Billy Durant: From Carriages to Cars

How Family and Entrepreneurship Blended to Create the Largest Car Company in the World

“Like father, like son,” runs the old adage. In the case of Billy Durant, the founder of General Motors, he was like his father and also his grandfather—even though the two men were polar opposites. The Durant story shows how family and entrepreneurship blended to start the largest car company in the world.

Durant’s grandfather was Henry Crapo, who came to Michigan in the 1850s and soon helped that state lead the nation in lumber production. Crapo built his lumberyard in Flint, and from that small town he exported top-quality wood as far east as New England. High integrity, Crapo argued, was the key to his success—it also brought the Republicans of Michigan to his door asking for help. With the Civil War raging, Crapo was elected governor of Michigan; when the war ended the popular Crapo was re-elected.

Crapo’s fortune and fame, pleasing as they were to him, could not resolve tension in his family. The problem began when Crapo was scouring New England for capital for his lumber business. In Massachusetts, he met William Clark Durant, member of an old New England family, clerk at the Webster National Bank in Boston, and a land agent. Durant’s attention turned first to Crapo’s bankbook and then to Crapo’s daughter Rebecca, whom he courted and married in 1855.

At first, the match seemed an excellent one. William and Rebecca had two children, Rosa and William. Durant did errands for his father-in-law and helped him sell stock in a railroad in Michigan. Crapo seems to have liked Durant, and urged “you and Becky” to visit Flint when possible. Crapo took a special liking to their son, William Crapo Durant, or Willie. In one letter to “Master Willie,” Crapo said that he “wants to have a visit from [Willie] very very much. Grand Pa knows that ‘Willie’ is a very fine boy, and he is very proud of him.” In another letter, when he was governor of Michigan, Crapo asked four-year-old “Willie [to] be Grand Pa’s Private Secretary.”

Grand Pa’s affection for Willie was soon matched by his concern for his son-in-law. Durant quit his job at the bank, became a stockbroker, and began risking large sums in stocks. “[M]y advice to him,” Crapo said, “was to go back into the Bank . . . and be careful about . . . the troubled and uncertain seas of stock speculation.” Durant rejected this advice, went broke in the stock market, and began drinking heavily. When he came to Flint looking for a job, Crapo tried to help him but couldn’t. Durant, Crapo wrote, “has not mind enough to know what to do, and has apparently given himself up to intoxicating drinks. He can’t get by a saloon or a drinking hole, no matter how low, without a ‘tip.’” Before a week was out, Crapo noted, “every business man in Flint knew that he was a tippler.” What was worse, Durant was “so intoxicated here as to have a regular drunken jab with Rebecca at the table before us all.”

Governor Crapo prepared for the worst. He changed his will to ensure that Rebecca had control of her share of the inheritance. Even so, Crapo was always concerned with Willie. How would he get by? What kind of work would he do? “The habits of the boy,” Crapo said, “are to be formed, both by parental training and parental example, in order to give him proper notions of business.” In 1869, when Willie was seven, “Grand Pa” died; his parents divorced soon afterward. Willie’s father drifted from place to place and disappeared from his family’s life completely. In 1872, at age ten, Willie moved to Flint with his mother to live with his prominent relatives there.

Growing up in Flint, Willie had no father to imitate, but he did have uncles who were lumbermen and bankers. Willie was popular in school, a good socializer, and a smart student. He left high school in his fourth year, however, to learn about business. He worked briefly for Crapo Lumber Company, and then sold patent medicine and fire insurance. Here he found his gift as a salesman. Friends later said he could sell sand to the Arabs and then sell them sieves to sift it. George T. Warren, a local cigar maker, hired Willie experimentally to go on the road and sell cigars. In two days, Willie astonished Warren by selling 22,000 cigars. The experiment was over: three other salesmen were fired and Willie was on salary for $100 a month. “Grand Pa” would have been proud.

The Cart

The destiny of William Durant, however, would not be in cigars or even lumber but in carriages. It all started by accident. In 1886, young Durant, age 24, hitched a ride to the local waterworks from his friend John Alger. Durant had never ridden in a cart like Alger’s before—small and durable, two four-feet wheels, two seats wide, and very smooth on bumps and turns even when the horse trotted briskly. The cart was light and graceful with a slatted footboard and a sturdy iron bar to grip for support. When the ride ended, Durant checked out the new cart. The seat was mounted to flexible springs in a way that cushioned the shock and cut the vibrations. The excited Durant, ever the salesman, envisioned himself selling these smooth-riding carts at low prices to middle-class men and women all over the nation.

Quickly Durant asked Alger where he got the cart and how much it cost. The answers led him by train the next day 75 miles away to Coldwater, Michigan, and the factory in which the new cart was created. After some haggling, Durant struck a deal to buy the company, patents and all, for $1,500. But Durant had no ready cash and was $3,500 in debt from having married and bought a home the year before. He had to raise $1,500 in five days or the deal was off.

Less than one day after signing papers in Coldwater, Durant was back home, standing on Saginaw Street, wondering where he would get $2,000: $1,500 for the business and $500 to bring it all to Flint. From the intersection at Saginaw and Kearsley Streets, he could see the Genesee County Savings Bank, founded and run by his Uncle James Willson, and the First National Bank of Flint, recently headed by his Uncle Ferris Hyatt. The son of William Clark Durant had a problem with these family options. “If I make a failure of this venture,” he thought, “I will never hear the last of it.” He would need his family for capital if his business grew big enough, but right now he had to show them he was more like “Grand Pa” than “Pa.”

Billy, as his friends now called him, strolled haltingly into the Citizens Bank of Flint—“not as pretentious as the others,” he thought, “but sound as a rock.” After a talk with President Richard Whaley, the persuasive Durant, with his customary soft voice, friendly smile, and thorough confidence, walked out with a $2,000 loan for 90 days.

Next, Durant needed a partner, someone to run the new business while he rounded up customers. J. Dallas Dort, the young manager of a local hardware store, rushed to join his friend Durant in the new Flint Road Cart Company. Dort, who bought a half interest for $1,000, would supervise the making of carts; Durant would be on the road selling them.

Expanding Markets

From his first day in business, Durant looked for ways to market his cart beyond Flint and even beyond Michigan. When his supplies arrived from Coldwater, he took one of the two finished carts and entered it in the Tri-State Fair in Madison, Wisconsin. “I did not have to do much talking,” Durant said modestly. The smooth-riding cart had strong appeal and when the competition was over it had won the blue ribbon. With this award in hand, Durant traveled to Milwaukee and Chicago and lined up jobbers to sell the carts in those cities. He had only one finished cart back in Flint, but he returned home with orders for over 600 vehicles. Furthermore, with charm and finesse, Durant managed to work out the contracts so that he would be paid quickly for carts delivered—his company was too short of cash to have much lag between sale and payment.

“We started out as assemblers with no advantage over our competitors,” Durant remarked. “We paid about the same prices for everything we purchased. We realized that we were making no progress and would not unless and until we manufactured practically every important part that we used.” Vertical integration is the term economists use for this method of controlling production from raw materials to distribution. And Durant used vertical integration to cut costs and keep his company supplied with axles, wheels, varnish, and lumber. He built factories in and around Flint to make these crucial ingredients in assembling carriages. He even experimented with making some parts for carriages on an assembly line.

During the 1890s, the Flint Road Cart Company changed its name to Durant-Dort and began selling carriages all over the United States, and exporting to Canada and Australia as well. It even started a profitable mail-order business to sell its vehicles. Durant, always the imaginative marketer, discovered that easterners preferred their carriages to be painted black, but that midwesterners liked more variety in color, including pinstripes. By 1901, Durant and his friends had transformed $2,000 in start-up capital into a $2 million-a-year business. Durant-Dort had become the largest carriage producer in the nation and probably the world. In 1906, its biggest year, the company employed 1,000 workers, who made about 480 vehicles each day.

Durant’s meteoric rise in the carriage industry occurred at the same time that Michigan’s timber resources were rapidly dwindling. His success inspired others to shift from lumber to carriages, and in the 1890s Michigan had about 125 carriage companies servicing the nation. Flint took the name “Vehicle City,” and Michigan became a center for expertise and talent in carriage-making. Capital and talent shifted smoothly from Crapo Lumber into Durant-Dort. For example, Durant started the Victoria Vehicle Company in 1894 to make a new line of carriages. He bought the large factory space for the company from his Uncle James Willson, whose Genesee County Savings Bank helped finance Durant. Durant in turn hired Willson’s son George to manage the Victoria Company and make it profitable.

Durant, many thought, could sell his carriages to the blind and his farm vehicles by mail order to urban illiterates. Often, however, what he was selling was simply himself and his ability to create a new product. In the 1890s, for example, Durant started a company in Flint to make bicycles. Many Flint citizens bought stock in the company simply because Durant was heading it. The bicycle craze of the 1890s, however, fizzled and Durant’s company ended up losing money. When that happened, he took his profits from Durant-Dort and covered the losses of his friends, who had trusted him enough to invest their money in his bicycle venture.

Then Came the Car

Durant would need help from all his family and friends when he spearheaded the transition in America from carriages to cars. During the 1890s, several mechanics had tinkered with steam, electric, and gas-powered vehicles. None had made a competitive product, however, and most carriage-makers saw no threat to their industry. Durant didn’t either for awhile, but in 1904, a group of investors in Flint urged him to take over production of the Buick, a local car with small sales and large debts.

At first, Durant hesitated: cars were smelly, noisy, and dangerous. He had even refused to let his daughter ride in one. But cars also might be the vehicle of the future. He tested a Buick on the streets of Flint and over the potholes of the countryside. He liked the way it ran, and he liked the challenge of building an industry from scratch. Durant would take over Buick if his family and friends supplied him with capital and expertise. Funds immediately poured in from Flint’s banks, especially the Crapo family’s Genesee County Savings Bank. Other Flint investors, including lumbermen and wagon makers, also anteed up. Durant-Dort supplied factory space, auto parts, and their sales and distribution network. Durant soon had a company capitalized at $500,000 and was in business.

With the money and organization in place, Durant the salesman sprang into action. In 1904, he repeated the success he had had with the road carts 18 years earlier. He entered the Buick in a New York auto show—and came home with orders for 1,108 cars, not bad considering that only 37 Buicks had ever been made. Walter Chrysler, who began his long career in car-making with Buick, spoke for many when he said of Durant, “I cannot hope to find words to express the charm of the man. . . . He could coax a bird right down out of a tree, I think.” Durant settled for coaxing outside experts, such as New Yorker Charles Mott, into his Flint organization to make first-rate axles. Durant also made use of local talent, such as Arthur Mason, his plant superintendent. Mason built for Buick an engine twice as powerful (4,000 rpm) as any on the market, and Durant made that fact a key advertising point. By 1908, after four years in the car business, Durant had brought Buick from near bankruptcy to being the best-selling car in America. His company was worth $3.5 million and had the largest auto factory in the world. The carriage king had been transformed into an auto genius.

Durant and his main rival, Henry Ford, were both prescient: they envisioned mass appeal for the car. Ford, however, thought his company should be built around one standard car, his low-priced, no-frills Model T. Durant, from his years in the carriage business, knew that in the long run, if he was to prevail as the auto leader, he needed many different types of vehicles to cater to different incomes and tastes. He therefore scoured the country with the idea of having Buick merge with other companies that could carve out niches in the auto market. He bought Cadillac, for example; its luxury cars suited those who could afford something more expensive than his Buicks. In 1908, Durant founded General Motors, a consolidation of 13 car companies and ten parts-and-accessories manufacturers, with a capitalization of $60 million.

The twentieth century has shown that Durant’s vision of different types of cars for different customers was the best way to build the largest car company in America. His problem came when he tried to stitch together the right automakers into his General Motors fabric. His Buicks and Cadillacs sold steadily and profitably; most others did not. “They say I shouldn’t have bought Cartercar,” Durant said later. “Well, how was anyone to know that Cartercar wasn’t going to be the thing? It had the friction drive and no other car had it. . . . And then there’s Elmore, with its two-cycle engine. That’s the kind they were using on motorboats. . . . I was for getting every kind of thing in sight, playing safe all along the line.” By 1911, General Motors was losing too much money. In that year, a group of Boston stockholders ousted Durant from leadership at General Motors and ran the company cautiously—making tens of thousands of Buicks and Cadillacs and putting the Cartercars and Elmores in museums of antiquity.

Durant was resilient, however. “We’re going to need a car,” he told his family and friends in Flint. With their capital and expertise, he started making the Chevrolet, a new economy car that quickly captured a large share of the market. Durant then cleverly traded much of his Chevrolet stock for General Motors stock, and soon held a controlling interest in both companies. In 1916, he triumphantly returned to General Motors for a final five-year term as chief executive officer.

During his second presidency, Durant bought the Fisher Body Company and Frigidaire to add to his Chevrolets, Oldsmobiles, Cadillacs, and Buicks. People such as Charles Kettering, who invented the self-starter, and Alfred Sloan, a brilliant organizer, joined the General Motors team—which by 1920 employed almost 100,000 workers. Like Walter Chrysler, Sloan thought Durant was a genius, often guided by “some intuitive flash of brilliance” that was “at times . . . astoundingly correct.”

A Question of Focus

As long as Durant focused on building the best cars for the lowest prices, General Motors grew and prospered. What he lacked in administrative and organizational skills, he made up for with his “intuitive flashes of brilliance” and his salesmanship. For many years, his work habits and integrity were legendary. He displayed the talent, perseverance, and savvy to run one of America’s largest corporations.

The problem was that General Motors began to receive less and less of Durant’s time while the stock market on Wall Street captured more and more. The gambling bug bit him hard, and a long talk with a broker was his favorite salve. He would postpone key decisions for GM and delay executive meetings while he studied Wall Street and gambled his millions. Walter Chrysler, the vice president in charge of all GM operations, could hardly ever get Durant’s attention. “For several days in succession,” Chrysler said later, “I waited at his office, but he was so busy he could not take the time to talk with me. It seemed to me he was trying to keep in communication with half the continent; eight or ten telephones were lined up on his desk. . . . ‘Durant is buying’ was a potent phrase in Wall Street then.” In 1920, in the midst of such neglect of duty, Pierre du Pont, chairman of the board, helped oust Durant and work out an arrangement to buy his GM stock.

After that happened, Durant, as was his custom, went again to Flint friends to finance another project: Durant Motors Inc., which would feature the new Durant car. He also produced the Star, which he showcased in New York and for which he persuaded 231,000 people to plunk down cash deposits. His gambling fever, however, was sapping his energy and resources, and Durant Motors never made a serious challenge to Ford or GM. Durant formed a “bull consortium” of stock buyers who plunged into the stock market with billions of dollars. Durant himself had over one billion dollars in the market by 1928, which included accounts with at least 15 brokers and phone bills of $20,000 a week. When the Great Depression hit, Durant’s roller-coaster ride crashed. Durant Motors was liquidated; Durant himself declared bankruptcy in 1936.

Some of the entrepreneurial spirit, however, was still in him. Nearing 80 years of age, he opened a restaurant and a bowling alley, hoping to make them into a national chain. The idea of building a chain business was perhaps ahead of its time, and Durant couldn’t make it work during the 1940s. He died in 1947, the same year as Henry Ford, at age 85.

What a remarkable blending William Crapo Durant was of his father and grandfather, the gambler and the entrepreneur. If Henry Crapo, 50 years after his death in 1869, could have returned to Michigan, he would have seen his “Willie,” the entrepreneur, perched on high as president of General Motors, a grandson who took the family fortune and multiplied it beyond recognition. If William Clark Durant, 50 years after his death in 1883, could have returned to Michigan, he would have seen his son, the gambler, close down his car company and lose his fortune in the stock market.

The big winners were neither the Crapos nor the Durants, but the American consumers, who, after the flurry of activity in Flint, had better lumber, more stylish carriages, and a bigger variety of cars to choose from.