Business & Finance: Dodge Motors

In 1920, the Dodge brothers (John, who skippered yachts; Horace, who played the violin and the organ) died almost simultaneously, and the great Dodge Brothers Automobile Co. was inherited by their widows. The latter awaited a favorable opportunity to sell it. They insisted on payment in cash. General Motors, through J. P. Morgan & Co., offered $124,650,000 worth of that commodity. But a banking syndicate headed by Dillon, Read & Co. of Manhattan offered $146,000,000 and the widows promptly accepted. The transaction is said to be the largest single cash transfer of an industrial concern in the history of the U. S.

Since the book value of the company is approximately $90,000,000, it is apparent that its actual and would-be purchasers all placed a huge valuation on goodwill−a high tribute to the manufacturing genius of the Dodge brothers.

The extraordinary success of the Dodges dates back to 1901, when they took over a small machine shop for debt. Just at that time, Henry Ford was hunting for a plant in which to manufacture his first cars. Shortly after, the Ford Motor Co. was formed. Ford owned about a fourth of its stock at first, and contributed his idea, plans and inventive skill. The Dodge brothers participated heavily, turning in to the new Company their motor experience as well as their shop. Executive experience was supplied by Mr. James Couzens (now a U. S. Senator), at that time a thrifty bookkeeper. All worked hard.

The Dodges were, however, anxious to build a higher-class car, in opposition to Ford’s continual and exclusive interest in the cheap vehicle. Finally, in 1914, they retired from the Ford Motor Co., later cashing in their investment at a colossal profit, and set up for them-selves as the Dodge Brothers Automobile Co. In the higher-price car field, they at once encountered keen competition. Yet their experience, engineering skill and ability in marketing their product soon led to a second success even surpassing their part in the first.

Just what the plans of Dillon, Read & Co., the buyers, are with respect to the Dodge properties is still unknown. Their banking syndicate has already subscribed sufficient money to pay the huge cash price demanded. Bonds and stock of the Company will be offered for public subscription. Back in the after-War period, Dillon, Read & Co. refinanced the then tottering Goodyear Tire & Rubber Co., and from this fact some have thought that a merger with Dodge Brothers and possibly other motor and motor-equipment firms might be planned, of a size and importance to rival General Motors. The motor industry faces keen competition and undoubtedly calls for consolidations. But Dillon, Read & Co. denied the existence of any immediate plans for such consolidation.