The Rise and Fall of William C. Durant
Deemed
the second most significant pioneer in American automotive history behind Henry
Ford,[1] American automaker William
Durant (1861-1947) built a massive empire, one that rivaled Ford in stretches. At
one point, Durant amassed a staggering $120 million in wealth.[2] Yet, failed and impulsive business
moves left Durant relatively broke when he died. In his 1936 bankruptcy, Durant
listed $814,000 in debt and only $250 in assets.[3] Nonetheless, considering
the massive extent to which Durant shaped the American automotive industry
through innovation and vertical and horizontal integration, he surprisingly remains
underappreciated and overlooked.
The Rise
A “genius at manipulation,” according
to a New York Times obituary,[4] Durant quit school at age
17, at which point he showcased unfettered enterprising spirit. When not laboring
in mills, he sold products such as cigars, patent medicine, and fire insurance.[5] Yet, Durant’s rise to
prominence took form in an unrelated industry. Inspired by ascending industrialization
and urbanization, Durant focused on mass transportation. Therefore, in 1886, Durant
acquired the Flint Road Cart Company (FRCC) and patents for $1500 on loan while
still plagued by sizable debt.[6] The gamble paid off. By
the turn of the century, Durant already had transformed the once diminutive firm
into America’s largest carriage producer, drawing in two million dollars in
annual revenue.[7]
Encouraged by his recent success,
Durant pivoted. Despite initial concerns of automobiles (he viewed cars as noisy,
smelly, and dangerous), Durant saw promise in Buick automobiles and the auto industry
at large. Before long, he took control of Buick, a firm nearly bankrupt at the
time.[8] Under Durant, Buick developed
into the world’s number one auto producer in less than four years.[9] Before age 50, he already achieved
top sales in the carriage and automobile industries. Quite remarkable.
Brimming
with even more confidence, Durant set his sights on expansion and consolidation.
A noted biographer on Durant: “…Durant was not a back-shop tinkerer. While
other men put automobiles together, he put organizations together, and he did
it with dramatic flair.”[10] This unique sense of
flair instantly set Durant apart from competitors. Where Henry Ford established
his organization around one vehicle, the budget-friendly Model-T, Durant sought
the market share of a range of income levels and taste.[11] Once again, Durant’s
vision proved correct. In 1908, he founded GM. Less than 16 months after
incorporation, GM procured 22 companies, including Buick, Cadillac, and GMC.[12] Durant stated: “I figured
if I could acquire a few more companies like Buick, I would have control of the
greatest industry in the world.”[13] Amazingly, had it not
been for Durant’s inability to secure financing, he could have also purchased Ford
for $8 million. Still, Durant guided GM to become the world’s largest automaker.
The Fall
Much
of what made Durant a successful businessman also produced occasional failure.
As Lawrence Gustin aptly put it, Durant had an: “unparalleled vision and
courage, an iron will, and a legendary charm…Even those who did not always
agree with his methods called him a genius, though they also sometimes called
him a dictator and gambler.”[14]
By
1910, Americans increasingly favored Henry Ford’s inexpensive Model T over
Durant’s luxury machines. By utilizing Fredrick Taylor’s scientific management
and other pivotal elements, Ford dramatically reduced the Model’s T’s price
over time. As a result, GM experienced heavy profit losses, so their
stockholders displaced Durant in 1911.[15] Not to be discouraged,
the resilient Durant co-founded Chevy in 1915. Again, Durant spearheaded the
ascent of yet another firm. And in 1916, Durant eventually regained control of
GM by trading Chevy stocks for GM.[16] Using the postwar boom to
his advantage, Durant applied vertical and horizontal integration by adding
Frigidaire and the Fisher Body Company.
However,
by 1920, America’s once prosperous postwar economy plunged into recession. While
GM sold 47,000 vehicles in June, by November, sales dipped to 12,700.[17] With stock and sales in sharp decline, GM faced
rising organizational conflict. Prominent players from inside and outside of GM
grew ever more antagonistic towards Durant. To make matters worse, Durant split his attention between the stock market and GM. This combination set the backdrop for Durant’s
second ousting at GM. In the end, hostile bankers and the du Ponts banished Durant.
The chairman of the board, Pierre du Pont, ultimately organized a buyout of
Durant’s stock.[18]
Despite
the debacle, Durant remained firmly committed to enterprise. In 1921, Durant started
Durant Motors. While the firm achieved some success, it never gained more than 20%
of the new car market.[19] At the same time, Durant,
deemed the “bull of bulls,” along with various millionaire stock market investors,
built great wealth during the Roaring Twenties.[20] Yet, the economic realities
of the Great Depression and the Stock Market Crash of 1929 left Durant scrambling.
By 1933, Durant Motors was liquidated. Finally in 1936, Durant filed for bankruptcy.
Now
nearly 80 years of age, Durant still maintained his spunk and eye for business.
In an appeal to family and recreation, Durant established a bowling alley in his
hometown of Flint, Michigan. To expand its customer base beyond men, the outfit
did not serve alcohol. It was also one of America’s first drive-thru
restaurants. Durant saw potential to expand the business into a national chain.[21] His grand vision never materialized.
Faced with poor health, Durant lived in relative obscurity until his death.
Bibliography
Folsom,
Burton W. “Billy Durant: From Carriages to Cars.” Foundation for Economic
Education, March 1, 1998, accessed September 18, 2024,
https://fee.org/articles/billy-durant-from-carriages-to-cars/.
General
Motors. “The Fearless Sprit of William Durant.” Accessed September 22, 2024.
https://www.gm.com/heritage/durant.
Gustin,
Lawrence R. Billy Durant: Creator of General Motors. Michigan: University of
Michigan Press, 2008.
Madsen,
Axel. The Deal Maker: How William C. Durant Made General Motors. New York:
Wiley, 1999.
Niemeyer,
Glenn A. and James J. Flink. “The General of General Motors,” August 1973,
accessed September 23, 2024,
https://www.americanheritage.com/general-general-motors.
[1] Gustin, Creator of General Motors, 8.
[2] Madsen, Deal
Maker, 4.
[3] Ibid.
[4] Ibid., 1.
[6] Ibid.
[7] Ibid.
[8] Ibid.
[9] Gustin, Creator
of General Motors, 87.
[10] Gustin, Creator
of General Motors, 15.
[11] Folsom, “From
Carriages to Cars”
[12] General Motors,
“The Fearless Spirit of William Durant”
[13] Ibid.
[14] Gustin, Creator
of General Motors, 15.
[15] Folsom, “From
Carriages to Cars”
[16] Ibid.
[17] Gustin, Creator
of General Motors, 204.
[18] Folsom, “From
Carriages to Cars”
[19] Niemeyer, Glenn
A. and James J. Flink. “The General of General Motors,” August 1973, accessed September
23, 2024, https://www.americanheritage.com/general-general-motors.
[20] Gustin, Creator
of General Motors, 276.
[21] Ibid. 248-54.