1-1. Mr. Nash, although the first president of General Motors to play a large role in that office, was in fact the fifth person to hold the title. Mr. Durant, in founding the company, chose the position of vice president for himself. The first person with the title of president was George E. Daniels; his term lasted less than a month, from September 22 to October 20, 1908. The second was William M. Eaton, who was in office about two years, from October 20, 1908, to November 23, 1910. James J. Storrow was an interim president for two months, from November 23, 1910, to January 26, 1911. The fourth was Thomas Neal. His term ran from January 26, 1911, to November 19, 1912.
1-2. The fact that the Chevrolet Motor Company held a controlling interest in General Motors was proved in 1917. Of the 825,589 shares of General Motors Corporation common stock outstanding (after the exchange of five shares of General Motors Corporation common stock for each share of General Motors Company common stock), 450,000 shares were owned by the Chevrolet Motor Company; thus Mr. Durant clinched his earlier claim. This odd knot, in which Chevrolet controlled General Motors, was not undone until some years later. General Motors, in May 1918, bought the operating assets of Chevrolet and paid for them in General Motors common stock. Still later the General Motors stock owned by the Chevrolet Motor Company was distributed to the latter's shareholders upon the dissolution of the Chevrolet Motor Company. The Chevrolet Motor Company became the Chevrolet Division of the General Motors Corporation.
1-3. The General Motors Corporation was incorporated on October 13, 1916, under the laws of the state of Delaware. The New Jersey company was dissolved and its assets taken over by the corporation as of August 1, 1917, and the latter became the active operating corporation on that date.
1-4. In quoting, I have followed original materials as closely as possible. This results in some variation in spelling, punctuation, and the like.
1-5. The entry of the du Pont interests into General Motors became the basis of a suit by the government against du Pont and General Motors — filed in 1949, or more than thirty years after the fact. The basic charge was that the acquisition violated the antitrust laws and had enabled du Pont to secure for its own benefit the business of General Motors in products produced by du Pont. This charge was denied by General Motors and du Pont. The district court, after hearing testimony over a period of several months of a broad cross-section of the active participants in the matter and the examination of many hundreds of documents, found there was no evidence to support the contentions of the government and dismissed the case. The Supreme Court on review held that the acquisition by the du Pont interests, some thirty years earlier, was illegal because there was a reasonable probability that the acquisition was likely to result in a restraint of trade. The Supreme Court agreed, however, with the finding of the trial court, stating that "considerations of price, quality and service were not overlooked by either du Pont or General Motors" and that "all concerned in high executive posts in both companies acted honorably and fairly, each in the honest conviction that his actions were in the best interests of his own company and without any design to overreach anyone, including du Pont's competitors." The trial court's judgment of dismissal was reversed and the case remanded for relief. On remand, and after further litigation and appeal, the district court decreed that the du Pont interests divest themselves of their General Motors stock over a period of years. It appears to me, as a layman, that the reasoning of the Supreme Court in the case is almost purely academic and is not supported by the realities of the situation as found by the district court.
3-1. A copy of this chart is at the end of the chapter.
3-2. It is only in recent years that I have had occasion to recall the surrounding circumstances and now for the first time I am able to place the approximate time when I drafted the study. It was at the end of 1919 — some time after December 5 and before January 19, 1920 — instead of in the spring of 1920 as I had long thought. I reach this conclusion from the fact that the study refers to the Appropriations Committee, which was created by the Executive Committee on December 5, 1919, and from a letter to me from H. H. Bassett, then general manager of Buick, dated January 19, 1920, in which he expresses his enthusiasm for the study. "I have read over every word of the attached report and I firmly believe it is a wonderfully thought out scheme of organization and certainly has my unqualified endorsement," said Mr. Bassett, very kindly. I replied to him on January 21 as follows: "My dear Harry: — I have your letter of January 19th and am pleased to note that die plan in general meets with your approval and support. "I do not know what action, if any, is going to be taken, but I hope that something will be worked out that will be satisfactory to all because I really believe that it would be desirable to have things a little more definitely arranged."
5-1. Many years later the state of the art of the air-cooled engine improved to the point where application of its principles to automobiles became practicable. An ex- ample of such an engine made of aluminum is in the modern Corvair built by Chevrolet
7-1. The inertia-type transmission did appear to have great possibilities technically, but in actual performance it did not prove to be sufficiently smooth or long-lived to warrant production.
8-1. Mr. Brown put it this way: "A monopolistic industry, or an individual business under peculiar circumstances, might maintain high prices and enjoy a limited volume with very high rate of return on capital, indefinitely, at the sacrifice of wholesome expansion. Reduction of price might broaden the scope of demand, and afford an enlargement of volume highly beneficial, even though the rate of return on capital might be lower. The limiting considerations are the economic cost of capital, the ability to increase supply, and the extent to which demand will be stimulated by price reduction. "Thus it is apparent that the object of management is not necessarily the highest attainable rate of return on capital, but rather the highest return consistent with attainable volume, care being exercised to assure profit with each increment of volume that will at least equal the economic cost of additional capital required. Therefore the fundamental consideration is the economic cost of capital to the individual business." ("Pricing Policy in Relation to Financial Control," Management and Administration, February 1924.)
9-1. The figures above are for passenger cars only. The full production of all vehicles, cars and trucks, for 1919 through 1929, was as follows: 1.9, 2.2, 1.6, 2.5, 4, 3.6, 4-3, 4-3, 3-4, 4-4, 5-3
10-1. The Index of Industrial Production for 1920-29 is at the end of Chapter 9.
10-2. General Motors Corporation organization charts for 1937 and 1963 are at the end of this chapter.
10-3. The Engineering Policy Group consists of the chairman of the group, who is vice president for engineering; the chairman and chief executive officer of the corporation; the president of the corporation; the executive vice president for staff; the executive vice president for financial affairs; the executive vice president for the automotive and parts divisions; the executive vice president for the other operating divisions; the vice presidents for styling, distribution, research, and manufacturing and the vice presidents who are group executives for the car and truck group, the body and assembly divisions group, the accessory group, and the Dayton, household appliance, and engine group. Of the fifteen members of the Engineering Policy Group, eight are members of the Executive Committee and constitute that entire committee, and four are also members of the Finance Committee.
11-1. Capital employed consists of funds invested in the business by security holders. These are derived from equity issues (common and preferred stocks), debt issues, additional capital paid in (capital surplus), and net income retained for use in the business (earned surplus). The capital employed is invested in two broad categories — working capital and fixed capital.
11-2. Net working capital represents the excess of current assets (cash, short-term securities, receivables, and inventories) over current liabilities (accounts payable, taxes, payrolls, and sundry accrued items).
12-1. General Motors' role in the Ethyl Corporation came to a close in 1962, when both General Motors and Standard Oil sold their interests in Ethyl to the Albemarle Paper Manufacturing Company of Richmond, Virginia. With this sale General Motors, in line with its policy, disposed of the last of its investments in partially-owned companies, and now carries on all of its operations through divisions or wholly owned subsidiaries.
14-1. Charts of the staff organizations discussed here and elsewhere appear at the end of the book.
14-2. This staff also has certain other responsibilities relating to real estate, industrial photography, production control, and procurement.
14-3. Located at Milford, Michigan, forty-two miles northwest of Detroit.
16-1. Today, General Motors passenger-car and truck dealers employ 275,000 mechanics, salesmen, and other personnel compared with 190,000 in 1941. Their facilities under roof, including salesrooms, office space, and parts and service areas, occupy 227 million square feet of space, compared to 117 million prewar. Not only have the facilities of many dealers been made larger but they have been modernized and otherwise improved to handle adequately the increasing mechanical complexity of our postwar cars and trucks. The great increase in car ownership since the war and the technological advances made in our products — such as automatic transmissions, higher-compression engines, power steering, power brakes, and air-conditioning — put a renewed emphasis on the need for well-trained mechanics. In 1953 we put into operation an important new policy of practical co-operation with our dealers when we established thirtv permanent Service Training Centers for dealer personnel in service and sales. The training centers, fully equipped and manned by specially trained instructors, have provided mechanics with the latest information on the repairing and servicing of our products. The maximum earning ability of mechanics has been increased and the quality of service has been improved to meet the new conditions. The centers provide training facilities also for sales personnel, and they are used for meeting with dealers. During 1962 more than 187,000 persons were given nearly 2.5 million man-hours of training in various technical subjects at the centers, and approximately 260,000 persons attended meetings on sales and other nontechnical subjects.
19-1. In 1937 Winton's name was changed to Cleveland Diesel Engine Division and in 1962 its operations were consolidated with those of the Electro-Motive Division. In 1937, too, we set up the Detroit Diesel Engine Division to produce smaller diesel engines for marine and industrial use. Though there has been some overlapping in their products over the years, it has been generally true that the Detroit Diesel Engine Division has specialized in smaller engines.
24-1. Ultimately this fact was recognized, and the price groupings reported by the statistical organizations covering the industry were modified so that such models are now included in the medium-price ranges.