THE AUTOMOTIW CAREER OF
R—ANSOM E. OLDS

ThcsisforfhobogtnofPh.D.
MICHIGAN STATE UNIVERSITY
Glenn Alan Niamey»

196.2? '

 

Will/7W!WWIFITIWHNWWW

3 1293 00991 3934

 

 

 

 

This is to certify that the

thesis entitled

THE AUTOMOTIVE CAREER OF RANSOM E. OLDS

presented by

GLENN ALAN NIEMEYER

has been accepted towards fulfillment
of the requirements for

_Eh_nD_._ degree in H1 3 1301‘}

 

3%“

Major professor

DMe October 26, 1962

0-169

 

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINE return on or before date due.
MAY BE RECALLED with earlier due date if requested.

 

DATE DUE

AL

DATE DUE

DATE DUE

 

m i 9 am

 

JAMOQSBZMI

 

 

 

 

 

 

 

 

 

 

 

 

 

1“ WWW“

 

 

 

THE AUTOMOTIVE CAREER OF RANSOM E. OLDS
ABSTRACT

by Glenn ANAlan Niemeyer
1950), one of the pioneers i

first constructed a

Ransom Eli Olds (186h- n the

utomotive transportation,

development of a
line to the business of

887 as a side-

horseless carriage in l
h he was engaged with his

manufacturing steam engines in whic
ine, Olds began

deficiencies of the mach

father. Due to the
de fur-

to work on improving it and in the subsequent years ma
perfect a self-pronelled vehicle. In 1892 he

ther efforts to
896 constructed

m-driven carriage and in 1

completed a second stea
o the formation of the Olds

a gasoline automobile which led t

Motor Vehicle Company.
ter the company was organized,

Within a short time af
Olds became desirous of producing automobiles on a larger
itional financial support from his

scale and requested add
fused, he turned for ass

When this was re

h and in 1899 the Olds

Several models were produced,

istance

stockholders.
Motor Works was or-

to Samuel L. Smit
all of which

ganized in Detroit.

and it was not until the plant was destroyed

were failures,
ided to concentrate on the production of

by fire that Olds dec
ract the parts from other manu-

the curved dash and to subcont
built. Through this

he factory could be re

method and the success of the curved dash, Olds h

tomohile manufacturer i

facturers until t
ecame the
foremost au n this country at that

time.
y with Smith's sons, however,

Differences over polic
ds was forced to resign,

d to a separation and 01

eventually le
nths after his resignatio

Rut less than eight mo n he was
(1)

Niemeyer
Abstract

(2)

approached to re-enter the automobile business and in August,
190k he organized the REC Motor Car Company. In 1910 he also

formed the REC Motor Truck Company which was later.merged with
the parent firm and like its predecessor was highly successful.

This marked the high point of Olds' automotive career

since after 1915 he gradually withdrew from the active super-

vision and direction of REC. He resigned as general manager

and devoted his attention almost entirely to his private busi-
His position at REG was largely an honorary

ness affairs.
one, particularly after 1923 when he resigned as president

and the actual management of the company was left to his

successor, Richard H. Scott.
Under Scott's direction REO embarked on a broad program

of expansion and throughout the 1920's experienced the pros-
But when the

parity that was typical of the nation generally.
American economy came under the grip of the Depression, the

over-extension of REO's resources caused dissension within

Dissatisfied with company policies, a group

the management.
of directors headed by Olds removed Scott as general manager

and in a bitter proxy struggle in l93h were able to defeat

him in a contest for control.
After Scott's removal the management of REO was placed
under an Executive Committee. As chairman of the Committee,

Olds prOposed several recommendations to improve the company's
When these were rejected

financial and competitive position.
and automobile production was abandoned in 1936, Olds resigned

from the company and spent the remainder of his life in retire-

ment.

4.1—1... -4. J -—WWE‘MWW an

THE AUTOMOTIVE CAREER OF RANSOM E. OLDS

By
GLENN ALAN NIEMEYER

A THESIS

Submitted to the School for Advanced Graduate Studies of
Michigan State University of Agriculture and
Applied Science in partial fulfillment of
the requirements for the degree of

DOCTOR OF PHILOSOPHY

Department of History
1962

PREFACE

In the deveIOpment of the automotive industry in the
United States certain figures have played a prominent role.
Among these have been the Duryeas, Winton, Haynes, Olds,
Ford, and others, all of whom have contributed significantly
to the invention, production, or perfection of the automobile.
Through their efforts an industry arose which promoted the
establishment of numerous other businesses, gave employment
to millions of men, altered the concepts of distance, and
even changed civilization itself. Perhaps in the twentieth
century modern society has witnessed no more transforming
phenomenon than the automobile.

Although the development of the automotive industry has
been a collective effort, much about its rise and success can
be revealed through a biography of one man. The outstanding
example of the merits of such a study is Allan Nevins' two—
volume work, Ford: The Times,_The Man, The Company_and‘zggdi
Egpansion and Challengp, 1915—1932. BY concentrating on Ford,
Nevins has not only brought into sharp focus the events in
Ford's life but has also placed in prOper parapective the
position of the Ford Motor Company in relation to the other
manufacturers. Too often survey accounts have failed to do
this. In an effort to summarize the history of the entire
industry, research has been diffused, the emphasis has been

11

on general information rather than the specific or unknown,
and only events of outstanding significance and highlights
in the careers of the automobile makers have been covered.
The result has been that continuity has been lost and little
actual insight has been provided into the men, companies, and
times which constitute a history of the automotive industry.

To a considerable extent this has been true of the lit-
erature on Ransom E. Olds. His early experiments with a
horseless carriage which led to the establishment of the Olds
Motor Works are common knowledge. Likewise, his success with
the curved dash Oldsmobile, introduction of assembly pro-
duction, and initial leadership among the automobile manu-
facturers are matters of general information as are also his
retirement from the Olds Motor Works and formation of the
REC Motor Car Company. But after that little is known about
Olds' career. His organization of the REC Notor Truck Com-
pany, promotion of Oldsmar, resignation as general manager
and president, and subsequent struggle to regain control of
REO are almost completely ignored because by this time his
importance had diminished. Nevertheless, these were prominent
events in his life which are significant both for an under-
standing of Olds and a realization of the problems confronted
by the small automobile manufacturers in their efforts to
meet competition from the larger companies.

In the past scholars have not written widely of the auto-
mobile industry or the men who made it. The only biography

iii

of Olds is one written by Duane Yarnell entitled Auto Pio-
neering, The Remarkable Story of R.E. Olds published in l9h9
by the Franklin DeKleine Company of Lansing. Neither have
there been any scholarly biographies of the other prominent
automobile figures outside of Nevins' work on Ford which
served as a model for this dissertation although in no sense
can the two be considered equivalent. Following Nevins'
example, the attempt in this study has been to present the
career of Olds and to proeerly place him in the stream of
automotive history. .

During the course of my research and writing many peonle
have contributed their assistance to this enterprise and to
all of them I would acknowledge my appreciation. A few, how-
ever, deserve particular mention hecause without their generous
aid the result would be something less than it is and to each
of them I would extend a Special word of gratitude: to Professor
Madison Kuhn for his patience and wise counsel throughout the
direction of this dissertation; to Professor Marvin Cain for
his efforts in gathering source material and arranging inter-
views; to Mrs. Gladys Olds Anderson who permitted.me to examine
a collection of her father's papers and other useful data at
the R.E. Olds Company; and, to Mr. Allan Wright who gave me
permission to inspect the records of the REC Motor Car Company
now in the possession of the White Motor Company. Finally,
my last and greatest debt is to my wife whose encouragement
and forbearance have been unfailing and should this work have

iv

a dedication, it could only be inscribed to her.
None of these people, however, should be held account-
able for errors or omissions for which I assume full respon-

sibility. Neither should they be held liable for the inter.

pretations which appear and to which some of them, no doubt,

will take exception.

PREFACE .

Chapter
I.

II.

III.

CONTENTS

Page

0 O O O O O O O O O O O O O C O O O O O O . 11

DEVELOPMENT OF A GASOLINE AUTOMOBILE . . . , 1

First horseless carriage (l) -- Parents,
birth, and early life (S) -- Move to
Lansin (7) -- Partner in P.F. Olds &
Son (9 -~ Second self-prepelled vehicle
(11) -- Sale to Francis Times Co. (1h)
-— Internal combustion engine (16) --
Gasoline automobile (l9) -- Frank Clark
(21) -- Olds Motor Vehicle Co. (29) --
Olds Gasoline Engine werks (32) --

Labor trouble (33) -- Richard H. Scott
(3h) -- Expansion refused (36).

THE CURVED DASH OLDSMOBILE . o o . . . . o . 37

Offer from Holmes and Nicol (37) -- Samuel
L. Smith (39) -- Olds Motor werks (h2) --
Early models (uh) -— Fire (52) -- Sub-
contracting parts (59) -- Henry M. Leland
(62) —- Offer from the Lansing Business
Men's Association (66) -- Machinists'
strike (67) -- Winton's cross-country
trips (72) -- Roy D. Chapin - Detroit to
New Yerk (7h) -- Innovations (78) --
Success of the curved dash (8h).

FROMOLDSTOREO............. 88

Differences with Fred Smith (88) .. Re-
moval as general manager (92) -- Stock
selling difficulties (9S) -- Plans for
a new company (105) -- Horace T. Thomas
(106) -- Acceptance of Reuben Shettler's
offer (112).

THE RED MOTOR CAR COMPANY . . . . . . . . . 116

Incorporation (116) -- Olds Motor works
contests (117) -- Site and plant (122)

vi

-— Experimental models (12h) -- Ray M.
Owen (126) -- George B. Selden (131)
-- A.L.A.M. (135) -- Ford suit (13?)
-- Efforts to form an independent
association (139) -- A.M.C.H.A. (1h5)
-- REO remains independent (1&5) --
Glidden Tour (1&7) -- Early success
(1’49). ‘

V. NEW CHALLENGES AND INTERESTS . . . . . . . . 151

Auxiliary companies (151) -- Selden
patent case (153) -- Abortive merger
(15h) -- General Motors (158) --

Judge Hough's decision (159) -- Ford's
victory (160) -- Branch in Canada

(162) -- Rumors of merger with U.S.
Motor Co. (166) -- REC Motor Truck Co.
(169) -- Purchase of Owen Motor Car

00. (170) -- Decline of passenger car
business (173) -- Resignation as general

‘manager (181) —— Merger of truck and
augomobile companies (182) -- Oldsmar
1 3 .

VI. DEPRESSION AND DISSENSION . . . . . . . . . 197

Olds and unionism (198) -- Apprentice
School (201) -- Labor-management
relations (203) -- Olds' resignation
as president (206) -- Changes in
administration (208) -- Laws of con-
centration and diversification (210)
-- Scott's plan (212) -- Purchase of
Duplex Truck Co. plant (213) -- Fabio
Sergardi (21h) -- Flying Cloud (218)
-- welverine (218) -- New Speed wagons
(219) -- Measures to meet competition
(221) -- Declining sales (225) --
Depression (226) -- Dissension (226)
-- William Robert Wilson (228) --
Voting Trust (229) -— Royals (230)
-- Efforts to keep pace with the in-
dgsgry (232) -- Resignation of Wilson
3 .

VII. .RETURN TO ACTIVE MANAGEMENT . . . . . , , 233
Effects of the Depression (239) --

Efforts to reduce costs (2&0) -- Re-

duction in par value of common stock

(2A1) -- Closure of the Capital

vii

National Bank (2&2) -- Executive
Committee (2h5)-- Replacement of
Scott, Teal, and Thomas (2h5) -—
Proxy struggle (2h?) -- Detection
of Thomas and Scott (25h) -- Re-
turn to active management (256)
—- Resignation from the Executive
Committee (260) -- Rumors of merger
with Auburn (262) -- COOperation
with GrahampPaige (26S) -- Sus-
pension of automobile production

(26?).
VIII. LAST YEARS . .

O O O O C O O C O C C O C 270
Retirement (271) -- Sit-down strike

(271) -- Changes in management (272)

-- Subsequent REC history (273) ~-

Olds Hall (275) -- Illness and death

(276) -- Contributions (277).

BIBLIOGRAPHICAL ESSAY . . . . . . . . . . . . . . . . 278

viii

Table

LIST OF TABLES

Page
ANNUAL OUTPUT OF THE R30 MOTOR CAR COMPANY
AND REO'S PERCENTAGE OF THE AUTOMOTIVE

INDUSTRY'S ANNUAL OUTPUT, 1905-1919 . . . . . 177

NET SALES, NET PROFITS, REINVESTED PROFITS,
CASH DIVIDENDS, AND NET NORTH OF THE REO
MOTOR CAR COMPANY, 1905-1919 . . . . . o . o . 178

ANNUAL OUTPUT OF THE RED MOTOR CAR COMPANY
AND REO'S PERCENTAGE OF THE AUTOMOTIVE
INDUSTRY'S ANNUAL OUTPUT, 1920-1936 . . . . . 216

NET SALES, NET PROFITS, REINVESTED PROFITS,
CASH DIVIDENDS, AND NET WORTH OF THE REO
MOTOR CAR COMPANY, 1920-1936 Q Q Q Q Q . . Q Q 217

 

 

LIST OF FIGURES

Page

Figure

1 REG MOTOR CAR COMPANY'S ANNUAL PRODUCTION,
NET PROFITS, AND PERCENTAGE OF THE AUTO-
MOTIVE INDUSTRY'S UNIT OUTPUT, 1909-1919 . . . 176

REO MOTOR CAR COMPANY'S ANNUAL PRODUCTION,
NET PROFITS, AND PERCENTAGE OF THE AUTO-
MOTIVE INDUSTRY'S UNIT OUTPUT, 1920-1936 . . . 215

ILLUSTRATIONS

Page
AN 1899 OLDSMOBILE IN FRONT OF THE OLDS
PLANT IN DETROIT. R.E. OLDS IS THE DRIVER. . . 50

R.E. OLDS DRIVING A CURVED DASH OLDSMOBILE
ON BELLE ISLE, DETROIT. . . . . . . . . . . . . 50

xi

CHAPTER I
DEVELOPMENT OF A GASOLINE AUTOMOBILE

Ransom E. Olds' test run of his first self-propelled
vehicle is perhaos the single event in his life that has
been written about more than any other. While there are
many accounts of his inausnicious beginning, they all follow
a similar pattern and the only difference among them is the
degree of imagination possessed by each writer. In view of
this, it seems apprOpriate to begin this biography by re-
lating the story as it has often been told.

One Spring morning in 1886, Duane Yarnell, Olds' bio-
grapher states, R.E. Olds arose at three o'clock and with
“flagging confidence" prepared to test his first horseless
carriage. As he eased the machine into gear, "the immediate
vicinity suddenly reverberated with the inhuman sounds of
metal parts grinding and clashing together." Almost instantly
he "was aware of windows banging onen, of peOple staring at
him through the gloom ... and somehow, above the chugging of
the luMbering carriage," he heard them saying, "'It ... it's
that crazy Olds kidi'" Fortunately, "R.E.'s horseless car-
riage chose that moment to run out of steam," after an "initial
VOYage" of "less than two blocks." As he waited "ingloriouslyu
while his “neighbors huddled around him," the engine again

1

built up steam and once more he put the carriage into gear
for the return home. "For the second time that morning, the
machine shook itself out of a cloud of steam, and the neigh-
bors leaped for shelter in the face of the horrendous noise."
Ry the time the steam was exhausted, he had reached the yard
outside the shep. While he had hosed for better results,
"R.E. Olds knew at that moment ... that he would keep on try—
ing," and that "before he finished, there would be a new space
in the stable .o. soace that once had been occupied by a horse."1
Although such accounts are interesting and highly dra-
matic, it becomes apparent upon closer investigation that
they are not entirely accurate. First of all, it is certain
that Olds did not make the first test ride of his horseless
carriage in 1886. While he may have conceived of the idea
of building a self-crooelled vehicle at that time, the evi-
dence shows that one year of experimentation was needed to
complete the vehicle? which would mean that his first horse-
less carriage could not have been ready for testing until
1887. Support for this date was given by Olds in lQOu when

he testified that he did not complete the Vehicle until 1887.3

__
_.__-

1Duane Yarnell, auto Pioneering, The Remarkable Story of
R13. Olds (Lansing, MICE}, lghgl, pp.416¥22.

aggrseless Age, xxxv111 (Sept. 15, 1916), 210.

3U.s. Circuit Court, Southern District of New Yerk: Electric
Vehicle Company and George B. Selden 33. C.A. Duerr & CO. and the
Ford Motor Cmmpany, et a1, IX, 6&1. Hereafter cited as "Selden
Case Record." -

On another occasion he stated that the vehicle was "Operated
on the streets of Lansing during the latter part of 1887...."LL
From this statement it can be inferred that not one but

several tests were made. It is also probable that the first
experiments were conducted within the confines of the shOp
before taking the vehicle out on the street. At the same time,
however, it seems likely that the first early morning ride was
taken sometime in the summer of 1887 and must have made quite
an impression on the young inventor. A few years later Olds
was still able to recount with considerable accuracy the ex-
perience of his first road test:

... when the clock struck three (it being in summer),
I was on hand, and got up steam ready for a start;
at h:30 the doors were opened and the road was
clear; I mounted to the seat and pulled the lever;
she moved slowly, but speed was increased as it

Went down the platform out of the shOp; there was

a slight raise, however, before crossing the side-
walk and she refused to ascend the grade, so I at
once dismounted, and going behind, gave it a push

to be remembered, which did the business, and it
reached the sidewalk in safety; I again mounted to
the seat; there was yet a descent to the street in
my favor, so that I had but little trouble in reach-
ing the road and running a block without a stop; at
this point the efforts of the machine were exhausted;
and an assistant was necessary, as it was getting
quite light and there was no time to be lost; I
secured two pushers behind, and, together with the
engine, got it back without an accideng, which ended
my first trip in a horseless carriage.

Olds‘ first self-propelled vehicle was a cumbersome

 

h1b1d., XVIII, 1u76.

5Ransom E. Olds “The Horseless Carriage," Michigan
Engineers' Annual, 1698, p. 93.

h

carriage of crude design. It was a three-wheeled affair and
weighed about 1300 pounds. There was one wheel in front and
two behind in order that it could be steered easily. The
front Wheel was mounted in a fork similar to a bicycle and
was steered by a tiller while the back two wheels were for
traction. All three were about four feet in diameter and
were fitted with steel rims. The body which resembled a crude
box, was mounted over the rear wheels and was eighteen inches
deep to provide room for the machinery. The seat was perched
on the front of the box and could accommodate three persons.
Power to prooel the vehicle was supplied by a steam
engine of two horsepower. The engine was heated by several
gasoline burners which produced a speed of from four to ten
miles per hour. The transmission first consisted of a series
of levers and clutches but this arrangement proved unsatis-
factory and gears and chains were later used with a ratio of
from six to twelve turns of the engine to one of the axle.6
The main drive wheel had half-inch nointcd pins screwed into
the face of it to form a Sprocket. The driving chain was made
from rollers on pins to hold the links tOgether and was oper-
ated by a set of lathe gears which, according to Olds, were
purchased from Providence, R.I. 5nd were the "finest cut gears

made" in order to "avoid the noise."7

__

6Selden Case Record, XVIII, lh7h-lh75.

7Olds, Michigan Engineers' Annual, 1898, pp. 92-93.

Most of Olds' experiments with his horseless carriage
were made between the hours of three and four in the morning.
This was the only time during the day when the streets were
clear and he was free to conduct his tests without inter-
ruption or fear of creating a hazard. Besides, most peOple
were still in bed and so not able to witness his difficulties,
which seems to have been of some importance to him because on
one occasion he stated, "I realized that I had a colt on my

"8 Further-

hands, and did not care to have any Spectators....
more, while the construction of a horseless carriage might
have been of primary interest to him, it was of necessity of
secondary importance as he was busy during the working hours
of the day and the only time he could devote to building a
horseless carriage was both before and after he had attended
to the task of earning a living since he was at this time a
partner in business with his father, Pliny Fisk Olds.

Pliny Olds was a native of Ohio. His father, Jason Olds,
had been a Congregationalist minister in Goshen, Massachusetts.
Sensitive to the needs of those peOple living on the frontier,
he had migrated to Ohio as a home missionary to the Western
Reserve. There on the periphery of civilization Pliny Fisk
Olds was born in 1828. By the time he had grown into manhood,
he had develOped an attachment to the region and in 18h8 when

he married Sarah Whipnle, a native of New York, the young

h

8 1d., p. 93.

 

couple had settled down in Geneva where Ransom Eli, the youngest
of five children, was born to them on June 3, 18614.9

During their residence at Geneva, Pliny set up a black-
smith and machine shop in which he engaged in general repair
work. While there is no indication that it was a large busi-
ness, it does seem that the Olds family lived comfortably.
Pliny operated the small concern for sixteen years and in that
time became an accomplished machinist. Skilled workmen were
in great demand and in 1870 he was offered the position as
superintendent of the Variety Iron Works in Cleveland.

Pliny devoted his best efforts to his new position but
soon discovered that it was far different from having his own
business. Under the pressure and strain of his work, his
health began to fail and it became necessary for him to look
for something else. Thinking that perhaps his strength could
be quickly recovered in the Open air, he resigned his position
at the iron works in 187A. The home in Cleveland was now
traded for a farm nine miles to the south at Parma, Ohiq,and
for a second time the Olds family headed for a new location
and way of life.10

While rural life was what Pliny needed to recover his

9Edson a. Olds, ed., The Olds (014, Ould) Family in
England and America (Washington,‘D{5.,1915), p. 1R9.‘;Ebpies
are n e possess on of various members of the Olds family.

1°Ib1d., p. 172.

health, it seems that he did not have the skill to become a
successful farmer. Within four years he was again ready to
move his family back to Cleveland. Unable to dispose of the
farm, however, it was decided that part of the family would
remain behind while Pliny and Ransom left for Cleveland, the
father to work as a pattern maker at the Garden & Price Printing
Press Company, and the son to continue his education in the
Cleveland schools.

This arrangement was continued until 1880 when an Oppor-
tunity came to dispose of the farm and reunite the family.
A deal was made to exchange the farm for a house and lot on
Cherry Street and a lot on the northwest corner of Allegan
and Grand Avenue in Lansing, Michigan. Although Pliny was
not anxious to move his family from Ohio, he saw this as
another chance for him to have a business of his own and
passage was booked for the family on a freighter out of Cleve-
land at one dollar per person.11

Soon after arriving in Lansing in September of 1880,
Pliny established another machine and repair shOp. His son
Wallace was taken in as a partner and the extra lot on Grand
and Allegan was sold. With the money they received, a small
Shep, 18 by 26 feet, was built on River Street. A boiler and
engine, lathe, plainer, drill press, and other small tools

were acquired and the new firm, P.F. Olds & Son was opened

‘—

11R.E. Olds, "Olds Blazed Trail to Fame ‘cIith Car," 01d
liners News (Jan., l9h6), p. 10.

 

 

for business.12

Ransom Olds was sixteen years of age when the family
moved to Lansing. Since his education had been interrupted
on several occasions, he had not yet finished the eighth grade
but soon after their arrival he was once more enrolled in school.
Both before and after school, however, he was expected to help
in the machine shop. Every morning he had to arise at five
o'clock, light the fires at home, and then hurry over to the
shOp to get up steam so there would be heat and power when
his father and older brother arrived for the day's work. After
that it was time for breakfast and then off to school. By four
o'clock in the afternoon he was back working in the machine shOp
or at some odd jobs he happened to pick up on the outside.13
Most of his Spare time, Saturdays and vacations included, was
spent working in the shop. At first he was given fifty cents
per day during vacation periods for his labors. After a few
years of what was the equivalent of an apprenticeship, he was
given advanced work and his pay was increased to two dollars
per day.1u

By the time he had finished the tenth grade, Ransom Olds

12"01d8 Companyis Career," MOtOP Age, V (NOV. 21, 1901),

13Detroit News, August 27, 1950.

1"titer-tic C. Forbes and O.D. Foster, Automobile Giants of
W (New York, 1926). p. 227.

was ready to take his place full time in the shOp with his
father and brother. Rut the business of P.F. Olds & Son had
been increasing steadily and as it did the bookkeeping became
more involved and complicated. Neither his father nor brother
had any training in accountancy so it was decided that Ransom
should take a six months course at Bartlett's Business College
to prepare him for this work.15 Early in 1883 he completed
the course requirements and a short time later went to work
as a machinist and bookkeeper at P.F. Olds a Son.16

After working at the company for two years, a situation
arose which enabled Olds to become a partner with his father
in the company. His brother Wallace who held a half interest,
decided to sell his share so Olds took advantage of the Oppor-
tunity. With $300 he had saved and a promissory note for $800,
he was able to buy out his brother's share and at the age of
twenty-one became his father's partner in the small concern.17

P.F. Olds & Son in 1885 had an annual income of about
$7,000 from a business which was devoted almost entirely to
general repair work, although small steam engines heated by

coal or wood were also produced. Soon after Olds became a

A.—

15REC Echo, 1910, p. 382. COpy in Automotive History
Collection,‘DeEroit Public Library.

16§gnsingCityDirectggy, l883-l88h, p. 103.

17Olds to R. Shettler, August 5, lQOh, Olds papers, Michigan
State University Museum, East Lansing, Michigan.

lO

partner, however, the emphasis was changed. Observing the
increasing demand for small engines in businesses which needed
power only infrequently, Pliny and Ransom Olds set to work
designing and making patterns for little one and two horse-
power steam engines in which the heat was generated by ordi-
nary gasoline stove burners. A one gallon gasoline tank was
elevated at one end of the boiler causing the fuel to run
down and when power was needed, all the Operator had to do
was light the burners. within five to ten minutes there was
sufficient steam to generate the engine.18

The Olds engine became an immediate success because of
the advantages of cheap fuel and faster firing it offered to
users of intermittent power. Between 1887 and 1892, it has
been estimated, P.F. Olds & Son sold over 2,000 of its gaso—
line-heated steam engines.19 By 1887 it became necessary for
them to purchase a new site on the east side of River Street
and a larger building, 25 by 110 feet, was erected. In the
same year, the payroll of the company was increased to twelve
men and the capital stock was raised to $12,000.20

Under these circumstances, Ransom Olds began to consider

other ways to adapt their engine as a source of power which

__

18Olds, 01d Timersgyews (Jan., lane), p. 11.
19Ib1d.

20Lansing State Republican, Nov. 7, 1887.

11

led him in 1887 to the idea of building a horseless carriage.
After his initial tests, he continued to exneriment with the
vehicle for another "three or four years" trying to solve all
of the problems but unable to overcome the difficulties, he
dismantled it in 1891. A year later, however, he made another
attempt to construct a successful horseless carriage.21

Early in 1892 Olds began to work on his second vehicle,
incorporating some improvements which he had learned from his
previous experiments. Several of the parts from the first
carriage were used in constructing the second model, including
the rear wheels and axle.22 But the big difference from the
first carriage was that it steered from the rear, the back
wheels instead of the front ones being pivoted which gave it
the appearance of going backward.23 The steering principle
was the same, however, with the exception that the 1887 car-
riage had only one turning wheel and this model had two but
the Wheels were set close together and angled slightly in a
manner similar to certain modern tractors. This gave the car-

riage greater stability and did not limit its maneuverability.

21Olds, Michigan Engineers' Annual, 1898, p. 93.

22David peecroft, "The History of the American Automobile,"
Agtomobile, XXXIII (Dec. 9, 1915), 1055.

23Peter Clark MacFarlane, "The Beginnings of the Auto-
mobile," Collier's, LIV (Jan. 9, 1915), 52.

 

12

One of the most serious shortcomings of the first carriage
had been its lack of power. Olds rectified this drawback by
using two engines instead of one which combined gave him a
total of four horsepower. The two engines along with the boiler
' were mounted on a platform over the rear wheels about fifteen
inches off the ground. Placed at this height, the engines were
low enough to make connections with the main axle in front on
which cranks were attached at each end,2u an idea he probably
adopted from the steam locomotive. Both engines were connected

and functioned as one.

Like the 1887 vehicle, this carriage was driven by steam
power using gasoline for fuel. The regulation of the fire in
the burners was automatic. More or less gasoline was consumed
depending upon the power required by the grade of the road.
When the vehicle was stOpped, the gasoline was closed off,
preventing the steam from rising above a given level. As the
engines were directly attached to the driving wheels, no trans-
mission or gearing was necessary. "Steam from the engines,"
a report stated, was "entirely done away with by an ingenious
contrivance of the inventor" and in Operation the rig ran "as
quietly as an ordinary carriage." It had power to climb any
average grade and on good roads the usual speed was fifteen

miles per hour.

-—_‘

2hflA Gasoline Steam Carriage,"_§cientific American, LXVI
(May 21, 1892), 3290

13

In general appearance the vehicle was "like an ordinary
surrey." The seat was placed up front and behind it were the
water and gasoline tanks. The water tank was sufficient for
a ten or fifteen mile run while the fuel supply was adequate
for a forty mile trip. The boiler and engines at the rear were
enclosed by curtains which shut off all view of the machinery
and there was nothing "about it to scare horses," nor did they
"seem to mind it any more than an ordinary carriage." It
carried two passengers besides the driver and if there were
additional riders, another vehicle could be attached behind.25

The impression has frequently been given that Olds built
this carriage, like his first, only for his own amusement. That
he liked to tinker with mechanical things is not Open to ques-
tion but he was first of all a businessman who was trying to
develOp a product that would sell. When the Scientific American
sent a man to Lansing in 1892 to investigate the rig, Olds saw
this as an Opportunity to publicize his vehicle which is re-
vealed by the report of the representative:

Mr. Olds states that its great advantages are that

it never kicks or bites, never tires out on long

runs, and during hot weather he can ride fast enough

to make a breeze without sweating the horse. It

does not require care in the stable, and only eats

while it is on the road, whigg is no more than at
the rate of 1 cent per mile.

25mm.

26Ibid.

1h

This was the statement of a man who was trying to advertise
his invention, not of one who was simply amused by the novelty
of his contrivance.

A short time after the Scientific American publiShed the
article describing his carriage, Olds received an offer to buy
it from the Francis Times Company, a patent medicine firm in
London. He replied that if he decided to sell it, he would
want fihOO. They in turn informed him they had deposited that
amount in the German American Rank and that when he was ready
to sell, he was to exchange the bill of lading for the check
as they wanted it shipped to their branch house in Bombay, India.
After driving the car a few months longer, Olds accepted the
offer, shipped the vehicle, and drew out the $u00.27

Two contradictory accounts have been given of what hap-
pened to the vehicle after Olds sold it. One states that the
ship on which the car was being carried to India went down
at sea and that Olds' "reputation was saved."28 The other
account contends that the car was shipped to Bombay "where it

saw service for a number of years."29 With the evidence at

27Olds, Old Timers Newg (Jan., lgho), p. 11; Questionaire
Completed by Olds, Jan. 19, 192h, Olds Collection, R.E. Olds C0,,
Lansing, Michigan.

28Automoh11e Trade Journgl, XXIX (Dec. 1, 192a), 3e.

29Thurlow Pepe, "Why Michigan Became Heme of the Auto-

mobile," Michigan Manufacturer and Financial Record, XXVI
(NOV. 20’ 9 O , O

15

hand, it is impossible to reconcile this conflict; the only
definite statement that can be made is that the car was actually
shipped in the Spring of 1893.30 Yet, this fact in itself is
significant in automotive history because Olds' car was the
first American horseless carriage sold for eXport and perhaps
the first American-made self-prOpelled vehicle sold anywhere,
including the United States, as the transaction antedates by
almost three years the sale of Frank Duryea's car to George H.
Morrill, Jr., of Norwood, Massachusetts, sometime in February,
1898, which Allan Nevins states, "seems to have been the first
sale of an American—built car in the United States,
at least five years the sale of a Hinton car to Robert Allison
on April 1, 1898, which is usually given as the first sale of

2 In view of these facts, the question

an American automobile.3
can prOperly be asked why Olds did not continue to build this
type of vehicle for sale. The answer seems to lie in the develOp-
ments that were taking place at the engine plant.

Ever since Gottlieb Daimler had perfected the internal

combustion engine in 1885, there had been an increasing aware-

ness in America of the importance of his invention. Millions

3OSelden Case Record, XVIII, 1501.

31Allan Nevins with the collaboration of Frank Ernest Hill,
Egrd: The Times. The Man. The Company (New York, 19Sh), p. 162.

32Ralph c. Epstein, The Automobile Industgy (Chicago,
1928) 1 pp 0 95'96 o

 

16

of farmers and thousands of small shops and factories were
hungry for a handy source Of small power. The gasoline engine
satisfied their demands because all it took was a can of gaso-
line, a turn of the flywheel, and they had the power they needed
at a moment's notice.33 While the steam engine fired by gaso-
line had been an improvement over coal or wood, there were
still too many difficulties for it to be classified as a
practical source of power. Constant boiler troubles and the
inability of the steam engine to produce instant power elim-
inated it as a ponular favorite once the gasoline engine came
into general use.

Olds had been aware of the limitations of the steam
engine prior to 1887 and when the internal combustion engine
was develOped to a point where it could be Operated safely
and economically, he, along with several others in the plant,
began to concentrate on producing one of their own.324 The
idea has been held that the gasoline engine which resulted
from their experiments was one that Olds alone designed.3S

While there is no doubt that he was in favor of producing

33George Cormack, "Pioneering Days in the Gas Engine,"
gas Engine. XXI (July, 1919), 221;.

3"Selden Case Record, XVIII, lh76.

35James P. Edmonds, Gasoline A e. Develo ment Of the
Automobile and Gasoline Engine in Michi an IEansing, Mich.,

, p. 3 e ro ree Pregg, Farch 9, 1950.

17

one, the available evidence suggests that he did not do it
without assistance. At this time he was still the junior
partner in P.F. Olds & Son which included his father and
brother Wallace Who had remained with the company. In addition,
Madison Bates, a skilled and imaginative machinist, was em-
ployed by the firm and there is reason to believe that he was
reSponsible for designing the gasoline engine produced by the
company,36 although it was probably the result of combined
effort rather than the work of any single individual.

The unique feature of the internal combustion engine
deveIOped at the Olds plant in 1892 was that the gasoline
was burned directly in the cylinder. The charge was ignited
by means of a hot tube made out of one—eighth inch pipe. A
torch was used to heat the pipe red hot and as the combustion
took place it would ignite the charge. When the engine was
producing power, earlier firing was made possible by turning
the burner on high and slower firing by setting the burner
on low.37

In order to begin manufacturing these engines, the com-
pany needed new patterns, tools, and machines. EQU1pment Of
this type was expensive and although the concern had been
successful during the past few years, the outlay or money

reQuired to finance such a large expenditure was out Of their

36Lansing State Republican, May 8, 1899.

3701ds, Old Timers Ngtis (Jan., laud), pp. 11—12.

18

reach. Besides, it meant that the size of the plant had to
be enlarged to handle the new machinery and if the orders con—
tinued to come in the way they had been, additional Space would
be needed solely for manufacturing Operations. Rather than
proceed on a limited basis, the decision was made to incorporate
the firm and increase the capitalization to $30,000.38

A great deal of confusion has surrounded this particular
event. First of all there is a misunderstanding of when it
took place. Dates varying from 1890 to 189h have been given.
While it is impossible to be precise, it seems clear that the
move was tied to the develOpment of the gasoline engine. Further-
more, a likely action taken in connection with incorporation is
the appointment of officers. The first reference of this that
can be found is in 189h when P.F. Olds was listed as president
and R.E. Olds as secretary and treasurer,39 which also ob-
Viates the notion that Ransom was president and general manager
of the company at this time. This would in all probability
place the date of incorporation sometime in 1893.

A second misconception is that when incorporation took
Place a new company was formed under the name of the Olds
Gasoline Engine works. Actually, the Olds Gasoline Engine

Works did not come into existence until 1897 and before that

._‘_-

38Arthur Pound, The TurningWhegl (New York, 1937), p. M6.

39Lansing City Directory, 189h, p. 197.

19

time the firm continued to be known as P.F. Olds a SonJJ»O
A few of the men who helped to finance the incorporation
of P.F. Olds & Son were Eugene F. Cooley, Edward W. Sparrow,
and Samuel L. Smith who had made a fortune in Northern Hichigan
COpper and lumber. The Smiths had lived in Lansing until 1890
and knew of the progress of Olds and his father. They were
now living in Detroit but S.L. Smith still maintained a Lansing
office for the Michigan Land and Lumber Companyul in which
both he and Sparrow had large interests. Through Sparrow,
Smith was asked to participate in the incorporation of P.F.
Olds & Son and became a considerable stockholder in the com-
pany, the first time he was to invest in an Olds' enterprise.LL2
Since Olds was occupied for a few years with getting the
enlarged company well established, he did not turn his attention
to constructing another motor vehicle until 1896. By that
time, there were several other individuals who had develOped
horseless carriages propelled by an internal combustion engine.
Charles and Frank Duryea had started working on a car of their
own design in 1890 and three years later made the first suc-

cessful run of an American gasoline automobile at Springfield,

 

24.0%., 1896, p. 200; 1898, p0 215.
hill) idep 1892, p. 258.

qudward D. Kennedy, The Automobile Industry (New York,
19111), p. 19; Pound, The Turning Wheel, p.116.

2O

Massachusetts.)+3 At Kokomo, Indiana, Elwood Haynes had arranged
with the Apperson Riverside Machine Works in 1893 to build a
self—prOpelled carriage and at Cleveland, the Scottish—born
Alexander Winton successfully Operated a five passenger car
in 1896.uh In EurOpe, Karl Benz, Gottlieb Daimler, Panhard &
Levassor, Peugeot, and Emile Roger were other inventors Speeding
the progress of the gasoline automobile.

It seems likely that Olds must have had some knowledge
of the activities of these men with gasoline-powered vehicles
and perhaps their work stimulated him to construct a third
horseless carriage which would take advantage of the internal
combustion engine which the company had recently deveIOped.
Conceivably, however, this idea might even have been in the
back of his mind when he sold the second steamer in 1893. As
far as the deficiencies of that machine were concerned, Olds
knew better than anyone else its limitations. It did not
have adequate climbing power nor did it have a reverse move-
ment.h5 Olds, in describing the carriage, said, "it was not
back geared for hill climbing, and I dreaded the sight of a
hill...."u6 At another time he stated that when they came to

a steep incline, "my wife followed behind the car with a large

H

h3Nevins, Ford: Times, Man, Company, pp. 136-137.

mIbid.’ pp. 132, 16L...

hSchle and Automobile Trade Journal, VIII (Dec. 1, 1903),

33.
“50mg, Michigan EngineersLAAnnual, 1898, pp. 93-9h.

21

stock of wood, so as to prevent the car from rolling back down
hill if it stepped."u7 These problems could be overcome by
building a vehicle prepelled by an internal combustion engine
having a transmission of varying Speeds as well as reverse
which was his intention when he began the construction of his
third automobile.h8

By the time he started work on this vehicle, Olds already
had considerable excerience with the internal combustion engine.
The Olds' nronerty extended to the Grand River and several
members of the family owned small boats or launches. The gaso-
line engines were first use on these boats, mainly for pleasure,
but after "two or three years" they shifted from the marine
business to stationary engine work.h9 By 1896 Olds had worked
with the engines for four years using them for various purposes.
They had proven reliable and were srch an improvement over the
steam engine that he decided to adapt it to the horseless car-
riage.

Unlike his other two cars which he had built by himself,
Olds had the assistance of Frank G. Clark and others in the

construction of his third vehicle. Frank Clark had graduated

_~

u
'7R.E. Olds, description of vehicle, n.d., Olds Collection.
h8Selden Case Record, XVIII, 1h76.

h9Ib1d., IX, 631—632.

at what is now Michigan State University in 1890 with a degree
in engineering. After that he had gone to work for Clark &
Company, a concern managed by his father which manufactured
carriages, wagons, and cutters. Recausc of this connection,
Clark agreed to build the body and Charles Blades, foreman of
the blacksmith shOp at Clark & Company was given the job of
hammering out the front axle.50 Olds was to supply the engine
and transmission and when each had finished his part of the
operation, the horseless carriage was to be finally assembled.
There were two reasons, in particular, why Olds enlisted
the assistance of Frank Clark. If the production of automo—
biles was to be a successful Operation, he knew that he had
to have a vehicle that was reliable and ordinary in appearance.
Both of his other carriages had bodies of makeshift design
which had been adapted to the machinery that went into them
and as a consequence were rather odd looking contrivances.
The carriage was the most common and acceptable conveyance of
that time. If he could adapt the machinery of the automobile
to the carriage without materially changing its design, Olds
thought he would have a product that would sell and for that
reason turned to Frank Clark, assistant superintendent of

Clark & Son, the largest carriage company in town.

L

50George w. Stark, City of Destiny: the Story of Detroit
(Detroit, 19u3), p. use; Interview with Harold Blades, son of
Charles Blades, Feb. 1, 1962.

 

23

A second reason why Olds brought Clark into the picture
was because of his ineXperience with carriage manufacture.
While he was familiar with the principles of powering and
propelling a horseless vehicle, he had very little knowledge
of the construction of carriages. Besides, it was his intention
to reproduce self-propelled vehicles from this model if it was
successful and he needed someone who could supply them. Frank
Clark was in a position where he could do that for him and it
was on this basis that a partnership was formed.

Construction of the vehicle was begun sometime in the late
spring of 1896 and it was completed in the summer of the same
year. When it was finished, Olds felt confident he had a
vehicle that was "noiseless and light running, yet perfect in
every detail as regards wear, stability and carrying capacity."
He was so assured of his success that he invited a represen-
tative of the local paper to examine the carriage. This gentle-
man then reported the following description of the vehicle and
his conversation with Olds:

At the invitation of Mr. Olds a Republican repre-

sentative visited the Olds' Engine works yesterday

and carefully inspected the new machine, afterwards

being given a ride in the vehicle by Er. Olds, hill

climbing and other severe tests being successfully

met by the motive power. The first thing that

strikes the visitor is the beauty of the vehicle.

Mr. Olds enlisted the services of Frank G. Clark

in the construction of the machine and his concern

furnished the wheels, which are ball bearing and

cushion tire, and the body, a handsomely painted

trap, with leather furnishings of the latest pat-

tern. The whole is painted a dark green with dainty
red trimmings, finished in the highest style of the

 

 

21;

carriage builder's art.

The propelling machinery is all under the
vehicle and consists of a compact gasoline motor
of five horse capacity, with gasoline tank capacity
for a 25 mile run. A double chain gear and sprocket,
similar to that of a bicycle only of larger pattern,
connects the motor with the rear axle and a lever
controls the motor from the driver's seat, the
steering gear also being in the front of the vehicle,
consisting of a light lever controlled by the left
hand. The equipment, complete, weighs about 1,000
pounds and Mr. Olds is confident this weight can be
reduced at least 200 pounds. The vehicle is on
exhibition at Olds & Son's factory. There is no
doubt that the much mooted question of the horse-
less carriage has been successfully solved by Messrs.
Olds & Clark.

After the trip yesterday, Mr. Olds sat in his
office and discussing his latest pet said: 'I have
made this subject of the horseless carriage a study
for several years and with eight men have been at
work on the present vehicle for about six weeks.

Mr. Clark and I have tested it thoroughly in the
past few days and we are confident we have a
vehicle in every way suited to the demands. I am
thoroughly convinced that had we placed our vehicle
in the Times-Herald contest at Chicago we could
have captured the first prize easily. The motor
is capable of develOping a running power of eigh-
teen miles an hour, or can be run as low as four
miles an hour, and your eXperience on the seat
with me this afternoon will best convince you as
to the ability of the vehicle to perform what I
claim for it.‘

'Is it your intention to manufacture this
vehicle for the market?‘ the reporter asked.

'Certainly,‘ was the reply. 'Ne hardly
OXpect they will be a ready seller in the ordi-
nary carriage repository, but a great many persons
in this country and EurOpe are waiting for some
one to make a vehicle of this character that is
a success. There is no trouble about selling them
after you oncgl get the article that class of cus-
tomers want.

Some discussion has also centered on the type of isnition

 

51Lansing State Republicag, August 12, 1896.

25

Olds used on this vehicle. The hot tube ignition system was
first adapted to the gasoline engines manufactured by the com-
pany but whether it was employed on this automobile is not
known. Duane Yarnell, however, has said that Olds definitely
used it on this machine and found it unreliable. In his account

he states:

R.E. went over with members of his shop force
the problem of simplifying this system. But nothing
better came from the discussions. Shortly there-
after, another representative from the Scientific
American came to Lansing to evaluate R.E.'s pro-
gress. And when he wrote an article about the
vehicle, the limitations of the hot tube ignition
system were thoroughly canvassed.

Following publication of the article, R.E.
was somewhat startled to receive a letter bearing
the return address of Sing Sing prison. The letter
was from the electrician at the prison, who in
addition to keeping the electric chair in working
order, had done c‘nsiderablc exnerimenting with
electricity. He forwarded to 3.3. a small device
Which he claimed would provide the necessary soark
for the combustion process.

It consisted of a battery coil and a spark
plug made from a water glass. After exhaustive
tests, R.E. realized that here was the answer to
the problem. Fe advised the electrician that his
product should have a good future. And before
long a Spark plug manufacturer came into existence,
with many of the features of thgg first crude plug
incorporated in the new design.

One would think that a revelation of such amazing pro-

portions would certainly have made an impression on Olds, but

this evidently was not the case. In fact, it is not even cer-

tain whether he used hot tube ignition on this vehicle when it

52Yarnell, Auto Pioneering, pp. 52-53.

26

was first constructed or whether by that time he had adapted
the electric Spark to his gasoline engines. In 1898, but two
years after the carriage was built, Olds was asked to describe
how the electricity was supplied for exploding the charge in
the motor cylinder. 1e answered that "an ordinary battery,
similar to those used on doorbells" was used to ignite the
charge.53 Again in 1905 he was asked when he had first heard
of the electric spark form of ignition and replied, "I do not
remember the date."5h These statements would seem to imply
that Olds at sometime heard of the electric Spark idea and at
a later date began to utilize it on his own engines. This
would account for his failure to recall when he first heard

of the idea or started to use it himself. Any other explanation
would appear to be apocryphal.

Still another matter concerning this 1896 vehicle that
needs clarification is the question of whether or not this is
the carriage that resides in the Smithsonian Institution. For
some years it has been assumed that the one there is Olds' first
gasoline-prOpelled vehicle. In the light of the evidence, this
assumption is erroneous. When Olds was asked in 190M if he Still
had this machine in his possession, he said no, that it had been

burned in a fire.55 The people at the Smithsonian Institution

 

53Olds, Michigan Engineers' Annual, 1898, p. 96.
ShSelden Case Record, XVIII, 1505.

551b1d.. IX, 656.

also suspected that the vehicle they were offered in lth was
not the original because after considerable investigation,
they finally labelled the automobile an 1897 model.56 This
date is probably correct since Olds, soon after completing
the model, began to produce others and this vehicle in both
design and appearance is almost identical to the original.
This automobile was the first Olds had built that was
duplicated. Production was not set up on a large scale but
a start was made. Advertisements soon began to appear which
reveal that Olds seems to have had some difficulty in deter-
mining a name for it. He finally wound up by simply calling
it a "motor-cycle or trap." The object Of this invention, he
stated,

is to produce a practical Motor-Cycle, one which
will combine simplicity, economy and durability,
with as little confusion to the Operator as pos-
Sible. To Operate the carriage, the Operator has
only to oil and start the engine, which then runs
continuously without further attention—~the Oper-
ator having nothing to occupy his attention but to
steer the vehicle with his left hand, and start,
step, back or change the speed at will, as desired
--from four to fifteen miles per hour, which is
all done by the lever at his right, so that the
carriage is controlled with as much ease as a
horse.

The price of the vehicle was given as $1,000 and the claim

was made that it could be Operated at a cost of one-fourth

 

7 S6D.F. Edwards to Smithsonian Institute, Oct. 26, 191k;
kov. 12, lglh; Olds to Smithsonian Institute, May 10, 1915;
Accession papers, Smithsonian Institution, Washington, D.C.

cent per mile. Those who were interested were invited to make
a call at the engine plant.57

By fall they had received their first orders but were not
prepared to make deliveries. Plans had been made to build three
carriages but construction work had gone on spasmodically. One
of these vehicles was to be shipped to Florida. Nhen it was
not finished on time, the buyer came to Lansing to find out
why he had not received it.58 The reason for the delay was
that they were receiving more orders for engines than they
could deliver and did not have time to build horseless car—
riages. In fact, they were so busy that Olds found it neces-
sary to place a notice in Horseless Age to that effect:

P.F. Olds a Son, Lansing, Mich., state that

owing to pressure of business in their gas engine

department, they have been unable to build any

Eats: giggiaggiegii E38 market. They intend to

9 ' "0

This situation continued until the summer of 1897 when steps
were taken to enlarge and eXpand the company through reorgan-
ization.

There were two reasons why Clds came to look upon re-

organization as the solution to his problems. The first of

 

S7Advertisement, n.d., reproduction in Roy D. Chapin
papers, Michigan Historical Collection, University Of Nichigan,
Ann Arbor, Michigan.

58Selden Case Record, XVIII, lSOl.

59Horseless Age, II (Jan., 1897): 13°

29

these is obvious. With orders coming in for horseless car-
riages and the firm unable to build them because of the pres-
sure Of the engine business, he felt he had to expand in order
to take advantage of the automobile market. This could only
be done adequately if additional capital was brought in since
Olds lacked sufficient surplus to finance the project himself.
The second reason for his interest in reorganization was the
intention of his father to retire. Pliny, who was almost sixty-
nine years of age, wanted to withdraw from the business and
move to California. Olds was now confronted with both a desire
for further eXpansion and the ambition to purchase his father‘s
interests. Unable to do both on his own, he reasoned that re-
organization was the best course to follow.

P.F. Olds & Son had been incorporated in 1893 and among
the investors were some of the wealthiest citizens of Lansing.
These men had seen the business grow from a little machine shOp
to one of the leading manufacturers of gasoline engines in
central Michigan in scarcely more than fifteen years. They
were also aware of Olds' work with self-prOpelled vehicles
and the orders which were not filled due to the lack of man-
power and facilities. Therefore, when Olds presented them
with the idea of forming a company to manufacture automobiles,
it seems that he had little difficulty convincing them such a
move would be profitable and on Saturday afternoon, August 21

1897, a new company was formed in the Office of Edward w.

30

Sparrow. The first order of business was the election of

officers. Sparrow was named president; Eugene F. Cooley,

vice-president; Arthur C. Stebbins, secretary; and Olds,

treasurer and manager.60 After this was done, the Articles

of Association were approved. The name assumed by the cor-

poration was the Olds Motor Vehicle Company and the stated
objective for which it was established was "manufacturing
and selling motor vehicles,"61 the first company in Michigan

organized for that purpose. The following resolution was

then adepted:

Moved by Mr. Stebbins that the Manager be authorized
to build one carriage in as nearly perfect a manner
as posségle and complete it at the earliest possible

moment.

Although the company was formed on August 21, the capital
stock was not issued until September 7. Total capitalization

was set at $50,000 which was divided into 5,000 shares at a

par value of $10 each. The amount of cash actually srbscribed

to get the business started was $10,000 or 20 per cent of the

company's capitalization. 0f the total number of shares, Olds

‘
_‘_‘

60Lansing State Republican, August 23, 1807.

61Articles of Association, August 21, 1897, Olds Motor
Vehicle C0,, Olds Collection.

62Minutes of first Directors' Meeting, August 21, 1897,
Olds Motor Vehicle 00,, reproduction in Edmonds, Gasoline Age,
pp. 10, 12; Yarnell, Auto Pioneering, pp. 60-61; Oldsmobile 00,,
Division of General Motors, Lanaing, Michigan.

 

 

31

controlled 2500 shares or half the stock, both in his own name
and as trustee for P.F. Olds & Son.63 The remainder was held
by the following men in the designated amounts: Edward M.
Sparrow, 500 shares; Arthur C. Stebbins, 500 shares; Fred W.
Seibly, 500 shares; Samuel L. Smith, 500 shares; Alfred Reamer,
37h shares; Frank G. Clark, 126 shares; and Eugene F. Cooley,
1 share.6h

Plans were announced two days after the company was or-
ganized that the carriages would be manufactured at the fac-
tory of P.F. Olds & Son until a building was erected or one
already built could be secured. Also for the present, the
company was going to manufacture only the motor and running

gear and contract the bodies and wheels. As soon as a suitable

location could be found it was their intention to manufacture

all parts of the carriages except the wheels. A number of men
were to be put to work at once assembling the vehicles and it
was expected the cars would be on the market within sixty days
as a number of orders had been received and every indication
pointed to a good demand for them.65

By the time the company was formed, Olds had formulated

what he thought were the principles of building a successful

—_

63Stock certificate, Sept. 7, 1897, Olds Collection.

6hArticles of Association, August 21, 1897, Olds Motor
Vehicle 00., ibid.

6SLansing State Republican, August 23, 1897.

automobile. In comparison with other horseless carriages, he
thought there were three advantages which made his vehicle
superior. The first of these was its weight. Olds claimed
that the lightest vehicle made by any other manufacturer
weighed 1,950 pounds while his weighed only 1,000 pounds.
The second advantage was economy of Operation and the third
was that it would accommodate four poodle.66 In each of these
respects, Olds felt that he had the best road carriage on the
market and began to take steps to protect his invention against
infringement by other manufacturers. Soon after he had com-
pleted his carriage, he took out letters patent on the motor
and on November 28, 1397, shortly after the formation of the
Olds Motor Vehicle Company, he obtained a patent on the ve—
hicle.67

Concomitant with the formation of the automobile company,
some changes were also made in the organization and management
of the engine plant. In Fovember of 1897, the name of the
company was changed from P.F. Olds & Son to the Olds Gasoline
Engine Works. Olds became the president, replacing his father
who retired, Eugene F. Cooley was named vice—president, and

James P. Edmonds, secretary.68 The actual management of the

__

Ibid.

 

67Selden Case Record, XVIII, 1a82.

68LansingCity Directory, 1898, p. 215.

33

plant, however, was handled by Wallace Olds since most of
R.E. Olds' time was spent getting the vehicle company started.

By 1898 the Olds Gasoline Engine works had eXpanded to
a plant of considerable size, occupying several acres of
ground. Twelve different times in the previous ten years the
company had enlarged its capacity and during the past year had
increased the productivity of the plant fully fifty per cent.
The machine shops and foundries had the very latest equip—
ment and additional facilities and new machinery were con-
stantly added. Their line of products had been gradually
expanded and included one-half to fifty horsepower gas and
gasoline engines which were sold throughout the United States
and some foreign countries.69

Olds had placed Wallace as shOp superintendent in charge
of this large Operation but early in 1998 difficulties develOped
between them which appear to have been caused by differences
over labor policies. Among the employees at the plant there
were a number of mechanics who belonged t3 the machinists'
union. They succeeded in influencing many of the other workers
to join them and then proceeded to make demands as to wages
and working conditions. Some of the requests were granted,
others were denied. The responsibility for carrying out the

decisions was left to the factory superintendent. When it

69Lansing Journal, May 21, 1898.

3b

was discovered that Wallace would not SUpnOPt the management
in these matters and had taken the side of the workers, Olds
removed him from all connection with the company.70 The
$2,000 worth of stock in die engine company which wallace
owned was transferred to Olds on April 18, 1898,71 the second
time this kind of transaction had occurred.

The man whom Olds secured to replace Wallace was Richard
H. Scott. Scott had been born on a farm near Seachburg,
Ontario, on May 18, 1869. At the age of seventeen he left
home and after soending a year in Ottawa, went to Varren, Chio,
where he obtained work as a machinist with the Paige Tube
Company. Wollowing the completion of his three-year apprentice-
ship, Scott had worked successively for the Packard Electrical
Company, the Harris Automatic Tress Company, the Rucyrus Steam
Shovel Works, the Todd Engine dorks, and when Olds was looking
for someone to run his plant, Scott was employed as factory
manager of the Toledo Machine and Tool Company.72 He was
persuaded by Olds to take a similar position with the Olds
Gasoline Engine Works and in harch of 1898, Scott arrived in

Lansing to assume his new duties.

7OYarnell, Auto Pioneering, pp. 65-68; Interview with
MP8. Richard H. Scott: wife, Eco. 4, 1961.

 

71$tock certificate transfer, April 18, 1898, Olds
Collection.

72

.Qetroit Motor Newg (Sept., 1929), p. 10.

 

Ix

35

The situation that confronted Scott at the engine olant

was extremely difficult. After the dismissal of Wallace, the

men at the factory demanded that he be reinstated and Scott
fired. When this was refused, some of them went on strike.

The others remained at their work but for several months
production was slowed down by the obstructionist tactics of the

strikers. The role Wallace played in all of this is not clear

but it is known that about a year after he was released, he
formed a partnership with C.M. Hough who had worked as a
pattern maker at the Olds Gasoline Engine Works for eight
years, and the two of them left for St. Louis, Michigan, where
they set Up a machine shep.73

Eventually the strike was broken and the plant was qUiCk1¥

brought back into full production. Under Scott's direction

the engines were turned out in increasing numbers and additional

machinery and equipment was purchased. Business became so

good that on October 3, 1998, the capital stock of the com-
pany was raised to $150,000, of which amount Olds held 2,500
shares or $25,000 worth of stock.7u Even though the strike
had set the company back, business expanded after it was

settled.beyond former levels and investors did not hesitate

to put additional money into it.

—_

73Lansing State Republican, May 8, 1899.

YhStock certificate, Oct. 3, 1898, Olds Collection.

 

36

The same circumstances, however, did not apply to the
motor vehicle company. The stock of the concern had steadily
declined since its formation and some of the investors, in-
cluding Frank Clark, were starting to sell out. Others who
had been enthusiastic originally were less so now. Since the
formation of the company only six vehicles had been built.75
Yet Olds seemed convinced that if the automobile once caught
on there would be a vast market for those who were already
in the business. Therefore, as the answer to their diffi-
culties he prenosed that additional capital should be raised
to promote and enlarge the Operations of the company. In

making this suggestion, however, he did not win the approval
of the other stockholders. While most of these men had been
willing to invest more of their money in the engine works,
they were not ready to take another risk on the motor vehicle
company. Past eXperience had been disappointing and if it
was an indication of the future, they could not see that
added confidence in the automobile business was warranted.
Under these circumstances, Olds began to look outside of
Lansing for the financial support which he thought was nec.
essary to manufacture horseless carriages on the scale he

envisioned.

7SRE0 Echo, 1910, p. 383; George N. Fuller, Michi an
A Centéfififfil’fiisto of the State angglts Peeple (5 vols.,
UHIEE§3:-I§§§T:_V:E%T_T0. ‘Edmonds, Gasoline Age. P. 12, and
Hi Sibley, Merry_01d.Mobiles on Parade—Tahicago, 1951), p, 13
state that it was fiur. ’

CHAPTER II
THE CURVED DASH OLDSNORILE

The confidence and determination Olds diaplayed in
asking his stockholders for additional financial support
was borne from a knowledge that other interests were desirous
of backing him since he had been approached six months pre-
vious with an offer from Detroit capital to recapitalize the
vehicle company. In the summer of 1898, John T. Holmes and
John M. Nicol came to Lansing and presented a plan to Olds

who gave evidence of some interest. On that occasion they
assured him they would have no trouble securing financial
support for the company and an agreement was reached among
them to proceed with the necessary steps for reorganization.
A short time later they informed Olds that the arrangements
had been made and asked.him to come to Detroit to attend to
the final details.

On July 28, 1898, Olds entered into a contract with.the
other two parties Which stated the conditions under which the
new company was to be formed. The principal office and place
of business was to be located in Detroit. Both the Olds
Gasoline Engine works and the Olds‘hotor Vehicle Company
were to be combined in the new corporation with.an authorized
capital stock of $1,000,000. The engine company was to receive

37

38

$75,000 in cash and $125,000 in stock of the new concern while
the motor vehicle company was to be paid $15,000 in cash and
$25,000 in stock. In order to finance this arrangement, a
mortgage to the amount of $500,000 was to be executed against
the preperty of the company in exchange for negotiable bonds.
These bonds were to be payable in ten years with an interest

rate of six per cent oer annum. All of the stock and bonds

 

of the new company were to go to the three contracting parties,
in consideration of which they were to pay for the prOperty
of the engine and vehicle companies. In addition, they were
also to deliver to the new corporation the sum of $350,000
in cash.1

It is not known why Olds soon after withdrew from the
contract with Holmes and Nicol but it may have been due to
his deSire to limit the number of stockholders. The signi-
ficant point of the abortive contract, however, was the effect
it had on his subsequent behavior. When he went before his
associates early in 1899 to ask for their continued support,
he was confident that he was not dependent on local financing
and at the same time it appears that he already had a second
offer pending. When his request was refused, he simply went
ahead with negotiations with outside interests.

Eastern capitalists had approached him with a prOposal

_‘

1Original draft of contract, July 28, 1898, Olds
Collection, R.E. Olds Co., Lansing, Michigan.

39

to build a factory for large scale production in the East
where it would be close to the centers of the largest pop-
ulation. This idea corresponded with Olds' views on the
manufacture and marketing of automobiles and he informed them
of his interest in going ahead with the arrangements. At

the invitation of the Easterners, Olds went to Newark, New
Jersey, where he picked out a suitable location for a factory
but after waiting ten days for his backers to make good their
promises, he desoaired of their sincerity in the venture and
returned home.2

. On his way back to Lansing, Olds had to change trains

at Detroit. While waiting at the Michigan Central depot, he
met Jehn T. Holmes. After recounting his disappointing ex-
perience in the East, Holmes again made him a proposition
similar to the one he had offered him the previous summer but,
for a second time, Olds declined.3

A certain amount of confusion has also surrounded this

chance meeting. Instead of Holmes, it has been stated that
Olds met Samuel L. Smith, one of the stockholders in both

the Olds Gasoline Engine works and the Olds Motor Vehicle

*-

2P0 d F1 1 1 Record XXVI
pe Michi an Manufacturer an nanc a ,
(Nov. 20, i920), 38;Herbert O. Duncan,‘ThSIWorId 0n Wheels

(Paris, privately printed, 1926), p. 932.

3Questionaire completed by Olds, Jan. 19, 192h, Olds
Collection.

no

Company, who, after listening to Olds' account of his frus-
trating ordeal, offered to finance his reorganization plans.“
In reality, Olds did not turn to Smith for assistance until
sometime later.5 When he did, Smith agreed that a large amount
of capital was needed to out the Olds vehicle into production
on a large scale and consented to invest substantially in the
enterprise himself, a decision which may have been influenced
in part by his desire to provide business careers for his two
sons, Frederick L. and Angus, who had recently graduated from
college.6

A more valid reason for Smith's action, however, was his
confidence in the future of the Olds companies based on his
association with them. As a former resident of Lansing and
through acquaintance with Olds,7 Smith had knowledge of the
former's eXperiments since he had started in 1887 and when
the Olds Motor Vehicle Company had been formed, he was among

the stockholders. Furthermore, he had been one of the leading

A

”John K. Barnes, "The Romance of Our Automobile Makers,"
WOrld's Work, XLI (April, 1921), 561-562; Carl B. Glasscock,

TE? Gasoline A 6 (Indianapolis, 1937), p. #1; Morris N.
Musselman, Get A Horse (Philadelphia, 1950), p. 68.

SQuestionaire completed by Olds, Jan. 19, 192A, Olds
Collection.

6Pound, The Turning Wheel, p. 51; Lawrence H. Seltzer,
Financial HisEBF§TET51he American Automobile Industry (Boston,
192 , p. 22. Seltzer's information was based.on an interview
with Olds in Lansing, Mich. on Dec. 2h, 192h.

 

7Frederick L. Smith, Motorinngown A Quarter of A Century
(Detroit, 1928), p. 15.

hl

investors in the Olds Gasoline Engine Works since 1893. From
his financial involvement he knew the fiscal condition of the
companies and something of their prospects for the future.
If he had not known this, it would seem like sheer foolishness
for him to have undertaken such a purely Speculative Operation
when there certainly must have been businesses of a more con-
servative nature in which he could have started his sons on
their careers. On the other hand, it would not be accurate
to state there were no risks involved. There were, particularly
in the automobile industry, but the same could not be said
about the gasoline engine business. The engine works had
undergone tremendous growth over the past few years and every
indication was that it would continue to be profitable. While
the main purpose of reorganization was to place greater em-
phasis on the manufacture of automobiles,8 it was largely on
the basis of the excellent record of the engine company that
Smith consented to become involved in the motor vehicle busi-
ness. It was also the reason why he was able to attract other
men in Detroit to invest in the company. This is evident from
a statement made bv his son Frederick who assisted.him in
securing the financial arrangements:
When we presented to Detroit capital the sug-
gestion of taking over and expanding the engine com-

pany at Lansing, it was the dividend record and the
sure field for the gas engine that induced the new

8Lansing State Republican, May 8, 1899.

A2

money to sign on the dotted line. The horseless

carriage -- in 1899 -— had few preponents among

the cold-nosed wealthy.9

Final arrangements for the incorporation of the new con-
cern which was known as the Olds Fotor Works were made on
May 8, 1899.10 The purpose for organizing the company was
given as ‘the manufacture and sale of all kinds of machinery,
engines, motors, carriages and all kinds of appliances there-
with.' The capital stock which was divided into 50,000 shares
at a par value of $10 each was set at $500,000, of which the
actual amount paid in was $350,000. or this sum, $50,000 in
cash went to the original stockholders, $150,000 cash went
into the treasury, and $150,000 was represented in the assets
purchased from the old companies. Originally 20,000 shares
of stock were issued of which S.L. Smith held 19,960, while
the other four shareholders, Olds and Edward W. Sparrow of
Lansing, James Seager of Hancock, Michigan, and F.L. Smith
of Detroit, each had ten shares. Later distributions of stock
to the shareholders of the original companies increased Olds'
holdings but he remained a minority stockholder. All the assets
of the Olds Eotor Vehicle Company and the Olds Gasoline Engine

11

Works were acquired by the new concern and both were to

M

9F.L. Smith, Eggoring Down A‘guarter of A Century, p. 16.

loLansing State Republican, May 8, 1899.

11Pound, The Turning Wheel, p. 51; F.L. Smith, Motoring
QQWH A Quarter of A Century, p. 16.

1L3

continue their operations in Lansing until a factory could
be built. In the new organization, S.L. Smith was named
president and his son Fred, secretary and treasurer. Olds
became vice-president and general manager.

Several liberal propositions were received from Chicago,
Toledo, Cleveland, Indianapolis, and Buffalo as possible

locations for the new plant but these were turned down in

favor of Detroit. The reasons given for this decision were

that Detroit was an excellent distribution center, it had a
"superior class of both skilled and common labor," and there
would be "many small economies assured" to the company.12
The same things Could have been said to a lesser or greater
degree about any of the other cities which made bids for the
company and they probably should have added that Detroit was
chosen simply because two of the three officers lived there.

In fact, it does not seem that any investigation was made of

the other locations. Already in April meetings were held

with Edward I. Stimson, a real estate agent, and Secretary
Campbell of the Merchants & Manufacturers' Exchange, with
the intention of acquiring pronerty in Detroit on which to

build a new factory.13

In May the company purchased four and one—half acres of

12Detroit Free Press, May 1h, 1899.

13Detroit Journal, May 13, 1899.

uh

land on Jefferson Avenue near Belle Isle and construction work
began immediately. Plans for the buildings to be erected con-
sisted of a machine shop of two stories, 70 by 300 feet; a
foundry, 70 by 1&0 feet; a blacksmith shep, 31 by 100 feet;
and a double building, 50 by 170 feet, one half of which was
to be used as a show room and the other half for offices.
Space along the river was to be left for the erection in the
near future of a plant for the manufacture of marine engines.
It was eXpected that the buildings would be completed by
August 1 and that on the 15th the works would begin Operations
with a force of 150 men, which over the next year was to be
increased to 300.1“

Soon after the buildings were completed the main business
of the company was transferred from Lansing to Detroit. The
engine works continued to Operate in Lansing but the Olds
Motor Vehicle Company went out of existence on February 29,
190015 and the manufacture of horseless carriages was shifted
to Detroit. There production centered on an 'improved model'
which sold for $1,250 and had a "pneumatic clutch"16 and

"semi-cushion" or hard rubber tires with cushion treads.17

*

lDetroit Free Press, May 1h, 1899.
lsPound, The Turning Whegl, p. 51.

1
6Epstein, The Automobile Industry, pp. 29-30.

1Zflgrseless Age, V (Jan. 2h, 1900), 20.

MS

David L. Cohn and Morris M. Musselman have stated that Olds
also had an electric push button starter on this model,18

information which no doubt has come from an interview B.C.
Forbes had with Olds in 1926 in which he stated that he had
"fitted" the car "up with some very up-to-the-minute improve-
ments -— including ... electric push button starter."19 While
it may have been possible for Olds to have developed a "self-
starter" since he was working with motors, batteries, and
electric automobiles during this period, no evidence has been
found to substantiate Olds' statement and until such time, it

seems desirable to leave the distinction for inventing the

electric starter to Charles F. Kettering.20

Nevertheless, it was true that the very things on which
Olds had.prided himself when he built his first gasoline
vehicle he had now thrown aside. Simplicity and economy

were the points he had emphasized but was to overlook for

more than a year. By his own admission he was later to re-

cognize his failings at this time. "We thought we had quite

a car," he said, "but we soon found that it was too complicated

18David L. Cohn, Combustion On Wheels (Boston, lghh),
p. 8h; Musselman, Get A Herse, p. 59.

19Forbes and Foster, Automobile Giants of America, p. 230.

20Epstein,_T_he Automobile Industry, p. 106; Nevins,
E23Q£.2ifl£§1 Man, Company, pp.‘hfllah82; Pound, The Turning
.flhsgl, p. 108.

 

A6

for the public."21 And that was not the only difficulty.
In a day when the public regarded the horseless carriage as
impractical and thought it would be a thing of the past in
a year or two, an automobile priced at $1,250 was not likely
to stimulate many sales or break down prejudices. Nor was
anything else that Olds produced for some months to come.
Following a disappointing beginning, Olds began to
deve10p other types and models in an effort to find one that
would have public appeal. Purely as an eXperiment he designed
a one cylinder runabout that ran on bicycle wheels and was
priced to sell at $500.22 Even a line of electric runabouts
was deve10ped which were test driven up and down Jefferson
Avenue and traveled from 3h to 35 miles on each battery

charge.23 In all, Olds

produced something like eleven different models
of wagons in 1899 and 1900, none of which was
entirely satisfactory, though an expenditure of
$80,000 cash was made in this attempt to find the
wagon of the future. Some of these eleven new
models were fine wagons, but were too expensive
in construction, and those which cost less were
not altogether durable, so that gone were con-
sidered commercially available.2

21Forbes and Foster, Automobile Giants of America,
P- 230; Pound, The Turning Wheel, p. 52.

22Merrill Denison, The Power To Go (Garden City, N.Y.,
1956), p. 110.

23Detroit Free Press, Sept. 23, 1956; Interview with
firs. Horace F. LoomiE, wife of an engineer at the Olds Motor
Monks: July 31, 1962.

3h Zggycle and Automobile Trade Journal, VIII (Dec. 1, 1903),

h?

The net result of more than a year of eXperimentation

was that nothing very favorable had happened. The stationary

engine business had been profitable but as far as the auto-
mobile was concerned, prospects for the future did not give

much encouragement and there was nothing on the drawing board

that looked promising. Olds’ comment later that, "The prospects

of the industry were not very bright,"25 was perhaps an under—

statement of just how bad the situation actually was. He must

have realized that if the company was to continue to manufac-
ture automobiles at all, he had to come up with a car that

would sell. Under these adverse circumstances, he was driven
back to the principles of simplicity and economy in automobile

construction that he had held formerly.

In his search for a vehicle that would have public appeal,
Olds began to concentrate his efforts on models that were low
in price, simple to Operate, and the owner could fix himself
or have repaired in local bicycle or general repair shops.
Th0 story is told that the idea first occurred to him one
night and that he was so enthused he climbed out of bed and

immediately began to make sketches of what eventually became

the curved dash.26 Whether this is the way it actually hap-

Pened or not is difficult to verify. The only information

L

25Forbes and Fbster, Automobile Giants of America, p. 230.

26Yarnell, Auto Pioneering, p. 77.

MB

that can be substantiated of how Olds arrived at the plans
for the curved dash comes from a description by Horace F.
Loomis, a graduate engineer who only a short time before had
been given employment at the Olds Motor Works. He recalled
that,

One Monday morning in the fall of 1900
Mr. Olds came to the office and declared to me
that 'what we want to build is a small low down
runabout that will have a shOp cost around $300.00
and will sell for $650.00.‘ He made a sketch of
a body similar to the one finally used with the
curved dash. He also showed by sketch the long
flat springs which were to act as reaches and
also the eliptic spring thru which steering was
accomplished. I cleared my board.and.laid out
the general plan including body, running gear
and frame. M. Beck, stationary engine designer
develoned the engine. I develOped the planetary
transmission, getting the idea from a small water
meter mechanism which I had picked up. Maxwell
developed without drawings thg cam mechanism for
controlling the transmission. 7

This account, of course, does not preclude the possibility
of Olds' nocturnal inapiration, but it does seem to give a
more realistic picture of how the curved dash was actually
developed.

The design of the curved dash, the unique feature
of the vehicle, may not have been the original idea of Olds.
Most cutters and some carriages were designed with a toboggan
front which might have given Olds the idea but w.s. Tidswell,
a carriage designer, suspected after the curved dash had

become famous that he had originally recommended the design

- __

2711.13. Loomis to n.n., n.d., Olds Collection.

he

to him. In a letter to Olds in lQOh, Tidswell stated:

... one day I paid a visit to the shOp on River St.,
before you left for Detroit; thinking possibly there
might be an Opening for me to become overseer of a
large wood-working plant. I said I knew little or
nothing of the iron mechanism, yet had devoted con-
siderable attention to the body; and could see no
reason why the carriage idea with leather dash,

was at all desirable. Then too why not lower the
body, and make it a receptacle for some of the
machinery? You said then, what about the dash?

what instead of that? I answered, curve up the
front. Well, your new body was built very nearly

as I said, except in my designs the ventilating
slats were on the sides, instead of the rear. But
the curved front proved to be the great distin—
guishing feature of the Oldsmobile; you can tell

it at quite a distance, and I can see myself in
every one which passes by. No one is prouder of
your success than I; and you were entirely wel-

come to any suggestions of mine.

The first curved dash was built and tested in October,
1900. It was run for some time without a transmission but
after that two more were built which had a planetary trans-
mission that had recently been develOped at the factory.29
In appearance the vehicle closely resembled a shaftless car-
riage but yet its style was trim and attractive. It had a
single cylinder, four cycle horizontal engine which was started
by a crank at the driver's side. The transmission provided the
machine with two speeds forward and one reverse. A single
Chain carried power to the center of the rear axle which

housed the differential. A tiller, curving up from the floor-

_

28W.S. Tidswell to Olds, August 8, 190h, ibid.

29H.F. Loomis to n.n., n.d., ibid.

So

 

An 1899 Oldsmobile in front of the Olds plant in Detroit.
R. E. Olds is the driver.

g”. 9.11», .1..- :1;

I\‘ .‘ g ‘
swag: E 1..

- ~~ ‘ Am.- -

 

R. E. Olds driving a curved dash Oldsmobile on Belle Isle, Detr01‘.

51

board to the seat, provided the steering control. The wheels
had wire spokes and were fitted with pneumatic tires. The
body, mounted only two feet off the ground, was independent
of the running gear to eliminate vibration. A seat for two
was on the front of the body and on the back was a low box
which contained the engine and gasoline tank. Alongside of
the seat the side-boards were cut away and the floor was rolled
up in front to form the curved dash.30

But it took a catastrophe before Olds appreciated the
valuable product he had and only then did he realize it out
of necessity. In the meantime, the main business of the com-
pany was making engines and automobiles were considered no
more than a sideline. A number of models had been built,
none of which was the answer to the market. In fact, in an
effort to find the solution, they had shifted the emphasis
from gasoline to electric vehicles. Most of the new models
the'OIds Motor Works was planning to display for the spring
showing in 1901 were electrics and some curved dash models
also had been equipped with electric motors. Even the testing
and experimenting that was done seemed to center on increasing
the distance an electric could travel before it needed another
battery charge. And meanwhile, the curved dash was considered

—‘

30Detroit Free Press, Oct. 20, 1901; Automobile and
Motor Review, June 25,’l902, pp. Q—h; Scientific American,
xxx an. 9, lQOh), 29-30.

52

. a
no more than a prospect along with several other modeler1

This situation was abruptly changed by the fire which
struck the Olds Motor Works plant on Saturday, March 9, 1901.
'Rush for your lives, the building is all on firez' yelled
one of the employes about 1:35 in the afternoon. This was
followed by a scene of wild excitement. Men dashed for the
exits; on the second and third floors, windows were thrown
Open and the frantic men either climbed out or deliberately
jumped to the ground.

Within minutes after the first alarm was sounded at
1:37 o'clock by James J. Brady, a young timekeeper who was
working in the office, the main building was envelOped in
flames. It was said there were few in Detroit who could re—
call such a rapid fire in a factory of that kind. Starting
near the wash room on the west side, the blaze quickly spread
to the other parts of the building. A conductor on an east
bound Jefferson Avenue line car was passing the scene when
the fire broke out. Sixteen minutes later when he returned
on his trip westward, the walls had crumbled. According to
statements of persons in the neighborhood at the time, the
cause of the blaze was the exolosion of gasoline and apparently,
the building was not of the strongest construction. The brick

walls of the first story appeared to be about fourteen inches

*-

631F.L. Smith, Motoring Down A Quarter Of A Century,
p. 1 .

53

thick but the upper walls were considerably narrower which,

along with the explosions, seemed to account for the rapidity

of the fire.
Almost the first words spoken by Olds who had just re-

turned from a five weeks trip to California when he was in-

formed of the fire, were that the business must not be de-

layed:
'We shall take immediate steps to Open up
again, and in two or three weeks time we shall

be running as though nothing had happened.
'While the material loss is great, we do
not care half so much about that as we do for
We had

the set-back it has given our business.
contracted orders to keep us working full time

for over a year, and a more inopportune time for

such a calamity could not be. The automobile

season is just onening up, and we expected to put
However,

machines on the market in a few days.
we shall immediately look for a building, where

we shall resume work temporarily, and as soon as
possible we shall rebuild in the old location.
In the course of two or three weeks we sha§l be

running as usual, in temporary quarters.‘

As close as could be figured the total damage of the

Of that amount, $65,000 worth of

fire was about $72,000.
prooerty was destroyed at the Olds Motor Works which in-

eluded the buildings, machinery, equipment, and personal
Olds estimated that the company

possessions of the employees.
was carrying $h5,000 of insurance at the time but later stated

that after all the claims had been processed, the company re—

32Detroit Free Press, March 10, 1901.

5h

COiVGd only $33,000 in payments.33 In addition, there was
damage amounting to more than $7,000 to the buildings of the

Detroit Stove Works, the Peninsula Iron Company, and the

Detroit United Railway which were located in the vicinity.
Although the Olds Motor works hired approximately 300

men, most of whom were employed in the gasoline engine divi-

sion, not more than twenty-four peeple were in the factory

at the time of the fire owing to the fact that the shop closed
One of the men that was in the factory

at noon on Saturdays.
was W.G. Murray, manager of the automobile department, who

was able to give a description of the work that was being

done:
'We do not run at all on Saturday after-

noons although there were a few men in my depart-
ment getting out work that was imperative. They,
with a few in the finishing department, and the
regular office force constitutes all that were

in the building, and I believe all got out safely.
My department will no doubt suffer the greatest

loss, as there were any number of machines nearly
we have been exoerimenting with elec-

completed.
trical automobiles for the past two years and this

year we were getting ready to put them on the mar-
We had orders for several months ahead, many

ket.
of which were started and others nearing completion.

The automobile department was stocked with all
parts of the machine, and we were running a full
But one machine was

force of men assembling them.
saved, and that is one that the company has been
In one portion of the building there
3fleady for the

running.
were twenty or more machines almost
market that are totally destroyed.‘

 

33Olds to A.C. Bement, April 28, 190h, Olds papers,
MIChigan State University Museum, East Lansing, Fichigan.

34Detroit Free Press, March 10, 1901.

55

Several years later, Fred Smith stated that,

The fire was beyond question the best move ever
made by the management, in that it put an end to
the experimenting and chasing after strange elec-
tric gods on the part of our mechanical geniuses.

The last of our 'StanhOpe' two-seaters came crash-
ing down from an upper floor and landed a-sprawl
on top of the steel safe in my office. The safe
was empty and the Stanhope a charred skeleton.
Somehow the combination seemed chocg-full of sig-

nificance -— emblematic, prophetic. 5
t remained that

J

The foundry was the only building thi

had not been seriously damaged. Within forty—eight hours

after the fire, work was going on to hastily convert it into

a machine shop. "On the following Monday," F.L. Smith wrote,

"the line-shafts were in place, power installed, and lathes
and drill presses doing their best to keep the pace."36 All
efforts were now directed towards reproducing the one machine
that had been saved, a model of the curved dash.
The common explanation that has been given to account
for the fact that after the fire the Olds Motor Works con;

centrated on producing the curved dash is that they had no

other alternative. All the other models had been destroyed

in the fire and this was the one "tangible asset" that re—

mained. It was already the time Of the year f0? the opening

of the automobile season and if they were going to get any-

thing on the market in the near future, it had to be the

_._--

351b1d., p. 17.

Se

curved dash. Disaster had made that decision for them. The

specifications and blueprints for all the models had been

destroyed so they were left with no other choice than to pro-

duce the curved dash.37

The evidence, however, does not substantiate this con-

clusion. Several years later, Olds received a letter from

the wife of Milton Reck who had been an engineer with the
company at the time of the fire, in which she described how,
"Mr. Beck, daring smoke and fumes, remained on the drafting-
floor, until he had gathered up all the assembled drawings
of the new machine" and placed "them all in the safety-

vault."38 In 1912, Olds wrote that the "valuable papers and

books" of the company had been placed in the "fire-proof

vault."39 On the evening of Narch 9, he was questioned by

a reporter as to what the company had lost in the fire. Olds

stated that, "he had been informed by his head draughtsman

that all the drawings and plans had been found in the vault,

and there would be no loss from that source."LLO Presumably,

this would have included the prints not only for the curved

dash but for all the other vehicles as well. Furthermore,

3ZMusselman, Get A Horse, p. 70; Yarnell, Auto Pioneerin ,
Pp. 88—89; Engene W. Lewis, Motor Memories (Detroit, $9h75,
:00 1.370

38L.s. Back to Olds, April 23, 193a, Olds Collection.

 

3901d3 to Boys of the Industrial School, Dec. 23, 1912,
Olds papers.
aoDetroit Free Press, March 10, 1901.

57

the company had offices in Boston, New York, Philadelphia,
Chicago, Omaha, Minneapolis, and Los Angeles,h1 anyone of
which might have had models on hand that could have been
copied.

The question then becomes not one of how but why the
Olds Motor Works staked everything on the curved dash. In
order to offer a plausible explanation, it is necessary to
look at the situation in which the management found itself
at that time.

First of all, the condition of the company made it im-
perative for them to proceed with great haste. The making of
engines had been profitable and the plant in Lansing was still
Operating but the automobile business had been a failure. In
addition, they new found themselves without the facilities and
equipment to handle the orders they had received, which was
accompanied by the fear that if they were unable to deliver,
the business might be lost to competitive firms. To wait
until the plant was rebuilt or to begin experimenting with
new models would have meant further delays and loss of busi—
ness. They could not afford either and under the circumstances
the decision was made to get into production again as soon as
possible. The quickest way was to focus their attention on

a simple, easy-to-construct, and inexnensive vehicle, a factor

_
‘—

hlLansing State Renublican, March 9, 1901.

58

of great importance since most of the parts had to be tempor-
arily subcontracted from other firms.

In the year and a half since the company had begun oner—
ations, they had yet to produce a car that gave indications of
success. Even though they had been experimenting with elec-
trics for some time and had assembled a few for shipment, there
was nothing that suggested these would receive a better re-
ception than any of their other models. While the electrics
were smooth and quiet-running, the limitations impOsed by the
necessity to recharge the battery every few miles was suffic-
ient to prevent it from becoming the principle automotive
power of the future. As far as the Olds Motor Works was con-
cerned, their specialty was the manufacture of gasoline engines
and their experiments with electric automobiles were no more
than attempts to discover what the public wanted. Under the
circumstances, concentration on the curved dash was not an
illogical course of action. Although they could not be cer-
tain that it would be more successful than any of their other
models, it had tested out well and was a vehicle they could
produce with their limited facilities and dependence on other
manufacturers.

On that basis, plans were made to go ahead with production
0f the curved dash and that model only. Working under the
pressure of time, the runabout was taken apart and special

tools, jigs, and templates were made in preparation for pro-

59

duction. "In exactly thirty days from the date of our blessed
disaster," Fred Smith wrote, "the first little Phoenix of a
runabout was again trundled out by Jimmy Brady to receive the
blessing of the management."u2 Olds, who at the time lay ill
in a hospital, was kept informed of progress at the plant

and when the new runabout was finished, it was driven out

for his inspectionJ’r3

Turning out one curved dash, however, was far different
from producing many. While the men at the plant had been able
to put together one car, they did not have the facilities and
equipment to make them in numbers. Nor did they have the means
to manufacture the engines, frames, sorings, wheels, bodies,
lamps, upholstered seat cushions, and other accessories that
went into the manufacture of a complete automobile. Until

the plant could be rebuilt, they had to find some other way

to manufacture the vehicles. Refusing to suspend production,
they adepted a technique which previously had not been used

to the extent that the Olds Motor Works employed it in the
next few years.

Since only the foundry building remained, they decided

to concentrate their workers on the job of final assembly and

___‘

h2F.L. Smith, Motorinngown A Quarter of A Century, p. 17.

1+3Barnes, World's Work, XLI (April, 1921), 562; Pound,
The Turnin Wheel, p. 53;‘Fbrbes and Foster, Automobile Giants

0? 6? ca. p. 2 3.

60

farm out parts for the curved dash to other manufacturers.
The success of this type of Operation had been shown by William
Crapo Durant and Dallas Dort of Flint, Michigan, who had

adapted it to carriage making.hh Following their example,

the Olds Motor Works through this method became the first
quantity producer of automobiles and many men who later held
high places in the automotive industry were given their start.
This fact alone earned for Olds the title "Schoolmaster of
Motordom" because more peoole were either trained or intro-
duced to the ootential of the automobile in those early days
by him than by any other individual.u5

Byron F. Everitt, who later built the Mayne, the E—N-F-30,
the Flanders—20, the Everitt, and the Maxwell, was given the
order for the Olds bodies. he had been born in Ontario in
1872 and at the age of nineteen came to Detroit where he went
to work for Hugh Johnson, a carriage builder. In 150C he had

established his own business and when Olds needed bodies and

upholstered cushions, he turned to EVCPitt.u6 who promptly

MLDenison, The Power To Go, p. 73.

usReginald M. Cleveland and S. T. Williamson, The Road file
Yours (New York, %l), p. 178; James R. Doolittle ed:, The
Romance of the Automobile Industry (New l'ork,19163, ,
EpStein, The Automobile Industry, p. 209; Found, The Turning
Wheel, pp. 66;67.

hérorbes and Foster, Automobile Giants of America, p. 18;
Barnes, world's work, XLI (Aor11,1921), 565.

 

_.....-{M - awn—

61

brought Fred J. Fisher, eldest of seven Fisher brothers from
Norwalk, Ohio, to Detroit to help him turn out the job.h7
Later, after Everitt had gone into the automobile business,
the Olds Motor Jerks purchased its bodies from the 0.3. Hilson
Body Company on Cass Avenue.u8

The Briscoe brothers, Benjamin and Frank, who owned and
Operated the largest sheet metal plant in Detroit were initiated
into the automobile business when Olds and John D. Maxwell who
was in charge of the testers at the Olds Motor Works, went to

the Briscoe plant in 1902 with a sample of what they said was

a "cooler" for the Olds runabout. Benjamin Briscoe recalled

that at the time he did not recognize it as part of an auto-

mobile. "It looked to me like some antiquated band instrument,"

he said. Nevertheless, he agreed to make samples of it and
soon afterwards Olds awarded him a contract to build h,h00 of

them, along with an equal number of tanks, sets of fenders, and

other sheet metal parts. "This order and other orders given

by the Olds Motor Works at the same time to other concerns
around Detroit," Briscoe stated, "marked the beginning in a

real way of the automobile manufacturing business in the city

of Detroit."h9 '

 

u7Denison, The Power To Go, p. 73.
uBNevins, Ford: Times, Man, Company, p. 222.

h9Bonjamin Briscoe, "The Inside Story of General Motors,"
_D_°troit Saturday Night, xv (Jan. 15, 1921), 2, 9.

62

Another brother team brought into the automobile business
by Olds was John and Horace Dodge. "Hard-headed hard-handed
young men with exceptional ability as machinists," they had
recently come to Detroit from Windsor, Ontario, and set up a
machine shOp at 2&0 Monroe Avenue. They were given their
Opportunity to become acquainted with the possible profits of
automobile manufacture when Olds went to them with a contract
for engines and transmissions.SO From this small beginning,
the Dodges developed a business which their widows twenty-
five years later sold for $166,OOO,OOO.Sl

When the Dodge brothers were not able to keep up with
his orders, Olds turned to the Leland and Faulconer Manufac-
turing Company, founded by the superlative New England mach-
inist, Henry Martyn Leland. Through this combination, Lloyd
Morris has theorized, the automotive industry received the
generative principles that made it the leading enterprise in
the nation. Olds had conceived of the principle of mass pro-
duction and realized that its efficient application depended
upon the technique of assembly. Leland made this technique
poasible by furnishing the principle of standardization or
the precision manufacture of parts. From their collaboration

a technology was develOped which revolutionized modern pro-

SOGlasscock, The Gasoline Age, p. 63.

 

51Musselman, Get A Horse. 9- 225-

 

63

ductive processes.S2

Henry Leland was fifty-eight years old when Olds launched
him unknowingly on a new career. Born in Danville, Vermont,
on February 18, 18h3, Leland had spent forty-nine of his years
in mechanical pursuits. As a youth, he got his first job
pegging shoes and was so efficient he was able to peg fifty
pairs a day by the time he was eleven. At age sixteen he
became an apprentice mechanic in the Crompton Loom Works of
wercester, Massachusetts. During the Civil War he was em—
ployed in the Federal arsenal at Springfield and afterwards
moved to the Colt arms plant. These munitions factories,
following the principle originally laid down by Eli Whitney,
had long assembled their weapons from finely machined inter-
changeable parts and it was there that Leland learned the
methods of precise workmanship.

After moving from one joh to another and from factory
to factory, Leland settled down in the Rrowne & Sharpe plant
in Providence, the foremost manufacturers of machine tools
in the East. Ry demonstrating his ahility and knowledge, he
became a machinery specialist and was sent out to install new
machines and co-ordinate them to the advantage of the purchaser.
In 1890 he gave this up and moved to Detroit where he organized
with his son Wilfred the Leland, Faulconer & Norton Company

to manufacture machine tools, marine engines, and bicycle

52Lloyd Morris, Not So Long Age (New York, 19h9), p. 258.

61+

parts. Constant emphasis was placed on working for closer
tolerances with the result that the name of Leland became
synonymous with precision manufacture.53

It was logical that Olds should have gone to Leland when
he needed someone to build his engines. Even before this he
had given Leland an order for gears and when the factory
burned down, Olds knew he could count on him to manufacture
dependable engines. For Leland, this was an opportunity to
demonstrate what could be done with an engine through close
attention to precision. The Olds engine as made by the Olds
Motor Works was rated at 3 horsepower. With his more exacting
standards, Leland was able to increase the horsepower to
3.7.5“

A.L. Brush, a young engineer, was working in the machine
shop of Leland and Faulconer when they were making engines
for Olds. Convinced that he could make a better single cylin-
der motor than the one going into the Olds runabout, he pep-
suaded Leland to allow him to experiment and a short time later
produced an improved and more powerful engine. In his book,
Ebb Turningdheel, Arthur Pound quoted a Leland associate who
related an interesting episode concerning the new engine:

At the first automobile show in Detroit, the
Olds display contained two cars, one powered-by

 

53Glasscock, The Gasoline Age, p. 10h.

sbrPound, Thegggrning Wheel, p. 103.

u.

65

Olds, the other by Leland. I recall that Henry
Ford pointed out to us as a curiosity the fact
that the Leland motor was operating under brakes
in order to bring it to the same pace as the Olds
motor. Our motor developed 3.7 horsepower as
against 3 for the Olds-built motor. This superior-
ity was due to closer machining. H.M. Leland went
seriously to work on the Olds motor and by intro-
ducing larger Valves and improved timing system we
were able to build this one-cylinder up from 3.7
horsepower to 10.25. On taking the improved art-
icle to the Olds Company, we were dismayed by the
refusal to use it. Mr. Olds was getting all the
business he could handle and I SUpnOSe such a
radical change in power plant would have neces—
sitated alterations in many directions.

Several reasons can be given why Old: turned down the
improved Leland engine. By this time, the plant was back in
Droduction and the curved dash had become popular. If he
had adOpted the Leland engine, Olds suspected that alterations
would have to be made in the body and chassis because the
engine was too powerful for the present model.56 There was
no reason why he thought this was necessary since the car he
was making enjoyed good sales. This had not been true when
he produced larger and more exnensive cars which would have
been the result if he had accepted the Leland engine and made
the structural changes to accommodate it. Fast eXnerience had
taught him that success had come only when he had concentrated
on the low-priced, economical curved dash and that success he

was not willing to disrupt by taking a chance on something which

A.“

SSIbid.

56Kennedy, The Automobile Industry, p. 2h; Glasscock,
$29 Gasoline Age, p. 165.

66

had proved a failure in the past. But before Olds reached this
point, there were several other decisions and events which were
of inestimable importance in the subsequent history of the
Olds Motor Works.

Since Operations of the Olds Motor Works had been moved
to Detroit in 1899, businessmen in Lansing realized the mis-
take they had made in not trying to keep the expanding con-
cern in their own home town. When the plant burned down, how-
ever, the Lansing Business Men's Association which had been
formed to bring new business and industry into the city, saw
it as an Opportunity to rectify their previous error. At a
meeting of the Association, it was voted to extend an invita-
tion to Olds and his associates to transfer the business back
to Lansing. As an inducement, it was agreed that the promise
of a suitable location should accompany the offer and Harris E.
Thomas, vice president of the Association, was commissioned to
convey the prOposition to Olds.

The tract of land offered to Olds comprised an area of
52 acres which had formerly been the fair grounds of the Gen-
tral Michigan Agricultural Society. The fairs once held
there had become a thing of the past and the land was now
offered for sale. The Business Men's Association recognized
the suitability of the site and commenced negotiations for
its purchase. In order to obtain a title to the property,
Harris Thomas gave a note for $5,000 which was endorsed by the

other members of the Association and the deed was given to

 

 

__.._—— _. _—._—_-- . .II no.“

 

 

67

them which they in turn offered to Olds and he accepted.57

The question arises as to the reasons why the management
of the Olds Motor dbrks should have decided to erect a factory
in Lansing. To state that the move was made simply because
Olds wanted to return to Lansing is not a valid answer to the
query. The Smiths, not Olds, owned the controlling interest
in the company. They had originally insisted that the busi-
ness should he moved to Detroit and the decision to build a
plant at Lansing was one in which they had to concur. Such
a matter could not have been decided by Olds without their
approval. Furthermore, if there were satisfactory reasons
for transferring the center of onerations to Detroit in 1899,
it would not be exnected that the advantages of returning to
Lansing had changed markedly in the two year interval. The
solution, however, revolves on what was haopening in Detroit,
not Lansing.

After the fire in Karch, the foundry had been converted
into a machine shop and more than sixty men were employed,
thirty-five of whom were machinists.58 On May 20, 1901, the
union machinists at the Clds Motor works along with machinists
all over the country went on strike for a nineéhour day at the

ten-hour day pay.59 For more than a week the strikers avoided

 

S7Lansing State Renubligan, August 13, 1901.
58Detroit News, May 21, 1901.

59Detroit Free Press, May 21, 1901.

68

violence but on May 31, a serious riot was averted only by
the timely arrival of the police. Fully 500 men, comprised
principally of workmen of different shOps, had assemhled in

a vacant lot near the Olds plant. When they began to approach
the factory in a threatening manner, one of the employees of
the company called in a reouest for more police protection.
Twenty-five additional patrolmen were de3patched to the scene
in an effort to prevent any further violence. Just when they
arrived, someone yelled, 'Let's rush through and get at themi'
On this signal the strikers and sympathizers began to run to-
ward the Olds plant, some going around other buildings and
reaching the Shep down by the river where they suspected non-
union men were at work. Three of the strikers received badly
swollen eyes and suffered bloody noses but the police reached
the building in time to prevent anyone from being seriously
hurt. The "company" men had armed with pieces of gas pipe

in order to defend themselves but at quitting time they had
to be escorted away from the scene by patrolmen and some had
to be accompanied all the way home. The next day it was ex-
pected that violence would break out again but with the police
in the vicinity, further attempts to disrupt Operations were
quelled.60

The labor situation at the Olds Motor Works when Olds

 

6OIbid., June 1, 1Q01; Lansing State Republican, June 1,

1901.

 

 

.uL—l

69

and the Smiths were approached by the Lansing Business Nen's
Association was a sufficient incentive to make them willing to
seriously consider the offer of Harris Thomas and from that
point on negotiations began in earnest. This is reflected in
a letter Boy Chanin who had left the University of Michigan
to work at the Olds plant wrote to his father on June 26,
1901:

Well, things have changed around here quite

a little. Loomis and Beck will go this week or

next and Mr. Olds and Mr. Smith are in Lansing

today and I should likglto know what the result

of their trip will be.

While there was less likelihood of labor unrest in Lansing
than in Detroit, however, this alone does not take into con-
sideration the other factors that were involved in a move of
this kind. There was still the need for adequate transportation
facilities, parts suppliers, and skilled labor. If Lansing
could not have supplied these it still would have been un-
suitable as a location for an automobile factory. That the
move was made would indicate that Lansing had or could pro-
vide to their satisfaction what was necessary for the manu-
facture of automobiles. The facts in the matter also point
to this conclusion.

Two essential parts of the automohile which the Olds

Motor Works had to subcontract in Lansing were the bodies and

_._‘
-

61R.D. Chapin to 3.0. Chapin, June 26, 1901, Chapin papers,
Michigan Historical Collection, University of Michigan, Ann
Arbor, Michigan.

70

wheels. The engines and running gear they intended to make
themselves, first at the Gasoline Engine Works and later at
the new factory. Because of the bulk of these parts, the
bodies in particular, and the transportation costs involved
in hauling them some distance, it was mandatory that Lansing
should have factories which could supply these parts.

In 1901 Lansing already had two plants which were manu-
facturing automobile bodies and wheels. N.K. Prudden & Com-
pany whose specialty was sulkies, bike buggies, and rubber
tires had been in business for some time62 and was supplying
the local demand and had contracted orders from companies in
Detroit and elsewhere. The other factory which had recently
been organized was the Auto Body Company, producers of auto-
mobile and carriage bodies.63 With these two firms supplying
the bodies and wheels, it was possible for the Olds Notor
Works to manufacture a complete automobile, a vital consid-
eration in their decision to erect a plant in Lansing.

But this only answered one of their demands and the pro-
blems of distribution and labor supply remained. Lansing was
off the main transportation routes and did not have an ade-
Quate supply of skilled labor. These matters, however, were

also successfully resolved. The land on which the factory was

 

62Lansing__Cit_y Directory, 1900, p. 23h.

63Ib1d., 1902, p. 55.

 

_____._ _ A I‘. .

 

71

to be built was located on a sour of the Grand Trunk Railroad
which made it possible to ship the automobiles directly into
Detroit and from there to centers throughout the country. The
lack of a supply of skilled labor was not a problem since
workers could be brought in and the real difficulty was pro-
viding the necessary shelter. This was remedied by converting
some of the buildings on the fair grounds into temporary bunk-
houses until private housing could be erected.6h

Final arrangements in the negotiations between the Olds
Motor WOrks and the Lansing Business Men's Association were
concluded on August 12, 1901. The agreement that was drawn
up provided that work would commence at once on the construction
of a building designed as an assembly room. Plans called for
its completion within three months at which time manufacturing
Operations were to begin. When this phase was finished, a
foundry was to be built and the following Spring another large
building added. Employment was set at hOO men from the start
and it was expected that number would gradually be increased
to 1,20065 Clds was placed in charge of organizing and super-
vising the work according to schedule. The measure of his
ability in this respect can be attested from the fact that the

first building was completed and manufacturing onerations begun

éuLansing §tate Republican, August 13, Oct. 31, 1901.
651b1d., August 13, 1901.

 

 

 

 

72

just four months after the decision to-accept the offer of the
Business Men's Association had been made.66

In October, 1901, a letter was received in Lansing from
the Olds Motor Works which stated that the company expected
to make not less than twenty-five automobiles a day.67 This
was a production figure that surpassed what anyone had ever
attempted. Perhaps they were a trifle optimistic but yet this
was an indication of their intention to produce automobiles
on a volume basis. However, it was one thing to envision a
market for the curved dash; it was another to create a demand
which corresponded with their hopeful expectations. While
it was possible to expand their plant and produce that many
cars, there was the problem of selling them which could only
be solved by advertising the curved dash and bringing it to
the favorable attention of the public.

Alexander Vinton had tried a novel scheme in 1897 to
prove that he had built a practical motor car. On the 28th
of June he set out on a drive from Cleveland to New York. It
was his hope that this accomplishment would demonstrate the
reliability of the Jinton car. He completed the trip after
forty days, probably more because of his Scottish persistence

than the superiority of his automobile. But along the way

66Ibid., Dec. 16, 1001.

67Ibid., Oct. 31, 1901.

 

TI '.

 

llL’n—l —l

73

crowds grouped about him at each morning's start and another
quickly gathered when he 'turned out' the engine for the night.68
The car was the cause of so much curiosity that two years later
Winton duplicated the trip, only this time he took with him
Charles B. Shanks, a newspaper reporter. The distance of over
700 miles was covered in h? and one-half hours running time

and Wherever they traveled, the car was greeted with great
interest due to the good work of Shanks. His articles at-
tracted much attention and were the first significant effort

to intelligently publicize the automobile. When they reached
New York, a million peOole came out to see the car,69 demon-
strating both the widespread interest in the automobile and
that Winton‘s advertising efforts had been amazingly success—
ful.

In the fall of 1901, Olds also was looking for a way to
publicize the curved dash. He needed something to advertise
his car in the heavily populated cities in the East if he was
to realize quantity sales upon which volume production depended.
Hinton had attracted so much attention just a few years before
that Olds decided to attempt a similar feat. He thought it
would give him a chance to prove that the curved dash runabout

Which sold for a price most people were able to afford, could

6BMacFarlane, Collier's, LIV (Jan. 9, 1915), SO, 52.

69Doolittle, The Romance of the Automobile Industry,
9- 322.

7h

COMpete with the larger cars. If the curved dash received as
much notice as Hinton's car, Olds suspected that increased sales

At least he was willing to try and the Automo-

WOUld f011OT/I.
bile Show to be held in New York presented him with an appro-

priate Opportunity.
The man chosen to drive the Olds runabout from Detroit
to New York was Roy D. Chaoin, a twenty-one year old tester

at the plant. Only the previous Spring he had gone to work

for Olds at $35 a month.
been given the job of taking pictures throughout the plant

An amateur photographer, Chapin had

when he was not busy filing gear teeth and often stayed after

hours to help John Maxwell finish and test the runabouts
After a brief period with

that had been made diring the day.
the company, Chanin had so impressed Olds with his unusual

interest and sense of responsibility that he was chosen to

drive the curved dash to New York.70

On Sunday, October 27, 1901, Chapin left Detroit in a
new curved dash which was equipped with a large tool box of
Spare parts behind the buggy seat. Ry the first evening he
had made only the short distance to Leamington, Ontario, and

at the end of the following day stopped at St. Catherines be-

fore crossing over into New York where he spent the third night
at Rochester. Up to this point he was still on schedule but

7OJohn C. Long, 391 D. Chapin (Bethlehem, Pa., privately
printed, IQAS), pp. 30-31;*Denison, The Power To Go, p. 11h.

75

then rain came, turning the roads into a quagmire. Forced to

leave the muddy highways, Chapin took to the towpath of the

Erie Canal and contested with mule teams for the right—of-way.

From there he pushed on to St. Johnsville, Hudson, and Peek-
Finally on

skill where he was held up for major repairs.
On his

Tuesday, November 5, Chaoin drove into New York City.
way down Fifth Avenue the runabout skidded into the curb and
one of the wire wheels was damaged but in spite of this diffi-

culty, he was able to maneuver the machine up to the Waldorf-

Astoria where Olds was waiting his arrival. Dirty, greasy,

and disreputable in appearance, Chapin was refused entry to
the hotel by the doorman and had to sneak in unobserved through

the servants' entrance in order to meet Olds.71

Upon his arrival, Chanin sent the following telegram to
the Olds Fotor werks where they were anxiously waiting word

on the outcome of his trip:

Arrived here at eleven in good order total distance
eight hundred twenty miles time seven one half days
average In miles pgr hour used 30 gallons gasoline

30 gallons water.
Little had been said about the journey in advance or en

route, perhaps because no one could be sure of its accomplish—

*-

71Long, ibid., pp. 31-32; Pound. The Turning Wheel. p. 55.

720hapin to Olds Motor werks, telegram, Nov. 5, 1901,

Chapin papers.

76

Now, however, Olds wanted the story told in order to

ment.
capitalize on the publicity and the following report appeared

in the flgw York Tribune issue of November 7:

Another new machine reached the Garden yester-
day for which the owner claims an interesting record.
It arrived in the city Tuesday evening, and was so
covered with mud and grime that it will not be placed
on exhibition until to-day. The automobile is of
the gasoline sort, and was driven from Detroit to

The machine

this city in seven days and a half.

weighs eight hundred pounds, and on the trip cov-

ered 860 miles and consumed thirty gallons of gas-'
The route was through Canada, crossing to

oline.
the United States over the suspension bridge just
The owner says his eXperience

below Niagara Falls.
ggt automobiles are

has showed that the lightwei
well adapted for such tours.

New York was the most ponulous and wealthiest state in

the nation but in 1901 it possessed fewer than one thousand
horseless carriages. This market Olds Wanted to crack. Search-
ing for a reputable firm to represent the curved dash in New

t Company, the well-known

uv

persuaded A.G. Spalding

York, he
goods firm, to take the New York agency and order

sporting
But on the first or second day of the show,

one hundred cars.
a Spalding representative came to Olds and told him that his

company's board of directors wanted to withdraw from the agree—

ment because they could not see the possibility of selling one
Olds asked them to permit the Spalding sign as

hundred cars.
New Yerk agents to remain up during the remainder of the show

but before it was over he had a new dealer to handle the run-

 

73This notice is also found in: Chapin paners; Long,

Roy Do Chapin, p. 33.

77

about.

Ray M. Owen had been selling the curved dash runabout in
Cleveland for some time and Roy Rainey whose father had become
wealthy in Pennsylvania coke had backed him to some extent.
Both of these men were in New York and before the show was
over, Rainey came to Olds and asked if Owen could handle the
New York agency. Olds said he thought that was possible as
Owen had certainly been successful in Cleveland. Rainey then
wanted to know how large an order they would have to place to
get the exclusive agency. Clds fixed the figure at five hun-
dred cars. Rainey told him they would talk it over and asked
Olds to meet them later at the Waldorf. That night they drew
up a contract for five hundred cars but before the papers were
signed, Olds was reported to have said, 'It isn't my business
but I would like to see you two put this thing over in a big
way. I would like to see you make this order for a thousand
cars. Then the public would drop its jaw and take notice.‘
Owen is said to have replied, 'I believe you're right. Make
it a thousandflnL

In 1902 Owen and Rainey sold 750 Olds runabouts in New
York City. They did not reach the thousand mark nor did any-
one expect they would. Rut they did succeed in selling more
cars in New York than anyone had ever sold. The story is

told that Owen and Rainey began doing stunts on Fifth Avenue

_

7uBarnes, World's Work, XLI (April, 1921), 563-5611,.

78

to attract attention. They were arrested for speeding, upset

a bicycle policeman, and got the curved dash talked about so
much that people noticed it and bought it.75 And when Chauncey
Depew, president of the New York Central Railroad bought an
Olds runabout and allowed himself to be photographed as he
drove to his office,76 the curved dash came to be accepted

even by New York's high society.

The public was beginning to take the automobile seriously
and Olds' sales and production figures showed it. In 1901 the
company built hZS curved dash runabouts and not long after the
Automobile Show a waiting list was announced. Peoole stood in
line at the factory to get cars and orders poured in from all
parts of the country. The problem now became one of trying
to produce cars fast enough to keep up with the demand. Up
to this time production had been on a one-at—a-time basis but
with the increased volume of sales, it became necessary for
Olds to consider ways to expedite production. The result was
that he devised a progressive assembly system which contained
all the elements of the modern assembly line with the excep-

tion of the power conveyor.77 The cars were moved along on

7SForbes and Foster, Automobile Giants of America,
PP. 232-233. 4

76Pound, The Turning Wheel, p. oh.

 

77Charles F. Kettering and Allen Orth, American Battle
.igr Abundance, A Story of Mass Production (Detroit, 19E7),
pp ’ 52‘53 o

79

rolling stands from one assembly group to another. Supply bins
were conveniently located and the Various parts were attached
as the car moved along. When they reached the end of the
building, the vehicle was a complete and finished product.

The significance of Olds‘ contribution of assembly pro-
duction to the automobile industry perhaps has been best ex-
pressed by John K. Earnes who said:

It was Olds' success in Detroit that fixed the cen-

ter of the automobile industry in that city. It is

equally true that the Olds Motor Works was the first

to reach quantity production by applying the pro-

gressive system of assembly to the manufacturing

of a single model gasoline-engine-driven vehicle,

and the first to popularize the automobile with

the American peOple, taking it from the classifi-

cation of rich man's toy to that of every man's

servant. 8

More and more "Oldsmobiles," the trade name taken from
the word "automobile" which the French Academy had recently
coined and legitimized,79 came off the assembly line and it
became necessary for the company to set up a sales organi-
zation in order to facilitate preper distribution. Requests
from merchants or firms in associated businesses such as
bicycle' and engine manufacturers for an agency made it desir-
able to establish a system whereby the factory could eliminate

much of the detail work and place the reanonsibility for sales

and service on dealers throughout the country. As a result,

_
.—

78Barnes,i_i_orld's Work, XLI (April, 1921), 56h.

79Morris, Not So Long_égo, p. 257.

80

the practice was established of appointing distributors for
an entire state who in turn assigned the various areas to local
agents.80
When the company established a dealership system, they
also set policies for the agents to follow. The most impor-
tant of these was cash for cars delivered. Very early the
Olds Motor Works adopted, as F.L. Smith said, Henry Joy's
private slogan that, 'When the money‘s in my pants, the auto-
mobile is yours.’81 There was no credit buying of automobiles
in those days and the potential buyer had to accompany his
order with a substantial cash payment. When the car was shipped,
a sight draft was attached to the bill of lading and the bal-
ance had to be paid on delivery.
The reasoning behind this practice was that the purchase
of an automobile involved a large outlay of money by the con-
sumer and it was felt that unless credit buying was discouraged,
the customer would request the privilege of making payments over
a period of time. Automobile manufacturers regarded this as a

risk they could not afford to take since cars depreciated rapidly

in use and were subject to failure and accident.82 Furthermore,

 

80Olds to Stoler & Clarke, July 1, 1903, Olds papers.
81F.L. Smith, Motoring Down A;gparter of A Centugy, p, 22.

82Isaac F. Marcosson, "The Automobile--A Miracle of the
Eggntieth Century," Munseyis Magazine, XLIII (August, 1910),
I

 

81

it was feared that if the factory did not demand cash from the
dealers, they would sell cars on time to the consumers. And
many of them, manufacturers well knew, would never have paid.
By thus selling to the dealers for cash only, the manufacturer
made it almost impossible for them to sell the cars other than
for cash, for if they did, local banks would not finance them.83

Another reason for this practice was the financial con—
dition of most automobile manufacturers. Many companies were
not able to finance their trade on a credit basis. By giving
terms to its dealers, a great deal of money could be tied up
that was needed to finance continued operations. Spring and
early summer was the best time for deliveries but the factory
could operate profitably only if dealers had sufficient credit
to buy and store cars manufactured during the winter months.
Thus the dealer's ability to finance purchases in advance of
‘sales became highly important to the manufacturers“ because
under this system, every car sold meant cash to the manufac-
turer for the full amount of cost plus profits and the company
was relieved of the responsibility of handling and financing
each individual sale.

As the first quantity producer of automobiles, Olds was

most reaponsible for establishing cash as the only basis upon

 

83Epstein, The Automobile Industry, pp. 137-139.

8h?ound,_$he Turning Wheel, p. 360.

82

which production and sales could satisfactorily be discharged.
The example he set was soon followed by other manufacturers
and his contribution has since been recognized as one of the
most important elements in the successful development of the
automobile industry.85 .The impact it had as a stabilizing
economic influence during depression periods has been sum-
marized by John K. Barnes:

One of Mr. Olds's sic important contributions
to the industry was the s blishment of the busi-
ness on a C.O.D. or cash basis. He turned the tide
that way at an early date and the industry benefit-
ted greatly by it. He eXplained to his agents that
it was also to their advantage to get their money
when they delivered the cars. Then the purchasers,
he pointed out, would be more careful how they used
the cars; they would not run them into the ditch
when something went wrong and telephone the agent
to go get his car. Until the past few years the
automobile business has been entirely upon that
basis. That is one of the reasons why the in-
dustry as a whole has come through past periods86
of business depressions with little difficulty.

Still another innovation of the Olds Motor Works which
contributed to the early develOpment of the automotive in-
dustry was the emphasis on advertising. Olds himself was an
astute salesman and fully realized the value of publicity to
increased sales. Already on February 15, 1902, the Saturday
Evening Post carried an Oldsmobile advertisement which was the

first automobile advertising in a national magazine. A play

 

85Ibid.° Arthur Pound, Detroit Qynmnic City (New York,
19h0), p. 276; Epstein, The Automobile Industry, p. 139.

86

 

Barnes, werld's Work, XLI (April, 1921), 566-567.

 

83

was even made for feminine attention when the first automobile
cepy to appear in the Ladies Home Journal was carried in the
April, 1903 issue. Not long after, newspapers and magazines
throughout the country were carrying Oldsmobile advertisements
until the slogans, "The Best Thing On Wheels," and "Nothing
to watch but the road," became commonplace. The result was
that sales continued to mount and more people were driving
the Olds runabout than any other car. One recent purchaser
perhaps summed up the enthusiasm for the curved dash as well
as anyone when she said, "Might just as well be out of the
world as without an Oldsmobile."87

Racing and endurance runs were also methods of adver-
tising used by the Olds Motor Works to boost sales. In 1903
the Oldsmobile Pirate, a specially constructed racing machine,
established a straight-away record for making five miles in
six and one-half minutes. A short time later the same car
was driven over the measured mile at Daytona Beach in AZ
seconds -— the first American car to cover a mile of space

88

in less than a minute. In that year Oldsmobile also won

the Tour de France.

 

87E. Edick to Olds, March 26, 190b, Olds papers.

88aso Spirit (June, 1930), p. 3-u. HBO Spirit was a
monthly publication of the REC Motor Car Co. for its employees
from 1916-1933. A complete set of all issues is available

at the welfare Dept., Division of White Motor Co., Lansing,
Michigan.

8h

The most Spectacular publicity the Oldsmobile received
from racing and endurance runs, however, came from a cross-
country trip undertaken in 1903. One of the runabouts was

shipped out to California and on July 6, Eugene Hammond and

L.L. Whitman began their long hard journey. Slowly the pair

made their way over the uncharted areas of mountains and de-

sert. For 900 miles they traveled without meeting another

car. Most of the roads they had to make themselves and on

the way encountered all kinds of mechanical difficulties.

When the tires gave out, they sewed cats in them. "I believe

I planted the whole state of Nebraska with oats that fell out

as we went along," Hammond later recalled.89 Finally on

September 7 the two men arrived in Detroit. "It's Made to

Run and Does It," was another Oldsmobile slogan and even
though it had taken Hammond and Whitman sixty days to make

the journey, the slogan was vindicated.9O

The success of Hammond's and Whitman's cross—country

trip added to the ponularity of the curved dash. In 1901,

MES of the cars were produced and that number was increased
to 2,500 in 1902. In 1903 the company aimed to make and sell
h,OOO. Early in the year, Olds announced at the Detroit Auto-

mobile and Sportsmen's Show "that the era of fad was over and

89Riverside (California) Daily Press, August 15, l9h7,
clipping, Olds Collection.

90F10yd Clymer, Historical Motor Scrapbook (8 vols.,

Los Angeles, l9hh-19SE). VIIT, Po é -

 

85

the era of utility had begun. Within a decade, he predicted,
the car in general use 'will be one of 700 to 800 pounds in

weight, small, compact, and simple in its construction.'"91

The success of the curved dash seemed to prove him correct.
When it was seen that quantity production and low price were

not incompatible with quality, many wealthy and distinguished

people were among those who purchased the $650 roadster. Some

of these early buyers were the Queen of England, the Queen of

Italy, Sir Thomas Lipton, Mark Twain, Maude Adams, and other

celebrities in all walks of life. But even more important

was the fact that the comron people were beginning to accept

the automobile. The country doctor drove an Oldsmobile on

his rounds, the more progressive merchant called upon his cus-

tomers in an Oldsmobile, and even farmers began to lose their

hostility to the new mode of transportation. If it had not

been for these peoole, Olds could not have sold h,OOO cars as

he did in 1903
The Olds Motor works in three years had become the most

successful automobile company in the country. There was no

other concern that compared with it as to size, production,

0
or sales.’2 The earnings of the company were enormous as

measured by the returns paid to the stockholders. At the end

 

91Nevins,p§grd: Times, Mag,_00mpanx, pp. 220-221.

921b1d., p. 22a; Epstein, The Automobile Industry, p. 213-
Kennedy, The Automobile Industry, pp. 20- 21.

86

of three years, those who held the original stock had realized

105 per cent on their investment in dividends. Not only did

early investors get their money back in three years but their
stock increased five-fold in five years. During the same
period the company increased its capitalization to $2,000,000

out of its earnings and still had a cash surplus of $600,000

at the close of 1903.93
The hard cash success of the Olds Motor Works was un-

matched in the motor world at that time. In 1903, the year

that Olds produced h,000 cars, Alexander Winton turned out

about 700 at Cleveland, Pierce-Arrow made 297 and E.R. Thomas

200 in Buffalo. Elwood Haynes and the Appersons were turning

out about as many at Fokomo and the Locomobile Company made

77 gas cars at Hartford, Connecticut. 001. James Packard

was making a few at Warren, Ohio, as were also Frank B. Stearns

in Cleveland, the Clark Brothers at Ardmore, Pennsylvania, and

the Nordyke & Marmon Company at Indianapolis. The Premier

Motor Corporation started production that year at Indianapolis
about the same time that H.H. Franklin was beginning his auto-
mobile career with John Wilkinson's air-cooled car at Syracuse.
Along with the Rambler, the Knox, and a few others, these com-

panies produced practically all the gasoline cars made that

year.9u

93F.L. Smith, Motoring Down A Quarter of A Century, p, 18,
guBarnes, World's Work, XLI (April, 1921), ssh-565.

8?

Inspired by the success of the Oldsmobile, many other

companies were soon formed in the next few years. Cadillac

and a half dozen others Quickly came into being, followed
somewhat later by Maxwell, Briscce, Buick, Hudson, Studebaker,
Willys, Dodge, and others. Ford had organized the Henry Ford
Automobile Company in 1901 but a year later sold out. After
that he was a frequent visitor at the Olds plant and the
prosperous activity which he saw undoubtedly stimulated his
efforts and probably made it easier for him to get the backing

of Alexander T. Malcomson who assisted him in organizing the

Ford Motor Company. But in 1903 most of these were just nanms,
not automobiles, and the Olds Motor Norks alone had achieved

the success which made it the leader in the automotive in-

dustry.

CHAPTER III
FROM OLDS TO REC

Since 1899 when the Olds Motor Works had been formed,
Olds' management and position within the company had been
dependent upon the support of Samuel Smith and his sons
Frederick and Angus who had financial control. Olds had
not been bothered by this situation, however, until early
in 1903 when he came into conflict with Fred Smith who was
backed by his father and his associates. Whether Olds con-
templated disoosina of his stock for this reason is not clear;
but that he considered it is apparent from a letter he received
on January 6 from Ray M. Owen in which the nrOSpects for sel-
ling Olds' stock were discussed.1 Although it cannot be proved,
it would appear that Olds' differences with F.L. Smith ore-
cipitated his decision to sell.

The first sign of onen dissatisfaction on the part of
Olds who was managing the Lansing plant while the Smiths had
charge in Detroit, appeared in a letter he sent to Fred Smith

on May 1, 1903, in which he complained that Smith was making

decisions without his knowledge:

 

1R.M. Owen to Olds, Jan. 6, 1903, Olds Collection, 3.3.
Olds Co., Lansing, Michigan.

88

89

I learned this morning by a round about way
that you were putting in an exnerimental room at
Detroit. Now if this is your policy to do busi-
ness underhanded and unbeknown to me, as you have
several other things, I do not care to be assoc-
iated with you. I am Vice President and Manager
of this company and such things should not be
taken up without my consent or the consent of the
board. I have had all I want of this treatment.

I have been sick with the LaGrippe for the
past three days or would have been down this week.
I now see why you have been so anxious the last
two weeks to have our meetings at Lansing so you
could smuggle this thing through before I knew
it. I do no care to have my interest handled

in this way.

The main issue between Olds and Fred Smith seemed to
revolve around the advisability of adding a larger car to
the Oldsmobile line. Smith favored this policy and had gone
ahead with the designs and eXperiments preparatory to the
introduction of a new ten horsepower touring car which the
company planned to place on the market sometime in 1903.
Notice of this departure appeared in the February 8 issue of

the Detroit News. In the same paper, Olds” views were re-

 

vealed in an article entitled "Mistaken Luxury" in which he
criticized the trend toward larger and more exnensive cars:

There is a strong effort being made by the
French, German and some of the American manufac-
turers to make the automobile the child of luxury,
instead of the child of necessity. Individual
models are being made for the wealthy men. All the
luxury of wealth is evidenced in the equipment of
some of the machines designed for relieving the
pockets of American millionaires of some of their
surplus dividends. Fancy prices are asked for
fancy cars, which are as impractical as they are

2Olds to F.L. Smith, May 1, 1903, ibid.

9O

costly. And the very fact that the press and
public are burdened with stories of these 'foolish
cars' leads a great many peonle to look upon the
automobile in the light of an eXpensive fad and a

rich man's plaything.
The future automobile will be the buggy with—

out the horse—-a light, simple and serviceable

vehicle, powerful enough to go through the heavy

mud and dragging sand of the American roads, yet

safe enough for anyone; reliable and free from

complications and So easy to control that the

driver will have nothing to watch but the road.3

Olds' comment that the automobile of the future would
be a "buggy without a horse" was typical of his attitude but
not indicative of what was happening in the automotive indus-
try. By 1903 the trend of motorcar construction was moving
from the motorized buggy toward the touring car, a transition
which was essential to the future of the automobile. The

curved dash, although it was reliable and ineXpensive, was

essentially a buggy-type car and had a limited utility with
only one seat and no baggage provisions. The public was de-
manding larger cars that could carry more passengers and goods
and even the dealers were asking for a touring car, or perhaps
a more accurate description would be "family car." This point
was stressed in a letter Olds received late in 1903 from his
friend Reuben Shettler who had formerly lived in Lansing and
was now the Oldsmobile agent in Los Angeles. A rumor had cir-
culated that the company was planning a larger car but that at
the last minute the decision had been reVersed. In Peeponse

3Detroit News, Feb. 8, 1903.

91

to this, Shettler wrote Olds that, "if it is true that you have

cut out the big machine we are up against it good and hard...."

On the same occasion he re-emphasized the point by stating that,

"while we are late in the day, we will have to do something for
a big machine...."u

Shettler's remarks were characteristic of the attitude
that was develoning throughout the automotive industry and

in making the move he did, Smith was trying to keep pace with

the changes which had become apparent. The curved dash had

reached the point where it was beginning to outlive its use-
fulness and it became necessary for the Olds motor Works to

produce a touring car or face the prospect of gradually losing

out to their competition. If they had continued to stake their

whole future on the runabout alone, they eventually would have
found themselves with a car that would have been difficult to
sell because it lacked the distinguishing style of an automo-
bile and fulfilled a limited purpose,

The Smiths have since been criticized for lack of judg-
ment in their insistence on abandoning the curved dash in
"favor of a larger, more pretentious model that would be in
keeping with the size of the rapidly growing company."5 Yet

from the records of the Olds Motor Works this does not seem

_‘—-

he. Shettler to Olds, Dec. 1h, 1903, Olds Collection.

SYarnell, Auto Pioneering, p. 12h.

92

to have been true. In 190h, the year Olds resigned, the com-
pany produced three models, none of which sold for more than

$650. The following year two models were offered.

dash, one cylinder runabout was priced at $750 and a two cy-

linder touring car at $1,250. Not until 1906 was a "fancy"

four cylinder model priced at $2,250 produced.6

In defense of the Smiths, it should be noted that Olds
himself in the fall of 1903 had been thinking of designing a
light touring car which would have weighed 1,1h0 pounds7
and after he left the Olds Motor Works, Olds did not attempt
to continue the horseless buggy type of automobile either in
the REC runabout or the touring car on which he set a price

of $1,250. The instinct of the Smiths was sound which Olds

later recognized and production at the Olds Motor works con—
tinued to increase through 1905 when it reached a total of
6,500 cars. The trouble with the Smiths was that they even-
tually moved too far from the cheap simplicity of the early
days until by 1908 when the company was incorporated into
General Motors, they sold only 1,055 cars, most of which were
four cylinder $2,750 models.8

At the board of directors meeting in January of lQOh,

6Records, Oldsmobile Co., Division of General rotors,
Lansing, Michigan.

701ds to R. Shettler, Way 23, 190a, Olds papers, Michigan
State University Museum, East Lansing, Michigan.

8Records, Oldsmobile Co.

A straight

93

the differences between Olds and the Smiths finally came to

a climax. When it was time to name the officers for the en-

suing year, Olds did not receive the necessary votes to con-
tinue as Vice President and General Manager, although he was

retained as one of the directors, and Fred Smith was elected

to fill his place. This was the price Olds had to pay for

accepting the financial support of Samuel Smith in 1899, a
mistake that influenced his business relations throughout the
remainder of his life.

When the news circulated that Olds was no longer managing

the company, many peeple suspected that he had completely

severed his connections with the firm. In an effort to give

an explanation, the Olds Motor works went to the trouble to
deny the report, stating that Olds still retained his interests

and that the change had been made so he could "devote a year

or so in traveling for pleasure throughout the United States
and Europe."9 Olds, when asked about the recent shake-up,
remarked that it was his desire to relinquish some of his
duties in the active management of the concern so he would
have more time to "follow his own inclinations."10

How he actually felt about his removal and the reasons

for it, however, Olds revealed to Dr. Tappey, a friend and

h

9Automobile Tonics, LXXVII (Jan. 30, 190a), 1080.

10Lansing State Rgpublican, Jan. 5, l90h.

at

former stockholder in the Olds Motor Works on Seatemher 6, 190A:

As you were a stockholder in the old company
and seem to place confidence in me, I take this
opportunity to say a few words in explanation of
my position. At the annual meeting in January
last the stockholders elected the old Board of Dir-
ectors, as you know. Later when the officers were
chosen I was voted down and F.L. [Smith] was elec-
ted to my place. It was a hard thing for me when
I had been manager since 1885, besides working
day and night to deve10p the business to a wonder-
ful success. You are aware of its advancement
last year and this year I had set my heart on
doing a business of nearly four million. My honest
Opinion is that I would have been able to put the
company to a capital of ten million within five
years. This, however, was all blasted.

I then realized how well the plan had been
worked. The desire of another to be its manager
and get the credit was so great that he complete-
converted the other directors, his own family.

137
I could then see how trifling things were made
into mountains, etc.

p to 190k. Never

You well know the success u
was there a year that there was a
business, but this year up to date1
the sales are way below last year. 1
remember the secretary's report. It gave our
capacity double for lQOh, say nothing of double
expenses, which ought to have meant double busi—
ness. I am told this also is t e of the engine
busines.. I am sorry for S.L. Egmitfil and Jas. H.
‘Spager as they do not seem to underStand, but
may 1a er. If they had stopped to consider they
would have known that a man who had worked up a
prOpOsition from nothing to a magnitude of busi-
ness at the beginning O£2this year, he ounht to

know how to Operate it.

decreasing in
I am told,
You well

Since this is the way Olds felt, it seems prover to

11Statistics on net sales are not available but the
Company produced 5,508 cars in 190h compared with 3,000 in
1903 which would indicate that this statement was probably

incorrect.

lZOlds to Dr. Tappey, Sent. 6, 190a, Olds papers.

95

question why he followed a course of submission rather than

was it because he had no other choice? Perhaps,

At the time

resistance.
but the evidence also suggests another reason.

of his dismissal, Olds entered into an agreement with Fred
Smith in which it was agreed that he would retire as General

Manager if Smith would assist him in disposing of a block of

10,000 shares of stock at a good orice. Smith, however, failed

to carry through his end of the bargain which promoted Olds
to write him on January 2Q, 190h from the Lindell Hotel in
St. Louis where he was staying en route to the West Coast:

Just as I was about to leave I not a wire
from Mr. Day stating he would not give me 22 for
the block of stock, 10,000 shares, and referred
me to you. This was in reoly to a wire from me
stating Detroit parties wanted an Option at 22.

I replied that I would not have time to see you
and would consider the deal off. Now when I told
you I would retire as General Nanager if you would
assist me in disoosing of this block you agreed to
do so. Now, Mr. Day seems to have got cold feet
very quick. The first time I saw him he seemed
very anxious to take it at $30.00. Now I judge
from a letter from him that he would like to get
it at par. I informed him that most anyone would
like to get gold dollars for 35 cts. but that he
would not have the opoortunity as far as I was
concerned. There is one thing certain, he must
have lost confidence in your ability to handle

the business, or you have talked discouraging to
him. It is just as I told you, I would have rather
got someone who would have been agreeable to us
both than to have disposed of the block through
brokers and not know who was getting it. I let
2500 shares go at $30, and do not believe I will
have any trouble in selling the balance at that
price if I cut it up into small pieces. My brokers
at New Yerk, Cleveland and Detroit are all very
anxious to advertise it. They say it is the only
way to sell it, that it will be necessary to ad-
vertise and cut into small blocks, inasmuch as any

96

large investor would have to look into the details
and might receive discourasem~nt from you. I have
notified them not to advertise unless they receive
a wire from me to that effect. I do not nropose
however to be blocked in the sale of this piece of
stock in order to reduce my holdings down to some-
where near the same as yours when you have the
handling of it. I have got to realize over 20 or
I will be obliged to take some stens to bring the
result about. The fact that our Comnany's net
earnings last year was 'sicl over $910,000, and
that the cash dividends pa a were $327,000, is
good evidence that the stock is worth 30, to say
nothing of our canacity for this year being double,
which ought to bring our earnings up to one and one
half millions this year. I have the 10,000 shares
with me, so that I can deliver at once on receipt
of wire from my brokers. I am givins a bin com-
mission and they are out for business.

Pefore leaving on his vacation to California, Olds had
anoointed J.L. Carleton and F.N. Delano, two Detroit stock
brokers, to act as his agents. After the deal with Fred Smith
fell through, Olds notified them from Grand Canyon, Arizona,
that if they could sell the block of 10,000 shares during the
month of February at $21.00 ner share, he would be willins to
pay them a $10,000 commission.1u Rut when the stock was still
not sold by the time he returned, it was decided that Carleton

and Delano should go East and try to sell it in some of the

larger cities. Olds was instructed to write a letter describing

the financial condition and productive canacity of the Olds

Motor werks which it was honed would satisfy the inquiries of

 

13Same to p.L. Smith, Jan. 29, 190M, Olds Collection.

1b’Same to J.L. Carleton, Feb. 7, 190h, ibid.

 

prospective buyers since Olds was somewhat dubious about the
information and advice Fred Smith would give to those who
corresoonded with him directly concerning the price and ad-
visability of purchasing Olds Motor Works stock.ls He had
not forgotten that Smith had failed to fulfill the agreement
to assist him in diSposing of the block of 10,000 shares,
largely, Olds suspected, because Smith had made disparaging
statements about the market value of the stock.

Fearing that Smith had contributed to the recent decline
in the price of the stock, Olds wrote him concerning the com-
pany's outlook for the coming year. The picture he was given

n16 which seems to have been

was that it was "first-class,
somewhat different from the information given to those who
were interested in buying stock. Elmer E. Cole to whom Olds
had traded some of his Olds Motor Works stock while in Calif-
ornia in exchange for the controlling interest in a gold mine,
complained in a letter to Olds dated April 19, lQOh that re—
ports issued by the company were driving the price of the
stock down:

I note what you say in regard to the sale of the

Olds stock, but think you do not fully understand

the circumstances. If you will remember, I told

you when the deal was first started that $25,000-

in cash was necessary in order to make the deal.
Mr. Shettler told me that the stock could easily

15F.M. Delano to Olds, April 11, lacs, Olds papers.

16F.L. Smith to same, April 12, icon, Olds Collection.

 

be sold to raise the money, and upon that under-
standing the deal was closed. I asked a bank
here to get a price upon the stock from their
correSpondent there, and they said they could sell
the stock at a much larger figure than it was sold
for, also another man who was asked about it from
here said he could sell at higher figures. I then
heard that these two men had clashed in offering
the stock, and thought it best to go there and
discover the exact situation myself, which I did.
I found that when I arrived there that there had
been a sale made at $12.50 per share, and that
more was on the market, that the men to whom the
bank wrote had offered the stock to many pCOnle,
and that no one would make an offer for the stock.
The stock had to be sold, and I made the best sale
possible under the circumstances, but it was a
loss to all concerned. I found that whenever any-
one asked at the office of the company about the
stock, that they were told that the last sale was
made at $12.50-per share, and that they did not
expect to make as much money this year as last,
and not as much next year as this, and that the
stock had a book value of less than par. I con-
cluded that in the face of all this, it would be
impossible to realise any fair figure for the
stock for some time, and as I told you when you
were here, the stock had to be sold in order to
make the deal. I regret to hear that the sale

of the stock injured you in any way, but our loss
was serious indeed, although as I told Mr. Shettler,
a deal is a deal, and no one is crying.

The same situation existed in the East by the time
Carleton and Delano arrived in Philadelphia. The stock which
only a short time before had sold for $30 per share, was sel-
ling for less than half that amount. The reason Seems to have

been caused in considerable part by a telegram Smith sent to

17E.E. Cole to same, April 19, lQOh, Olds papers.

 

99

Percy Neel, the Oldsmobile agent in Philadelphia, who had
given it good circulation. The substance of the Smith tele—
gram stated: "In my Opinion the stock of the Olds Motor Works

is a good investment at par."18

The par value of the stock
was $10 per share.

Carleton and Delano had gone to Philadelphia to approach
some peeple of means who they thought might be interested in
buying Olds' interests. When they mentioned the subject and
the price Olds was asking, however, they continually were con-
fronted with the effects of Smith's telegram. In an effort
to find out why Smith had sent the telegram, they wrote to
Olds:

What are the Smith crowd trying to do? Bear

your stock and throw obstacles in the way of our

finding a market to net you $15.00 per share?-

Ehinking theyiwill bzhabée to get itea: thg price

- y are due ng o e ompany s ag n s.
In response, Olds instructed Carleton and Delano to steer all
inquiries about the company to Henry Russell,2O a prominent
Detroit attorney who had become president in the recent man—
agerial shake—up. It was also decided that prospects for
selling the stock might be better where the effects of the

telegram had not been felt so Carleton and Delano accordingly

left for New York.

 

1b 18J.L. Carleton and F.N. Delano to same, May 10: 190M:
1d.

19Ib1d.

2001ds to J.L. Carleton, May 12, 190k, ibid.

 

100

In New York the story was much the same. Persons approached
had also heard through their Philadelphia friends of the Smith
telegram and refused to buy. Meanwhile, Olds was getting more
impatient. On May 17 he wrote to Carleton in New York and ex-
plained that he felt that if the stock was not sold by the
middle of June, it would be too late to do business. There—
fore, he stated, he was going to take the matter up with some
Chicago parties. David J. Kennedy, a Chicago broker, had given
Olds reason to believe he could place some of the stock in
exchange for real estate or bonds and Olds had given him his
consent to proceed on that basis.21 Olds also notified E.C.
Chapin, a Lansing real estate agent and father of Roy Chapin,
that he was willing to trade 1,500 shares of Olds Motor Works
stock for the Hollister Block where he had recently leased an
office, in an effort to realize $20.00 per share on his stock.22
By this time, however, no one was willing to give that much for
it. Even on an exchange basis, Olds was finding it increasingly
difficult to dispose of the stock at what he considered a good
price, let alone for cash.

The Whole trouble, as Olds saw it, could be traced back
to the Smiths. In writing to Carleton on May 23 he stated,

I think it would be wise for you to give your
peeple to understand that if they inquire of the

_‘_..

21Same to same, May 1?, 190a, ibid.

2239mm to E.C. Chapin, May 23, lGOh, ibid.

 

101

Smiths that they need not expect a favorable re-
ply. You know that they have in other cases
brought down the price in order that they might
buy; they might say in the face of it that they
did not want any more yet we know that they would
buy if they can get the price down low.33

Carleton replied two days later and stated that he would act
on the suggestion. But he went even further:

They, in my judgment are bearing the stock for the
purpose of buying your stock at a low price, or
thinking that they may be able to do so, but we
will fool them. We wrote a letter to Neill, gig;
the Philadelphia Agent of the Company, statin,
that if the Smiths thought the stock was only
worth $10.00 a share, that we would Eflke their
entire holdings at $15.00 per share.

This, however, did not satisfy Olds who was worried about
another factor that had entered into the picture. On May 27
he answered Carleton's letter:

Perhaps you do not realize the importance of
swinging this matter before the dividend season.
It came to me second handed that it was reported
at Detroit that the July dividends would be
passed; I do not know w ether this has been cir-

culated from our office 3 or not; anyway it has
its effect.~6

Whether there was any truth to this rumor appears doubt-
ful. The Olds Motor Works issued a report on their financial

condition and volume for the first five months of lQOh in the

_-.-‘

23Same to J.L. Carleton, May 23, 190k, ibid.
2hJ.L. Carleton to Olds, May 25, icon, ibid.

2
5The reference is to the Lansing office of the Olds
Motor Works.

26
Olds to J.L. Carleton, May 27, 190h, Olds papers.

102

early part of June which showed that the business and earnings
had increased over the previous year. Rut Olds was not con-
vinced. On June ll he sent a letter to Carleton in which he

stated his misp ivi ings:

I have read over the statements handed me yester-
day which refer to the Clds Notor Works business;
also one sent out by a New Haven, Conn. party. I
wish to criticize the capital of $7,500 at the time
of organizing the Clds Fotor Works; this was however
at the time of organizing the Olds Gasoline Engine
wer1:s which was lo ter immerged sic into the Olds
Iiotor Works; also the statement'f?‘ urning out no
machines per day at the Lansing olant and 10 at

the Detroit plant. I understand they are not doing
this. The statement that since the beginning of
the nresent year the bank balance has almost doubled
is also not correct as near as I can learn without
examining the books. I would also take excention
to the sta tem=nt of net profits for the nresent
year ex ceedin? one million five hundred thous sand;

I do not believe this will be possible in as much
as the Comoany was late in getting started on th
years business. I write this simnly because I
believe it unwise to use any matter not backed by
facts as ne ar as nossible; if I were to advise

you in your business would advise you to act on
what has been done rather than what will be done;
the long record of this company certainly ought

to be sufficient.

 

Olds seems to have forgotten however, that the "long
record of the comnany" had very little to do with the erice
at which the stock was selling. The imuortant consideration
was what the market conditions were that had an effect on the
nrice of the stock. In that connection, there were two reasons
in particular which br01m 1t the nrice of Olds Motor Jerks stock

down from a high of around $30.00 her share in January to a

 

2
7Same to same, June ll, lQOh, ibid.

103

low of $10.00 or below by the fall of look.

The first of these was that there was too much Olds Notor
Works stock being offered for it command nremium nrices. The
demand had slackened as soon as the market had been flooded
with the result that the price soon drOpned.28 Perhaps, if
Olds had not dumoed all of his holdings on the market at once
he could have disposed of it gradually in small lots at a
higher return. This, however, he was unwilling to do, both
because of his desire to sever all connections with the com—
pany and his need for cash to finance the develoement of
several business ventures in which he had become involved.

The second reason for the declining nrice of the stock
was due to the activities of Fred Smith. Just how much his
telegram affected the market is impossible to gauge but the
fact of the matter was that Smith wanted to reduce the price
of the stock so he could buy it cheanlv and did a great deal
as General Manager of the company to achieve his objective.

He wanted to increase his holdings and this he was able to
do. During the nine months from January to Sentember, he,
along with others who were in control, ourchased 10,000 shares
of stock at an average price of $12.50 per ShPTe-Zg

To some extent this was done at Olds' exoense. Even

28T.S. Sprague to Olds, August 22, lacs, ibid.

29J.L. Carleton and F.M. Delano to Dime Savinps Bank,
Sent. 9, 190a, ibid.

lob

though he realized over a million dollars in value from his
stock, much of it was in worthless securities and unstable
businesses. The difference between what Olds heped to get
for his holdings in January and what he actually received

was considerable. Added to this were the losses he sustained
over the next few years from the failure of several companies

in which he had invested large sums of money in order to dis-

pose of his stock. As far as Olds was concerned, the person

responsible for his difficulties was Fred Smith which only

increased his resentment toward him and from which he found

satisfaction only after he had started another automobile com-

pany in direct competition with the Olds Voter works.
When Olds left the company in January of lQOh, he did not

do so because of a lack of faith in the future of the automo-

tive industry. On the contrary, he was more convinced than
ever that it was the fastest growing business in the country

and that the growth had only begun. His Optimism which was
supported by a desire to keep the price of Olds Motor Works

stock at $30.00, he exnressed less than two weeks after he

resigned:

I believe that in five to ten years the horse will
not be allowed on the streets in the larger cities.
Did you ever stOp to thi k what this means? In
Michigan alone there is isic! over two hundred
thousand horse drawn veh c , made annually. There
must in that event he Automobiles. I have made a
careful study of the business for a great many
years, and predict that the Automobile business
will be one of the greatest industries that this
country has ever seen. Eery successful Company

105

will see its business multiplied many times in
order to keep us with the demand.3

Throughout the spring and summer of lQOh, Clds continued
to echo these sentiments. On July 5 he corresponded with N.J.
Morgan, a friend and newsnaner editor in New York, and again

revealed his assurance that for him the automobile business

was the most lucrative field he could enter:

As to the future, I consider the automobile in-
dustry as just started. If I was anxious to pick
up a few barrels of money I do not know of anything
I would attack Quicker than the automobile busi-
ness; on the other hand I have all that I can ever
use, so that I am not interested in setting into
the harness. I have had a great many neOnle
approach me on this subject; in fact, have several
propositions where I could enter entirely on my
own terms. I say to them that I am not inter-
ested; I have an efficient trin laid ougland do
not care to listen to any prOnositions.

One of the proposals to which Olds referred came from
Eastern interests who approached him either in the late spring
or early summer of lQOh with an offer to start another auto-
mobile company. Two men from New York H'o assured him they

represented considerable financial backing, presented him

with a pronosition to organize a firm canitalized at $1,000,000.

Olds Version of the details he later recounted in a letter to

Henry Russell:

I appreciated the offer and feelinn of the eastern
caoitalists when they sent a committee out to inter-

3001ds to F.M. Delano, Jan. 1a, 190b, ibid.

318ame to w.J. Morgan, July 5, 190a, ibid.

106

View me and to make me an offer of the controlling
interest in a full paid million dollar comnany if I
would take its nresidency and management, saying it
was satisfactory to them to put their money afiainst
my exnerience and renutation as an automohile manu-
facturer. I had not thought of enterina the busi-
ness again and so thanked the gentlemen and said
that I did not care to accent.32

The statement made by Olds that he had |'not thought of

entering the business aaain," according to the evidence, does

not aopear to be correct. Nor did Olds reveal the real reason

why he declined such a generous offer. Sis underlying motive
that he already had another offer heading and was waiting
for it to develOp. On his recent trip to California, Olds

had been in touch with Reuben Shettler. Resides interesting
Olds in a gold mine, Shettler had also discussed the possi-
bility of organizing an automobile company which Olds would

direct. Olds mUat have been ouite enthusiastic over this

conversation because he heran to give some thought to the
fact that if a comnanv were started, a new car would have to
he built since all his natterns and desiqns had remained with
the Olds Motor Works. This was a job for an automotive engi-
neer and the man who came to Olds' mind was Horace T. Thomas.
A native of Vermont, Thomas had left home at the age of

fifteen for LOwell, Massachusetts, where he aporenticed him-

self for four years in the shoe of the Perkins Machine Tool

Company. when he had finished his anorenticeship, he left

 

3ZSame to H. Russell, Sent. 1a, 190b, ibid.

 

107

Lowell and went to work as a draftsman for the Laird & Sweeney

Comnan makers of power hammers at St. Johnsbury. In the
3 . 3

course of a few months he was made sunerintendeat of the
machine shoe but after two years the comoany was dissolved

due to disagreement between the nartners over financial matters.

After leaving St. Johnsbury, homas got a job as a machinist

in the little town of Sunfield, Vermont with the Gilman & Son
Comnany, manufacturers of automatic wood lathes. Vhile there
he became acquainted with a man by the name of Richardson, a
recent Princeton graduate, who had a great influence on him.
Shortly after he met Richardson, Thomas decided that he
wanted to become an engineer so in 1897 he came to the Midwest
and enrolled in the enaineerin: school at what is now Michigan
State University. In 1901 he graduated with his derree, the

same year Clds was getting the curved dash into oroduction and
following commencement, Thomas went to Detroit where he was
given a job on the Oldsmobile engineering staff.33

During the three years that Olds had known Thomas prior
to his retirement from the Olds Motor Works, he had worked

very closely with him and had develoaed a respect for his

engineering ability. Therefore, when he arrived in San Diego

on February ll after talking with Shettler, Olds immediately

wrote to Thomas who had since returned to the East where he

was working on the IQOh Columbia touring car. In his letter

 

33RE0 Spirit (June, 1a17), pp. 2-3.

 

108

Olds outlined the preposal he had discussed with Shettler
and asked Thomas if he would accent a temporary position as
superintendent of a peat factory which Olds had recently
started until the final details could be worked out. Cn

Aoril M, Thomas replied to Clds:

Upon receivinn your letter from San Diege I
concluded that the best thing I could do was to
accept a temporary position until you could make
SUCh arranqements as you thought best.

Nothing was settled at this point but a month later Clds

wrote to Thomas and offered him the cosition as superintendent

of the peat plant:

It occurred to me this morning that it might
be a good idea for you to come out here and take
charge of the Rancroft Peat Plant. We will have
the buildina up in about two weeks so that we ought
to be ready to run in four or five weeks. If your
present position is not a very satisfactory one,
would be pleased to have you let me know whether
you would be willing to come at once and what
salary would be satisfactory for the next three

or four months.

In his postscript Olds referred to the plans for an automohile

company although he did not Specifically mention it. "The

other matter is progressinc slowly," he explained. "It will

[.J
take some little time yet,"39
Three days later Thomas mailed his acceptance:

Your letter received and shall be pleased to
accept the position you offer. I will arrange to

 

3”FLT. Thomas to Olds, April A, lQOh, Olds papers.

3sOlds to H.T. Thomas, May 6, 190h, ibid.

109

finish my work here bv the end of this week or

middle of next.
As to salary I will leave that to you what-

ever you feel that the position can afford to pay

will be satisfactory to me. H
I am at present receiving $100. per month.

The position is not satisfactory to me from the
fact that the concern offers nothing in future
prospects except failure mien the Selden patent
peoole3gnd stockholders get sick of putting up

money.

It seems obvious that there was only one reason why Olds
asked Thomas to work for him and only one reason why he ac-
cepted. That was because Clds was planning to begin manufac-

turing automobiles again. Thomas was an automotive engineer

and it is not likely that he would haVe left his position with
the Electric Vehicle Company just to take charge of the peat
plant on a temporary basis unless there was the prospect that
Olds was going to design a new automobile and would need his

assistance. In fact, it could even be surmised that Clds may

have offered Thomas at this early date the position of chief
engineer when the company was formed.

0f further significance in this matter is the timing of
Olds. 0n the same oceasion that he asked Thomas to direct the

peat factory, Olds specifically stated that the position would

last only for the "next three or four months" and on this con-

dition Thomas accepted Olds' offer. In view of what eventually

happened, this arrangement could not have been planned better

 

36H.T. Thomas to Olds, May 9, 190M, itid.

 

110

because less than four months after Thomas' arrival in Lansing
in the latter part of May, Olds had fended his second motorcar
comsany and apnointed Thomas chief engineer.

This should not be misconstrued to imnly, however, that
plans for the new comnany were complete by the end of Way.
Without doubt the matter had been thoroughly discussed by that
time but nothing had been definitely settled although Olds,
from his actions, evidently considered it only a question of
time. What caused the delays in the arrangements is not known
excent to state that it might possibly have been due to the
failure to reach an agreement or the fact that Reuben Shettler
who snearheaded the move, lived in Los Angeles and was not
always available. As far as Olds was concerned, he played a
rather inactive role throughout the negotiations and left it
to Shettler to provide the momentum to nut the deal acrOSP.

Until the latter hart of June when ghettler arrived in
Lansing, no definite action had been taken but shortly there—
after, he again discpgqed the matter with Olds who anparently
was waiting to see what would materialize before he would

ODenlv commit himself. After talking with Olds, Shettler went

ahead with his own olans and on July A wrote Olds that he

wanted to present a pronosition to aim:

After talking with you the otherneveninu, I
have talked the matter over very carefully with1
V A -m,d to make a prososition wnlcn
1r. Peer, and decide h’ h I desire to are-
I believe will lUtCPCSt you, wile; ,. L
sent to you nersonally. ,‘

I am poinw to Detroit this afternoon to rcttrn

lll

tomorrow evening at 8 o‘cloca, and will call and
see you at yetr house Tuesday evening, soon as
oossihle after I arrive. As we leave for the north
fiednesday night, our time will he pretty well taken,
which is my reason for wishing to see you Tuesday
night.

Sincerely honing I may he able to see you
at time mentioned ahove and present to you the
nroposition, which I helieve is a aood one and as
the iron is new hot it is the time to strike.

After hearing Shettler's pronosal, Clds began to for-
mulate clans for the new comoany although it was to take
several weeks yet before the final arrangerents would he made.
On August h he wrote to Ray K. Owen in Pew York. Besides out-
lining the plans for the new comnany, Olds also aoproached him
with an offer to subscrihe for some of the original stock.
Perhaps he was already thinking of asking Owen to become the
sales manager and distrihutor for the new company:

I have on my desk a written offer from a re-
snonsihle party offering to put in an Automobile
Commany for me with a capitol ‘sigl of one million;
five hundred thousand is to he co ”on and five
hundred thousand preferred. We have a site under
Option of 132 acres which will nrohahly he used.
Their prooosition to me is to give me controllin?
interest in the Commany by turning over to me two
hundred and sixty thousand of the common stock;
the preferred of course, will not have any control
in the affairs of the Comoany. The amount of common
stock is urned over to me for my good will and the
factory site of 132 acres; the balance of the common
stock will he sold at fifty cents which will nut
one hundred and twenty thousand in the treasury.
The preferred stock we only expect to sell a small
amount, say one hundred thousand; this will give
us all the money that we think will he necessary.

I have informed them that if I accept their nro-

37H. Shettler to same, July h, 190a, ibid.

112

position, that I should want to reserve some of
the common stock for your peoole, providing you
wanted it, as I would like very much to have you
and your people with me. I was visited a short
time ago by a srndicate from N.Y. who offered me
a preposition 1&1 which there was about double
the amount in it for me to start with; I did not
care about this however; I care more for the peeple
connected with this Comoany and I will take my
chances on the future; had I never allowed the
controlling: interest of the Olds Motor Llorks‘s [sica
to get away from me, I know that the Company‘s '_-—
matters would be going up the ladder instead of
tumbling down the other side. If I decide to
move in this matter, I shall move quick and be
ready for next year‘s business.

I would like to know however, how you feel
in reference to the stock mz3tter, as this will be
the only Opportunity to get in, owing to the fact
that all of the Common Stock is oversubscribed
the moment I decide to accept the pronosition.
I thought I had retired from active business,
but it seems to be my lot to asain put my shoulder
to the wheel; I believe the opdortunity to- day
is far greater and easier than it fiver was when I
started out with the Olds Mobile.

On August 6, two days after writing Owen, Olds left
Lansing for a week's vacation in Forthern Vichinan. In the
meantime, however, the stock subscrintions had all been sold
and completion of the arrange ents den ended on his acceptance.
A message was sent to Olds at his summer home in Petoskey
asking him to return and upon his arriVal he was presented
with a paper by Reuben Shettler which was dated August 9.

"In keeping with other communications, and private conver—
sations," Shettler stated, "I hand you herewith a prooosition

for your careful consideration, which I sincerelyb one will

 

3801ds to R.N. Owen, August u, lOOh, ibid.

113

meet with your aonroval, so that you may be able to see your
way clear to accept of same."

The terms of the nronosal followed. The company was to
be capitalized at $1,000,000, "for the uurnose of manufacturing
automohiles" and was "to be located in Lansing, Mich." One
half of the capitalization was in preferred stock which was
to be retired in ten years. Olds was expected to start the
sale of the preferred stock which was to be offered at nar,
by subscribing for $50,000 of the same "as soon as the Com-
pany would need the money" and after all the common stock had
been sold.

An equal number, or 500,000 shares of common stock were
also to be issued. Of that amount, 2h0,000 shares of the
stock which had a par value of one dollar, were to be sold
at fifty cents each making a total of $120,000 cash available
for erecting a olant and ourchasina machinery. This money
was also to be oaid in as the company needed it. Olds was
to receive the other 260,000 shares, or the controlling in-
terest in the common stock Maich had all the voting newer,
in consideration for his "name and standing in the trade"
and for his "personal attention and general management" of
the company. In return, he was to furnish all the patents
he held that would annly to the business and all inventions
ho miaht nroduce while associated with the Company. In

addition, he was to provide the land for a test track "free

11h

of charge to the comoany or orOnerty that might he selected
in place of it, of like value."39

Many authors of automotive history have since written
that Olds' reputation had reached such heights that merely
for the use of his initials, R.E.0., Olds received the con-
trolling stock interest in the new comnany. In View of the
evidence, these statements are inaccurate. Olds' renutation
and managerial ability were important as was his knowledge
of automobiles and the automotive industry hut he was exnected
to contrihute much more to the new company. 0? great signi-
ficance was the fact that Olds had to turn over all his ostents
and any he should receive while he was connected with the com-
pany. At the time the nrooosition was drawn up, the parties
to the contract and Olds himself, thought there were several
patents to which he held the title. This was of naramount im-
portance in protecting the new company against a ocesihle leaal
dispute over patent infrinaement by the Olds Motor Works or
litigation involving violation 0? the Selden patent hr the
Association of Licensed Automobile Manufacturers. Equally im—
portant was the fact that Olds was asked to provide the land
for a test track and to take $50,000 of the oreferred stock
as soon as the company needed onerating capital. This was a

large amount of money, esneciallv in comparison with the

—_‘

39R. Shettler to Olds, Aucust s, lQOh, ibid.

 

115

$120,000 the other ten original stockholders were to invest
in the buildings and machinery and it essentially made Olds
financially responsible for the company once production
started. The generosity of the pronosal made to Olds was
intended to induce him to accept but like the others, he was
eXpected to share in the finances and resaonsihility of this
undertaking and on that basis alone was he given the Oppor-

tunitv to establish his second automobile company.

CHAPTER IV
THE REC MOTOR CAR COMPANY

On August 16, 190a, the articles of incorporation for
the new concern were registered but bv then some minor alter-
ations had been made in the fiscal arrangements. The cap-
italization of the firm remained at $1,000,000 hut only 200,000
shares of preferred stock were to be issued which were subject
to redemption at par heginning January 1, 1905. At the same
time, provision was made to increase the amount of common
stock from 500,000 to 800,000 shares in the event they would
need more canital. This contingency did not arise, however,
and the actual value of the assets held by the Company re-
mained at $250,000. Of this amount, $120,000 was in cash from
the sale of the common stock and $130,000 in orOperty and
patents contributed by Olds. A value of $100,000 was placed
on two patents he held for automohile motors and $5,000 on
the drawings for two styles of automobiles which he had de-
signed. In addition, an evaluation of $25,000 was figured
on the land he had agreed to furnish for a test track.1

The day after the articles of incorporation were filed,

1Art1e1es of Incorporation, August 16, 190h, Records of
RED Motor Car Co., Division of White Motor Co., Lansing, Mich.

Hereafter cited as "REC Collection."

116

 

 

117

plans for the new company were also revealed to the public.
It was announced that work on the new factory would begin
within thirty days and it was hoped that it would be com-
pleted by November and not later than December 1. By the
first of the year, it was expected the plant would he in
operation employing from 900 to 1,000 men. It was also dis—
closed that at a meeting held on the afternoon of August 16,
the stockholders had elected Olds, president and general
manager, Reuben Shettler, vice president, and Edward F. Peer,
secretary and treasurer. On that same occasion, the name
"R.E. Olds Company" was Chosen for the new concern.2

This name immediately brought a resnonse from the Olds
Motor Nerks. On August 13 they wrote Olds and informed him

of their objections:

We notice in the papers that it is reported
that you have orfianizod an automobile company to
be known as the R.E. Olds Company, for the pur-
pose of making automobiles.

While we are not surprised that you should
go into the manufacture of automobiles, we are
surprised that you should take the name which so
clearly and unmistakably will conflict with the
name of the company which you assisted in organ-
izing and in which you were a large stockholder.

Thinking it is probable you have not taken
advice in this matter, and have unwittingly taten
a name which would conflict with that of the Olds
Motor Works, we take this opportunity of calling
your attention to the fact that in our Opinion
and in that of our attorneys, the use of the name
"Olds" by you in an automobile company, or in the
automobile business, is clearly an infringement

2Lansing State Republican, August 17, 190h.

118

of our rights. We are sending you this notice

at an early date so that you may know our oosition
in the matter and so that if your disncsition is
to avoid litigation and conflict between the two
comoanies becaUse of the similarity of names, you
can without any loss to yourself in prestige and
advertising make a change which will eliminate

the name Clds and save the trouble and annoyance
and exnense of litigation that no essarily must
follow in case you do not change.

The following day Olds answered the letter which he sus-

pected had been written by Fred Smith:

Our name does not in any way appear like the Clds
Motor Works. As far as the name Olds is concerned,
I think that if you were to refer to the name of
Smith, Jones, or Brown, you would find that they
would all have to stay out of business as far as
their name was concerned. The name of our car
certainly will not be a name that will in any way
sound like Olds Mobile}L

This exchange, however, did not fully reveal the anim-
osity which had deveIOped between Olds and Smith by his time
and the resentment they held for each other. Olds disclosed
his attitude toward Smith and his efforts to place obstacles
in the way of the new company in a nersonal letter of Sept-
ember 6:

My friend, F.L., I am told has now written to

all my new stock holders with a view of discouraging

them by talking litigation, etc. All our banks here

have received letters, I sunoose, in hones to affect

our credit, but he might as well talk to a stone....
The old comoany have written my stockholders that I

301ds Motor Works to Olds, August 18, 190a, Clds papers,
Michigan State University Museum, East Lansing, Michigan.

LLOlds to Olds Motor works, August 19, 190A, ibid.

119

sold them my name, but if any one will take the
trouble to look this up on the original articles
they will find to the contrary. If we had not
used the name 'R.E. OLDS CO.,' which would never
be mistaken for 'Olds Fotor Vorks,‘ we certainly
would have published the facts concerning the
president of the company and his eXperience, as
he certainly made every turn in the success of
his companies, and their falling off when he re-
tired, not withstand'nc their fine condition at
the time of leaving.

This letter gave an indication of the argument Olds began
to pursue in his dispute with the Olds Notor Works. He had
not sold his name to them and he would hold them responsible
for bringing damage to it or degradina his reputation. These
points he emphasized in a letter to Henry Russell:

As to the name of our company, I want to say

that I do not consider your company owns anything

outside of its corporate none, or 'OLSSMOWILE.'

We do not care to have anything that will conflict.

While in New York the other day I was informed that

I could enjoin the Clds Moto Works for using my

name on an inferior machine, that it had a ten-

dency to injure my renutation as a manufacturer.7

Olds‘ reasonina, however, did not satisfy the Olds Motor
Works, nor was Olds himself convinced that he had met their
objections. In an effort to avert further difficulties over

the matter and orevent the eventuality of a legal case, he

decided to succumb to their demands. At a meeting of the

L

SSame to Dr. Tapoey, Sept. 6, lQOh, ihid.

6The lQOh Oldsmobile was basically the same as the 1903
model and no evidence has been found to indicate that it was
"inferior."

7Olds to H. Russell, Sent. 19, lQOh, Olds papers,

120

stockholders of the R.E. Olds Company held on the afternoon
of September 27, it was decided to change the corporate name
to the "EEO Car Company."8 This was done, it was eXplained
to avoid confusion with the Olds Notor Works.

Besides forcing Olds to remove his name from the title
of the company, the Olds Motor Works also charged him for pay-
ment of nronerty which they claimed was no longer rightfully
his. On August 16, the same date the new company had been
organized, Olds had resigned from the board of directors of
the Olds Motor Works.9 But since then, he and his family had
continued to drive "company cars." The Olds Voter Works held
Olds accountable for these automobiles and demanded that he
Day for them.

According to a statement by Olds, he still had three Olds-
mobiles in his possession, none of which were new, after he
resigned from the board of directors. One was an experimental
touring car he had "fixed over" and driven for three years.
The other two were runabouts, one of which had been used in an

"which

endurance run and the second was an eXperimental car
had been made over so many times trying different devices that

it could not be sent out as a regular racbine." Olds supposed

 

8Amendment to Articles of Incorporation, Sept. 27, 190a,
REC Collection. ‘The name was changed again on April 7, 1906
to "REO Motor Car Co."

9Olds to H. Russell, August 16, lgOh, Olds papers.

121

he had more than paid for these automobiles while he was assoc-
iated with the company but stated that he was willing to settle
the matter on a "reasonahle basis."1o

Fred Smith, however, remained cold to the concessions made
by Olds and engaged Robson, George, and Fisher, counselllors at
law in Detroit, to prosecute for full payment. They contested
the statement by Olds that the cars were secondhand and claimed
they were new when he had taken them. In fact they stated that
each one had been huilt in a Special way to meet the require-
ments of Olds or his family and placed a total value of $2,0h0
on the three machines. But in a letter to Clds on hovemher 8,
they stated they wished to he ”abundantly fair" and informed
him that if he would pay $2,000, it would he "accepted in full
satisfaction and the incident closed."11

In the meantime Olds had hired Thomas, Cummings & Nichols,
a legal firm in Lansing, to handle his interests in this matter.
They entered into negotiations with Frank E. Rohson who was
representing the Olds Motor Works and after several weeks of
quibbling, an agreeeent was reached. The final settlewent
Which was signed by the Clds Rotor fiorhs, read_in part: "Re-
ceived in full of the matters in disoute referred to and set

forth," from Ransom E. Clds, "the sum of Eighteen Hundred

___.

1OSame to same, Sent. 19, lQOh, ibid.

ihi 11F.E. Robson to Thomas, Cummings & Nichols, Rev. 8, lQQM,
do

122

Dollars."12 With that the legal disoutations between Olds

and the Olds Mot r fiorks came to a cloae, perhaps because Smith
was convinced there was little or nothing more he could do to
prevent Clds from continuing with the develOpment of the new
company which had proceeded on a systematic basis since it had
been organized.

Soon after the company was incorporated, a decision was
made on the location for the factory. A twenty acre tract was
selected, the largest nart of which was Pnown as the Haynes
pPOperty. This site was situated in the southern section of
Lansing and was adjacent to the Grand Trunk Railroad denot.
Olds had nurchased fifteen acres of the plot the previous Anril
fOP 35,00013 with the intention of erecting a warehouse for the

‘

storage of peat.13+ his plans, however, has not materialized
and vhen the automobile company was formed, he had offered this
prooerty as a fulfillment of his obligation to provide land for
a test track and suggested it as a possihle location for the
factory. his srggcstion had been aonroved and besides the pro-

PGPtV Which Olds owned, other small nieces were nurchased.which

also gave the company the right of way to the old Lake Shore

,4

12Same to same, Nov. 19, lQOh, ihid.
lBOlds to M. Haynes, April 16, low, ihid.

1 T

b“Olds Owned and onerated the Rancroft Peat Fuel & Cement
90. until 1910 when the business was discontinued heoause it
had proved a financial failure.

and Nichigan Southern railway. This permitted access to two
railroads and insured adequate transit facilities which was
the deciding factor in the decision to turn down several other
sites under consideration in favor of this locality.

On September 5 ground was broken and work commenced on
the erection of the new buildings, the largest of which was
70 feet wide and 700 feet in length. Four structures were
built initially, three for manufacturing and the fourth for
offices. All the buildings were two stories high and huilt
of brick construction. Nost of the contracts were awarded to
local concerns which were required to post heavy bonds to
guarantee that the work would he completed within ninety
days.15

In the meantime, snace was rented in the bui 1d ing formerly
occupied by the Lane ing Pure Food Companj; where a temporary
factory was laid out16 and two caoable men whom Olds had en-
gaged for imnortant nositions were nlaced in charse. Richard
H. Scott who had come to.Lansins in 1398 as plant manager of
the Olds Gasoline Engine Works was named factory suoerintendent
and Iorace T. Tiomas whom Olds had hired more than three months
before the company was organized was anoointod chief enrineer.

On August 30 more than twenty draftsnen and machinists resorted

 

15Lansing State Reoublican, Sent. 6,1QQh; Automobile
TOEics, VIII (Sent. 2h,“190h), lBZo-lEZO.

 

 

léLanSing State Reoublican, Angust 20, 100M

/ “vhf.

 

12h

to them and work was begun on oatterns and tools for models
of the new car Which was to be known as the "R30."17
By October 15 the first of two ernerimental models was

completed and given its initial tests. This automobile was

a five passenger touring car which weighed 1,500 pounds and
was priced at $1,250. It was nowered by a sixteen horsenower
double obnosed engine elaced under the seat and started by a
crank at the side. The radiator was concealed under the hood
and the company claimed that water could freeze in it without

doing any damage. Wooden artillery wheels were used for rugged—

?
3

ness and the car was equiaqed with a steering kneel rather than
a lever.18 Later another model was added, a two passenger run-
about with an eight horseoower single cylinder engine which
sold for 3650.19 Like the touring car, the runabout also had
the distinctive stvling of an automobile in both its design

and appearance.

The question arises at this joint as to why Olds changed
his views on the co.struction and tyne of artomobile that it
was advisable for the new company to build. Less than a year
before he had insisted that the Clds Voter Works should con-

tinue to concentrate on croduction of the curved dash. New

 

17Ibid0: AUQUSt 3°, 19GB; gycle and Automobile Trade
M. IX (Oct. 1, 1901M, no.

18Automob11e Tocics, IX (Nov. 26, IQOM), 255.

19Lansing State Regublican, Way 9, 1905.

 

125

he was supporting the same move he had previously Opposed as
the touring car was the model REO esoecially emphasized in
their sales promotions. What had caused him to reverse his
position?

There are several factors which should be mentioned.
First of all, the transition takin? niece in the automotive
industry certainly had an effect on Olds. Most manufacturers
were following the new trend, some faster than others, but
within a matter of time all came to recognize the superiority
of the automobile over due motorized buagy. Furthermore, the
touring car by lGCh was beqinnino to suroass the runahout in
popularity. Olds was aware of these develonments which partly
accounts for the fact that both of the R30 models were dis-
tinctively automobiles and that of the two, the touring car
was advertised more heavily than the rUnabout. From this
it would seem reasonable to conclude that even if Olds had
remained with the Olds Voter Verks, he eventually would have
been forced into a similar position.

Another factor which contributed to the chanse in Olds'
attitude was the advice he received from several individuals
with considerable automotive exoerience in engineering and
sales regarding the tvoe of automobile the new company should
build. Horace Thomas who worked with Clds for a few months
on designs for two automohiles which were turned over to the

comnany when it was organized and who was in charae of engi-

126

nearing the new cars, must have had some ideas on the new trends
in the structure and.aonearance of autorobiles which had an
influence on Olds. The same was true of Reuben Shettler who
was the second largest stockholder in the comnanv and who had
agreed to become the California distrihutor for the REC cars.
Based on his oosition and the manner in which he had written
Olds the nrevious December concerning the necessitv of mar-
keting a larger machine, it seems unlikely that his attitude
would have changed during the intervening months. Rather

it anoears more probable that the continuing trends in auto-
motive design strengthened his views which he impressed on
Olds.

From the available evidence, however, the screen who
most openlv projected his ooinions on Clds was Ray N. Owen.
After Olds had written to him on August h infonhinq him of
the pronosal for the new comoany and inviting him to come in,
Owen had reolied that he and dainev wrre interested but wanted
to know more about it and asked Olds to hold the matter Open
until he could come to New vorlz.20

By the time Olds answered Owen, the ccmoany had already
been ornanized and all the stock had been subscribed. Rut
Olds was anxious to have Owen and Raine: join him and he in-

formed them on August 19 that he could arrange to have some

___

203.m, Owen to Olds, August 9, lQOh, Olds napers.

127

of the large holders give un nart of their stock and still let
them in if the? desired. "I would like very much to have you
interested," he wrote to Owen. "I feel ... that you would be
a great assistance in the oronosition and nothing would have
suited me better than to have you with us."21

Owen was on vacation when Olds letter arrived causin: his
renlv to he delayed for a few days. Mhen he answered on
August 30, he said they would be glad to get some stock in
the concern but added that he had a new nrowosal he wanted
to nresent to Clds:

How would you like to have us take the exclusive

selling agency for your car, on some satisfactory

basis for all concerned? I helieve some sort of

orooositien could he Forked out to our mutual

advantage alonfi this line. Cf course, we are in

a nosition to take the exclusive selling anency,

for some standard make of car, and if this sug-

gestion meets vour approgfil, I would like to hear

from you on the suhject.

Unon reflection, Owen realized that while this could he
a wonderful Opaortunity for them, they had not seen the car
Olds was goinn to build. Two dafs later he again wrote to
Olds:

Since writing you, it has occurred to me that
you have not given me any idea of the nroaositicn
you are going to out on the market.
I think we ought to get to-gether. What do

you say if I she a run us and see you the first
of the week?2

21Olds to ;.u. Owen, August 19, lQOh, ihid,
22R.M. Owen to Olds, Aunuet 30, lQOh, ihid.

23Same to same, Sent. 1, 1°0h, itid.

128

Evidently when Owen came, he was sufficiently impressed
with the models he company was building because a short time
later he was anoointed sales manager and agreed to take the
exclusive selling agency for the EEO cars with headquarters
in New York City. Perhans the reason Olds was willing to make
this move was that it freed tte comnany Cf advertising and
selling resnonsibilities and placed the burden of contracting
dealers on Owen. Duane Yarnell has written that this was not
a problem at all. Former Cldsmohile dealers, he said, "were
clamoring to get ahoard the Rec bandwagon. Mithout so much
as turning a hand, the Rec had the nucleus of a countrywide
organization."2u

The evidence, however, suggests that in some instances
dealers were reluctant to make the change. Shortly after he
had seen Olds and agreed to become sales manager, Owen went
to Chicago to find a dealer for that area. He had asked
Githens, the Oldsmobile distributor for Illinois, to take
over the REC agency instead hut was turned down. Several
other dealers were also anproached and their reasons for re-
fusing were much the same. Owen did not have a model to dis-
play and was unable to convince them there would be a market
for the new car. On Sentember 22, he wrote to Clds of his

difficulties:

 

ZuYarnell, Auto Pioneering, pp- 150'161'

 

129

They all want us to show them and seem to he afraid
the line will not look right, that it will look too
cheap or that it will require a season to test it
out. All my arguments that it is not a new game
with you does not seem to convince them that the
line ill he of suitable design and proserly worked
out.2g

Not only was Olds' renutation as an automobile manufac-
turer inadequate to convince established dealers to take the
EEO in nlace of the car they were selling hut frequently, Owen
informed him, it was the reason for their hesitancy:

I find throughout the country the general im-
pression is, that you are very much inclined to cut

the material down on your cars. They cite an in—

stance of the cast iron differential gears, the

cast iron hearings in the transmission, and several

well known weak noints in the Oldsmobile, as being

directly up to you. You will, therefore, have this
prejudice to overcome, and I would not hesitate,

if I were in your place, to out in the hast mater-

ial obtainable igéthese cars, even at a slight
additional cost.

In the same letter, Owen fine was sosxibly in the best
position to give advice on the new models in terms of what
other companies were doing, also advised that they should
lengthen the wheel base of the touring car. Through assoc-
iation with dealers of various makes he had ohserved the
growing tendency of other manufacturers to do this and he
suggested that EEO should follow their lead:

It will he absolutely necessary to have a
longer wheel hase than you have on the nresent

25am. Owen to Olds, Sent. 22, lacs, Olds Collection,
R.E. Olds Co., Lansing, Nichigan.

26Same to same, Sent. 27, l90h, Olds caners.

130

tonneau car, to make it a saleable car, and on my

trip, I found that the great tendency of Automobile

makers, was for a long base, and the side door

makes one imperative. The Auto Car for instance,

are increasing their wheel base to some one hun-

dred inches, and the Northern have an exceptionally

long wheel base. It will sell for $1500.00. It

is now selling for $1hO0.00, and will be a strong

competitor. The Franklin have lengthened out their

car some einht inches, and I find that it s the

tendency of all manufacturers to do this.

Quality construction and a well—prodortioned car would
help sales when they got into production but it did not solve
the immediate problem of organizing a nation—wide dealership
system. Agents were not ready to commit themselves to a car
that was still on the drawinfi board which Owen had recognized
after his trip to Chicago. "We will have a lot of work to do
at the show," he predicted. "I see the hand writinn on the
wall, and we will require demonstrators in abundance. Retter
apply for admittance in the National association and snace at

the show."28

Th. annual automohile shows were held in late winter in
both New York and Chicago. Refore the motorcar was in demand
and a system of dealer distribution had been established, ex-
hibitors had been primarily concerned with making direct sales
to customers. A few years later, however, this had changed
and the principal advantage automobile manufacturers realized

27Ibid.

28Same to same, Sept. 22, lQOh, Clds Collection.

131

was the Opportunity to close contracts with dealers and dis-
trihutors.29 This was the reason may Owen had requested Olds
to reserve space since he thought the shows would provide him
with another chance to contract dealers for territory he had
not been ahle to cover. The difficulty, however, was that RED
was an "independent" and the nrivilege of attending the shows
was directly related to membership in the Association of Lie-
ensed Automohile Manufacturers, protector of a patent on a
gasoline road vehicle originally issued to George P. Selden.

Selden, a patent attorney of Rochester, New York and a
graduate of the Sheffield Scientific School at Yale University,
began to direct his attention towards the develoament of a
"road engine" as early as 1377. “y that time, two types of
internal comhus ion engines were known. One was a four cycle
gasoline engine invented by Kikolaus A. Otto of Cologne, Ger-
many; the other a two cycle developed hy George P. Rrayton of
Rhode Island. Of the two, American observers preferred the
Pravton because it was "smooth and eouahle, resemhling in all
respects, externally, a well-proportioned steam-engine," while
the action of the Otto engine was "very irregular" and caused
a "kind of vague fear that the whole piston and rod or rack

might be projected from the cylinder."30 Selden likewise fav-

29New York Times, Jan. 10, 1926, See. 9, p. 32.

 

3OScientific American Supnlement, I (May 27, 1376), 339,

132

ored the Prayton engine over the noisy German product and chose

it for his experiments.

After two years of testinn, Selden filed a model and des-
cription of a prevosed road vehicle on May 8, 1879 with the
Patent Office. his application was rejected but Selden amended
it and filed again. Cnce more it was turned down. For nearly
sixteen years Selden constantly subnitted, withdrew, and a—
mended his application, frequentlv taking adVantage of the
two year limit allowed hv the law hefore reannlyins. Recause
of these delays, he did not receive a patent on his invention
of 1879 until Yovemher 5, 1595.31 In the meantime, he had never
built a motorcar nor had he heen ahle to rot anyone sufficiently
interested to obtain financial sunnert for the exploitation of
his invention.

Meanwhile, the automobile industry had developed inde-
pendently and ohlivious of Selden and his patent. Vuilding
largely up n the Euronean achievements of Gottlieb Daimler,
Carl Renz, and Edward Rutler, several other American inventors
had now entered the field. Charles and Frank Duryea 53d 9P0-
duced a gasoline automobile in 1892 and were soon followed by
Alexander Winton, Olds, Yenry Ford, and Elwood Haynes and the
Appersen hrathers. Pefore the end of the century there were

many individuals who had either produced experimental models

31Macfarlane, Collier's, LIV (Jan. 9, 1915), Uh.

133

or had actually begun commercial manufacture of motor vehicles.32

By 1900, the period of experimental automobile building
in America was practically over. The industry was now on a
commercial footing and the battle over the Selden patent began.
In 1899, Selden had assigned to the Electric Vehicle Company
of Bridgeport, Connecticut, a concern in which George A. Day,
William C. Whitney, Anthony F. Rrady, Thomas Fortune Ryan, and
P.A.R. Wiedener were chiefly interested, exclusive rights to
his patent with the authority to grant sunlicenses upon pay-
ment of a royalty. Whoever refused to pay this royalty was
subject to prosecution in suits for infringement.

Soon after acquiring Selden's rights, the Electric Vehicle
Company announced its intention of enforcing the Selden patent
against several comnanies which were commercially producing
automobiles. The first to feel the results of this action was
the dinton Notor Carriage Company. In 1900 a suit was brough
against this concern charging them with unlawful infringement
of the Selden oatent. The comes y, in its demurrer, "asserted
that the patent was invalid, contending that Selden's plans,
Which covered ‘a road locomotive, provided with suitable run—
ning gear including a prooelling wheel and steering mechanism,
and a liquid hydro-carbon gas engine of the compression type'

were not patentable at all because they constituted merely a

328e1tzer, A Financial History of the American Automobile
Industry, p. 17.

13h

combination of known and existing elements."33

District Judge Coxe, however, overruled this demurrer
and fine Hinton Motor Carriage Company was tied up under a
royalty license of fiVe per cent on the retail price of each
car they produced. After this initial victory, other com-
panies were also anproached about obtaining a license on a
similar basis. When this haooened, ten manufacturers got to-
gether in Detroit and each contributed $2,500 in cash to fight
the Selden patent. They elected Fred Smith president of the
group and Henry Joy of Packard, secretary and treasurer. The
association also named an executive comrittee which consisted
of Smith and four other members: Col. Charles Clifton (George
N. Pierce Company, Ruffalo), Sanuel T. Davis, Jr. (Locomobile
Company, Wridpenort, Connecticut), Elihu P. Cutler (Knox Com-
pany, Springfield, Massachusetts), and L.H. Kittredge (Peerless
Company, Cleveland).3hr These five men were delegated to adjourn
to New York where the Madison Square Garden Automobile Show
was onening and arrange a meeting with the Selden interests.

Georg H. Dav

u, acting for the Electric Vehicle Company

made the arrangements for the five men to get together with

William C. Whitney and his attorneys. According to Smith,

 

33Epstein, The Automobile Industry, pp. 228-229.

c3uWilliam Qreenlea , Monopoly On Wheels (Detroit, 1961),
p0 9).

 

135

Cutler was the official spokesman of the automobile manufac-
turers in that meeting. He had jotted on an old blue envelope
three points upon which they had agreed and when they were
asked to state their position, Cutler reoeatedly read from his
envelope:
‘First. - We will pay one and one-fourth per
cent royalty, three-fourths of one per cent to the
Electric Vehicle Co., one-half of one per cent into
an association of our own. ‘
'Second. - This association shall say who shall
or shall not be sued under the patent.
'Third. - It shall say who shall be licenseds
and who shall not be licensed under the patent.‘
Regardless of the authenticity of this account, these
three points did provide the substance of the agreement that
was eventually reached but later a more elaborate statement
was drawn up by Frank E. Robson, legal representative of the
Olds Motor works. On March 5, 1903, the final papers were sig-
ned and the Association of Licensed Automobile Manufacturers
was formed in which eighteen companies were given meMbership,
including the Olds Motor Works.36 The result of this movement
which gradually increased in strength, was an envelopment of
American motorcar manufacturers from which few escaped and

those Who remained outside did so at their own risk.

One of the most recalcitrant of those who refused to join

35F.L. smith, Motoring Down A Quarter of A Century,
ppo 29-30.

36Selden Case Record, V, 2779.

136

the A.L.A.M., outside of Thomas Jeffery who never demurred
from his decision to remain free of all affilitations, was
Henry Ford. Bristling with members and money, the A.L.A.M.
decided to exert pressure on Ford to force him into the Assoc-
iation or out of business. The Ford Motor Company had been
organized only a few months before and.had scarcely begun
Operations when an advertisement, placed by the A.L.A.M.

and aimed at Ford, appeared in the Detroit News of July 26,

1903:

No other manufacturers or importers are auth-
orized to make or sell automobiles, and any person
making, selling, or using such machines made or
sold by any unlicensed manufacturers or importers
will be liable for prosecution for infringement.

Two days later the Ford company replied with an adver-

tisement of its own:

NOTICE

To Dealers, Importers, Agents and
Users of our Gasoline Automobiles

We will protect you against any prosecution

for alleged infringement of patents.
We are pioneers of the Gasoline Automobile.

Our Mr. Ford also built the amous u omo-
bile which was driven by Barney Oldfield in New
Yerk on July 25, 1903, a mile in SS h/S seconds,
on a circular track which is the world record.

Mr. Ford driving his own machine beat Mr.
Winton at Grosse Poigye track in 1901. We have
always been winners.

The advertisement campaign continued throughout the sum-

37Detroit Free Press, July 28, 1903.

137

mer of 1903 and by autumn both sides had made their position
clear. Ford would not submit to the A.L.A.M. and their tac-
tics had only increased his obstinancy. Finally, on October 22,
1903, the Electric Vehicle Company and George B. Selden, acting
as nominal complainants at the request of the A.L.A.M., lodged
suit in the United States Circuit Court for the Southern Dis-
trict of New York against C.A. Duerr & Company, the Ford agent
in New Yerk City, and the Ford Motor Company for infringement
of the Selden patent.38l

Like Ford, Olds was opposed in principle to the Selden
patent and the A.L.A.M. This was particularly true as he pre-
pared to launch his second automobile company into business in
the late summer of l90h. Would the A.L.A.M. interfere with
the new company? Olds could not be sure but stated in a per-

sonal letter that he expected some trouble from Fred Smith Who

knew of his Opposition:

... he will no doubt do something by way of the
Selden patent, but the world will know its work-
ings. It cost the old company last year nearly
$30,000.00 for no protection, only the honor of
F.L. being its president. Nothing can prosper,
in my estimation, that buys people off at the
price of $75,000 and is not founded on good and

just principles.

Less than two weeks after notice of the formation of the

_—.

38Greenleaf, Monopoly 0n wheels, p. 125.

39Olds to Dr. Tappey, Sept. 6, 190M, Olds papers.

 

138

R.E. Olds Company was released, Olds was notified by Betts,
Betts, Sheffield & Betts, attorneys for the Electric Vehicle
Company, that manufacture of gasoline automobiles constituted
in their minds unlawful infringement of the Selden patent:
On behalf of our client, and at its request,

we hereby notify you that any ... unlicensed manu-

facture, use and sale, when entered upon, will be

an infringement of the said Selden Patent, and the

rights of our client under the same.

we therefore warn you to promptly discontinue

your preparations for the same. If this notice and

warning is not heeded, and you proceed to manufac-

ture and sell, you will render yourself liable to

a suit for an injunction and accounting Sor your

infringement of the said Selden Patent.h

A similar warning came from a friendly quarter. On his
recent visit to New York, Olds had discussed membership in the
A.L.A.M. with Owen and Rainey. The consensus had been that no
bad effects would result if they did not enter the Association
because, as they said, "all their claims were based on nothing
at all." But since then, Rainey had been led to believe that
the A.L.A.M. was much stronger than he had at first suspected.
Acting on the reports which he had heard, Rainey had called on
George H. Day, head of the Association. In their conversation,
Day had.made several remarks Which mistained the ideas which
had been suggested to him before and Raine? W83 fU11Y con-

vinced after this meeting that the A.L.A.M. was planning some

kind of action, the nature of which he was unable to determine.

hOBetts, Betts, Sheffield & Betts to Olds, August 29, 190k,
ibid.

139

But as insurance "against any trouble that they might want to
make," he advised Olds to secure a license from the Associationfi1
Olds, however, was not prepared to take that step. The
Ford suit was nearing the end of its first year of testimony
and so far Ford had absorbed the brunt of the Selden attack
without any sign of weakening. To independents, he had as-
sumed the role of leader in this struggle and Olds reasoned
that, led by Ford, it might be possible to form an indepen-
dent association composed of all those manufacturers in cp-
position to the Selden patent and the A.L.A.M. This was a
more palatable alternative to him and certainly worth a try.

Therefore, on September 9 Olds wrote to Ford and informed
him of his position in the Selden patent case. Ford was both

pleased and surprised. He wrote to Olds:

I was not aware of your personal position in
regard to the Selden Patent Association. I only
of course knew of the position that the Olds Motor
Works took. I had supposed that you were intimately
acquainted with the workings of this association,
and on this account I am more than pleased to know
of your position and certainly value your Opinion
very highly on this account. I am glad to say that
our company has not the slightest inclination to
be a member of such an association on any basis.
The suit is still in progress and our attorneys
are now in the East taking testimony in our be-
half. I would be very glad, at any time, to talk
over the matter personally with you, at which time
we can go into mattersugery much more thoroughly

than we can by letter.

_‘_—

ulR.A. Rainey to same, Sept. 15, 190k, ibid.

qu. Ford to same, Sept. 19, l90h, ibid.

lhO

Meanwhile, Owen and Rainey had kept the lines of com-
munication open with the A.L.A.M. because of their touchy
position. They were not Opposed to the formation of an in-
dependent association but did not want to find themselves in
the middle of the cross-fire if one was organized. Besides
agreeing to handle the entire output of REC, they had also
made a similar contract with the H.H. Franklin Manufacturing
Company, a member of the A.L.A.M. In View of this situation,
Owen wrote to Olds, it seemed to him as it did to Franklin,
that the safest move was to also bring REO into the Selden
Association:

I stOpped in Syracuse on my return from
Indianapolis and laid a plan before Mr. Franklin,
and was assured of his hearty co-Operation. We
have an appointment with Mr. Day this morning.

Mr. Franklin advised me to take the matter up with
him, and that he would use all [his influence to
get a favorable consideration of an application,
provided you made one. I informed him, that while
you were very much Opposed to joining such an
organization, I believed that Mr. Rainey and I
could bring influence enough to bear upon you, to
have you make an application, provided he was
assured same would receive favorable consider-
ation This is the way the matter stands at pre-
sent”!13

Olds was not convinced. Nor had he given up the idea
of an independent organization, On October 31 he again wrote
to Ford:

Permit me to suggest that now would be an
ideal time to form an association to protect the

_-—n

h3R.M. Owen to same, Sept. 27, 190h, ibid.

lhl

automobile manufacturers from the demands and drain
of the Selden Patent Association. I believe that an
association to be known as the ‘Independent Assoc-
iation of American Automobile Manufacturers,' or
some similar approeriate name, with its object the
uplifting of the automobile industry of America,
rather than the drain on the manufacturers to sup—
port extravagant methods in hOpes to build a wall
around the Selden Patent, whereby each member is
obliged to acknowledge its validity, is cergfiinly
the only hOpe they can have for the patent.

A few days later Ford came to see Olds, He said he was
willing to join an independent organization and the man they
agreed upon to take charge of it was John P. Bartholomew,
president of the Bartholomew Company of Peoria, Illinois, manu-
facturers of automobiles, peanut and coffee roasters, and corn
poppers.LLS On November 3 Reuben Shettler informed Bartholomew
Of this decision and told him what they had in mind:

Our thought is to get every concern that is out-

s de of the associated company, and not allow any

other new concerns that may Spring up to take any

license with the Selden patent, or to strengthen

any further. In this way, it will be but a short

time until the outside will have the strength, and

I am confident that we could choose no one that

could lead us to the front better than you, and

I am exceeding glad to get your views in the matger,

and know that you are taking hold of the thing.u

The following Sunday at eight o'clock in the morning, Olds

and Shettler met with Bartholomew at the Great Northern Hotel

 

uhOlds to Ford Motor Co., Oct. 31, l90h, ibid.
LLSPeoria City Directory, 190M, p. 79.

hr6R. Shettler to J.P. Bartholomew, Nov. 3, l90h, Olds
papers.

1&2

in Chicago. The results of this meeting are not known but Olds
seems to have changed his mind on account of it and notified
Ford on November 1h. Two days later, James Couzens, Ford's
partner replied. "We note you have had an interview with
Mr. Bartholomew," he wrote, "and have somewhat changed your
plan."u7

The change in Olds' plan was caused by his desire to
withdraw as organizer of an independent association and to
shift the resnonsibility to someone else, preferably Ford.
This decision was made for two reasons. First of all, Olds
did not feel he could take the time that was necessary to
establish such an organization. He was extremely busy during
the fall of l90h supervising the construction of the new fac-
tory, giving out contracts for machinery, and building the new
models. This was of greater importance to him and until it was
completed, he did not care to become involved in other matters.
Secondly, Olds did not want to place himself in the vulnerable
position as leader of an Opposition group to the A.L.A.M.
because he suSpected the Olds Motor Works was again planning
action against him.

From an informant Olds had learned that the Olds Motor
Wbrks was considering a suit against him for the use of his
name in connection with the formation of the R30 Motor Car

Company of New York, a firm organized by Owen and Rainey for

 

h7J. Couzens to Olds, Nov. 16, 190k, ibid.

1’43

the exclusive distribution and sale of EEO cars. Olds' name
was to be associated with the concern only for advertising
purposes and he was to hold only one Share of stock. When
Olds, however, heard that the old company again threatened
action against him, he immediately wrote a letter to Owen in
which he intimated that he might withdraw from any association
with the EEO Notor Car Company of New York. Two days later
Owen coldly replied to his suggestion:

Referring to your letter Of the 7th, I am much
disappointed at the weak hearted tone of your letter.
I have always felt that you were a fighter and your
letter has certainly given me cause for anxiety on
this point.

In the first place, your informant was probably
a good friend of the Olds concern, and is trying to
make your life miserable. A tip of that kind to me
would raise my spirits several degrees, as it would
mean a large saving of our apprOpriation for adver-
tising. I must admit that I give the Olds Motor
Works credit for more sense than to consider a fight
Of the kind you mention.

I am enclosing you the corporation papers, and
trust that you will see fit to Sign them and cause
us no further delay in the matter. Until this ifl
done, we cannot proceed with our contracts, etc. 8

Rainey also was at a loss to understand Olds' anxiety
and wrote to him on the same day as Owen in an effort to mini-
mize his ill-conceived fear:

I beg to advise you that you are in no way reapon—

sible for the actions of the Rec Motor Car CO. of

New York. Inasmuch as you are to hold only one

share of stock, you would be resoonsible to this
extent only. In case of any contingencies arising,

h8R.M. Owen to same, Dec. 9, 190h, Olds Collection.

lhh

such as an injunction obtained by the Association

preventing you from manufacturing cars, you have

your factory building, machinery, real estate,

etc. as assets to fall back on, while the only

asset we would have would be an inglorious defeat,

having Spent a great deal of money and a great dea§

of time in lawyers' Opinions, printers' ink, etc.4

Reassured by the statements of Owen and Rainey, Olds
signed the corporation papers and soon afterwards the REC
Motor Car Company of New York was organised. Rut this action
did not dispell the differences between Olds and Owen over
whether REO should join the A.L.A.M. or an independent assoc-
iation. Owen believed REO'S position in the industry would
be much safer if the company was a member of the A.L.A.M. and
he expected they would be approached on the cuestion of mem-
bership during the New York Automobile Show which was held in
1905 from January lh-Zl. He wanted to be able to reply with
an affirmative answer and on January 16 wired Olds for his
decision but at the same time inferred what he thought was
the wise course for them to follow:

Movement started to organize outsiders situation

demands immediate action undoubtedly will be ac-

preached to join insiders what do you advise must

decide Soday long hard fight or submission answer
fully.s

Owen's persuasion had little effect on Olds, however. As

far as the A.L.A.M. was concerned, he felt it would be only a

__

LL9R.A. Rainey to same, idem., Olds papers.

1 SOR.M. Owen to sane, telegram, 7:25 8-mo, Jan- 15, 1905,
bid.

1&5

matter of time before the organization collapsed as a result
of the invalidation of the Selden natent. His heart was with
the "outsiders" and in his reply he instructed Owen to join
an independent association of automobile manufacturers if one
was formed:

Join outsiders by all means insiders must break

sooner or later nothing fO them to stand on and

most of them dissatisfied.

On February an, 1905, just five weeks after Olds had
instructed Owen to join the indeoendents, a secret meeting
was held at the Ford plant in Detroit and the American Motor
Car Manufacturers' Association was formally organized. All
unlicensed manufacturers were invited to join and the A.M.C.M.A.
began its life with a charter membership of twenty firms,
among them Ford, the Maxwell-Rriscoe Company, the Duryea Power
Company, the Mitchell Motor Car Comnany, the Nordyke & Marmon
Company, and the Dayton, Premier, National, Moline, and Jackson
companies.S2 REC which had been expected to join was not listed
as a member of the new organization.

During the interlude between the Automobile Show and the
formation of the A.M.C.M.A., Olds had suddenly decided not to
become a party to an independent association. The reason for

this turnabout seems to have been the result Of his differences

5101ds to R.M. Owen, telegram, 2:05 p.m., idem., ibid.

52Greenleaf, Monopolngn wheels, p. 171.

lhé

with Owen. Rather than allow this issue to separate them in
their business relationships, they agreed to compromise and

not commit themselves to either the A.L.A.M. or the A.M.C.M.A.
Any new struggle in the industry was likely to be an extension
of the Selden patent case in which the members of the A.M.C.N.A.
would make themselves liable by association with Ford. By re-
maining outside of the camps of the contestants, Olds hOped to
avert inclusion in legal suits which could have hindered the
prOgress of the fledgling company.

This was uppermost in Olds' mind and had been since he
decided to assume the management of R30. Until this time the
company had been Spared from involvement in juristic disputes
and, if possible, he wanted to avoid any in the future. Out-
side of minor difficulties with the Olds Motor Works, nothing
had interrupted or altered his plans and the development of
the entire undertaking had been remarkably rapid.

Olds' comment on the progress of their operations was that
he had "never known a pronosition to move along more smoothly
than this." By the middle of March the largest factory building
was completed and another which was used for assembling and
shipping was almost ready for occupancy. About 350 men were
employed and the number was increased every day by eight to
ten workers. Also, the initial success of the agents in selling
the cars indicated that it had met with public aonroval and

Olds revealed that prior to the first of February, the factory

1&7

had received orders for 770 automobiles. "Many of the agents,"
he said, "could be satisfied with what they have done already
for a whole season's business."S3

This first flurry of orders kept the plant busy during
the Spring months but by summer Olds was looking for ways to
stimulate REO sales. This was the season for endurance con-
tests and it seemed there was no better way to prove REO'S
quality and durability than to place it in competition with
the cars of other manufacturers. Of the several reliability
contests held each year, the most important was the Glidden
Tour Sponsored by Charles J. Glidden who had made a fortune
in the paint and varnish business. In 1903 he offered a cup
for the winner of an annual tour of not less than 1,000 miles.
The first contest was to be held in the summer of 1905. All
members of the American Automobile Association or any club
recognized by them were eligible to enter. The purpose of the
donor was to promote private touring in general and not pri-
marily to establish a competitive publicity contest for manu-
facturers so he stipulated that each car entered had to be
driven by its owner. But while some lay owners did enter,
most of the contestants were manufacturing executives, several

of Whom drove their own cars.su

 

S3Lansing State Republican, March 1h, 1905.

S”Epstein, The Automobile Industry, pp. lSh-ISS.

1&8

Thirty-three cars started the first tour which ran from
New York through the White Mountains to Bretton Woods, New
Hampshire and return. Among the participants were John D.
Maxwell (Maxwell), Walter C. White (White), Charles E. Walter
(Pope-Hartford), and Percy Pierce (Pierce—Arrow). Two REO
cars were also entered, one driven by Olds and the other by
R.M. Owen. Scoring was based on the performance and serious-
ness of the troubles which each car encountered and the best
score was made and the trophy won by Percy Pierce. Certificates
of performance were also awarded to the twenty-eight contestants,
including Olds, who finished the tour.55

Although REO was not the winner of the tour, the car had
performed well in competition with other makes, particularly
in the economy tests which were not very accurate but had some
publicity value. The Lansing Journal reported in an article
entitled "New Laurels for REG" that in the run from New York
to Hartford, Connecticut, Ray M. Owen's car took first place
in the economy test, using only 63 cents worth of gasoline per
passenger while the lowest amount used by other makes was 70
cents or more. Olds further reduced that figure to h3 cents
per person by carrying five passengers in his car on the 122

mile trip from Hartford to Roston.56

_‘

SSHorseless Age, XVI (August 9, 1905), 206.

 

56Lansing Journal, July 17, 1905.

1M9

REO's showing in the Glidden Tour, however, was not
enough to boost the company's sales to 3,000 cars, the figure
Olds had anticipated for the first season.57 From March when
the first shipment was made to the last of August which was
the end of their fiscal year, REO sold 86h cars. This was
considerably less than one-third the number Olds had ore-
dicted. But even though volume was comparatively small, the
company managed to show a sizable profit for the abbreviated
period. Net sales for the first six months totaled $955,905
while net profit amounted to $323,h57. From the earnings a
ten cent cash dividend was declared on the 500,000 shares of
common stock outstanding which had a par value of one dollar.58

The financial success of the company in 1906, the first
full year of Operations, was even more remarkable. Deliveries
rose to 2,h58 cars and gross sales climbed to $3,097,579. Net
income totaled $u59,82h, out of which a thirty-five cent cash
dividend was paid. In addition, a 50 per cent stock dividend
was declared.59 Surplus funds amounting to $272,32h60 were

57Lansing State Republican, Nov. 3, l90h.

 

58Records, 1905, REO Motor Car Co., REC Collection. These
figures have been taken from data compiled by the REC Motor Car
00. listing total net sales, net profits, and production volume
for the years 1905-1936. Since the annual reports of the com-
pany from 1905-1907 are not available, it is impossible to guar-
antee their accuracy. See also Seltzer, A Financial History of
the American Automobile Industry, pp. 260-261. ‘5:

59Idem., 1906, ibid.

60Seltzer, A_Finangial History of the American Automobile
lfldustgz. p. 261.

150

applied to the retirement of the preferred stock of $100,000
and two large buildings were added to the plant out of the
earnings of the company.61

By the summer of 1906, it was apparent that REO had wea-
thered the initial difficulties encountered by new concerns
and had assumed a position as secure as most companies in the
highly unstable automotive industry. Within a matter of two
years an idea had been converted into a prOSperous reality
and for the second time in his career, Olds had become one of

the leading automobile manufacturers in the country.

 

61Lansing State Republican, Sept. 5, 1906.

CHAPTER V
NEW CHALLENGES AED INTERESTS

At the annual stockholders' meeting in September, 1906,
Olds stated that he anticipated fully as prosperous a busi—
ness for the coming year as the company had enjoyed in 1906.
REO's past business had been good, he explained, and the out-
look for the future appeared favorable. The capacity of the
factory had been increased and a larger output was forecast
for 1907.1

Like most automobile companies at this time, REG was
essentially an assembly plant. All of the bodies were pur—
chased locally from the Auto Body Company but most of the
parts and forgings for the enaine and running gear were sup-
plied by companies outside of Lansing. Olds, however, pre-
ferred to have his supply firms close at hand and in the sum-
mer of 1906 he began to establish some local auxiliary com-
panies to supply parts for RED and relieve the company of its
dependence on suppliers outside of the city.

The National Coil Company was the first of these to be

organized. On July 17, 1906, the company was incorporated

lLansing State Republican, Sept. 5, 1906.
151

152

for the purpose of manufacturing jump Spark coils for auto-
mobile and stationary gas engines. Originally, 20,000 shares
of stock were issued of which approximately one-third was sub-
scribed. Olds purchased the controlling interest and the rest
of the original stock was held by E.F. Cooley, E.N. Sparrow,
C.R. Wilson, R.H. Scott, and H.T. Thomas,2 all Lansing men who
were in some way connected with REC.

Olds also was instrumental in forming two other larger
firms in the fall of the year. On October 2, the Michigan
Screw Company was incorporated with a capital of $100,000.
Olds became the president and Hugo Lundberg who had been super-
intendent of the Detroit Screw Company was named the general
manager. The principle business of the company was the manu-
facture of set and cap screws, nuts, and special machine work
for automobiles, in particular REG, although it was eXpected
that other manufacturers would also furnish a market for the
firm‘s products.3 Six weeks after the Michigan Screw Company
was incorporated, the Atlas DrOp Forge Company was organized
on November 20 with a capital of $100,000. As in the other
two instances, Olds was named president and the company's

primary business was supplying parts and forgings for EEO.LL

2Articles of Incorporation, July 17, 1906, National Coil
Co., Olds papers, Michigan State University Museum, East Lansing
Michigan.

3Lansing State Republican, Oct. 2, 1906.

uIbid., Nov. 21, 1906.

153

By the spring of 1907, these companies were in operation
and REG eXperienced another prosoerous year in spite of the
depression conditions that existed. While many manufacturers
were bankrupted and forced out of business, REC continued the
pattern of growth that had characterized the company's Oper-
ations from the outset. In that year production reached
3,967 cars and gross sales totaled more than $h,000,000. Net
profits climbed to $811,382 and the company declared an eighty
cent cash dividend and a 33-1/3 per cent stock increase.5

In the meantime, however, the A.L.A.M. had taken action
against EEG and several other unlicensed automobile companies
for alleged infringement of the Selden patent. No other cases
had been brought before the court since 1903 when action had
been taken against Ford and it was commonly thought the A.L.A.N.
would wait until a decision was rendered in the Ford suits.
But on January 16, 1907, in a move that caught the industry
by surprise, the A.L.A.M. lodsed actions against several inde—
pendent manufacturers and dealers and in May, 1907, a series
of additional cases were filed in the Circuit Court for the
Southern Edstrict of New York because it was felt that if an
affirmative decision was reached in the Ford case, it would
be binding upon the defendants in the other suits as well.

In a very short time actions were lodged against more than

5Records, 1907, RED Collection, Division of dhite Motor
Co., Lansing, Michigan.

15h

fifteen unlicensed manufacturers, including Premier, Rambler,
National, Wayne, Dragon, Mitchell, Stoddard-Dayton, Welch,
De Luxe, Nordyke & Marmon, Aerocar, Maxwell-Briscoe, and BBQ.
In all there were some seventy cases, each joining a manufac-
turer and his agent, pending before the court by July, 1907.6

This action brought several of the unlicensed manufac-
turers to Detroit where a meeting was held in conference with
Ford, Couzens, and Ralzemond A. Parker, Ford's attorney. Among
those who attended were Olds, John D. Maxwell, Renjamin Rriscoe,
and Thomas B. Jeffery. Parker delivered an analysis of the
Selden patent which reassured the independents and induced
them to cast their lot with Ford.7 By January, 1908, fifty
firms had become members of the rival A.M.C.M.A., giving it a
larger enrollment than the A.L.A.N. Some of the new companies
that had recently joined were Dragon, Acrocar, Wayne, De Luxe,
Moon, Crawford, Hack Brothers, Nelch, Frontenac, Marion, Regal,
Dorris, Reliance, Simplex, American Rors, and RE0.8

This was the general situation in the automotive industry
in 1908 when Olds was approached with a prowosal to merge REO

with Ford, Buick, and Naxwell-Rriscoe, an idea which had orig-

 

6Greenleaf, Monopoly On Wheels, pp. 183-18h.
7Motor werid, XVI (May 16, 1907), 287.

8Detroit Journal, Jan. 25, 1908.

155

inated with William C. Durant. Born in Boston, Durant had
been reared by his grandfather, Michigan's ex-Governor Henry
H. Crapo. As a young man he had gone into the carriage busi-
ness in Flint and was already a millionaire when he took over
the Buick company which he made an early success chiefly through
his outstanding promotional abilities. From his observations
of the automotive industry, Durant reached the conclusion that
what was needed was consolidation and stabilization. Up to this
time, automobile manufacture had been highly individualistic
and there were numerous companies in the business. Based on
his faith in the strength of the industry, Durant wanted to
take the best of these and form them into a single sizable
corporation.9

On Durant's invitation, Renjamin Rriscoe came to Flint
to discuss combination because the Naxwell-Briscoe Motor Com—
pany was hard-pressed financially. To Durant's Ruick and his
own company, Rriscoe prososed to add Ford and REC. Durant
agreed and it was decided that Driscoe who knew Ford, Couzens,
and Olds through his experience as a parts manufacturer, should
see them and arrange for a meeting in Detroit if he found them
agreeable. The next day Briscoe saw Olds and found him in a
receptive mood. The following day he met with Ford and Couzens

and they also expressed a willingness to discuss the matter.

9Pound, The Turning Wheel, p. 293.

 

156

A meeting was arranged to be held in Detroit Maich finally
ended in Durant's room at the Ponchartrain Hotel. At this
first session, Wriscoe claimed, they "agreed that the net assets
of the companies as shown by anpraisal, would be paid for by
preferred stock of the new combination. The diVision of the
common stock was, however, too delicate a matter to do much
with at this first meeting, so it was touched upon rather
gingerly." Having progressed that far, it was decided to hold
a second meeting in New York the following week.

In New York, the choice of an attorney to handle the legal
asnects became of paramount importance. Hard, Hayden & Satterlee,
the last named a son-in-law of J.P. Morgan, Sr., were the attor—
neys for the Maxwell-Rriscoe Company. When Rriscoe and Maxwell
had organized the firm, they had obtained a subscription from
the Morgan office and consequently felt obliged to have Satterlee
act as their legal representative. Ford and Couzens, on the other
hand, preferred their own New York attorney, Job Hedges who had
also been legal counsel for the A.M.C.M.A. After some discussion
on this point, it was finally agreed to hold the meetings in
Setterlee's office which Rriscoe later contended was the cause
for the hesitancy displayed by Ford and Couzens throughout
the remainder of the negotiations.

After numerous conferences, audits and appraisals were
completed and a tentative agreement providing for the distri-

bution of both classes of stock in the projected combination

157

was arranged. At the final meeting the parties in the nego—
tiations were to bring their balance sheets with them. Rut
before presenting his statement, Couzens uneXpectedly announced
that Ford and himself had decided they would enter the combina-
tion only on condition that in place of receiving all preferred
stock for their appraised value, hey would be paid $3,000,000
in cash. Whatever above this sum the appraisal showed them to
be worth, they would be willing to take in preferred stock.
When this happened, Olds likewise insisted that if the Ford
company was to get $3,000,000 in cash, RED had to get that

much also.

This development was a complete surprise to Durant and
Briscoe. They suggested that once the combination was effected
anyone could sell their interests for cash if they desired but
talk was futile. Rriscoe and Durant felt they probably could
have secured the $3,000,000 for Ford but an additional $3,000,000
for REC was more than they could raise. Since neither Couzens
nor Olds could be persuaded to change his position, the whole
project collapsed.10

Both Briscoe and Durant were still interested in a com-
bination, however. They continued their own negotiations and
evolved a paper project, the International Notors Company,
named by George N. Perkins of J.P. Morgan and Company who was

__—

loBriscoe, Detroit Saturday r3313, xv (Jan. 22, 19.21),
2.h,7o

158

to underwrite $500,000 of the $1,500,000 needed. When final
arrangements in this deal also fell through, Durant decided to
form a combination of his own. Since Perkins had suggested
the name "International," he claimed the right of use. Durant
simply crossed it out and wrote "General" in its place. In
October, 1908, he succeeded in incorporating General Motors
with a capitalization that was quickly raised to $12,500,000.
His first acquisition was the Olds Motor Works11 and within
two years he brought more than twenty automobile and parts
companies into the corporation.12

Differing reasons have been given why Durant, Briscoe,
Ford, Couzens, and Olds were willing to discuss and consider
a merger of their companies. Rriscoe proposed "that at the
bottom of every combination, either accomplished or attempted,
there is the belief that through the prososed combination there
will be an Opportunity for re-capitalization, for securing more
money to place the project in a better financial position."13
Others have suggested that the merger idea appealed to the
interested parties because of their apprehension over the out-

come of the Selden patent issue and the effect an adverse

4—...—

11The net worth of the company was evaluated at $2,961,769.
In consideration, the stockholders received $17,279 in cash,
$1,827,69h in preferred, and $1,195,880 in common stock of
General Motors: Seltzer, A Financial History of the American
Automobile Industry, p. 15E}

 

12Nevins, Ford: Times, Man,chmpany, pp. h12-h13.
13Briscoe, Detroit Saturday Night, XV (Jan. 22, 1921), 7.

159

decision could have on their separate companies.

If this was their concern, the worst they could have ex—
pected came on September 15, 1909, when Judge Hough who pre-
sided throughout the hearings, filed his Opinion. With few
qualifications he accepted the argument of the Selden lawyers
and Selden was accorded recognition as the inventor of the
gasoline automobile. He viewed the Brayton and Otto engines
as basically alike and insisted that undue importance had been
attached to the differences between them. As he saw it, Selden
had set forth in his original application an invention that was
a novel development in the history of the mechanized road
vehicle. "If I have correctly apprehended it," Hough stated,
"there was clearly room for a pioneer patent, and it must now
be held that on its face and in view of the art, Selden's is
such a patent."1u

The position of the A.L.A.M. had been vindicated. All
gasoline cars made, sold, or used in the United States were
an infringement of the Selden patent. EVery independent auto-
mobile manufacturer was now subject either to back payment of
royalties on the cars he had produced or expulsion from the
industry. This realization soon brought on a flurry of appli-
cations to the A.L.A.M. for membership.

By mid~0ctober the defection from the A.M.C.M.A. began.

a _-

luElectric Vehicle Co. v. C.A. Duerr 2:; Co., 172 Fed
923 (19097} Greenleaf, Monopoly On Wheels, pp. 205-210.

 

160

Seven of the leading independents were induced by Charles
Clifton, president of the A.L.A.M., to apply for full member-
ship in return for a voice in policy matters and the hope of
limited competition. Other effective considerations were the
promise of reduced fees for licensed manufacturers, the threat
that the A.L.A.M. was planning suits against additional in-
fringing companies, and the probability that those who re-
jected an offer now'might not have another Opportunity. Within
a short time Maxwell-Briscoe, Premier, Mitchell, Stoddard-
Dayton, Regal, Jackson, and R30 received Selden licenses. Be-
fore the year was out, several other independents, including
General Motors to which Durant since 1908 had added Cadillac,
Ranier, Oakland, Welch, Reliance, and Rapid, also deserted the
A.N.C.M.A. and on February 8, 1910, this body was disbanded at
Chicago.15

Following Judge Hough's decision, Ford carried his case
to the United States Court of Appeals. The presiding judge
was Walter Chadwick Noyes who, unlike Hough, had served on a
number of important patent cases and was recognized as an ex-
pert in the field. Moving with surprising Speed in View of
the fullness and complexity of the testimony, a new decision

was rendered a year and a half after the Selden victory. 0n

“V

lsNevins, Ford: Times, ManllCOmaany, pp- h26-h27; Greenleaf,
ibid. , pp a 213.2114.

161

January 9, 1911, Judge Noyes read the Opinion of the court.

The crucial point on which he based his decision was the dif-
ference between the Brayton constant pressure engine and the
Otto constant volume engine. Selden thought he had covered

any liquid hydrocarbon gas engine in his application bu Noyes
held there were two distinct types and the one Selden had de-
scribed was not the one which had come into general use in auto-
mobiles. In his conclusion, Noyes stated,

[:eldeE] undoubtedly appreciated the possibilities
of the motor vehicle at a time then his ideas were
regarded as chimerical. Had he been able to see
far enough, he minht have taken out a patent as
far-reaching as the Circuit Court held this one was.
But like many another inventor, while he had a con-
ception of the object to be accomplished, he went
in the wrong direction. The Brayton engine was

the leading engine at the time, and his attention
was naturally drawn to its supposed advantages.

He chose that type. In the lirht of events we

can see that had he appreciate d the superiority

of the Ctto engine and sdonted the t tjie for dis
combination, his patent would cover the modern
automobile. He did not do so. Ye made the wrong
choice, and we cannot, by placing any forced con—
struction upon the patent or by straining the doc-
trine of equivalents, make another choice for him
at the eXpense of these defendants, w f8 neither
legally nor morally owe him anything.

Ford's victory was a triumph for the industry and all
other manufacturers as well as himself. Most A.L.A.M. members
were delighted they no lon~er had to pay royalties. One by

one they began to hold back payments and in 1912 the A.L.A.N.

__..‘
_

16Electric Vehicle Co. v. C. A. Duerr & Co., 18h Fed
M32 (191177 Greenlea?, 1513., pp. 226- 23f.

 

162

was formally dissolved. Even before it collapsed, the Assoc-
iation was succeeded by the Automobile Roard of Trade, ances—
tor of the present-day Automobile Manufacturers' Association}7
The awesome threat which had hung over every automobile com-
pany for more than a decade was removed. Manufacturer, agent,
dealer, supplier, the industry in general, was now at liberty
to deve10p and progless in an atmOSphere of unbridled freedom.
Olds had begun to branch out fully three years before the
Noyes decision was delivered. The recent development which had
attracted his attention was the increasing potential of the
Canadian market. With the opening of the Jest in the late
1900‘s and after, a wave of immigrants from Central EurOpe
poured into Canada. Although there were other stimuli, like
the mining develonments in Rritish Columbia and Ontario, the
driving force behind this new period of unparalled expansion
was wheat and the wheat-growing region, Spurred on by the use
of the dry-farming technique of summer fallowing, the adeption
of the more rapidly growing Red Fyfe wheat, and a drop in
transportation costs. During the first decade of the century,
new areas were Opened for settlement and waste lands were
turned into productive regions which resulted in a corres-
ponding increase in the nonulation and an unrivaled demand

1
for consumer goods.

17Greenleaf, ibid., p. 2h2.

18Douglas R. Annett, British Preference in Canadian
Commercial Policy (Toronto, 19MB), pp. 29-30.

 

 

163

Canadian manufacturers were quick to realize the impor-
tance of the growing Western market. In an effort to prevent
foreign competition, they did their best to restore the prin-
ciples of a high protective tariff with the Canadian public.
In 1902 the Canadian Manufacturers' Association joined in the
crusade and began a vigorous campaign for still higher pro-
tection which had the support of J.I. Tarte, a member of the
Canadian cabinet. The net result was a downward revision in
the scale of preferential rates and the passage in lQOh of a
new tariff schedule which included a provision to raise the
duty on automobiles imported from the United States to 35 per
cent.19

In spite of this high tariff, American automobile manu-r
facturers moved rather slowlv in organizing branch factories
in Canada. In 1907, there were only four subsidiaries of
American firms throughout the entire Dominion, one at Toronto
which manufactured complete automobiles and three establish-
ments at Walkerville, Willand, and St. Catharines which assem-
bled the parts imported from the United States. One of these,
the Ford Motor Company of Canada had been organized as early
as August 10, lQOh, by Gordon McGregor of walkerville, Ontario,
an experienced wagon manufacturer, who had been quick to see

__‘

19McGill University Economic Studies, National Problems
of Canada ("Reciprocal and Preferential Tariffs," Vol. IV;
'T3333537’n.d.), pp. 8, 26; Canada, 2 Debates of the House of
Commons, LXXIX (1906-1907), 2398-2M000

16h

the possibilities in the Canadian market.20 But Ford, with
whom McGregor entered into a contract, was one of the earliest.
Most of the other manufacturers did not establish plants in
Canada until sometime later.
Four years after Ford, Olds entered the Canadian field.
On December 10, 1908, at a stockholders' meeting held in
Windsor, the REC Automobile Company, Limited, was incorporated.
Capitalization was set at $h0,000 of which 3,995 shares of
the common stock which had a par value of $10.00 were issued
to the REC Motor Car Company. The other five shares were held
equally by Olds, 3.3. Scott, E.F. Peer, Donald E. Rates who
had become Assistant Secretary-Treasurer of the parent firm,
and W.G. Morley, recently named manager of the branch company.21
Several changes were made in the by-laws of the company
When the directors again convened on January 23, 1909. Offices
of the company were moved from flindsor to St. Catharines,
Ontario, the name of the concern was changed to REO Motor Car
Company of Canada, Limited, and the capital stock was increased
from $h0,000 to $200,000. These amendments were necessitated
by the acquisition of the Packard Electric Company, Limited,
at St. Catharines. On January 9, Olds had preposcd to repre-

sentatives of the Packard company that in consideration for

 

20Nevins, Ford: Times, Man, Company, D. 357.

21Stockholders' Minutes, Dec. 10, 1908, REO rotor Car
Company of Canada, Limited, HBO Collection.

165

their property, including buildings, plant, tools, and equip-
ment, and the sum of $10,000, he would issue to them the par
value of $99,500 in fully paid shares of the 390 Motor Car Com-
pany of Canada. This offer was accepted by the Packard manage-

022 where

ment and soon after the plant was turned over to RE
the manufacture of automobiles continued until 1915 when it
was released for the production of munition:.23

Olds went into the Canada venture largely on the basis
of REO's record of continuous growth which remained constant
through 1910. In 1908, the company produced h,105 cars and
profits totaled $838,9hl, out of Which a cash dividend of
$800,000 was paid. The following year was even more profitable.
Sales volume amounted to more than $6,000,000 from the sale of
6,592 automohiles and stoCkholders received a sixty cent cash
dividend and a 100 per cent stock dividend. In 1910, profits
were more than $1,500,000 for the first time in the company's
history.2u Although the balance sheets and dividend records
of a few automobile companies were more fantastic than this,
there were many manufacturers who went bankrupt during the

same period, a factor which encouraged new attempts on the

A -‘

221bid., Jan. 23, 1909.

23Toronto Daily Mail and Empire, larch 2h, 1931, clipping,
Olds Collection, R.E. Olds Co., Lansing, Michigan.

9
‘uAnnual Reports, 1908, 1909, 1910, REO Collection.

166

part of some of the survivors to further consolidate the in-
dustry.

One of these was Renjamin Vriscoe. Ne had parted with
Durant when the latter formed General Motors in 1908 but had
not given up the idea of merging the Maxwell-Briscoe Company
with other firms because, as he said, he wanted to make a "vir-
tue out of necessity." His Opportunity came along when the
very wealthy Rrady-Wiedener-Elkins people who owned the Columbia
Motor Car Company at Hartford made him an offer to merge their
company with the Maxwell-Rriscoe. They agreed to put in $1,000,-
000 of new capital and turn the Columhia over to Priscoe. The
deal was completed and the United States Motor Company was or-
ganized.25

Since that time Briscoe had been looking for other com-
panies to add to his combination. In the spring of 1910,
rumors were circulated in Lansing, Detroit, and New York that
REC was to pass into the hands of the United States Motor Com-
pany. The basis for the speculation was the transfer of a
large block of one shareholder‘s stock along with the sale
of some smaller blocks of REC stock to United States Motor‘s
interests. The price at which 1E0 was said to be taken over
ranged all the way from seven to twelve millions and from an
all stock to an all cash deal. One individual who was supposedly

on the inside of U.S. Notor's Operations even positively de-

25Briscoe, Detroit Saturdagflright, XV (Jan. 29, 1921), h.

 

167

clared that the larger concern had absorbed the REC plant,
its output, and its future on a basis entirely satisfactory
to the RED company.

In an effort to confirm or deny the rumors, the Lansing

State Republican sent a representative to question Clds on the

 

matter. "There has been no sale of the Rec Co., as a whole or
in part, to the United States Motors Co. or to any other com-
pany," Olds answered emphatically. "Nor has any man or any set
of men, representing the United States Rotors Co., or any other
company, purchased either a controllinc or a minority interest
in the Rec Co." Olds, however, did not deny that they had been
approached and his comment revealed that he still entertained
the idea of selling if an arrangement was made on his terms:
'I will not say that the plant may not be

sold, eventually. Almost anything is possible.

The Rec today is the greatest money maker in the

automobile trade. It is not mirprisins that the

U.S. peoole should want to buy it, but if it is

sold, it will be at our figures. WHEN THE U.S.

MOTORS CO. OR ANY OTHER COMPANY CAN SHOW US SEVEN

MILLIONS OF DOLLARS IN CASH FOR OYR HOLDINGS WE

WILL CONSIEER A PROPOSITION. THAT IS THE PRICE.'26

On this same occasion, Olds stated that his holdings in
the REC company were not for sale unless every stockholder
was taken in on the same basis. "In other WOTdS," he said,
"there must be a fair deal all around and every stockholder

must be paid cash for his stock." Seven months later he had

changed his mind on this point. He was willing to do business

26Lansing State Republican, May 3, 1910.

168

on an individual basis and to consider partial payment for
his stock.27 Throughout the next two years he continued to
make attempts to dispose of his controlling interest and gave
up the idea only "for the reason that apparently no one could
raise the money for so large a prososition."28

On May 19, however, while negotiations were in progress
for the sale of E0 to the U.S. Motor Company, it was revealed
that Olds had made a bid for the procerty of the E. Bement Sons
Company, an old Lansing firm that six years previously had gone
into a receivership. Three days before the announcement, Olds
had received an offer from the Detroit Trust Company, acting
as receiver, to sell him the remaining unsold real estate of
the company. This included an office building, a large brick
warehouse, and an engine house which they agreed to turn over
to him for the sum of $h0,000 in cash.29 This offer was ac-
cepted by Olds and the trust company agreed to petition the
court to allow the sale which it was eXpected they would accept
if the committee of creditors approved.

The rumors which circulated as to how Olds intended to
use the preperty were clarified less than a month later. On

June 10 the head lines of the Lansing State Republican read:

_‘_—

27R.H. Scott to Olds, Jan. u, 1911, Olds papers.
28J.H. Thompson to J.R. Rateman, May 19, 1912, ibid.

29Detroit Trust Company to Olds, May 16, 1910, ibid.

169

"REO MOTOR CAR COMPANY TO RAKE TRUCKS." The accompanying
article explained that the Bement buildinns were to be re-
modeled for temporary use until a new factory could be built.
"The great increase in the comosny's oassengcr car business,"
the paper stated, "make it both impossible and imnractical to
build trucks at the nresent plant and to build and equip a new
plant meant the loss of valuable time in taking nossession of

' For

the field that is now ready for systematic cultivation.‘
the past three years, the article continued, REO had been
Olanninq on the addition of a commercial vehicle to its line
of nleasure cars. During that time they had exoerimented with
several different models and had finally decided on two styles
of trucks they would produce. One was a light delivery wagon
that was to be priced at $600 and the other a 1,600 pound truck
that would sell at $750. Two thousand of the delivery models
and 500 of the larger trucks were scheduled to be built the
first year.31 The R,N. Owen Comoqny of New York which had

the contract for the sale of REG oleasure cars was also given

charge of sellinr the new tPUCkso32

The original nlnn called for the truck business to be

3OLansing State Reoublican, May 19, 1910.
31Ibid., June 10, 1910.

321bid., July 7, 1910.

170

handled by the car company but later this decision was changed.
On October 8, 1910, the REC Motor Truck Company was incorpor-
ated for the purpose of manufacturing "Automobiles, vehicles,
Commercial Trucks and parts thereof and Engines, Motors and
general machinery." Capitalization of the company was set at
$1,000,000.33 Out of this amount, the board of directors which
consisted of Olds, James H. Thompson, Olds' legal counsellor,
and J. Edward Roe, a prominent local banker, authorized the
issuance of $600,000 in capital stock and the further payment
of $100,000 in consideration for the Bement prooerty, certain
machinery, jigs, tools, patterns and rights, privileres and
goodwill of the R30 Motor Car Company.3u Three days later this
agreement was ratified by he shareholders of the car company.35
A second and equally important transaction was consummated
on October 19. On that date negotiations were completed and
the papers signed whereby the Owen Notor Car Company of Detroit
was absorbed by the HBO Notor Truck Company.36 The Owen comoany
had been organized about a year before by Ralph Owen, former

factory manager of the Oldsmobile company and brother of Ray M.

 

33Articles of Incornoration, Oct. 8, 1910, 1E0 Notor Truck
Co., REO Collection.

3"‘Directors' Minutes, ibid.
3SLansing State Republican, Oct. 12, 1910.

361bid., Oct. 19, 1910.

171

Owen, REO‘s sales manager. Two of the large stockholders in
the company were Fred and Angus Smith are had left the Olds
Motor Works since it had been taken over by General Motors.
The car produced by Owen was one of the highest priced cars
on the market, selling for $h,000, but the Company had never
been granted a license by the A.L.A.N. and its sales were some-
what handicapped for that reason.37 0

The offer Olds made for the Owen company was essentially
an all stock pronosition. In consideration for the machinery
and equipment belonging to the Owen company, the stockholders
were to receive $100,000 in fully paid shares of the capital
stock of the EEO Notor Truck Company which it was agreed would
be withheld from sale for a period of at least one year. An
inventory and determination of the market value of all material
which could be used to advantage by the truck comoany was to
be decided by Richard Scott and Ralph Owen. Payment for the
material was to be made when the HBO company received the money
for the cars manufactured from the material as it was their
intention to produce the Owen automobile as long as it was
commercially practicable. A11 profits from the sale of these
cars were to go to BBC and in no case was the Owen company
to be paid a sum Of money in excess of the value of the mat-

erials used.38

37Ibid., Oct. 13, 1910.

38Directors' Minutes, Oct. 19, 1910, REO Motor Truck Co.,
REO Collection.

172

Soon after the arrangements were completed for the trans-
fer of the Owen factory to Lansing, work was started on dis-
mantling the plant and shipping the machinery to the truck
factory where the Owen Operations were placed under the manage-
ment of Ralph Owen. For a short time HBO continued to produce
the Owen car which was identified as the "R.O." In fact, the
car was one of the main reasons why 30 purchased the Owen
company. The firm had pioneered in the development of a new
center gear shift control which EEO wanted. Ry obtaining the
patent rights, REO was able to incorporate the innovation on
their own cars the following year.39

Truck manufacture like passenger car production at RE
was a success from the outset. Commercial vehicle manufacture
was just getting started in the United States and REO soon
became an acknowledged leader in the field. In its first full
year of Operations, the company produced 7hS units and out of
the profits paid a ten cent cash dividend. In the next few
years other models were added to the "Speed Wagon" line in-
cluding a two-ton truck, moving van, and bus.u0 By the end
of 1916 production had more than tripled as the demand for
trucks increased, stimulated in part -y the sales to EurOpean

countries engaged in the war effort.

39REO Spirit (June, 1930), p. h; Lansing State Journal,
April 28, I555.

uOCharles N. Haybarker, "Brief Fistory of Reo," MS, REO
Collection.

173

During this same period, several other companies, realizing
the onnortunities in commercial vehicle manufacture, also turned
their energies in that direction. The Autocar company withdrew
completely from the production of passenfier cars and concentrated
all of its resources on a single type of one-ton truck.h1 In
the ensuing years other firms followed this example, new com-
panies were horn, and several established automobile concerns
added commercial vehicles to their line of manufacture, in-
cluding Ford, Chevrolet, Studebaker, and Dodge.

While EEG was among the front-runners in commercial vehicle
manufecture, however, the position of the company in passenger
car production had slipped considerably since 1908 when it
was classified as one of the leading producers in the country

along with Buick, Ford, and Naxwell-Rriscoe.ha In the years

following, 330's production had remained constant while that
of other firms had increased rapidly. The reason was that

REC had not kept pace with the rest of the industry. when
Ford came out with the Nodel T and others had changed their
body style and made numerous improvements in their automobiles,
Olds had continued to produce a model that with minor alter—

ations was essentially the same car he had introduced in lQOh.

thoolittle, The Romance of the Automobile Industry, p. 383.

l*2John B. Rae, American Automobile Manufacturers, The First
‘Egrty Years (New York, 1959), p. 87g‘Epstein, The Automobile
Industry, p. 225.

 

17h

By 1911 the results of this policy had their effect and for
the first time in the history of the company they were forced
to omit a dividend. Only when this happened did Olds come out
with a new model called REC the Fifth which sold for $1,195
with windshield, tep, and self-starter.

The advertisements run by the company on the new car,
aside from their advertising value, were also indicative of
how Olds viewed the automotive industry. "The Car That Marks
My Limit," one ad read. "Reo the Fifth comes pretty close to
finality," he asserted. "Men will never be able to greatly
improve on it. This factory can never say, 'Here is a model
much better than Reo the Fifth'.“L3 In another advertisement,
Olds proclaimed that he did not "believe that a car materially
better will ever he huilt," and called the HBO the Fifth his
farewell car.uu On one occasion in 1912 he was asked if he
thought the automobile had been brought to its highest point
of efficiency. "Jove, I do," was his answer. "I don't see
where the improvements are going to come in. Eventually ma-
chines will be cheaper, but onple are notional. They don't
mind a little additional cost, hut the moment a manufacturer

reduces his prices he cheapens his machine in their estimation."LLS

 

u3M°trop011tan Magazine, Way, 1012, clipping, Olds Collection.

uuAdvertisement puhlished in 1012 and reproduced in Lansing
§£fite Journal, May 7, 1958.

usLansing State Reouhlican, June 10, 1912.

175

This statement was typical of Clds' attitude. Whereas at
one point in his career he had concentrated on producing a
low-price car, he was now concerned with quality production.
"After twenty-six years, and perhaos a record success, I am
building but fifty cars daily," he advertised in 1913. "Men
ask, why aren't you in the h0,000 class, with all this fame,
all this eXperience, and such a car as Rec the Fifth?" The
reason, Olds eXplained, was that he twice analyzed every lot
of steel, tested his gears with a crushing machine of 50 tons
capacity, used a $75 magneto to end ignition troubles, gave
each body 1? coats to insure an enduring finish, ground each
part over and over to get utter exactness, and limited his out-
put to fifty cars daily so nothing was ever rushed. "I could
build Reo the Fifth without all these precautions for some $200
1638," Clds stated. "Put this added cost saves the average
buyer several times as much. It insures a car that's flawless,
durable and rightflm'6

This obsession for quality and detailed inspection, how—
ever, did not make the REC superior to competitive cars and
at the same time contributed to a considerable extent to the
company's proportionate decline in the industry. In the medium-
price field, that of the $625-$1500 car, REC produced only
7.5 per cent of all the cars sold in 1913. TWO Compani»3: th°

. .. ' ~, 12’
Willys-Overland with 29 per cent and the Ruick Witt 21./ per

A‘—

u6Harner's waging, LVII (Jan. 11, 1913), 37.

 

176

Fig. 1.-- RED Motor Car Company's annual production,
net profits, and percentage of the automotive industry's
unit output, 1905-1919.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Net
Output Profits fgtgeggtpgg
058.06 '07 '08 '09 '10 Ill l12 '1 g '1 ' , . t
50b eat I V f T 7, F 3 We,”
‘ § .
L-.. l in; _ ....-.i.._________ 4 . ; ,
/ u: _ g ' 5
/ 3“ : 3 , .- a
ho *h.0'— / «Mi—- ..?.{....-.~.- --...j..-_-.._..f_,...- .-.L......_...r.__..- .... 1 3L7, “-.. 850
7 , i
b“ ’ 1 ‘ i F ; 2
V \ ’ é ? ' I: g
35 $3.5t”**4~“‘**””* *“"“" ~T***“t~ ~’-~ -#* f e—\ T t__ 7”
I i \ 3 ‘ a ‘
/ i V i 5 ‘ ’ ‘ 3'
l‘ C t . I ‘ e
30 $3.0L iTl_iuii-”vl%pmu. ’T’ i., .ii Ari“ is f_ if 6%
. 3 \QJ, : 'E I 1’ ‘
’ \ ( i z ' ~ i
25 $2.5 1 ~—% -- -‘ 4».- J-—--- ‘. K 5%
. i .- ., ‘
I i: {\c" I"? ‘\ Z
I ' \2 a r ‘
20 $2.0 +~~~~r 7»- r ~ -\~ 7 T h%
I Vt ' 7 "
0 i
> J I
A \ , fl .
15 $1.5 —\- we”- ', / I 3%
1’ \ \ ,/\ f i
I \ \ I
10 $1 0 O r” wr-L' ’9' -..—X...“ ‘1' I /‘ \ i 2%
‘t‘t", \‘ V \'I \ I
a 9-- F \ \ , K.\_ ...-1+, —-1\
I 0 4L
‘5‘ JL-l‘xu.“ I \
s $.5 kw ‘37;
0 $.o/ i A 0%

aAll figures are for the fiscal periods ended August 31, except
that those for 1911 are for the thirteen months ended September 30,
1911; those for 1912, for the year ended September 30, 1912; those for
1913, for the eleven months ended August 31, 1913; those for 191k, for
the fourteen months ended October 31, l91h; and those for 1915. for
the ten months ended August 31, 1915.

‘bAll figures for annual output are in thousands of units.

°A11 figures for net profits are in millions of dollars.

TABLE 1 177
ANNUAL OUTPUT OF THE REO MOTOR CAR COMPANY
AND REO'S PERCENTAGE OF THE AUTOMOTIVE

INDUSTRY'S ANNUAL OUTPUT, 1905-1919a

 

 

 

 

 

 

 

—~‘ REO'S PERCENTAGE OF
Fiscal OUTPUT - REO AUTOMOTIVE INDUSTRY'S.
‘Yba, 1_QEIEHI.
Cars Trucks Total Cars Trucks Total
1905b 861 ... 861 3.56% ... 3.15%
1906 2.158 ... 2.158 7.10 ... 7.22
1907 3,967 ... 3.967 9.22 ... 9.01
1908 1,105 ... 1,105 6.16 ... 6.31
1909 6,592 ... 6,592 5.31 ... 5.18
1910 6.588 ... 6.588 3.63 ... 3.52
1911 5.278 .969 6.217 2.61 9.07% 2.97
1912 6,150 552 7.002 1.81 2.50 1.85
1913 7,167 715 8,182 1.61 3.01 1.68
1911 13.516 712 11.288 2.16 3.10 2.19
1915 11,691 2,171 16,865 1.61 2.93 1.73
1916 23,311 2,551 26,365 1.56 2.76 1.62
1917 25,577 1,669 30,216 1.16 3.61 1.61
1918 13,321 6,837 20,158 1.11 3.00 1.72
1919 7,307 9,185 16,192 .11 1.08 .87

 

aThe annual production figures of the RED Motor Car Company
were obtained from the Company's balance sheets. Production
figures of the automotive industry necessary for the computation
Of REO's percentage of the industry's annual output were obtained
from : Automobile Manufacturers' Association, Automobiles of
America (Detroit, 1961), p. 101.

bAnnual production figures for REO are for the fiscal periods
ended August 31, except that those for 1911 are for the thirteen
months ended September 30, 1911; those for 1912, for the year
ended September 30, 1912; those for 1913, for the eleven months
ended August 31, 1913; those for 1911, for the fourteen months
ended October 31, 1911; and those for 1915, for the ten months
ended August 31, 1915.

178
TABLE 2

NET SALES, NET PROFITS, REINVESTED PROFITS,
CASH DIVIDENDS, AND NET WORTH OF THE REO
MOTOR CAR COMPANY, 1905-1919a

 

Fiscal Net Net Reinvested Cash Net

‘Year Sales Profits Profits Dividends Worth
1905b" 1 A?" A .3 A .3 s .05 1 .1
1906 3.1 .5 .3 .2 .9
1907 1.3 .8 .2 .7 1.1
1908 1.8 .8 .01 .8 1.2
1909 6.3 1.1 .1 1.2 2.2
1910 8.1 1.6 1.0 .6 2.5
1911 6.6 .6 .6 ... 2.8
1912 7.5 .5 .06 .1 3.1
1913 6.1 1.1 .7 .2 3.5
1911 11.9 2.1 1.1 1.1 1.7
1915 12.1 2.6 1.5 1.1 6.7
1916 18.8 3.8 2.6 1.2 9.3
1917 21.8 1.6 .9 .7 11.6
1918 20.7 1.5 .8 .7 12.1
1919 19.1 1.8 1.1 .7 13.3

 

aThe data in this table was obtained from the balance sheets

and annual reports of the RED Motor Car Company and from: Seltzer,
AgFinancial History of the American Automobile Industry, pp. 260-

261.

bFigures are for the fiscal periods ended August 31, except
that those for 1911 are for the thirteen months ended September 30,
1911; those for 1912, for the year ended September 30, 1912; those
for 1913, for the eleven months ended August 31, 1913; those for
1911, for the fourteen months ended October 31, 1911; and those
for 1915, for the ten months ended August 31, 1915.

°A11 figures are in millions of dollars.

179

cent produced more than half of the total cutout in this class.
Studebaker was close behind with 21 per cent and Tupmohile manu—
factured 10 per cent. Reduced to round numbers, Villys—Overlend
made 35,000 cars in this price range, Ruick 26,000, and Stude-
baker 25,000.“7 All were well ahead of R30 which produced
7,167 cars in 1913, the same year Ford turned out 182,000
Model T's.

Dissatisfaction with the company's performance began to
Show up in the ccrresnondencc of some of he dealers. One of

these, Shollcnhcrger Tlrothcrs, the R30 agent in Hichita, Kansas,

wrote to Olds late in 1913 and Voiced their complaints:

... if there was ever a time in our history that
we felt like giving up the ship, now is the time.
Your factory has been four months putting out One
Thousand cars. Out of that numher we did not get
enough to nav running exoensss for one week,

They tell me you nre starting in another hunch
of Four Thousand oars. It will be thirty dnvs or
more before vou are producing on an average of
twenty five cars oer dew. It is now almost dead
winter time, and a big bunch of these cars will
have to go into storage and when spring comes vc
will start business with cars hovinr htdies on
them already one year hehind the times, which will
result in slow Spring sales, no Summer sales, and
then a repetition again of this same late fall
start we had this year.

Rut the failure to make deliveries was only one of his
criticis.s. Equally serious, he stated, was the tendency of
the company to carry over from one season to another outdated
body styles on the "bread and butter Four." Peoole will not

__‘__-

h7Nevins, Ford:_Times, Man, Companl, p. 189.

180

buy in quantities, he explained, a car having a body already

a year behind the times:
Sure, you can possibly get away with an old time

Model with a small production, like you did in 1911

and 1913, but it is a rotten shame that the Reo family,

and we include ourselves in this bunch with the fac-

tory, equipment and money back of it, that you have

to forever force us to trot along with our faces to

the ground bringing up the tail end of the procession.

In 1910 we led the field-~now we are tail enders.’

The accomnanying results of this kind of direction were
inevitable. At a time when the industry was taking hold stens
forward, RED hesitated and was never again able to recapture
the oosition it had once held. Although the comnany's output
gradually climbed and dividends were issued with steady reg-
ularity, REO'S rate of growth was discreportionate to that of
the principal nroducers and at the clone of the 1013 fiscal
year, R.M. Owen & Comnany asked to he released from their sales
contract because they were poinn to engage in the manufacture
of automobiles and become a competitor of EEO.M9

About this same time Olds benan to take a less active
Dart in the management of the comoany and frequently was ab-
sent from the factory. host of the winter season he SUCDt at

his home in Daytona Reach, Florida, and durina the summer months

he often took lengthy vacations and extended cruises on his

 

1+8H.H. Shollenberger to Olds, Nov. 26, 1013, Olds papers.

ugMinute Rooks, Directors' Meeting, Oct. 9, 1913, R30
Motor Car Comnany, REC Collection. Hereafter cited as "Dir-
ectors' Minutes" or "Stockholders' Minutes."

181

yachts off the Atlantic Coast or on the Great Lakes. These
activities kept him almost completely out of touch with the
company's Operations for long periods of time. Communication
with the plant was intermittent and his immediate supervision
over REO's affairs was snasmodic, the result of Olds' apparent
disinterest more than any other single cause.§0‘ When he was
in Lansing, he increasingly snent more and more of his time dir-
ecting his own private hvsiness affairs and the actual manage-
ment of RED was left to others, principally Richard H. Scott
to Whom he relinquished the General Manager‘s duties in 1‘-"15’.51
Since the firm had been organized, Scott had been in
charge of factory Operations and during Olds‘ frequent ah-
sences he had assumed the active direction of the company.
By this time he had demonstrated a fundamental knowledge of
business and had proved himself an excellent administrator
despite his attitude of moral and economic ultra-conservatism.
During the seventeen years of their association, Olds had come
to rely heavily upon the judgment and ability of Scott. In
many ways he was to him what Couzens was to Ford during the
early years. Roth Olds and Ford were mechanics by inclination
and training. Neither enjoyed the rcsoonsihilities or limit-

ations of administrative duties and relegated these tasks to

._‘_

5OInterview with Rohert Frank Nchim, former Sec., REC
Motor Car Co., Jan. 5, 1962.

SlDirectors‘ Minutes, Dec. 21, 1915.

182

Scott and Couzens respectively, which has led to the inter-
esting Speculation that Olds, like Ford, might have wound up a
tinkering inventor if it had not been for Scott's assistance.52
Regardless of the validity of this observation, Scott, as well
as Olds, was resnonsible for the degree of success attained by
REO.

One of Scott's first acts after he became General Manager
was to consolidate the truck and passenger car companies. Al-
though they were separate firms, the business affairs of both
had been operated conjointly since the start of commercial
vehicle manufacture. The two comnanies had the same officers
and directors, the management of both was conducted by the
same men, the trucks manufactured by the truck comnany were
sold by the sellind oraanization of the car company, and the
engines and many of the carts made by the car company were
used in the trucks. This dual organization was unnecessarily
cumbersome and costly. Accordingly, in August, 1916, it was
decided to merge the two corporations by dissolvina the truck
company.

On September 8 notices were sent to the stockholders of
both comnanies explaining the desirabilitv of consolidation.
The basis for the merger, the letter stated, would be an ex-

change of stock. The car comnany would surchase share for

_
——

52Interview with Hubert Rates, Pres. American Bank a
Trust Co., son of D.E. Rates, hov. 27, 1961.

183

share truck company stock with its own. All holders of truck
company certificates, totaling 93,725 shares outstanding, were
to return them so the exchange could be made.53 Meanwhile,
attorneys for the two concerns felt that to avoid any nossible
difficulty which might be created by stockholders of either com-
pany, it was desirable to have both grouns consent to the con—
SOlidation. Notices were acain sent out and on Sentember 28
stockholders' meetings for both companies were held in which
formal approval of the merger was given.51+ On October S the
exchange of stock was effected and on November 10 final details
of the arrangement were comnleted.SS

In fine meantime, Olds, since his retirement from the
active management of 3E0, had become interested in a new busi-
ness undertaking. At some noint he had come into possession
of a three-story apartment brilding in Chicago. After oner-
atinm it at a loss for several venrs, Olds decided to disoose
of it. One of the offers he received for the nrooertv was from
Richard G. Peters who owned 37,5h1 acres of undeveloned land

in Florida on Old Tamoa Pay. On December 17, 1915, Olds noti-

 

53REO Motor Car Co. to stockholders of EEO Rotor Car 80.
and REO Notor Truck Co., Sent. 8, 1916, RED Collection.

S""Stockholders' Minutes, Sent. 28, 1916, EEO Motor Car
Co.; REO Motor Truck Co., REG Collection.

ESREO Motor Car Co. vs. Commissioner of Internal Revenue,
"Statement of vacts and Argument, " Docket} 70. 11,008 I
(Jan. 26, 1928), pp. 5-6, REC Collection. (Mimecgranhed.)

18h

fied the Michigan Trust Company, administrators in the nego-
tiations, that pending a trip South to investigate the land,
he was willing to make a pronosition of $200,000 in cash,
$75,000 in bonds which he held, and the apartment building
which he evaluated at $125,000, in exchange for the Florida
real estate.56 Ten days later his offer was accented and by
Narch final arrangements for acquisition of the nronertv had
been concluded.57

For several years Olds had been convinced of the possi-
bilities which the climate and soil of Florida offered. As
an annual visitor, he had been impressed with the gradual but
marked growth of the state. On several occasions he had in—
vestigated tracts of land with a View toward buying them as
a sneculative investment and holding them until such time as
he could dispOse of them at a “profit.58 Although he had never
done anything along this line, his interest had not diminished.
When he was nresented with the chance to UuPChHSC the Peter's
oronerty, he saw it as an opportunitv to take advantage of a
potential develonment that was still in its early stages and

he began to envision the establishment of an agricultural and

A

56Olds to Nichigan Trust Co., Dec. 17, 1915, Olds caoers.

S7J.H. Thompson to Kleinhans, Kappen & Uhls, March 3, 1916
ibid.

“

1

c’
’88ame to W.S. Vincent, Dec. 31, 1912, ibid.

¢-~,-

f“.. k" .0'. .

185

industrial settlement which wmsld attract necnle of modest

means .59

The Peter's nroncrtv seemed to Clds to be an ideal loca—

tion for his nrojected community. It was situated in Hills-

borough and Pinellas counties near the West Coast towns of

Tampa, Clearwater, St. Petershurg, and Tarpon Sprints. The

lumher and timber resources on the preserty, besides the ad-

vantages it had for cattle, dairy, and general farming, were

(r

thought sufficient to make iv a fine opnortunit“ for a safe

investment and large oroiits. A.C. Clewis, president of the

First Savings and Trus Comnnny of Tamra, when asked by D.F.

Conley, Olds' agent, for his Opinion of the site, said:

It has great advantages over any other large

tract in this State, because of its water frontage

on Old Tamna Pay, the hard surface County Roads

and railroads throuwh it, and the fact that on

the West, North and East sides ;re settled and
rapidly develoning nronerty. In my oninicn, these
lands will for many years continue to rauidly en—
hance in value and the surchaser should rean very
large and satisfactory profits from his investment,
when its resources and oossihilities are develoned.60

One month after acquirinf the Peter's tract, Clds formed
the administrative machinery to handle the develonment of the

site. In April, 1°16, he organized the REC Farms Company, a

firm capitalized at $1,000,000, the have of which was changed

59Interview with Hrs. Pernice Clds Roe, daughter of Clds,
Feb. 9, 1962.

60A.C. Clnwis tc D.F. Conley, Dec. 13, 1915, Olds naners.

186

a short time later to the REOLDS Farms Company. The principal
officers besides Olds were Fred L. Cook of Detroit who was
president; 8.8. Glass, partner of Cook who was vice president;
E.T. Larson, secretary; Charles E. Ecker, Olds private sec-
retary and counsellor, treasurer; and William E. Ralles, sales
manager. The first name chosen for the community was Reolds-

On-The-Ray but this was afterwards Chanmed to Oldsmar.61

Architects and city designers were soon busy laying out
the plans and a hevy of workmen was hired to construct the
new town. Along the ten miles of waterfront a luxurious hotel
with its own privqte hathins beach, boat houses, and acres of
gardens was to he erected, dock facilities were to he built,
and the rest of the land facing Tampa Bay was to be divided
into "choice bungalow sites" which were to sell for $1,000 to
$1,500. In the town itself, a post office, bank, electric
liaht plant, a large garage, railroad deoot, numerous stores,
churches, and schools were to he built. Nile after mile of
curving drives and sidewalks, terraced hy rows of palms and
hundreds of flowerinn oleanders were to he laid out. Street
lights, telenhones, a waterworks system, and good transportation
facilities were some of the improvements the town was to have
in addition to several hundred acres which were to he set

61"01dsmar for Health, Wealth, Happiness" (REOLDS Farms
C0.), Automotive History Collection, Detroit Public Library.
(Multilithed.)

187

62

aside for golf courses and recreation areas.

Beyond the residential area a community of "little farm
dwellers" was laid out. Tracts for farming, fruit—growing,
and cattle and poultry raisin: could be purchased for $50 per
acre in amounts to suit but they were usually limited to either
twenty or forty sore plots. The R£OLDS Farms Company would
clear any piece of land and prepare it for cultivation, build
a residence and other huildinis to meet the wishes of each
individual purchaser, build fences and dig ditches, drill a
well, furnish.mnchinery, and supply the livestock which came
from Elbamar Farms, Olds' ranch near Grosse Ile, Nichigan.
Payment could be made on terms. The first installment had to
approximate 25 per cent of the total contract and 10 per cent
had to be paid each year on the balance which carried an in-
terest rate of 6 per cent per ennufl.63

Once the essential work had béen completed, the company
initiated an extensive outlicity cnmoaign aimed at enticing
Northerners to move to the "Sunshine State." Advertisements
describing Oldsmar as a “veritable garden snot for all kinds
of fruits and vegetables" were placed in some of the Detroit
and Michigan newsnapers and a network of agents, each with

his own territory, was organized. Prochures were mailed to

A..—

62New York Uerald, April 1, 1017, clipning, Clds sewers.

 

63"Instructions to Aiontfi" (REOLDS Farms 90.), itid.
(MimeOgranhed.)

188

anyone who was nlnnni n“v a trip to Florida and occi 11 excur-
sion trains with throuzh Pullmans wore chartervd from Detroit
to Oldsmnr for all those who were interested in nurchasing a
farm site or a "village lot." ”The Reolds Paras 3c. and its
customers, Fred Cook wrote d ring the first year of operations,
"have scent and are spending large amounts of money to heln
make Oldsmar a oooular winter resort, as well a: a nrosp ‘PCJS
farming and fruit-nrowins center. As a result, Cldsmnr is
making more progress in one year, than some other nlaces rake
in ten. The right kind of noodle are goinf there. That's
”by.u6h

An important consideration for the success of Cldsmw wn‘
providing work for the neoolc who came. Clds had ,iven some
thouqht to this matter and nlanned to fvrnish the town with a

21 ‘- er

saw mill, plan , ill tanncry, ano wrusH factory. ) In Dec-
ember of 1916, he saw another opportunity to bring industry
into Oldsmnr.M1 K.rde ll hrcthers, agents for the REC in
St. Louis, had oerfected a tractor which they wanted to nut
on the market. Their intentions were to org; aniae a $1,500,000
cornoration for its minufaoture ard had annroached Clds with

the idea of accepting the nresidoncy. Clds told them he he-

___

6""Fred L. Cook, "Florida Is Attracting Thousands of Feoole
from Midhigan Cities," newsnnwer and date unknown, ibid.
‘ “

65Victor Seller rs, "Oldsmar, Florida" (Chamher of Commerce,
Oldsmar, Florida.) (I lultiqraohed.)

189

lieved in their pronosition But that he was not intirestcd in
becomin? an officer unless they TQPO willing to entablish thClT
plant at Cldsmar. The advantage of this location, he informed
them, was its nroximity to Alabama, one of the l rg st iron
nroducinq states, the money they could save in hewtina costs,
and the fact they would he anle to try out their tractors cvcrv
day "while at a northern omint they would be froze us six months
of the year." "Nost of all," Olds said, "I called their atten-
tion to the laror situw' t5on, ordinnry labor down there can he
had for about $1.65 oer dqv -s arainst $3.00 per day in the
North. They became very inch int rested and said they would
go to Tampa in the near future and look the situation over."66
Sometime later the Kardell's visited Cldsmar and were
sufficiently impressed with the layout. After several delays
the? again came to Olds in Octoter, 1017, ith an offer to
locate their factory at Cldsr7r i? he would take a "fair sized
interest with them."67 This nrowosal was accented and Fred
Cook was sent to St. Louis where tho finnl arrangenents vere
made for the removal of the Kardell Tractor and Truck Comoanv
to Oldsmar. A olot of ground was res vrved fo r the slant and
work was soon started cn,tne construction of the new factory

buildings. "This is really an innOVation for the state of

4——

66Olds to H.J. Person, Dec. 20, 1916, Olds papers,

67Same to A.E. Cook, Oct. 17, 1917, ibid.

190

Florida," one newspaner stated, "and may be the beginning of
a new era for that state, putting it in the manufacturing col-
umn..,."68

One reason why Olds was particularly anxious for the
tractor company to locate in Oldsmar was due to the difficulty
they were having in clearinn the land of nine stumps and a
tropical growth known as "scrub palmetto" or "saw palmetto."
For many years the stumps and troublesome roots had been re-
moved by hand but this method nroved to be both slow and ex-
pensive. Back in 1915, J.3. Vincent, owner of the Pensacola
Seed and Nursery Company, had invented a power "stumo puller"
which he wanted to manufacture and had turned to Olds for fin-
ancial assistance.69 Clds' reoly to Vincent's aopeal was that
he had looked over the blue prints he had sent him and failed
to find anything very new. "You simply have a hoisting device
on wheels," Clds wrote him, "and I take it you plan on putting
on a gasolene engine to do the work and move the tractor along.
No doubt but what a device of this kind could be made to work,
but from a manufacturing standnoint it would, in my judgment,

have a limited field.” On that account, he informed Vincent,

he would have to reject his offer.70

...-_-

68"Truck Plant Is Moving to Olds' Florida Town," HCWSpRner
and date unknown, clipping, ibid.

69W.S. Vincent to Olds, Oct. 16, 1915, ibid.

7001ds to v.3. Vincent, Oct. 19, 1915, ibid.

191

Less than six months after the tractor company located

in Oldsmar, however, Olds announced that he had been working
for some time, assisted by a staff of exocrt mechanics, on a
machine that was "somewhat like a gigantic tank, making a sweep
about 100 feet wide, picking out the bif stumps as though they
were bushes and piling them up in great windrows to be burned."
Further preparation of the soil for cultivation, Olds stated,
would be done by a "wheel root thresher" he had invented and
patented which would pick up about twelve inches of top soil,
elevate and screen it free from small roots, sift the earth,
and drop it in prooer shape for planting. It was his intention,
he asserted, to manufacture the machine "just as soon as the

eXperimental tests have enabled us to improve it to the limit

of our ability in all of its details."

The reason he was "bending his efforts" toward clearing

land quickly on an extensive scale, Clds said on this same

occasion, was because he thoucht the world was "threatened

with famine" on account of World War I:

'I am doing all in my power to get out 37,000
acres of land around Oldsmar under cultivation as
soon as possible, in order to do my bit. I can see
no reason why Florida should fail to be the garden
soot of the future. It has the climate to produce
three or more crops a year on plenty of good land,
and Florida should be able to yield food enough to
supply many of the northern states, as well as some
of the foreign countries, and thus help to win the

war.'71

a AA.-

71Tampa Daily Times, March 2, 1918, clipping, ibid.

192

While this statement was perhaps more indicative of Olds'
desire for land values to increase in the Oldsmsr area than a
sincere belief that b“ clearing his land he was hastening the
end of the conflict, he did combine a sense of patriotic loy-
alty with his business interests. This seems anparent from the
offer which he made to President Wilson on April 23, 1917, just
seventeen davs after the Fnited States declared hostilities on
Germany. On that date he addressed a telegram to Wilson which
read as follows:

Having been solicited bv a shiobuildinr concern for

a location on my lands on the North Shore of Old

Tampa Bay, Florida, and.having refused to sell nearby

timber to parties claiming to be agents of a foreign

government, the thought came that at this time our
government micht desire this for a'navy yard. If

such a thing is feasible and the government will

agree to establish a navy yard there, I will be

pleased to donate the land for the yard and the tim-

ber on ten thousand acres of virgin Florida forest

for use in connection with Government shipbuilding

at this yard.72

The President, through his secretary, thanked Clds for
his "generous and patriotic offer" and assured him he would
bring the matter to the attention of the Secretarv of the
Navy. When little encouraaement was received from this ounrter,
Olds turned to Howard E. Coffin, a former acquaintance and
engineer for the Olds Motor Works who had formed the Hudson

Motor Car Comoanv with Roy Chanin and was now engaged with

the Council of National Defense. Coffin referred Olds‘ offer

 

7201ds to President Nilson, telegram, Anril 23, 1917,
ibid.

193

to the United States Shipnin: hoard. F.A. Evstis, assistant
general manager of the Board, informed Clds that the gCVernment
had authorized the construction of as many wooden carso-carryinc
vessels as possihle in the near future. "The need for tiese
shins is very great," he stated. "I feel that if we should
fail to get the ships we should pretty certainly have to fight
Germany alone.” But at the same time, he disclosed that his
commission was not prepared to erect government shinbuilding
yards and intended to award contracts only to established pri-
vate firms.73

In response to this redly, Olds again addressed communi-
cations to the Navy Department and the United States Shisping
Board in which he requested them to send him more definite
information concerning their nlnns for the future, stating
that he did not care to commit himself unless he had some
assurance the? were in a oosition to award contracts to ship-
building concerns that micht he established on his oronerty,7u
In neither instance was Olds given any satisfaction. Rear
Admiral J.N. Helm notified him that it was impossible even to

3

set a date for the inspection of tne Cldsmar site.7S Likewise,

_....__

73F.A. Evstis to Olds, April 29, 1917, ihid.

7hOlds to United States Shioping ncard; 0.3. Ecker to
Navy Department, May A, 1917, ibid.

7SJ.M. Helm to Olds, May 7, 1917, ibid.

19h

the Shipping Roard advised him that plans and soecifications
for the "proposed wooden fleet" were still incomplete and they

were uncertain when copies would be finished.76 Confronted

with this situation, Olds gave up all attempts to obtain a
ship yard for the Oldsmar area.

There seems to be no doubt that Olds' motives in this
matter were tainted by hopes of financial reward. A naval
yard or'a shipbuilding firm in the vicinity would have attracted
many peOple to Oldsmar, stimulated the growth of industry, and
strengthened the economy of the entire community. Failing in
this, Olds tried to overcome the loss by building a foundry,
machine shOp, and even sank $100,000 into a wildcat oil well
in an effort to give the town the boost it needed. By 1923
he had poured su,500,ooo into the community but in spite of
his efforts Oldsmar failed to yield the profits he had once
thought and had been assured were possible.

Disillusioned by the failure of the town which in 1923
had an approximate pooulation of 200 inhabitants,77 Olds began
to dispose of his interests during the business slump of the
early Twenties. The first deal he made was a trade of the

Oldsmar race track Which was almost finished for the far-from-

’—

76F.A. Evstis to same, May 8, 1917, ibid.

77Federal works Agency Worn Projects Administration,
Florida, A Guide to the Southernmost State (New York, 1930),
p0 5210

195

complete Fort Harrison Hotel in Clearwater.78 In 1923 he ex-
changed the unsold platted nortions of Oldsmar and a "large
amount of cash" for the Bellerive Hotel in Kansas City which
had cost $2,500,000 to erect.79 The last of his holdings, the
tractor company which had been in business for a "number of
years" and included six acres of property, railroad siding,
and "other facilities," was finally sold early in 1926 for
$100,000.80

For Olds, the entire Oldsmar venture was a disappointment
from the start. His dreams of an agricultural-industrial work-
men's colony failed to materialize because it lacked a sense
of realism. Few employed pe0ple either wanted or could afford
to give up their security for an uncertain future. This was
eSpecially true during the war and the difficult recession
period which followed. Only when the "roaring Twenties" ushered
in prOSperity did Florida experience the type of deve10pment
he had anticipated. Olds was ahead of his time but as a re-
sult of his miscalculation, he suffered an accumulated net

loss which has been estimated at about $3,000,000.81 The only

78010arwater (Florida) Sun, July 10, 1957, clipping, Olds
Collection.

79§utomobile Topigg, LXVIII (Jan. 27, 1923), 110.

BOIbid., Lxxx1 (April 17, 1926), 895.

81Interview with Mrs. Gladys Olds Anderson, daughter of
Olds, Feb. 8, 1962.

196

satisfaction he seems to have received from this costly ex-
penditure was that he gave his name to the town which it still

bears today.

CHAPTER VI

DEPRESSION AND DISSENSION

One of the most dramatic chapters in American history
during the twentieth century has been the continuing struggle
between labor and.management. When the century opened the
unions had gained a tenuous position in American industry
under the impulse of Progressivism. The American Federation
of Labor and other organized unions had grown rapidly in
strength, stimulated in part by the eXposure of sweat shOp
conditions which existed in many industries and factories.
Led by Jehn Mitchell the United Mine workers in the famous
anthracite coal strike called on May 12, 1902 were even able
to score a partial victory after President Theodore Roosevelt
intervened in the dispute. Private organizations and govern-
mental committees, among them the Consumers' League and the
National Child Labor Committee, prepared reports on working
conditions and child labor practices which generally were favor-
able to labor and pointed out the need for reform.

The enemies of organized labor, however, soon moved to
retaliate. Throughout the country well-financed groups, led
by the National Association of Manufacturers, denounced what
they called labor tyranny and fought for the Open shoe. In
two significant legal contests, the Danbury Hatters' Case

197

198

and the Buck's Stove and Range Case, the Anti-Boycott Assoc-
iation pressed charges against the obstructionist tactics
employed by the unions and in both instances were successful.
When labor extremists turned to violence and terrorism, union
membership, including the A.F. of L., soon declined. Aided by
internal dissensions, the effects of the panic of 1907, and
the mechanization of industry, organized capital was able to
win a decisive victory for the Open shep.

Olds' position on the relationship between employer and
employee was similar to that of most industrialists of his day.
The encouragement of unionism and the closed shon he thought
would lead to anarchism which he equated with labor violence
and strikes. "I have run both Open and closed shops," he
stated in 1912, "and have employed for a good many years a
good many thousand men. I know from experience that it is
practically impossible to run a closed Shop successfully.

Since running an open shOp I have never had but one strike

and that was when the balance of the unionists went out."

Equal wages for men and women he thought would "put the women
out of business as the men would have preference when the wages
[éeré] the same." Child labor laws he considered unnecessary
and harmful because it prevented boys under sixteen years of

age from getting employment and permitted them to run the streets
"picking up vice." Workmen's accident compensation he felt was

a "great injustice as eight tenths of the cases Eera due to

199

the carelessness of the workmen as the employer as a rule [had]
done everything possible to guard against accident."1

These ideas were premised on his belief that if organized
labor represented all workers and the government assumed re-
aponsibility for the citizenry, it would detract from individual
initiative and place management at a disadvantage. One of the
great dangers he saw was the "establishment of charitable in-
stitutions simply to care for the unemployed...." He thought
this encouraged idleness "by caring for the happy-go-lucky who
have no desire for an honest day's work, who spend their money
as fast as they get it without any thought of the future, de-
pending upon charitable institutions to care for them...."
The most practical form of helpfulness that he felt could be
given to peeple was providing them with employment. The satis-
faction he had from "seeing an army of men marching out of his
factory, contented, prosnerous and happy in the consciousness
of their abilitv to own and maintain comfortable homes," Olds
contended, was "far greater than the pleasure of receiving
dividends."2

Although this no doubt was an overstatement, it did con-
tain an element of truth. Olds and the other managerial of-
ficers of EEO were concerned about the attitude of their workers

since it had a direct effect on the company's operations. To

 

1Olds to J.G. Cannon, May 6, 1912, Olds papers, Michigan
State University Museum, East Lansing, Michigan.

2Lansing State Journal, May 11, 1915.

200

promote harmony and avoid disnutes they advised and warned
employees regularly through the columns of a monthly periodical,
REQ Spirit. REO workers were urged to vote for local Option
in the prohibition issue of 1916, a matter which was of parti-
cular concern to R.H. Scott, an ardent and zealous "dry."3
When the Industrial Workers of the World, a militant and "radi-
cal" labor organization, stepped up agitation during werld War I,
REC workers were advised to denounce and clean out this "danger-
ous nest of traitors and German-paid criminals."h After the
end of the war when strikes and violence broke out across the
country in the famous "Red Scare," it was Bolshevism the em-
ployees were warned to avoid.5 Aliens were urged to become
citizens and free "Americanization" classes were organized for
all foreigners employed bv the company.6

While the underlying motive of these appeals which were
made in the name of national patriotism and loyalty was the
prevention of labor unrest, the company was, at the same time,
unusually benevolent towards its workers. Free annual picnics

and fairs, an employees' insurance program, death payments,

‘__—_-

3REO Spirit (April, 1916), p. 3.

 

uIbid. (Oct., 1917), p. 7.
sIbid. (Nov., 1919), p. 16.
6Ibid. (July, 1916), p. 6; (August, 1919), p. 5; (Dec.,

1919),_E:_3; Robert W. Dunn, Labor and Automobiles (New York,
1929), p. 155.

201

legal and medical services, athletic leagues, and social activi-
ties were some of the benefits that were provided. In May, 1917,
the REC Clubhouse, a recreational and social center which had
been built at a cost to the company of over $100,000, was Opened
to all EEO employees and their families.7 Movies were shown
every week in the auditorium, dramatic productions and public
art exhibits were staged, and concerts were rendered by the
Choral Society and REC Band which was among the leading indus-
trial instrumental organizations in the country. As a result
REC was recognized as the most progressive factory in town as
well as the entertainment headquarters for the entire city of
Lansing.8

One of the most significant programs initiated by the
company, although it too had corporate benefits, was the R80
Apprentice School. In March, 1916, an apprentice course was
started for boys "16 or 17 years of age, of good character
and possessing mechanical ability."9 First preference was
given to sons of REO employees but all promising young men
were encouraged to enroll. Arrangements were also made whereby
the apprentice course could be taken in connection with the

7REog§pirit (May, 1917), pp. 2-3.

8Ibid. (Feb., 1922), p. 5; Interview with Raymond Young,
toolmaker, RED Motor Car Co. and White Motor Co., Jan. 9, 1962.

9RE0 Spirit (Feb., 1918), p. 16.

 

 

202

local high school industrial course. The first class had hl
regular and 12 high school apprentices10 but as the demand
increased, the facilities were gradually enlarged to accommodate
200 students.11 A trial period of two months was set up to give
the company an Opportunity to determine whether the candidates
were qualified. If the company was satisfied, the apprentices
were obliged to sign a contract which permitted them to con-
tinue the course and stipulated that during the period of their
training they would be paid from twenty to forty cents an hour
depending upon their skill and experience.12

The apprentice course covered a period of three years.
During the first three months the students were kept in the
apprentice rooms where they began the study of blueprint
reading, sketching, principles of mechanical drawing, lay-out
work, and shOp mathematics. Here they were also taught the
rudiments of handling the various machines until they became
familiar with them. When this phase was completed, they were
placed in departments throughout the factory, usually Spending
about three months in each. During this time they also attended

classes for one half day each week. The American Machinist

 

Handbook was the textbook for the courses in which they were

‘—

lOIbid. (Sept., 1916), p. 18.
llIbid. (May, 1919), p. 18.

12Ibid. (Sept., 1918), p. 7.

 

 

203

taught algebra, trigonometry, and general mathematics as applied
to lay-out and machine work.13 For the last six months they
were taken back to the apprentice rooms where they were given
tool and die making. Upon completion of their training the

apprentices were awarded a "Certificate of Apprenticeship" and

 

the company made every effort to place them in the factory in
the work they liked and where they had shown a Special pro-

ficiency.1h

According to a report compiled by the company in 1927,

 

over 75 per cent of the graduates of the apprentice school
remained in the employ of RED after they had received their
diplomas.15 This exceptionally high record, a graduate of the
school stated, was achieved because the management of EEG was
"interested in getting along with the workers and creating a
spirit of harmony. They wanted to help the men and give them
a chance. This was the ‘REO Spirit'," he added.16

These sentiments were typical of those expressed by men
who had worked at R30 for over thirty years. "Even though

Richard Scott hired detectives who watched things in the plants

 

13Ib1d. (Nov., 1920). p. 7.

1thid. (Oct., 1918), pp. 7-8; Interview with Ray North,
Motor plant inspector, REC Motor Car Co. and White Notor Co.,
Jan. 9, 1962.

15sec Spirit (April, 1927). a. 13.

16Interview with Carl Scheibels, toolmaker, REO'Motor Car
Co. and white Motor Co., Jan. 9, 1962.

20b

and fired those who were caught smoking,"

one worker stated,
"the men didn't seem to resent it. Everyone chewed tobacco
instead. Harry Teel, Scott's brother-in-law and factory super-
intendent, was a good fella and chewed as much as anyone. He
often bummed a chew from whoever happened to be around, no
matter if it was a sweeper. There was real mingling between
the workers and the management at REC."17 Another long term
employee stated that, "the front office had the attitude that
everyone belonged to one big happy family and, in fact, every-
one spoke of it as the 'REO Family.’ Because of this attitude
and the many things REO did and had for the workers," he added,
"REC was the place in town to work."18

As a result of the harmonious feeling between the manage-
ment and employees, the rate of labor turnover at REC was un-
usually low. "The labor turnover percentage at the 360 Motor

Car Company is the lowest of any company in the automobile

world with one exception, a Detroit concern," REC Spirit boasted

 

in 1919. "This is a fact speaking highly for the faithfulness
and satisfaction prevailing in the Reo family. In some fac-
tories where conditions are almost intolerable, the figure

runs as high as 35 and ho per cent monthly."19 Automobile

 

 

17Interview with Peter Chapman, ibid.
18Interview with Raymond Young, ibid.

19REo Spirit (Dec., 1919), p. 3.

 

205

Topics reported that for the year 1923, REO had an average
labor turnover of less than 3.7 per cent per month.20 In

1928 the Michigan State Digest reported that RED had on its

 

payroll 2h.men who had served the company for twenty years;
123 who had been with RED for fifteen years; 571 who had seen
ten years of service; and 1,913 who were five—year men. "Reo
has less labor turnover than any concern in the industry," the
report concluded. "More than 63 per cent of 860 workers own
their homes, thus indicating Reo's pOsition as a steady and
stable employer."21

Because of these factors, REO came to be the foremost
industrial establishment in Lansing. Since lQOu the company
had been highly successful and already by 1915 it was reported
that REO was providing employment for 25 per cent of the city's
working pOpulation.22 The Olds Motor works, REO's closest
rival, had steadily declined after Olds had resigned and even
under General Motors consistently trailed REO throughout the
1920's. Only when REO faltered in the Depression was the Olds

Motor Works able to surpass her younger competitor.23

 

2OAutomohile Toeics, LXXIII (Feb. 23, l92h), 117.

 

21MichiganԤtate Digest (May 31, 1928), p. 23.

 

2‘gLansing State Journal, April 28: 1955'

23New;flbrkfigimes, Jan. 6, 1932, p. 30.

206

The person largely reSponsible for REO's record of achieve-
ment after 1915 was Richard Scott who had replaced Olds as
general manager. Even before that time Olds had turned many
of his srpervisory responsibilities over to Scott. In fact,
it was felt by many pecple at REO that after 1910 Olds had
"soured" on the automobile business because he felt there was J
no challenge left to him. He Spent very little time at R30
and concentrated his attention on his own priVate interests.
After he became involved in the Oldsmar venture he was seen

infrequently around RED and took only a casual interest in the

 

company's affairs even though he still retained the office of
president.2u

After more than eight years of relative managerial in-
activity, Olds finally decided to retire as an active officer
of REC. The first indication of his intention came in March
of 1923. At that time he offered to sell to the company 50,000
shares of his stock at $lu.OO per share.25 This prOposal was
accepted by the board of directors and they in turn agreed to
make the stock available to all employees of R30 and its affil-
iated companies, distributors, and dealers because, as they
stated, it was "deemed for the best interest of the Company
that there should be a larger number of stockholders among

2"l'Interview With Robert Frank NcKim, Jan. 5, 1962.

25330 stock for the month of March, 1923 had a high of
17 1/8 and a low of IA 1/2; Lansing State Journal, March, 1923.

207

" The company financed the sale of the stock

its employeeS....
over a two year period. Purchasers had to consent not to sell
their holdings before April 1, l92h, and assure the management
they were not acting on behalf of another person,26 an arrange-
ment which made it possible to disoose of the stock in small
lots, prevented outside interests from buying it, and precluded
any precipitate dron in price.

Nine months later, following a Special meeting of the
board of directors on December 20, it was announced that Olds
had retired from the presidency of R30. R.?. Scott was named
to succeed him and Olds became chairman of the board, a new
office which had been created especially for him.27 "Olds'
retirement as president is the result of a desire on his part

for the last few years to be relieved of the responsibilities

of this office,"_§utgmotive Industries stated. "The position

 

of chairman of the board was created that he might continue
actively identified with the company which he founded and at
the same time give him more time for his other business enter-
prises."28

Following his retirement, Olds began to diSpose of his

.—

26Directors' Minutes, March 31, 1923, REO Collection,
Division of White Motor Co., Lansing, Michigan.

27Ibid., Dec. 20, 1923; Lansing State Journal, Dec. 21,

 

1923.

28Automotivelndustriesn IL (Dec. 27’ 1923)’ 1325’

 

208

REO stock and by mid—1928, he and other members of his family
with whom he had divided his interests, had sold the bulk of
their holdings. Fbr Olds this was the final step in his with-
drawal from the company. Never again did he expect to assume
an active role in the management of REC. Time, depression,
and deficits, however, were to change his mind and influence
him to return.

In the meantime, it was not anticipated that any major
deviations in the management of RED would result from Olds'
retirement. On the surface it appeared that the same men who
had actually been running REO for some time had simply received
promotions due to his withdrawal and it was thought they would
pursue the policies that had characterized REO's operations
over the past nineteen years. In particular, it was expected
that Scott would follow this course as he more than anyone else
had been responsible for directing REO's affairs during a period
in Which the company had eXperienced its most spectacular growth.
In the eight years from l9lS to 1923 production had more than
doubled, sales volume had tripled, profits had increased from
approximately $2,500,000 to over $5,500,000, almost $9,000,000
in cash dividends had been paid, and in 1916 and 1922 two-for-
one stock Splits had been declared.29 On the basis of these

results, it hardly seemed likely that Scott would depart radi-

_-

29Annual Reports and Balance Sheets, 1915- -l923, REC

Collection; Seltzer, A Financial History of the American
Automobile Industr J, pp. 260526I_

 

209

cally from the policies he had followed in the past.

Richard Scott, although of a conservative bent, was an
opportunist. Strong willed, strong principled, and strongly
disliked by some peeple because of these traits, he nevertheless
had shown himself to be a capable and progressive administrator.
For twenty-five years he had worked in Olds' shadow deSpite the
fact that the burden of reaponsihility for much of that time
had been his. Now that Olds had retired in actuality as well
as practice, Scott felt that at last he was to have the oppor-
tunity to manage REO in his own right. With an established
company, assets totaling almost $23,000,000, a moderately suc-
cessful car, and almost $8,000,000 in working capital,30 Scott
was ready to make the moves that he honed would assure REO a
greater share of the automobile market.

Since the founding of the company in l90h, REO had spec-
ialized in the manufacture of a medium-price car. Restricted
changes in body styling, limited diversification outside of
the commercial truck field, concentration on one model, and
an excessive emphasis on quality had been characteristic of
the firm's operations over the years. Prices had remained
virtually unchanged or had been increased while those of other
manufacturers, notably Ford, had been slashed on several oc-

casions. In 1915, the Lansing State Journal quoted the fol-

 

lowing statement of Robert Rueschaw, REC Sales Manager,'Mlid1

_-_

3°Annus1 Report, 1923, REO Collection.

210

was typical of management's attitude: "Unlike most concerns,
the Rec does not depend upon the cities for its demand--not
even for the major part of it. Fully ho per cent of the Rec
product goes into the prosperous rural sections where the auto-
mobile has proved the most valuable accessory to modern life
and happiness." In the same edition of this newspaper, REC
boasted that its total administrative sales and advertising
expenses were less than 3 per cent.31 While these methods
seemed adequate for survival at the time, continuance of these
policies in all probability would have destined the company to
an early extinction.

Already in the early 1920's two apparent laws were Oper-
ative in American business. The first was that of concentration.
In the large industries like steel, oil, radio, railroad,

banking newspaper, automotive, and others, weak competitors

.9
were forced out of business. The survivors, favored by the
indulgent Republican atmosphere of the Harding and later the
Coolidge and Hoover administrations, often were mutually tol-
erant of one another and where competition remained, it was
gradually limited to the more powerful companies which became

the situation in the automobile industry. Some new organizations
were formed and did manage to enjoy an early success but gen-

erally the tendency toward restricted competition increasingly

Spelled doom for all but the largest and financially strongest

-—_¥

31Lansing State Journal, May 11, 1915.

211

32

concerns.

The second apparent law which was particularly applicable
to the automotive industry was diversification. The most
notable example of the validity of this principle was General
Motors. Built from an amalgamation of small and struggling
companies, the strength of this combination was in part attri-
butable to its success in marketing cars in all price ranges.
Even Ford whose name was synonymous with one car, one style,
and one color, succumbed to the urge. In 1021 w‘ren the Lelands
were threatened with a receivership, Ford purchased their com-
pany with a bid of $8,000,000 and entered the high-price field
with the Lincoln, 9 luxury car.33 Four years later it was
Walter P. Chrysler who resourcefully eXposed the merits of
diversification. Starting with the acquisition of the Maxwell
company, he Quickly organized the Chrysler Corporation. In
1926 with four models he climbed from thirty—second place in
the industry to fifth. Ry 1928 he was planning a new six, the
De Soto, had taken over the Dodge Brothers Company, and had
introduced the Plymouth in the popular-price field.3u In
Lansing, William Durant, now almost sixty years of age, had

again embarked on a similarly ambitious program. One month

_._

——

32Allan Nevins and Frank Ernest Hill, Ford: Expansion
and Challenye,»lQlS-1933 (New York, 1957), pp. h7§LH76.

33Ibid., pp. 181—182.
3th1d., pp. u73-u75.

 

 

212

after his second resignation from General Motors in December,
1920, he had organized Durant Motors. Starting with the Durant
Four, he introduced the Star to compete with Ford less than a
year after organization. Other products soon followed, in-
cluding the Flint, the Princeton, the Eagle, the Durant Special,
the Mason Truck, and the Locomobile which Durant had purchased.
By 1927 he had evolved plans for a new combination, Consolidated
Motors, which was to be patterned after General Motors, using
the Star as the nucleus around which independent companies would
be added.35

Scott's objective was to duplicate on a smaller scale the
diversity achieved by General Motors, Ford, Chrysler, and Durant,
not by merger as these companies had done but by internal ex-
pansion over a period of years. By invasion of the low-price
field, continuance of their standard line, and the development
of a luxury car, Scott hoped to bring REC quality into all
price ranges, get additional volume, and improve the prestige
of the company. Distrustful of outside interests whom he
thought would take over control if allowed to come in, and
proud of the company's record, Scott felt he could accomplish
independently at far less cost what the others had by con-

solidation.36 Encouraged by the upturn in the business cycle

35Forbes and Foster, Automobile Giants of America, pp. 57.
58; Lansing State Journal, April 26, 1955.

 

36Interview with John T. Clark, former Export Sales Mgr.,
REC Motor Car Co., Feb. 1, 1962.

 

 

213

following the depressive period of the immediate post-war
years, Scott, cautionsly at first and later with greater con-
fidence, began to formulate plans for expanding REO's business.
The first need was for additional space. A move of the
scepe Scott anticipated would require more assembly lines, new
machinery, storage room, and increased facilities of all kinds
in order to accommodate the enlarged Operations. Opportunity
to obtain the needed space came when the officers of the Duplex
Truck Company decided to Sell their Lansing plant and continue
manufacturing only from their headquarters at Charlotte, Michi-
gan. REO officials seized upon the chance to buy a factory
only two blocks from their own and on December 6, 1923, offered
$200,000 for the plant and real estate.37 Later the same month
stockholders of the Duplex Truck Company approved the sale. The
entire plant which was to be cleared and turned over to REO
by March 1, officials announced would be used for storage and
the assembly of buses and special truck jobs.38 By the summer
of 192M, REO had the new factory fully equipped and Operating.
Scott now had the floorspace he desired in the main plant
for passenger car production but for over a year nothing was
done towards the fulfillment of his objective. The reason for
this delay was due to the decrease in REO's production, sales

volume, and profits for lQZh from the previous year. The
37Directors' Minutes, Dec. 6, 1923.
38330 Spirit (Dec., 1923), p. 6.

 

 

211;

number of units sold dropped from 31,880 to 28,681, gross sales
declined almost $2,500,000, and profits were more than $2,000,000
less than the year before.39 This was enough to make Scott
hesitate before embarking on an eXpansion program that was to

be financed entirely out of earnings from a company which had

a relatively small volume. Not until 1925 when REO's production,
sales, and profits reached or surpassed former levels was Scott
again willing to proceed with his earlier plans.

Reassured by the profits of $S,h22,181 which REO showed
for the 1925 fiscal year,h0 Scott once more prepared to bring
out a full line of passenger cars in the three price classes
and in October hired Fabio Sergardi, an automotive design
engineer, to style REO's new models. Born in the province
of Toscany, Italy, Sergardi had attended the University of
Naples where he had taken his degree in mechanical engineering.
His first job was as a draftsman with the Italian Railroad but
after a short time he came to the United States and took a
position with the Sprague Electrical Company in New Jersey.
After a brief stay he had returned to EurOpe and worked in an
engineering capacity with both the DeDion—Bouton company in
Paris and the Fiat in Italy. Before long he returned to the
United States to work for the American Locomobile Company at

Providence, R.I. and some time later was engaged by the Barroccue

39Annual Reports and Balance Sheets, l923-l92h, EEO
Collection.

h01dem., 1925, ibid.

 

 

215
Fig. 2.-- REO Motor Car Company's annual production,
net profits, and percentage of the automotive industry's
unit output, 1920-1936.

Annual Net
Output Profits

60b *2

Percent. of
Auto Output

° '1'132'73rf-13w

m- i ..4.. «L+1.25%

 

'21'26 '2szat2a'29'

    

 

9
--' -..—..~

 

50 t

 

 

 

 

 

to $1; 1.00%

 

 

 

30 $3

 

f
i
f
. s ‘
Qstifi'ti L

4)f\\,.50%

 

 

 

20 $2

10 $1

 

 

 

 

 

 

 

 

 

 

 

‘__ \
-32 - ,lrl - .

-$3 4 \[Ek ‘

aAll figures for 1927 are for the sixteen.months ended December 31

when the fiscal year was changed from August 31 in order to conform to
the calendar year.

 

 

 

.-.-.....m... cat‘vl‘.' ““4
~

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

bFigures for annual output are in thousands of units.

°Figures for net profits are in millions of dollars.
dDenotes loss.

 

 

 

—-——————-T-—I_———_—-—-—__
OUTPUT — REG

TABLE 3

216

ANNUAL OUTPUT OF THE RED MOTOR CAR COMPANY

AND REO'S PERCENTAGE OF THE AUTOMOTIVE

INDUSTRY'S ANNUAL OUTPUT,

REO'S PERCENTAGE OF

1920-1936a

 

 

AUTOMOTIVE INDUSTRY‘S

 

 

 

 

Fiscal OUTPUT
Year

Cars Trucks Total Cars Trucks Total
1920 13,500 19,300 32,800 .71% 5.99% 1.h8%
1921 9.767 12.60h 22.371 .6u 8.5a 1.3h
1922 9.2h9 13.903 23.152 .38 5.50 .87
1923 15.228 16.652 31.880 .hl u.u2 .79
192h 13.366 15,315 28,681 .ul h.31 .80 _
1925 16.035 16,539 32.57h .hl 2.96 .73
1926 13.193 21,3u9. 3u,5u2 .35 3.83 .76
1927b 33,353 20,525 53,878 1.07 n.12 1.50
1928 23.h98 23.509 h7,007 .58 3.99 1.02
1929 16,100 19.087 35.187 .33 2.30 .62
1930 12.563 8,73h 21,29? .t3 1.h5 .60
1931 6,007 7,878 13,885 .29 1.81 .56
1932 3,908 3,t71 7,379 .32 1.h1 .51
1933 n.889 5,398 10,287 .30 1.50 .51
193A u,ueo 11.222 15,682 .19 1.83 .su
1935 u,692 13,811 18,503 .13 1.82 .uu
1936 3,206 11, u22 1a,628 .08 1.u1 .31

 

aThe annual production figures of the REC Motor Car Company

were obtained from the Stockholders' Minutes.

Production figures

of the automotive industry necessary for the computation of REO's
percentage of the industry's annual output were obtained from:
Automotive Industries, XLVI-LXXVI (Jan., l921-June, 1937).

bFigures for 1927 are for the sixteen months ended December 31
when the fiscal year was changed from August 31 in order to conform

to the calendar year.

In the twelve month period from September 1,

1926 to August 31,1927, REO produced no, 7&0 cars and trucks.

 

217
TABLE h

TS

NET SALES NET PROFITS, REINVESTED PROFI ,
CASH DIviDENOs, AND NET NORTH OF TEE REO I
MOTOR CAR COMPANY, 1920-1936 f

A.-.-..

 

 

 

 

F322? 3231:. .923... R323??? D1382... £35..
1920 T 013.19 $1.6 33.9 1 .7 916.7 7
1921 31.8 1.0 .3 .7 16.7
1922 29.3 3.1 2.1 1.0 19.6
1923 38.3 5.6 3.5 2.1 22.8
1921 35.9 3.8 1.2 2.2 2u.0
1925 u2.1 5.8 2.9 2.5 26.9 7
1926 hh.1 8.3 1.1 3.2 28.0 E
1927c 67.2 5.0 2.0 2.0 30.0
1928 59.8 5.1 2.1 3.0 31.3
1929 h8.0 1.1 ... 2.1 30.8
1930 29.7 (-2.0)d ... 1.6 27.3
1931 17.0 (-2.7) ... .8 22.0
1932 9.1 {-2.9) ... ... 1n.3
1933 10.3 (-2.6)° ... ... 11.7
1931 13.8 (-1.0) ... ... 10.7
1935 16.1 (- .2) ... ... 10.5
1936 13.2 (-1.u) ... ... 9.6

 

8.The data in this table was obtained from the balance sheets
and annual reports of the RED Motor Car Company, Division of
White Motor Co., Lansing, Michigan.

bAll figures are in millions of dollars.

cFigures for the years 1920-1926 are for the fiscal periods
ended August 31; those for 1927 are for the sixteen months ended
December 31 when the fiscal year was changed to conform to the cal—
endar year; and those for 1928—1936 for the year ended December 31.

dDenotes loss.

eLoss from operations, $1.h90 666, and provision for loss on
deposit accounts in closed banks, $1,096,980.

.ml.

218

Company of France as engineer in charge of the Few York Taxi-
Cab Company, an organization they had formed and which was

using several hundred of their cars. Since then Sergardi had
worked as a design engineer for the Hudson Notor Car Company,
chief engineer at both the Olds Notor werks and Willys Corp-
oration, and research engineer at the General Notors Laboratories
at Dayton, Ohio.ul

Fifteen months after Sergardi was hired REC announced

 

the first of its new models, the "Flying Cloud." The name,
taken from the "queen of the clipper ships," the company stated,
had "become a synonym for fleetness, for a quality of soeed, I
effortless, smooth, invincible, for stanchness of construction,
for virility in design, for honor in huilding."u2 Four closed
models, priced slightly higher than the 1926 RED cars and
ranging from $1,595 for the brougham to $1,8h5 for the sedanu3
were presented simultaneously with the opening of the New York
Automobile Show in January of 1927.
On May S, 1927, RED officially announced the second of

' a lower priced and smaller

its new models, the "Wolverine,'
companion to the Flying Cloud. Listed at $1,195 for the two-
door brougham which the company stated was the only model it

would build for the present, it was neither a small car nor a

.___ -_

[#13110 Epirit (Oct., 1925), pp. 6, 16.

 

uzTradcmark Application, 1926, EO Collection.
h3AUt0mObile TODiCS, mIv (Jan. 8’ 1927), 7990.

219

light one and was not intended to compete in the lowest-price
claSS. Powered by a six-cylinder engine, equipped with hy-
draulic brakes on all four wheels, and outfitted with an auto-
matic windshield wiper, steering-post lock, touring trunk,
locking type tire-carrier, and front and rear bumpers which
were included as standard equipment,uu the car was built, Scott
stated, to round out their line and make a "brisk business for
the company." This step was taken, he concluded, because "it
had become necessary that the company add a model somewhat
smaller and lower in price than the old traditional line of
Reo products."h’S
The following month 330 again was in the center of atten-

tion in the motor world. Early in June the company announced

a complete new line of Speed Wagons miich the New York Times

 

called "the outstanding news in the commercial field." De-
signed by Charles F. Magoffin who had come to REC at the same
time as Sergardi, the new line covered a wide range from half-
ton to three tons and wheelbases from llh inches to 175 inches.
Trucks for every type of job were offered in various models in—
cluding stake, eXpress, and panel bodies. The newest addition
to the line was a "Speed Wagon Junior," a light delivery truck
Which sold for $895 for the chassis and $1,085 when it was

_‘

uuNew York Times, May 8, 192?, Sec. 8, p. 1h.

 

usLansing State Journal, May h, 1927.

220

equipped with a deluxe panel body.LL6 Never before had REC
offered such a wide variety of trucks, a fact which underscored
the gradual tendency of the company to emphasize the commercial
field. Several times in the past truck production had sur-
passed passenger car output and after 1927 truck sales usually

exceeded the number of cars sold.

By the close of 1927 REO had bettered all previous sales
and production records. The popularity of the new models, it
was reported, had enabled the company during the first nine
months to break all previous records for an entire year's pro-
duction with 37,599 units.u7 By the end of the fiscal year,
#097MO cars and trucks had been produced,l+8 a figure which to
some extent was made possible by the deferred payment financing
the company had arranged for the first time in its history with
the Commercial Investment Trust Corporation on all REC cars,
trucks, and buses.19 Total sales amounted to more than $67,000,-
000 but net income per share dropped to $2.0h against $2.1h in
the 1926 fiscal period, a significant factor in the company's

attempt to meet keener competition by operating at a closer

u6New York Times, June 5: 1927: 3°C. 8! p. 17'
h7Ibid., Jan, 8, 1928, See. 10, p. 36.
hastockholders' Minutes, Dec. 20, 1927.

ugNew York Times, May 7, 1927, p. 27.

221

margin.50

Renewed efforts to keep pace with the leading producers
in the automotive industry in 1928 were again reflected in
REO's Operations for the year. On December 8 the company an-
nounced the introduction of a new six-cylinder automobile
which.was christened the "Flying C1oud.Mate" and described
as a smaller edition of the original car which became known
as the "Flying Cloud Master."51 Available in two and five
passenger sport and sedan models, the car was priced from
$1,375 to $1,h95 and was intended to fill the gap betweeen
the wolverine and REO's more expensive models.52 The same
month the company also added a new line of medium-size and
heavy-duty Speed Wagons powered by "Gold Crown" engines which
the company had recently developed.

Both the new cars and trucks "have met with gratifying
public acceptance," the company stated in the annual report
for 1928. "The dealer and distributor organization has mater-
ially increased due to the complete line of passenger and com-
mercial vehicles with their wide range of prices now offered

to the buying public." The officers concluded that this had

 

soMagazineggwall Street, XLI (Feb. 11, 1928), 686.
51Automobil£ Topics, x011 (Dec. 8, 1928), 399.
53New 1914: Times, Jan. 6, 1929, Sec. 11, p. 1..
533333., Feb. 17, 1929, Sec. 10, p. 18.

222

enabled them to strengthen their "distribution with desirable
representation" because the selling organization was not "af-
fected materially by seasonal demands." This had been overcome,
they pointed out, by offering a "line of vehicles covering so
large a field of transeortation" that dealers eXperienced a
year-around demand and the factory was kept busy even during
the cold months, whereas they formerly had been forced to resort
to a series of lay-offs and part-time work. The result, they
stated, was that there had been further improvements in REO's
financial position over the previous year.su

"In all we seem to be mighty well off as old 1928 draws
the curtain," the editor of REC Spirit commented in December
and in view of the company's achievement over the past year
his statement appeared to be warranted. Production in 1928
had eclipsed all former records with a total output of h7,007
units55 and employment had reached a new high of 7,200 workers.56
Many new machines had been installed in the motor wing of the
factory, manufacturing facilities had been eXpanded, and a
new bus plant was being readied for production in anticipation

of another peak year in 830's business.57

 

51‘'Annual Report, 1928, RED Collection.
gsstockholders' Minutes, April 16, 1929.

S6Dunn,£abo_gand Automobiles. P. 19.

S73§0 Spirit (Dec., 1928), p. h,

223

Throughout the first five months of 1929 the plans of the
management for increased volume were substantially fulfilled
by actual sales. In February the company shipped 3,250 cars
and trucks as compared with 2,h67 in February, 1928. "Shipments
for the year to date are about 20 per cent ahead of the cor-

responding period of last year," the New Yerk Times reported.

 

"The heavy carryover of February orders into March indicates
shipments of 5,500 units for the current month, against 3,500
in March, 1928."58 At the end of May it was reported that
20,127 units had been sold compared to 19,632 for the first
five months of 1928 Which had been the company's previous
record.59 "The rate at which retail deliveries are being
reported, the condition of dealers stock throughout the coun-
try, and the number of unfilled orders," REO Spirit stated,
"seem to assure a Continuation of the very satisfactory busi-
ness we have been enjoying."60

0n the basis of these encouraging results, Scott decided
to step-up REO's overseas activities in a further effort to
boost sales. For several years most of the major automobile
companies had been Operating in EurOpe and some had established

branches in other parts of the world, principally the Pritish

__ ‘_-

Seflew York Times, March 2, 1929, p. 27.

sgIbid., Jun. 2, 1929, Sec. 2, p. 12.

60R304§pir1t (May, 1929), p. 21.

22h

Empire and Latin America. Prior to this time REO had exported
to foreign countries but had not set up agencies of its own
specifically to stimulate and handle sales abroad. However,
the Opportunities which the foreign market offered became in-
creasingly apparent and on April 1, 1929, a subsidiary, REO
Motors Britain, Limited, was organized for the purpose of
carrying on the sale of REO products in England. The company,

wholly owned by the parent firm.61

was another attempt by
REG to directly take advantage of the growing foreign market
and in the years ahead this effort was greatly accelerated.
Simultaneously with the opening of the English agency,
REO announced the marketing of a new deluxe edition of the
Flying Cloud Master which was known as the "Car of the Month."
The plan was to present each month a Special car with distinctive
upholstery and trim and limit production to one of these models
to each dealer.62 Although the company did not expect this
scheme would increase production or sales to any considerable
extent, it was an attempt on the part of the management to
gauge on a limited basis public acceptance of a higher priced
REO car. Already plans were underway to produce a luxury auto-

mobile on a full scale and this measure was intended as only a

stepgap until the new model could be marketed. It was to be

_

1Application for Reconstruction Finance Corporation loan,
"History of REG," l9h0, REO Collection. (Mimeographed.)

6ZNew Korgfgimes, Feb. 2h, 1929, Sec. 10, p. 11.

225

the last and most spectacular step in the completion of Scott's
program to produce a line of automobiles covering most of the
price ranges.

The successfulness of 350's enlarged and diversified oper-
ations which were financed entirely out of company earnings,
however, depended upon continuation of orosnerous times. But
except for the first quarter of 1029 hhen REC showed a net
profit of $537,51h compared with a net loss of $86,b87 in
1928,63 this was not the case. By the end of June it had
already become apparent that R30 would not equal the records
set the year before. Jet profits for the first six months of
1929 totaled only $1,686,358, equivalent to 8h cents a share
on the 2,000,000 shares of stodc outstanding, compared with
$3,018,1uu or $1.50 a share in the first half of 1928.6h Pro-
duction which through Nay bad surpassed that of the previous
year likewise fell behind. For the first six months shipments
were 23,127 units compared with 26,031 in the same period of
1928.65 The comparison after nine months of business was even
less favorable. At the conclusion of the third quarter ended
September 30, REO showed a net profit of $2,093,655 or $1.0h

a share,66 contrasted with an accumulated profit of $h,651,656,

... __

63Ibid., April 26, 1929, p. 36.
6"Ibid., July 25, 1929, p. 33.

651bid., July 2, 1929, p. M7.

6632320: 00$. 31, 1930, p. hl.

226

equal to $2.28 a share in the similar period of 1928.67 By the

end of the fourth quarter the company had a deficit of $1,326,h76

after dividends were paid as profits were clipped to $1,073,52h,68

the last year RED showed a profit in more than a decade.
Throughout the country REO's predicament was multiplied

' many times. For on Thursday, October 21;, 1929, the American

prosperity bubble suddenly burst with the precipitous decline

of the New York stock market. Frantic efforts by the pooling

of banker's funds to shore up the market met with only temporary

results and on the following Tuesday, Octoher 29, it plunged

so drastically that prices dronved forty points and thousands

of marginal speculators were wiped out. Attempts to bolster

the American economy proved futile and gradually the sense of

Optimism which had characterized the 1020's gave way to a

feeling of pessimism as America ushered in the 1930's.69 The

Great Depression that had been forecast but repeatedly fore-

stalled abruptly descended upon the nation's business life and

the main question for many companies now became one of simple

survival.

At REO the problems caused by the onset of the Depression

6732.4» OCt- 21L, 1928, p. 1L8.

6§£Eis-. March 25, 1930, p. us.

69John Kenneth Galbraith, The Great Crash,_1929 (Boston,
1961), pp. 103-118.

227

were further intensified by internal dissension. For some time
there had been a latent dissatisfaction among an element of the
seven-man board of directors with Scott's management, a dis-
affection that was heightened by the recent financial catas-
trophe and the decline in the company's profit ratio, parti-
cularly after 1925 when the broad eXpansion and diversification
program had been inaugurated. Since that time the profit margin
had been cut to meet competition, several additions had been
made to the REC line of cars and trucks, restyling had become
an annual event, and.the major portion of the company's surplus
funds had been funneled back into new dies and equipment, Dis-
turbed by these policies which they considered an over-extension
of REO's resources, a group headed by Olds which included Donald
E. Bates, secretary and treasurer of the company, George H. Smith,
purchasing agent, and Carlton K. Higbie, a partner in the Detroit
brokerage firm of Keane, Higbie & Company, after October, 1929,
began to Openly Oppose Scott who was supported by H.T. Thomas
and Harry Teel.70

The controversy which separated the two groups was tem-
porarily resolved at a meeting of the board of directors held
on February 12, 1930, when a compromise was effected. As a
concession to the Olds faction, Scott agreed to resign as

general manager although be retained the Office of president,

70Interview with Hubert Rates, Nov. 27, 1961.

1 .4.- .. .... ...——

228

and William Robert Wilson was appointed as his successor.71
An influential figure in Detroit's industrial and banking
circles, Wilson had received his start in the automotive field
as assistant to the manufacturing manager of the Studebaker
Corporation five years after graduating from the engineering
school of Armour Institute in Chicago in 1906. Three years
later, in l9lh, he became the personal aide of John and Horace
Dodge and assisted them in organizing the Dodge Brothers Com-
pany. In 1919 Wilson had gone to the Maxwell Motor Company
where he had been associated with Walter Chrysler in the re-
habilitation and reorganization of the Maxwell business out
of which the Chrysler Corporation was formed. From there he
had moved on to the Murray Body Company where in 1927 he had
been elected chairman of the board and president. Since his
resignation from the Murray Corporation in 1928, Wilson had
devoted his attention to looking after his personal interests
which included large holdings in Allied Motors Industries, an
automotive and industrial holding company, and Cepeland Pro-
ducts, manufacturers of electrical refrigeration.72

At the same time Wilson was named general manager, the
board of directors also approved a three-year contract at an

annual salary of $35,000 which stated the terms and conditions

71Directors' Minutes, Feb. 12, 1930.

72Lansing_§tate Journal, Feb. 17, 1930; REO §pirit (Feb.,
1930), pp. it. 5:60

229

under which he was given the appointment. Besides making him
the chief executive officer of the company, agreeing to elect
him vice-president and a member of the board of directors, and
promising to sell him 30,000 shares of treasury stock at $12.00
per share, the most important stipulation of the Wilson agree-
ment in terms of the company‘s managerial structure was the
provision for a voting trust which was to run through Decem-
ber 31, 1932.73 The plan, authored by Scott and conceded to
him by the Clds group, was set up for the purpose of assuring
the Voting Trustees, composed of Scott, Wilson, and Bates,
continuity of control over a period of time and the prevention
of attacks on their management either internally or externally.
“For the next three years," R.H. Scott stated in explaining
the agreement to REC stockholders, "we want this present manage-
ment to be given the same solid support the management of the
past has had, and a voting trust was the most logical and best
medium for assuring this result."7hr

Regardless of the changes in management, however, REC
losses continued to mount. At the end of the first half of
the 1930 fiscal year net loss totaled $3h9,39775 and after

nine months of business it was more than $1,300,000,76 despite

w

73Directors' Minutes, Feb. 12, 1930.
7“Automo311ogmoo1os, XCVII (April 19, 1930), 873.
75New;York_$imes, July 29, 1930, p. 31.

76M" Oct. 30, 1930, p. 113.

230

efforts to reduce costs by manufacturing their own commercial
bodies.77 Production was barely more than half of what it had
been the year before78 and in only one month, October, did it
exceed the figures set in 1929.79

Despite the decline in REC‘s business, the company went
ahead with plans to market a luxury automobile and on October 9
announced the introduction of the REC "Royals." Powered by a
straight-in-line eight-cylinder, 125 horsepower engine, the
first to be made by REC, and styled along "aerodynamic" lines
by Amos E. Northrup, chief designer of the Hurray Corporation,

80

builders of REC bodies, and Fabio Sergardi,81 the car was
described as the "most beautiful in America." From the "sharply
pointed Vee-type radiator" and the "wing-like" front fenders
which were swept back and "rolled under at the edges" through
the I'leping windshield" where the "exposed sun visor had been
eliminated" to the "sweeping rear body panel" which completely
concealed the gasoline tank and springs, the "unified contour"
of the Royale was "unbroken." Inside the cars were outfitted
with many "custom features." "Down pillows backed up by full

Marshall springs," "softly padded arm rests,' adjustable front

__-_.

77Directors' Minutes, March 28, 1930.
78New York Times, July 2, 1930, p. 35.

79Ibld., Nov. 2, 1930, Sec. 2, p. 11.
80Autgmgbile Tgpics, 0 (NOV. 15, 1930), 12M.

BlLansing State Journal, Dec. 9, 1930.

231

seats, "individual sun visors," "folding center arm rests" in
front and rear, "smoking sets, including lighters," and "lamps
to illuminate the running boards automatically when the doors
Opened," were standard equipment. "Individual hassocks" or
foot rests and cushions covered with "deep pile velvet" com-
pleted the "plush appointments" of the Royale.82
Following close upon the appearance of the Royals, REO
alsO announced the introduction of new Flying Cloud eights
and sixes, each in three body styles--sedan, Victoria, and
coupe. Patterned after the Royals series, the models ranged
in price from $1,195 to $1,995 and were equipped with REO‘s
new "silent-second" herringbone gear transmission which was
said to eliminate the noise of second-gear driving and per-
mitted easy shifting between second and third at Speeds up to
forty miles per hour.83 Two months later new intermediate-size
Speed Wagon models featuring "improved appearance, comfort, and
performance" and priced from $895 to 31,095 were also intro-
duced.8h
While the new models introduced in the fall of 1930 met
with favorable public acceptance, Barron's reported in the

Spring of the following year, "seasonal influences and business

-

821bid., Oct. 9, 1930; REO Spirit (Oct., 1930), pp. 3, o,
7, 13; Kutomobile ToQics, C INOV. lg, 1930), th-lZS.

BBEQw'York Times, Oct. 26, 1930: 866° 09 p. 6°

8h:b1d., Dec. 7, 1930. 390- 10: Po 11-

232

conditions prevented the realization of any important volume,
so that results to date are not a fair indication of the new
line's possibilities."85 Nevertheless, REO's annual statement
showed that for the first time in the company's history it had
Operated in the red. Losses for the year totaled $1,989,1h8,
production dwindled to 21,297 units, and dollar volume of sales
of cars and trucks decreased 38.9 per cent over 1929. The

only consoling factor was that REO had bettered the average

reduction of h7.3 per cent for the industry, exclusive of Ford
and Chevrolet, and had advanced to ninth position in factory
sales in the final quarter of 1930 compared with twenty-third
place in the corresponding period of 1929.86

Concomitant with the issuance of the annual report, R.H.
Hudson, export sales manager, disclosed that REO would again
start assembling trucks, buses, and passenger cars in Canada.
Since 1915 when the original REO factory had been turned over
to the production of munitions, the company had been supplying
the Canadian market from the home plant. The cause of this new
decision was an announcement from Ottawa on February 19 by E.B.
Ryckman, Canadian Minister of National Revenue, that a fixed
discount of 20 per cent from list prices had been placed for

__

85"Reo Motors Expanding Its Line," Barron's, XI (April 6,
1931). 20.

86Ibid.; Annual Report, 1930, REO Collection; Lansing
State Journal, March 2h, 1931.

233

duty purposes on all American automobiles entering Canada for
sale. Prior to this time motorcars exported to Canada had
entered on a list price, less a discount, and the duty was
assessed on the reduced amount. In the past the discount had
ranged as high as 30 per cent which had led Canadian automobile
manufacturers to ask that a maximum discount be set. The re-
sultant action, a measure affecting almost exclusively the
United States, amounted to raising prices on American automo-
biles entering Canada 15 per cent or more depending on the
original price.87

Preceded by the Nash Company and the Hupp Notor Corporation,
REG was the third American motorcar company to announce pro-
duction of automobiles in Canada after passage of the Order-
in-Council which limited trade discounts on imported cars.
On March 2h, 1931, the company revealed that it had leased one
of the main buildings of the former Dodge Brothers plant in
Toronto. Equipped with an assembly line, overhead carriers,
and other special equipment, the factory began production on
April 1. At the start all parts were imported from the home
factory but in time it was expected that an increased prepor-
tion of the cars and trucks would be fabricated in Canada.
Eventually it was anticipated that besides supplying the Cana-

dian market the plant would also furnish all units for REO‘s

w #

871m: York Times, Feb. 20, 1931. pp. 1, 30; Joseph M.
Joges, Jr., tariff Retaliation (Philadelphia, 193M), pp. 197-
19 .

 

23h

sales subsidiary, REO Motors Rritain, Limited, because of the
passage in England of a higher tariff and the imperial pre-
ference she accorded to her Dominions and colonies.88
Other evidences of REO‘s efforts to weather the Depression
soon followed. In April the sagging sales organization was
bolstered by the formation of the REC Sales Corporation, a
firm set up to finance the company's dealerships in Philadelphia,
Dallas, Jacksonville, Atlanta, Birmingham, San Francisco, and
Charlotte, North Carolina that had failed.89 Later other agen-
cies in Washington, D.C., Boston, Kansas City, New York, Chicago,
Newark, Milwaukee, and Indianapolis were taken over by the com-
pany. In the spring of the year plans were revealed for ex-
panding the company's line of passenger cars and new commercial
vehicles, both larger and smaller than the present offerings,
were also added. "With the consummation of those plans,"
Barron's reported, "Rec will be in a position to bid more ef-
fectively for whatever business develops during the upturn in
the cycle of automobile production and sales, now generally
conceded to be in its early stages. In providing its sales
with wider variety of offerings and the Opportunity for in-
creased volume and profits, Reo is preserving a reputation for

consideration of its distributors and dealers. The new pro—

‘__

88Toronto Dailprail and Empire, March 2h, 1031, ClinpinG.
Olds Collection, R.E. Olds Co., Lansing, Michigan; Lansing State
Journal, March 2h, 1931; Jones, Tariff Retaliation, pp. 23S-ZKO.

BgDirectors' Minutes, April 28, 1931.

235

gram should strengthen Reo's competitive position materially."90

But all was not well at REO. The first sign of renewed
management difficulties occurred in Fay of lQ3l when notice
was given that the Voting Trust would be dissolved on June 30,
a year and a half before the prescribed termination date.91
The reason given for this action was that the Trustees had
"noted with satisfaction the conduct of the affairs of the
Company since the creating of the Trust, and now feel that the
purpose of the Agreement has been sufficiently served so that

it need no longer continue."92

In actuality, however, the
Voting Trust had not fulfilled the objective for which it was
designed. It had not prevented the recurrence of dissension
among the officers since only 500,000 of the 2,000,000 shares
of BBC stock, most of which was held by company executives,
had been converted into Voting Trust Certificates and dis-
solution of the Agreement which was tied to the Wilson con-
tract, gave indication that further trouble lay ahead.
William Robert Wilson had been brought to REO to try to
pull the company out of its difficulties. Since that time,

however, REO's problems had multiplied. The Royals, intro-

duced in a period of depression when the trend was toward the

-___-

goBarron's, XI (April 6, 1931), 20.
o
’lDirectors' Minutes, May 21, 1931.

92Ibid., June 2M, 1931.

236

smaller car, was a mistake that it was estimated cost REC in
excess of 356,000,000.93 Several other new models of cars and
trucks, produced at great expense, gave REC one of the most
complete lines of passenger and commercial vehicles in the
industry'but this had no effect on improving the company's
financial position in a rapidly declining market. By the end
of the year sales had dropped off to $17,0h3,9§7, losses soared
to $2,7h9,238, and production shrank to 13,885 units.9u Com-

petition from the automotive industry's "Big Three,"

along with
the Depression, had taken the toll of many independents. REC
was beginning to feel the pinch.

When it was seen that Wilson's plans to revitalize the
company had failed, pressure was brought on him to resign.
On September 1, 1931, the three-year contract he had with the
company which still had a year and a half to run, was termin-
ated by mutual consent of both parties.95 Six months later
on March 5, 1932, he tendered his resignation as vice-presi-

dent and general manager and Richard Scott whom Wilson had re-

placed was again installed as REO's ranking executive officer.96

 

93C.W. Haybarker, "Brief History of Reo," MS, REO Collection.

ghAnnual Report, 1931, ibid.; Stockholders' Minutes,

gsDirectors' Minutes, Nov. 2M, 1931.

96Ib1d., March 5, 1932.

237

After two years of official dissension, the first round in
the struggle to control the company had ended in a victory
for Scott. In another two years the second round would go

to Olds.

CHAPTER VII
RETURN TO ACTIVE MANAGEMENT

Nowhere in America was there an area of life untouched
by the Depression which had been precipitated by the frenzied
sale of nearly sixteen and a half million shares of stock on
"Black Tuesday," October 20, 1929. Three years later the
nation was engulfed in the throes of the economic upheaval
and indications were that the worst was yet to come. Twelve
months after the crash six million men walked the streets
looking for work. By 1032 unemployment figures rose as high
as 80 per cent in some of the highly industrialized cities.
The mounting number of banks that failed continued to grow,
scores of factories shut down, foreign trade declined from
$10 billion in 1920 to $3 billion in 1932, and bread lines
swelled as the effects of the Depression drifted up into the
middle class. The plight of the farmer who had seen little of
the prosperity of the Twenties, grew more hopeless as gross
farm income fell from nearly $12 billion to a low of $5 billion.
Within the three year period the physical output of manufacturinq
fell to Sh per cent of what it had been in 1929. Steel plants
were Operating at 12 per cent of capacity and the output of
pig iron declined to the lowest figure it had been since 1896.

Freight shipments were cut in half and several of the major

238

239

railroad systems passed into receivership.l

The automotive industry was one of those hardest hit
by the Depression. By the last year of the Hoover adminis-
tration the great auto plants were operating at about one-fifth
of their 1929 capacity. It has been estimated that in 1930
between one-quarter and one—third of the nation's automobile
dealers went out of business. The roster of small independent
manufacturers that went under lengthened with each passing year.
Among the firms which disappeared in 1930-1931 were the makers
of the Stearns, Moon, Kissel, Gardner, Locomobile, Elcar, and
Jordan automobiles while the Marmon Company soon followed them.
For those companies that managed to hold on, Operating losses
became an annual statistic and cash reserves slowly began to
melt away. Hudson posted its first deficit in 1930 and two
years later Studebaker and Nash went into the red. In 1931,
the Ford Motor Company which only a season before had outsold
the entire line of General Motors, showed a net loss of $37,181,-
000 as the Model A experienced the same disfavor that had once
overtaken the Model T.2
At REC continued financial difficulties and Operational

losses became of primary concern as the company endeavored to

_‘__
;_-

lwilliam E. Leuchtenburg, The Perils of ProsperityL191Q-
33. (Chicago, 1958), pp. 2&7-2118.

S 2Nevins and Hill, Ford: Expansion_and4§hallenge, pp. 571.
73. "' _" ‘*‘

2&0

stay alive in an industry where the well-established trend
towards concentration had taken on new meaning. Although
the ratio of current assets to current liabilities at the close
of 1931 was still a substantial 8.89 to 1 compared with 10.5
to l in 1930, these figures did not reveal the actual extent
of the company's losses over the previous two years. Since
1929 total current assets had fallen off more than $10 million
while total current liabilities had drOpped less than $1,500,-
000. Total capital and surplus reserves likewise declined
almost $9 million and Operating deficits for the two year period
added up to more than $3,700,000.3

By 1932 the prolonged seriousness of the economic situation
forced the company to make several changes in its policies. In
January REC announced plans to return the manufacture of many
parts to its own shOps as a measure to increase the productive
efficiency of its plants and to provide more work for its own
employees.h The following month the company discontinued the
REC plant at Toronto and completed arrangements with the
Dominion Motors, Limited, an independent Canadian firm, for
the exclusive manufacture, sales, and service of R30 passenger

H
cars and commercial vehicles.) In April a new line of Flying

A—

BAnnual Ranorts’ 19?Q; 1930; 1031, REO COllCCtion, DiViSion
of White Motor Co., Lansing, Michigan.

hAutomobile Tonics, CIV (Jan. 23, 1932), 905.

SLansing State Journal, Feb. 6, 1932.

2H1

Clouds, priced around $1,000, was introduced by the company6
and in the summer new Speed Wagons, selling as low as $625,
and a four-ton truck, priced at $2,295, were announced.7

Despite the efforts of the company to reduce costs, REO's
pattern of unprofitable Operations continued into 1932 as the
stagnating effects of the Depression wore on. At the end of
Narch, REO'S net loss was $753,277, almost double what it had
been the year before8 and for the first time since 1911 the
quarterly cash dividend was omitted.9 After six months of
business losses totaled $1,3h0,181, almost three times more
than in the first half of 1931 and after nine months net loss
was nearly $2 million. Cash and marketable securities were re-
duced by $h,§00,000,10 creatina an alarming imbalance in the
ratio between current assets and current liabilities.

The remedy proposed by the directors on December 7, 1932
to correct this situation was to halve the par value of REO's
common stock from $10 per share to £5, a step which had been

taken by several other corporations during the course of the

 

6New%§ork Times, April as, 1932, See. 9, p. 6.

7Ibid. June 12 1932 Sec. 9 p. 7; August 21, 1932
...—...... , 9 ’ 3
Sec. 8, p. 7;_Automobile Topics, CVII (August 6, 1932), l

8

 

yew York Times, April 30, 1932, p. 25.

9Directors' Minutes, Feb. 16, 1932; Ibid., Feb. 21, 1932,
300. 2, p. 7.

1
Qng York Times, Nov. 19, 1932, p. 36,

2112

year including Studebaker and Chrysler.11 By approving this

action, Scott stated in a letter to the stockholders informing
them of the directors‘ decision, REO's capitalization would be
cut in half which would result in a credit of $9 million to the
company, Of this amount, he said, they recommended that $h,h79,-
766 would be written off against the fixed assets, $h05,595

"other contingencies," and the

12

would be kept in reserve for
remainder would be charged to cavital surplus. On Decemhor 27
a Special stockholders' meeting was held in which formal en-
dorsement was given to the change which became effective im-
mediately.13

While this move made the company appear more solvent, the
actual gains occasioned bv it were shortly wiped out by the
failure of the Capital National Rank to reonen following Presi-
dent Franklin D. Roosevelt‘s hank moratorium in Narch, 1933.
REO's investments in the institution at the time of its closing
totaled $1,096,980, the result of an arranrement made fifteen
months earlier. In December, 1031 the City National Bank of
which Richard Scott was president and in miiCh REO had dOUOPltS
of approximately $800,000, was on the verge of collapse. In

11Lansing, State Jounigl, Dec. 8, 1932,

12R.H. Scott to REC Stockholders, Dec. 7, 1932, REO
Collection.

lBStockholders‘ Minutes, Dec. 27, 1932; Lansing State
W. Dec. 28, 1932. ~—

2MB

order to avoid the closing of the City National, the Capital
National Bank of which Olds was president had agreed to assume
all of the deposit liabilities of the former if certain con-
ditions were met. One of the terms was that REC would guarantee
the Capital National Bank against loss to the extent of $375,000
and would also place on time deposit for at least one year the
sum of $1 million. This agreement which was approved by Scott
at the time of the negotiations was ratified on December 28 by

30‘s board of directors who turned over to the Capital National
Bank $395,000 in municipal bonds and $1 million in cash.1h

The loss suffered by R30 throuqh the closure of the Caoital

National Bank was the prelude to another unprofitable year and
the spark that once more ignited the fires of discontent. Dur-
ing the ensuing months other fuel was added. The costly intro-
duction of new models with refined styling and engineering im-
provements, the further reduction of prices, continued concen-
tration on passenger car production at the expense of the com-
mercial vehicle business, gradual loss of the small truck market
to Chevrolet, Ford, and Dodge,15 the eXpense of developing and
manufacturing the "self-shifter," an automatic transmission in-

16

vented by H.T. Thomas, and accumulated losses totaling more

1"I'Directors' Minutes, Dec. 28, 1931.

15c.w. HaYbarker, ”Rrief History of Rec," MS, 330 Col-
lection; Interview with Robert Frank McKim, Jan. 5, 1962,

16Lansing_§tate Journal, April 10, 1933; New York Times,
April 16, 1933, p. 16; RED Epirit (April, 1933 , p. 7.

 

EMA

than $1 million by September 3017 were factors considered.by
the Opposition as sufficient cause for a second attack on the
management of Richard Scott.

The incident that touched off the new crisis was the fol-
lowing letter of resirnation as chairman of the board of dir-
ectors sent by Olds to Scott on December 15, 1933:

Dear Mr. Scott,-

I regret that I feel it my duty to resign from

the Board of the Eco Notor Car Company. Our re-

lations over the past twenty-five years have been

very pleasant.

However, I am not in sympathy with the policy

of the present management, so I feel it my duty to

take this action rather than have tte world blame

me for what I am in no way responsible for.

Yours truly,
R.E. Clds (Sgd.)18

Immediately the onoosition seized upon Olds‘ resignation
as a lever to oust Scott from control and on December 18 a
Special meeting of the board of directors was called for that
purpose. With the lines of support unevenly drawn, the results
were a foregone conclusion. Scott was deposed as general mana-
ger although he once again was permitted to retain the office

of president and Charles N. Avery who was chairman of the board

and president of the Murray Corporation in Detroit19 was elected

 

2 17New York Times, Aurust 3, 1o 33, p. 30; Oct. 23, 1O 33,
p. 9.

18Olds to R.H. Scott, Dec. 15, lo 33, Olds Collection
R. E. Olds Co., Lansing, Michigan.

IQQgtroit City Directory, 1933, p. 288.

v“ ....”—---L- :1 A',,_-~ .-

2MB

to succeed him. At the same time, management of the company was
temporarily vested in an Executive Committee which was given the
power to exercise all authority in policy matters until the next
stockholders' meeting was held in April, 193h. Olds, who had
agreed to remain under the new set-up, was named chairman of
the Committee Which also included D.E. Bates, George E. Smith,
and Avery.20
Ten days after the major reorganization of REO‘s managerial
structure, additional changes were brought on by the resignation
of C.W. Avery. Named to succeed him by the Executive Committee
meeting in its first session on January h, 193h, was Bay A.
DeVlieg who was also appointed works manager in full charge of
factory operations, a move which virtually eliminated Barry C.
Teel, factory superintendent and cohort of Scott, from all re-
Sponsibility.21 For many years works manager of several plants
of the Chrysler Corporation, DeVlieg recently had come to 130
as assistant to the president.22
With Scott and Teel out of the way, the last member of
REO'S "old management" to he purged was H.T. Thomas. Early

in February he was replaced as chief engineer by Ray J. Fitness

who also came from Chrysler where for the past three years he

 

20Directors' Minutes, Dec. 1?, 1933.
21Executive Committee minutCS, Jan. h: 193k.

22Lansing State Journal, Jan. 6, 193h; Automobile Topics,
CXII (Jan. 13, 19§E5, 507.

2M6

had been an exocrimental engineer. Prior to that he had been
associated with several other automobile concerns including
Continental Motors, Studebaker, and Dodge Brothers. "The ap-
pointment of Mr. Fitness, and his active supervision of the
engineering division," the company stated in a public announce—
ment, "will enable U.T. Thomas, veteran head of the Bee staff,
to devote Virtually all his time to the duties of chief research
engineer."23 In effect, however, Thomas had been demoted just
as Scott and Tool before him, the last move of the Executive
Committee in laying the groundwork for what turned out to be
the first and most bitter proxy struggle in REO's history.

For almost two months following the deposition of Thomas,
however, the affairs of mansfiement at REC were carried on with-
out any sign that a dispute would result from the recent actions
of the Executive Committee. On March 19 a proxy committee con—
sisting of Olds, Scott, Smith, and Donieg was appointed to
prepare and mail to all the shareholders a notice of the annual
meeting to be held on April 17, erclosing with the letter a
printed proxy in favor of the committee.2u Scott signed the
notice along with.the others and it appeared that he had ac-
cepted the limitations imposed unon him just as he had on a

former occasion under similar circumstances. Not until April

23Automooi13 Topics, CXIII (Feb. 10, 1931.1), Sh.

2,"’Directors' Minutes, March 19, 193h.

2h?

was there any evidence that he would contest the Olds group
for control of the company.

The first indication of a proxy struggle came on April 3
when a letter was sent to the REC shareholders by an "Inde-
pendent Stockholders' Committee" consisting of H.S. Diamond,
chairman, Raphael P. Koenig, counsel, and Edward Light, secre-
tary, all New York figures. Charges were made that sales in
the past six years had fallen off 83 per cent, operating de-
ficits in the last four years had resulted in a loss to the
company of more than $10 million, and workins capital had de-
clined by $13 million, an "appallinn shrinkage," the letter
stated, that could not be "attributed alone to the Depression."
REO was pictured as "far behind the field" becarse of the in-
ability of the management to meet the "demands of the times,"
while other automobile concerns had started a "forward movement
in 1933" that had netted them tremendous profits in the first
quarter of 193M. Management of the company, they contended,
was controlled by 25,000 shares of stock and Olds who they
said "dominated" the REC Board of Directors, was listed as
holding only 600 shares, having disnosed of 26,000 shares in
the early part of 1933 when he knew the company had more than
half of all its cash tied up in the closed Capital National
Bank which he headed. The question out to the stockholders by
the committee was whether they wanted the Clds faction which

was characterized as having a 'self-seeking attitude" and owned

 

 

 

 

 

2h8

"practically no stock" to continue to dominate the company or
whether they would reinstate the Scott group which was said to
own about 150,000 shares and was pledged to a "prOgressive policy
of engineering and manufacturing" along with "skillfully planned
and aggressive merchandising."25

This notice of the Independent Stockholders' Committee
was followed on April 5 by a letter sent to the shareholders
by R.H. Scott in which he ooenly associated himself with the
group trying to gain control of the company:

I believe the Independent Stockholders' Com-
mittee has the best interests of your Company at
heart and that your interests will best be served
by forwarding to them your proxy.

So that there may be no misunderstanding, I
wish to go emphatically on record with my belief
that only by signing the proxy of the Independent
Stockholders' Committee will it be possible for
the stockholders to obtain preper representation
in the management of the Company.

When this is done, our Company again can look
forward to recovering its former position in the
automotive industry. Once harmony is established
within, it should be possible to make the progresé
sive moves necessary to regain our earning power. 6

These attacks by the "independents" drew a response from
the "New Management Committee" on April 7 in the form of a
"true statement of facts." EXpressing "regret and surprise"
over the charges which were said to constitute a "deliberate

attempt to create unfavorable reaction to the Company," the

—__._
##—

25Independent Stockholders' Committee to REG Stockholders,
April 3, 193a, REO Collection.

26R.H. Scott to same, April 5, 193A, ibid.

2&9

letter named Scott as the instigator of the assault and cause

of REO's difficulties:
Whatever reSponsibility arises as a result of

the critical accusations made by the 'Independent

Stockholders' Committee' must be squarely placed

upon the promoter of this attack, Mr. R.H. Scott.

For the past ten years Mr. Scott has been President

of the Company, and with the exception of the years

1930 and 1931, he has for the past sixteen years

been General Manager. The by-laws of;the Company

_gave to him as General;flanager, the fullgpower and

authgljity to mans ge the’jiusi nos 8 .
They agreed that the results of the operations of the company
during the past few years had been unsatisfactory and for that
reason, they explained, they had Voted to remove Scott. "At
the same time that Mr. Scott was removed as General Manager,
his brother-in—law, Mr. H.C. Teel, Factory Manager, and several
relatives holding important positions were removed," the letter
continued, because the time had passed "when stockholders should
be required to carry the burden of a family clique on the pay-
roll." Since these pe0ple had been dismissed, the statement
concluded, "real progress" had been made under the direction of
the New Management and "public interest in Rec" had reached the
"highest point in years."27

Two days later the New Management Committee followed up
this initial rebuttal to the Independent Stockholders' Committee
with the publication in the April 9 issue of the Lansing State

Journal of a letter from Hugh 3. Baker of the American Bank Note

u
__...

27New Management Committee to same, April 7, 193M, ibid.

250

Company to Olds concerning an investigation he had made of W.S.
Diamond:

I received the circular from W.S. Diamond yes-
terday. Its allegations were so grave that I at
once called on his Attorneys. Invited to assoc-
iate with him, I felt I should know something of
his antecedents. I wanted to know his position
with respect to Rec shares, the names of those
aligned with him, the names of those he had in
mind for new Directors, and what he proposed to
gain through his action. I therefore put a series
of questions to Koenig, Brachsner & Koenig as
follows:

Who was Mr. Diamond? Was he in business here?
What was his address--in view it was not to be found
in the Directory?

A more evasive set of men I have never contacted.
They couldn't give me his address because that would
be divulging something anent a client. I would.have
to take their word that he represented a half million
($500,000) investment in Reo. A list of his assoc-
iate Rec shareholders? That was impossible because
there was only one list and that in his possession!
(Imagine one copy only in existence of so important
a list!) Who was he? Well, he had money but was
in no especial business.

And on the strength of these vague explanations
they tho't I instantly should identify myself with
them. I however am not used to such leadership. I
think you have made mistakes--what business man hasn't
during this period of stress and turmoil? And I be-
lieve you can rebuild the business which you so re-
markably deve10ped during those many years. I there-
fore enclose our proxies; and you are at liberty to
use this letter as you see fit. I feel that if Reo
stockholders could see and experience what I did
with these men, they would form the same resolution
as have I. And.I'm sure they would draw the same
conclusion as have I. It is this: that the elusive
Mr. Diamond is nothing more than a professional proxy
seeker. His type is so well known in the financial
district where I serve that the matter may be dis-

missed without more ado.

In a counterattack to the accusations against Diamond

in the Baker letter, the Independent Stockholders' Committee

 

251

on April 12 replied by levying a new charge against Olds. "Do
you want to see the 200,000 shares of Rec stock now in the treas-
ury leave our Company without payment of cash?" the stockholders
were asked. Warning that this might happen if Olds was not re-
moved, the Committee issued the following statement to substan-

tiate their contention:

On March 13th, 193h, in New Ybrk, Mr. Olds stated
to the Chairman of this Committee, in the presence
of three other persons, that it was his intention,
when he became president after April 17th, to turn
over to the Rec Company a Diesel engine, taking as
payment the 200,000 shares of R60 common stock now
in the treasury. (The Co an bou ht this stock on
the 0 en market and paid about - 000 0 0 in cash

Mr. Olds knew enough to sell his Rec stock in
1929 when the Company was at the height of its pros-
perity. Evidently now he knows when to sell his

Diesel engine company. He can do this withopt your 28
permission, if he and his factibn remain in control.

 

This attack on the New Management Committee and Olds in
particular, was bolstered the following day by the publication

of an Open letter R.H. Scott had written to REO stockholders.

"It 13 certainly distasteful to me to be forced into the posi-
tion of defending myself after thirty years' service with your

Company against the odious and untrue statements just made by

Mr. Olds and his Committee," Scott said. He then proceeded to

outline eight "true facts" which included such observations as:

he was not the instigator of the Independent Stockholders' Com-

mittee and had no part in its formation; during the period since

1915 the company under his management had profited $h0 million

!

28Lansing State Journal, April 12, 193M.

252

despite losses of the past four years; as general manager he
was subject to the board of directors, the majority of which
was controlled by Olds; and he had demonstrated.his good faith
in the banking situation at the time of the failure of the City
National Bank by personally depositing 70,000 shares of his

REO stock in the Capital National Bank "to protect the public
of Lansing," while Olds who also deposited 26,000 shares, in
some way later extracted his stock and sold it. In conclusion,

Scott stated,

Obviously as the largest stockholder in the
Rec Motor Car Company, my selfish interest is my
investment in the Company. I am not satisfied
that the Olds group will do justice to the stock-
holders and it is for that reason that I have
indorsed the activities of the Independent Stock-

holders' Committee.

The next day in a notice entitled, "The New Management
Committee of the Rec Motor Company Answers Two Grave Charges

Made by R.H. Scott," a reply was given:

Mr. Scott ... made two statements concerning
NP. Olds, which make it necessary for the New Manage-
ment Committee to lay bare the abortive attempt of a
group, headed by W.S. Diamond of New York City and
supported by R.H. Scott to gain control of the Rec
Motor Car Company. .

This group has launched a series of vicious
personal attacks through letters mailed to stock-
holders, and advertisements in newspapers. The
majority of their statements have misrepresented
facts, have been irrelevant to the issue and are
so ridiculous that they need no answer. However,
two statements made by R.H. Scott in his message
... must be challenged--and answered.

—‘

29 1d,, April 13, 193a.

 

 

 

 

 

253

The first was Scott's statement that he was not the in-
stigator of the Independent Stockholders' Committee. Proof
that he was, the Olds group contended, was a letter from Scott
to Diamond dated March 22, 193k, in which Scott wrote that he
had notified the Guaranty Trust Company, REO's transfer agents,
to furnish Diamond with a complete stockholders' list. Ad-
ditional evidence, they pointed out, was a letter Scott sent
to Koenig on March 26 in which he personally authorized the
circulation of a notice to the stockholders stating he approved
of the activities of the Independent Stockholders' Committee.

The second "charge" answered by the New Management was
Scott's statement that Olds had deposited 26,000 snares of

his REO stock in the Capital National Bank and then withdrawn

and sold them. In rebuttal, they stated,

... Mr. Olds deposited 25,000 shares of Reo
stock instead of 26,000. On May 13, 1933, Mr. Olds
withdrew the 25,000 shares and deposited in their
place $230,000 par value Municipal bonds approved
by the Board of Directors of the Capital National
Bank and the Conservator. This was done in con-
formity with the provisions in the Guarantee Agree-
ment for the substitution of collateral. Yet Mr.
Scott charges that Mr. Olds 'in some way' 'ex-
tracted his stock from the Bank.‘ Mr. Scott failed
to say that both he and Mr. Thomas recently told

Mr. Olds that they hgge signed an Option for the
sale of their stock.

On this note the public campaign for proxy votes came to
a close with both sides claiming more votes lined up behind

them than the other. Neither was certain of victory, however,

AA

3°Ib1d., April It, 193M.

 

25h

until H.T. Thomas in a surprise move, notified Olds on April 16

that he was turning his votes over to him:

I regret that I had anything to do with the
Independent Reo Proxy Committee. I have been with
you for over thirty years and must say I consider
you the most honorable man it has been my lot to be
associated with. Therefore I am through with so-
called Independent proxy commfiitees and enclose you
my proxy to vote as you wish.

In the evening of the same day, Scott in a public state-
ment, also said that he regretted having had anything to do

with the "independents" and announced that he had aligned

himself with Olds:

I regret that a difference of Opinion as to the
policies to be pursued by the Rec Motor Car Company
has arisen between R.E. Olds and me, and that cer—
tain individuals have sought to take advantage of

this difference of opinion.
Mr. Olds and I have been friends for over 30

years. I believe he has at all times sought to do
whatever he thought best for the interest of the com-
pany. It would be a great misfortune if any personal
difference should adversely affect the company.

After further consideration of the facts, I have
decided to withdraw as president and director of the
company and to whole-heartedly support the new manage-
ment. I have therefore given my proxy to Mr. Olds
and his committee for thgzannual meeting to be held

Tuesday, April 17, l93h.
Scott's decision to defer to Clds no doubt was a diffi-

cult one for him to make. Possibly he realized that regardless
of the action he took he could not hepe to win. Furthermore,

it seems that by this time he had developed a dislike and dis-

31H.T. Thomas to Olds, April 16, l93h, Olds Collection.

32Lansing State Journal, April 17, 1931;.

255

trust of Diamond and his associates who he thought wanted con-
trol of REG only for personal gain. Loyal to the company and
desirous that it should remain in local hands, he had come to
the conclusion that despite the outcome he would have to resign
and reasoned that under those circumstances HEO's interests
would best be served by the Clds group.33 Nevertheless, this
did not soften his resentment for Olds and those who had sup-
ported him and until his death on March 9, l9hh,3u the bitter-
ness he held towards them did not subside.

The defection of Scott, however, left the Independent
Stockholders' Committee without any possibility of carrying
on the fight for control. In a public statement, R.P. Koenig
declared, "I seem to have lost my ace of trumps in the middle
of the game." Later addressing the stockholders' meeting, he

announced there would be no further contest due to the fact

that his committee had control of only 300,000 proxies.35 When
the count was taken, it showed that the management committee had
voted more shares of stock than had ever been represented at a
REO annual meeting. The actual number was 1,275,997 of which

1,236,056 were in the form of proxies vested in the Olds group,36

h.—

33Interview with Mrs. Richard H. Scott, Dec. 6, 1961.
314’Lansing State Journal, March 11, 19hh.

351b1d., April 17, 193A.

363tockholders' Minutes, April 17, 193h; Automotive Daily
News, April 21, l93h.

"hvi

256

After the conclusion of the stockholders' meeting, Clds
was asked for his comment on the recent proxy struggle and

stated:

It was an interesting fight. I enjoyed it from
start to finish and hold no bitterness toward anyone
involved. I have implicit faith in the exoerience
and ability of the men chosen for the company's active
direction. I have said right along that I was not

looking for a job and that my only purpose in seeking

to perpetuate the present control was to give Reo a

more aggressive management. It is a great company

with a great reputation and deserves to grow and

prosper. Under this group, with the program ngw

in process of development, I am sure it will.3

The program to which Olds referred had been started
shortly after the formation of the Executive Committee. At
the board of directors' meeting in January he had preposed
that a study be made of the advisability of marketing a low-
Drice, four-cylinder car to sell for $h00 and had recommended
an inquiry into the capacity of the Continental Motors Corpora-
tion of Grand Rapids to produce it for them,38 The following

month when an unfavorable report was made on the Continental
small-car program, Olds again had stressed before the board

the extreme importance of quickly considering another plan for
deveIOping a lowaprice car and R.A. DeVlieg had been authorized

to begin an engineering study to determine what could be done.39

37Lansing State Journal, April 18, 193h.
38Directors' Minutes, Jan. 15, 193h.

39Ib1d., Feb. 6, 193a.

257

The motivation behind Olds' desire to have REG market a
loweprice car at this time was based on the common idea to
which he subscribed that while many peeple bought more expen-
sive cars in prosperous times, during scarce money periods
most of them tended to buy the best automobile they could for

he least amount of money. In 1910 he had said,
I have found that during periods when money

is scarce and times are dull, the majority of the

buying public look for a ponular priced car, which

has proven practical. In fact, it is hard times

that the people look for the greatest bargains in

the article which they desire to secure, and seek

to obtain that which will give the best satisfac-

tion with the least outlay of money both in pur—

chase price and cost of maintenance....4
Now that the nation was in the grip of the Great Depression,
Olds returned to the idea and strongly advocated the volume
production of a low-price car, a step which he considered
vital to the recovery of BBC.

Closely following his views on the economic importance to
REC of manufacturing low-cost transportation, Olds also thought
that lowered maintenance and Operating expenditures would appeal
to a buying public confronted with limited purchasing power.
With this in mind he patented and reputedly invented a device
known as a "gasifier" which he attempted to induce the other
members of the Executive Committee to produce as an accessory

for all 3E0 cars and trucks. Attached between the carburetor

and the motor, the gasifier supposedly changed the mixture to

”0330 Bebe. No. in, 1910, p. 385.

 

258

a highly impulsive gas which held the cylinder pressure through-
out the length of the stroke of the engine reducing gasoline
consumption about 70 per cent.“1

The third suggestion Olds posed as a means to rejuvenate
the deteriorating sales picture was the adoption by R20 of the‘
Hill Diesel engine which was manufactured by a company of the
same name. Its predecessor, the Bates and Edmonds Motor Com-
pany, was originally incoroorated in December, 1899 to manu-
facture and sell gasoline engines. Arrangements were made

with the Eastern Fairbanks Company to handle their output and

a satisfactory business was carried on until about 1922 when
the Fairbanks firm cancelled its orders, forcing the company
to eventually turn from the manufacture of gasoline to oil

engines. The fortunes of the company continued to decline,

however, and in lQZh, Harry Hill who had been factory super-

intendent and had since acquired the controlling interest,

came to Olds and.asked him for financial assistance. At that

time Olds purchased Edmonds' stock for almost $u20,000. In

1929, when the business was reorganized and the name changed

to the Hill Diesel Engine Company, Olds again ant money in the

concern which raised his total investment to more than $700,-

ooo.h2

h1"R.E. Olds Latest Automotive Invention," Sept. 1h, 193U,
Olds Collection. (Mimeogranhed.)

h2F1nanc1a1 Records, 1929—19h0, Hill Diesel Engine Co.,

Olds Collection.

259

Since then Olds had tried to encourage close c00peration
between the Hill Diesel Engine Company and R30. In 1930 he
had equipped a Speed Wagon with a Hill Diesel engine for a
trial run to New York.u3 This was followed by similar tests,
suggestions on several occasions that REC should investigate
the Diesel engine business, and experiments relating to the
adaptation of Hill Diesel engines to various models of EEO cars
and trucks. On this account and because of a statement Olds
was reported to have made in the presence of w.s. Diamond, he
became subject to a charge by the Independent Stockholders'
Committee in the recent proxy struggle that it was his inten-
tion if he retained control to turn over to REC the Hill Diesel
engine in exchange for 200,000 shares of REC treasury stock.hh
At the time Olds had replied that he had no desire to make such
a deal. "In fact," he said, "the Kill Diesel Company, with
Which I am connected, builds marine and stationary engines
only."liS Although this was not completely true, the sincerity
or accuracy of Olds' denial can neither be verified or denied
from the available evidence.

Perhaps, however, to avoid the accusation that they were

—_

hBLansing §t§te Journal, Sept. 6, 1930.

Minna” April 12, 19314.

MENew Management Committee to RED Stockholders, April In,
193b, REC Collection; Detroit Free PT9§§. April 15, 193k.

 

260

simply pawns in the hands of Olds by the Diamond group which
after their stinging defeat in April had again circulated a
notice in June charging them with mismanagement,li6 the Executive
Committee turned down Olds' offer of the Hill Diesel engine as
they similarly had refused his suggestions to manufacture a

$hOO car and to produce his gasifier. Unaccustomed to Opposi-
tion and unwilling to compromise, Olds then resigned as chair-
man of the Executive Committee. On.Ibcember l7, 193u he sent
the following letter to the board of directors explaining the
reasons for his action:

Gentlemen:

I have sent in my resignation as member and
chairman of the Executive Committee of the Rec
Motor Car Company.

My reasons are that I have reached a point
where I cannot sleep nights and unless I do some-
thing I may find myself a nervous wreck, so that
I believe I owe it to myself to take steps to re-
lieve myself. Besides I do not wish to be out of
harmony with the Committee. We do not think along
the same lines. When I went into the proeosition
it was against my better judgment, but it seemed,
under the circumstances, that for the time being
there was no other way it could be handled. After
getting into the pronosition, I realized we must
have a low priced car. I at once got samples of
the Continental and wanted to take on either their
four or six cylinder two-door sedan. We could pro—
bably have revamped it and had it ready for the mar-
ket by June or July and then the agents would have
a $hO0.00 car, which would enable them to attract
the attention of the peOple to their sales rooms.
Now, the Graham peOple have availed themselves of
it, and I venture to say it will be a good thing
for them.

A;

“has. Diamond to REO Stockholder’S, June 12, 193k. REG
Collection.

261

Next, I wanted to announce the invention of
the gasifier, which would.have set fifty million
people talking about the Boo. I wanted to put up
a Bee sign on the Detroit Opera House where eleven
million people from all parts of the country would
have seen it every month. This, together with the
one-half cent per mile gasifier, would have let the
people know that Reo was alive instead of asleep.

I am perfectly satisfied that this would have greatly
increased our sales to such an extent that we would
now be manufacturing instead of carrying over a lot
of left over models. This, of course, would have
been an accessory, and we could have taken our time
towards furnishing it. In the meanwhile everybody
would have been talking about it, which would have
been an ad worth many times its cost.

Then again, the changes of the stroke of the
engine may not be worth its cost, and as for its
increasing the mileage to fifteen miles to the gal-
lon is more or less of a ouestion.

The radical change of body at a cost of $h50r-
000.00 on tOp of a passenger car loss for the first
eight months of over $600,000.00 is, in my Opinion,
very poor judgment. We have a fine looking car and
a design that caused the Oldsmobile to have the lar-
gest business in the history of the company, turning
out five hundred a day while we have handled less
than four thousand cars in the whole season.

I would favor the Boo considering taking on
the Diesel Engine business. I feel that my new
engine recently invented has great possibilities
and will make the most ideal engine for bus, truck,
marine and direct connected generator service. The
Winton—Diesel Engine Company sold out to the General
Motors for $6,000,000.00. Since then, I understand,
it has been one of their best paying units.

I hold everyone of the Committee and the Board
in the highest esteem and, therefore, regret that I
feel it my duty to write the complaints regarding
the policies of the business, but I have just reached
a point physically where I feel that I owe it to my-
self to retire from any active management in the com-
pany.

Yours truly,

R.E. Olds (Sgd,)u7

..—

h701de to REO Motor Car Company Board, Dec. 17, 193k,
Olds Collection.

262

Even if Olds' suggestions had been followed, however, it
seems rather doubtful that R30 could have regained its former
position in the automotive industry. Competition from Ford,
General Fotors, and Chrysler, accentuated by the Depression,
pointed up the fact that the manufacture of automobiles had
almost completely been taken over by big business. The number
of small companies that had failed or had been swallowed up
by the larger concerns prior to 1929 reached into the hundreds.
Under the winnowing effects of the Depression, the names of
many other automobile makers soon disappeared, a factor which
emphasized the advantages of combination and influenced several
of the independents to attemnt a merger for financial and com-
petitive reasons.

Automobile men had often talked of the economies in opera-
tions which could be effected through a consolidation of some
0f the smaller motor units but it was not until Pierce—Arrow
applied for permission to reorganize in federal court on
August 20, 193M that there seemed to be any reliability to
the rumors which frequently circulated through Wall Street and
automotive circles. The action of Pierce-Arrow, it was re-
ported, was preparatory to a union with the Auburn Automobile
Company and RED.u8 A few days later the names of the Graham-

Paige Motor Corporation and the Hunp Motor Car Corporation were

—*
__.

uBLansing State4Journal, August 21, 193h; New Yerk Times,
August 22, 193h, p. 27.

 

263

also linked with the impending merger. According to reports,
the Duesenberg, manufactured by a subsidiary of the Cord Corp-
oration which controlled Auburn, would head the line of cars
made by the new combination if the merger was completed. Next
would come the Pierce-Arrow and Cord, follOwed by Auburn, and
either Graham or Hunp in the low-price class. REC was con-
sidered for its Speed Wagon business and it was also thought
that its facilities could be used in making the smaller cars.u9
On several occasions representatives of the Auburn Com-
pany which headed the move, flew to Lansing to confer with
HBO officials but never did the negotiations reach the trading-
table stage. Why the talks bogged down is unknown but appears
to have been caused in part by the reticence of the indepen-
dents to give up their independence deepite the predicament
that each was in and the advantages which consolidation offered.
This was particularly true of RED. Proud of their company's
record, distrustful of outside interests, and confident that
recovery could be accomplished independently, REO's "new manage-
ment" which in reality was as old as the company itself, was
unwilling to face the fact that the company could no longer
afford to stand alone.50 When Olds was asced for his comment

on the prOposals for a merger by Auburn executives, he said, ‘We

—A_‘

h9New York Times, Sept. 7, 193M, Do 32.

 

Soluterview with Donald Davis, Technical Chief Clerk,
REC Motor Car Co. and White Motor Co., Jan. 9, 1962.

26h

have listened to what they had to say but have promised no-
thing.' At the same time he attempted to minimize the pros-
pects 'that anything will come of it.‘ Donald E. Bates who
succeeded Scott as president of the company, confirmed Olds'
pessimism and would go no further than to state that, 'Reo
might join Auburn and some of the other independent companies
in a standardization of tools and dies that could effect great
savings in competing with the larger companies.'51

For REC such a pronouncement was a clear indication of
the severe difficulties the company confronted. Never before
had COOperation with a campetitor been considered. Now it
had become a necessity. In the years from 1929 to 193k, out-
put had drOpped from 35,187 to 15,682 units and of this figure
only h,u60 were passenger cars, a field where REC continually
showed losses which consistently had to be supported by profits
from the truck business. Sales in the same period declined
more than 70 per cent and reserves were cut by over 65 per
cent.52 The number of dealers across the country at the close
of 1933, according to a company report, was reduced to 668
outlets as compared with 756 a year earlier and almost all

of the losses, it was stated, were in the small townsS3 where

-—_ ____

SlLansing State Journal, August 21, 193h; New York Times,
AUSUSt 22, quh—g p. 270

52Annual Reports, 1929-193h, RED Collection.

53Lansing State Journal, April 17, 193a.

265

REC normally had done the bulk of its business. Added to the
problems of the management were the resumed attacks by W.S.
Diamond and his Independent Stockholders' Committee as they
again tried to whip up support for a radical change in the
policies and officers of the company by pointing to the loss
of almoat $1 million sustained by RED in 193u.5h

Under the circumstances of this unhealthy situation, RE
officials were forced into a position where COOperation with
some of the other independents seemed a desirable alternative
and at the meeting of the board of directors on October 9,
193A the subject was brought up for consideration. The out-
come of the discussion was that a decision was made to approach
Graham-Paige and the Hupp Motor Car Company to inquire if either
would be interested in supplying motor parts for REG in exchange
for body designs and dies.55 Although nothing came of the
negotiations with Hupn, Graham-Paige evidenced a desire to
cOOperate and wanted to extend the provisions of any agreement
that would be made beyond the terms originally proposed by R30.
At the July 15, 1935 directors' meeting, Robert Graham, speaking
on behalf of his firm, suggested that a sales company be formed
for the purpose of marketing the products of both RED and Graham-

Paige and he further pPOpOsed the formation of a body company

A . _-.-

Shw,s, Diamond to RED Stockholders, n.d., Olds Collection.

55Directors' Minutes, Oct. 9, l93h.

266

to build and market commercial bodies.56 But once again the
reticence and hesitancy of REO'S directors came to the fore-
front and instead of entering into a contract that eventually
might have been the basis for a broader and mutually essential
agreement, they would go no further than to permit Graham-
Paige to use the dies of the Flying Cloud bodies for a con-
sideration of $7.50 per automobile and to share the expenses
of any revisions.57

REO'S refusal to combine resources and facilities with
those of Graham-Paige was due primarily to the fact that this
move in effect would have involved a partial consolidation of
the two companies and would have limited their own indepen-
dence. But at the same time, the agreement they made did
nothing to improve either REO's competitive or financial
position. Losses from the passenger car business annually
kept R30 in arrears despite profits from the increased sale
of commercial vehicles. A contract with Rack Trucks, Inc.
to supply them with Speed Wagons which they marketed under
their own name and distributed throughout their entire sales

organization,58 in addition to government contracts in 1935

4——

56Ib1d., July 15, 1935.

57Ib1d., July 22, 1935.

SBIbid., Oct. 21’ 1935; Automobile Tooi‘gg, CXX (Dec. 2,
1935), 251.

 

267

totaling $3,500,000 worth of business,59 contributed to the

highest production figures REO had shown since 1930 but was
still insufficient to prevent the company from posting a loss
of $219,860.60 Exnensive retooling of the 1936 models and
compliance with President Roosevelt's plan for introducing
the new cars in the fall of the year in an effort to level
out production and unemployment61 had no effect on improving
sales. Comparative production figures for 1935 showed that
out of the leading twenty-seven companies that manufactured
automobiles, R90 placed twenty-second and produced less than
one-twelfth of l per cent of all the cars made in the United
States for that ye1r.62

After six years of deficit Operations caused principally
by losses incurred in the manufacture of passenger care, 330
was finally forced to give up automobile production in favor
of exclusive concentration on commercial tranSportation. The
first move in this direction was a recommendation by the
Executive Committee which was ainOVOd by the board of direc-

tors on May 18, 1936, to move the truck department into the

59Lansing State_dournal, Jan. 1, 1936.

 

60Annual Report, 1935, 380 Collection.

61Lansing State Journal, Oct. 19, 1935; New York Times,
00t- 20 1935, §C.A,TI p.11.

62Automotive Industries, LXXIV (Feb. 8, 1936), 176;
Lansing* StateiJournal, Oct. 8, 1936.

268

main assembly plant.63 Four months later the transfer was
completed and the company officially announced on September 3
its susoension of automobile production in order to devote
all their engineering and manufacturing facilities to com-
mercial vehicles. In explaining the change in policy, Donald
We feel that the day has passed when trucks

and buses can be considered as side-lines. The

truck and bus and trailer engineer has nothing more

to learn from the passenger car. Today, he must

concentrate his entire attention on the problems

presented by the increasing demand for efficiency

in commercial vehicles, if he hOpes to keep pace
with progress.

In the past few years the use of the passenger
bus has become more general than ever. As business
continues to improve, the demand for trucks and
buses of all kinds must inevitably increase. We
intend to take full advantagguof the Opportunities
these growing markets offer.

Deepite the reasoned explanation and optimism expressed
by Bates, the fact that this step was taken was in itself a
confession by the management that REO had lost out in the
automotive field. ‘While it was true that commercial vehicle
manufacture had become an area of specialization and several
other companies had profitably given up cars for trucks, REO

had done so only because it was no longer expedient nor pos-

sible for them to compete successfully with the larger auto—

—‘
A ._‘__

63Directors' Minutes, May 18, 1936.

éuLansing StatLJournal, Sept. LL, 1936; New York Times,
Sept. 5, 1936, p. 190

 

269

mobile producers. It was not a move that was taken by choice
but rather one which was forced upon them out of sheer nec-
essity. The proud company that had once ranked among the
leaders of the automotive industry had been reduced through
competition from big business and the hardships of the De-
pression to a position where it was now struggling simply to

survive.

CHAPTER VIII
LAST YEARS

For Olds the decision to halt the production of passen—
ger cars must have been a rather disheartening climax to his
automotive career. Since that day in 1887 when he had ex-
perimented with his first horseless carriage, his whole life
had revolved around the manufacture of automobiles. While he
thought trucks were an important and profitable field of enter-
prise, he considered it a supplement to 330's business which
had always been geared to the production of motorcars. Failure
to keep the company among the leading automotive producers had
been the cause for the criticisms he had leveled at Scott and
the factor which had influenced him to once again actively
participate in the management. His primary concern at the
time had been to bolster the company's sagging automobile sales
and to reclaim a portion of the automotive market for RED.
Deepite the refusal of the Executive Committee to approve his
preposals which had led to his resignation as chairman, Olds
had remained with the company in an honorary capacity but when
passenger car production was abandoned, he was willing to give
this up as well.

Several times before in the thirty-two years since he had

founded RED, Olds had resigned from various positions but never

270

271

had he completely dissociated himself from the company. how,
however, he had reached the point where he wanted to sever all
connections. Less than four months after the decision to stop
manufacturing automobiles was disclosed, Olds announced his
retirement in a letter to D.E. Rates on December 28, 1936:
Following out my desire to retire from as

many obligations as possible ..., I hereby tender

my resignation as a Director and Chairman of the

Rec Motor Car Company Board.

It is with a great deal of regret that I take

this step as my long association with you and the

Board has been very pleasant and I have felt that

I had your full cooperation at all times.

Through his retirement Olds was Spared the difficulty
of dealing with the problems which soon after descended upon
REC. In the Spring of 1937 the company was beset by a sit-
down strike, one of a series which paralyzed the nation's
automotive plants in that year. On March 10 at hz20 p.m.,
ten minutes before closinn, the strike was called. Caused
by the "firing of fifteen men and a reduction in wages,"
90 per cent of the 2,200 employees refused to leave the fac-
tory, leased a restaurant across from the plant, and prepared
to holdout until their demands were met. Claiming that the
REC Employes' Association, a company union was 'dead,' the
workers through their representatives demanded recognition

of the United Auto Workers as the sole bargaining agency for

all REC employees, a forty hour week, a minimum base pay of

..—_

lolds to D.E. Rates, Dec. 28, 1926, Olds Collection,
R.E. Olds Co., Lansing, Michigan.

272

seventy cents an hour, and time and a half for overtime.2
For one month the management persisted in refusing to bargain
exclusively with the U.A.w., stating they were doing so out
of fairness to employees who did not belong to the C.I.O.3
Finally on April 7, however, after Governor Murphy had inter-
vened, an agreement was reached which was patterned after the
settlement ending the Chrysler strike twelve hours before and
provided for recognition of the U.A.N.u

At the same time that company officials were negotiating
a settlement of the sit—down strike, a new Independent Stock-
holders' Committee began to attack the management in an effort
to obtain representation on the board of directors at the forth-
coming annual meeting. The Committee, headed by Nilliam Loeb
and Frank Vanderlip, Jr., both of whom were wealthy New York
financiers, charged in a letter sent to REC stockholders on
April 7 that the company was "being allowed to disintegrate
through ineffective mananenent" which, they stated, could be
overcome by electing directors who had "wide business connections

with large vehicle purchasers....S On April Q, D.E. Rates

2Lansing State Journal, March 11, 1937.

3New York Times, March 12, 10.37. p. S.

 

uLansing State Journal, April 7, 1937; Ibid., April 8,
1937, p. 18.

5Independent Stockholders' Committee to REC Stockholders,
April 7, 1937, REO Collection, Division of White Rotor Co.,
Lansing, Midhigan.

273

replied to these charges. He reminded shareholders that the
193k Independent Stockholders' Committee had been "definitely
discredited" and further stated that althougi "Mr. Vanderlip
notified the Bee Management that he and his associates held
substantial blocks of Ree stock" which entitled them to repre—
sentation on the Board, no evidence of this had been furnished.6
But three days after Fates sent his notice, the proxy struggle
collapsed. After meeting in Detroit with Fates and REO's four
other directors, Vanderlip announced that a compromise between
the two groups had been effected. He disclosed that the of-
ficers of the company were.to continue to hold their present
positions but as a concession to the independents, the hates
group had agreed to increase the numher of directors from five
to nine members with the four new seats roing to the Loeb-
Vanderlip interests.7 Less than fifteen months later, however,
Bates resigned and Rowland Campbell, one of the newly elected
directors was named Chairman of the Seard and Chief Executive
Officer of the company.8
During the subsequent years, REO's history was marked by
continued adversity and instability. On December 16, 1938,

the plant was closed following a petition filed by twenty

6D.E. Rates to same, April 9, 1937, ibid.

7Lansing State Journal, April 13, 1937; New York Times,
April 1h, 1937, p. E1; Newsweek, IX (April 2h,11937), 394EO:

 

8Lansing State Journal, June 22, 1938.

27h

stockholders against the management requesting the appoint-
ment of a receiver for the company.9 After more than a year
of litigation, plans for reorganization were approved, a
$2,000,000 loan from the Reconstruction Finance Corporation
was obtained, and the company resumed Operations under a new
name, REO Motors, Inc.10 Aided by military truck contracts
during World War II, RWO slowly began to make a comeback but
in the immediate post-war period financial difficulties again
plagued the company. In an attempt to overcome the reduction
in government contracts, a broad diversification program was
undertaken. Industrial and marine engines, power lawn mowers,
toys, and playground equipment were produced and a truck leasing
firm was started. None of these was the solution to REO'S
problems, however, and in l9§h the company was sold to the
Bohn Aluminum a Dress Corporation of Detroit. Soon after the
lawn mower and toy divisions were sold, truck leasing was in—
tegrated into the REC organization, and new heavy duty trucks
and engines were placed on the market.11 This program of pro-
gress was continued by the White Motor Company of which EEO

became a subsidiary in 1960 and under White's direction the

..—

9Ibid Dec. 151938; Automotive Industries, LXXIX
(Dec. ‘2E"1938), 803.

10Commercial and Financial Chronicle, CIL (Oct. 28, 1939),
270h; CE (Jan. 6 lgfiUT, 135:136} Automotive Industries, LXXXII
(Jan. 1,19uo), 31; (Jan. 15,19u01, 77.

 

11Lansing State Jouraal, Avril 28: 1955-

275

company once again attained a measure of the stability and
success that was reminiscent of former years.

Until his death in 1950, Olds took no part in REO's af—
fairs nor was he ever called on to try to straighten out the
company's difficulties. fihen he resigned from RED, it was
permanent. Except for infrequent visits to the plant he had
nothing to do with directing the company's operations, either
in an active or advisory capacity. After his retirement he
left on a trip to Australia and other extended vacations were
taken in the following years. Winters were Spent at his home
in Daytona Beach and much of the summer season at his cottage
in Charlevoix, Michigan. At both places many of his leisure
hours were taken up with yachting, the recreation he most
enjoyed. His private interests which consisted mainly of
real estate holdings were handled by the R.E. Olds Company,
an investment firm he had established in 1912, and outside
of occasional consultations as to the disposition of his es-
tats, the last years of his life were lived free of business
responsibility.

The only new undertaking of any significance that Olds
initiated was the establishment of a home for retired reli-
gious workers, one of his last charitable acts although in
his lifetime he had never been a large philanthrOpist. A mem-
ber of the Baptist church since his marriage to Netta U. Woodward

in 1889, Olds had conceived of the idea, he said, because he

276

"greatly disturbed" by the number of retired min-

had been so
isters and missionaries who were unable to be accommodated in
retirement homes that he "determined to do something to relieve
the situation." Following out his purpose, he purchased the
Daytona Terrace Hotel in Daytona Beach on April 7, l9h2, for
$60,000 and a short time later Opened the seventy-five apart-
ments to the new occupants.l2 In his last years, the home
which he named "Olds Hall" and Operated as a non-profit, self-
sustaining, and interdenominational organization, was Olds‘
greatest interest. Vhenevor he was in Florida he frequently
stopped in to visit with the residents and until the end of
his life he often stated that he had never done anything that
gave him more satisfaction.13

For Olds this was the capstone to a long and successful
career. Celebrating his eighty-sixth birthday in June, 1950,
he still appeared to be in good health. But on July 28 while
vacationing at his summer home at the Belvidere Club in Char-
levoix, he complained of "not feeling very well" and was driven
back to Lansing where he was admitted to the hospital for ob-
servation. Diagnosed by the attending physicians as suffering

from the "complications of old age," Clds returned home a few

‘__ A‘

12Ibid., April 12, 19a2.

lBInterview with Mrs. Gladys Olds Anderson, Feb. 8, 1962;
John Conger Prince, Olds Hall, A Residence for fietired Ministers
and Missionaries_(Nashville,‘l9§§7:73:-T77_7fififles are in the
possession of members of the Olds family.

277

days later Where his condition became more critical and death
overtook him on August 26,1u one week before the demise of his
wife. Three days later he was buried in the family mausoleum,
the last of the automotive pioneers to be laid to rest.

In his lifetime Clds had done much to rank him alongside
of the foremost automotive figures. He had pioneered in the
develonment of the horseless carriafie, demonstrated the po-
tentialities of the mass car market through the success of the
curved dash, initiated quantity production methods into the
industry, insisted that the producer must receive cash for his
product, helped to fix Detroit as the center of automobile pro-
duction, provided the training and stimulus for the men upon
Whom a generation of automotive history was built, and produced
two cars, both of which were leaders in their day. These
achievements were sufficient to earn him the title "Father of
the Automobile." Reyond the efforts of any other individual,
he had done more to establish the infant automotive industry
and pave the way for those who followed. On this the reputation

and significance of R.E. Olds still stands today.

thansing State_Journa1, August 27, 1950.

.«--— --.-v

WIRLIOGRAPHICAL ESSAY

By far the most valuahle collection of materials for
a biography of Ransom E. Olds are the manuscripts since they
offer information on the middle and later years of his career
Which are not covered by any other source. This is parti-
cularly true of the R.E. Clds papers (Fichinan State University
Museum, East Lansinr, Mich.) and the R.E. Olds Collection (R.E.
Olds Co., Lansing, Nich.) which contain the private corres-
pondence, newSpaper clippings, and similarly useful data on
Olds after 1003. Equally helpful for the history of the REC
Motor Car Company is the RED Collection (Division of flhite
Motor Co., Lansing, MiCh.) which includes the minutes of the
directors' and stockholders' meetings from 1911—1937, all of
the annual reports after 1008, letters to the stockholders,
stock records, and official company papers. "Brief History
of Ree," an unpublished manuscript by Charles W. Haybarker,
a former employee, covers rather superficially RBO‘s history
to lQhO hut is of some value because it is the only secondary
source availahle on this tonic. The Roy D. Chapin papers
(Michigan Historical Collection, University of Michigan, Ann
Arbor, Mich.) furnish useful information on activities at the
Clds Notor Works, particularly during the year 1901.

Although Olds himself did not write a great deal about

278

279

his career, a few things do exist. The most important of
these is an article, "The Horseless Carriage," Michigan
Engineers' Annual (1898), 92-96, in which Clds describes
the first trial run in his 1887 steam-powered carriage and
eXperiments with his 1892 and 1896 vehicles, subjects on
which little factual evidence remains. Another article,

"Olds Plazed Trail to Fame with Car," Old Timers News (Jan.,

 

lghé), lO-12, is a recollection by Olds of his boyhood, part-
nership with his father, and efforts to get started in the
automobile business. Its value resides in the fact that it
was written late in his life and depicts how he viewed his
early career in retrospect.

Two other works, although they were not authored by
Olds, are sources of primary information about him. One is
Olds' testimony in the Selden patent case, United States
Circuit Court of Appeals for the Second Circuit: Columbia
Motor Car Company and George R. Selden XE: C.A. Duerr &
Company and Ford Notor Company gt_al., Transcript of Record
on Appeal from the Circuit Court of the United States for
the Southern District of New York. These published pro-
ceedings, apart from briefs and printed oral arguments, con-
sist Of twenty—two volumes, a cony of which can be found in
the.Automotive History Collection of the Detroit Public
Library. Volumes IX (pp. 631-658) and XVIII (pp. 1&72-1517)

contain the direct and cross examination of Olds in which he

280

was questioned concerning the dates and construction of his
first automobiles. The other is a biogranhy, Duane Yarnell,
Auto_§iggeering. The Remarkable Story of 3,3. Olds (Lansing,
Mich., 19u9). The significance of this book is that in essence
it is an autobiography since Olds assisted in its comoosition
and according to his daughter was the "ghost-writer."

Several publications which are reminiscences of peeple
associated with Olds or the automobile industry are helpful

on specific aspects of his career. Gasoline Age, Dgyelogment

 

of the Automobile,andfiGasq;ine Engine in Michigan (Lansing,
Mich., 19h6), written by James P. Edmonds, an acquaintance of
Olds, is a favorable sketch of Olds' exceriments with a gaso-
line automobile and his subsequent formation of the Olds Motor
Vehicle Company. According to the author, the manuscript

had been submitted to Olds for his examination and was "as
correct as it can oossibly be made." Frederick L. Smith,
Motoring Down A Quarter of A Century (Detroit, 1928) is a
useful history of the Olds Motor Works from 1899-1908. The
book, however, is colored by Smith's dislike of Olds to the
extent that Olds is not even mentioned. Motor Memories ~
(Detroit, 19h?) is a recollection by Eugene H. Lewis who was
associated with the Timken Roller Bearing Company of the men
who founded the automobile industry, many of whom he knew

personally, including Olds. Charles F. Kettering and Allen

Orth, American Rattle for Abundance, A Story of Mass Pro-

 

281

duction (Detroit, 19h?) credits Olds with the contribution
of the assembly line in the develOpment of mass production
methods in the automotive industry. Penjamin Rriscoe, "The

Inside Story of General Notors," Detroit Saturday Night, XV

 

(Jan. 15, 1921), 2rr.; (Jan. 22, 1921), 2ff.; (Jan. 29, 1921),
2ff.; (Feb. 5, 1921), 2ff. has a good discussion of the attempt
to merge REO, Buick, Ford, and Naxwell-Rriscoe in 1908. glgi
Hall, A Residence for Retired Ninisters and Missionaries (Nash-
ville, 1955) was written by John Conger Prince, one of the
residents, and is a brief account of the motivation and his-
tory of Clds Hall from its organization in 10h2 to 1955.
Another important source are the newSpaners. Particularly
useful for descriptions of his 1996 automobile and formation
of the Clds Notor Vehicle Company, Olds Motor works, and R30

Motor Car Company are The State Republican and Lansing Journal

 

(Democratic) which merged in 1911 and became The State Journal.
The Detroit papers have good coverare of the organization of
the Clds Motor Works in 1899, the early automobiles produced
by the company, the fire which destroyed the plant on March 9,
1901, and the machinists' strike later that year. However,
The State Republigan also carried many of these notices as

it often reprinted news dealing with Olds which appeared in
the Detroit Free Press, a morning paper. After 1901 when

the Olds Motor Works began to transfer its operations to

Lansing and especially after lQOh when Olds formed the REC

282

Motor Car Company, the Lansing papers are again the Chief
source of newspaper information.
0f the many automotive journals, a few are of special

significance for a study of Olds. Automobile Topics has

 

good coverage of his career after 1900 and is particularly
useful since there is an index to its contents in the Auto—
motive Uistory Collection of the Detroit Public Library.

Automotive Industries contains much helpful information on

 

Olds and REC from 1920-1937. The annual issues list the
gross sales, unit output, and percentage figures of the in-
dustry's total production for each of the major companies.
Other periodicals of lesser importance but esnecially per-
tinent for the early years of the automotive industry and

Olds' activities before l90h are The Automobile which after

 

1917 became known as Automotive Industries, Automobile Trade
Journal which was originally the Cycle and Automobile Trade

Journal, Horseless Age and Motor Age which merged in 1918

 

 

under the latter's name, and Motor World.

Interviews are also a valuable source of information on
Olds, his companies, and his associates. The members of his
immediate family who are still living are his daughters, Mrs.
Gladys Olds Anderson and Mrs. Bernice Olds Roe. Another per-
son who knew Olds most of his life is Mrs. Richard E. Scott,
widow of his closest business associate and successor as

General Manager and President of REC. Among those who have

 

283

a knowledge of REO's managerial affairs are Robert Frank
NcKim who was given employment with the company in 1910 and
advanced to the position of Secretary, Hubert Bates, son of
Donald E. Bates who became President of REC in l93h, John T.
Clark, former Export Sales Manager, and Ebnald Davis, Tech-
nical Chief Clerk. Peter Chapman, Bay North, Carl Scheibels,
and Raymond Young are employees who have worked at R30 for
over thirty years. Two known survivors who were acquainted
with Olds at the Olds thor Forks are Mrs. Horace Loomis,
wife of one of the company's engineers, and Oliver Rarthel,
a former accountant, who, however, was too ill to be ques-
tioned. In addition there are some other people who were
associated with Olds but who refused an interview.

Several scholarly histories of the automotive industry
have been written which contain much helpful information about
Clds or topics related to him. One of these is Lawrence
Seltzer, A Financial History of the Americagiéutomobile In-
dustry (Boston, 1928) which focuses on an economic analysis
of the rise and growth of the major automobile companies and
includes an appendix which cites the annual financial statis-
tics of each of them, including 3E0, through 1926. Similarly
useful books are Allan Nevins and Frank Ernest Hill, 332g;
The Times,_The Man, The Company (New York, l9Sh) and 333$;
Egpansion and Challenge, 19lS-l9§;_(New York, 1957) which

are a biography of Henry Ford and a history of the Ford Motor

28h

Company but also a description of the deveIOpment of the auto—
motive industry in the setting of national affairs with fre-
quent comparisons between the major automobile producers.

William Greenleaf, Monopoly On Wheels (Detroit, 1961) is the

 

most detailed and comprehensive study of the Selden patent.
A student of Allan Nevins at Columbia University, Mr. Greenleaf
originally wrote this work as a Ph.D. dissertation which grew

out of his assistance on the Ford volumes. Raloh C. Epstein,

 

The Automobile Industry (New York and Chicago, 1928), Arthur
Pound, The Turning Wheel (New York, 1937), and John R. Rae,
American Automobile ManufacturersL_The First Forty Years (New
York, 1959) are the best general histories available on the
automobile industry. All of them have good discussions of
Olds' career through the formation of the HBO Motor Car Com-
pany.

Among the many other secondary sources that deal with
the automotive industry there are a few which have a parti-
cular interest for a study of Olds. John C. Long, Roy D,
Chanin (Bethlehem, Pa., privately printed, l9h5) is a highly
favorable biography yet it has a good description of Chapin's
trip from Detroit to New York in a curved dash Oldsmobile.
Floyd Clymer, Historical Motor Scrapbook, 8 vols. (Los Angeles,
l9hh-19SS) contain a collection of advertisements and news-
paper notices of the early automobile companies, including

the Olds Motor Works and EEO. Hi Sibley, Merry Old Mobiles

 

 

285

99 Parade (Chicago, 1951) is a short illustrated account of
the early history of the major automobile manufacturers which

has many interesting pictures, diagrams, descriptions, and

anecdotes.

5.33:3. USE OiiLY

 

”I

GQN STQTE UN v

Tight

Aggy