that time. 


GENERAL MOTORS first became interested in this company in 1910 
through purchase of $170,000 of its Common stock from the Buick, 
Cadillac, and Olds companies. Earlier the same year it had contracted 
for differentials. Ownership of Brown-Lipe-Chapin was completed in 1923. 
Of the three men whose names formed the company's name, Mr. 
Alexander T. Brown and Mr. Charles E. Lipe are dead, and Mr. 
H. W. Chapin retired in 1931. There were several Lipes connected with 
the business, including Mr. Willard C. Lipe (1861-1924). Both Mr. 
Brown (1854-1929) and Mr. Charles E. Lipe (1851-1895) were well 
known engineers and inventors as well as manufacturers. The former 
had to his credit the L. C. Smith shotgun, the Smith-Premier typewriter, 
the clincher tire, and the automatic switchboard for telephones. He was 
a founder of the Franklin Company, Syracuse, makers of automobiles. 
Mr. Lipe was interested in broom machinery and was the first to 


Appendix 485 

perfect the invention of a machine for sewing brooms. He also invented 
a milling machine applicable to general machine-shop work. The success 
of several companies was due to his mechanical and inventive genius. 

Messrs. Brown and Lipe formed a partnership in Syracuse in 1895 to 
manufacture a two-speed gear for bicycles, the invention of Mr. Brown. 
This was not a commercial success, and Mr. Brown turned to design- 
ing a spur gear type of differential for an automobile he was using. 
While the differential was not patentable, the application to the auto- 
mobile was new. The differential was put in production in 1900 and 
scored an immediate success, being adopted by Winton, Mobile, Loco- 
mobile, and other pioneer makes of cars. The first large order, however, 
came from Cadillac, 3,000 differentials for the one-cylinder cars. 
Growth and expansion were paid out of earnings. The business was 
incorporated as Brown-Lipe Gear Company. 

Mr. H. W. Chapin (born 1867), who had been associated with the 
sales department of the L. C. Smith Company, joined Messrs. Brown 
and Lipe in the gear company in 1900. He had become its secretary 
when he was suddenly called to Flint by Mr. C. S. Mott of the Weston- 
Mott Company, their largest customer. Mr. Mott showed him a bevel- 
gear type differential of a new design which would replace the gear 
company's goods in Buick, Cadillac, Olds, Oakland, and probably other 
cars as well. To produce the new gear meant retooling at an expense of 
at least a half-million dollars. Mr. Chapin had to make the decision 
quickly, and he did, placing an order by telegram for new machinery. 
To him is given the credit for saving one of the largest industries de- 
veloped in Syracuse. As a result of the need for new capital, the Brown- 
Lipe-Chapin Company was formed in 1910 to take over the differential 
gear department of the gear company, and Mr. Chapin became manager 
of its plant at the beginning of 1911. 

The new company had a five-year contract with General Motors. It 
sold $150,000 of treasury stock. Its business progressed with success. 
Mr. Chapin became president and general manager late in 1922, and 
as of January I, 1923, Brown-Lipe-Chapin affiliated with General 
Motors as a division. 

The Syracuse plant occupied 450,000 square feet of floor space on 
five acres and had about 1,800 employees. Much of the special equip- 
ment used had been designed and built in the plant. Operations were 
transferred elsewhere in 1933, the Brown-Lipe-Chapin division being 
discontinued as an operating unit. 


THE Automobile Trade Journal for December I, 1924 gives this his- 
torical note on one of General Motors' early purchases, to which refer- 
ence has been made in the text: 

The Becker Brothers, who organized the Elmore Manufacturing 
Co., Clyde, Ohio, in 1901, gave the industry the two-cycle automobile, 
which they continued manufacturing until the company was sold to 

486 Appendix 

General Motors in 1910, and manufacture of this car discontinued 
two years later. The car had a twin-cylinder, two-cycle motor, rated 
at 4 h. p., which was mounted in a Stanhope design, with curved dash, 
and lever steering. The radiating coil, later to be known as the radia- 
tor, was concealed under the floor-boards. As the Becker Brothers 
had been in the bicycle business, it was natural that bicycle type tires 
should be used. A dynamo furnished ignition current. The car weighed 
775 pounds and was very similar in design to the popular steam 
vehicles of that day. 


GENERAL MOTORS entered the radio field primarily to develop and pro- 
duce radios for automobile use in the expectation that radio would be- 
come standard equipment in all its cars. The Corporation bought into an 
already existing Dayton plant, licensed under RCA patents, and in that 
way entered the wider radio market, the plan being to have General 
Motors radios sold by its car dealers. This arrangement did not prove 
commercially successful, and the above company quit radio production 
in 1931. 

In the meantime, after many difficulties had been overcome, the re- 
search engineers had gone a long way toward developing successful 
automobile radios. Automobile radios manufactured by other producers 
are sold by United Motors Service, Inc. 


THIS company, first known as the Jackson Rim Company, was organ- 
ized in 1911-12 and headed by Mr. O. W. Mott, who went from the 
Mott Wheel Works at Utica, New York, to Jackson, Michigan, and 
established this industry as an overflow from the Utica works. Operations 
began in 1913, but the real expansion dates from 1917 when the Perl- 
man Rim Corporation of New York took over the company. Later the 
organization operated as a division of United Motors and was taken 
over by General Motors January I, 1919. 

It manufactured automobile rims, felloes, wheels, tire carriers, 
battery box hangers, and stampings. In 1923 it produced 1,050,000 
sets of rims. There were normally 1,050 to 1,150 employees. Floor 
space totaled 201,000 square feet, about eight acres being comprised in 
buildings, sidings, etc. Beside General Motors some ten other car manu- 
facturers were supplied with equipment, and the Hayes Wheel Com- 
pany, with certain materials. 

All the assets of the Jaxon Steel Products Company were sold to and 
taken over by the Kelsey-Hayes Wheel Corporation of Jackson, June 
19, 1930. 


THE immediate predecessor of this corporation was the Lancaster Steel 
Products Company, to which the name had been changed May 16, 1916, 

Appendix 487 

from New Process Steel Corporation. Mr. H. B. Cochran was presi- 
dent from 1915 to late in 1920. 

There had been two earlier incorporations: New Process Steel Wire 
Manufacturing Company, incorporated in 1908, and the New Process 
Steel Company, incorporated in 1909 to operate the plant at Lancaster, 
Pa. In 1911 New Process Steel Corporation was organized, and the 
earlier companies were later dissolved. 

First production consisted of drill rod and high carbon cold-drawn 
wire. In 1911 began the production of cold-drawn roller-steel for the 
Hyatt Roller Bearing Company. Following the change of name in 1916, 
operations were extended, and the plant was enlarged to a capacity of 
4,000 tons per month. 

Lancaster Steel Products Company passed into the hands of General 
Motors January I, 1919, and was dissolved the next year, being suc- 
ceeded by the above corporation. 

In 1923 production totaled 32,133 tons, consisting of cold rolling of 
strips, band, hoop, diaphragm, and steel for stamping purposes, and cold 
drawing of wires, bars, and special shapes. A large percentage of the 
output went to General Motors. The plant, occupying about nine acres, 
was sold to the Armstrong Cork Company in 1927. Lancaster Steel 
Products Corporation was subsequently dissolved. 


THIS activity was not separately incorporated but was operated as a di- 
vision of General Motors Corporation until 1932. In September, 1909, 
the T. W. Warner Company was organized for the purpose of specializ- 
ing in the manufacture of steering gears, transmissions, and control 
levers. The original plant at Muncie, Indiana, was moved to a larger 
building in 1910. Additions and extensions were made rapidly. The 
company furnished one or more of its products to many of the earlier 
cars, including the Moon, Norwalk, Davis, Kissel, Columbia, Willys 
Overland, Marion, Chandler, Haynes, Studebaker, Wescott, Stoddard- 
Dayton, American, Stutz, and Cole. It had also established relations 
with the General Motors group through furnishing transmissions for the 
Scripps-Booth car, and in 1915 began supplying Chevrolet F. B. trans- 
missions, and steering gears for all Chevrolet models. It then added 
transmissions for General Motors Truck, Oakland, and Olds, and also 
steering gears for the Sheridan, so that the Corporation eventually 
absorbed most of the company's output. 

The result was the absorption of the company by General Motors 
in October, 1929, with Muncie Products taking its place as a division 
of the Corporation. At the time a large plant was erected for the manu- 
facturing of Chevrolet chassis parts. In 1924 all the plants of Muncie 
Products had 377,500 square feet of floor space, occupying seven build- 
ings in an area of eight acres. All operations were built on a progres- 
sive line-up of machinery. There were 2,200 employees. Annual produc- 
tion in units consisted of 250,000 transmissions, 800,000 steering gears, 

488 Appendix 

750,000 chassis parts sets, and 500,000 sets of valves. The annual volume 
of business amounted to from $12,000,000 to $15,000,000. 

In 1929 another building was erected for the manufacture of gear 
forgings for use in transmissions and automobile engine valves for 
Buick, Olds, Oakland, and Pontiac. 

Muncie Products plants were closed down in August, 1932. The 
transmission equipment was shipped to Buick Motor Company, Flint, 
Michigan, and to General Motors Truck Company, Pontiac, Michigan. 


THE original incorporators were Messrs. R. E. Northway, A. F. Knob- 
lock and M. McMillan. The company was organized for the purpose 
of building, in Detroit, motors and parts for passenger cars and trucks. 
In 1913 the Michigan Auto Parts Company was consolidated with it. 

Motors were built for Oakland, Oldsmobile Company, and various 
other buyers. Clutches and transmission were also manufactured. After 
the World War, with Oakland and Oldsmobile equipped to build their 
own motors, production of motors for Samson Tractor was increased. 
On the completion of that program in 1920, activities were trans- 
ferred from the Maybury plant to the new plant, occupying a site of 
five acres on Holbrook Avenue, and the manufacture of motors for 
General Motors Trucks was begun, the General Motors Truck Com- 
pany later becoming the exclusive customer. These motors had removable 
cylinder walls known as sleeves, thus obviating the need of pulling the 
motor to replace any that were scored or worn, also the need of re- 
placing with a whole set. Northway division has been discontinued, its 
property being turned over chiefly to Chevrolet. 


RAINIER began manufacturing in New York City in 1905. Its product 
was rather well known and ranked in the high-priced field. After re- 
moving to Saginaw, Michigan, Rainier Motor Car Company failed in 
1908, as the result of conditions caused by the panic of 1907. 

Mr. J. T. Rainier, president of that company, bought in the company 
at the receiver's sale and in turn sold it to General Motors Corporation. 
After Mr. Durant relinquished control, the banker management ceased 
manufacturing the Rainier car. 

"In 1917 Rainier Motor Car Company was wound up by Mr. Durant, 
who had regained the presidency of General Motors, for the purpose 
of permitting J. T. Rainier to manufacture trucks and call them Rainier 
trucks, doing business as Rainier Motor Corporation. This company in 
turn was succeeded in October, 1924, by Rainier Trucks, Inc." 


In 1919 the name Saginaw Products division had been given to the 
Saginaw activities of General Motors Corporation. These comprised the 

Appendix 489 

Jacox steering gear plant, Motor plant, Grey Iron Foundry, and the 
allied plant of the Saginaw Malleable Iron Company (q.v.) 

The motor plant was the Rainier Motor Company's property ac- 
quired by General Motors in 1908. There, for about three years, the 
Corporation built the Marquette, a high-priced car, and subsequently 
the plant lay idle until 1917. It was then devoted to the assembling of 
trench-mortar shells for the government, with a production peak as high 
as 25>ooo shells assembled in nine hours. In 1919 the plant was equipped 
to manufacture overhead valve motors of the four-cylinder type, with 
Chevrolet and Oldsmobile taking the product. Chevrolet discontinued 
its FB model in 1922, and Oldsmobile became a "light six" in 1923, thus 
ending the demand on the motor plant and bringing about its close. 
Over 130,000 motors had been made there. The 25-acre property was 
turned over by the division to General Motors in November, 1923. 

Grey Iron Foundry was erected under the management of Saginaw 
Products division in 1919 to furnish an adequate supply of grey iron 
castings for motors. The site, 100 acres of low ground near the river, 
was chosen with a view to expansion and filling. Original capacity of 
100 tons of finished castings was augmented to 225 tons by the installa- 
tion of continuous mold conveyors and other labor-saving and material- 
handling devices. Floor space of the foundry building itself, core room, 
pattern shop, etc., amounted to 225,720 square feet in 1924. The plant 
was turned over to Chevrolet in September, 1927. 

Before 1921, when it was absorbed by Saginaw Products, there ex- 
isted for a while a Crankshaft division, the outgrowth of one of Sagi- 
naw's long-standing industrial concerns, the National Engineering Com- 
pany. The company produced crankshafts first in 1907, its exclusive cus- 
tomer being Reo. However, it was not until 1913, when it received 
orders from the Northway Motor Company, that quantity was ob- 
tained. In 1917 the concern passed to Lansing capital, already interested 
in crankshaft manufacture in that city, and the name became Michigan 
Crankshaft Company. The Saginaw plant had run up to a production of 
300 per day, and the Lansing plant to 200 in 1919, when they became 
affiliated with General Motors. The two were then eliminated in favor 
of a plant at Saginaw to take care of their previous productions and in- 
creased needs. This was the Crankshaft division of General Motors, 
continuing about two years as such, when its proximity to Saginaw 
Products division resulted in its absorption by the latter. The plant in 
1924 had a floor space of 121,520 square feet on a 44-acre site. Produc- 
tion was about 2,000 crankshafts daily, employing 500 to 550 men. Some 
65 to 90 operations were required in making the product. Close grinding, 
especially on the bearings and pins, was exacted down to one quarter of 
one thousandth of an inch. The plant supplied General Motors and 
several other car manufacturers. 


THIS company originated with the manufacture of bicycles, hubs, and 
wheels by Messrs. I. A. and G. B. Weston at Jamesville, New York, in 

490 Appendix 

1886. Some years later the brothers J. C. Mott and F. G. Mott of 
Bouckville, New York, became interested in the concern and, in 1898, 
built a new factory at Utica. The bicycle business dropped away swiftly, 
but the company also made wire wheels for buggies, improved pushcarts, 
and axles. As early as 1897, inquiries regarding wire wheels for automo- 
biles began to come in. The next year the company received an order 
for 500 sets of wheels for an automotive quadricycle. There were 
orders in 1899 from the Grout Motor Company of Orange, Mass., and 
the Autocar Company of Philadelphia. Mr. C. S. Mott became superin- 
tendent at Utica in 1900. Mr. Mott had received a technical training 
at Stevens Institute and in 1897 had engaged in the manufacture of car- 
bonators with his father, Mr. John C. Mott, who died in 1899. Their 
plant was moved to Utica and merged with that of the Weston-Mott 

In 1900 orders began to come in from the Olds Motor Works for 
500 sets of wire wheels at a time for the famous curved-dash runa- 
bout. Two years later Oldsmobile went to wood wheels and Weston- 
Mott had to adjust itself accordingly. Mr. C. S. Mott became president 
and general manager in 1903. 

The company was pressed by its customers to supply axles, which it 
did in the spring of 1903* furnishing 1,500 sets, chiefly to Cadillac, but 
also to Elmore, Blomstrom, and others. These were crude affairs, of 
the chain-drive type, for nearly two years. Buick began buying in 1903, 
a few at a time and then by the dozen, for the two-cylinder car. The 
bevel drive axle of Weston-Mott found its first customer in Stevens- 

Through the efforts of Messrs. Durant and Dort, the company was 
moved to Flint, a factory site having been granted in 1905, and the 
Weston-Mott Company of Michigan was incorporated with $500,000 
capital, Buick interests taking a part. The new factory began operations 
late in 1906. Mr. H. H. Bassett, later president and general manager of 
Buick, came to Flint as part of the Weston-Mott organization. After 
the death of Mr. Doolittle of Weston-Mott, Mr. C. S. Mott, as agreed 
upon, purchased the decedent's 40 percent interest, which had equaled 
his own. 

Following its organization in 1908, General Motors Company bought 
into Weston-Mott until it owned 49 percent against Mr. Mott's 51 per- 
cent. Weston-Mott at the time made a contract to furnish Buick axles 
for ten years. General Motors completed its ownership of Mr. Mott's 
stock in 1913, at which time he was serving as Mayor of Flint for 
the first of three terms. Weston-Mott is now part of Buick Motor divi- 
sion. Mr. Mott has been a director of General Motors since 1913 and 
a vice-president since 1916. 


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