July 20, 2006

Today In Automotive History

1894 Errett Lobban Cord is born

Errett Lobban Cord was born in Warrensburg, Missouri, on this day in 1894. Cord moved to Los Angeles while he was in high school and remained there after his graduation, starting a number of car dealerships. His prowess as a salesman led him to pursue bigger goals and to look for a way to invest the $100,000 he had managed to save in a few years of work. "Then I started looking around," he said, "I wanted to do something with that $100,000."

Cord found the struggling Auburn Automobile Company in Auburn, Indiana, a company on its last legs, having completed only 175 cars in 1923. Cord convinced Ralph Bard, head of a Chicago group that had purchased Auburn, to take him on as general manager at no cost, with the stipulation that if Cord turned the company around he would be allowed to purchase controlling interest. He launched a sales blitz, rapidly clearing out Auburn's inventory and enabling it to show a profit.

By 1926, Cord was company president and the following year the company established dividends at $4 a share and eight percent in stock. Cord then launched an aggressive business strategy, purchasing companies in many manufacturing fields and trading his stock on the New York Stock Exchange. He acquired Duesenberg in order to add a luxury car line to his Auburn cars. Sound stock management allowed Cord to expand his operations during the Depression while many other companies were merely struggling to survive.

Cord established an empire consisting of Auburn, Duesenberg, Stinson Aircraft, Lycoming Motors, Limousine Body, and a number of engineering plants. He placed his new acquisitions in a holding company called the Cord Corporation. In 1933, he added New York Shipbuilding and Checker Cab to his conglomerate. During the 1930s, sales of Cord's cars stumbled. Their heavy price tags could not be born by the tightening market. Nevertheless, during the late 1930s, Cord's company produced some of the finest classic cars in automotive history, but Cord's empire fell as precipitously as it had risen. He and Morris Markin, President of Checker, were investigated by the Securities and Exchange Commission for stock manipulation. In one case Cord and Markin had purchased 70,000 shares of Checker at $7. Their action created the illusion of great activity in their stock, driving the price up. Markin and Cord unloaded their shares at an average price of $59 per share. Both men denied the charges, but neither contested a court injunction preventing them from further impropriety. The same day of the verdict Cord sold all of his interest in the Cord Corporation for $2.6 million.

Cord died from cancer, in Reno, Nev., in 1974.

Posted by Quality Weenie at July 20, 2006 06:54 AM | TrackBack