William Crapo Durant was the greatest entrepreneur in the history of the U.S. auto industry. He was also one of the least effective businessmen ever to head a major automotive concern.
In 1886, at age 24, Billy Durant bought a small Michigan carriage company for $2,000 and moved it to his native Flint. In 15 years, Durant-Dort Carriage Co. became the nation's largest carriage producer with $2 million in sales.
But by the early 1900s, Durant was growing tired of the carriage business and becoming irritated with the horseless carriages that were showing up around Flint. Motor cars, thought Durant, were odorous and noisy. They frightened the animals. And motor cars could ruin his carriage business.
In 1904, he began to change his mind about the new mode of transportation. In August 1904, James Whiting, a former competitor, asked Durant to consider investing in his Buick Motor Co.
Durant took over Buick in November 1904. He once bragged that he raised $500,000 in 48 hours to purchase Buick. Sales rose from 776 in 1905 to 2,295 in 1906 and 3,848 in 1907.
SONG IN HIS HEART
About the time Durant was getting Buick up and running, the country was humming 'In My Merry Oldsmobile.' Despite its victories in several promotional races, Oldsmobile was on shaky financial ground.
Market share plummeted from 27 percent in 1903 to 3 percent in 1906. Cash reserves were dwindling. The company, controlled by the Smith brothers, lost $340,000 in 1905 and eked out a slim $45,000 profit in 1906. Ransom Olds had departed.
Durant made his move in 1908. Fred Smith, who had bought Olds Motor Works from Ransom Olds, recalled that Durant arrived in Lansing around midnight and awakened Oldsmobile officials. At 3 a.m., he took a 15-minute tour of the plant. The group talked until dawn.
Durant was working on a merger with some of the top U.S. automakers, including Reo, the company formed by Ransom Olds after he left Olds Motor Works. Olds, Henry Ford and Benjamin Briscoe of Maxwell-Briscoe met with Durant in Detroit in 1908.
SO HE FORMED GM
The four disagreed on how the company would be managed and how each man would be compensated. Ford and Olds walked out of the talks, and Durant became uninterested in working with Briscoe.
But Durant had an option to buy at least 75 percent of Olds Motor Works. His holding company was called General Motors; it was incorporated Sept. 16, 1908.
On Oct. 1, 1908, GM purchased Buick for $3.75 million; all but $1,500 was an exchange of stock. On Nov. 12, GM bought Oldsmobile for $3 million; all but $17,279 was an exchange of stock. Some experts believe GM paid too much for Olds.
Oldsmobile did not have a new model to show Durant. He ordered the body in white of a Buick Model 10 to be brought to the Olds plant. The car was cut lengthwise and crosswise, the body widened and lengthened.
'When it was finished, it was a handsome creation, painted and trimmed to meet the Oldsmobile standard and priced to the trade at $1,200,' Durant said in his memoirs. 'This gave the Oldsmobile dealers a very handsome small car without interfering in any way with the Buick Model 10.'
BUILDING A NEW COMPANY
Oldsmobile gained not only capital, but also the engineering expertise of Buick and Durant's salesmanship. Durant began to buy several key GM suppliers, such as Champion Spark Plug and Seagar Engine Works.
Oldsmobile offered GM a step-up car from Buick and a sizable dealer body. It also gave GM a well-known brand name. Roadways across the country were peppered with Oldsmobile signs.
By the spring of 1910, GM's cash reserves were gone. Durant had counted on Buick's earnings to fund his rapid expansion of GM's empire. An East Coast banking syndicate came to the rescue with a $12.75 million loan. But the bankers wanted complete control of the company.
Durant refused to be a part of an organization that he could not run. He left GM in 1910 and teamed up with former Buick racer Louis Chevrolet to begin building a new empire. Using Chevrolet as his bank, Durant and friends began to buy up huge blocks of GM stock. In September 1915, Durant had accumulated enough to wrest control of GM from the bankers.
But five years later, Durant again was stung by overexpansion and poor controls. He was forced out of GM in 1920.