This is the 1,250th post on Disaffected Musings. I have written about 630,000 words in this blog, which is the number of words in 7-9 average length books. As I have been the author or co-author of three published books, I have an idea how many words are in a book.
Of course, and as I have mentioned before, one of those books was called without a doubt the best book of its kind ever written by The Wall Street Journal. As David Banner (not his real name) wrote about me in a message to my wonderful wife, “He still has a big heart even though he has been kicked in the shins too many times.”
Although I have come to accept it as my fate, the fact that I have been unable to find an interesting and fulfilling career post-baseball will always be a thorn in my side. I love writing this blog, but I know I can do so much more. However, I don’t seem to be able to create the opportunity to do so much more.
According to automotive journalist Larry Printz in The Detroit Bureau, General Motors almost purchased Ford in October of 1909. A long excerpt from the piece:
“In 1909, Durant [William Crapo Durant, founder of General Motors] approached Ford’s business manager James Couzens about General Motors’ interest in acquiring Ford Motor Co. Couzens said he would talk it over with Mr. Ford. At the time, Ford was fighting George Selden, a patent lawyer who was granted a patent for the automobile.
Selden formed the Association of Licensed Automobile Manufacturers and began collecting a 0.75% royalty on all cars sold. But automakers had to get a license from the ALAM. Having been refused one by the ALAM, Ford built cars anyway. Selden sued, and the case dragged on for years. Ford was still battling Selden when Durant’s offer arrived. With victory uncertain, and huge costs being incurred with the installation of the automobile industry’s first [moving] assembly line, Ford couldn’t help but be swayed by the offer.
‘I had reason to believe that if we were successful, General Motors would not require any more motor car companies,’ Durant writes.
Ford agreed to sell his company to General Motors for $8 million. His terms: $2 million in cash, $2 million in stock, and the remaining $4 million paid during the next three years at 5% interest. But Durant’s acquisition fee left GM short on cash. Durant turned to the National City Bank of New York to ask for a $2 million loan, even as GM’s board of directors gives Durant the authority to buy Ford on Oct. 26, 1909. But the bank was unwilling to take a risk on the fledgling industry, let alone Durant’s new company.
The answer was no.”
Note that according to Printz, Ford agreed to the sale as did the GM Board of Directors, but it was National City Bank of New York that said no. Why Durant didn’t try another bank is not explored in the article. Ford eventually defeated Selden in the patent case (in 1911) and, of course, the moving assembly line revolutionized automobile manufacturing.
I really have a hard time with people who think that what happens/happened in the world is the only thing that could have happened. Life is a Monte Carlo simulation with outcomes that have a probability. Nothing except death and taxes are certain; everything else has a probability of less than 100%. Actually, I guess it is possible–although difficult–to live a life without paying taxes. Below is a picture of William Durant:
Durant, already the owner of Buick Motor Company, formed General Motors as a holding company in 1908. The company first “purchased” Buick and then Oldsmobile, also in 1908. Durant was trying to build an unbeatable automobile conglomerate through acquisition.
Any time someone tells you something is inevitable (other than death or taxes), remember this story.
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6 thoughts on “1,250”
This story makes me think of how many “deals” do not get done. While Microsoft helped Apple avoid bankruptcy, where would the two companies be if Gates had bought 30-40% of Apple back in the early 2000s?
After making friends with Gates, how rich would Buffett be had he bought more stock in Microsoft? As technology geeks, how rich would Gates and Sergei Brin be had they bought Amazon or Tesla stock?
While I don’t think I’ll ever see a trillion dollar man, it looks possible with the right vision and opportunity.
Yes, of course, so many things “could” have happened, but didn’t. However, that doesn’t mean that what actually happened was the only possible outcome.
The near purchase of Ford Motor Company by GM is also covered to some extent in ‘The Buick: A Complete History.’
Prior to what is related above, Benjamin Briscoe of Maxwell-Briscoe informed Durant that a partner in JP Morgan was exploring merging auto companies. Durant instead suggested he, Briscoe, Ford and RE Olds (then running REO) discuss the possibilities.
Apparently it got serious. Durant wanted a holding company arrangement, Briscoe preferred a real union. Ford wanted to ensure prices remain low, providing affordable transportation. But things broke down as Ford and Olds decided they were not interested in stock deals, they wanted cash and to retire. It was concluded that there had been misunderstanding, Ford and Olds dropped out (Ford expressing possible further interest if things could be worked out), leaving Durant (Buick), Briscoe (Maxwell-Briscoe) and the JPMorgan people.
Things did not work smoothly though, disagreements over how the deal was to be structured etc. Durant ended up reaching out to Olds Motor Works (RE Olds’ former company) and that formed the basis for GM.
Durant went on a buying spree, acquiring Cadillac, Oakland, Rapid and Reliance (which would form GMC) and more.
The Selden patent loss in court did prompt Ford and Couzens to agree to a deal which this book states was $8M ($2M cash, $2M in stock options to Couzens, remaining $4M payable in 3 years with 5% interest). The bank did turn Durant down for the cash, the deal fell through.
How different could things have been? Consider…
By 1911, Ford’s earnings were $35M, this book quoting Durant as saying “his banker friends never forgave themselves”. Also, Ford won his appeal on the Selden patent, killing it and removing the royalties all automakers had been paying.
Consider also Maxwell-Briscoe managed to survive without merging but eventually was in a poor position. In the mid 1920s, an auto exec was brought in and saved the company. This exec had actually joined Buick during Durant’s first exile, and left not long after Durant returned because the two men couldn’t t get along. That man’s name was Walter Chrysler, who used the $10M in GM stock Durant paid him to turn Maxwell-Briscoe into Chrysler Corporation.
Mark, thanks for elaborating on the almost purchase of Ford by General Motors. I mentioned that Ford ended up prevailing over Selden in the patent dispute when Selden’s patent was ruled “valid, but not infringed” by a federal appeals court in 1911.
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It’s impossible but sometimes fun to speculate what ‘might have been’ but… imagine if Ford had sold to Durant. Few car markers seemed interested in fighting the Selden patent, and had Ford exited the industry perhaps the patent may have endured today (though I’m sure someone else eventually would have taken issue).
And who knows what the industry would have looked like had the eventual ‘Big 3’ actually become one in the industry’s infancy.
Thanks again, Mark. I repeat myself, but what actually happens in life is NOT the only thing that could have happened, nor is it always the outcome with the highest a priori probability. Just because we may not be aware of other potential outcomes doesn’t mean they don’t/didn’t exist.
The fact that my parents’ families were Jews living in Poland at the start of World War II means my existence is certainly not the outcome that had the highest probability at the time.
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