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.")
Dodge Brothers did not immediately offer a truck line, and when it did, only a single model was offered. Even that started out life as a purpose-built ambulance for US forces in World War I before morphing into an actual factory-built pickup in 1918.
Both brothers died in 1920 - John in January, Horace in December - and despite productive moves such as the hiring of Frederick J. Haynes to run the company, and a 1921 joint venture with the Graham brothers to produce Graham Brothers trucks (which used Dodge mechanicals and were sold through Dodge dealers), the Dodge widows appear to have considered themselves unable to run the business themselves, though Matilda Rausch Dodge, John’s widow, had been his secretary in the company’s earliest days. The widows sold the company to New York investment bankers Dillon, Reed & Co. in 1925 for $146,000,000, an astronomical sum in an era when a new Ford sold for less than $300.
John Bittence, Editor, Dodge Brothers Club News, added: “Frederick Haynes of Dodge Brothers was not the Haynes of Haynes-Apperson [as we had written]. Frederick Haynes attended Cornell University where he learned state-of-the-art casting and mold making, and came to Dodge from Franklin Motors early in the machine-shop era of the Dodge Brothers, bringing Russell Huff, Franklin engineer, to Dodge when they started on the car.
While Dillon, Reed apparently bought Dodge Brothers with the intention of selling it, the company continued to operate at a profit after the takeover.
Dodge management under Dillon, Reed 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 relative 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 relative fly on the wall in comparison. Walter Chrysler desperately needed Dodge’s foundry and production capacity if he was ever going to make it The Big Three. It’s unclear now whether there was other interest in Dodge besides that of Chrysler, but it seems likely that there would have been... Billy Durant, for one, mad acquisitionist that he was, had to have been tempted, though perhaps without the means of payment.
Unlike GM, which acquired more than thirty different car, truck and tractor manufacturers before settling down with the five core car divisions plus GMC, 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 absolutely 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 a huge success and Willys-Overland’s Whippet doing well. Studebaker had a smaller car, the Erskine (named after the company CEO), but its greatest success was overseas. At GM, Cadillac had the lower-priced LaSalle filling the gap between Cadillac and Buick, and Oakland had the popular Pontiac, which outlived its parent (Oakland was dropped in 1932). Buick had the lower-priced Marquette in the wings, which differed from established Buick practice in that it had a flathead engine, and Oldsmobile was preparing to introduce the Viking, unusual among GM makes in that it 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 the announcement of three new makes of vehicles. The first Plymouth (or "Chrysler Plymouth" as it was originally billed) was a continuation of the old Chrysler Four, which was itself 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 initially sold right below Dodge in price, and the Fargo line of trucks, aimed straight at the Dodge truck line. In his excellent biography of Walter P. Chrysler, Vincent Curcio states that DeSoto and Fargo were created for the primary purpose of intimidating Dillon, Reed into selling Dodge... which they did later in 1928 for $170 million, perhaps short of their asking price but still at a profit (not even counting the profits made by Dodge Brothers after their acquisition).
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 interesting, and a little unsettling, to imagine how the two firms would have weathered the upcoming Depression had they remained separate, with Chrysler’s new multiple makes and low production capacity, and Dodge’s ownership by an investment firm with no other ties to the auto industry. [Editor’s note: it did not seem to take much in those days for a car company to suddenly plummet into or close to oblivion, as Studebaker, Durant, Packard, Hudson, Nash, and others did — and as Maxwell and Chalmers would have, if not for Walter P. Chrysler’s intervention.]
DeSoto, on the other hand, was sold through a separate network of three thousand dealers, who would have had grounds for legal action had Chrysler dropped the make as planned. The fact that DeSoto Division was headed by Chrysler son-in-law Byron Foy may been an additional complication.
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 gained a reprieve that lasted an amazing 32 years 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