General Motors Corporation

In the early 1900's Billy Durant, grandson of a Governor of Michigan, was already a millionaire, having founded a successful handcart factory with his partner, Josiah Dallas Dart, an ex-dealer in trinkets. These two decided to convert their factory in Flint to motor car production, Durant being particularly keen to do so. Their problem was to find a farely well-known make, preferably in financial difficulties, which their assistance could turn into a financial success. Buick fitted the bill.

David Dunbar Buick was in an ex-tinsmith, also from Michigan, who, having amassed a sub­stantial fortune from his patents on the application of enamel to cast-iron, decided to build motor cars. His prototype for a light car created interest; it had a well-balanced engine, a pleasing appearance, and certain good technical details, notably pushrod-operated overhead valves. The financial aspects of the company, however, were not equally good. The Buick Manufacturing Company, in fact, became the Buick Motor Car Company after only one year, when it accepted a contribution of new capital from the Briscoe brothers. The association with the Briscoes did not last long. When they saw the way the company's finances were going they withdrew, and Buick, in spite of his ingenious ideas and the success of the few vehicles built, found himself on the brink of bankruptcy. It was in this way that Durant, in November 1904, was able to get his hands on the Buick business. He immediately increased the company's capital from $75.000 to $300, 000, and later to $500, 000. He transferred the works to Flint, not to his own factory but to that of the Flint Wagon Works, another company with which he had recently be­come associated.

The impulse that Durant gave to the Buick business is shown by the production figures; they passed from 28 machines, in 1904, through 626 in 1905, to 2, 300 in 1906. By 1908 Buick production was sufficient for Durant to consider his next step towards the motor industry throne that was clearly his ambition. Instead of buying another motor com­pany, he set up a much higher goal — nothing less than a trust to incorporate all, or at least most of the big American motor manufacturers, a trust with the then fantastic produc­tion of 50, 000 units per year.

Durant did not waste any time. He went so far as to found the new company first, with the grandiose title of International Motor Company, and then sent his emissaries to talk to the major competitors. Ford, obviously the prime objective of this larger scale operation, gave a decisive " no". Reo and Maxwell-Briscoe also refused. Never one to lose time up blind alleys, Durant changed his tactics at once and on 16th September 1908, founded a second company — General Motors with an initial capital of $12, 500, 000. This company was given the task of acquiring motor companies which found themselves in difficulty, including those manu­facturing accessories.

The first companies absorbed by General Motors had already been previously incorporated by the International Motor Co. They were Dow, Ewing Automobile, Carter Car Company, and Elmore, all of minor importance and forgot­ten today. To these were added the Western Mott, manu­facturers of axles, and Champion, of enduring sparking plug fame.

Following his plan of absorbing all the accessory-pro­ducing companies, Durant next bought the Briscoe Com­pany (which had initially refused to join G.M.) and later made his first major acquisition — Oldsmobile — major more for its reputation than for its production record.

All these acquisitions had been made in a few months — five, to be precise — and Durant, motivated not so much by success as by the need at that stage to impress his associates, paid $245, 000 in dividends to the shareholders. By now Durant had the bit between his teeth, and on 28th July, 1909 he bought Cadillac for $3, 400, 000.

A little later Durant conceived the most ambitious plan of his career — nothing less than the acquisition of Ford, for which 'fabulous Billy', as he had been christened by Wall Street, was prepared to pay the unprecedented sum of $8, 000, 000.

With Ford's refusal, Durant's star began to decline. It was typical of American high finance in those years that the absolute faith that had made almost unlimited funds avail­able to him was quickly changed into suspicion — of his ambition and of the scale of his plans — and then into open alarm. Wall Street turned its back on him, he was asked to resign, and was substituted by Charles W. Nash. Nash had been a collaborator of Durant in the letter's Flint factory. He was made president of Buick after its purchase by Durant, and had led that company to unheard-of prosperity. It is not surprising that the shareholders saw in him someone who was capable of taking over — with a less ambitious and more realistic policy — from 'fabulous Billy'.

We might add that this was by no means the end of Durant. Five years later, (in 1915) he was once more trium­phantly at the head of General Motors, thanks to his success with a new name -Chevrolet. He was finally to leave the company in 1920 when another crisis made G.M. shares fall from $400 a share to $12. Even after this he was to figure largely in the activities of other new makes — Durant, Dort, Star and Mason — until the crisis of 1929 finally pushed him into obscurity. He died a largely forgotten man in 1947.