William C. Durant: Builder of the General Motor’s Empire

The first three decades of the 20th century, in America, were years of growth and prosperity. They coincided with drastic technological change, with new machines like automobiles, airplanes, electric appliances, new communication, movies, radio, faster rail transportation, faster sea travel and so many other great innovations. 1900-1929 represented a rollover from the postbellum years that were turbulent, but ever-changing and technologically progressive. Those early decades were ripe with opportunity for so many who would become pioneers in the realm of business, and economics.

One of the foremost businessmen to come out of age during the first thirty years of the twentieth-century is William Crapo Durant. Growing up in Flint, Michigan I can attest to the effect Durant had on the area. He founded the automotive giant that would later become General Motors, first by manufacturing shock-absorbing carriage seats to later absorbing major corporations in automotive manufacturing. Durant is usually overshadowed by automotive pioneer Henry Ford, especially in Michigan. Ford’s legacy is still alive today as his southern Michigan manufacturing plants, and his phenomenal museum, The Henry Ford Museum, while Durant’s legacy is represented by the now dilapidated city of Flint. 

Durant was born in Boston, in 1861 but when his father abandoned the family, Durant’s mother took them to live with her sister, and brother-in-law who lived in Flint, Michigan. His uncle, Dr. James Wilson, was a Civil War veteran, and physician, who taught at the University of Michigan Medical School. Despite being raised by a doctor, Durant dropped out of high school, and after working at his grandfather's lumber yard, he worked as a Cigar Salesman in Flint. According to a biographer, Axel Madsen, in The Deal Maker: How William C. Durant made General Motors, Durant was an adept salesman from a young age. He traveled extensively around Michigan, successfully selling cigars.

While late for a meeting, in 1886, Durant hitched a ride on the carriage of his friend, John Alger. Riding down the rough back-country roads of Flint, Durant noticed this particular carriage didn’t offer an uncomfortable ride. When he checked under the seat he noticed a new type of shock absorber, and immediately saw the future for these new seats. The carriage seat was made in Coldwater, Michigan by Schmedlin & O'brien, and Durant travelled to see their factory. He offered the men 1500 dollars to buy the patent, and start making them in Flint. To gain money he walked to every bank in Flint, but ultimately from his friend Josiah Dallas Dort. The two founded what later became the Dort-Dort Carriage Company, a company in Flint, that would become the largest carriage manufacturer in the country by 1900.

Durant’s successful career in automotive manufacturing we’re because of three major traits, his ability to absorb other businesses, his ability to hire tremendous organizers and his ability to sell. His career was covered extensively by biographers, like Madsen as mentioned before, Lawrence Gustin in Billy Durant: Creator of General Motors and Bernard Weisberger’s The Dream Maker: William C. Durant, Founder of General Motors. What appeared most interesting was the mention of Durant in Daniel Wren and Ronald Greenwood’s Management Innovators: The People and Ideas that Have Shaped Modern Business. Wren and Greenwood cover the business strengths of many people in American History, but are somewhat leery of Weisberger’s idea of Durant as a “dream maker”. While Durant did think big, and take big risks, it was ultimately his ability to hire strong management that allowed him to properly grow General Motors. 

It is hard to sum up the career of Durant, in so few words, but first and foremost he was adept at growing his business infrastructure. Alfed Chandler in Scale and Scope: The Dynamics of Capitalism in the chapter titled “Scale, Scope and Organizational Capabilities” it seemed as though Chandler was summarizing the growth of General Motors. It was interesting to later find out that Durant was chronicled by Chandler as well. Chandler noted that in order for businesses of the 20th century to survive, they needed to grow, and that is exactly what Durant did with GM. Through obtaining part’s manufacturers he was able to keep many competitors out. Chandler was writing about the Economies of Production Distribution, as being a place where the ability to distribute and make products occurred in one place, and that is exactly what Durant did. He brought all his part’s and automotive manufacturers to Flint. He obtained numerous plants, and divisions. Eventually GM, under Durant, was composed of 5 divisions, which he obtained from previous manufacturers: Chevrolet, Pontiac, Buick, Oldsmobile and Cadillac. 

Durant hired phenomenal people. He purchased Buick from David Buick, and his co-owner James Whiting, employing Whiting they grew Buick into the largest automotive manufacturer of the 1905-10. The two sold 8820 Buicks in 1908, as opposed to 25 in 1906. Durant purchased axle manufacturer Weston-Mott, and hired away C.S. Mott, one of the most successful automotive leaders in GM history. He hired Albert Champion to make spark-plugs, a company that still exists today grew from this transaction; Champion Spark Plugs. His greatest hire was likely the hire of Alfred. P. Sloan.

Sloan was one of the most innovative organizers in business history. When he was hired away from a refrigerator manufacturer, upon Durant’s acquisition of his company, Sloan was destined to move up. Sloan conducted experiments in organization, during a time when Durant was highly disorganized. Sloan created three aspects of major manufacturing that still stand today: 1) Central committees for policy formation 2)general staff officers for advising and assisting 3)divisions organized around products for implementing policy and conducting operations. Sloan divided GM into five divisions, with each division appealing to a certain price-point for each customer. 

Durant was a phenomenal salesman. While Henry Ford believed in one car, in one color, Durant knew people would want variety. He was one of the first manufacturers to tour his product across the country. According to The Oxford Leader, September 17th 1909 Durant ran a line from the Michigan Central Railroad directly to his plants to rapidly expand his reach. He was innovative in setting up dealerships across the country, and his offer of different varieties of make and model for cars.

Durant’s career had several ups and downs. At one point he lost control of the company, but in that low point he purchased Chevrolet, raised enough money to buy back controlling stock of GM and did. By the time of his death in 1947, he had fallen into obscurity, once again losing control of the company. The Great Depression bankrupted him, and the once powerful magnate died with nothing. He was a man who revolutionized the modern manufacturing machine, practically inventing the idea of Vertical Integration, the addition of various manufacturers.

Gabriel Kolko writes in The Triumph of Conservatism about the creation of the Federal Trade Commission. Kolko believes that conservative politicians, joined with big business interests to form the FTC, as a way to create Crony Capitalism. The FTC was set to be founded with outsiders, who had no major interest in business, but this is exactly what happened. While these capitalists, through politics sought to rid themselves of small-business competition, the story of Durant can be seen as one that triumphs over this idea. Durant’s career began as a small-business owner and salesman that rapidly grew his business into a virtual empire. 

Durant’s career, and growth of General Motors can very well corroborate the ideas Chandler put forth in The Visible Hand. Chandler states that modern business enterprise came when administration coordination enhanced productivity and lowered cost, something Durant did through the reorganization of the companies that later became General Motors. Building a managerial hierarchy was something Sloan, on the behalf of Durant, did efficiently. The entirety of Chandler’s list in this regard can definitely work in the comparison of Durant to Chandler’s work. As Chandler later studied Durant, something not known until after studying Durant, it is no surprise much of Chandler’s work lines up so well with the work of Durant.