On This Day: General Motors is Founded

On September 16, 1908, a group of men sat in a nondescript N.J. office and signed a stack of papers. They did their business quietly; there was no fanfare and no one alerted the media. Yet the events of that unremarkable day have earned an indelible place in history: those men incorporated General Motors Co. and began a new era of car manufacturing and ownership.

William “Billy” Crapo Durant, the founder and idea-man behind General Motors, refused all interviews and kept his fledgling company quiet at first. Within 12 days of its founding, General Motors issued $12 million in stock. By the time the company was six weeks old, it had acquired both Buick and the Olds Corporation of Lansing, Michigan, by paying stakeholders in those companies with GM stock.

During the late 1800s, Durant was the head of the country’s largest carriage manufacturer, the Durant-Dort Carriage Company. At its most successful, the Flint, Michigan-based manufacturer was producing 150,000 horse-drawn carriages each year.

Meanwhile, the automotive revolution was beginning to take hold. In 1904, Durant was approached by Buick to help guide the fledgling automaker. With Durant at the helm, Buick was soon making more cars than any other U.S. company—8,800 a year.

Early in 1908, another popular automaker, Maxwell-Briscoe, approached several top car companies with the idea of a merger. Durant, as head of Buick, was involved with the negotiations, which fell apart when Ford pulled out of the deal.

Still keen on the idea of a consolidated car company, Durant went it alone, and incorporated GM. In addition to Buick and Oldsmobile, the company also acquired Pontiac and Cadillac in its first year.

With the strategy of “a car for every purse and purpose,” GM sought to take cars beyond a luxury item to an irreplaceable household staple.

From the beginning. GM’s path was marked by extreme highs and lows. Within its first 18 months, the company acquired more than 30 automotive companies. But Durant paid a price for the rapid expansion. GM was taken over by the bank in 1910 and during the next decade, it changed hands frequently.

By 1935, GM was the largest producer of vehicles in the world and by 1940, it had produced 25 million cars. During this time, GM’s chief competitor was Ford, but GM’s willingness to provide financing helped it outpace its competitors, who still followed cash-only policies.

As the company grew, so did its labor force. Annual strikes shut down plants and the company was constantly embroiled in union negotiations. In 1949, GM president Charles Wilson signed “The Treaty of Detroit,” an agreement with the United Auto Workers that guaranteed pensions and other long-term benefits for the company’s thousands of workers.

Fifty years later, as the auto giant has begun to founder, some have pointed to that treaty as leading to its decline. By 2008, GM had closed many of its plants, had seen less company valuation than any time in history and faced the reality of selling a minority of the cars on the road today.

In 2008, both Flint, Michigan and General Motors itself are celebrating the 100th anniversary of GM’s founding. Flint featured a parade in July with car models from the last 100 years and a Web site where residents could record their memories of working at the automaker’s many plants. GM has rebranded its anniversary as GMnext Day with reflections on the past but a focus on what the next century holds.

In a time when high gas prices dominate the headlines, GM, along with most other car manufacturers, is eager to join the move toward alternative fuels and alternative technologies. Although it has been a little behind the curve, with foreign automakers dominating the alternative-power market, GM has announced it will sell an all-electric vehicle by the end of 2009 and will pursue hydrogen-powered vehicles in the future.