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Chapter 21 Look—No Hands! Book: The Indomitable Tin Goose Subtitle: The True Story of Preston Tucker and His Car Author: Charles T. Pearson Publisher: Abelard-Schuman Year: 1960 |
21 LOOK—NO HANDS!
WITH MONEY COMING in from the accessories program it looked like good odds for starting at least limited production, and with a few hundred cars on the road the company should have smooth sailing. Body stampings were coming in from the Hayes Body Company in Grand Rapids, and permanent metal dies were expected by the end of July. Glenn Madden, purchasing agent, said the company had spent well over $4,000,000 on tooling.
“We are on the threshold of mass production,” Madden said, “within ten months from the time we received the major part of our working capital. Even an established firm will normally take from eighteen months to two years to design and build an entirely new car, and it has been customary in the industry to spend at least a year changing a single model.”
By comparison, Madden said one producer spent $37,000,000 retooling one model, almost twice what Tucker had to develop an entire automobile. Automotive Industries quoted Nash as saying their changeover would cost approximately $15,000,000, and reported Chrysler would spend about $75,000,000 on their new models. According to figures from the industry itself, Tucker's overall expenditure was low.
When the accessories program first came up for discussion I thought it was risky in that it could bring bad reaction unless deliveries of cars began within the next few months. Rockelman said they didn't have any choice, that they had to have money or go under, and this was a way to get it.
Rockelman was right about the plan raising money, because before it ended they collected more than $2,000,000. But I was right about the risk. This was the opening SEC had been waiting for to holler “Fraud!”
The plan was at least unusual, and fantastic in that it worked, but there was neither fraud nor misrepresentation. For every order taken accessories were delivered, or stored in the factory or by dealers. And buyers were told, and this was emphasized by dealers, that the automobile was still on a strictly if-as-and-when basis.
When the combined attack by SEC and the Justice Department started May 28, 1948, the first round with SEC appeared to be little more than a continuation of the sniping which had been going on since before the stock was registered. Tucker didn't realize at first how serious it was, partly because to some extent it was overshadowed by the death of Ralph Hepburn.
Hepburn had been racing since 1924, and only one driver had made more appearances in the famous “500.” When he joined Tucker as Western zone manager in 1947 he stayed out of the race, but in 1948 he was determined to make one last try for the win he had so narrowly missed so many times. Nobody, including Tucker, could talk him out of it.
“I've got a lot of money tied up in you,” Tucker told him, “and besides you can't stand to be broken up very many more times.”
Hepburn was then 53 years old and walked with a marked limp, from earlier racing accidents.
“If I get hit this time I won't feel it,” he said.
Hepburn was right. In a practice run May 18 he wound the big Nov up to 132 miles an hour, then skidded off into the infield in the northeast turn, swerved back across the track and into the concrete retaining wall, and was killed instantly.
Tucker had made a special trip to Indianapolis for a last effort to persuade Hepburn not to drive. He was walking over to the track when he heard the crash.
When Tucker got back from the funeral at Glendale, California, he found plenty of problems to take his mind off Hepburn, the most serious of which was the new investigation. It opened officially May 28, but Tucker first heard about it after a meeting June 3 in the Chicago SEC offices, attended by James D. Coolidge, company attorney. There Coolidge was given a copy of the order for the investigation, and told it would be kept secret if the books and records were turned over voluntarily.
Coolidge said he would have to take it up with the company and would let them know as soon as possible. Next day he called James P. Goode of SEC and told him Tucker wanted to take the matter up with the board of directors, and the earliest it was possible to have a meeting was June 8.
Goode said he would clear with Washington, and called back later to tell Coolidge that Washington had authorized waiting until the following Tuesday, June 8.
On June 6, a Sunday night broadcast by Drew Pearson told of the new SEC investigation, and predicted a Department of Justice investigation that “would blow the new Chicago auto firm higher than a kite.” When the information was leaked to Pearson it destroyed the last chance of keeping the investigation secret, as promised by SEC, whether Tucker cooperated or not. By this time Tucker was more than a little weary of such attacks because there was no way they could be answered.
To Tucker it was either a desire to destroy the corporation, or belated retaliation for his treatment of Ted Granik the year before, that prompted Pearson to make such an announcement over the air. Tucker had no possible knowledge how Pearson got the information, if indeed it were genuine, but ultimately it had to come from SEC.
Whatever the immediate source, it was a deadly blow. It was the kind of story that would have far-reaching effects, for simply to mention the Department of Justice was to throw suspicion on Tucker and the corporation, to make him appear guilty before any shred of evidence was produced. It created the kind of talk that Tucker in those days was continually fighting. As soon as one rumor was disproved, another appeared. Some men might have given up then. It only made Tucker more determined.
The rumor of a new investigation with a mention of the Justice Department brought immediate and disastrous results:
Tucker stock dropped to less than $3 a share, a loss of some $6,000,000 to stockholders.
The Air Force lost all interest in Campini.
The accessories program slowed almost to a standstill.
Creditors started pressing for their money.
Suppliers, who had been delivering parts and materials on the usual credit terms, suddenly demanded cash.
Dealers everywhere started worrying about their notes.
To make the situation still rougher, SEC demanded that the corporation's records be delivered to its regional office in Chicago. Tucker was stunned when he heard the Pearson broadcast, and he shook with rage when he learned that the news had leaked to Pearson before he even had a chance to comply. He refused to surrender the records, and SEC filed suit in Federal court.
“SEC made a pre-emptory demand for literally thousands of our files and records,” Tucker said in a press release. “Tying up our records at this time will make it impossible to continue operating.”
Thomas B. Hart, SEC regional administrator, said Tucker was confusing the issue, that SEC had no intention of interfering with production of cars. In the court hearing Tucker surrendered, and said SEC could investigate his records in the plant. At the same time he laid off close to 1,600 employees and said the plant would be closed until the investigation was over.
He had to close. Trying to work with SEC men swarming over the offices would have shattered the morale of employees, and scared the wits out of dealers and distributors visiting the plant. While it wasn't entirely true that the company couldn't operate with SEC checking its records, it was true that Tucker couldn't raise a dime of outside money while the investigation was going full force, with continuous reports that the FBI was on his trail for fraud.
About quitting time one afternoon, when things looked blackest, a few executives assembled in Tucker's office to try to figure some way out of the mess. Somebody suggested that a drink might help. A secretary knocked on the door and much to her surprise was handed a glass and invited to stay. Some of the office help drifted in, and as the word got around they were joined by men from the shop, still in greasy work clothes. Everybody had a few drinks and some, including Tucker, got a bit high.
Some of us in publicity feared that Tucker might lose the respect of his few remaining employees, but we were wrong. The effect was exactly the opposite. Their reaction seemed to be one of pleased surprise and approval, in effect:
“He's human, just like we are. He's got worries and problems, just like we have.”
Tucker had never had his employees so solidly behind him. Even Tucker officials didn't realize how far SEC intended to go until they received a six-page letter listing the records they wanted. The list covered five pages, single spaced, and included the corporation's entire activities since April of 1947: books, correspondence, minutes of board meetings, contracts—in short, everything.
They even demanded all the engineering reports, a mass of material that SEC's few technical men couldn't have evaluated in a year and the rest couldn't even have understood, much less analyzed. In addition to files from the Chicago plant SEC wanted records—presumably down to the last memorandum from two Tucker subsidiaries, the export office in New York and the Canadian branch in Toronto. With Aircooled Motors in Syracuse now a wholly owned subsidiary, its records would likewise be subject to Hart's demands.
To Tucker, the real reason for WAA's rejection of his bid for the Cleveland steel plant was Ferguson's outburst a week earlier, and he also believed that enemies in the auto industry in Detroit had pulled wires to provoke this new investigation.
“It didn't just happen,” he told associates, “that War Assets threw out our bid the same day this new investigation started. Whoever's back of it is sure as hell covering all the angles, because War Assets knows we've got the money, they know we need the plant to stay in business over the long haul, and up to now we've got along swell except for a few arguments, which you've got to expect in this business.”
Tucker struck back with an “Open Letter” carried in newspapers across the country. On the advice of attorneys he didn't name names, but he said:
“Most of the political pressure and investigations we have had to face these last two years can be traced back to one influential individual, who is out to get Tucker ... Now once more we are being investigated. Just at the time we are getting into production on a car that has won the hearts of the million motorists who have seen it, just when the job of making automobiles demands all our time and energy, my associates and I are asked to take time out to testify and explain and refute charges against us similar to those that have been brought up again and again ever since we had the temerity to suggest America is eager for a completely new car.
“What would you think in our place? Would you say it was just coincidence—or would you think it was planned that way?”
What the industry thought, if anything, nobody said, and if Ferguson was disconcerted no indication of it appeared in Chicago. The Open Letter put Tucker on the record, but accomplished little else. That there was political pressure behind the investigation few could doubt, but Tucker didn't have the connections he needed in Washington, or even in Chicago.
One night during this period I flew with Tucker to Detroit, where an appointment had been set up with men reported ready to put up additional capital. As it turned out, the trip didn't even justify cab fare to the airport, much less putting more mileage on the Beechcraft. A small group with offices in the General Motors building offered Tucker $1,000,000 cash for Aircooled Motors. He turned it down for two good reasons: Aircooled was worth easily twice that amount and, more im-portant, the company needed it for preliminary engine production and later research and development. A million dollars looks like a lot of money, but when you need at least ten to twenty times that amount, a million might as well be $500.
The corporation's credit was almost gone and most of the negotiations for new financing stopped after Person's broadcast. With both the SEC and FBI breathing down Tucker's neck, few would risk money in a venture threatened with criminal action by the government.
The company was by no means broke, but it had heavy commitments and a big payroll to meet, and to continue it had to have money—heavy money—and soon. Just before the investigation opened, Tucker was employing approximately 2,200 persons with a payroll of more than $250,000 a month. As long as the SEC investigation continued, with attendant damaging publicity in radio and newspapers, there was little if any chance of getting that money.
Employees who were laid off were understandably unhappy, since there had been an earlier layoff two weeks before when a strike in Detroit stopped delivery of stampings. A mass meeting was held, contributions collected and a committee formed to see what they could do about it. The most spectacular result was a parade of 300 cars through the Loop, with floats and signs protesting SEC's action. The committee got permission for the parade from the traffic department, which furnished a motorcycle escort. It started early on a Thursday afternoon on schedule, featuring six Tuckers and a chassis.
Whether the demonstration was actually spontaneous or not wasn't important; few such demonstrations are. What was important was that, except in the upper ranks, the employees were solidly behind Tucker as they had been from the beginning. A large percentage had bought Tucker stock, even if only a few shares, and the union—Local 88, UAW-CIO—had bought 10,000 shares.
Technically Tucker wasn't supposed to be in the parade at all, it being an employees' demonstration, but he could no more stay away from a parade than he could be in Indianapolis on Memorial Day and not go to the race. Driving one of the polished Tuckers toward the front of the parade, he started talking with a motorcycle cop who came in for a close look. When the parade slowed down, Tucker traded places with the cop and roared happily down the street on the motorcycle, one of the few times he had been on one since he left the Lincoln Park police force. When he came back to the car he waved. “Look, no hands!” he yelled.
“Gee, you got a swell boss,” the motor cop told employees riding on the float behind.
The procession started sedately enough, but before long it developed into what one reporter called “one of the dizziest motor parades in the memory of local traffic cops.” Heading south, the first fifty or so cars went so fast they lost the rest by about five minutes, and when the rest tried to catch up a tail section broke off.
By the time the cars and floats had turned around at 22nd Street, three separate parades were heading north towards the Loop, and when the last two sections tried short cuts to catch up, the result was one of the finest traffic jams in the city's history. At Wacker Drive and Dearborn Street they came in from three directions, with impatient motorists horning in between.
When the paraders got back to the plant, they agreed ruefully that there was little they could do, but at least Tucker knew they were on his side.