• U.S.

Business & Finance: Motion For Sale

20 minute read
TIME

(See front cover)

Stuck in the mud of the last U. S. Depression (1921), Business was pulled out by a great acceleration of the automobile industry, teamed with a building boom long deferred by the War. The automobile industry then looked back a decade and smiled at its gangling youth. It looked ahead a decade with confidence and composure. Both were justified.

Another ten years and another Depression found the automobile industry a mighty thing in its maturity. Ranked next to Agriculture and Railroads in amount of capital invested, the automobile and its ramifications are the biggest industrial enterprise of the nation. Its orders call for the following percentages of U. S. commodity production:

Steel 15.5%

Aluminum 17.4%

Copper 14.8%

Rubber 82.6%

Lead 26%

Nickel 30%

Gasoline 85%

The 21 million automobiles on the road in 1931 were an economic necessity almost as valid as bricks and bread. Almost, but not quite, for the automobile still combines pleasure with necessity. To millions of owners it is their most beautiful and costly possession. Its esthetic appeal is at once its weakness and its strength, for the potential owner who need not buy for necessity must be made to buy for pleasure. If he bought enough, the automobile industry might again perform its magic trick, might pull Prosperity out of Depression.

Business looked last week with eagerness at the 32nd annual New York Automobile Show, as usual to be seen in the classic halls of Manhattan’s Grand Central Palace. For seven days every manufacturer except Ford, who has always scorned the Show (though he puts his Lincoln in it), demonstrated the innovations his engineers and artists have been able to evolve in the past year with some $100,000,000 for research at their disposal. Basing their prediction on sales at last year’s Show, prophets put 1931’s probable output of passenger cars, a prime index, at 3,500,000. Final figures last week showed 2,040,000 cars were turned out in the U. S. and Canada, compared with 2,910,000 in 1930. 4,794.000 in 1929 (record year), 4.012,000 in 1928. Confronted by an alarming decrease, prophets turned over their problem to statisticians, gave them a basic theory that 21 million cars would continue to roll the roads, asked what 1932’s production must be to maintain that figure.

The simple arithmetic answer is three million cars each year. Various adjustments have reduced the magic number to eight millions for the three years 1930-1932. Statisticians point out that combined 1930-31 production was 4,950,000, that 3,050,000 will have to be built in 1932. This, they have said, is unlikely. They estimate an output of 2,500,000 this year, concluding that only 20 million cars will be on the road while replacements fall another million behind.

Two things might upset these calculations: a great business revival in 1932; or developments within the industry itself so compelling that present owners might be excited to the pitch of buying new cars instead of hoarding their money or worrying about their banked savings. It was just possible that the public might replace its doddering pieces of locomotion with new models on a grand scale.

Some 25,000 people went to the New York Show on its opening day. They saw 260 passenger cars representing 18 makers, 32 brands.

Inspection of the Show revealed refinement, not revolution. Nowhere was there any major new departure such as, in their day, were the Self-Starter, Four-Wheel Brakes. Free-Wheeling or Floating Power. Instead the industry’s net progress and chief attractions were in its perfection of these departures and its emphasis on design and dollar’s-worth. Streamlining was the outward keynote. Slanted windshields, longer fenders gave conservative models a more rakish air. Actually tonneaus were wider but the Ylike radiators and more pointed hoods gave the new bodies a teardrop or pear shape, accentuated in the rear by converging fender lines. But looks were not the reason for streamlining. Higher speeds and fuel saving dictated it. Carried to its ultimate possibility, streamlining can save 40% of a car’s fuel at high speeds.

Biggest exhibitor was General Motors, maker of 43% of all U. S. passenger cars. The GM exhibits underlined a major mo tor problem : What to do about the medium-priced car? Through Depression, sales of very cheap and very expensive cars have held up best. The in-between classes suffered heavily. GM’s total sales of auto mobiles in 1931 were 1,074,709 units, off 99,406 from 1930. At the Show last week the expensive Cadillac remained much the same, the 16-cylinder model in small production, the twelve selling well in the luxury class. At the other end of the GM price-range, Chevrolet showed nothing new internally except Free Wheeling, stood pat on the chassis that outsold Ford last year. But in the medium-priced range GM did several things to boost sagging sales and profits. The new model brought out last November was Buick’s first new bid for popular favor in three years. With new body lines and heavily advertised “Wizard Control” (making use of the clutch pedal practically optional) the exhibit drew a big crowd though it was no longer a novelty. Buick’s December shipments totalled 11,629 cars against 4,092 in the same month of 1930. New too was an Oldsmobile Straight-Eight to compete in the $1,000 class, and a Pontiac V-Eight at $845. Gone from the GM family was the name Oakland, dropped this year so that its factories might turn out the new Pontiac, not compete needlessly with the new Oldsmobile.

Back of GM products stands the genius of Charles Franklin Kettering, tall, bald chief of General Motors Research Corp. Inventor of the self-starter, chemist of ethyl gasoline, perfecter of Frigidaire and many a less prominent invention, he has defined research as “a method of keeping everybody reason, oly dissatisfied with what he has.” Last summer he scolded business for not developing something new. Said he: “There is a horrible thing in this world known as monotony. When we continue to produce the same things, the same model indefinitely . . . the people don’t want to buy it. … We are suffering today from that thing called standardization.” Apparently GM, with plenty of Kettering ideas up its commodious sleeve, had been largely content to consolidate its position as leader of the industry and let others try to startle the public into a new buying mood.

A great but infrequent startler is the motor industry’s second-biggest factor, Henry Ford— That Motorman Ford was up to something this year was best known by the heavy secrecy that guarded his plants. Workers were forbidden to talk; others in the know did not dare talk for fear of losing Ford contracts. But last week observers were satisfied that Mr. Ford had an eight-cylinder car, lacking only the master’s approval, ready for production. Along with it was expected an improved model “A,” although 35,000 of the present type remained to be sold ifc clear up inventory. Back on the job in person Henry Ford still intended to dominate the low priced field, would not be undersold. His improved model “A” might have an optional four or eight-cylinder motor, trucks to be supplied with the four only. But Fords would still be cheaper than Chevrolets.

While the National Show is on, Ford Co. usually has its own exhibit elsewhere in Manhattan. This year it did not overlap the Show but was expected to be in the public eye at the Philadelphia Show next week. Meanwhile, not to let his competitors crowd him off the advertising page, Mr. Ford with nothing to say about a new car reminded people of an old one. ! In December was published a painting of ! Inventor Ford pushing his first contraption out of a red brick barn into a Detroit dawn of 1893.*

Walter P. Chrysler’s new Plymouth, like GM’s new Buick, had not waited for the Show. It came out in July under the banner of “Floating Power,” a basic new principle to reduce vibration, which must have excited the admiration of Charles Franklin Kettering. Rubber sockets where metal parts meet are not new in automotive engineering (TIME, Jan. 7, 1929). But Plymouth’s Floating Power is not only rubber sockets. It is an actual placement of the motor on a two-point suspension axis instead of fastening it directly to the frame at three or four places. At the suspension points rubber an inch thick allows the engine to rock naturally without moving the rest of the car. Torque is taken up by a spring connecting the engine to the frame side. From July through December, 83,158 Plymouths were sold to dealers. Floating Power did great things for Chrysler. From a poor third in the low-priced class Plymouth became a real contender, made Ford and Chevrolet look sharp. Sure he had discovered something urgently needed by the industry, Mr. Chrysler introduced all his makes at the Show with Floating Power. Especially rejuvenated was the DeSoto six, with a new round-nosed radiator, all-steel body, hydraulic brakes and free wheeling at around $700.

At the Show last week two other manufacturers, Fierce-Arrow and Lincoln, offered new twelves. Pierce, still advertising “character and social prestige” had one for $3,185. Mr. Ford’s Lincoln twelve could be had for no less than $4,300, the eight for $2,900. The Pierce eight started at $2,385.

What Floating Power did for Plymouth last year Free Wheeling did in 1930 for Studebaker, which also owns Fierce-Arrow and the new Rockne, launched in the low-price class to compete with Ford, Chevrolet, Plymouth (TIME, June 29). First to popularize Free Wheeling, Studebaker set an example that nearly everyone has followed. At last year’s Show only five stock models had Free Wheeling. There were only about that many exceptions this year.

The Rockne six, making its first public appearance, proved to be a trim little job with lines more like Plymouth’s than Chevrolet or Ford. It can be recognized on the street by an R on the hubcap, a slightly slanted V-type radiator and the generous width of its glass panels. Its streamlined fenders will not be so distinguishable from its competitors this year as they would have been last. Prices: $585-$695 for the 66-h. p., 110-in. wheelbase model; $68s-$795 for the 72-h. p., 114-in. model.

Most radically changed car in the 1932 Show was probably Graham-Paige. From a conservative body with small color range last year it now offers a thoroughly streamlined design in tints of the Easter egg spectrum.

Plymouth and Buick both gave the public something to think about in the autumn but until then 1931’s automobile excitement was supplied chiefly by Auburn. In 1930 Auburn Automobile Co. turned out 13,000 cars. Last February, banking on the hit it made at the 1931 Show, it stepped up production to 19,900 cars for the first four months. Enthusiastic President Errett Lobban Cord predicted 40,000 for 1931. At year’s end some 33,300 Auburns had been sold. There was much that was psychological in the Auburn triumph. The U. S. was on the downside of Depression yet here was an automobile at $945, low with racy lines. It looked rich, would do 80 m. p. h. It answered the need of many a man who had lost his shirt but hoped his friends did not know it. It made many another man who never had it to lose, feel like a million dollars.

Not content with the Auburn and the high-priced Duesenberg which he had been making in small quantities since 1928, Errett Cord launched another car in late 1929, longer, lower, racier than his first. Expensive and finely engineered, with the driving power in the front wheels, it was named after himself. The Cord, jokes the automobile industry, is just an Auburn running backward. But Errett Cord, the industry admits, is still a Cord running forward. At the Show last week was to be seen a new Auburn V-Twelve with at least one exclusive device novel to the industry—a dual ratio rear axle operated from the dashboard. From a 4½-to-1 ratio in high speed a touch on the button steps the car up to 3-to-1, giving great speed and smoothness on flat straight stretches. Able to do 100 m. p. h., priced at $1,345, the Auburn drew the largest crowds from the moment the Show opened.

Mercury Cord. Not since Walter P. Chrysler strode into business for himself and built up his Chrysler Corp. to compete with General Motors all along the line, has the motor industry felt a new presence so definitely as it now feelsErrett Lobban Cord’s. John H. Quinlan. the long-experienced distributor for whom —Mr. Cord used to work in Chicago, calls him “the greatest automobile man in the country today for he knows what the people want and the dealer needs, and he gives it to them.” This superlative, commonplace enough in the automobile business, is less banal in Errett Cord’s case than in most because it has, especially to Distributor Quinlan, a very tangible meaning. John Quinlan remembers how Errett Cord, who worked for him in 1919 on a $35 drawing account, became president of Auburn six years later.

The Cord family lived in Missouri, the father shifting from business to business (groceries, jewelry) and from town to town (Warrensburg, Marshall, Joliet, Los Angeles). Mr. & Mrs. Cord named their son Errett for a Rev. Isaac Errett who married them. Lobban was Mrs. Cord’s maiden name. The names bothered the boy except when Swedes in Joliet got the first one wrong and called him “Eric,” which he liked. His schooling was spasmodic and in Los Angeles in his ‘teens his fun began—painting and reselling old Fords. He raced cars professionally, ran a bus line into Arizona, went broke three times after thrice building his stake up to $50,000. He had $20 in his pocket when he got his job with John Quinlan selling Moon cars.

So many Moons did young Cord help sell that the Quinlan agency became largest in the land and Cord’s commissions were running about $30,000 per year. In 1924 he told John Quinlan something which the latter suspected: The cream was off Moon, he wanted to quit. He had about $100,000 saved up and he wanted to get into the production end of the business. Mr. Quinlan introduced him to Ralph Austin Bard (now president of Chicago Investors Inc.) whose firm controlled a hobbling little company with a factory at Auburn, Ind. Mr. Bard was warned that here was a cocky, footloose youngster who feared and respected nothing in the auto game, but who was interested in the Auburn plant. When they went to look over the layout, young Cord laughed derisively at all he saw—and asked permission to “hang around” the place for a month or so.

The Auburn people had tried everything, cut costs to the bone, pushed hopelessly at a mounting inventory of cars. Young Cord went back to Chicago full of ideas and with a design for a new model for which (says legend) he had paid $50. He offered to sell the 700 stagnant Auburns immediately and have a new model in production in time for the next show. His terms: No salary, just a free hand, discuss money later.

With an advertising campaign that he still describes as “a goddam wow.” most of the old cars were disposed of. The new model went into production without a cent having to be borrowed. Vice President & General Manager Cord then made his terms: 20% of the profits and options on the stock at $20. There were no profits then—but in the next six months Auburn made half a million dollars. In ensuing months, President Cord acquired 70% (21,000 shares) of the stock, which last year with 195,234 shares outstanding went as high as $295}.

To sell his first batch of Auburns. Salesman Cord simply “dressed them up.” That was one thing he thought his public want-ed—snappy looks. Into the first model whose production he supervised he put another ingredient—speed to match the looks. Also, for he is as smart a mechanic as a salesman, he added engineering improvements: the first convertible body was on an Auburn (1928): the first cheap straight-eight was an Auburn (1929. $1,095).

If the old Auburn management cut costs to the bone in 1924, Cord sucked the marrow out of the bone. He has kept it out so strictly that his financial reputation now matches the rest of his legend. Because Auburn’s common stock is one of the highest-priced and most sensitive on the New York Exchange, moving up or down anywhere from two to 15 points in a session, Errett Cord’s name is as well known on Wall Street as in the Midwest. The stock’s astonishing gyrations have given rise to many tales of pools and corners, most of them untrue. Mr. Cord declares he often goes three days without even looking at the market. At the peak of the bull market he was elected a director of an investment trust. At his first (and last) meeting the directors were discussing what to do with their stocks. Errett Cord was silent until someone asked him what he thought. He answered: “I think the stuff you own is lousy and a hunch of hooey. Throw it all out.” Shocked, the directors ignored his advice, to their everlasting regret. He resigned soon afterward.

After Errett Cord got it started, Auburn’s production of cars was:

1927—14,517

1928—12,899

1929—22,135

1930—13,692

1931—33,379 (approximate)

By 1926 Auburn was ready to expand. Mr. Cord, looking for more speed, had had his eye on Frederick Samuel Duesenburg, who was then building mostly racing cars at his Indianapolis plant. Speed king and a fine designer, Duesenburg was no businessman; his company was nearly bankrupt. Cord got control of it by an exchange of Auburn stock. Another thing he wanted was Lycoming Manufacturing Co. which supplied power plants to Auburn. Long builders of automotive, marine, industrial engines, Lycoming was being marked for its new airplane engine. Cord got Lycoming in 1927 the same way he got Duesenburg. For two years Auburn quietly consolidated its position.

Errett Cord’s personal experience in aviation (he had a pilot’s license) convinced him that here was a new factor for speed not to be ignored. He became convinced that one day cabin and transport planes would be as indispensable to the average man as automobiles. He set out to be a Mercury to the middle classes, to provide motion above the ground as well as on it for lower prices. In 1929 he acquired Stinson Aircraft Corp., again by an exchange of stock. This time, though, it was not Auburn stock he offered but the common of Cord Corp.. a holding company he had formed earlier in the year to centralize his growing activities. Under Cord the Stinson company has done well. Last year it sold more trimotored transport planes than all other manufacturers.

Just selling planes was not enough for Errett Cord. He organized Century Air Lines, Inc. and Century Pacific Air Lines Ltd.. equipped them with Stinsons, operated between St. Louis, Chicago and Cleveland and in the West at rates directly in competition with the railroads and well under competing airlines.

Errett Cord is 37. slim, medium height with brown hair and eyes. Except when he puts on his steel spectacles and looks like a young college professor he is undistinguished. He is a voluble talker with small regard for grammar and no qualm about profanity. He pays small attention to the detail of his business but thinks and talks plans and policies incessantly. He and his whole company believe in using the telephone long & often. The company’s bill sometimes runs between $15,000 and $20.000 a month. Mr. Cord’s right-hand man is tall, blond Lucius B. Manning, 37, Yale graduate (1913) and onetime football player, a grain broker until he organized his own investment firm in 1926 and got acquainted with Errett Cord. Now he is vice president of Cord Corp., president of Auburn Aircraft & Airliner Corp.

Errett Cord has been married twice, has three children. Two sons, 16 and 14, are by his first wife who died in 1930. Nine weeks ago his second wife bore a daughter. The Cords spend much time in California where, at Beverly Hills, they are building a spacious new house, and when in Chicago they live in a penthouse. At one time they had twelve automobiles. Now Errett Cord has cut down to a Duesenburg (two years old), a Cord and two Auburns. He hates society, does not go on weekend parties often because it is too hard to get back to work Monday. He believes in training for his job like an athlete, does it by eating little, seldom drinking. His men are expected to do the same. Auburn is famed for its low salaries, but Errett Cord often makes up for that personally. He has been known to give individual presents of $10,000 each, compensating for low pay without raising the cost of his cars to the public.

¶ Stock cars are equipped with so many accessories it seems incredible that at the Show a whole floor was devoted to specialties. It would take a car a block long to carry everything that was offered to refine the pleasure of motoring. There were windproof matches, cigaret lighters, electric clocks, radio outlets, pneumatic foot rests, fancy metal tire covers, heated windshield wipers, sunvisors. There was an ejector spring that opens the door at a touch on the handle. More costly was a shock absorber system operated from the dash which lets the driver adjust his car to the roughness of the road (called “ride control,” featured on Buick, Graham-Paige, Oldsmobile). There was a starting system operated by a button on the dash (featured by Hudson and Rockne). There were custom-made tires at $100 apiece that cannot blow out and are guaranteed for 20,000 mi., carrying only 12 Ib. of air pressure.

Stewart-Warner Corp. exhibited a new brake system, as yet not in use on any but test cars. The principle is to use the momentum of the car to check the speed. On the Stewart-Warner model this operates mechanically with a clutch attached to the brake pedal. Frederick I. Libby, young automotive engineer of Bronxville, N. Y. is working on a similar brake operated by hydraulic pressure.

¶ During 1931 about 60,000 mi. of new road were surfaced at a cost of $2,250,000,000, brought the total U. S. mileage to over 760,000. Well aware of this expanding territory, and of the replacement figures beckoning the industry, Alfred Pritchard Sloan Jr., General Motors president, had courage to prophesy guardedly: “We know we have the first lien on the purchaser’s budget; that the motor car is the last thing that the individual gives up. . . . The new offerings this year unquestionably represent greater .value than ever before. . . . My own belief … is that we will enjoy a somewhat better year than in 1931.”

* Painted by California-born Artist Albert Sheldon Pennoyer. In the central foreground is the slender figure of young Henry Ford in blue overalls and shirt sleeves. Single-handed he is pushing something that looks like a buggy without shafts. A number on the red shed in the central background fixes the scene at No. 56 Bagley Street, now the site of 14-story Michigan Theatre building, then on the fringe of Detroit’s residential district, two blocks west of Grand Circus Park. A bronze tablet at the theatre’s entrance preserves the record of what happened there. The Fords then lived at 58 Bagley Street and the. shed which “went with the house” was Henry Ford’s workshop. In 1893 Governor John J. Bagley’s mansion stood across the street a block and a half to the east. Today the Statler Hotel stands there; across the street from the shed’s site is now a transcontinental bus station.

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