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Chapter 30 What Went Wrong? Book: The Indomitable Tin Goose Subtitle: The True Story of Preston Tucker and His Car Author: Charles T. Pearson Publisher: Abelard-Schuman Year: 1960 |
30 WHAT WENT WRONG?
THERE COULD BE no valid criticism of the Tucker's performance, and the government's own investigation showed it could be built competitively. And there was an assured market, proved by experienced dealers and by people who bought some $2,000,000 worth of accessories just for a chance to buy the car.
So why the continued and determined opposition from the government, and the pretended surprise when Tucker needed more money? This was spelled out clearly in the prospectus, warning that failure to obtain such funds might result in “substantial losses” to investors.
At the time it was charged the deal was born in nightclubs and cocktail lounges, proving it was a swindle from the start. Cocktail lounges played their part, it is true, but chiefly in Washington, where no one in his right mind makes a confidential call through a hotel switchboard, or talks in a room that might be bugged. If part of the deal was made in saloons, Tucker had distinguished company.
It will be said the guy tried and missed, so what of it? Who cares? If it were only the story of Tucker there could be little argument. But it is also the story of a lot of ordinary people who bought stock and franchises. Some were gamblers and shrugged off their losses. Many were not and came to suffer hardship, even poverty. There was at least one suicide. And there was a smaller group of skilled and devoted men, who accomplished near miracles trying to make Tucker's dreams into reality.
It is to these people, if to any, that some explanation seems due. People one columnist called “ ... gullible souls ... misguided and accepting fallacies with something approaching religious fervor.” Throughout history such people have followed men who believed unshakably in themselves, who became prophets of a sort—and Preston Tucker, with all his faults, was one of these.
Probably the deciding factor against Tucker was the government's refusal during the entire time to recognize, officially at least, that the design was advanced and practical, and there was a waiting market. Even the engineering report to the trustees was kept under wraps until long after the trial.
John N. Kern, an attorney at the plant, lost only a few days when it was closed, going back to work on the trustees' payroll. Kern said he and another Tucker white collar man decided to find out for themselves how the car drove and what it was like.
“There was a straight gravel road inside the plant about a mile long,” Kern recalled. “We put the Tucker against a Hudson, one of the hottest stock cars that year, and the Tucker beat it in every gear. We put it against other cars in clay up to the middle of the hub caps, and it was the Tucker that walked out.
“The first time you stepped on the gas in low you would scare the hell out of yourself. Sometimes we took other people along and first thing we knew we had a waiting list. So we decided everybody who worked there ought to drive the car at least once.”
There were still about 300 people on the payroll, so they gassed up three Tuckers and lined up the people at one end of a mile and one-half course inside the plant grounds.
“There was one little guy with a Polish name they called Joe,” Kern said. “Maybe Personnel knew his real name but nobody else did. When Joe got under the wheel he could just barely see over it, but he put it in first as he was told and stepped on it.
“He got up to fifty-five before somebody told him it was time to shift, and when he got past sixty he was having a little trouble. The car started to weave and one of his buddies in the back seat told him, 'Hey, Joe, take it easy!'
“When we got out Joe's buddy said, 'You know, that's the first time Toe ever drove a car?'”
“That right?”
“Yup. But he said he always heard anybody could drive a Tucker, and he wanted to find out.”
There were not only plenty of Tucker cars, but millions of dollars in tooling and equipment, supplies and raw materials, most of which was sold later at junk prices. But with the evidence right under its nose, the government insisted throughout that the car was a fake and Tucker was a phony who never intended to build automobiles. The slander spread and multiplied, and Tucker was branded a fraud by people who wouldn't have known a butterfly valve from a spline shaft. One dealer commented at the time:
“A lot of jerks who never handled more than $6,000 or $7,000 a year in their lives suddenly knew exactly how $20,000,000 should have been spent.”
It is possible that the prolonged investigation by SEC and the FBI produced enough dirt on Tucker personally to make certain officials feel justified in knocking him off. But there was no possible justification—either legal or moral—for misrepresenting the Tucker automobile to achieve that end.
The government not only ignored evidence in its own possession, it disregarded the testimony of competent and experienced dealers across the country. Some of the basic principles of the Constitution are to guard citizens against injustice from their own government, and Tucker—whether innocent or guilty—was entitled to that protection.
Tucker's collapse started with the leak from SEC to Drew Pearson, and accelerated after the succeeding release of confidential information to the Detroit News and Collier's. Tucker people, after the News story, waited anxiously after the government announced it would investigate the source of the News “confidential” report. If the FBI expended one tenth the energy checking the leak that it did finding out about the backgrounds of Tucker's associates, the Justice Department should have had the answer that same night.
The law was clear and specific regarding treatment of information obtained during investigations, and the Justice Department was bound in theory at least—by the same laws which governed SEC. And there could be no question whatever that both agencies considered the information secret and confidential.
During the trial Assistant U.S. Attorney Lawrence Miller, referring to documents he said would be made available to the defense, told the court:
“But among these documents certainly is not the confidential report of the Securities and Exchange Commission. As far as the reference to Collier's and the Detroit News is concerned, why, we don't know anything about those newspapers, or where they got their information, if they got it.”
Velie's deposition said he was given the report to read and use in Kerner's offices in the Federal building, and in Hart's office, where Hart furnished him office space and a desk.
A deposition taken from Martin S. Hayden, Detroit News Washington correspondent, told a similar story of duplicity and intrigue. Hayden said Harry A. McDonald, then Commissioner of SEC, gave him the report to read in a room at the Statler Hotel in Washington.
McDonald, as Commissioner of SEC, could hardly plead ignorance of the law, much less after two years in law school at the University of Chicago. Yet he admitted giving the report to Hayden, in direct violation of the law, and later told a Senate committee:
“My purpose was to protect the Commission against unjustified criticism and to maintain public confidence in the Commission. I would unhesitatingly do the same thing today under similar circumstances.”
But the pressure didn't stop with McDonald and Kerner. Hayden's deposition said while SEC refused to let Tucker even see the report, still insisting it was “confidential,” he got a copy from the Tucker trustees for News attorneys to use in fighting Tucker's $3,000,000 libel suit. Asked why he went to the trustees, Hayden explained:
“Well, I could not get the detail of it from the SEC, and I preferred not to cause Mr. McDonald any more trouble, and the trustees had it. I knew that. I talked with the Justice Department about it, and the Attorney General said he saw no great objection to my having the report, but there was a considerable problem as to how they were going to copy it in order to let me have a copy of it. It just seemed the easiest and most logical place to get it was from the trustees.”
The government's part in the whole drama posed some interesting questions. Why wasn't the information on Hart and McDonald made public at the time? Was protecting McDonald's name and SEC's prestige more important than justice to Tucker and Tucker investors? And why was the government still supporting the News against Tucker, long after the trial was over?
Was there a conspiracy of silence that included even the Attorney General's office?
Whether the leaks came from SEC or Justice wasn't important. It was SEC's responsibility to keep its findings and opinions confidential and if the first leak was an accident or a mistake, the Commission could have made it right with a public statement. But it never did. The leaks which followed were in the same pattern, and again the government made no traceable effort to minimize their effect, or to expose the people who were responsible.
Tucker shot some fast angles and cut some corners, but there wasn't enough evidence to convince the jury that he was wantonly dishonest, or that he wasn't sincere in trying to produce automobiles. When the final score was in on both sides, about all it proved was that the opposition held the high cards. Careful study of the evidence points to only one conclusion: the government itself destroyed the corporation.
Trying to answer the question of what went wrong with Preston Tucker and his car isn't a simple matter of re-reading the script to separate the bad guys from the good guys. Because designing and producing an automobile isn't as simple as painting a picture or composing a symphony or raising hogs. The story becomes complicated because so many people are involved. Other companies and other industries. A variety of conflicting talents, personalities and interests which can never be merged into a smoothly operating whole, because the picture itself changes from day to day, even from hour to hour.
It isn't like taking some simple new product such as, say, a can opener to a company and saying: “Here, make this.” No one man could ever get an automobile into production, no matter how gifted or how determined.
One of the early steps is analyzing the problems that others in the field have faced, and how they solved them. No one man knows the answers, whether in finance, production or sales. There must be limitless cooperation and innumerable advisers and experts. Some will be tremendously valuable, others will prove useless. When you start from scratch in a venture this size you have to get help where you can find it, with little or no guarantee of either competence or loyalty.
General Motors, greatest in the field, has lost millions when somebody goofed or conditions changed, even with many of its complex operations long since reduced to formulas. Like government, it has become so vast that no one man can even know its many activities, much less understand them. Every big corporation, including General Motors, has its bona fide experts and its phonies. Tucker, on a smaller scale, was no exception.
Starting with a new and simplified design may, from the outside, look relatively simple. But even the most carefully worked out designs will have to be worked over endlessly, as the many people and departments involved demand changes that are necessary for their purposes. Such changes may result from whim, with authority behind it. Others stem from real or imagined necessity, most often from purchasing, production and sales. The end result will inevitably be a compromise that will placate, if not satisfy, the many persons and departments involved. Even then the design cannot remain static, because progress is a continuous process and only progress can meet competition.
When Tucker crashed the automotive field he found a hostile industry that was solidly entrenched and wanted no interlopers poaching in its private preserve. The auto industry was long established, it had learned the rules of government, even helped to make them. So when a newcomer like Tucker entered the field with an ingenious and practical plan to raise capital, the government was there, ready to block him.
“You can't do it that way. You will have to do it this way.”
There were other rules, hundreds, even thousands of rules, and the government was there ready to enforce every one of them. When a newcomer tries to cut corners he invites the law to land on his head.
Besides the opposition of powerful competitors and the constant harassment by government, there was the seething and ferment that is a part of any large organization. People inside and out who want to capture part or all of the operation and take it over. Plots and counter plots, ambition and intrigue. Angle for a raise. Undercut the boss and get his job. Sell out to the enemy and get a better job there. Dethrone the king and take over.
These, in ridiculously simplified form, were the problems that Preston Tucker faced when, on a comparative shoestring, he horned into one of the most savagely competitive fields in business today. It is a tribute to his ability and determination that he got as far as he did.
Who could have done any better under the circumstances?