TheRise and the Fall of Tucker Corporation
Upto date, the rise and the fall of Tucker Automobile Corporationremains an intriguing piece of automobile history in United States.The Tucker Automobile Corporation was a company that manufacturedcars after the Second World War from 1947 to 1948 (Berger, 24). Thecorporation is located in Chicago, Illinois, united states. Tucker isa unique car, named after its manufacturer Preston Tucker. Prestonwanted to bring awareness to the American public on his newinnovative car design with emphasis on safety and performance andsafety features. The car was different from the rest with especiallyin its designs. The car had a huge, fuel-injected, six-cylinderengine that was mounted in the rear. Preston also claimed it was oneof the cars with the highest speed and maintaining cruising speed. Inaddition, the car had a revolutionary delivery system with hydraulictorque converters hence, the car can eliminate transmission, driveshaft, the need for a clutch, and differential. Unluckily, Prestondreams never came into full completion. In 1948, Tucker AutomobileCorporation named its cars as “the car of tomorrow.” Just likethe name suggest, the cars were not manufactured but were yet to bemanufactured in the future hence the name tomorrow. Likewise, thecars were of high performance standard and the most developed car atthe time. After the Second World War, everyone wanted to own a carfrom the Tucker Automobile Corporation. Surprisingly, only fiftypeople got the chance to own one.
Upto date, historians and economists cannot explain the mystery behindthe fall of the corporation. In 1998, Francis Ford Coppola composed“Tucker: The Man and His Dream” movie to show the difficultiesthat the company faced as it tried to produce cars one year ahead ofits time. He bases the movie on the rise and the fall of the Tuckerautomobile Corporation since its establishment. The movie attributesthe fall of the Corporation using public choice theory (Berger, 56).In the movie, Francis Ford suggests that the alliance between theS.E.C and the auto mobile company is the main course of its fall,whereas historians do not approve it. Instead, they say that its fallis due to two reasons. First, they urge that corporation lackedfinancial planning and its refusal to utilize loans terrified awaycapital venture. Secondly, they reason that the collapse of thecorporation is due to S.E.C arguments that the Tucker business ofselling car accessories was illegal. They filed a court case againstthe corporation, and as a result, the corporation used a lot of moneyleaving it bankrupt.
In1948, Tucker Corporation was so determined to rise. In fact, it wasgiven the title “car of tomorrow” basing it on its performancestandard. Indeed, the company cars were some years ahead of time. Thecars had security facilities such as pop-out windshields, seat belts,and middle light bulb that turn on with the steering wheel and otherunique characteristics. For instance, Tucker ’48 has a fuelinjection, disc brakes, rear engine, and has a speed of approximatelyone hundred and twenty miles per hour. The company managed tomanufacture fifty one cars before it’s down falls. Among them,forty seven of them are still roadworthy each with a value of morethan two hundred and fifty dollars. This makes the private enterpriseeconomists to questions the reason of the corporation bankruptcybesides its high innovation and superior car designs in the market.
Historyof the Tucker Automobile Corporation
Themain founder of the Tucker automobile corporation is Preston Tucker.He was born on September 1903 in Capac, Michigan. His mother raisedhim single handedly after his father died when he was two years old.Preston grew up in the suburb of Lincoln Park, Michigan. Atchildhood, Preston was obsessed with vehicles and automobiles. Heattended Cass Technical High School, but he quitted to become anoffice boy in Cadillac Motor Company (Flory 89). Here, his role wasto make roller skates. At the age of 11, Preston had already learnthow to drive. At the age of 16, he began to purchase automobiles andhe would refurbish and repair them. He delved into the business ofbuying and selling vehicles. Later in 1922, Preston joined Michiganpolice department in Lincoln Park, though against her mother’swill. However, his interest still remained in the automobilebusiness. He desired to come up with the fastest, high-performancecars and motorcycles. Later, Preston sold Studebaker cars where hemet another automobile salesman Mitchell Dulian.
In1930, Preston met with Harry Millar, maker of Indianapolis 500engines with whom they joined together to form Miller and TuckerCorporation. They built car races such as 10 Souped-up V-8 racercars. The company continued until the death of Miller in 1943. In1940, Preston formed the Tucker Aviation Corporation to manufactureaircraft and marine engine (Langelett 45). However, the companyclosed down due to financial problems. After the end of Second WorldWar, Preston moved back to California where he started he own companywith the aim of building and designing combat cars for the unitedstates army forces. He named the company as Tucker AutomobileCorporation. He designed the cars to have an armored narrow-wheelbasewith a gun turret machine on the top. In addition, the combat car wasdesigned to have a maximum speed of one hundred and fifteen miles perhour. Surprisingly, the army department rejected it on the basis thatit is “too fast” for a combat car. Fortunately, the U.S Navypurchased the car’s gun turret machine to use it in the P.T. boatsand in B -29 and B -17 bombers. As the war came close to an end,there were low orders of the gun turret machines, and Tucker startedto design new types of vehicles.
Duringthe Second World War, Preston focused on making military equipmentthat he distributed to most of the European countries. After the war,this business was not performing well hence, it was Preston’s timeto fulfill his ambitions. He wanted to build the “car of tomorrow”which would have high performance standards, as well as highsecurity. In 1945, after the war, Preston came up with the Tuckerautomobile corporation (Flory 78). However, Preston had few dollarsto start the company and he did not have some land to allocate hisbusiness. Luckily, the U.S military had large firms that were earlierused to build tanks, planes, and ship and they were no longer in use.The War Assets Administration (WAA) was mandated to oversee the sellthese installations. Preston won the lease being the only bidder ofthe Dodge plant. The plant was allocated in Cicero, IL. In 1946,Preston moved his corporation to the Dodge plant after signing thelease to pay one million dollars by the first day of October in 1946,and the rent for the following two years. In addition, the leasestated that he had to pay $2.4 million every year thereafter.
TheFall and the Rise of The Tucker Automobile Corporation
Initially,Preston would not manage to pay are the requirement of the leaseagreement. The WAA extended the rent payment date from October 1946to March 1947. Unluckily, Tucker would not still afford to pay it,and the WAA further pushed the rent payment date to an ultimatum dateon the first day of July 1947. Still, the WAA insisted that theTucker Automobile Corporation had to pay a total of fifteen millionin order to renew its lease. However, this money was a lot for thecorporation to pay at once. To clear the debt, Preston opted applyfor a bank loan. However, he feared that the bank would take controlof the corporation in order to give such a huge amount of money.Instead, Preston decided to sell car dealership in order to raise themoney. Contrary to the norm, Preston did not contact the Securitiesand Exchange Commission and he argued that a business does notrequire permission to sell franchise and dealerships unlike in thesale of stock and insecurities (Papillo n.p). Since itsestablishment, the corporation received a stiff opposition from thegovernment federal agency, the Securities and Exchange Commission.Unfortunately, the SEC started to investigate the corporation salesof franchises and dealerships. It urged that the sale of a dealershipis not the same as the issuing stock hence, the company had to beinvestigated. The SEC forced the corporation to amend the dealercontract which made the corporation to go bankruptcy. The Tuckerautomobile Corporation managed to pay only six million dollars out ofthe fifteen dollars. This contributed greatly to its fall since thecorporation was only recording a loss. In addition, the SEC delayedin approving the Tucker corporation stock offering. Preston believedthat inviting the public to buy their profit would encourage them tojoin his enterprise whereby some would become part-owners.Correspondingly, the part-owners would take the risk of ownershiphence, they would share profits of successes, as well as losses offailure. Preston used the money from the sale of dealership and stockto design and build Tucker ’48 (Tucker n.p).
Thesecond major downfall of the Tucker automobile occurred in November1946. After signing the lease agreement, the National Housing Agency(NHA) ordered the WAA to terminate the contract. The NHA wanted thelease to be given to Lustron Corporation that built prefabricatedhouses. NHA urged that houses were more important compared to carsand especially after the war. From November 1946 to February 1947,the Senator Homer Ferguson worked hard to break the lease agreementbetween the WAA and the Tucker Automobile Corporation (Pearson 103).On the other hand, Tucker spends all this time solving the matter incourt. On February 1947, the court ruled out the case in favor of thecorporation. Preston continued to use the plant and WAA extended thelease payment date up to July 1947 when the company would afford. Itonly managed to pay six million dollars. To settle the bill, thecorporation decided to sell its stock. This time, Preston approachedthe SEC and offered to give it twenty million dollars to approve. TheSEC approved the sales with the condition that the corporation had tobuild a work prototype in Dodge plant. On July 1947, the corporationcompleted the construction of the prototype and nicknamed it “TinGoose.” Nonetheless, the SEC never stopped to harass Preston. TheDetroit Senator, Homer Ferguson started the battle to crush downTucker Automobile Corporation (Tucker n.p). He persuaded the SECcommissioner, Harry McDonald to investigate the Tucker Corporationagain. Interestingly, the SEC spent more money while investigatingTucker Corporation than the money the corporation used to design andmanufacture the one car. The collapse of the Tucker can be blamed onthe SEC that was always against it.
Atthe same time, Preston started to advertise his company all over theworld to gain popularity and establish a good name for his products(Pearson 90). Unfortunately, he was advertising a product that didnot exist in reality. Though he believed that he would manufacturethe car, people show this as empty promises. In the meantime, threestrong car companies planned to squash Tucker. They collaborated withthe senator and make sure that Preston would not purchase steel fromanyone.
In1947, the Tucker automobile won the court case on the rumination ofthe lease agreement. In the same year, it completed the constructionof the work prototype. In the meantime, thing seems to be moving onsmoothly. The company now focused on the construction of ’48prototype, and converting the dodge plant into a production firm.Regrettably, problems started to rise again in 1948. The sale ofstock only managed to raise fifteen million whereas the corporationexpected a sale of twenty million (Phillips 102). Additionally, thecompany had not started to record any profit despite employing morethan one thousands employees. Further, the corporation did not havesources of revenue yet it needed some money to buy car spare partsand steel. At the same time, WAA requested the Tucker AutomobileCorporation to pay them $2.4 million as part of the lease agreement.This time, Preston came with a pre-purchase plan for the Tucker ’48(Tucker n.p). This is whereby customers would first pay for the caraccessories and then pre-order for the features they want for thecompany making it. For instance, a customer would pay some amount tothe corporation and then give details of the desired accessories suchas seat covers, radio, and color, among other. By the use of thisstrategy, the corporation managed to raise two million dollars withinone year by pre-selling its products.
In1948, the SEC started to investigate the corporation again. Thistime, they realized the corporation was pre-selling it products whichaccording to the law were illegal and a form of fraudulent (Rehmke,n.d). Accordingly, the SEC ordered the Tucker automobile to stop itsproduction and shut down its business as it waits for furtherinvestigation. In the same year, Preston responded to the allegationthrough an open letter. He published his letters in all the UnitedStates newspapers to air his grievances. In the following year, thecorporation was bankrupt and it closed down. In the same years, theTucker Corporation was brought before the board of directors andcharged with fraud offence. The directors liquidated the corporation,and the WAA confiscated the corporation for its lease paymentfailure. As a result, all the Tucker Automobile Corporation assetswere sold including all the manufactured cars. Later, the WAAterminated the lease agreement with the Tucker Corporation and signedanother lease with Lustron Corporation that dealt with pre-fabricatedhousing.
Afterthe collapse of the Corporation, Preston decided to start all overthe business of building cars. Though he was subdued, he was stillhopeful that the business would succeed. He pulled together all themoney he had and started the business. In 1951, he designed and builtthe “Carioca” sports car. Unfortunately, Preston fell ill aftermanufacturing the first car, and was detected to suffer from lungcancer. However, he still sustained the work on his company until hisdeath on December 1956.
Tucker:The Man and His Dream Movie
Therise and of the fall of Tucker Automobile Corporation cannot be saidwithout mentioning “The Man and his Dream” movie. Francis FordCoppola and George Lucas brought out the story of the TuckerAutomobile Corporation in the limelight. In 1988, Francis FordCoppola composed the movie “Tucker: The man and his Dreams.” Hebased it on the successes and the failures of the Tucker AutomobileCorporation. In the movie, Coppola depicts Preston as an optimistic,dynamic investor, and an optimistic and charming salesman (Speck1133).The movie dramatically illustrates the mixed economy and therelationship between businessmen and politicians. The movies start bydisplaying the vision of the corporation to build “the car oftomorrow.” Then, the movie convinces the audience to join thecorporation, and also advertises its sales of cars and dealerships.The movie also portrays the political forces that are against thecorporation. The film also features the Senator Homer Ferguson, whois the head of the War Assets Administration (WAA). The senator wasalways against the corporation and looked forward for its downfalls. The films also portray the alliances between the Tucker automobilecorporation and the Securities and Exchange Commission and the U.Ssenate. Additionally, the movie portrays the political pressure thatthe corporation faces the Securities and Exchange Commission (Speck1135).At one time, the SEC investigations introduced a criminal trialagainst Preston and the corporation executives. However, the courtrules in the favor of the corporation. Due to all these court trial,the corporation spends a lot of money and finally it is financiallybankrupt. The film, which runs for one and a half hours, portrays theentire hypothesis for the downfalls of the corporation. Following themovie, there is no enough proof that the automotive industriescontributed to the downfall of the Tucker automobile corporation.
Upto date, some people believe that the down fall of the Tuckerautomobile corporation was due to its alliances with the SEC.However, historians found no evidence of this conspiracy. On thecontrary, historians believe that the downfall of the Corporation wasas a result of two major problems. Firstly, the corporation lackedenough financial planning that led to continuous crises in thecorporation (Tucker n.p). The corporation did not have sufficientfund to pay for the lease agreement and the rent for the Dodge plant.Additionally, the corporation could not receive a bank loan due toits statues. In addition, the SEC was always against any corporationstrategy to raise some money. For instance, SEC opposed thecorporation ideas to sell stocks and dealership. Likewise, itrejected the pre-purchase strategy which had a great positive impactto the corporation. Further, the SEC also urged that the pre-purchasesales of product were illegal and a form of fraud. Secondly, thecorporation failed to sell more stock or dealerships hence it neededmoney for it to produce high class vehicles. Finally, the corporationwas bankrupt with no money to restart it. However, Preston laterdecided to move to Brazil where he started another business-makingbusiness. Unfortunately, Preston died after making the first vehicle,Carioca sports car. Nevertheless, the legacy of Preston Tucker stillexists up to date. Forty seven of the Tucker automobile corporationstill exist, and are all in the good conditions with high securitystandards. In addition, Tuckers are prized by car collectors most ofwhom are Tucker Automobile Club members. However, his opposersconsider him to be guilty of fraud and they discriminate his ambitionof the “the car of tomorrow.” On the contrary, his fans refer himas a visionary who does not focus on money and power. Some otherpeople neither support nor oppose his deeds. They urge if hisultimate goal was to be rich, then he was sincere his ambitions ofbuilding the most advanced cars.
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