On This Day: General Motors Founded

In the late 1800s, William “Billy” Crapo Durant was the head of the country’s largest carriage manufacturer, the Durant-Dort Carriage Company. At its most successful, the Flint, Mich.-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 8,800 cars a year, more than any other U.S. company.

In 1908, Benjamin Briscoe, head of automaker Maxwell-Briscoe, proposed that Maxwell-Briscoe, Buick, Reo and Ford—the four largest U.S. automakers—merge to create the International Motor Car Company. The deal fell apart when Ford and Reo pulled out, but Durant pushed ahead to form the proposed company, which he renamed General Motors.

On Sept. 16, 1908, he incorporated General Motors in New Jersey. Within 12 days of its founding, General Motors had issued $12 million in stock. On Sept. 29, it purchased Buick, Oldsmobile, Cadillac and Oakland (later known as Pontiac).

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 changed hands frequently over the next decade.

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.

GM’s fortunes began to change in the 1970s, when an Arab oil embargo and increased competition from Japanese automakers forced massive downsizing. In 1980, the company posted its first financial loss in 60 years, and it continued to struggle financially through the ’80s, ’90s and 2000s.

As labor costs rose, GM lost billions every year. The 2008 economic downturn doomed GM, which looked like it might not have enough cash to survive 2009. In December 2008, it received a bailout from the federal government, which began to oversee the company’s finances.

On June 1, 2009, after failing to restructure the company in the manner required by President Obama, General Motors filed for Chapter 11 bankruptcy. As part of the restructuring, GM dumped its Pontiac, Saturn, Hummer and Saab brands. The “new GM” is made up of the Chevrolet, Cadillac, GMC and Buick brands.