The spark that created GM: Billy Durant takes control of Buick
Written by Lawrence R. Gustin. (Copyright, 2006)
Note: The spark that led to the creation of General Motors in 1908 was the decision by William C. Durant, "king" of the Flint carriage makers, to take control of the tiny and almost bankrupt Buick Motor Company in Flint on Nov. 1, 1904. This account is from David Buick’s Marvelous Motor Car: The Men and the Automobile that Launched General Motors by Lawrence R. Gustin, the award-winning first biography of David Buick. It is available from the Sloan Museum in Flint at (810) 237-3450.
Synopsis: The tiny Buick Motor Company of Detroit had been bought by James H. Whiting and other directors of the Flint Wagon Works of Flint, Mich., in the fall of 1903. Founder David Dunbar Buick (whose companies had built two experimental Buick cars between 1899 and 1903) remained in charge of day-to-day operations, with Whiting as president. Buick had a strong overhead-valve engine but not much else. When former Buick engine manager Walter Marr returned in April 1904, he persuaded Whiting to build automobiles. The first Flint Buick car was built in June of 1904 but by September, with 16 cars produced, the company was almost bankrupt. Whiting needed more money and a younger man to take control. He turned to a competitor, William C. Durant, the founding genius of Flint’s highly successful Durant-Dort Carriage Company.
As he studied his options for financial help, James H. Whiting had no problem reaching out to a competitor. By 1904, William C. Durant was already a magical name in Flint. Grandson of a Michigan governor of the Civil War era, Henry Howland Crapo (it’s pronounced Cray-po), Durant was a late comer to Flint’s carriage industry, but he quickly surpassed them all. On a September evening in 1886, the young businessman hitched a ride in friend Johnny Alger’s horse-drawn road cart in downtown Flint. Captivated with the way its patented spring suspension cushioned the bumps, he immediately took a train to Coldwater, Michigan, where the cart was manufactured, and bought the rights to build it.
Durant was a very personable young man, about 5-foot-8, slim and often flashing a dazzling smile. He moved quickly and, as a 1931 voice recording reveals, spoke with a clipped Boston accent, a holdover from his childhood. Durant had been about 10 when he moved with his family from Boston to Flint. His actions and speech radiated energy and confidence. He was a natural salesman, trying his hand at patent medicine, cigars and insurance, while running the Flint Water Works on the side.
In 1886, when he needed money to close the deal with the Coldwater Road Cart Company, he avoided banks where his family had influence because "if I make a failure of the venture, I will never hear the end of it." So he went to another bank, Citizens National, where he had no problem persuading its president, Robert J. Whaley, to loan him $2,000 on a 90-day renewable note.
He quickly found a partner – friend Josiah Dallas Dort, who put in $1,000 he borrowed from his mother. (In Whaley’s restored home in Flint, the original Citizens National bank book of the Flint Road Cart Company is displayed, with the first entries of September 28, 1886, being deposits of $1,000 each by Durant and Dort -- the first document in a series of events that led to the creation of General Motors).
Then he shipped his only existing road cart to a big fair in Wisconsin, and began to work. To Durant, the road cart was a "self-seller," and he was confident nobody could match him in selling a genuinely appealing product. His self-confidence was not misplaced. Durant took orders for an astonishing 600 carts before he had built one. He went home to Flint and contracted with the best local carriage maker, William A. Paterson, to build 1,200 carts at $12.50 each. He figured he could sell them for nearly twice that.
By the turn of the century his Flint Road Cart Company, renamed in 1895 as the Durant-Dort Carriage Company, was said to be the leading volume producer of horse-drawn vehicles in the United States. Durant had pulled together suppliers from across the country and had created what automotive historians would someday label "the General Motors of the carriage era."
It was a giant concern and Dallas Dort called Durant "easily our leading force and genius." In 1904, Durant, though only 42, was semi-retired from the carriage industry and playing the stock market in New York. Like most carriage leaders, he was said to be no fan of automobiles. A.B.C. Hardy, who had been president of the Durant-Dort Carriage Company before building Hardy Flint roadsters, remembered going to a carriage convention in New York along with about 350 other participants, including fellow Flintites Whiting, Durant and Dort. They were all offered an opportunity to take a side trip to ride in a horseless carriage. Hardy said only he and Whiting jumped at the chance "to see and ride in those strange contraptions."
When he asked Durant why he didn’t try them out, Durant said banker friends had told him automobiles “were to be sold to rich men for their foolish sons, and that some doctors were buying them.”
Hardy went to Europe, learned of the bustling automobile industry there, and came back to Durant with a warning he should get out of the horse-drawn vehicle business. "Billy, there’s something coming that will sweep it away," Hardy said. "Get into this horseless carriage field…."
Durant, always polite and patient, listened carefully, and then said: "We have more business than we can handle. Ours is a permanent business, and we are going to add another factory." But enthusiasm for automobiles was beginning to take off, even in the carriage capital of Flint, and even among relatives of the carriage king. Arthur Jerome Eddy, who had grown up in Flint and married Durant’s cousin, Lucy Crapo Orrell, was a Chicago lawyer when in 1901 he wrote a book, Two Thousand Miles on an Automobile, using only the pen name "Chauffeur." It was an account of his incredible long-distance trip in an unidentified car (it was a one-cylinder, 8 ½-horsepower Winton). Eddy drove out of Chicago on August 1, 1901, and on to Boston, New York City and Albany.
He then returned through Canada to Sarnia, Ontario, and on to Flint to visit his parents. The roads, he reported, were best in Canada, worst in Michigan. He then drove to Montreal and had the car shipped back to Chicago. For 1901 it was a stunning adventure, said to be the longest auto trip yet taken in the United States.
Eddy’s conclusion: “Any woman can drive an electric automobile, any man can drive a steam; but neither man nor woman can drive a gasoline; it follows its own odorous will and goes or goes not as it feels disposed.”
In 1902, Eddy, by then the owner of a Panhard and visiting his parents again, gave rides to a number of Flint citizens, notably Dallas Dort. Durant’s daughter Margery also got a ride in the car. When she raced into the house to tell her father of her exciting adventure, Durant scolded her for taking a foolish chance.
Clearly the prospect of selling an automobile concern to Durant would be daunting for Whiting. But if he wanted to save Buick Motor Company, he needed to be persuasive with his case. Durant was not only a great salesman but he also had no peer as an organizer and promoter. And with his connections, he could put Wall Street money behind a product. As Fred Aldrich, the Durant-Dort secretary, remembered, he advised Whiting: "William C. Durant is the man who can put Buick on its feet." Whiting, working through Aldrich and Durant’s partner, Dallas Dort, asked him to come home and take a look at Buick.
So Durant returned to Flint in the fall of 1904. Although he was admittedly dubious about automobiles, he was loyal to Flint and liked a good business challenge. Possibly more important, he was concerned Flint banks, where he and his many relatives and friends did business and had ownership, were being made vulnerable by their loans to Buick. And so he would check out the Buick proposition.
Dr. Herbert H. Hills gave Durant his first ride in a Buick on September 4, 1904, per Hills’ diary. It’s a story remembered by Hills himself in an interview shortly before his death in 1953. "We started off with Durant and me in the front seat, and Mrs. Durant and their daughter in the rear. We drove out East Kearsley Street, then one of the few paved streets in Flint, and Durant kept firing questions at me about how the car ran and if I liked it or not. We didn’t talk about anything else the whole time." (Hills joined Buick as assistant sales manager in 1906 and left Buick for Packard in 1909).
As Donald E. Johnson, husband of Whiting’s granddaughter, Alice, told the writer in the 1970s, Whiting then drove Durant around Flint, and they pulled up in front of Whiting’s house and talked for an hour. When Whiting walked into his house, he told his family: "Billy’s sold!" Sam McLaughlin, longtime chairman of GM of Canada, told several versions of a a different story. In his recollections, Durant revealed no intent to study the Buick proposition when he arrived back in Flint in the fall of 1904. McLaughlin said Marr drove one of the first Buicks to Durant’s office, but Durant refused to ride in it. "Then later, Walter and Dave Buick drove it up and down past Mr. Durant’s house all that evening, and then the next day induced Mr. Durant to go out in it for a ride."
Although the elderly McLaughlin, recalling this story to Buick General Manager Ed Rollert in a letter October 27, 1964, wrongly remembered Marr came from Lansing with the car, he had known Durant from the carriage days and presented the anecdote as a well-known fact. He had provided more detail to Eric Hutton in McLean’s magazine 10 years earlier, relating that after Durant refused to even look at the car, Marr taught Dallas Dort how to drive it. Dort returned to the office and said excitedly to Durant: "Come on out! It’s great. They taught me how to drive. I’ve been driving a car!" To which Durant replied, "I want nothing to do with it."
But Marr kept driving the car back and forth in front of Durant’s house, that evening and then the next morning (along with David Buick, according to McLaughlin’s letter to Rollert). Durant, finally impressed with Marr’s persistence if not the car, agreed to go for a ride. According to McLaughlin, Durant then learned Marr was not trying to sell him a Buick car, but the Buick company!
All of this could be at least partially true, starting with Durant’s first ride with Hills, coaxed into a second ride with Marr and Buick, and the clincher meeting with Whiting (though McLaughlin’s memory, like Durant’s, was at least occasionally more creative than entirely accurate).
There are also oft-repeated accounts of Durant taking the Buick out himself, test driving it around Flint. Durant put the Buick "through swamps, mud and sand and pitchholes for almost two months," wrote Arthur Pound in The Turning Wheel. Others are doubtful, characterizing Durant as a super salesman, super promoter and super organizer of big business, but no test driver.
But he should have driven the car and probably did. He was about to make an important decision. The master salesman needed to persuade himself that this was indeed a great product. The roads around Flint were poor but the Buick engine was always up to the challenge. Durant became convinced. This car performed.
Dort once said Durant would have gotten into automobiles sooner or later because he was a gambler – he would have been in the thick of the California gold rush, or in railroads, in earlier times. Perhaps, but he certainly wouldn’t have chosen such an unlikely enterprise as Buick had he not been persuaded by his friends and relatives in his adopted home town of Flint. Now that he was enthusiastic about the product, Durant needed to find out how serious the stockholders were about placing the business on a sound financial footing. There was money in Flint – fortunes had been made in lumbering, carriages and even cigar-making. But it now needed to be invested in the new business in town. Buick was important to the city’s economy and it could not survive under-capitalized and heavily in debt.
Durant said his investigation of the firm in the fall of 1904 "ascertained that it was practically insolvent," agreeing with Whiting’s assessment. However, he said in a 1911 legal document, he believed that if the business were "properly conducted and vigorously prosecuted, there was a fair prospect of bettering such condition."
Under Durant’s prodding, Buick’s stockholders agreed to increase the capital stock to $300,000 on November 1, 1904, and to raise it again to $500,000 on Nov. 19. Of this, $175,000 would be turned over to Durant "as his sole individual property to be used by him in his sole judgment he deemed for the best interest of said company…," according to the legal document. Coincidentally (or maybe not), at virtually the same time, owners of the Flint Gas Light Company sold that firm to other interests for $325,000 and it is reported Durant persuaded the sellers to invest much of that money in Buick stock.
With the financial details agreed upon, finally the decision was made. On November 1, 1904, Durant was elected to the Buick board. He was now in charge but declined the presidency in favor of Charles Begole, a Flint Wagon Works director and son of a former Michigan governor, Josiah Begole. Whiting resigned to devote more time to the wagon works, but he would soon be working with Durant again. The directors agreed to raise capitalization to $300,000 with plans for an early increase to $500,000 (which happened quickly – November 19).
General Motors celebrates its birth date as September 16, 1908, when the company was incorporated – but the real beginning of GM was November 1, 1904, when Billy Durant agreed to take control of Buick. This was the spark. Once Durant held control of Buick, the great success story was launched.
As an immediate example of his showmanship, Durant created a Buick event on November 3, 1904, two days after taking control. He paraded eight Buicks – all he could find – through downtown Flint "with tooting bugles…(creating) a great deal of attention and much favorable comment," The Flint Daily News reported. Another historic photo bearing Charles Quay’s imprint captures the Buicks lined up at Saginaw and First streets, one of the city’s main intersections.
Durant avoided one sticky problem by quietly purchasing a license late in the year so Buick could join the Association of Licensed Automobile Manufacturers (ALAM). This was the organization that tried to control the industry under the patent of George B. Selden. The ALAM was blamed by A.B.C. Hardy for forcing his Flint Automobile Company out of business in 1903. Durant realized he would have to deal with the ALAM so he bought the failing Pope-Robinson Company and obtained its license from that firm. The ALAM’s control was eventually ended thanks to the legal fight of Henry Ford, to the general relief of the industry as a whole.
Buick produced only 37 cars in 1904 (forget the incorrect old accounts that 16 were made in 1903; the first 16 were made between June 1904 and September 16, 1904). With Billy Durant aboard, the small number was meaningless. After all, local people still talked about how he had started in road carts, purchasing one cart and shipping it to a Wisconsin fair. There, he talked the judges into giving him a blue ribbon. He then took 600 orders for his "Famous Blue Ribbon Line" of carts before he had even figured out how to build them.
With Buick, he followed the same theme. With fewer than 40 Buicks under the company’s belt, Durant shipped a car and a chassis to the New York Auto Show of January 1905 and within a few days had accepted orders for 1,100 Buicks. As his wife Clara wrote to a friend: "The Buick certainly is a success." To Durant, the Buick, like his first road cart, was a "self seller" – a product so good it could sell itself. David Buick and Walter Marr had produced an automobile that was not only mechanically and cosmetically pleasing, but could navigate mud and steep hills like no other automobile he had ever seen.
Just as Durant had done with the road cart, he had backed a vehicle with a unique attribute (spring suspension with the road cart, valve-in-head engine with the Buick), emphasized the asset and made a large number of sales, largely because of his own engaging personality. Durant immediately focused on engine performance as Buick’s claim to fame. The company noted, "the first conspicuous event that impressed the general public…was furnished on Thanksgiving Day (November 24, 1904) at Eagle Rock near Newark, New Jersey. That day marked America’s greatest and severest hill-climbing contest."
The Motor World told the story: "In the class for cars between $850 and $1,250, the new Buick car made its initial appearance, and in a twinkling stamped itself as a wonder. It easily carried off the first honors in its class by a wide margin…the clean-cut and businesslike appearance of the car and its quiet running caused much favorable comment." Buick pointed out the car was "not specially built or geared for hill climbing or for racing; it was a regular stock model" and driven by "a gentleman [dealer H. J. Koehler] who is in no sense a professional” whereas many of its competitors “were specially built or specially geared and driven by factory experts."
Durant took David Buick with him to the New York show, and it became apparent other automobile writers had been reading Hugh Dolnar’s stories about the Buick engine. The valve-in-head engine was news in New York.
The Motor World reported in its discussion of the show: "There is one newcomer which must command the attention of the public, the Buick, already famous for claims of wonderful development of horsepower from a relatively small engine…Twenty-two guaranteed horsepower from two 4 ½ by 5 cylinders is equal to, if not in excess of, the best performances by a motor of any kind."
The publication also interviewed the reticent David Buick. It reported: "Mr. Buick…very generally and in a very nice way explains why he is certainly getting more horsepower than engines of similar size."
David and Tom were enthusiastic upon their return to Flint from New York on January 23, 1905. "The Buick car was the sensation in its class," said David. The car was to be exhibited that very week at the Philadelphia auto show.
By May 10, 1905, when he again gave a production report to the Flint Daily News, David’s duties were described as "in charge of the Jackson end of the Buick Motor Company." Said Buick: "We shipped 53 machines last week, and the output this week will be 70 machines. The Jackson plant will be kept in operation until the enlarged Flint plant is in readiness for operation, probably about the first of next January."
David Buick had moved to Flint in September of 1904, selling his home on Meldrum in Detroit by year’s end. Some members of his family became involved in a big Flint community celebration. In June of 1905, Flint put on a show in honor of its 50th anniversary as a city. Tom Buick was on the Committee on New Flint along with James H. Whiting, William S. Ballenger and Charles W. Nash, among others. (The event’s Reception Committee included Billy Durant, his attorney, John J. Carton, carriage maker William A. Paterson and Flint banker Arthur G. Bishop).
A highlight of the Golden Jubilee was a parade down Saginaw Street with U.S. Vice President Charles W. Fairbanks waving to the large crowd from a carriage. One of David’s daughters, Fanny, won an award for decorating a 1905 Buick Model C with flowers and his other daughter, Mabel (or Maybelle), drove the car in the parade.
But David’s time in the sun in the Flint Buick organization was short. He had created the Buick company and kept at it long enough to get the Buick automobile into production. But now the main impact on the Buick company was Billy Durant. William Beacraft, Arthur Mason’s key assistant in manufacturing Buick engines, remembered the situation when he arrived in Flint in late 1903, when the company had only 40 employees: "We were just struggling along then, and it was not until the second week of my arrival that I hired an assistant. In the spring of 1904 we put out our first cars….Our first thought then was whether we could sell the cars when we made them, but this soon reversed itself to: how can we get them out fast enough to supply the demand?"
"It was when W.C. Durant took hold that the company was reorganized and took on new life…. In those days we were so busy that I used to sleep in the shop, but we never could keep up with the demand…"
William C. Durant (front seat light colored cap) in a Buick Model F during the 1906 Glidden Tour.