Last time we learned a little about John Raskob and the fortune he made with Billy Durant. The other player in this little drama is much better known.
Walter Chrysler
Billy never felt compelled to blow his own trumpet and, like John Raskob, was not overly concerned about his public persona. Such humility was never a fault of their compatriot, Walter Chrysler.
Chrysler started his working career in the railroad business and had risen to a production manager at ALCO, the largest steam locomotive company in the world. Jim Storrow was the lead banker in the syndicate which bailed out General Motors. He was Billy’s main adversary, the bad guy in Comeback! He was everything Billy was not: a Boston Brahmin banker, educated at Harvard and well connected on Wall Street. Storrow despised Billy. Hate might not even be too strong a word. We will get to Storrow in another post, suffice to say he made it his life’s mission to displace Billy Durant and replace all he did and stood for with people he respected.
Storrow wanted someone of his own to run Buick, the first company in the General Motors empire and the largest. He happened to be on the ALCO board and approached Walter Chrysler to take over Buick production.
Chrysler wanted to get into the fast growing automobile business and took the only pay cut of his life to make the jump. He wasted no time, however, to demand a succession of raises at a time when Storrow actually cut every executive’s pay. Chrysler, though not shy, was competent and under his management Buick blossomed.
The Change
Chrysler, then, was Storrow’s man and Storrow hated Billy. When gloves came off and Billy had to fight Storrow bare knuckles, sentiment in the two camps hardened. Kind of like an Italian blood feud–the other side is the sworn enemy and death is… well, okay not that bad, but you get the point.
The other person in the Storrow camp we will hear more of later is Charles Nash (where Nash cars got their name).
It should surprise nobody that, once it was clear Billy had won the fight, Storrow and his band would pick up their marbles and go home. Storrow discovered Packard’s owner, Henry Joy might be interested in selling out and so Nash, Chrysler and Storrow planned on that.
While they were hatching their plans, Billy took the reins at GM. When he saw Chrysler didn’t even bother to come to work, he went to Chrysler’s home. They didn’t know each other that well. Chrysler was brought in well after Billy was banished and since you don’t bite the hand that feeds you, he had adopted Storrow’s view that Billy was bad news in every way. Surprise is an understatement when Chrysler opened the door. Not knowing what else to do, he invited Billy in.
Billy, the consummate people person, asked Walter in his understated way to stay on. Before Chrysler could respond, Billy dropped the bomb. “All I ask is three years. I’ll pay you $500,000 a year.” This at a time Henry Ford’s ‘overpayed’ workers made $10,000 a year. Chrysler would be the highest paid executive… by a handsome margin.
Billy had seen Chrysler’s weak spot. It worked. In five minutes Chrysler switched sides. Chrysler would later famously remark: Billy Durant can charm a bird right out of a tree. Nash and Storrow had to go it alone. The Packard deal collapsed and they had to make do with an also-ran which they renamed Nash.
Overnight, Walter Chrysler went from a decent compensation to outrageous wealth.
After GM
It didn’t stop there. After serving out his three years, Walter Chrysler wanted to move on, to where he didn’t have to answer to anyone anymore. As it happened, another Walter, also not shy, wanted to get out of the automobile business. Walter Flanders had consolidated the remnants of Ben Briscoe’s empire into Maxwell. Chrysler was invited to take it over, which he did. And promptly renamed it Chrysler. No Billy Durant humility spoken here.
Of course you know the Chrysler building came from this.
Only, it didn’t.
Although Walter Chrysler was CEO of the company carrying its name, it was not his. He was a hired hand. Handsomely compensated, of course, but still a hired hand. True wealth comes from not from a job, but from ownership… or something else.
Billy and Walter
After 1920 Billy was out of GM. His main interest, the stock market, had become his main business. The fact that he used it to regain control over General Motors only reinforced his affection.
They key to his comeback was the investing syndicate he formed with Kaufman, Raskob and Du Pont, described here. In a syndicate you have a group of investors either pool their money in a single fund or buy and sell as a pack, everyone doing the same thing and reinforcing each other’s moves.
After his comeback, Billy was famous. Investors fought each other to be part of his syndicate, and as the Twenties roared on, Billy became one of the top five operators on Wall Street. Heady stuff. And Walter Chrysler was one of the most devoted of those syndicate members. Although Chrysler garnered fame from leading an automobile company, he made all his wealth from Billy’s syndicates.
Both saw the big crash coming and both got out in time. That’s where they parted ways. Billy couldn’t think of anything else to do so he got back in the market and lost everything. Chrysler, on the phentermine other hand, found something else to invest in: real estate.
Walter Chrysler had two sons, neither of whom were interested in the automobile industry, so he sought to kill two birds with one stone: create a viable business for them in New York (where they grew up) and erect himself a bit of a monument.
That’s why he decided to pursue a skyscraper as a personal investment, not something owned by the car company (which technically could fire him at any point). In the next post we’ll see how that played out.