Durant loses GM a 2nd time; Sloan and DuPont usher in the modern era
Photo credit: HAGLEY MUSEUM AND LIBRARY
After the financial success of his family's E.I. du Pont de Nemours & Co. during World War I, he certainly could have. The business already had been turned over to his younger brothers. Yet because of a large stake that was almost nonchalantly acquired, he got stuck as president of General Motors in 1920. He had been chairman of GM since 1915.
His interest in GM had begun in 1914 when he purchased 2,000 shares of GM stock for his personal portfolio and several hundred more for the family's trust. He paid $135,000.
DuPont had been encouraged to do this by his own company's treasurer, John Jacob Raskob. Before long — and not in the least because of an advantageous opportunity in one of Billy Durant's stock manipulations — the DuPonts owned 43 percent of all GM shares, worth about $50 million.
Durant organized GM in 1908 and lost control of it in 1910. But Billy was no quitter. Through financial and operational moves, he regained control in September 1915. But in 1920 he was out again — for good.
Billy on the skids
When Durant regained GM from Eastern financiers, Pierre DuPont was the most acceptable choice as chairman. Nevertheless, the chairmanship remained something of an avocation for the baron from Delaware.
Durant ran the company in his slapdash way. Several dozen managers reported to him, if he would bother to see them. Meanwhile, Durant dreamed up pet projects such as the Samson Tractor Division, which gulped down $33 million without yielding a return.
After recession set in during the summer of 1920, DuPont encouraged GM Vice President Alfred Sloan to draft a reorganization proposal. DuPont then assumed the company's presidency as Durant's latest stock scheme failed and he was dramatically forced out for good on Nov. 19 of that year.
DuPont led the bailout of GM, averting a Wall Street panic and national economic collapse. He moved into Durant's old office on Dec. 1.
The 1890 chemistry graduate of Massachusetts Institute of Technology was shy and sober. When he was 14, his father died in a powder works explosion, leaving Pierre as the man of the family. Even as an adult, he was often called "Dad" by his younger brothers.
Taking charge of GM, he immediately approved Sloan's reorganization. It provided for decentralized operations with coordinated controls. That gave the central office control over policy but delegated operations to the division managers. Committees with memberships drawn from both sides oversaw such matters as purchasing, advertising and technology sharing.
Brown, Bradley rise
Despising the new setup, the general managers of Cadillac and Chevrolet quit. But DuPont and Sloan wanted to oust Durant's men anyway. Donaldson Brown and Albert Bradley assumed strict control of the corporation's financial strategies and economic forecasting, and Brown created the standard-volume concept that generated the highest return on sales.
Next to be examined was the product lineup. An executive vice presidency was created to improve management of divisional expenses and inventories. Ten of GM's 34 divisions were losing money. Samson Tractor was discontinued; other operations were reorganized.
Consultants recommended that the Chevrolet Division be closed because it couldn't possibly compete with Ford. DuPont told Sloan, "Forget the report. We will go ahead and see what we can do."
But compounding the problem for DuPont, Chevy's new general manager, Karl Zimmerschied, became overtaxed by the demands of developing Charles Kettering's air-cooled car and collapsed from exhaustion early in 1922. DuPont then was also general manager of Chevrolet. A year later, Sloan hired William S. Knudsen.
Back to the garden
Knudsen had quit as Ford's production boss to avoid a messy confrontation with Henry I. The boss had overruled Knudsen's shop instructions; Knudsen considered the Model T, already 11 years old, a relic, and he was troubled by Ford's anti-Semitism. Knudsen was eager to prove himself again in the auto industry.
Knudsen's biography relates DuPont's appeal of March 1923, saying, "As you know, Mr. Knudsen, operations at Chevrolet are somewhat confused. Because of the illness of Mr. Zemmerschied (sic), I have had to take over the presidency of the Chevrolet Division in addition to my other duties as president of the corporation. I wish you would come in and help me."
By May 10, 1923, DuPont had turned the presidency of GM over to Sloan. Chevrolet was handed to Knudsen.
DuPont resigned as GM's chairman late in 1928 when his friend Raskob was forced out as finance chief. Sloan had chafed at Raskob's ramblings in the press and his political activity in support New York Gov. Alfred E. Smith, who appointed him chairman of the Democratic National Committee.
The board voted out Raskob, and DuPont quit to tend his garden.