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Monday, December 22, 2008

The Future is the Past, Part 2
Joining the Club

The 1940 Bantam Hollywood. The symbol of a great
American 
automotive success congressional story.

RUN-ON POST. Having discussed government involvement in the automotive industry in the last post, I was going to move on to other Future/Past topics, but then I realized that a lot of you younger IP readers (i.e., under 40) probably have some huge holes in your knowledge of the American automotive industry.

And those holes are not only interesting in their own right but also relevant to understanding how the capitalist system works in good times, bad times, and when the government gets involved. This post is therefore going to seem something of a hodge-podge, without a clear political lesson, but my intention is to make part of the fairly recent past you may think you have a good handle on a great deal more intriguing and worthy of exploration than you might have imagined. The Internet contains an immense amount of information, but unless you know what you're looking for, there are vast regions of its geography that will remain permanently invisible to you. End of lecture. Now, on to the good stuff.

Like the clicheed middle child, the middle part of longish histories tends to get overlooked -- it just doesn't get as much attention as 1) the exciting beginning and 2) either the sad end or (if the story's not done yet) the duller and more familiar present. Here's my sense of what reasonably well educated people know of the history of American automobiles. They know about the revolutionary breakthrough of the Ford Model T, the technological dead end of the Stanley Steamer, maybe something of the early sport marques like the Mercer Raceabout and the Stutz Bearcat, and almost certainly the (still) startling glamour of Depression-doomed Grand Marques like the Pierce Arrow, Packard, Auburn, Cord, and Duesenberg.

They also know about the rise of the modern American automotive corporation, best exemplified by the General Motors economic stratification of markets with brands ranging from the low-end Chevy to the high-end Cadillac. They know that both Ford and Chrysler prospered by pursuing the same strategy -- Ford by offering Fords, Mercurys, Edsels (ha ha), and Lincolns and Chrysler by offering Plymouths, Dodges, Chryslers, and Imperials. And they may know that there were a couple of lesser competitors -- Studebaker and American Motors -- who fell by the wayside sometime in the 1960s or 1970s.

They probably even think of it as basically a two-part story. Part 1 begins with the Model T and ends sometime in the Great Depression when no one can afford the iconic Duesenberg SJ and coffin-nosed Cord. Then there are no cars built during World War II, and afterwards (Part 2) it's all about GM, Ford, and Chrysler, with some minor distractions provided by the Studebaker Lark and the American Motors Rambler and (ugh) Gremlin and Pacer. And, oh yeah, somewhere in there is a mysteriously complicated history of the archetypally American Jeep, which somehow fills the World War II hole all by itself, being the only passenger vehicle made in the U.S. between 1942 and 1946.

But if this is your understanding, the hole in your knowledge is far bigger than World War II, and the Jeep -- which still miraculously exists -- is only an incredibly important placeholder for what is in many ways is the most fascinating, and illuminating, part of the American car story. In fact. this is the part of the story that offers us the very best available insight into the current state of the worldwide automotive industry -- both in terms of how we got here and where we might be going from here. The story of the Jeep is a huge fork in the road, analogous to what we face today, and back then, as now, the government of the United States played the deciding role. Are you ready for some forgotten, almost invisible history?

The car pictured above was manufactured by a company called American Bantam, which was organized in 1930 at the onset of the Great Depression by a British entrepreneur who believed there might be a market in the United States for small, inexpensive cars as an alternative to the big, comparatively pricey gas hogs of the day. His plan was to make American cars in America for American consumers, initially under the Austin name that had prospered in Britain but as soon as possible under the American Bantam name. Here is a photo gallery of the American Bantam product offering. And here's a sampling of what you could have bought between 1930-something and 1940 if you had a job and didn't need the elbow room of a Buick:







We're not talking Ford Pintos and Chevy Vegas here.


I mean, think about it. Style is style, regardless of size.

Now. Wouldn't you think that the U.S. government, in the days of FDR's New Deal, would be rooting for American Bantam to succeed, to prevail in its attempt to bring a vision of 'less is more' to an American public so distressed by economic hard times? Yes? Well, here's what actually happened:

The American Austin debuted in 1930 at the National Automobile Show. In little more than a week more than 52,000 orders had been received. By mid-June a production rate of 100 vehicles a day was achieved at the Butler [PA] plant. Unfortunately, the Great Depression continued and American families had less and less money and sales fell drastically. The factory closed in the spring of 1932.

In the fall of the same year, the factory was acquired by entrepreneur, Roy S. Evans, who, at age thirty, was the largest automobile dealer in the South. Austins again rolled off the production line in Butler. By summer of 1935 more than 20,000 cars and trucks had been built. But the stockholders decided to sell all the assets of the American Austin Car Company. Evans was able to acquire these assets and reorganize the company as the American Bantam Car Company, by 1936, but had no money left to build cars.

It wasn't until 1938 that the first Bantam "60" passenger cars and trucks began rolling off the production line. A recession later that same year resulted in far fewer sales than expected. In 1939 five new models were added to the line and prospects seemed bright. Over a two and one-half year period the company produced approximately 6700 cars and trucks, but at an average loss of $75 per vehicle. By 1941 those bright prospects had dimmed considerably.

War had already consumed Europe and Evans saw the handwriting on the wall. He had tried to interest the government in a military version of the Bantam for some time. Meanwhile, a military committee had been formed to develop a midget combat car. Before deciding upon specifications the committee members came to Butler and each drove a Bantam roadster. The report of the committee indicated the potential of the vehicles and the capabilities of the plant.

Formal bid requests were sent in 1940 to 135 manufacturing companies. By the time Bantam received the request the Engineering Department in Butler had been disbanded. With less than two weeks to develop a design and no engineer on the payroll, the company contacted Karl K. Probst, in Detroit. He reluctantly agreed to come to Butler and make an attempt. Within days, Probst, factory manager, Harold Crist and Cmdr. C. H. Payne, Bantams military sales representative, presented an actual layout of the design to the committee.  
  
The Willys Overland Company of Toledo, Ohio also presented a design. (Ironic since Evans, himself, had helped keep the Toledo factory open through a financially hard times several years before.) But only Bantam said they could deliver a prototype within the 49 day time frame required.

Early on the morning of September 23 the prototype began a day-long drive to Camp Holibard, Maryland. It arrived with only thirty minutes to spare.


The first "Jeep." (Short for General Purpose vehicle.)

Doesn't it sound like the classic American underdog success story? Individual vision and effort, heroic execution against formidable odds, followed by acclaim, fame, contracts, and riches? Forget it.

The vehicle was rigorously tested by the Army for several weeks, and then declared to exceed expectations. By this time both Willys and Ford had submitted their own prototypes. Both companies had the advantage both of watching the testing of the Bantam, and having free access to the blueprints of the Bantam.

In the end the government decided that the American Bantam Company plant in Butler was too small to produce the numbers of vehicles it needed and the contracts were given to Willys and Ford. But the Bantam "jeep" had already begun to revolutionize surface warfare...

In May of 1943 the Fair Trade Commission charged Willys with false and misleading advertising by claiming that Willys had created the Jeep. The court determined that the Jeep was fostered and conceived in Butler, Pennsylvania, by the American Bantam Car Company.

At the end of the war the tools and dies had been scrapped at government request and Evans sold the company in 1946. New management continued building trailers at the plant until 1956 when the plant was sold to American Rolling Mills.

In fact, the government had a lot to do with the way the post-World War II automotive industry developed. Without its Jeep contracts, Willys would surely have perished before the post-war boom. But they received the lease on life that the far more innovative American Bantam never got. Here's a look at their product lineup through 1953, when they merged with another automobile manufacturer, Kaiser Motors, which wouldn't have existed at all if its founder, Henry J. Kaiser, hadn't become a tycoon by low-bidding on government contracts in World War II., most notably for the infamous troop-transport "Liberty Ships" which were renowned for being built in four days and then breaking in half en route across the Atlantic

In 1946, Kaiser reinvested his shipbuilding fortune in the U.S. automotive industry and founded Kaiser Motors, which holds the unique distinction of being the most forgotten player -- well nigh invisible today -- in the biggest business in post World War II America. If you think the 1950s were dull, well...

A digression. Most of us have a sense of the fifties that is shaped more by media -- movies, memoirs, memorabilia, music, nostalgic creations (a la Happy Days), and conveniently ignorant oversimplifications -- than actual memory. We've been taught to think of it as conformist, dull, repressed, safe, witlessly prosperous, lacking in choice and variety, essentially sexless except for Elvis and the Righteous Brothers. We reinforce these cliches every time we (make or) see a movie populated by 1957 Chevies and poodle skirts. The cars are always Ford, GM, and Chrysler products, beautifully restored and convincing exemplars of the age. The viewer can't help but infer a stultifying corporate, rococo conformity. But the image created thereby is factually and historically wrong. Has it ever occurred to any of you that part of the creativity of the beatnik culture of Jack Kerouac, Ken Kesey, Allen Ginsberg, and Lawrence Ferlinghetti might have have been partially inspired by the industrial creativity of the era? That they were not the only creative voices of their time, but merely the angry tip of a monumentally creative iceberg?

If you don't click on any other link in this post, click on this one, which should, in every sense of the term, blow your mind. Just a few models of the most bizarre (and occasionally brilliant) automotive company in American history.






The sports car at bottom was a fiberglass-body roadster that beat the Chevrolet Corvette to market by a few weeks in 1954. You can like the cars or not, but they were there, they were part of the competition, and you don't ever see them in reruns of American Graffiti.

Truth is, the American automotive landscape was a hell of a lot more interesting in the 1950s than any of our movie-based fake memories comprehend. There are two levels of perception for you to tumble to here. First, whatever you think you trust about your inherited sense memory of the fifties is counterfeit if it doesn't include Hudsons, Nashes, and, yes, post-war Packards.

Second, your knowledge of how American big business works is wrong if you don't understand that even in times of great prosperty like the fifties, companies die all the time.

On average, company lifespans are shorter than human lifespans. It's far less amazing that GM, Ford, and Chrysler are dying in their current incarnations than that they have survived this long. All this talk of imminent liquidation is just the business equivalent of political scare tactics. Hudson and Nash didn't liquidate; they became American Motors. As did the Jeep component of Willys, which survived Willys, Kaiser, and American Motors to remain a vital part of today's Daimler-Chrysler. Because people still wanted the product, regardless of who stamped their name on it.

Two more points before I move on. Liquidating the entire American automotive manufacturing capacity makes no economic sense at all. Automotive demand is not dying, only the business viability of the companies that have been slowly losing their competitive capabilities for two generations now. Automotive jobs will not leave the United States. Toyota, Honda, Mitsubishi, BMW, and Volkwagen have plants here because they can't serve the U.S. market economically without building much of their product here. That's not going to change.

Just as Hudson, Nash, and Willys merged with more successful companies, so will GM, Ford, and Chrysler. If Michigan won't bow to market realities, South Carolina, Georgia, and Louisiana will. Nor will the profits of foreign manufacture in the U.S. leave the U.S. We can still buy stock in the companies that do business here, and we can keep our dividends and capital gains here. If automotive manufacturing capacity becomes a national security issue, we can appropriate foreign plants to build tanks and armored personnel carriers. When it comes to that.

If you're getting hung up on the "too big to fail" argument," remember this: it's the United States of America that's too big to fail. Not because we have the biggest government on earth, but because we're the biggest consumer market on earth. If we stop buying things, the world economy dies and goes the way of the Maya.

It's okay if GM becomes a footnote like Hudson and Kaiser. Michigan will suffer. The U.S. will continue to prosper.

Second point. It's a 'What if' point. It was the federal government that killed American Bantam, which -- given the chance -- could have hired a financial whore like Henry Kaiser to create the manufacturing capacity for the Jeep. Think about it. If American Bantam had been allowed to enjoy the fruits of its brilliant design, maybe the entire foreign invasion of small cars could have been blunted, prevented. We'd have had our own homegrown inoculation against Toyota, Nissan, Hyundai, and even British Leyland and BMW. Just a thought. Yes, the government would have been playing a role in that outcome, too, but we've reached the age when the government always has a role. Why couldn't it have come down on the side of creativity and individual innovation? For once?

INERADICABLE LAW OF BIG GOVERNMENT: When it involves itself in business, Big Government ALWAYS favors Big Business.

Remember that. The Obama administration will also come down on the side of big business. They'll faciliate the acquisition of American car companies by Toyota, Nissan, and Mitsubishi. You know. Bigger-is-better type stuff. The global economy and all. And the worldwide union label. So. Join the club, Detroiters. We'll still always love all your old pictures.

UPDATE. An astute commenter has pointed out the omission of the most famous Kaiser of all, the Henry J, which was conceived by its eponymous (and modest) creator as a kind of post-war Model T. It was cheap. Really cheap. So cheap that it was even sold in the Sears catalogue under the name 'Allstate.'



Turns out, people didn't want a post-war Model T. Enough said.







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