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Maxwell and Chrysler: The Chrysler Canada Story, Chapter 2

Reprinted with permission from The Chrysler Canada Story, copyright © 2001 James Mays

The Chrysler story is one of multiple beginnings.

Jonathan Maxwell and Ben Briscoe
worked together on a horseless carriage that was introduced in 1904. They built a number of four-cylinder vehicles before creating the United States Motor consortium, a company that sold a range of cars, set up along the lines of General Motors.

Maxwell gained fame for being rugged; it was the first car to be driven across the continent by a woman and the first to win the Glidden Tour. When the combine collapsed in 1912, Maxwell was strong enough to survive and produced popular models called the Maxwell Mascotte and the Maxwell Mercury. Maxwells hit the tracks too, with no less a name behind the wheel than the great racing hero, Eddie Rickenbacker.

Chalmers was the other hyphenated half of the pre-Chrysler heritage. It was founded in 1908 by Hugh Chalmers, when the retired National Cash Register vice-president bought the Thomas-Detroit company (of Thomas Flyer fame) and renamed the product line after himself. Chalmers retained the Detroit name ("Chalmers-Detroit") until 1911, when the expensive and elegant cars were simply Chalmers. The company's best year was in 1916, when 21,00 units were built. The next year, production nosedived to nearly half that amount.

Architecture Building Mixed-use Urban design Project
In 1918, the Maxwell concern moved into the newer, larger Chalmers factory and the two cars were built together and sold side by side on showroom floors, even though there was no formal agreement between the two automakers. Maxwell sold well, but the pricy Chalmers continued to slip in popularity. The depression of 1919 hurt the auto industry as a whole and Chalmers in particular. Even though it was the weak link, stronger Maxwell picked up the slack for Chalmers.

The management teams for the two companies often worked at cross-purposes. Fed up and angry, Chalmers revoked the right for Maxwell to build cars in its plant. Maxwell officials didn't care, they had lots of completed cars that needed to be sold sitting out on the grounds. Chalmers was the big loser. It had nothing to build; no one was buying that brand any more, and without Maxwells rolling off the lines, the Chalmers plant was idled and soon in receivership.

This restored Chalmers Model 9, with a 30 hp four-cylinder engine, was sold for $57,750 by RM Auctions in 2012.

Despite their closeness, the two companies never could agree to sign on the dotted line. Things looked grim, the company was $32 million in debt and had a glut of 26,000 unsold and seemingly unsaleable cars on the factory grounds. Eventually the stalled partnership found the two companies in the middle of lawsuits, when Walter Chrysler stepped in to work his magic in 1921.

Walter Chrysler had started working at General Motors in 1910, tapping his railroad manufacturing experience as works manager at GM's Buick Division. He worked hand and glove with Charles Nash, Buick's president, to build up the company; both were geniuses in production and they became good friends. Soon Buick was accounting for half of GM's profits, but Chrysler was repelled by GM founder Billy Durant's loose way of doing business.

Walter Chrysler and Charles Nash left General Motors in 1916 and tried to buy Packard, but Packard's board of directors wasn't interested. Walter was wooed back to GM when Billy Durant offered him an indecent salary of $500,000 a year. He stayed for three more years, but was still at odds with Durant's style of management. Billy simply couldn't keep his word that Walter would have complete control of Buick and continually made deals behind Walter's back, deals that weren't sound, deals that hurt Buick and GM.

The two men parted company in 1919. Walter walked away from the presidency of the Buick Division and his role as Vice-President of Production at GM. Announcing his retirement from the industry, Walter wisely kept an office in Detroit and drove down from Flint daily. Because he had taken so much of his salary in stock options, it was a full-time job selling them off.

When he wasn't in Detroit, his home was filled with cigar-chomping buddies. His wife finally complained that the house had become a glorified train station for his cronies. She told him it was time to go back to work. Walter admitted that he was bored. Opportunity knocked soon enough.

Willys-Overland came calling. The company was one of the world's biggest automakers - traditionally in the top five along with Studebaker, Ford, and Buick - but Willys-Overland was $50 million in debt and bankers were fearful they would lose their money. Walter Chrysler had proven his engineering genius many times over at GM and the bankers would have him rescue their investment in Willys-Overland.

Walter was bold. He asked for a vice-presidency and the outrageous sum of $1 million a year to run the show in Toledo, any way he wanted, for two years. The bankers were only too glad to have him sign.

John North Willys was allowed to keep his title and his glorious gilt office in New York City, but Walter Chrysler was given complete control of the operations. Bankers told Willys to think of Chrysler as the doctor. Willys accepted the notion. The first thing Walter did was cut Willys' personal salary in half.

The company had been grossly mismanaged; Willys had been an absentee owner for too long. Walter made greedy officials pay back money they had wasted. A harvester company and an airplane subsidiary were sold. Contracts with suppliers were renegotiated at reasonable, uninflated prices. Within months, millions of dollars in debt evaporated. Under his guidance Willys-Overland recovered and became as healthy and profitable as it was before the 1919 depression.

The same desperate banking circle beat a hasty path to Walter Chrysler's door late in 1921. He was offered the job of rescuing Maxwell-Chalmers while still running Willys-Overland! Appalled at the horrific entanglement of affairs between the two companies and grumbling that he wouldn't touch the mess with a ten-foot pole, Walter took on the job. He realized the long-term potential of sorting out Maxwell and Chalmers - bringing out his own car. He asked for a small salary of $100,000 along with massive stock options.

The stalled merger was completed, and the company was immediately reorganized as the Maxwell Motor Corporation. Walter perceived that most of the company's money was tied up in completed inventory, and slashed the price of Maxwell cars to the point that they garnered only $5 profit per car. Bankers were horrified at the notion, but went along. The slightly restyled and mechnically improved cars were dubbed "the Good New Maxwell."

It was a bold gamble, and it worked. Maxwells began to move, and sales almost tripled over the previous year. Walter hired K.T. Keller away from GM Canada to run the production lines. He then convinced bankers to loan the company another $15 million so that all of the company's assets could be bought outright. Skeptical bankers saw the logic and arranged for the loan. Maxwell was moving into the black.

Secretly, Walter's trio of engineers, Zeder, Skelton, and Breer, developed a new car, one that would not bear the Maxwell name, but that of Chrysler himself. Walter needed $5 million to bring the new, fast and sleek car to production; his sales chief, Joe Fields, brilliantly arranged for the lobby of the Hotel Commodore to be rented. The Commodore was the hotel where most of the bankers and moneymen were staying during the glitzy show. They had to walk by the snazzy Chrysler in order to go anywhere. The prototype gleamed and was the biggest attraction. Able to get his loan to build the new car by sitting through high-powered, all-night negotiations, Walter Percy Chrysler was on his way to owning a company of his own.

Chapter 1: Roots (Walter Chrysler's early years)Chrysler CanadaCanada at Valiant.orgFargo Trucks

James C. Mays' writing can also be seen on the OldCarsCanada site. Also see: Chrysler Canada summaryCanada at Valiant.orgFargo Trucks

James Mays' full book, The Chrysler Canada Story:

Chrysler 1904-2018

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