Charming visionary builds GM empire, then loses it
Chevrolet was a vital part of a high-stakes gambler's game plan
 | Billy Durant: "There is no such thing as a saturation point -- not until every man, woman and eligible child in the country has an automobile." |
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Today's auto industry would be no place for Billy Durant.
He was a gambler, charmer, salesman and visionary. With supernatural energy, he founded and built General Motors and Chevrolet.
He failed to keep the financial rewards of his accomplishments. That was left to disciplined managers, such as Alfred Sloan, the legendary GM president and chairman who welded the disorganized pieces left by Durant into a colossus.
For a man gifted in stock dealing and acquisitions, Durant cared little for wealth. He craved action, conquests, 18-hour days and the next business deal.
Durant outmaneuvered his contemporaries in the first full decade of the U.S. auto industry. He assembled the proper combination of companies -- starring Chevrolet -- that survived the hectic growth of the 1910s and 1920s and the Depression of the 1930s.
He had the energy and vision to create GM. But his helter-skelter style crowded out the patience and discipline needed to keep it.
Selling cigars
Durant was born in 1861 and grew up in Flint, Mich. Although his grandfather was a wealthy governor of Michigan during the Civil War, his father, William Clark Durant, was a drifter, stock speculator and drinker.
Durant dropped out of high school at 17 and worked at menial labor jobs before he found his calling: sales.
In the early 1880s, Durant traveled by train from Flint to Port Huron, Mich., to sell cigars. Sales of a few hundred would have made it a good trip. In a few days of selling, Durant won over most of Port Huron's cigar retailers. He shocked his boss when he returned with orders for 22,000 cigars.
Durant's powers of persuasion blossomed early and never left him. He made his first fortune in Flint's carriage industry. After riding in a cart that had special springs to cushion the ride, he purchased the patent for the device and borrowed $2,000 to launch his own carriage-making company.
He built America's largest carriage company and was a millionaire by the time he turned 40 in 1901. But he was far too driven to settle into a quiet, wealthy life in Flint.
In 1904, his business associates steered him to a promising motorcar built by Detroiter David Dunbar Buick.
Complete control
The car's mechanics were sound. Buick's engineer, Walter Marr, had placed the valves in the engine's head, an innovation that boosted power substantially. But Buick and Marr were inventors and tinkerers, not businessmen.
A Flint business leader, James Whiting, manager of the Flint Wagon Works, foresaw that the emerging motorcar would supplant his company. He acquired Buick's company and was building bodies for the car. He wanted Durant to take charge.
Durant agreed. His terms: complete control and fresh capital.
Leaving production to others, Durant concentrated on sales and promotion. He touted the Buick at the industry's early auto shows in New York and other large cities. He signed up dealers, recruiting many who had sold his carriages before.
In 1908 Buick was in the top echelon of the industry. It sold 8,487 cars that year. Ford sold 10,202.
Ford gets away
Although the industry was only 12 years old in 1908 and dozens of companies were building autos, far-sighted automobile men were planning corporate combinations to dominate the industry. Durant was one of them.
With tentative backing from banker J.P. Morgan to acquire competitors, Durant called three other leading automakers: Henry Ford; Benjamin Briscoe of Maxwell-Briscoe; and Ransom Olds of Reo. Olds had left his original company, Olds Motor Works, in 1904. The four men met in Detroit's Pontchartrain Hotel in 1907.
The meeting went well enough, despite natural doubts and suspicions. Ford, prickly and single-minded, was the most dubious. But he went along with Durant's plan until mid-1908. At that point, he demanded cash for his company, not stock as originally planned. Olds also demanded cash. The deal died.
Durant pushed ahead. Eager to start acquiring companies, he needed a holding company. His plan: swap shares of the holding company for shares of his targets. With little fanfare, he founded the holding company in New Jersey in September 1908. Its name: General Motors Co.
Durant quickly arranged capital. He chipped in $500,000. And Buick was folded into General Motors, adding equity.
Durant was ready to deal.
He first snagged Olds Motor Works, which was struggling without the genius of Ransom Olds. Later Durant acquired Oakland, a small manufacturer in Pontiac, Mich., predecessor of the Pontiac car. He persuaded Henry Leland, manufacturer of Cadillacs, to sell his company in 1909 for $4.75 million in cash. Durant wanted a complete lineup of autos, from basic to luxurious.
Later in 1909, a great "what if" occurred. Durant almost acquired Ford Motor Co. Ford was willing to sell it for $8 million in cash. Durant agreed. But, stretched thin by the acquisition of Cadillac, GM couldn't pry the money from banks.
Durant had little patience for bankers with small imaginations. Challenged by a banker at one point, Durant replied: "No, sir, there is no such thing as a saturation point -- not until every man, woman and eligible child in the country has an automobile."
Losing control
Even without Ford, Durant had achieved his purpose by 1910. He had done what he was born to do: deal and acquire. He had assembled Buick, Oldsmobile, Cadillac, Oakland and many parts suppliers.
It took him an entire decade to play out his hand. Overextended in 1910, he lost control to bankers. With brilliant strategy, he regained control in 1916 with the help of Chevrolet Motor Co.
Chevrolet, backed by Durant's loyal Flint investors, acquired GM in a cunning stock swap engineered by Durant.
Durant lost control a second time in 1920 to the DuPonts and J.P. Morgan. Durant spent his final days managing a bowling alley in Flint in the late 1940s. Durant was certain from the earliest days that America would embrace the auto with limitless enthusiasm. His creation, a company that later became the world's largest industrial corporation, proved him right.
• Legacy: Brilliant men, such as Walter Chrysler and Alfred Sloan, bristled under Durant's helter-skelter leadership, but they still admired him. "Too often," Sloan said, "we fail to recognize the creative spirit so essential to start the enterprises that characterize American business and that made our system the envy of the world."
• Last job: Managing a bowling alley in Flint, Mich.
You can reach Charles Child at cchild@crain.com.
