Here’s a new thought after rereading the history of Studebaker for the 100th time.
Albert Erskine took over as CEO in 1918. Under his rule Studie prospered and handed most of the prosperity to shareholders. Erskine believed in paying the stock criminals first and letting the company (facilities, workers, development) have the leftovers.
Some of the other smaller companies (Nash, Hudson, Packard) ran the opposite way. Nash did it best. They improved factories and paychecks first and allowed the stock criminals to have the leftovers if any.
Because Studie hadn’t been building up a reserve of cash or skill, it reached bankruptcy in 1934. The same thing happened to Willys for the same reason, though less extreme. John North Willys had been behaving like GM, acquiring companies instead of improving his product.
New thought:
After bankruptcy Studie and Willys were state-owned enterprises.
Like the Post Office, they were private companies regulated to serve a public purpose.
Studie’s bankruptcy judge was a South Bend man who liked the city and wanted its people to succeed. He recognized that Studie was the main source of wages for South Bend, and carefully reshaped the corporate policy to serve the WORKERS instead of JP Morgan.
The company returned to prosperity after it allowed the stock criminals to lose everything, which was the LEGAL and ORIGINAL purpose of stock shares. The managers continued running it to benefit South Bend until the 50s when they started acting like GM again.
Unsurprisingly they went bankrupt again, but this time they were “saved” by an even worse stock criminal. After foolishly merging with Packard they had to accept a leveraged buyout by Curtiss-Wright Aviation, who followed the LBO playbook. Crash the company into the ground, steal the useful assets (Packard’s aviation plants) and get a tax writeoff.
Willys was forced by the court to make only one product, the small Model 77. The focused skill enabled them to grab the Jeep contract in 1941. After the war Willys continued SOE behavior, focusing on its best skills. It survives today, at least in name and symbols, after being bought by several different companies. Staphylococcus, the latest purchaser, appears to have replaced the real Willys descendants by restyled Fiats.
Moral of the story: A state-controlled enterprise works. A state-controlled enterprise makes things and provides services and pays workers. Stock-controlled enterprises enrich Larry Fink and ruin everyone else.
The Soviet system was centered on skills, not stocks. Like the bankruptcy judge, Gosbank gave each company its own skill or niche. Each company and its workers built up an increasing reserve of skill capital.
Polistra's Mill 