(Informal) History of General Motors Circa 1958 Author: Unknown Source: Retired GM employee who received it while attending GM Institute.

THE DEVELOPMENT AND GROWTH OF GENERAL MOTORS

INTRODUCTION

General Motors Corporation is one of the largest and most widely known

industrial enterprises in the world today. Its activities have acquired impor

tance in many communities and among many individuals. General Motors

came into existence in 1908, several years after the invention of the automo

bile. With Buick, Oldsmobile, Oakland (now Pontiac), Cadillac, Cartercar,

and Elmore passenger cars, and Reliance and Rapid truck as a nucleus,

General Motors has had an illustrious history. General Motors entered this

highly competitive field in the years when the future of the automobile was

not yet assured, and has survived the high mortality rate which has plagued

the industry. More than 2,500 different makes of motor cars have been pro

duced in this country at one time or another, yet of all these only a handful

(18 at this writing) remains today. The history of General Motors over the

past half century has been both colorful and interesting, but it is possible to.

present only a brief outline in this text.

The pages that follow present some of the highlights of the growth of

General Motors during the period of America's greatest industrial develop

ment, and of its contributions to that development. This pattern of events is

typical of many successful manufacturing businesses that have grown from

small beginnings, through the efforts and skills of individuals working to

gether in a system of free competitive enterprise. Many events and details

are necessarily omitted from this discussion. Students whose interest goes

deeper will find much additional information in the many excellent volumes

available on the automotive industry.1

EARLY DEVELOPMENTS

In the year 1893 the first successful gasoline car in America coughed

and wheezed its way down a side street in the quiet town of Springfield,

Massachusetts, to the annoyance of the residents and the terror of their

See "The Turning Wheel, " by Arthur Pound; "Concept of the Corporation. " by Peter F. Drucker; "The

Adventures of a White-Collar Man, " by Alfred P. Sloan, Jr.; and "The Story of General Motors, " among

others.

horses. This single-cylinder "horseless carriage," built by J. Frank Duryea

at the suggestion of his brother, incorporated for the first time in any Amer

ican car, electric ignition and spray carburetion, both of which were designed

and built by Duryea. It ran very uncertainly, but was the beginning of a great

industry.

In the years since 1893 the automobile has progressed from a faltering

buggy-like contraption to a safe, dependable, and efficient vehicle for econom

ical transportation. As the motor car has improved, the industry itself has

grown in social and economic significance.

General Motors was organized in 1908, but its roots go back to the very

earliest days in the industry and even beyond — to carriage and wagon build

ing, stationary engines and bicycle bells; to the days when men like R. E.Olds,

David Buick, and Henry Leland were experimenting and tinkering and forming

companies to make the "horseless carriage" about which everybody joked.

R. E. Olds and the Oldsmobile

After having spent seven years in his father's machine shop working on

stationary and marine gasoline engines, in 1892 young Ransom Olds took his

savings, bought his father's interest in the business, and incorporated the

Olds Gasoline Engine Works for $30,000. He then experimented for five more

years before completing his first Oldsmobile in 1897, having been authorized

by the board of directors to "build one carriage in as nearly perfect a manner

as possible." This first Oldsmobile had two seats holding four passengers

and was powered by a five-horsepower gasoline engine which, under the best

conditions, could propel the car at a speed of about 18 miles an hour. At

present this first Oldsmobile is in the Smithsonian Institute in Washington.

Because of the success of his first model, Mr. Olds built in Detroit the

first factory in America especially designed for the production of automo

biles in 1899. His first "deluxe" model priced at $1,250, including such im

provements as "cushion tires," did not sell. He discarded his plans and

started all over again, producing a one-cylinder car that weighed 700 pounds

and sold for $650. Production figures of Oldsmobiles are 1901 - 425; 1902 -

2,500; 1903 - 4,000; and 1904 - 5,000. These were the famous "curved-dash"

runabouts. In addition 6,500 one-cylinder straight-dash runabouts were built

in 1905. This was a record of quantity production for this time; no other auto

mobile manufacturer approached it.2 The success of Olds in Detroit fixed this

city as the center of the new automobile industry. In 1905 Oldsmobile moved

back to Lansing, where the continued success of this automobile was to prove

a strong factor in the commercial and industrial development of that city.

Buick

The progress of Olds with his low-priced and dependable car caused

many engineers and designers to decide that the automobile field held great

possibilities. Among them was David D. Buick, who had already been active

in the manufacture of marine engines and plumber's supplies in Detroit.

Having developed a method of fixing porcelain on metal, the key to low-priced

bathroom fixtures, he already had one substantial achievement to his credit

when he entered the automobile field. In 1902 he organized the Buick Manu

facturing Company in Detroit.

The costs of putting together the first Buick had strained the resources

of Buick and his partner Robert Sherwood. They had borrowed much money

from Benjamin and Frank Briscoe, sheet metal manufacturers, who decided

to sell the firm when the financial burden became too heavy.

Late in 1903, the Flint Wagon Works, with James H. Whiting as presi

dent, bought Buick and moved operations to Flint. January 19, 1904, Buick

was incorporated with capital stock of &75,000. The name was changed to Buick

Motor Car Company and Whiting, looking for a younger man, turned the firm's

management over to W. C. Durant.

After he took over operation of the infant Buick enterprise, Mr. Durant

(who had become a millionaire in the Durant-Dort Carriage Company of Flint)

saw that immediate expansion was necessary. Facilities in Flint were inad

equate and he already had a large plant standing idle in Jackson.

2Pound, p. 54.

So Mr. Durant raised Buick's capitalization to a half-million dollars to

put the firm on its feet and moved the assembly operation and main office to

Jackson. This division of work was unsatisfactory, and consolidation in one

city was inevitable.

Mr. Durant offered to consolidate Buick in Flint if capitalization could

be raised to $1,500,000 so a suitable assembly plant could be built there.

With Durant himself doing most of the soliciting the new figure was reached.

Buick assembly operations were moved back to Flint in November, 1906,

and business increased rapidly. Out of its success, other automobile manu

facturing units were purchased, and the group later was consolidated to be

come General Motors.

Cadillac

The Cadillac Automobile Company, organized under the direction of

Henry M. Leland in 1902, was named in honor of Antoine de la Mothe Cadillac,

the French explorer whose expedition established a settlement at Detroit in

1701.

Cadillac built one car late in 1902 and furnished two in the spring of

1902. In the following year, 1,895 finished automobiles were built and

shipped. Although the first Cadillac gave little promise of what the car was

to become in later years, it was then the last word in superior workmanship

at the time. Practicing the highest standards of precision, Cadillac demon

strated that automobiles could be made of interchangeable parts just as

effectively as firearms, the industry in which Mr. Leland received his early

training.

Oakland

About 1907 it became apparent that the automobile was a successful

means of individual transportation, and Edward M. Murphy, owner of the

Pontiac Buggy Company of Pontiac, Michigan, decided that the buggy busi

ness was a thing of the past and that he had better get into the growing

automobile field. He organized the Oakland Motor Car Company in August,

1907, naming it after the county in which Pontiac is located. His car was

a two-cylinder model, designed by A. P. Brush, who had been with Cadillac

as an engineer. This two-cylinder design did not prove successful and in

1908 the company brought out a four-cylinder model, powerful for its time,

which undersold all competitors. In 1926, eighteen years later, Oakland was

to introduce the Pontiac car.

BUILDING GENERAL MOTORS

1908 - 1919

From the time he reorganized Buick, Mr. Durant seems to have been

looking toward wider horizons. Vehicle parts plants, some of them controlled

by Mr. Durant, turned to making automobile wheels, axles, springs, paints and

bodies. He induced Charles Stewart Mott to move the Weston-Mott Company

to Flint from Utica, N. Y. to supply axles for Buick. Mr, Durant also per

suaded Albert Champion to produce the famous AC Spark Plug in Flint.3 He

also organized the Janney Motor Company in Jackson, but this company was

soon merged with Buick.

Early Negotiations

In May, 1908, Benjamin Briscoe of Maxwell-Briscoe Motor Company,

who had sold Buick in 1903 for $10,000 advised Durant that George W. Perkins

of J. P. Morgan & Co., already a major owner of Maxwell Briscoe, was ex

ploring the idea of a giant automobile merger to save the industry from death

by co'mpetition. Also involved, in addition to Durant, Briscoe, and Perkins,

were Henry Ford and R. E. Olds. Negotiations proceeded through the sum

mer and had reached the final showdown stage when Henry Ford surprised

the group by demanding cash rather than holding company stock. He would

sell but not merge, and he supposed that everyone knew that all along. Olds

subscribed to the same idea, and from that point both he and Ford were out

of the negotiations.. Disagreement finally caused the negotiations to disinte

grate, but Mr. Durant was still undaunted.

3Pound, p. 111.

General Motors is Born

Finally Mr. Durant had Curtis R. Hathaway draw up articles of incor

poration for General Motors Company (a holding company) which were filed

in New Jersey on September 16, 1908, the birthday of General Motors. This

historic event passed unnoticed for several weeks. Capital stock was only

$2,000 and no name then famous in motordom appeared on the record.

On September 28, 1908, capital was increased to $12,500,000. The next

day G.M. bought the Buick Motor Company. This transaction cost about

$3,998,000, all in G.M. stock except for $1,500 in cash. Also G.M. bought

from Buick for $250,000 in stock the body plant of W. F. Stewart Company

which was leased to Buick and finally sold back to Buick in 1909.

Oldsmobile was the third G.M. acquisition. Negotiations lasted for

about a month and the deal was closed on November 12, 1908 for a total of

more than $3,000,000.

On October 20, 1908, the board was enlarged from the previous three to

seven directors and W. M. Eaton, an influential Jackson business man, was

elected president. Mr. Durant became vice president, a post he held until

November 16, 1915. Although Mr. Durant was actually the founder and ac

tive head of the organization, he chose not to accept the highest office,

thereby leaving himself free for more active duties.

Expansion

The expansion was on. G.M. directors on January 20, 1909, author

ized the purchase of a half interest in the Oakland Motor Car Company of

Lansing. By the end of 1909 there were 22 institutions or plants combined

into G.M.

The highest price G.M. paid for an automobile firm was the $4,400,000

cash and $275,000 in preferred shares of G.M. which Cadillac owners re

ceived July 29, 1909. This was the largest transaction Detroit had known up

to that time, nearly all in cash. This purchase actually was backed by Buick

which had the strongest financial position of any subsidiary.

At the time he was forming General Motors, Mr. Durant brought

Albert Champion to Flint, September 10, 1908, to make spark plugs for

Buick. A year later he organized the Champion Ignition Company, now AC

Spark Plug Division, with $100,000 capitalization of which General Motors ac

quired $75,000. A few years later, a youngster, Harlow H. Curtice by name

and destined to become President of General Motors, started with Champion.

Soon Mr. Durant was to miss a second chance to buy Ford Motor Com

pany. Henry Ford was willing to sell in 1909 to devote himself to the farm

tractor industry. On October 26, 1909, the G.M. board of directors approved

the purchase of Ford at $8,000,000, payable $2,000,000 in cash and the balance

in one to three years at five per cent interest. The $8,000,000 would pay for

the entire business, including the name Ford. Mr. Durant sought to borrow

the cash required at the National City Bank of New York. However, the bankers

turned down the loan - the automobile industry was being criticized, its phe

nomenal growth was suspicious, it looked too much like speculation.

By the end of 1910, General Motors had acquired entire ownership in

more than 30 firms and plants, and smaller holdings in numerous others.

Among this number were 16 makes of cars, only four of which remained long

in production after purchase by G.M. Collectively, these purchases were

worth the price paid. In the first two years G.M. realized a net profit of

nearly $19,340,000, mostly from Buick. It reinvested $18,279,297 in expan

sion. When it was only five months old General Motors had declared its first

semi-annual dividend of $3.50 on preferred stock. It has never since missed

a preferred dividend. Since 1915 it has never missed a cash dividend on com

mon stock.i

Financial Crisis of 1910

Up to the end of 1909 credit seemed to be unlimited. Suddenly the

bankers began to tighten up, ask for their money, refuse further loans.

Early in 1910 Buick sales had been phenomenal, nearly double the 1909

total. But for months during the summer as the panic was being felt, Buick

plants were almost deserted. Conditions were almost as bad elsewhere;

workers were laid off by the thousands; factories were almost idle. G.M.

shares fell from around $100 to $25.

At first Mr. Durant was not inclined to be alarmed, but soon he dropped

everything to search for money. So much was needed that it had to come from

the largest banks. He visited them from coast to coast and the longer he took

to find the money, the more he needed. Nothing less than $12,000,000 would

save the day.

Finally J. & W. Seligman & Co. of New York, and Lee, Higginson & Co.

of Boston offered a loan of $12,750,000 only if they could change the manage

ment and create a trusteeship to assure a more conservative operation than

had been provided by Mr. Durant. Mr. Durant agreed to step down from man

agement. General Motors Company of Michigan was organized to take title to

all real properties of the subsidiary concerns, so that a blanket mortgage

could be issued to the banker syndicate. For this mortgage on all Michigan

property, $4,169,200 in preferred stocks, $2,000,000 in common stock, and

$15,000,000 in 6% notes, General Motors received $12,750,000 cash.

New Management

The bankers quickly began to change management. Mr. Durant remained

on the board and as vice president, and for a year he continued as chairman

of the finance committee, but he was no longer the driving force that for two

years had leti G.M. to motor supremacy and almost to destruction. A new

board was named and James J. Storrow of Boston was elected interim presi

dent to be followed shortly in that office by Thomas Neal of Detroit. New

managers were appointed to several subsidiaries, among them. Charles W.

Nash who became president of Buick, and president of G.M. the following year.

General Motors voting trust certificates, share for share equivalents

of common shares on deposit, were listed on the New York Stock Exchange-

July 31, 1911, the first automobile securities to be so listed. By July 19 the

number of subsidiaries had been reduced to 20. All but four of these were

yet to be liquidated or merged with other acquisitions. Public confidence

which had been shaken by the withdrawal of several cars from the market

had to be rebuilt. The public was wary of cars that might become orphans,

without service and parts agencies, and with greatly lowered resale value.

G.M. had to prove that it and its remaining car plants were permanent.

Banker management had established a policy of building up existing

companies rather than acquiring new ones. No more efforts were made to

buy Ford or other competitors. Passenger car units had been reduced to

Buick, Cadillac, Oakland, and Oldsmobile. Only one more passenger car

unit was still to be added, Chevrolet, but not until Durant had regained con

trol of G.M. That return was one of the most dramatic episodes in motor

history.

When Mr. Durant stepped down as head of General Motors in 1910, he

continued to hold the title of vice president. He cooperated with the bankers

in the retrenchment program but did not agree with their views regarding

the future of the automobile. He immediately began to look around for fresh

fields in which to exercise his promotional abilities. He acquired all the

G.M. shares he could and encouraged his friends to do likewise; some of

them left G.M. to join him in his new ventures. Durant enterprises, usually

without his name, appeared in rapid succession. Among these was the Chev

rolet Motor Car Company.

Chevrolet

The Chevrolet was more of a promotion than an automobile during

the first years of its life, but in June, 1913, it was moved to Flint from

Detroit and got into successful production. In the early part of 1915 capi

talization was increased to $20,000,000 and Chevrolet was re-incorporated

in Delaware.i

During all these promotions, Mr. Durant had kept his eye on General

Motors and its stock on the exchange. The bankers lacked his optimism

even when their profits doubled annually. While he overestimated the future

and never allowed for depressions, they erred more in the other direction.

Meanwhile, Mr. Durant was able to add to his already large holdings in G.M.

Up to the time of the banker control, G.M. had been almost a one-man

corporation. That one man was now out of control but still very much in

terested. He thought that G.M. needed a sponsor, an investor who repre

sented a large and long-established fortune, outside of the corporation.

9

The du Pont family had assigned John L. Raskob to find a likely invest

ment for accumulated funds, and hearing that Mr. Raskob had picked up some

G.M. shares, Mr. Durant thought that the du Ponts might be interested. Ne

gotiations followed and the du Ponts decided they would join in Mr. Durant's

program of regaining control of G.M., providing they could acquire sufficient

stock at the right price. At the time of the du Pont negotiations G.M. certifi

cates were about $125, but Mr. Durant assured the du Ponts that he could get

certificates for them at anywhere from $20 to $120.

He was able to do this because he and several other holders of large

blocks, friends of his, were willing to part with some of their shares, even

at apparent sacrifice, in order to bring the powerful sponsor into G.M. and

thereby enhance the value of their remaining shares. The du Ponts invested

about $27,000,000 through Mr. Durant at well below the market listing.

At that time Mr. Durant had a suite of three rooms in the Belmont

Hotel in New York with a wall telephone in each room. They were practically

private lines to different brokers and he jumped from one to the other buying

G.M. shares all over the country. He was later to have a private switchboard

and a battery of phones right on his desk.

The incorporation papers for Chevrolet of Delaware were withheld

from filing until he drained the market of G.M. certificates. He let it be

known among certain holders of large blocks of G.M. stock that he would

trade five shares of Chevrolet common for one share of G.M. common. They

turned in G.M. certificates and proxies by the suitcase full. Some loaned

him their entire holdings.

At a meeting of the stockholders on September 16, 1915, Mr. Durant

asked that General Motors buy Chevrolet. When this was refused he showed

his hand. He and his associates owned General Motors. This began his

second reign lasting five years and during which assets were multiplied five

times, to a total of $514,000,000. Chevrolet, however, did not become a di

vision of General Motors until 1918.

On the same day, a cash dividend of $50 a share, the first ever issued

on common stock, was declared, payable on October 15. It was one of the

largest dividends ever heard of in any large corporation at that time. It had

been earned under the banker administration but its declaration at that time

was a sensational victory for Mr. Durant and his backers.

10

Among the changes in the board which took place at an election of G.M.

directors two months later (November 16) was the election of Pierre S.

du Pont as chairman of the board. Mr. Nash remained in the presidency

until June 1, 1916, when Mr. Durant accepted the title for the first time.

Incorporation of General Motors

General Motors Corporation was incorporated in Delaware on October 13,

1916, and by August, 1917, had acquired all the stock of the General Motors

Company of New Jersey. Five shares of new common stock were issued for

each old share of common, and one and one-third new preferred for each old

share of preferred.

The way was not clear to take.on more divisions and expand those re

tained, which had become divisions of the Corporation through dissolution of

the old independent companies.

On the same day that Buick became a division, Walter P. Chrysler,

president and general manager of Buick, was elected a vice president of G.M.,

as were some of the other divisional general managers. Charles S. Mott had

been made a vice president three weeks previously.

Further Expansion

During these developments within the Corporation, Mr. Durant was busy

promoting on the outside. He gathered together leading parts firms into

United Motors Company, and began to nurse along the beginnings of Frigi-

daire. Into United Motors he brought, among others, Hyatt Roller Bearing

Company of Harrison, New Jersey. He had heard that Alfred P. Sloan, Jr.,

his father, and a few friends had a successful bearing business, and immed

iately became interested. He arranged a meeting with Mr. Sloan and offered

to buy Hyatt. Mr. Sloan consulted his board of directors, and when he re

turned, the first price mentioned was $15,000,000.4 The price eventually

paid, mostly in United Motors shares, was $13,500,000.

4Sloan. p. 97.

11

In the same year (1916) Remy Electric, Klaxon, New Departure Manu

facturing Company, Dayton Engineering Laboratories Company, Harrison

Radiator Company, and Jaxon Steel Products Company were purchased. On

May 11, 1916, United Motors Corporation was formed for the purpose of

coordinating the activities of these companies, and Mr. Sloan became presi

dent of the new corporation. In 1918 United Motors Corporation became a

part of G.M. and on November 7, Mr. Sloan became a G.M. director. Six

weeks later he became a vice president. Stockholders of United Motors Cor

poration received G.M. shares for their holdings. However, United Motors

Corporation remained a subsidiary until 1944 at which time it became a G.M.

division.

Frigidaire

The Murray Body Company of Detroit had formed the Guardian Friger-

ator Company in 1916, producing about 50 primitive electric refrigerators the

first year at a heavy loss. This led one of the Murray sons to persuade

Mr. Durant to discourage their father from engaging in such a costly experi

ment. When he learned about the idea of making ice right in the home, he

became intrigued and climbed up four flights of rickety stairs to the poorly-

equipped shop to have a look around. Asa result, within two years he had

invested $56,000 in the enterprise. Frigidaire was organized in February,

1919, and the next month G.M. bought it for $56,366.50 and operations were

moved to Dayton where most of G.M.'s electrical facilities were established.

Soon {he Frigidaire name became the common household name for any sort

of electric refrigeration.

World War I

The first decline in General Motors sales and employment since the

panic of 1910 was in 1917, the year the United States entered the war. The

government relied on the motor industry for production of military needs

and all G.M.'s facilities were placed at its disposal.

Wartime and Post-War Expansion

General Motors expansion took an unprecedented spurt during and fol

lowing the war. Capitalization was increased to $200,000,000 on March 20,

1918. On May 2, Chevrolet was bought for 282,684 shares of G.M. common,

12

taking all assets except 450,000 shares of G.M. common already in the Chev

rolet treasury. Purchase of United Motors was authorized on June 26. Capi

talization was raised to $370,000,000 on December 10, 1918. The du Pont

American Industries subscribed for $24,000,000 of common at $120 a share

on December 19. At the same meeting in which the capitalization was raised

G.M. bought interest in McLaughlin Carriage, Chevrolet of Canada. McLaughlin

Motor Car Company. Lancaster Steel Products, and concluded the purchase of

United Motors. On January 29, 1919 General Motors Acceptance Corporation

was incorporated, beginning the world-wide financing of car distribution, both

wholesale and retail.

In June 1919, at the height of the post-war prosperity. G.M. capitaliza

tion was increased to $1,020,000,000. It was a billion dollar corporation on

paper with assets still only a little more than half that much.

In 1919, a three-fifths interest was acquired in Fisher Body for

$27,000,000 in G.M. shares and a big contract for bodies. This organization

had been founded eleven years before by Fred J. and Charles T. Fisher, who

were the eldest of the six Fisher brothers to become active in the automo

bile field. It was the Fishers who led the change from the buggy-type bodies

of the early industry to the "Body by Fisher" that soon won acceptance in the

industry for its strength and durability. Fisher also pioneered closed bodies

which, for the first time, made it possible for owners to year-round use of

their automobiles. Among other Fisher Body contributions were: No-draft

ventilation, Uni-Steel Bodies, and Turret Tops. Fisher Body became a di

vision of General Motors in 1926, and now has 27 plants in 21 communities

throughout the country.

The $20,000,000 General Motors Building in Detroit, the world's

largest office building at the time, was begun June 2, 1919 by Durant Build

ing Corporation, the first firm to have the promoter's name since the

Durant-Dort Carriage Company.

Post-War Decline

On November 11. 1919. the first anniversary of the World War I

Armistice, General Motors stock dropped more than 38 points, and the next

day it fell 20 more. Mr. Durant immediately tried to bolster the market by

buying G.M. shares.

13

The slump was not immediately critical but Walter P. Chrysler re

signed from the first vice presidency of CM. and the presidency of Buick.

A few months later he took charge of Willys-Overland and Mr.. Durant ne

gotiated for his G.M. holdings.

By June, 1920, trainloads of G.M. cars stood on rail sidings undelivered.

By October, production at Chevrolet had been so far curtailed that it was con

sidered necessary to publicly deny that Chevrolet would be closed entirely.

The Corporation suddenly found itself in need of $80,000,000. An issue

of 3,200,000 shares of common at $20 was subscribed in part by du Pont

interests, 1,800,000 shares, and the remainder by J. P. Morgan and Co. Be

fore the deal was completed, the market had dropped so low that there was

doubt that the stock would be accepted at $20. In November, G.M. shares had

fallen to a low of $12.75. Finally, after he had lost about $90,000,000 Durant

was forced to give up. To keep Durant's millions of shares from being thrown

into an already panicky market, the du Ponts paid for the shares he had purchased

on credit and in that way acquired 3,000,000 of his shares, leaving him a sub

stantial number of shares.

Mr. Durant resigned from the presidency on November 30, 1920. He

soon had his own office and was promoting Durant Motors, Inc.

Critical as this period was, G.M. was able to borrow $82,000,000 with

out the embarrassment involved when it had borrowed $12,750,000 in 1910.

One of the reasons for this was the confidence of bankers in the men at the

head of G.M. Pierre S. du Pont took over the office of president, at the

same time retaining chairmanship of the board. Alfred P. Sloan, Jr. be

came executive vice president, and an entirely new management policy was

initiated. Mr. Sloan succeeded to the presidency on May 10, 1923.

William C. Durant

As the man who founded General Motors leaves its history, it is per

haps appropriate to take a closer look at the kind of man he was.

He has been called, "a promotional wizard," "a dictator," and "an

incurable optimist." Even when used by those who disagreed with him, these

terms did not necessarily imply a derogatory note. His integrity was un

blemished, his devotion to General Motors complete.

14

In the early days of General Motors a man with the promotional genius

of Mr. Durant was indispensable. Without his zeal and ability to bring invest

ments into the infant automobile industry, progress and development in those

early days might have proceeded much more slowly. He seemed to recognize

the importance of new developments before other men, and frequently used

his personal funds to speed their progress. Frigidaire is just one example.

He operated as a dictator in bringing General Motors into existence, but

was unable to develop an effective organization.5 Throughout his tenure, it

was plain that G.M. was a one-man organization, but soon it became impossi

ble to direct and control such a vast organization. True, there were other

executives who presumably had decision-making power, but this power was

rendered ineffective by Mr. Durant's custom of making decisions which

affected their divisions without consulting them. It was not unusual for divi

sion heads to be called to New York or Detroit, only to be kept waiting in

outer offices sometimes for days, while the Chief kept in touch with his vast

empire by telephone or spent hours discussing the carriage days with old

cronies. Such an organization as G.M. could not grow into a successful or

ganization under a dictator because such a dictator would have to know all

the answers, and size and complexity made this impossible. He tried to

carry everything in his head and whenever some idea flashed through his

mind he would act on it immediately, usually without taking the time or

trouble to consult with the executive who had the real responsibility.

Mr. Sloan relates later that when the land was purchased for the G.M, Build

ing in Detroit, Mr. Durant walked along the boulevard with him and finally

indicated a place at which he instructed him to buy up to "there." How

"there" was arrived at, apparently was forever locked in the mind of

Mr.. Durant.

His optimism seemed to be both the source of his strength and his

weakness. He always looked for the best, but never was prepared for the

worst when it came. 7

5See Alfred P. Sloan's "The Adventures of a White Collar Man, " and the statement by Harlow H. Curtice

before the Senate Subcommittee on Antitrust and Monopoly, December 2, 1955.

6Sloan, pp. 111-114.

L 7Pound, p. 190.

15

After he left General Motors he continued to promote numerous enter

prises. Among them, Durant Motors which after a spectacular beginning, soon

was passing from the scene. In October 1929 the crash came and Mr. Durant

lost an estimated $40,000,000. Suits piled up against him by brokers claiming

unpaid commissions, and in February 1936 he filed for brankruptcy. He con

tinued to promote after his third failure but he was out of the automobile pic

ture for good. Small enterprises such as a Flint bowling alley, started in his

79th year and conceived as the first of a nation-wide chain of family recreation

centers, occupied his time. He suffered a stroke in 1942 which left him in poor

health until his death in New York in 1947.,

DIVERSIFICATION AND PROGRESS

1920 - 1940

Upon taking over the presidency of General Motors, one of the first acts

of Pierre du Pont was to tour the industrial centers with Mr. Sloan to counter

act the resentment felt by admirers of Durant, both within and outside the

Corporation. He assured everyone that all would benefit as the Corporation

expanded under new management. An examination was begun of the structure

and composition of the Corporation and sweeping changes were made in the

way in which it was organized and coordinated. The part played by Mr. Sloan

in the reorganization will be covered in greater detail in the following chap

ter.

In the course of this examination a group of consulting engineers who

studied the Corporation's units recommended that Chevrolet, among others,

be thrown out as hopeless. It could never compete with Ford. Mr. Sloan

had a hunch, with which Mr. du Pont agreed, that they should forget the re

port of the experts and keep the division which was to become the world's

largest producer of automobiles.

About this time, Henry Ford released his $50,000 a year production

manager over a disagreement on hiring and firing men, and thereby let

G.M. acquire the services of William S. Knudsen. Charles S. Mott intro

duced Mr. Knudsen to Mr. Sloan, who had become president in 1923. He

was hired and soon put in charge of all Chevrolet Manufacturing with the

title of vice president. He shortly became general manager of Chevrolet,

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increasing production steadily until in 1927 Chevrolet output passed Ford for

the first time.

In 1933 Mr. Knudsen became executive vice president of G.M. in charge

of coordinating the manufacturing of Chevrolet, Buick, Oldsmobile, and

Pontiac. These units came through the darkest years of the great depression

under his guidance. He was elevated to the presidency in 1937. On May 29,

1940 he was appointed to the national defense commission and resigned

September 4 from all positions with the Corporation. Charles E. Wilson be

came acting president and then president. The auto industry was hard hit by

the depression, but gradually conditions improved and the auto industry is

credited with helping to lead the country out of its most serious economic

setback.

During the 1920's G.M. acquisitions were numerous. Foreign sales

were stimulated and by 1929 there were 19 foreign assembly plants. G.M.

acquired an interest in Opel in 1921 and bought Vauxhall in 1925. Expansion

at home also continued in the 1920's under Mr. du Pont and Mr. Sloan.

These years witnessed the entrance into G.M. of Fisher Body Division,

Moraine Products, Inland, Brown-Lipe-Chapin, G.M. Proving Grounds, Gen

eral Motors Institute, and others. Non-automotive divisions became in

creasingly important, producing motor driven household and office equipment,

refrigerators, air conditioning, light and power plants, oil burners, vacuum

cleaners, water pumps, gas refrigerators, and for a short time the General

Motors Radio. Automobile sales also climbed steadily during the period.t

G.M. research was one of the important activities that led the Cor

poration into leadership. General Motors Research Corporation was organ

ized in June 12, 1928 from Dayton Engineering Laboratories Company in

Dayton, and headed by Charles F. Kettering. He was vice president in charge

of research until his retirement in 1947 but still remained as a director and

research consultant for the Corporation until his death in 1958.

Recognized as one of the world's leading engineers and inventors,

Mr. Kettering's outstanding contribution was the self starter which ended

the hand-crank era in motoring, permitted the building of more powerful

engines, and sped the advent of mass ownership of cars. During his career

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he also invented or shared in the invention of Delco Lighting, a farm lighting

plant designed to furnish electrical power in rural areas; Ethyl antiknock

gasoline, for which Thomas Midgley, his assistant, received credit as the

inventor; crankcase ventilation; and a pioneering two-cycle Diesel engine for

application to locomotives, submarines, trucks and buses; and many others.

Like the later Technical Center, G.M. Proving Ground was the idea of

Alfred P. Sloan, Jr. After having witnessed a brake test on a public road, he

decided something more adequate was required. Accordingly, a 1,268 acre

site was purchased and the General Motors Proving Ground was established.

Here, new devices and new models are tested scientifically under all operat

ing conditions. Cars of other manufacturers are also tested, proving data

by which the cars of General Motors can be evaluated against other makes.

Later a proving ground specifically for military vehicles was estab

lished adjacent to the original site and in 1954 the purchase of additional land

brought the total area at Milford to 3,875 acres.

Additional testing facilities were established near Mesa, Arizona, where

2,21A acres of land were purchased and a test track built. Known as the Des

ert Proving Ground, this location permits the testing of cars under extremes

of heat and dust. In 1954 a permanent General Motors Engineering Test Head

quarters was also set up at the foot of Pikes Peak in Colorado.

WORLD WAR II

1941 - 1945

When Japan struck Pearl Harbor in December, 1941, peacetime produc

tion quickly came to a halt, and the Corporation's plants were turned over to

the war effort. The contribution of G.M. during World War II dwarfed the

efforts of World War I and demonstrated the vital importance to a nation at

war of being able to call upon powerful industrial resources. From 1940 to

1945, G.M. delivered to the government defense materials valued at

$12,319,000,000. At the peak of production, the rate was $12,000,000 per

day. As the nation's largest single producer of war materials, G.M. deliv

ered one-fourth of all the airplane engines, tanks, and armored cars built in

18

this country; almost one-half of all the machine guns and carbines; two-thirds

of all the heavy trucks; and three-fourths of all the Diesel engine horsepower

used by the Navy.

With the end of hostilities in 1945, the monumental task of reconversion

of plants began. However, reconversion did not mean simply getting plants

back into the condition they were in prior to the war. The postwar program

was carefully planned for expansion and improvement. It included the organi

zation and balancing of existing production facilities, the acquisition of new

machines and equipment, and completely new plants. In this immediate post

war program, approximately 700 million dollars were spent. This was evidence

of faith in the country's future at a time when many were predicting postwar

depression.

POSTWAR PROGRESS

For several years after the war, emphasis was placed on production.

Materials were difficult to obtain because supplies also were engaged in re

conversion programs. It was important to make up for the years during

which the production of goods for civilian use had been curtailed.

The expansion program included a new plant in Grand Rapids, Michigan,

for the manufacture of Diesel fuel injectors, the formation of the Buick-

Oldsmobile-Pontiac Assembly Division, and the Fabricast Division.

In June, 1950, hostilities flared in Korea and the country was once again

on a war basis and General Motors stood ready to take any production jobs

that the armed forces were prepared to assign to it. Military production got

under way slowly for the first few months but the tempo picked up when, in

December, a state of national emergency was declared. Early in the next

year, all 34 manufacturing divisions in the United States were participating

in the defense program. Deliveries of military items had reached a peak in

1953 when hostilities ceased. Following this, military production was cut

substantially, falling steadily from 19 per cent of total G.M. sales in 1952

and 1953 to 5 per cent in 1956. Production has continued on any items re

quested by the government, and research and development work on defense

projects is constantly in progress.

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InJ1948, Harlow H, Curtice, who had headed Buick since 1933, was ad

vanced 1&. Executive vice president in charge of General Motors Central Office

General Staff. When Charles E. Wilson left CJ.M. late in 1952 to become Sec

retary of Defense, Mr, Curtice became acting president of the Corporation.

He was formally designated G..M. president by the board of directors on

February 2, 1953.

Under the guidance of Mr, Curtice, some of the greatest achievements

of G.M. were attained. During his first year as president, G.M. sales passed

ten billion dollars for the first time in history. Also during 1953 General

Motors acquired the Euclid Road Machinery Company of Cleveland, Ohio,,

manufacturers of heavy off-the-road vehicles. On January 1, 1954 this be

came the Euclid Division, Also in 1953 a further step was taken to help

dealers provide better service to their customers This was a program to

set up a chain of Training Centers across the country, the first of which was

opened in Detroit in September of that year. The Training Centers are used

to keep mechanics employed by G.M. dealers up to date with improved serv

ice methods and technological advances, and also to train dealer personnel in

sales, merchandising, and management.

Talk of business recession was commonplace in January, 1954, when

Mr. Curtice startled the country with an announcement that General Motors

would spend one billion dollars in an expansion program to meet future

market needs. This bold action gave business and industry renewed confi

dence in the future. In 1955, General Motors became the first Corporation

to earn a billion dollars in a year.

General Motors Technical Center

An important milestone in G.M.'s long-established policy of continuing

technological development was the completion of the General Motors Techni

cal Center. This Center is now the focal point of all the central research

and development work of the Corporation.

The first group of buildings was completed in 1951, housing the Cen

tral Engineering Staff. Several buildings for the Research Staff followed;

and then complete facilities for the Styling and Process Development Staffs.

20

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■

Various service and utility buildings were added, making this a,self-contained

unit of extensive facilities for advanced technical operation. Formal dedica

tion in May, 1956, was attended by nearly 5,000 scientists, educates* and

industrialists.

Adjoining the Technical Center are Fisher Body Engineering and Ad

ministration Buildings and the Chevrolet Engineering Center, comprising

design and test facilities unmatched in the automobile industry.

Support of Higher Education

G.M.'s attitude toward the value of higher education is exemplified by

the operation of General Motors Institute in Flint, Michigan. The Institute

was founded in 1926 and began conferring degrees in 1946.

Over the years. General Motors has given substantial aid to higher

education outside its own corporate structure. In 1958 G.M. gave approx

imately $5,000,000 in colLege scholarships and grants. These funds are pro

vided without restriction as to use by institutions or the courses of study

selected by students.

Fifth Millionth Car

The year 1954 brought the Corporation to a historic occasion. Flint

was the focal point for a giant celebration to mark the building of G.M.'s

fifth millionth car on November 23. The car was assembled at the Chev

rolet plant. It symbolized what can be done in an economy that encourages

free enterprise. It was a tribute to the employes., shareholders, dealers,

suppliers, and countless others without whose aid such an accomplishment

could never have been reached. On this date also, Mr. Curtice announced

that G.M. was contributing $3,000,000 toward the Flint College and Cultural

Development.

Golden Milestone Year

On September 16, 1958, G.M, reached the fiftieth anniversary of its

founding. From a small company in New Jersey with $2,000 capital, G.M.

has grown to a vast enterprise with net working capital of $2,025,000,000

21

and assets valued at 6.8 billion dollars during its Golden Milestone Year. Its

United States operations consist of 34 manufacturing divisions, one automotive

parts and accessory distribution division, three financing subsidiaries, an

insurance affiliate, and headquarters for G.M. Overseas Operations Divisions.

There are 126 plants in 70 U. S. cities. In Canada there are four subsidiaries

with plants in five cities. Overseas operations include assembly and manu

facturing operations in 16 foreign countries and warehousing facilities of G.M.

vehicles in two others.

On September 1, Harlow H. Curtice retired, after 44 years of service

with the Corporation. Albert Bradley, Board Chairman, also retired after

having been with the Corporation for 39 years.

Frederick G. Donner was elected board chairman and chief executive

officer, and John F. Gordon was elected president and chief operations officer.

Mr. Donner had previously been executive vice president in charge of finance,

and Mr. Gordon had been vice president in charge of the body and assembly

group. The board chairmanship was made a full-time position, which is sim

ilar to the system used prior to 1946 when Alfred P. Sloan, Jr., was board

chairman and chief executive officer.

The motto of the Golden Milestone celebration, "Forward from Fifty"

gives an indication of the philosophy of G.M. regarding this significant ob

servance. The past can be viewed with justifiable pride. Its list of accom

plishments has made industrial history. It has pioneered many ventures

that have indeed brought "more and better things to more people." But G.M.

looks forward to the next fifty years with the expectation of even greater

changes and opportunities for the Corporation and its people.

22

Milestones of Progress

1890 - Olds Gasoline Engine Works organized, located at Lansing, Michigan.

1892 - Hyatt Roller Bearing Company formed at Harrison, New Jersey.

1893 - Pontiac Buggy Company incorporated at Pontiac, Michigan.

1894 - R. E. Olds starts to build his first gasoline car.

1895 - Henry M. Leland forms the Leland & Faulconer Manufacturing Com

pany, predecessor of Cadillac, in Detroit.

1897 - The first Oldsmobile produced and the Olds Motor Vehicle Company

organized.

1899 - Olds Motor Works began construction of first factory devoted es

pecially to automobile production, in Detroit.

1900 - First national automobile show.

1901 - Olds Motor Works produces famous curved-dash runabout. One of

these cars was the first light car to make the trip from Detroit to

New York.

1902 - Organization of the Cadillac Automobile Company.

1903 - 1,895 one-cylinder Cadillacs sold in first year of production. Im

provements included canopy tops, windshields, and radiators in the

front.

1904 - Straight-eight engine, shock-absorbers, pressure lubrication, auto

matic carburetors introduced.

1905 - Ignition locks make cars harder to steal. Cadillac starts production

of four-cylinder models.

1906 - Buick made its first four-cylinder engine. Front bumpers, vibrating

horns and drop steel frames among the year's advancements.

1907 - Oakland Motor Car Company organized at Pontiac, Michigan.

1908 - Fisher Body Company organized. September 16, General Motors

Company organized. Buick and Oldsmobile join General Motors.

Left-hand steering and baked enamel finish introduced.

23

1909 - Oakland and Cadillac join General Motors. Electric generators,

electric headlights, four-door touring car bodies, instrument panel

oil gages, and demountable rims appear.

1910 - Harrison Radiator Co. organized at Lockport, New York. G.M.

purchases interest in Champion Ignition Company, which later be

came AC Spark Plug Division. Closed bodies offered as standard

equipment for the first time by Cadillac.

1911 - Chevrolet Motor Company of Michigan and General Motors Export

Company organized.

1912 - Cadillac pioneered in adopting electric self-starter as standard

equipment. Won Dewar Trophy for second time for this contribu

tion - the greatest of the year. General Motors of Canada organized.

1914 - Cadillac first in this country to build a V-type, eight-cylinder, high

speed engine.

1915 - Tilt-beam headlights introduced on Cadillac.

1916 - United Motors Corporation organized.

1918 - Chevrolet Motor Company joins General Motors. United Motors

Corporation joins General Motors; bringing with it several organi

zations, including Hyatt Roller Bearing, Dayton Engineering Labor

atories, Remy Electric, New Departure, and Harrison Radiator.

1919 - Formation of General Motors Acceptance Corporation. Fisher Body

Corporation and its subsidiary, Ternstedt Manufacturing join Gen

eral Motors. General Motors Building begun in Detroit. General

Motors Institute opened at Flint, Michigan. Frigidaire Corporation

acquired by General Motors.

1920 - General Motors Research Corporation formed. Harrison Radiator

produced cellular radiator from ribbon stock.

1922 - Balloon tires introduced.

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1923 - Alfred P. Sloan, Jr., named president of General Motors. Compen

sated crankshaft (balanced with counterweights) introduced. Four-

wheel brakes introduced by Buick on its 1924 models. Duco lacquer

finish standard for Oakland production. First commercial sale of

Ethyl gasoline, developed in General Motors Research Laboratories.

1924 - General Motors Proving Ground placed in operation at Milford,

Michigan.

1925 - Yellow Truck & Coach Manufacturing Company organized, with Gen

eral Motors Truck as a subsidiary and General Motors Corporation

holding a large interest. Cadillac installs crankcase ventilation.

1926 - Pontiac car introduced by Oakland. Safety glass and adjustable front

seats appear. Delco-Remy formed, producing starting and ignition

equipment, batteries, and horns, at Anderson, Indiana. Delco Prod

ucts Corporation organized, manufacturing hydraulic shock absorbers

and fractional horsepower electric motors at Dayton, Ohio.

1927 - Chrome-plating used on Oldsmobile.

1928 - Cadillac introduces synchromesh transmission. Guide Lamp Cor

poration formed, producing automobile lighting equipment. Chev

rolet changes from a four-cylinder to a six-cylinder engine for its

1929 models.

1929 - North East Electric Company of Rochester becomes part of General

Motors. Frigidaire manufactured the first room air conditioner.

1930 - North East Electric merged with Delco-Light to form Delco Appli

ance Corporation, manufacturing farm power and lighting plants,

fans, oil burners, etc. Electro-Motive Company of Cleveland

acquired by General Motors.

1932 - Packard Electric Company, producing automotive starting lighting,

and ignition cable, joins General Motors.

1933 - No Draft Ventilation built into all Fisher bodies. Two-cycle Diesel

engine introduced. Knee-action - individual front wheel suspension

by means of coil springs - first installed on General Motors 1934

models.

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1934 - Two-cycle Diesel powers first streamlined train. Dealer Council

organized.

1935 - Electro-Motive Corporation erected plant at LaGrange, Illinois, for

the production of Diesel locomotives. Southern California Division

organized at Southgate, California, for assembly of Buick, Oldsmo-

bile, and Pontiac cars. First all-steel single piece stamped top

(Turret Top) introduced by General Motors on 1935 models.

1936 - Delco Radio Division established at Kokomo, Indiana to produce radio

sets.

1937 - Winton Engine Manufacturing Corporation, acquired in 1930, becomes

Cleveland Diesel Engine Division of General Motors, producing spe

cial large marine Diesel engines. Detroit Diesel Engine Division

organized for the production of small Diesel engines. Automatic

transmission introduced on Oldsmobile.

1938 - Dealer Relations Board organized.

1939 - Rochester Products Division organized. Sealed-Beam headlights

adopted by the industry. Oldsmobile introduced Hydra-Matic Drive

on its 1940 models. Motors Insurance Corporation organized.

1940 - General Motors completes its 25,000,000th car. Aeroproducts Di

vision acquired at Dayton, specializing in the development and manu

facture of airplane propellers. Retirement plan for salaried employes

adopted. General Motors began defense production.

1941 - Defense Bond payroll deduction plan adopted. Civilian production cur

tailed. Pearl Harbor.

1942 - Civilian production halted completely. General Motors converted 100%

to all-out war effort.

1943 - Production lines turned out more than $3-1/2 billion worth of war ma

terials. Diesel Equipment Division formed to manufacture unit fuel

injectors.

1944 - General Motors employment reached war time peak - averaged

477,072 for year.

26

1945 - General Motors began reconversion to civilian production. Buick-

Oldsmobile-Pontiac Assembly Division formed.

1947 - Train of Tomorrow introduced to the public.

1948 - G.M. makes 2-year agreement with labor unions incorporating cost-

of-living wage adjustments and annual improvement factor. Buick

introduced Dynaflow automatic transmission^ Cadillac and Oldsmo-

bile brought out new high compression engines. General Motors

begins production of the Holden car, first Australian-built automobile.

1949 - Allison announced its turbo-prop engine. General Motors introduced

the "hard top," a sedan with the lines of a convertible. General

Motors Diesel Limited established at London, Ontario, for production

of G.M. Diesel-electric locomotives for Canada.

1950 - Chevrolet introduced Powerglide automatic transmission. The

Allison-Bedford Foundry becomes the Fabricast Division.

1951 - First group of buildings completed at G.M. Technical Center near

Detroit.

1952 - Power steering offered on three lines of General Motors cars.

Autronic Eye automatic headlight dimmer introduced by Guide Lamp.

General Motors announces Better Highways Awards contest.

1953 - Harlow H. Curtice becomes president of General Motors. Air con

ditioning and power brakes introduced on several G.M. cars. General

Motors acquires Euclid Road Machinery Company, manufacturer of

heavy, off-the-road vehicles. Chevrolet Corvette sports car put into

limited production. First of a series of nation-wide Training Centers

opened in Detroit.

1954 - New body designs, featuring panoramic windshield, introduced as a

General Motors "first." General Motors celebrates the building of

its first 50,000,000 cars in the United States.

27

1955 - The number of G.M. shareholders crossed the half-million mark,

and climbed to 565,408 by the end of the year. Sales from all G.M.

plants were 5,030,994 vehicles - a new high figure. The Powerama

commemorated the production of G.M.'s 100 millionth Diesel horse

power.

1956. - Formal dedication of G.M. Technical Center, housing Research,

Styling, Engineering and Process Development staffs. Frigidaire

produced its 20-millionth refrigerating unit. Transistor-powered

car radio produced by Delco Radio.

1957 - Cadillac announced Eldorado Brougham - first American passenger

car with air suspension. Fuel injection offered by Chevrolet and

Pontiac on some 1957 models.

1958 - General Motors celebrates Golden Milestone, its Fiftieth Anniversary.

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Bibliography

1. Drucker, Peter ¥., Concept of the Corporation, New York, The John Day

Company, 1946.

2. General Motors Corporation, "The Development and Growth of General

Motors," Statement by Harlow H. Curtice, President, before the Subcom

mittee on Antitrust and Monopoly of the U.S. Senate Committee on the

Judiciary, December 2, 1955.

3. General Motors Corporation. "The Story of General Motors," 1957.

4. Pound, Arthur, The Turning Wheel, New York, Doubleday, Doran Company,

1934.

o. Sloan, Alfred P. Jr., Adventures of a White Collar Man, New York, Double-

day, Doran Company, 1941.