Cock of 1933
(See front cover)
In Chinese terminology 1929 was the Year of the Serpent, 1930 the Year of the Horse, 1931 the Year of the Sheep. 1932 the Year of the Monkey. U. S. automobile men, who produced 5,621,000 cars in 1929, might have little objection to these names: 1930 (3,510,000 cars) was comparatively a year for the horse; 1931 (2,472,000 cars) left the motor industry looking rather sheepish; 1932 (1,431,000 cars) made monkeys of those who had high hopes for an automobile comeback. To the Chinese, 1933 was the Year of the Cock, but U. S. motormen would have the right to insist that it was the Year of the Automobile.
For in 1933 the automobile industry stalked out of Depression wearing all the airs of chanticleer. It fashioned some 2,040,000 cars, 42% above 1932. Its sales not only bulged in May and June when all industries were booming, but afterwards, when other industries felt a reaction, it continued making headway. In darkest November it did 108% more business than in November 1932. And in spite of a two-month strike of tool and die makers, in spite of mechanical and style changes which seriously retarded the production of new models, the industry came into the New Year as if 1933 were but a preliminary lap and the National Automobile Show which opens this week in Manhattan were the starting line for a real exhibition of speed.
All this was fortunate for motormen not only from the standpoint of profits but of privileges. The motor industry has become the prize pupil in Franklin D. Roosevelt's school of Recovery. The growth of automobile business helps to relieve unemployment, helps to keep the steel mills busy, helps to use up the surplus of gasoline, helps to make profits for manufacturers of tires and many another accessory. For all these things the Administration is thankful. Some of its gratitude was publicly acknowledged last month when the automobile code came up for renewal. Motormen were determined to continue the merit clause in the labor section. Although the Administration regretted having allowed that section to slip into the original code, General Johnson and the President quietly accepted a renewal of a provision which no other industry has succeeded in wangling for itself.
Exit v. Entrance. When the automobile went into Depression the average (factory) price per car was $829. When it came out in 1933 the average price was $630. This difference represents, in part, price reductions. It also represents the public's purchase of relatively fewer expensive makes, of relatively more cheap makes. This fact leads to still another big difference between the automobile's going-in and coming-out. In 1929 the sales of passenger cars were divided as follows:
General Motors 40%
Ford 33.7%
Chrysler 8.9%
Total Big Three 82.6%
Total all other makers 17.4%
Since the Big Three, at least until recently, have been the only makers of the lowest price cars which Depression made big sellers, the 1933 sales figures (approximate) show the following change:
General Motors 44.6%
Chrysler 25.3%
Ford 20.4%
Total Big Three 90.3%
Total all others 9.7%
Striking fact about the industry's 1933 comeback was that although there are some 30 makes of cars in the U. S. all but nine of them sold fewer cars in 1933 than they did in 1932. And all but two (Essex & Austin) of those nine makes are products of the Big Three. Although this growing ascendancy of the Big Three depended largely on the sale of more cheap cars, that was not the whole story. Cadillac and Lincoln, like other high priced cars, found their sales still shrinking, but in the middle and lower middle price brackets the big companies made progress. Pontiac and Oldsmobile as well as Chevrolet, Dodge and Chrysler as well as Plymouth, got a share, if a smaller one, of the comeback.
Grand Opera, Not only by its 1933 record but by character the automobile industry is the prima donna of U. S. industries. No other industry moves with such pomp and circumstance of drama. Its annual show is always "good theatre," replete with all the tricks of the stage.* A few years ago the prima donna had a dozen great impresarios. Last week General Motors, preparing for motor show festivities, called the roll of its past executives. Among them were William Crapo Durant, Henry Martyn Leland, Alexander Winton, John D. Maxwell, Ransom Eli Olds, Charles W. Nash, Roy D. Chapin-- impresarios all.
This celebration is to mark a silver anniversary, not of one great impresario but of a mammoth corporation, with $285,000,000 working capital, with 75 affiliated and subsidiary companies, with 350,000 stockholders, 125,000 employes. To the corporation and not to individual executives goes the credit of making one third of all the world's automobiles on its twenty-fifth birthday. A similar change has come over Ford. Henry Ford still rules Ford Motor Co. but he no longer is Ford Motor Co. He says "Yes" and "No," but Edsel Ford, Charles Sorensen, Peter Martin, William Cowling and others are an organization, and the organization makes Ford cars. In this year of Recovery, however, the prima donna of industries still has one impresario of the old school. One of the Big Three, whose 1933 record is the most striking of all, he is Walter P. Chrysler.
Wamegonian. Sixty years ago Henry Chrysler used to drive a wood-burning locomotive across the plains of Kansas. Fifty-eight years ago a son was born to him in the town of Wamego, Kans. Walter Chrysler from boyhood was a wizard with machinery. At 1 7 he quit school to become an engine wiper at 5 -c-an hour. He took a course in mechanical engineering from International Correspondence Schools. At 33 he had already driven through all the branches of railroad mechanics to the position of superintendent of motive power and machinery for the Chicago & Great Western. From that job he went to American Locomotive Co.'s Pittsburgh works as assistant manager. A year later he was promoted to manager. But it was in the automobile business that Chrysler first proved his ability as an executive as well as an operating man. In 1912 Charles W. Nash, who had succeeded Durant as head of General Motors, put him in charge of Buick. For two years Chrysler kept a cot in the factory. Buick's production jumped from 40 to over 500 cars a day. When Durant made his comeback into General Motors, Chrysler became vice president in charge of GM operations. But Durant and Chrysler quarreled. In 1920 Willys- Overland which had just gone on the post-War rocks hired Chrysler to pull it off. Then Maxwell Motor came to him with another salvage job. Maxwell had only 50 active dealers, had 26,000 unsold cars piling up demurrage in freight yards all across the country, had $20,000,000 in debts. By the time Chrysler had rehabilitated Maxwell, it was his company. In 1924 he brought out his first car under his own name, a car with a high speed motor, low slung, built for traffic. It caught public fancy and for the first time its maker began to make money hand over fist.
Neck Out. Walter Chrysler swam atop the great boom of the twenties. He bought Dodge at a grand price. He plunged into the fiercely fought small car field, setting up Plymouth as a competitor of Chevrolet and Ford. He acquired an estate at Great Neck, L. I. He built his skyscraper in Manhattan. He became a collector of fine oriental rugs and tapestries. He had his life insured for $1,000,000. The whole glittering world of the boom beckoned to him and he responded. It would have been hard to find a man who, in the language of the market place, "had his neck farther out" in 1929. It stuck out almost as far as the necks of the giraffes which he had had collected in Africa for the Washington Zoo. His Chrysler Building, built to house a population greater than that of Wamego, was not completed until almost a year after the bubble burst. Chrysler Motors had expanded at the top of the boom, to face a dwindling market. It was some satisfaction to him that in 1932 Plymouth was the only car of the Big Three to increase its sales (18%) but when he footed up the bill for that year Chrysler Corp. had a loss of $11,254,000. Yet the hard-driving operating man who had denied himself none of the plush upholstery of the boom showed that he had lost none of his skill when it came to Depression.
His Manhattan skyscraper, all but circled about with half-vacant pinnacles of the same vintage, by shrewd management actually increased its rent roll during Depression. The millions he had spent in plugging his cars out of season came back like waterborne bread. The day before Franklin Roosevelt became President, Chrysler stock sold for $7.75 a share, but in the next six months the company made nearly $15,000,000. By November Chrysler stock had multiplied nearly seven times in value, touched $52.87 a share, and on Dec. 31, Walter Chrysler was able to celebrate the fact that he had for the first time sold more cars in one year than Henry Ford. More than any other individual manufacturer he had come to personify his industry in its forward march.
Next Lap, Three new things in the automobile world were visible on 1934's New Year's Day: 1) slightly higher prices for the lowest priced cars to offset, in part, the rising cost of automobile materials; 2) independent front wheel suspension ("knees")--old to Europe--to make cars of General Motors, Chrysler and others "easier riding"; 3) streamlining in a big way--Walter Chrysler's bid to claim the distinction that he made the buggy a bugaboo. A few years ago a 22-year-old graduate of the University of Texas named Byron Cecil Foy began selling Fords in Dallas. Norval A. Hawkins, Ford's salesmanager, was staging a nation-wide sales contest and to everyone's surprise the young Texan won it. Soon he was working directly for Ford. Next he became head of Reo's sales in California. Then he moved to Manhattan as partner in a firm of Metropolitan Chrysler distributors. From there he moved into Chrysler Motors & the Chrysler family, by marrying Walter Chrysler's eldest daughter, Thelma. In 1932 as president of the company he took hold of De Soto, gave it a new round radiator grill and many another feature that he, an expert salesman, wanted on the car he sold. Now he is trying to take De Soto over its highest hurdle by stream lining it like an airplane.
Streamline. Last year Fierce-Arrow startled the automobile world by exhibit ing a streamlined car, the Silver Arrow, at the automobile show. Only five were specially manufactured. This year the Silver Arrow will be a production job. But Pierce Arrow, a high priced car, has necessarily a high priced, therefore a largely conservative market. This year will see automobile companies making three kinds of cars, the standard traditional type, the semi-streamline, and the streamline which is the gamble of Chrysler & Foy. Chrysler is not taking this gamble with his big volume makes Plymouth and Dodge, for the results of a failure with them would be too costly. But even with De Soto it is a big enough risk, involving millions in new tools and dies aside from the possible loss of sales. But it is not all gamble: rather it is an attempt to rationalize a device that was born a generation ago as a buggy with an engine under it. Later the engine was put in front to substitute for the horse. Thus the automobile gradually acquired a shape that was just the reverse of that most efficient for overcoming air drag--low in front and high behind instead of high in front, tapering behind. The new De Soto is an approach to the sweeping curve of a tear drop. Its front mounds up in a smooth curve over the engine, with headlights and other gadgets embedded in its solid structure. The hump of the tonneau is in the centre rather than at the rear of the car. The engine is over, not behind, the front axle. The rear seat is moved forward some 20 inches from its old place on top of the rear axle to slope off the body. The front seat has been widened eight inches to hold three passengers comfortably. When and if streamlining is completed the running board will disappear and the engine will move to the rear. But that time is not yet. Such is Chrysler's attempt to give the automobile a shape of its own, to get further ahead in the automobile race of 1934. But he has by no means got that race to himself. General Motors which came out of Depression with 45% of U. S. automobile business is digging in to hold that gain and get more. The shakeups which took place in General Motors (TIME, Oct. 23) were evidence of the internal struggles of that company to improve its position. William Knudsen, new executive vice president in charge of operations, who previously was Chevrolet's big push, is now putting his shoulder to the whole company for a still bigger push. Ford also has changed its ways. Ford has lost ground in recent years because it persisted in making cars to the exclusion of ringing Ford bells in the public consciousness. Two months ago however Henry Ford did the unprecedented by taking a magazine (FORTUNE) into his plant and telling about his business. A month later he gave newsmen beer and a welcome such as he has never given them before. His advertising, sales promotion and merchandising for 1934 is planned on a huge scale. Instead of being, as usual, a month behind other companies on his new model, this year he was a good month ahead of them. By Christmas week his plants were turning out 2,000 cars a day while other companies, impeded by the tool makers strike and finding difficulties in putting their new "knees" into production, were struggling to get a few cars ready for the automobile show.
The Big Three will also face more competition from the "independents." Charles W. Nash, who once was the big impresario of General Motors and now operates on his own smaller but very well financed stage, is offering a new low priced car, named LaFayette after his expensive car of a few years ago. By the closing months of 1933 they were already beginning to forge ahead, indicating that in 1934 they may have the comeback which the low priced cars staged last year. It will be surprising, however much progress the Big Three make, if the other companies do not do more than 10% of the automobile business in 1934.
*Even curtain calls are not unknown in the motor business. Last week Ford's private show in Manhattan (TIME, Dec. 18) took a curtain call and a week's encore. Ford press agents duplicated in all but formal phrase the theatrical claim: "SMASH HIT! 100 BEAUTIFUL MODELS, 100!"
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