How Chrysler Bought Dodge Brothers
History does not tell us about Walter P. Chrysler’s abilities as a poker player, but his approach to and eventual acquisition of Dodge Brothers suggests he may well have been as good as any.
When the 1920s opened, Dodge Brothers was one of the stronger manufacturers, having started as a machine shop making engines for curved-dash Oldsmobiles and most of the assembly of the earliest Fords on a subcontracting basis before building the cars bearing their own names in 1914.
Dodge’s first dealer was Cumberland Motors of Nashville, Tennessee, which remained in business until the late 1960s, proudly advertising their status as “World’s First Dodge Dealer.” There was no shortage of applicants, though, to sell Dodge Brothers cars.
Dodge Brothers did not have a truck line for some time; their first was a purpose-built ambulance for US forces in World War I, which became a factory-built pickup in 1918.
Both brothers died in 1920 - John in January, Horace in December. The Dodge widows promoted Frederick J. Haynes to run the company, just one year later Dodge Brothers entered a joint venture with the Graham brothers to produce Graham Brothers trucks using Dodge mechanicals and Dodge dealers. Matilda Rausch Dodge, John’s widow, had been his secretary in the company’s earliest days.
In 1925, five years after the brothers’ deaths, the widows sold the company to investment bankers Dillon, Reed & Co. for $146,000,000, an astronomical sum in an era when a new Ford sold for less than $300.
While Dillon, Reed apparently bought Dodge Brothers with the intention of selling it, the company continued to operate at a profit after the takeover. They went on to buy out the Graham Brothers in 1926, freeing the Grahams to buy Paige-Detroit, renaming it Graham-Paige, and selling it to Kaiser-Frazer. The purchase allowed all truck manufacturing to be consolidated under the Dodge Brothers name.
Having started out building engines and transmissions for other auto manufacturers, Dodge was a colossus among independent automakers, most of whom bought a much higher percentage of components from outside suppliers. Dodge had an enormous plant complex in Hamtramck, Michigan (known as “Dodge Main” until it was torn down in 1980), with its own foundry, hospital, and even its own telephone exchange. Dodge also had one of the strongest dealer networks in the business.
Dillon, Reed had a pretty good idea of what it had, and had no intention of letting it go cheaply.
The fledgling Chrysler Corporation, still not much larger than it had been as Maxwell-Chalmers, was a fly on the wall in comparison. Walter Chrysler needed Dodge’s foundry and production capacity if he was ever going to make it The Big Three.
Unlike GM, which acquired more than thirty different car, truck and tractor manufacturers before settling down with the six core car divisions, or Ford, which seems to have acquired Lincoln as much for Henry I to administer a dose of payback to Henry and Wilfred Leland as anything else, Chrysler needed Dodge, and Walter Chrysler never seemed inclined to acquire any other existing makes during his lifetime. Indeed, he had killed Chalmers not long after his Chrysler car was launched, and the new Plymouth brand was essentially a continuation of the “Good Maxwell” Four.
His scheme for getting Dodge was quite possibly his most audacious act since buying the Locomobile touring car that became his introduction to the auto business.
Companion makes were in the news at the time, with Hudson’s Essex and Willys-Overland’s Whippet doing well. Cadillac had the lower-priced LaSalle, and Oakland had the popular Pontiac, which outlived its parent by around seven decades. Buick had the lower-priced Marquette in the wings, and Oldsmobile was preparing to introduce the Viking, which was actually higher priced than its parent car. Most of the GM companion make activity was aimed right at Dodge’s segment of the market, which had to have made Dillon, Reed somewhat less than comfortable.
Into this fray stepped Walter Chrysler, with three new brands.
The first Plymouth (or "Chrysler Plymouth" as it was originally billed) was a continuation of the old Chrysler Four, which was a continuation of the final Maxwell. But Dillon, Reed was likely far more unnerved by the other two introductions; a new lightweight six-cylinder car, the DeSoto, which sold right below Dodge Brothers in price, and Fargo trucks, aimed at the Dodge Brothers truck line.
In his excellent biography of Walter P. Chrysler, Vincent Curcio wrote that DeSoto and Fargo were created for the primary purpose of intimidating Dillon, Reed into selling Dodge — and it worked. They sold out in 1928 for $170 million, perhaps short of their asking price but still at a large profit, not even counting the profits made by Dodge Brothers in those three years.
Walter Chrysler successfully bet the entire company on his ability to buy Dodge Brothers; in later years, he was quoted as saying, “without Dodge, there would be no Plymouth car.”
Plymouth and the other makes would not have been able to expand production as they later did without Dodge’s capacity, not to mention the later sale of Plymouths by Dodge dealers, this was true... and yet, Plymouth, DeSoto, and Fargo production were all well under way when the Dodge sale took place.
It’s a little unsettling to imagine how the two firms would have weathered the Depression had they remained separate, with Chrysler’s multiple makes and low production capacity, and Dodge Brothers’ ownership by an investment firm with no other ties to the auto industry. Car companies boomed and went bust quickly in those days.
DeSoto, on the other hand, was sold through a network of three thousand dealers, who would have had grounds for legal action had Chrysler dropped the make; and it was headed by Chrysler son-in-law Byron Foy. In any event, DeSoto took the first year sales record for a new make, and appears to have been profitable for most of its years. DeSoto lasted an amazing 32 years longer in the United States, and continues to this day in Turkey.
Dodge Brothers through the years
- How Chrysler Corporation bought Dodge Brothers
- Graham Brothers, builders of Dodge trucks
- Pioneers of the American Auto Industry
- John North Willys, founder of Nash and Willys
- Joseph Fields, early sales chief
- Clessie Lyle Cummins, engineer of the Cummins diesel engines and inventor of the Jake Brake
- Lee and Richard Petty, legendary NASCAR racers
- Avard T. Fairbanks, designer of the Dodge Ram and the Plymouth Flying Lady ornaments
- Ethel Miller, owner of the first and millionth Plymouths.
- Thomas Jeffery, creator of the Rambler (and what became Nash)
- Other bios • Chrysler history