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The General Of General Motors
"Billy" Durant typified the courage of American business. He was charismatic, arbitrary and impenetrable.
August 1973 | Volume 24, Issue 5
Some of Durant’s new moves turned out to be brilliant. The Fisher Body Company was purchased in 1918. And recognizing well ahead of his contemporaries that the automobile industry could not continue on a cash-on-delivery basis, Durant pioneered in time sales for expensive consumer goods with the creation of the General Motors Acceptance Corporation in 1919. Against everyone’s advice he paid fifty-six thousand dollars for a faltering, one-man electric-refrigerator company that served only forty-two customers, on the ground that refrigerators were related to automobiles—both were essentially cases containing motors. A contest to find a name for the company was won by “Frigidaire.”
The trouble was that Durant lacked the judgment to discriminate among the many ideas about which he became enthusiastic. For every Buick there was a Cartercar; for every Frigidaire there was a Heany Lamp. Durant’s idea of “playing it safe all along the line,” backing every impulse in the hope that some would pan out, made him an inveterate expansionist who could survive only in flush times. His performance was brilliant when he concentrated his considerable energies upon building up a single company in an expanding market, as at Durant-Dort, Buick, and Chevrolet. But his bent toward indiscriminate dispersal of his energies and one-man rule spelled disaster when times got tight and the profits from a few phenomenally successful bets began to dwindle. Sorry examples were two new passenger cars that Durant added to the General Motors line for no apparent reason : the Sheridan and the Scripps-Booth. Both were losers. But even had they proved popular, they would merely have competed in the same general price range with Buick, Chevrolet, Oakland, and Oldsmobile. As in 1910, by 1921 only Buick and Cadillac were making money for General Motors.
The enthusiasm that Durant developed to get into the farm-machinery business was more understandable. Impressed by the initial success of the Fordson tractor, Durant developed an obsession to “lick Henry Ford in the manufacture of tractors” and, while he was at it, to “lick the I nternational Harvester Company in the manufacture of agricultural implements.”
In 1917 Durant bought into the Samson Sieve-Grip Tractor Company, of Stockton, California, manufacturers of a tractor called the Iron Horse, which was guided by reins. He later added two other small agricultural-machine companies and formed the Samson Tractor Division of General Motors. In addition to the Iron Horse, a lighter “Samson” tractor was developed to compete with the Fordson. Plans for a nine-passenger farmer’s car that would sell for only seven hundred dollars never materialized because it became obvious there was no way to build it at a profit. The Samson tractor and the Iron Horse were returned in droves by irate farmers who demanded their money back. The tractor-division fiasco cost General Motors a sum variously estimated as between thirteen and forty-two million dollars before it was liquidated in 1920.
Relationships with key associates were severed as Durant became more and more difficult to work with. Charles W. Nash was the first to go. Next, Henry M. Leland and Wilfred C. Leland left Cadillac to form Lincoln in 1917 over the refusal of Durant, a pacifist by inclination, to endorse their enthusiasm for the war effort. Other executives grew frustrated by Durant’s chaotic schedule, inability to recognize priorities, and increasingly heavy involvement in the stock market. Walter P. Chrysler was called to New York by Durant. “For several days in succession,” he said later, “I waited at his office, but he was so busy he could not take the time to talk with me. It seemed to me he was trying to keep in communication with half the continent; eight or ten telephones were lined up on his desk. … ‘Durant is buying’ was a potent phrase in Wall Street then. ” Alfred P. Sloan, Jr., also recalled that executives lounged around the room watching Durant’s barber, Jake, shave him “while our scheduled work was neglected.” At executive meetings “the ten or fifteen of us who gathered there would wait all day for the Chief… old friends could not easily be denied, and so we had to wait.”
As the stock market came to absorb his attention Durant relied on cronies and made important decisions off the top of his head. Sloan was aghast that a car model was tested on a supposed cross-country trip by the same man who designed it; he dispatched reports, enthusiastically received by Durant, “by conniving with hotel porters along his scheduled route” while never actually making the trip. Sloan was even more aghast at Durant’s casual attitude about the location and price of the new General Motors Building in Detroit, a twenty-million-dollar project that Durant later opposed as too costly. “He started at the corner of Cass Avenue, paced a certain distance west on West Grand Boulevard past the old Hyatt Building. … Then he stopped, for no apparent reason, at some apartment houses on the other side of the building. He said that this was about all the ground we wanted, and turned to me and said, as well as I can remember, ‘Alfred, will you go and buy these properties for us and Mr. Prentis will pay whatever you decide to pay for them.’”