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by Curtis Redgap
History is a sight to behold. There are so many interconnecting things, situations, and relationships that intertwine in creation of things we know but never take the time to connect with.
With the future of Chrysler up in the air, it is time to take a look back at some of the driving forces that formed Chrysler, as well as other companies we all know and love.
Over 7,000 car manufacturers have operated in the United States of America. Of all those, only three actually remain, and wags point at the lack of American ownership of Chrysler as making it a half a company. We are going to view Chrysler for what it used to represent — an independent and well engineered alternative to Ford and General Motors.
The first manufacturer to establish his business in Detroit was Ransom E. Olds. Born June 3, 1864 (President Lincoln was killed when Olds was nine months old), the son of a blacksmith, Olds was a wizard at making machines. Fascinated by steam cars, he built one of his own from junk and cast-off parts when he was 30 years old, in 1894. Two years later, he did the same thing, only this car was a gasoline powered unit, the first “Oldsmobile.”
Several months later, based on his own designs, he founded the Olds Motor Vehicle Company in Lansing, Michigan to build the Oldsmobile automobiles. For the first two years, he struggled; he had too many models, though his quality was excellent, and he was building a reputation for dependable products. Needing to expand, he partnered with a lumber and copper magnate, Samuel L. Smith, in 1899. Smith, the majority partner, renamed the company to Olds Motor Works, and moved it to Detroit, near the Belle Isle Bridge. A fire destroyed the original building in March 1901; the site more recently held the Uniroyal manufacturing plant.
At the time, Olds was producing ten or eleven different models. The only car that had managed to be saved was a “curved dash” model, a smaller Oldsmobile powered by a single cylinder engine. Olds reinvested immediately, making the small Oldsmobile, the "Merry Oldsmobile" of song fame, the only model. It was a relatively inexpensive automobile at a mere $650, and it became the first true "high volume" car.
Within a few days, given the nationwide publicity of the fire, and the news that he was reinvesting, Olds found himself swamped with orders for the Curved Dash Oldsmobile. He needed more capacity, without major investment. Olds recalled that during a visit to a musket rifle factory how the parts were put on a sort of roller, and moved to different stations where workmen assembled the guns from individual parts assigned at their station. He set up an experimental production line in 1901. Although Henry Ford is often credited for introduction of the line to produce cars, Ransom Olds used it to jump his production from 425 cars in 1901 to 2,500 in 1902!
Olds needed more engines. He did not have the capacity to keep up with the orders he had in hand. He sought someone to assist him in making engines. That man was Henry M. Leland, who owned the Leland and Faulconer Machine Company in Detroit. Leland’s shop was well known, considered the best in the entire Midwest, due largely to Leland's no compromise stance on quality. Though Leland went on to found both Lincoln and Cadillac, until approached by Olds, he had not considered automobiles or the automobile business. He agreed to build the engines for Olds.
Olds needed more. He had dealt with and knew through suppliers of the excellent work done by a couple of brothers who had a shop on Beaubien near East Lafayette. John and Horace Dodge had manufactured excellent bicycles. Their work now encompassed all things to do with machinery. Olds showed them the design of the transmission for the Curved Dash Oldsmobile. Within a few moments, both brothers had agreed that they could do the job, and do it with exceptional quality. Pleased, Olds ordered 2,000 of them on the spot! Nonplussed, the brothers shook Olds’ hand, and the deal was set. Eventually, after suffering through the cramped confines of where they were, the Dodge Brothers moved to 240 Monroe Avenue, near the eventual site of the Dodge Main Plant.
Among Random Olds’ aides were the redoubtable Roy D. Chapin, who would form the Hudson Motor Company, known for its high quality, sturdy vehicles; and Jonathan Maxwell, who would alter form the Maxwell car company, which combined with Chalmers was the eventual foundation for the Chrysler Corporation.
Just down Beaubien Street near the corner of Piquette was another struggling auto builder named Henry Ford. Ford had already been through two of his own companies, and had just about decided that his connection with the third, the Detroit Automobile Company, has come to an end, leaving them in 1901. Later on in the same year, with four investors, the Henry Ford Company was formed.
Henry Ford soon came calling on the Dodge Brothers, also wanting transmissions for his new car, made by the new Ford Motor Company in 1903. A deal was struck, making the Dodge Brothers manufacturers of engines, transmissions and axles for Ford, and putting John Dodge on the Board of Directors. The two brothers were allowed to acquire $10,000 of Ford stock, as well (the company was privately held until 1955). When Ransom Olds came back to renew his contract, the Dodge brothers had to turn him down.
Dodge built engines, transmissions, and other parts for Ford for 10 years. Their fortunes and their production increased mightily when Ford introduced his famous model T in 1908. The brothers built a new production facility in Hamtramck in 1910; it would later become Dodge Main.
In 1913, John decided they could do a better job of automobile making on their own. He resigned from Ford Motor Company and the brothers did not renew their Ford parts making contract. In 1914, they introduced their own sturdy line of automobiles that quickly gained a solid reputation and a public acceptance. In 1919, Henry Ford, wishing to divest himself of a competitor having access to his company, paid John and Horace Dodge over $10 million (in 1919 dollars) for their shares of the Ford Motor Company. It made the Dodge Brothers into the Princes of Detroit.
Assuming that improvements would be welcomed, Leland, without consolations, took the Olds engine and made it better, changing the valves and increasing the compression. Olds said he was not interested, as he had all that he could handle with things the way they were.
Leland took the engine to the Henry Ford Company. The investors decided they liked it, and wanted Leland to build it. With Henry Ford gone, Leland suggested that they rename the company after the founder of Detroit, Antoine de la Mothe Cadillac, which they did in 1902. Later on, Leland would sell Cadillac to General Motors. He left GM in 1917 to form Lincoln, to build aircraft engines.
In 1920 Leland decided to try automobiles again, with the Lincoln car designed to compete directly with Cadillac and Packard. Struggling, due to Leland's uncompromising demand for perfection, and unwilling to consider compromises to move production, Lincoln suffered. An economic depression forced Leland to try to sell the company, and Ford, knowing he was the only bidder, made a low-ball offer; the bank accepted, Leland was forced out, and Ford went on.
There, in 1902, we can see the basis for the building of all three automobile empires that encompass the former Big Three.
David Dunbar Buick was well heeled long before he became involved in the car business. He perfected the method of bonding porcelain onto cast iron for bath tubs and sinks in the late 1800s. His interests were not really business; he loved to tinker. Given his fortune, he could indulge himself as he saw fit. That was his mistake.
Buick was cantankerous, as well as a dreamer. He was an inveterate tinker, not willing to build something and move on. Had it not been for taking on a partner, he may never have been able to keep the plumbing business intact.
After amassing a fortune in plumbing, Buick the dreamer began playing around with automobiles. Essentially, Buick intended to build engines to power stationary objects or marine power. Spending more and more time and money away from the plumbing business began to infuriate his partner. Finally, in desperation, Buick's partner delivered the ultimatum. "Pay attention or get paid to get out!" Buick sold his share.
Using $100,000 Buick started, and quickly ended, three different companies, all with Buick in the name and in charge. Buick had hired a brilliant machinist named Walter Lorenzo Marr; like many dreamers mixing with practical types, the two often had acrimonious arguments. Marr charged that he worked for Buick in three different companies in less than 18 months. Yet, somehow, during that time, a Buick car, a single one, did get built.
Near the end of the end of Buick Motor Company, David Buick offered to sell the car to Walter Marr for $300 in August 1901. Marr claimed that since he actually had built the car, it should be his by default. He held out, finally paying Buick $225 for the single car. In it all, however, was the engine that Buick had developed, but now lacked the resources to fully bring it to production. It was a horizontally opposed two cylinder affair, with one notable addition. The valves were in the head. A prominent writer of the day arranged for testing. He was enthusiastic. The engine developed about 25 horsepower, much higher than any other engine of the time for its size and weight.
David Buick was not at rest. He convinced his good friends, Benjamin Briscoe and Frank Briscoe, to invest in the Buick Motor Car. The Briscoe brothers agreed, to the tune of $100,000, premised on Buick being able to pay back $3,500 within 90 days or losing the company to the Briscoe brothers. Buick failed to meet the deadline, and the Briscoes took possession of the company in 1903. David Buick stayed on as President. In turn, Briscoe sold the Buick company to J. H. Whiting, who owned the Flint Wagon Works in Flint Michigan. Whiting was so impressed with the Buick car, still the only one, that he took his fellow wagon manufacturer friend for a ride.
William Crapo Durant could have cared less about automobiles. He was partnered with Josiah Dallas Dort as the Flint Road Cart Company selling wagons. Parts built by local suppliers were assembled and sold for $8 apiece. As well, they sold carriages and carts with an annual production of 50,000 units a year. Dort joined General Motors after Durant formed it in 1908. He also became a director of Chevrolet when Durant created it in 1912.
Whiting was Durant’s only major competitor. Their rivalry was friendly, and they often attended parties, dinners, and local events as friends. Once, Whiting had been caught in a cash flow situation, and needed a loan quickly. He turned to his friend, who drove right over to the bank, and withdrew the cash from his own account, to help Whiting. Make no mistake, however, the Durant-Dort company was the single largest producer in the USA.
Durant was totally impressed with the Buick car. The Buick, with that fantastic engine, pulled through mud, easily climbed any hills, and accelerated better than anything so far produced. He made hasty arrangements to buy the Buick company, which was then moved to Flint. One of the first people that Durant hired to help in the Buick company was an associate in the carriage trade named Charles W. Nash.
Durant was a salesman and a selfless promoter. Barely getting the assembly lines together, Durant went to the New York City Auto Show in 1905. He returned to Flint with 1,000 firm orders in hand, though the company had managed to build just 40 to that time!
Durant formed deals with Flint business people and Flint banks to build a large production facility for the Buick car in Flint. With the orders steadily coming in, all were eager to please. He ended up with the largest factory in the country on Flint's North side. Noting production line and supplier solutions made by others in the car business, Durant began pulling experts and supplier companies to Flint. He tapped a small axle manufacturer, owned by Charles Stuart Mott, in Utica New York, to come to assist. In 1905, Mott axle became part of Buick, and later in 1908, part of General Motors. Mott became a Director of GM's board, and served until his death in 1973, over 60 years!
However, in the interim, David D. Buick had enough of Durant, constantly clashing over production shortcuts that, in Buick's estimation, cheapened the product. Over time, Buick was demoted and moved around from one post to another, but Buick bosses could not fire him as he was the founder of the firm. He lost his influence in the Buick Motor Company when the Briscoes came on board, and left GM with $100,000 and a chunk of General Motors Company stock. He blew it all on his next business attempt; had he simply held onto it, it would have been worth billions of dollars by the 1950s.
Alfred E. Sloan became President of GM in 1923 after Durant resigned (his second loss of GM). Sloan noted that it was solely Buick that pulled the Corporation through. In 1923, David Dunbar Buick would have been worth more than $12 million had he only held on to his Buick stock shares. By then, however, Buick, never one for business, had lost everything, and was relegated to teaching for a small salary.
Durant overextended General Motors, in his rush to be everything to everybody. He had pulled over 30 different companies under the GM tent by 1908. Durant acquired Oldsmobile, then Oakland, which later became Pontiac, along with Cadillac. With a small recession in 1910, the General Motors Board of Directors tried to rein in Durant, to no avail, and Durant was forced out.
Undaunted, Durant pulled in Louis Chevrolet, a famous race car driver, and had him design a new car; under Durant, Chevrolet manufactured touring cars of great workmanship. Without realizing it, Chevrolet had signed all his rights, including his name, to Durant, who also created a “new” model, actually a revised Little model (a company Durant acquired after creating Chevrolet). The model designed by Chevrolet, priced much higher than the Little, was not selling. Louis Chevrolet initiated a large law suit, but it never got into court; Durant’s contract triumphed.
Durant lead Chevrolet into a sales success. Using the profits, he quietly began acquiring General Motors stock. General Motors, now under the guidance of Durant's protégé, Charles Nash, was coming out of its doldrums, heading for great profitability. Buick, now headed by Walter P. Chrysler, was showing the way.
In 1916, Durant regained control of General Motors, and Charles Nash immediately left. According to Bill Watson, Durant was aided by the war-rich Dupont family, which bought GM stock; by 1916, the DuPonts, Durant himself, and Chevrolet owned over half of GM stock. General Motors Corporation as formed in 1916, and all stockholders in the General Motors Company and Chevrolet Motor Company traded their stock for the new GM Corporation; in the end, the DuPonts were the largest stockholders with just under 30%.
Walter Chrysler was asked to stay, but he had his doubts, and demanded an outrageous salary - an increase from $50,000 a year to $500,000. Durant didn't bat an eye, but promoted Chrysler from President of Buick Division to Vice President in charge of GM production, making his expertise available to all divisions. Later Durant would promote Chrysler to Executive Vice President, making him Durant's assistant. By 1919, Chrysler could not stand Durant's methods — especially after Durant bought Janesville Machine Company for $30 million in 1919 — and resigned, ostensibly retiring. Durant himself would be thrown out of General Motors for the second and final time in 1920, the same year Walter Chrysler left, to start yet another car company, Durant Motors.
Charles Nash vowed never to work for someone, especially for a someone like Durant, ever again. He formed his own company in 1916 buying the Jeffery Motor Company and renaming it after himself. He also bought the Lafayette Motor Company, which he kept operating as a separate luxury manufacturer until 1924 (the name would be used again from 1934-1940 by Nash).
Walter Chrysler kept his options open, maintaining an office in Detroit, but spending most of his time a rural estate in Long Island, New York.
In 1919, he was approached by a group of bankers to take over Willys-Overland Company. It was overextended, experiencing labor problems at the Toledo factory, and they feared that the owner, John North Willys, would take the company into bankruptcy. Chrysler was not interested, at that time, in just running someone else's enterprise, but was casting about for a company that he could make his own. He asked for a million dollar a year salary. The bankers didn't blink. In fact, Willys-Overland was a decent company, with many good things already in place.
John North Willys was a good business manager. He had sound business decisions up through 1919, but had hit a rough patch. He started out making bicycles in 1987. Within a couple of years, he entered into the retail end of the automobile business, and by 1907 had made his Overland dealership, located at Elmira, New York, one of the largest in the country.
Supplier problems lead him to completely take over the company, and he quickly turned the company around. By 1909 he had acquired a large production facility in Toledo from the bankrupt Pope Motor Company. In 1912 he renamed the company the Willys-Overland Company. In 1918, he acquired the Moline Plow company which manufactured tractors and the Stephens car, and in 1914 acquired the Edwards Motor Company of New York, which gave him the Knight Sleeve Valve engine.
All the companies that Willys acquired (Moline, Autolite, New Process Gear, etc) were held by the Willys Corporation, which, in 1919, took over control of Duesenberg, primarily to gain control of a production plant in Elizabeth New Jersey. That is where Walter Chrysler, working for Willys, met the three engineers that later made up the cornerstone of his company, as they worked on a new Willys six-cylinder engine. John Willys had rebuilt the New Jersey plant using inflated 1919 dollars, which brought about the downfall of Willys Corporation in 1920, the year the bankers brought in Chrysler. Chrysler and the bankers ruled, not the stockholders.
In an effort to stem cash flow, the plant was put up for auction. In the bidding were none other than William Durant and Walter Chrysler. Had Chrysler been successful in his bid, he had intended to take over the Willys operation for his own, and keep the three engineers, who had built a beautiful car that Chrysler wanted, and initiate his own company. As it was, Durant outbid all comers, gaining the plant to build his Star. Chrysler's efforts to take over Willys-Overland was rebuffed by stockholders, who trusted John Willys.
With the infusion of cash from the auction of the Elizabeth New Jersey Plant, as well as the sale of Moline, Autolite, and other companies, Willys Corporation was dissolved debt-free and John North Willys was left with Willys-Overland, which continued to expand; Chrysler left after his failed takeover bid.
Durant used the Elizabeth plant for the assembly of the Star car (a higher priced car, the Durant, was built in Flint.) The stillborn Chrysler Six was reworked by Z-S-B to become the Flint Six. By 1927, Durant was going downhill, and both the Star and Flint were dropped and the Elizabeth plant sold.
Chrysler did not have much time to consider what else he might be able to do, because the same group of bankers that saw him through the Willys operations approached him again. They asked Chrysler to step in and manage the Maxwell Company. Chrysler agreed, quickly, for $100,000 a year with huge stock options. He knew more of what he had to do to gain full control of Maxwell. While he set out to turn the financial situation around, he also set upon his method to acquire Maxwell, the three engineers he had met at Overland, and the engine that they had developed.
Maxwell had been started by Jonathan Maxwell, who was a partner with Benjamin Briscoe, and an associate with Ransom Olds. Hugh Chalmers was a businessman who bought E.R. Thomas’ interest in Thomas-Detroit, which had been started by Roy Chapin (Hudson) and his associates, and in 1908, Chalmers renamed it the Chalmers Car Company. It made decently assembled, well priced cars.
Roy Chapin, according to Bill Watson, had wanted to build a smaller model than the Chalmers; he got backing from J.L. Hudson, owner of Detroit's Hudson Department Stores.
Thus, in 1909-10, Chalmers and his associates sold their interests in Hudson to Chapin and associates, and vice versa. After building a large, new facility on East Jefferson Avenue, Chalmers had a slowdown in sales; Maxwell needed production space, and the two combined, with Hugh Chalmers leaving to create Saxon Motors. Saxon was bankrupted in the 1920 recession, and their plant was sold to GM in 1924, then to Chrysler in 1934, becoming DeSoto's home plant in 1937. Ironically, Hudson also came home to Chrysler, merging with Nash to form AMC which was purchased by a rejuvenated Chrysler Corporation in 1987.
Walter Chrysler hired Zeder, Breer, and Skelton, and had their engine design installed in several Chalmers cars that were sent to the New York Auto Show. They arrived branded as Chryslers, and in 1924, the brand became a reality. By 1925, Chalmers was gone (having outlasted Saxon but not Hudson), followed shortly afterwards by Maxwell.
Josiah Dort became a Director of Chevrolet after William Durant acquired it. In 1913, not enamored with Durant's style of business, Dort stepped down, purchasing a car company for himself. He cut all association with Durant in 1915, continuing to make his own brand of automobile. Dort passed away in 1923. The car company continued to build cars for a time, however, with the death of its founder, it quickly lost its way and was liquidated.
Curtis wrote: “My maternal grandfather had a REO stake truck that he used to take crops from his farm to the free market in the city. One afternoon, the REO, with a 5 speed transmission and an Eaton two speed rear end (what happened to them?), was being used as grain hauler for the rice crop. The sides had been sealed up with plywood, making a box that was 8 feet across and 16 feet long. It was about 80% full of grain, which is heavy. The transmission had a creeper gear in the first range that was stump-puller low.
The rear wheels rolled into a deep rut, sort of slowly settling down. When grandpa let in the clutch, the truck did not move. He increased power, slowly. That big engine kept turning, but the transmission split, and gears went all over the place. Not bad for a big old gas engine.”
Ransom E. Olds founded the REO company in 1904 which made cars and trucks; the REO truck line was successful on its own, and the Gold Crown Engine was practically indestructible. Ransom Olds went to Florida in 1913, bought 37,500 acres north of Tampa, and began a development which is now OLDSMAR.
Walter Chrysler went on to help design and build the Chrysler Building, which is one of the world’s finest examples of Deco Art on a building. He contracted with Carrier, which developed a method of cooling the air inside the entire structure, making the Chrysler Building the world's first totally air conditioned sky scraper. in 1930, the Chrysler Engineering staff worked to improve air conditioning systems, and developed a high-speed radial
compressor, which was a major improvement. Based on their work, Chrysler Corporation created AirTemp Corporation in 1934, using a former stamping plant in Detroit; Chrysler introduced the first truly reliable automobile air conditioning systems built through the AirTemp division. Airtemp was moved to Dayton, Ohio in 1936, using some of the plants once belonging to Stoddard-Dayton, a member of the defunct United States Motor Company, which had included Maxwell.
In 1937, Airtemp engineers
invented capacity regulators, which helped the air-conditioning system adjust to varying loads, and the following year they developed the first self-contained air-conditioning units.
Airtemp was the last new venture that Walter Chrysler initiated.
History is not a series of islands. It is like a huge lake, where people make ripples, which touch other ripples, made by other people. Life becomes a series of interlocking ripples where in some way, we all touch each person, unknowingly or knowingly.
Looking around at the floundering big three today, you have to wonder what the originators of those companies would be doing or saying about it. I am betting that they would be out there, slugging away, making deals, and acquiring new companies. After all, that is how they all built their business. Cutting back was not in their vocabulary.
— Copyright © 2007 Curtis Redgap. All rights reserved.
(Thanks to Bill Watson for some clarifications)
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