1918 DuPont, GM & Cars

DuPont’s link with General Motors (GM) began with Pierre S. du Pont, who bought GM stock in 1914. In 1915 Pierre was elected a GM director, then board chairman, to help strengthen GM’s management. After World War I, GM executive and former DuPont Treasurer John J. Raskob persuaded DuPont’s directors to invest $25 million in GM. Pierre became GM’s president in 1920. By then DuPont’s GM holdings provided half of DuPont’s total earnings. DuPont disposed of all its GM stock in 1961.Show more

DuPont’s link with General Motors (GM) began with Pierre S. du Pont, who bought GM stock in 1914 and watched wartime demand increase its value sevenfold in a year. Despite high profits, though, GM suffered from divided management. In 1915 Pierre was elected a GM director, then board chairman, to help solve that problem, but America’s entry into World War I in 1917 left him little time. After the war, GM executive and former DuPont Treasurer, John J. Raskob, persuaded DuPont’s directors to invest $25 million in GM. Raskob saw a sure market for DuPont’s artificial leather, plastics and paints; plus, the investment would also yield reliable returns. Pierre became GM’s president in 1920. His brother Irénée succeeded him at DuPont. By then DuPont’s GM holdings had doubled, accounting for a third of all GM stock. In 1929 GM stock provided half of DuPont’s total earnings. During the 1920s DuPont and GM developed new refrigerants (GM owned Frigidaire) and anti-knock gasoline additives, and DuPont’s Engineering Department helped GM build plants and workers’ housing. Most significantly, however, DuPont adopted the bold restructuring plan that Pierre and Alfred P. Sloan, Jr., successfully implemented at GM. The close relationship between the two companies eventually attracted the attention of federal antitrust prosecutors, who filed suit in 1949. Eight years later the U.S. Supreme Court ruled against DuPont, and in 1961 the company finalized the disposal of its GM shares.


John J. Raskob (1879-1950) rose from private secretary to the highest executive levels at DuPont. He attended business college after high school and was working as a stenographer at a pump-manufacturing firm when Pierre du Pont hired him as a bookkeeper for his midwestern steel and street railway businesses in 1900. When Pierre became treasurer of DuPont in 1902, he made Raskob his private secretary. Raskob’s talent for financial management soon made him Pierre’s assistant. In 1911 Raskob became DuPont’s assistant treasurer. In 1914 he became treasurer, was elected to the Board of Directors, and joined the Executive Committee. The next year he was named secretary treasurer of the Christiana Securities Company and also joined the General Motors (GM) board of directors. From 1918 to 1928, as vice president and chairman of the Finance Committee of General Motors, and as vice president in charge of finances at DuPont, he guided the financial operations of both companies.


Raskob resigned from GM in 1928 but stayed with DuPont until his retirement in 1946. During the 1920s and 1930s he was involved in a variety of business activities and spearheaded the construction of the Empire State Building. He also was active in politics. Raskob was chairman of the Democratic National Committee from 1928 to 1932, when he resigned to become a leading opponent of Franklin Roosevelt’s New Deal. He was active in the Catholic Church and received many honors for his work on behalf of various charities and educational programs.


Donaldson Brown (1885-1965) graduated from Virginia Polytechnic Institute in 1902, did graduate work in engineering at Cornell, and joined DuPont in 1909 as an explosives salesman. His financial acumen became apparent in 1912 when he submitted an efficiency report to the Executive Committee that used a return-on-investment formula. Treasurer John J. Raskob took Brown under his wing and encouraged him to develop uniform accounting procedures and other standard statistical formulas that enabled division managers to evaluate performance company-wide despite the great diversification of the late 1910s. In 1918 Brown helped Raskob execute DuPont’s heavy investment in General Motors stock, and when he took over the treasurer’s office from Raskob the same year, he brought in economists and statisticians, an exceptional practice at the time. Brown joined the Executive Committee in 1920.


By 1921 DuPont had gained a controlling interest in the flagging General Motors Corporation, and Pierre du Pont made Brown GM’s vice president of finance. Brown helped bring about GM’s financial recovery and in 1923 he developed the mechanisms that allowed DuPont to retain the GM investment. Brown was appointed to GM’s Executive Committee in 1924, and working with President Alfred P. Sloan, he refined the cost accounting techniques that he had been developing at DuPont. The principles of return-on-investment, return-on-equity, forecasting, and flexible budgeting were subsequently widely adopted in corporate America. Brown retired as an active executive of GM in 1946 but remained on the boards of both GM and DuPont. In 1959 he was one of four DuPont directors who resigned from GM’s board due to the Supreme Court’s  antitrust decision.