DURANT, WILLIAM C. 1861-1947

Founder of general motors

Big Dreams

William C. "Billy" Durant was not the typical automotive executive of the 1910s—an engineer or designer who liked to tinker with cars. Durant, rather, was a man of big dreams, a master stock market manipulator, charmer, and intense individual. He was a wealthy entrepreneur and salesman who fell in love with a Buick in 1904 and decided that he wanted to become a car baron. Fortunately, he had the initiative and access to money to pursue his dream. Durant wanted to create a group of independent car companies that cooperated with one another and could take control of the industry, following the pattern of consolidation in railroads and banking. Durant's greatest trait was as an empire builder. If he did not have the resources to achieve his goals, he would engage the imaginations of others who were powerful and wealthy.

Founds GM

On 16 September 1908 Durant incorporated General Motors (GM) with only $2,000. He then quickly used the profits from GM to acquire Buick, Oldsmobile, Cadillac, and Oakland (later renamed Pontiac). His acquisitions led to a national distribution net-work and a diversity of product lines. In 1909 he even considered purchasing Ford, but the cost of $8 million in cash was too high. By 1910 Durant had swallowed up thirty companies, including eleven automakers. He dealt on an international level by buying McLaughlin Motor Car Company of Ontario and Bedford Motors of Britain. Like many acquisitional wizards, Durant had much difficulty organizing his empire, and by late 1910 the company teetered on the verge of bankruptcy. No one had placed any controls on Durant's spending spree, and his profits were insufficient to cover his losses when the economy entered a recession. GM was leveraged to the hilt, and Durant faced economic ruin.

Banks Intervene

A GM stockholder, John H. McClement, proposed a plan to save the company, but most people had already given up hope. Durant's bankers circled like vultures and wanted to break the company into parts, selling most and keeping the guaranteed profit-generating divisions, such as Buick. Durant had to convince them that the whole empire was worth saving. He put together a deal that had enough profitable parts to make the whole thing worthwhile. Lee, Higgins and Company of Boston and J. and W. Seligman and Company of New York agreed to underwrite General Motors and provide $15 million. The interest rate was extremely high on the guarantee and produced a $9 million profit during the next five years. A condition of the takeover was that Durant's control had to end. He was given a token vice presidency, but GM was controlled by the banks. Durant's actions had always been fueled by a deep love of the automobile and the thrill of bringing in a new era. GM's new management, on the other hand, was concerned only with the profit margin.

Rebound

During the next five years Durant founded five automobile companies, including his baby, the Chevrolet Motor Company of Michigan. Durant personally commissioned the designing and building of the first Chevrolet models, raised the funds, and put together the factory and sales organizations. He used the profits from his ventures to buy GM stock and urged his friends to do likewise. Durant was setting the stage to take back his company. Durant received support from his close friend Jacob Raskob, who shared Durant's ambition, charisma, and risk-taking. Raskob was the chief financial officer at DuPont. He convinced Pierre Du Pont to invest in GM because the Du Pont Company would profit by selling paint to the carmaker. Du Pont eventually invested $50 million in GM.

Reclaims GM

In 1915 the bankers controlling GM met to vote whether to renew their arrangement with the automobile company. It was unclear if Durant actually had enough stock to take control of the company, but the bankers had faith in Pierre Du Pont and relinquished control to Durant. In 1916 he replaced the bankers from GM's board with car company managers. When he regained control, Durant set up the General Motors Acceptance Corporation (GMAC), the industry's first company to provide loans for car buyers, car dealers, and dealership owners. By the middle of 1919 GM's common stock was valued at more than $1 billion. The next year, however, led to Durant's second downfall. Farm prices fell; the bond market slumped; and GM could not sell its debt. The market shriveled up, and the company's cash reserves of $100 million vanished; factories closed; and inventories began rusting away in storage yards.

Losing Control

GM once again developed into a sprawling empire of seventy-five factories in forty different cities all under the personal control of Durant, who simply did not possess the management skills required for such a large endeavor. Vice President Alfred P. Sloan Jr. set up an organizational plan for the company, while Durant bought GM shares as the prices were declining, hoping it would create greater demand for the stock. Durant's ploy to manipulate the market failed, and his personal debt grew to $38 million. Instead of stimulating Wall Street, Durant's downfall would take many bankers and brokers with him. The only thing Durant created was market panic. J. P. Morgan Jr. stepped in and formed a company to bail Durant out, and Durant resigned as president of GM in 1920. Ironically, his resignation and the rescue by Morgan abruptly halted the GM stock slide.

Legacy

Durant had a lasting impact on the automobile industry, even if he could not control his empire. Both Chrysler and American Motors Corporation (AMC) were spinoffs from GM. Durant gave both Walter Chrysler and Charles W. Nash their start in the car industry. Durant's passion for acquiring new companies led to many important products being developed. He took over Delco in 1916, and the company still exists as a manufacturer of batteries, starters, and other electrical elements. Durant also refinanced Frigidaire out of his own pocket, renamed its product the "Frigerator," then sold it to the directors at GM for a fraction of its actual cost.

Downfall

Old age was difficult for Durant. At sixty he tried to found Durant Motors but failed. The former multimillionaire was forced into bankruptcy in 1936 and had to sell his wife's jewelry in an attempt to raise money. Two years later he watched as the contents of his New York apartment were auctioned off for a paltry $112,000. He would have remained penniless if not for donations from Sloan and others at GM in gratitude to the entrepreneur who created, but could not manage, the world's largest industrial company.

Sources:

Maryann Keller, Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors (New York: Morrow, 1989);

David M. Kennedy, Over Here: The First World War and American Society (New York: Oxford University Press, 1980);

Arthur S. Link and others, American Epoch: A History of the United States Since 1900 (New York: Knopf, 1987);

Bernard A. Weisberger, The Dream Maker: William C. Durant, Founder of General Motors (Boston: Little, Brown, 1979).

DURANT, WILLIAM CRAPO

Born in Boston, Massachusetts, on December 8, 1861, William Crapo Durant (1861–1947) grew up in Flint, Michigan. His parents divorced after his father went bankrupt in the late 1860s, and his mother moved the family to Michigan. There she reunited with her father, who had prospered in the lumber business and served as mayor of Flint and governor of Michigan. Durant left high school early to work in his grandfather's lumberyard and at various other jobs. One of those jobs was as a salesman for a local cigar manufacturer.

Durant was a natural salesman. "Let the customer sell himself," was his stated philosophy. In 1885, after finding a unique suspension system that minimized bounce, he organized the Durant-Dort Company to make carriages. This company was his first real success, and it became one of the leading manufacturers of horse-drawn carriages. By 1900 the company was the largest carriage manufacturer in the United States.

But Durant saw that the future of transportation rested in the automobile rather than the horse-drawn carriage. In 1904 he took over management of the Buick Motor Company, which had financial problems. That year, he arranged for Buick to participate in the New York Automobile Show and took orders for 1108 cars, more than 25 times the number of cars the company had ever manufactured. To raise the capital necessary to respond to this increased need, Durant sold Buick stock to anyone in Flint who was interested in buying. Production at the Buick Company went from 725 cars in 1905, to 1400 in 1906, to 4641 in 1907. Buick reached the position of number one in the country in 1908, with a production of 8820 cars, outselling Ford Motor Company and Cadillac combined.

Durant tried to buy Ford in 1907, but the bid failed when Henry Ford (1863–1947) insisted on being paid in cash. The next year Durant formed General Motors Company in response. Durant's concept for his new company was to be a total supplier of automobiles from the car itself to its parts and service. Durant added Cadillac, Oldsmobile, Oakland (Pontiac) and other lesser companies to the original Buick at General Motors. Durant was a great salesman, but not so great at purchasing companies. Many of his acquisitions were over-priced or ill advised. In 1910 General Motors was heavily in debt and under a cash crunch. Bankers rescued the company from its financial predicament, but the price was a loss of control for Durant.

Still believing in the automobile, Durant joined forces with race car driver Louis Chevrolet (1879–1941) and established Chevrolet Motor Company in 1911. Chevrolet was an instant success with the Model 490, which cost more than Ford's Model T, but offered greater refinements and comfort. The loan the bankers had made to General Motors expired in 1915, and with it, Durant's prohibition from involvement in the company. With the help of the Du Pont family, Durant was able to regain control of General Motors in 1916. Chevrolet was brought into the General Motors family of automobiles, and the company prospered.

Durant, however, was unable to effectively deal with the company's stock price problems during the Panic of 1920. General Motors stock fell from $42 per share in March to just $14 per share in October. Durant felt personally responsible to many of the shareholders, as he had made personal commitments to friends and neighbors to sell the stock. He tried valiantly to prop up the stock price and save his friends' investments, but he failed.

When the Du Ponts discovered Durant's position, they forced him out of General Motors in order to protect their own investment. Oddly, Durant could have weathered all the problems with stock prices and the company if he had just left the situation alone. By 1926, just six years later, General Motors stock was trading at $210 per share. From April to November of 1920, Durant lost over $90 million. Adjusted for inflation, that amount would have been over $1 billion in the 1990s. Many believe this to be the largest relative loss of money in the history of the stock market.

Durant made another attempt to succeed in the automobile industry, starting Durant Motors in 1921, but it failed to establish itself in the market. By the time of the stock market crash of 1929, Durant Motors was already shaky and it lost ground steadily until its dissolution in 1933. By 1935 Durant had declared bankruptcy. He dabbled in a number of other business ventures, including a bowling alley, but none were particularly successful. He died in New York on March 18, 1947.

See also: Automobile Industry, General Motors Corporation

FURTHER READING

Bowman, John S., ed. The Cambridge Dictionary of American Biography. Cambridge: Cambridge University Press, 1995, s.v. "Durant, William C."

Encyclopedia of World Biography. Detroit: Gale Research, 1998, s.v. "Durant, William C."

Gordon, John Steele. "Paper Losses, Real Losses." American Heritage, February-March 1996.

"Trailblazer Buick Put Premium Cars on the Sales Chart Hit Parade." Automotive News, April 29, 1996.

Weisberger, Bernard A. The Dream Maker: William C. Durant, Founder of General Motors. Boston: Little, Brown, 1979.

William Crapo Durant

The American industrialist William Crapo Durant (1861-1947) was the founder of General Motors, an automobile manufacturing company.

William C. Durant was born in Boston, Mass., on Dec. 8, 1861. He grew up in Flint, Mich., where he became a leading carriage manufacturer. In 1886 he organized the Durant-Dort Company and helped to make Flint the carriage capital of the nation.

Durant acquired control of the Buick Motor Car Company in 1904 and revived it; by 1908 Buick was one of the four leading automobile companies. Durant had a vision of the boundless possibilities of the automobile, particularly the moderate-priced car, and attempted to capitalize on these possibilities by establishing a large-scale enterprise based on volume production. He intended that his company would be well financed, market a variety of automobiles, and produce many of its own parts.

After an attempt to buy Ford Motor Company in 1907 failed because Henry Ford wanted to be paid in cash, Durant established the General Motors Company the next year. He began with the Buick and added Cadillac, Oldsmobile, Oakland (Pontiac), and other lesser companies. Durant overextended himself, and by 1910 General Motors needed the intervention of a bankers' syndicate to lift the burden of debt. Durant returned to the automobile business in 1911 with the Chevrolet car. In 1916, with the backing of the Du Pont family, he recovered control of General Motors.

In 1919 General Motors was one of the largest American industrial enterprises, but Durant exercised little control over its operation; General Motors was too decentralized to be effective. When the Panic of 1920 occurred, Durant was overcommitted in the stock market. He tried unsuccessfully to support the price of General Motors stock; he was forced out of the company in 1920 by the Du Ponts, who wanted to protect their sizable investment.

The remainder of Durant's life was anticlimactic. In 1921 he started Durant Motors, which failed to become a major automobile producer. Durant Motors was already shaky when the 1929 crash occurred; the Depression then sharply reduced automobile sales and resulted in 1933 in dissolution of the firm. Durant was bankrupt by 1935. During his remaining years he engaged in a variety of business enterprises but without marked success. He died in New York City on March 18, 1947.

Durant was a pioneer in the automotive industry, and his most notable creation, General Motors, has dominated the automobile market since. Some of his chance ideas, such as the entry of General Motors into the manufacture of refrigerators, were highly successful. However, Durant never succeeded in organizing and administrative structure adequate for the giant enterprise he founded, and the task of converting General Motors into an enduring monument was left to his successors.

Further Reading

John B. Rae, The American Automobile: A Brief History (1965), places Durant in the context of his times and industry. Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of the Industrial Enterprise (1962), has a chapter which analyzes Durant's administrative strategy. Carl Crow, The City of Flint Grows Up: The Success Story of an American Community (1945), includes a brief account of Durant's early years.

Additional Sources

Weisberger, Bernard A., The dream maker: William C. Durant, founder of General Motors, Boston: Little, Brown, 1979. □

DURANT, WILLIAM C. 1864-1947

Automotive promoter

Twenties Symbol

The flamboyant William Crapo Durant became a symbol of the Roaring Twenties. Rising to great wealth and fame, he died in poverty and near obscurity as the result of his stock-market speculations. In 1908 he founded the General Motors Corporation, which became in the 1920s the largest corporation in the world. He was ousted as president of the company in 1910, regained control of it in 1916, and suffered a second ouster from GM in 1920.

Promoter

While Henry Ford and Walter P. Chrysler were production men, Durant was the epitome of the salesman and promoter, essentially a marketing specialist. But he also had a great eye for design and quality, putting together a line of cars that, under the GM banner, included Chevrolet, Pontiac, Oldsmobile, Buick, La Salle, and Cadillac.

Flamboyance

By the beginning of the decade GM was a company that attracted wide interest from investors and even more attention from a vast chain of suppliers. Durant was impatient and sometimes erratic in his methods. He disliked controls and rigidity, especially in financial matters, and he was apt to embrace innovative financing methods if things moved too slowly. A great many officials, both inside and outside the firm, disliked this quality; they also felt that Durant was paying too much attention to his outside interests. Both factors contributed to his second ouster from GM. For a time Durant survived as an independent, manufacturing the Durant, a medium-priced car, and the Star, a lower-priced competitor to the Ford and to the GM Chevrolet, which Durant had originally developed.

Aftermath

Following Durant's departure, Pierre S. du Pont became GM's president with Alfred P. Sloan as manager. For several years the firm was essentially controlled by du Pont interests.

Sources:

Lawrence Gustin, Billy Durant (Grand Rapids, Mich.: Eerdmans, 1973);

Bernard M. Weisberger, The Dream Maker (Boston: Little, Brown, 1979).