A Brief History of
The First 100 Years of the Automobile Industry
in the United States
Chapter 13 - Dinosaur slayer falters; car guys vs. money men
by Richard A. Wright
Shortly after he took over as president of American Motors, George Romney told a stockholders meeting: "I am praying daily that this company will be a success."
Apparently stunned by his obvious sincerity, the audience was silent. Then it applauded, long and enthusiastically. Romney had that effect on people.
At a meeting of workers in Milwaukee, he blistered some of them whom he felt were letting the company down with their sloppy work and drinking on the job. "It must stop!" the angry Romney said. A few days later, he personally ordered the firing of a supervisor and four workers for drinking on the job. Milwaukee hailed his toughness.
Romney, who had worked for the Automobile Manufacturers Association and then joined Nash-Kelvinator in 1948, had a way of disarming people with his candor and honesty. It always seemed spontaneous and real. And it may have cost him a shot at the White House.
Nash-Kelvinator and Hudson Motor Car Co. merged in 1954, with George W. Mason as chairman and president. Before the year was out, Mason died and Romney, who had been executive vice president, became president.
With his vigorous, evangelistic style, Romney took on the auto establishment. He crusaded against Detroit's "gas-guzzling dinosaurs," urging Americans instead to go for AMC's "compact" Rambler. Rambler sales grew, as did sales of imports. Americans, it seemed, were indeed turning against the dinosaurs.
But Romney did not limit his activities to selling cars or his crusades to dinosaurs. He also crusaded for better government and formed Citizens for Michigan, which produced a plan for revising Michigan's tax structure, and he played a leading role in writing a new state constitution.
One of the key authors of the new constitution was George Romney and he built a political following which in 1962 propelled him into the Michigan governor's mansion.
The enthusiastic governor with the auto industry "can-do" approach quickly caught the attention of the national press and political king makers. After he was elected to his third term as Michigan governor in 1966, the pressure to seek higher office intensified. Interest mounted in Romney as Republican candidate for the '68 campaign. The Republicans fully expected to wrest the White House from the Democrats in that year of protest, rioting and unpopular war and Romney came under the increasing scrutiny of the national media.
Much was made over the fact that he was born in Mexico. His Mormon grandparents had fled to Mexico in 1885 when Congress outlawed polygamy and the U.S. Constitution says the president must be a "native-born" American. Another issue was his own Mormon religion and that church's policies toward blacks.
But the thing that seemed most damaging to Romney's White House ambitions was a statement he made on a broadcast talk show in answer to a question about why he had changed position on Vietnam and now opposed the war. Romney explained that he had been "brainwashed" during a tour of Vietnam and had since come to regard the war as a mistake.
In saying he had been brainwashed, Romney was probably reflecting the view of many Americans who felt they had been misled on the war. In time, many politicians in effect made the same admission. But they did not use that word. It was, perhaps, too candid and the word "brainwash" plagued him for years. It knocked him out of the presidential race.
Romney later served his country as secretary of Housing and Urban Development in the Nixon administration's first term. That was after he came closer to the White House than any other automotive man ever had.
Alfred P. Sloan had been careful at GM not to let his financial people take over from the engineers, manufacturing people and sales people. It was a partnership and the pattern still is followed at GM: the chairman is usually a financial man, while the president is an "automobile man" or a "car guy."
But the financial people greatly increased their power after World War II and a tension built up between "money guys" and "car guys." When the balance got out of whack, there was trouble.
The change became most visible first at Ford Motor Co., but the takeover came first at Chrysler Corp.
When Henry Ford II hired the "whiz kids" in his successful effort to save his financially shipwrecked company, they were exactly what was needed. The corporate finances were a shambles after years of eccentric and even bizarre management by a failing old Henry and the enigmatic Harry Bennett.
Robert McNamara, Ed Lundy, Arjay Miller, Jim Wright and the other "whiz kids," along with a GM-oriented management team brought in by Ernest Breech, seemed to be just what Ford needed. Breech had headed Bendix Aviation, partly owned by GM. One of Sloan's favorites, it has been said that he went to Ford with Sloan's approval because Sloan felt Ford needed Breech and Sloan did not want to see Ford fail.
At Chrysler Corp., however, the takeover was more complete. After the death of Walter P. Chrysler in 1940, K.T. Keller, Chrysler's own man, continued as president until 1950, when he moved into the chairman's seat which had been vacant since Chrysler's death. He named as president a lawyer named Lester Lum "Tex" Colbert.
Keller died in 1956 and the corporation once more had no chairman, until Colbert ascended to that post in 1960. Chrysler was run as a kind of an old boy's operation and during the '50s a stockholder named Sol Dann claimed that Chrysler profits were being eroded because higher prices were being paid to suppliers than need be. The reason, he said, was that high-ranking Chrysler executives owned financial interests in these supplier firms.
The largest Chrysler stockholder was Consolidation Coal Corp., whose chairman, George Love, took an interest in Dann's charges and as a director he led a campaign to clean up Chrysler's act. To help, he brought in Touche, Ross & Co. as outside auditors. He was impressed with the intelligence and integrity of one of the auditors, Lynn Townsend.
Meanwhile, Colbert moved into the chairman's spot in 1960 and it came as no surprise when he named one of his top executives and an old and close friend, William C. Newburg, as president. After two months, Newburg was fired amid charges of conflict of interest. Later, Newburg claimed that he was made the sacrificial goat in a massive coverup engineered by Colbert.
Newburg had long been a protege of Colbert and had followed Colbert up the corporate ladder at Chrysler. Their wives were close friends and the Colberts and the Newburgs lived only a few blocks from each other. Colbert knew all about his holdings in a supplier firm, Newberg said. In fact, Newburg said, Mrs. Colbert inquired about the possibility of Newburg getting her son a summer job at his supplier firm.
After the firing, Colbert and Newburg tried to avoid each other, but they traveled in the same social circles and they met the following year at a wedding reception at the Bloomfield Hills Country Club and exchanged a few heated words. Colbert left, then returned to the club in the afternoon. He encountered Newburg in the locker room. Onlookers say there were more words, then ex-lumberjack Newburg took a punch at ex-cotton trader Colbert. Friends say Colbert showed up the next day to play golf with a bandage on his chin, hiding the cut and stitches.
Colbert retired later that year and Love took over the corporation as chairman, bringing in Townsend as his president and thus annointed him as his successor. Love stepped aside in 1966 and Townsend became chairman. Townsend recruited John J. Riccardo from Touche, Ross, making him president in 1970.
Chrysler was now run by financial people. Closest "car guy" to the top was Robert McCurry, a former Michigan State football star who headed Dodge and was a favorite with the dealers. He left for Toyota.
While financial people were calling the shots everywhere by then, the other makers all had "car guys" at the top also; Lee lacocca at Ford (and Henry II himself was no mean judge of autoflesh); Ed Cole and Elliott "Pete" Estes at GM; Bill Luneburg at American Motors.
In Detroit, financial people could also be "car guys." But everyone knows what the terms mean -- financial people put money first, "car guys" put product first.
The result at Chrysler Corp. and later in the '70s at Ford Motor Co. and General Motors was a selection of cars that the public didn't think looked so good. Not as good as what was coming out of Europe. Or out of Japan.
Copyright 1996, Richard A. Wright
Published by Wayne State University's Department of Communications