Pierre S. Du Pont and the Making of the Modern Corporation
By Alfred DuPont Chandler and Stephen Salsbury
2000/12 - Beard Books
1587980231 - Paperback - Reprint - 738 pp.
It is truly one of the finest business histories ever written by an author who won both the Pulitzer and Bancroft Prizes for History.
This meticulously researched biography of Pierre S. du Pont, head of the Du Pont Company and later General Motors, describes how the Delaware scion took a loosely run, family gunpowder factory and turned it into a giant corporation. Moreover, by astute business management he transformed a faltering General Motors into one of the world's most profitable enterprises. Chandler and Salsbury, who had access to business and personal records rarely available to historians, made the most of them. It is truly one of the finest business histories ever written.
The Man who Bought General Motors, November 5, 2001
When we hear about the Du Pont Company with think of synthetics and even nylon, but few realize that the Du Pont Company was founded as a maker of explosives - - black powder to be exact and that this firm was founded in 1802.
On it's 100th anniversary, the firm was about to go under as its family-owners due to age, illness, or other factors could not find a successor following the death of Du Pont's president and patriarch. Some of the Du Ponts who were involved in the day to day affairs were too old to run the firm and wanted to sell out. But the youngest of them, Alfred, was in his early thirties and he would not hear of his birthright being sold out from under him. In one of the first modern large scale leveraged buyouts, Alfred and his two other young cousins, Coleman du Pont and Pierre du Pont, bought the firm from the family for the stupendous sum, in 1902 dollars, for $12 million.
And now the story gets interesting!
The three cousins proceed to build the Du Pont company until, some years later as the firm thrived, Coleman decides to step out and in a move on. Coleman's departure (into politics no less) meant Coleman's shares were up for grabs. And in a almost Byzantine set of events, the shares ended up in Pierre's hands. That outcome embittered Alfred until his death and led to a split in the Du Pont family's allegiances with Pierre garnering the lions share of family support.
World War One brought a windfall of profits to Du Pont that had expanded far beyond black powder. Adding smokeless powder and dynamite to its products and selling to the powers fighting the war, Du Pont Company soon was, probably unfairly, dubbed "the merchants of death."
But the real story here is not of Alfred and Pierre, although this story is well known and documented in other interesting books. Nor is it the story of the explosives business in World war One and the eventual break-up of Du Pont. Like Standard Oil, Du Pont was considered to big and powerful and the firm was split into Du Pont, Hercules, and Atlas. But even that story is prelude to the real story and subject of this interesting book. Bill Gates at Microsoft would do well to think through what happened to some of the large firms in at the turn of the century that seemed to control their markets far too tightly.
The key player and genius that Chandler and Salsbury focus on is Pierre Du Pont and how his genius transformed Du Pont from an explosives manufacturing company into one of the most modern industrial giants of the day. Undaunted by the split up of Du Pont, Pierre set sail, so to speak, and acquired Durant's failing automotive manufacturing firm, General Motors.
It was Pierre du Pont who hand picked Alfred P. Sloan to serve as President while Pierre was Chairman of the Board of GM. And although not the only story that Chandler covers, it is interesting to see how tight a reign Pierre held over Sloan and how Pierre incentivized the future GM President and others in Pierre cadre of senior managers.
As one reads about the operating problems facing the current Chairman of Du Pont, Chad Holliday, we see that the issues are in many ways the same ones - - a global economy and getting feed-stocks to keep the firm running in a world where we need three world worth of resources to supply the one world's worth of people on this planet.
Ultimately, there was too much power in the Du Pont Company as Du Pont acquired Fisher Body from the Fisher brothers, and Delco, and put its hooks into the tire business. We watch the vertical integration of not only GM, but Du Pont and its interlocking directorates.
This book is a "good read" for people who enjoy business history and the behind the scenes pulling of strings by the captains of industry when they were called "robber barons" among those writing yellow journalism.
Yet for its faults, Du Pont was and continues to be perhaps the greatest industrial firm of all time and its staying power of two centuries is no accident.
Chandler and Salsbury weave together hard facts along with an interesting narrative to give a vivid picture of business in an age of new strategies and modern structures that have stood even into the so-called information age and virtual corporation. For those who do not wish to wade through the hundreds of pages of "Pierre S. Du Pont and the Making of the Modern Corporation," I highly recommend the broader and less intense, although equally fascinating "Strategy and Structure," also by Alfred D. Chandler. Much of the material in "Strategy & Structure" can be found in "Pierre S. Du Pont and the Making of the Modern Corporation," along with the stories of GM, Standard Oil and Sears and the coming of vertical integration to those industries. If that book does not sate the appetite, by all means read "Pierre S. Du Pont and the Making of the Modern Corporation."
On a personal note, my first job out of college was at Du Pont and it was the best five years of experience I ever had in industry. It was the very end of the 1960's and the last of the "grand old men" of the Pierre era were leaving the firm, but I caught the tail end of it enough to see what Chandler and Salsbury write and they captured it, but good!
Again, if you like business history, Harvard Business School case method style, I recommend this book without hesitation.
Alfred D. Chandler, Jr. received an AB in 1940 and a PhD in 1952 from Harvard University. He has taught at MIT and John Hopkins University, and since 1970 at the Harvard Business School. He became Professor Emeritus in 1989. He is the author of several books, among which is the Visible Hand: The Managerial Revolution in American Business (1977) that earned both the Pulitzer and Bancroft Prizes.
Other Beard Books by Alfred D. Chandler Jr.:
Stephen Salsbury was an Associate Professor of History at the University of Delaware when he co-authored this book. He is also the author of The State, the Investor and the Railroad: The Boston and Albany 1825-1867. He later became Chairman of the History Department at the University of Sidney, Australia. He is now deceased.