In 1915, Billy Durant, the founder of General Motors, was in exile from the company. Bankers, unhappy with his free-spending ways, had ousted him five years earlier.
But revenge was not foremost in his mind as he plotted his return. Rather, he was drawn by the thrill of the chase.
For Durant, who was 53 in 1915, cars were fine. But it was the finesse and audacity of big-time stock dealing that truly energized the former cigar salesman from Flint, Mich.
Throw in a dash of behind-the-scenes maneuvering required for small Chevrolet, his current company, to acquire the much larger GM, and Durant was in his element.
A chance to win back a company that he still called "my baby" made the chase all the more enticing.
A trail of bad luck and misjudgments put William Crapo Durant on the outside looking in at GM in 1915.
First, Durant was a risk-taker. After incorporating GM in 1908, Durant mashed together dozens of operations needed to produce cars. He brought Buick, which he already controlled, under the GM umbrella. He quickly added Olds Motor Works, later Oldsmobile, into GM, along with Oakland Motor Car Co., which became Pontiac, and Cadillac.
In Billy Durant, Creator of General Motors, Lawrence Gustin writes that Durant had "acquired a bargain in Cadillac. Though it cost him more than $4.5 million, it was earning $2 million a year in net profits. Other men, including the financial backers of Cadillac and the big financiers of Wall Street, were frightened by the speculative nature of the automobile business. Only Durant -- and perhaps Briscoe -- had the vision and courage to make that kind of deal." Benjamin Briscoe owned automaker Maxwell-Briscoe Co.
By the end of 1909, Durant had acquired about 20 companies, a hodgepodge of parts suppliers, patent holders and others. GM was selling a lot of cars, but it was unwieldy, disorganized and overextended financially.
Micromanager in charge
Worst of all, Durant was in charge. He was ill equipped to operate what he had glued together. He was an impulsive, impatient micromanager, poring over such things as wiring diagrams of one of his factories, writes Gustin.
Profits were thin despite rapidly expanding sales, and Durant had borrowed heavily from banks to finance operations.
When the economy slowed in 1910, GM's bankers grew alarmed and called their loans.
Wilfred Leland of Cadillac helped persuade them to save GM, and the bankers provided new financing. But their terms were severe. They demanded control of the company for the five-year term of the loan. Durant was out, although he kept a token vice presidency.
Although Durant had lost GM, his nature remained irrepressible. He plunged into a partnership with a well known race car driver, Louis Chevrolet, who wanted to build his own car.
Durant and Louis Chevrolet split in 1913, but Durant kept building Chevrolet Motor Co. without him. Production reached 13,292 vehicles in 1915 and 70,701 in 1916.
Supported by a thriving Chev-rolet and operating out of new headquarters in New York, Durant hatched his plan to regain control of GM, which sold 102,130 cars in 1915.
His plan was straightforward: Buy enough GM shares on the open market to gain control. With credibility from Chevrolet, he was backed by various financiers, including Pierre du Pont, president of the DuPont chemical company.
The big day
The big day came on Sept. 16, 1915. At a morning meeting with board member James Storrow before the board convened, Durant brashly announced, "I'm in control of General Motors today." Actually, it would take well into the following year to consolidate his position.
At the meeting on Sept. 16, a new board was named, with du Pont as chairman. In December, Durant offered to trade Chevrolet shares for even more GM shares.
In May 1916, Durant controlled a majority of GM shares, and in June he was named president.
Victory was sweet. But what was good for Durant was not particularly good for General Motors. He was no better at operating a large corporation the second time.
"Durant's interests were not entirely in company operations either," wrote Walter Chrysler, at that time a GM executive. "He had a large battery of telephones on his desk and kept in touch with stockbrokers around the country. At times of unusual price changes, Durant became so involved with his brokers that it was almost impossible for his small cadre of top assistants to get into his office."
The end came in 1920. The economy was slumping, GM was overextended and GM's stock was sinking. Durant borrowed heavily on his own brokerage accounts to buy GM stock to support the price. But it kept dropping.
Durant owed millions that he couldn't repay. Chairman du Pont stepped in and helped raised money to pay Durant's debts in exchange for much of his stock. But Durant was out as president.
His departure was a boon for GM and the auto industry. Alfred Sloan, the organizational genius of his day -- and in temperament and method the antithesis of Durant -- became president in 1923.
And with Chevrolet, which had been officially folded in to GM in 1918, he molded Durant's baby into a colossus.