Sunday, December 03, 2006
The Preston Tucker Story, 1: Ordeal by Trial
TECHNICSOnce there was a man who dreamed of building an automobile bearing his name: An affordable car of radically new design, with revolutionary engineering and safety features. A six-passenger, four-door sedan, longer, lower and more powerful than any standard American automobile on the road at the time. The dashboard would be round-edged and padded. Mounted in sponge rubber, the laminated safety-glass windshield was designed to pop out in an accident. A center-mounted third headlight at the front would turn with the wheels, giving better illumination on turns. Its rear-mounted engine was designed to cruise at up to 100 mph. An automatic transmission did away with the clutch pedal on the floor. All four wheels were independently sprung.
It was dubbed "the Car of Tomorrow." Compared to Detroit's offerings at the same time, it was that and more. Some of its features have yet to be adopted by American carmakers. Launching the Tucker car would not be easy. The last successful startup of a car company was Walter P. Chrysler's in 1925. In fact, the history of technology is dotted with names of those who tried to introduce a new American automobile and failed: Powel Crosley, Jr., Earl "Madman" Muntz, Macolm Bricklin, John DeLorean, to name a few.
Add to this list the name of Preston Tucker. One difference is that Tucker was defeated by the interference of sinister forces in government and an industry that did not welcome competition. The story of his shabby treatment is one of the darker chapters in the history of technology. Surmounting roadblocks and interference that would have discouraged lesser men, he managed to build 51 of his innovative cars, 47 of which have survived. The Smithsonian's Museum of American History has Tucker car No. 39. Others are scattered across the country in private hands and in museums.
A Trial in Chicago
Our story opens in the brick canyons of Chicago on the fourth Sunday in January of 1950. A wintry wind is blowing off Lake Michigan cold and raw. Pedestrians passing the U.S. Courthouse on South Dearborn Street bundle themselves tighter against the gusts. A close observer might have noticed the line of different-looking automobiles parked in nearly deserted Adams Street alongside the venerable old building. A car buff would have recognized them as Tucker automobiles. They are an important defense exhibit in a trial, although their presence is unrecorded by any court clerk.
Upstairs in the grimly splendid 45-year-old Courthouse, a few lights burn, attesting to the unceasing grinding of the judicial mills. In a sixth-floor courtroom, adorned by artist William B. Van Ingen's heroic murals depicting the development of the law, there is an air of suppressed excitement and anticipation. The jury in the trial of Preston Tucker and seven other defendants has been out since 11 a.m. of the previous day. A brief flurry of activity was sparked that night. An empty Thermos jug was thrust from the jury room with the request that it be filled with hot coffee and that some aspirin and a dozen bottles of Coca-Cola be brought. U.S. District Judge Walter J. LaBuy is in his chambers awaiting the jury's verdict. In the courtroom, bailiffs and attendants are arranged around the room in relaxed and disinterested attitudes. Members of the press lounge on benches outside, bored with it all--or at least pretending to be. The consensus is that the longer the jury remains out, the blacker it will look for Preston Tucker.
Attorneys for both sides reflect supreme confidence. The relatives of the defendants appear anxious, while the defendants themselves--many of whom have long since ceased being friends--smile nervously and watch the door to the jury room for signs of activity. That is, all except one. A handsome man has separated himself from the glad-handers, the inquiring and persistent reporters, and the morbidly curious. His face and its ready smile have graced the front pages of newspapers across the country for many months. Preston Tucker now sits alone, lost in thought.
What does someone reflect on when facing a prison sentence of 155 years and hefty fines? Does he reflect that history was made in this very building, where gangster Al Capone was sentenced for income tax evasion and the Standard Oil Company was fined a cool $29 million? Do the events of a lifetime pass in review? How does a poor boy from a small town in Michigan find himself in a courtroom in the Windy City, hearing his name reviled, hearing himself disparaged as a thief and a cheat?
Small town is right. The only remarkable quality about his birthplace was its name: For some unexplained reason, it was called Capac after Manco Capac, traditional founder of the Peruvian Inca dynasty. On September 21, 1903, Preston Thomas Tucker was born in the unprepossessing little town in the flat peat bog country between Port Huron and Flint. Those who knew Preston Tucker as a young man would have said that he would be the last person to be haled into court on charges of theft and fraud. In his teens, Tucker's parents moved to Lincoln Park, a suburb of Detroit. His first job was as an office boy in the Cadillac Motor Car Company. Here he introduced a revolutionary scheme for delivering the mail. He made his rounds in the corporate halls on roller skates--until the day he ran into his boss, literally.
Years later, when his star flashed briefly across the national horizon, he was asked to contribute biographical data to Who's Who in America. Unashamed of his lowly beginnings, he listed his employment history, starting with his first job as "office boy, Cadillac Motor Company." Not "sales manager," which he wasn't. Not "in charge of document distribution," which would have been an oblique and crafty way of describing his duties. Nor did he leave a gap in the record, with his lowly job conveniently forgotten. And this was when it could have been useful to him to make his record more impressive.
He went from GM's Cadillac division to the Lincoln Park police force. Floyd M. Crichton, a rookie cop with Tucker and later Lincoln Park's chief of police, recalled Tucker as a brash and nervy young motorcycle cop. Tucker's service record included arrests of armed criminals at gunpoint. The time was the Roaring Twenties. Bootlegging was widespread. Lincoln Park was not far from the Canadian border, and Tucker was up against toughs, not young punks.
The needs and urgings of a growing family made young Tucker quit the police force. He took a better-paying job as a salesman for car dealer Mitchell W. Dulian in Memphis, Tennessee. When Tucker needed a sales manager for his own corporation, he would tap Dulian for the post. And, inadvertently, bring him into the courtroom. One of Tucker's co-defendants sweating out the jury's deliberations in Chicago was this same Mitchell W. Dulian.
In 1931, Tucker became a regional manager for the Pierce-Arrow Motor Car Company in Buffalo; two years later he was in Detroit selling Dodge automobiles. Indianapolis was a powerful magnet for Preston Tucker. The city's 500-mile races fascinated him. When the Packard agency in the Indiana capital was offered to him, he jumped at the chance. That way he could be close to the 2.5-mile track known to auto-racing fans as "the Brickyard." In 1935, he teamed up with Harry A. Miller, legendary builder of racing cars. Miller & Tucker, Inc., contracted to build ten V-8-engined racing cars for Henry Ford. By 1940, he had set up his first Tucker company. The Tucker Aviation Corporation, of Ypsilanti, Michigan, began work on combat cars and aerial gun turrets of his own design.
Gearing up for Defense
America's entry into the war brought defense contracts, and he found himself suddenly projected into the national spotlight. His working partner was none other than fiery, redheaded Andrew Jackson Higgins, New Orleans boat builder extraordinary and bon vivant. Their plan was to equip Higgins's speedboats with Tucker's innovative turret. The idea was sound, but a clash of two strong personalities was inevitable. Something had to give. Tucker took his staff and his ideas back to Ypsilanti in 1944 and began dreaming about a postwar car.
In spite of their differences, Higgins always regarded Tucker as "the world's greatest salesman." Speaking in his soft southern drawl, Higgins once warned an associate about Tucker, "When he turns those big brown eyes on you, boy, you'd better watch out." Another early Tucker associate was Abe Karatz--promoter, fast man with a buck, and wheeler-dealer. With Dave ("Long Count") Barry, a former boxing referee, Karatz had been convicted in June of 1935 of conspiring to embezzle funds of the Amalgamated Trust and Savings Bank. He served three years of a one- to five-year sentence in the state prison at Joliet.
When friends called Tucker's attention to Karatz's criminal record, the ex-cop shrugged. Hadn't Karatz paid his debt to society? Besides, Tucker liked the expansive, outgoing Abe. Later, hardheaded realists convinced him that Karatz could be a liability to the corporation. Tucker encouraged Abe to take a new name and a Tucker distributorship, and make a fresh start in Southern California.
After the Tucker car idea was launched in the hectic months following the end of World War II, many people hastened to take credit for the car and its innovations. Most of those who worked closely with Tucker later scattered throughout the automobile industry. Yet it is difficult to find a mention of their association with him in their biographical material.
To Make a Car
Tucker formed the Tucker Corporation in 1946 and set about to make a car. Several experienced executives were associated with him at the start: Robert Pierce, a canny Scot and former secretary-treasurer of Detroit's Briggs Manufacturing Company, the world's largest independent auto body builder; Fred Rockelman, ex-Ford Motor Company sales manager; and Ray Rausch, also a former Ford executive.
Tucker's group had its eyes on the sprawling 475-acre Dodge-Chicago plant in Cicero, Illinois, where B-29 airplane engines had been built during the war. It was now in the hands of the War Assets Administration (WAA) and up for disposal. By the Fourth of July in 1946, a lease was worked out with the WAA contingent upon the Tucker Corporation having at least $15 million in capital by the following March 1st. It called for a minimum rental of half a million per year for the first two years. Thereafter, the rent jumped to $2.4 million a year or 3 percent of the company's gross sales, whichever was larger. To close up the deal, all Tucker had to do was to find $15 million in cash in a hurry.
Tucker worked out a dealer-franchise program to provide quickly available capital. Plans also were set in motion for a $20 million stock issue handled by the Chicago brokerage firm of Floyd D. Cerf. It looked like smooth sailing ahead, but the picture's rosy hues quickly faded. Despite Tucker's contract with the WAA, Wilson Wyatt, quick-rising young politician and former mayor of Louisville, threw a monkey wrench into the deal. Wyatt, who wore the two hats of Housing Expediter and head of the National Housing Agency, directed the WAA to allocate the Dodge-Chicago plant to the Lustron Corporation. Lustron was a company planning to construct prefabricated homes using porcelain-enameled cold-rolled steel panels.
The dispute quickly involved the Reconstruction Finance Corporation, going all the way to the White House before being resolved. And the March 1st deadline--not to mention the entire summer--came and went before the issue was settled in Tucker's favor on September 12 of 1947. Lustron eventually leased an almost new aircraft plant in Columbus, Ohio. Its overpriced homes did not sell well, and the company went bankrupt in 1950. Getting caught between two government agency buzz saws set the Tucker program back by months. It also made powerful enemies in high places.
No sooner were the Tucker Corporation's stock plans announced than another government agency started poking around in its affairs. This was the Securities and Exchange Commission. In the postwar years, the SEC did not confine its activities to regularizing a corporation's stock registration and similar administrative matters. It also aggressively investigated corporations.
Paradoxically, in June of 1947, at the same time the SEC was giving a green light for Tucker stock sales, its press handouts were publicly questioning Preston Tucker's stewardship of his company. The SEC office in Chicago, headed by Thomas B. Hart, scrutinized Tucker's franchise agreements with dealers, claiming the agreements were "a security within the meaning of the Securities and Exchange Act."
Obstruction of Tucker's plans was widespread. To achieve self-sufficiency in automobile production, he decided to buy one of the remaining surplus steel plants being sold by the government. The blast furnace at Granite City, Illinois, operated by the Koppers Company under lease, had a fair value set by the WAA of $2.5 million. Tucker offered $2.75 million for it and was the high bidder. The other bidders were the Fulton Iron Company and a brand new company half-owned by Koppers, Missouri-Illinois Furnaces, organized a week before the bidding was opened.
All bids, however, were rejected; the WAA announced that it had boosted the fair value of the plant to $3.35 million without telling either the Fulton Iron Company or Preston Tucker, and had sold the plant to the Koppers interests for a mere $5,000 more than the newly set "fair value." Justice Bennett Champ Clark of the U.S. Court of Appeals later described these transactions as "surrounded by a pervasive and most offensive odor of skullduggery." Nevertheless, the Court dismissed Tucker's petition for an injunction to stop the sale to Koppers because the WAA had not consented to be sued.
When the last government-owned steel plant, this one in Cleveland, was put on the block, Tucker again was high-bidder. This time the WAA rejected the two bids--Tucker's and the Republic Steel Corporation's--insisting that the bidders first demonstrate their ability to operate the plant and keep it supplied with raw materials. Tucker scoured the markets, buying up materials and making commitments to buy. After months of negotiations with the WAA, the outcome for Tucker was another bitter disappointment. The agency leased the plant to Kaiser Steel with an option to buy--for less than either Tucker or Republic Steel had bid. The only bright spot in the picture was Tucker's acquisition of Air-Cooled Motors, Inc., a Syracuse helicopter engine manufacturer in March of 1948 for $1.8 million. This deal was easily arranged. The sale went smoothly, probably because no government agencies were involved and the sale was entirely in the private sector.
Harassment of Preston Tucker by government agencies, which had been sporadic in 1946 and 1947, reached a fever pitch in 1948. Tucker corporate counsel James D. Coolidge was summoned to the Chicago offices of the SEC, where he was informed that an investigation of the company had been ordered. Secrecy in the investigation was promised--if the company would voluntarily turn over its books and records to the SEC.
A Dire Prediction
Any hope of the promised secrecy was dashed when news of the investigation was leaked to Drew Pearson, a popular newspaper columnist and radio commentator. Pearson publicly predicted that the SEC investigation as well as a projected Justice Department investigation would "blow the Tucker firm higher than a kite." After Pearson's nationwide broadcast, Tucker stock, then selling for five dollars a share, abruptly lost more than 50 percent of its value.
Seeing the hopes and dreams of a lifetime suddenly threatened by cabalistic forces, Tucker decided to fight. He refused to surrender the company's records to the SEC, contending that it would then be impossible to operate. The SEC retaliated by getting a court order requiring the company to open its records. Tucker complied, but closed down the plant to conserve the firm's dwindling funds. Examination of the books, which the company had assailed as a fishing expedition, began. By a curious coincidence, the WAA had rejected Tucker's bid for the Cleveland steel plant on May 29, the very same day the SEC had opened its investigation of the Tucker company.
"One Influential Individual"
Tucker struck back with full-page advertisements in major newspapers. Titled "An Open Letter to the Automobile Industry," he charged that "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." The "influential individual" was unnamed. Identifying him, however, was easy. Most readers knew Tucker was pointing a finger at 60-year-old Senator Homer Ferguson, Michigan Republican, sometimes called "the one-man grand jury" for his holier-than-thou crime-busting activities. Ferguson was also known in some circles as "the senator from Detroit" for his fierce protectiveness of that city's established automakers.
Ferguson and his Senate War Surplus investigating committee had been a prime mover in probing Tucker's failed attempt to lease the Dodge-Chicago plant, and a gadfly in other investigations. Tucker's advertisement also charged that the unnamed individual's wife owned a controlling interest in an automobile company subsidiary. Even more damaging, the tab for an elaborate party for the unnamed individual at a Washington hotel was paid by a Detroit automaker. The ad did little to stem the tide of bothersome investigations, but it undoubtedly made Tucker feel good to hit back at his tormentors.
By the late summer of 1948, stockholder groups were filing suits asking receivership for the immobilized company and alleging the danger of financial collapse. These suits continued throughout the fall and winter of 1948, punctuated by the resignations of corporate officers and directors. No one ever left with a whimper, always with a bang. Perhaps the reason was Tucker's own colorful and aggressive personality. Copies of resignations were invariably hand-delivered to newspaper offices and wire services. The departing executive would call a press conference, where he would announce to the world what was wrong with the ailing Tucker Corporation: The problem always was none other than Preston Tucker.
American corporations have had their share of growing pains and organizational headaches, but it is doubtful that any company had the sorehead quotient of the Tucker Corporation. Among other low blows the corporation suffered in 1949 at the hands of the government, the first was U.S. Attorney Otto Kerner's. announcement that the February Grand Jury would investigate Preston Tucker and Tucker Corporation activities.
Otto Kerner, Jr., was married to the daughter of Chicago Mayor Anton J. Cermak, killed in Florida by an assassin's bullet intended for President-elect Franklin Delano Roosevelt in 1933. Tucker hailed the action as "an opportunity to explain our side of the story." Subpoenas were issued, and a parade of witnesses began before the 23 jurors making up the panel.
March 3, 1949, marked another disaster. Tucker lost control of the corporation bearing his name. On that date, Judge Michael L. Igoe named two trustees, Aaron J. Colnon and John H. Schatz, to operate the company. Tucker called them, "Igoe's pet trustees." They soon became another rich news source, providing journalists with information about the company's tangled affairs.
Ten days later, readers of the Detroit News opened their Sunday paper and were confronted with the headline, "Gigantic Tucker Fraud Charged in SEC Report." The explosive front-page story was by Martin S. Hayden, the paper's Washington correspondent. U.S. Attorney Kerner said he would demand an immediate Justice Department investigation into the apparent leaking of a confidential SEC report. Edmond M. Hanrahan, chairman of the SEC, rushed from his Long Island home to the SEC's Philadelphia headquarters, and then to Washington to trace the leak. If these investigations turned up any evidence, it was never made public. Instead, Tucker, already reeling from these blows in the government's vendetta, was hit again on June 10. U.S. Attorney Kerner announced the indictment of Tucker and seven associates or former associates on 31 counts--25 of mail fraud, five of violations of SEC regulations and one of conspiracy to defraud.
Listed on the indictment with the 46-year-old Tucker were Harold A. Karsten, 58, (additionally identified as "alias Abe Karatz" in his subpoena); Floyd D. Cerf, 61, whose firm had handled the stock offering; Robert Pierce, 63; Fred Rockelman, 64; and Mitchell W. Dulian, 50. Also named were Otis Radford, 42, formerly Tucker Corporation comptroller, and Cliff Knoble, 42, former advertising manager, who only recently had sued the corporation in a dispute over back pay. Tucker called the charges silly and ridiculous, pointing out that a so-called "secret investigation" like the SEC's could upset any company, strong or weak. Bail was set at $25,000 for Tucker, Karsten, Cerf and Pierce and at $10,000 for the other four defendants.
Despite the government's offensive against Preston Tucker, the country was behind him. This support was epitomized in a letter to him from someone in Sydney, Ohio. Signed Dated June 11, 1949, it said: "I was just getting ready to buy one of your cars when the big boys squeezed you out. I wouldn't give up so easy. Why not ask everyone in the country to send you a buck. With approximately 160 million in the country, you should be able to get $50 million. Here's the first one. Good luck." A single dollar bill was attached.
In its issue of June 25, 1949, Collier's magazine, featured a damaging article by writer Lester Velie. Entitled "The Fantastic Story of the Tucker Car," it contained much the same information as the Detroit News account, but in greater detail. Clearly, persons had written both stories after having access to the confidential SEC report. Adding fuel to the fire, the widely read Reader's Digest picked up the Velie article and ran a condensed version in its September 1949 issue.
A Trial Begins
The Tucker trial got underway October 5, 1949, in this poisoned atmosphere. Newspapers carried the story of jury selection under the same headline that announced "Tucker Loses Dodge-Chicago Plant." Federal Judge Michael L. Igoe approved the return of the $172 million plant to the WAA, but gave the court-appointed trustees 60 days to sell Tucker's lease or reorganize the company. Any chance of producing Tucker automobiles was rapidly evaporating. Preston Tucker was now fighting for his life. It would take a miracle to save him.
Assisting Otto Kerner in prosecuting the case were Robert J. Downing and Lawrence I. Miller. Handling the Tucker defense were William T. Kirby, 38, and Frank J. ("Spike") McAdams, 38. During the war, Kirby, a graduate of the University of Notre Dame and its law school, had served in the Army's Corps of Engineers. McAdams, a feisty New Yorker and Navy veteran, had lost his right arm in the invasion of Leyte.
At every stage of the trial, defense requests to see copies of the SEC report were denied. The prosecution insisted it was classified "secret." The defense argued that this was clearly not the case since the report had already been shown to publications unfriendly to Tucker. Even Judge LaBuy remarked, "To permit the SEC to expose the report to the public press and have the District Attorney deny the same right to the defendant shocks the Court's sense of justice, fairness and right." Nevertheless, the defense was never shown the report.
The government began the procession of witnesses whose testimony was expected to weave a web of guilt around Tucker and the other defendants. Five days later the trial came to an abrupt end. Mark Mourne, former secretary of the Tucker Corporation, was on the stand. Assistant U.S. Attorney Miller asked the witness whether he recalled having a conversation with Preston Tucker about Karsten.
Floyd R. Thompson, representing stockbroker Floyd D. Cerf, objected to the line of questioning. Out of hearing of the jury, he argued that the question was designed to elicit disclosure about Karsten's past. The government attorneys denied this. Questioning of Mourne was permitted to continue. Miller asked, "What was the substance of your conversation with Mr. Tucker?"
The witness, who was Tucker's cousin, responded, "I told him that Mr. Karsten had a criminal record and that...." The rest of Mourne's statement was drowned out by the vociferous objections of the defense attorneys who jumped to their feet and protested. Judge LaBuy granted the defense's motion for a mistrial and ordered a new trial to start in one week. This meant a new jury would have to be selected. Ground that had already been covered by previous witnesses would have to be gone over again.
Jury selection was completed October 18. Evenly divided, with six men (a carpenter, a painter, a bookkeeper, a salesman and two machine operators) and six women (a telephone operator, four housewives and a widowed apartment building owner), it was as representative an American jury as could be wished. The stage was now set for a replay of the punitive trial that would determine Preston Tucker's fate.