Another chapter in the E.L. Cord story 

BY the 1920s, automobile companies had become multifaceted, building vehicles for every budget and every need; a scenario that made it increasingly difficult for smaller operations to compete against the likes of General Motors and Ford.

Yet there was a small but lucrative market where smaller manufacturers had an edge.

They were better suited to produce purpose-built taxis, hearses, ambulances, and similar vehicles for niche markets profitably. They were also in a better position to develop beneficial partnerships with other small manufacturers. But they were also more vulnerable to market fluctuations, to constricted financial markets, and to stock manipulation.

Before World War II, two innovative automotive tycoons figured prominently in the attempt to dominate these niche markets.

One was E.L. Cord, the man who had revived moribund Auburn, launched Cord and Duesenberg, and acquired an array of companies including Lycoming engines.

The other was Morris Markin, the man behind the legendary Checker taxicab. Markin masterfully built a small, but profitable, empire with Checker. As an example, during the early 1930s he created the MU6, available on two wheelbases and built on the taxi chassis.

In the long wheelbase, it would seat nine passengers plus the driver. With the removable seats, it quickly converted into a panel truck or, as it was promoted, also a hearse.

A 1931 advertisement with the heading, ‘A Checker Product,The Utility Car’ is followed by a small photograph and the notation “all the fine appearance and riding qualities of a nine-passenger car - quickly convertible into a spacious ton-plus station wagon.”

Markin also used his stoutly built taxi chassis to create a limited line of light duty flatbed trucks. The cabs and front sheet metal were derived from the Checker taxi.

And he pioneered the export of niche market vehicles profitably. In the immediate post war years Checker built taxis and extended wheelbase multi passenger/cargo vehicles were being sold in Tahiti, Scandinavia and the Middle East.

Together Markin and Cord formed a partnership that, for a brief period, dominated the niche market industry. The story begins in 1919 when Charles A. McCulloch began using Parmelee Transfer Company, the oldest taxi and cartage company in Chicago, to build a company to dominate the urban public transportation market in numerous cities.

He acquired controlling interest in Motor Cab Transportation Company of New York City, and Transportation Management Corporation, a holding company with a lengthy list of subsidiaries that included the Yellow Taxi Company of Minneapolis, Deluxe Cab Company of Cleveland, Yellow Cab Company in Pittsburgh, and the Pittsburgh Transportation Company that operated busses in that city.

The second stage became public knowledge with a story published by the Associated Press on April 5, 1929.

“Taxicab operating interests of Chicago and New York are to join with the Checker Cab Manufacturing Corporation in the largest merger in the history of the business. According to plans revealed today, New York banking interests, representing Checker Cab, have arranged to acquire the Chicago Yellow Cab Company, the largest operator in that city, and the Parmelee Transfer Company …”

An Associated Press story published on April 24, 1929, that detailed a planned expansion of the Kalamazoo manufacturing facilities with an estimated cost of one million dollars is indicative of what the merger and acquisition meant for Checker Cab Manufacturing Corporation.

Meanwhile, as Markin moved to consolidate dominance or control of the taxi industry through the building of cabs and acquisition of taxi franchises, John J. Raskob moved to acquire controlling interest in Checker Cab Manufacturing Company. Raskob was a swashbuckling investor. He was also the financial chair of DuPont and General Motors having acquired forty-three percent of the latter company from its founder, William Durant, during his period of precipitous decline several years prior.

Raskob had quietly begun acquiring blocks of shares in Checker Cab Manufacturing Company with the initial public sale of stock in 1928. Through the creation of an investment group that included Walter Reid, a major stockholder in the company manufacturing Mack trucks, and DuPont family members, Raskob solidified his hold on Checker.

His plans and vision were breathtaking in scope. After acquiring controlling interest in Checker, he planned on using the companies’ facilities to manufacture Checker taxis as well as GM’s Yellow Cab taxis. Engines, transmissions, and differentials would be manufactured by Mack in preparation for the launch of a new line of light duty trucks.

Raskob’s plans fell short, largely resultant of Cord’s intervention. But his idea for a light duty Mack truck would become manifest in the mid 1930s in attempt to keep mack afloat during the Great Depression. Mack and REO would enter a limited partnership that would result in a line of Mack Jr. pick up trucks, and REO Speedwagon trucks.   

The cost of factory expansions, mergers, and acquisitions in the late 1920s had left Checker Cab Manufacturing Corporation in a poor financial position to deal with the constriction of credit and precipitous decline in sales that were hallmark of the first years of the Great Depression. With the production facilities idle for most of 1932, the company and its various subsidiaries posted a loss of $821,105 for the year.

In July of 1932, the Raskob-Dupont group acquired control of the company and immediately initiated a series of dramatic changes. In June 1933 at the meeting of company directors a reduction in the number of board members from eleven to seven received approval. On the heels of this decision four board members, Pierre S. duPont, J.A.Sistro, Mathew Robinson, and John J. Raskob voted for the removal of Morris Markin, the company’s founder, as president.

Markin had prepared for this by acquiring options on large blocks of stock. The Raskob investment group were betting that Markin did not have the approximately $1 million needed to exercise those options and regain control of the company, and they were correct.

Markin, however, had developed a lucrative business relationship with E.L. Cord. In a limited partnership Markin had begun using engines manufactured by Lycoming Manufacturing Company, a company controlled by Cord, for the Model M Checker taxis and trucks that were introduced in 1932.

Cord had been making inroads into the taxi and commercial limousine business with the manufacture of the Saf-T-Cab. These vehicles were manufactured by Auburn. They were powered by a new line of industrial engines developed through Lycoming.

To counter the attempts to control the company by Raskob, Markin signed his options over to Cord who immediately exercised them, reinstated Markin as president, and restructured the board of directors.

With acquisition of Checker Cab Manufacturing Company, Cord transferred the manufacture of taxis built for Cleveland based Saf-T-Cab Corporation by Auburn Automobile Company, another Cord controlled manufacturer, to the Checker facilities in Kalamazoo. Checker built taxis continued the use of Lycoming engines. An additional cost saving measure was the utilization of body dies, with slight adjustment for the Checker Model Y that appears almost identical to the Auburn sedans.

It was a complicated and questionable arrangement that would later contribute to cause for an investigation by the Securities and Exchange Commission, and subsequently the indictment of both men.

Cord had initiated production of the Saf-T-Cab in early 1926 to bolster solvency of the Auburn Automobile Company. From their inception carefully crafted promotion and advertisement alluded to the shared lineage with Auburn but left no doubt that this was a purpose-built vehicle that utilized the Lycoming commercial engine that powered busses, and similar heavy-duty components.

Early promotion for the Saf-T-Cab provides insight into both the manufacturer of vehicles specially built for use as taxis, and taxi company operations during the closing years of the 1920’s.

“The Green Cab Company operates about 200 specially built metered cabs. They employ over five hundred people. Their cabs travel over SEVEN MILLIONS OF MILES per year and furnish safe, convenient transportation to more than EIGHT MILLIONS OF PERSONS.

Their system of operation is unusual. The company is fortunate in having strong management and exceptional financial strength. It retains in its employ only those drivers whose record for safe driving, courteous treatment of passengers and earnings for the company, are such that they become eligible to purchase one of the company’s cabs on a time payment and thus become a partner in the good will of the business. This seems to materially further success.” 

On May 25, 1936, an announcement released by Cord stirred tremendous interest among Wall Street investors and garnered the interest of the Securities and Exchange Commission. The cornerstone of the agreement, the subject of the announcement, was the creation of a pool of stock in Cord owned companies and the Checker Cab Manufacturing Company for investing in the securities of taxi related companies. However, the investment group also served to inflate the shares of stock owned by Markin and Cord through fictitious trading.

On August 7, 1937, the Securities and Exchange Commission filed a Bill of Complaint against Errett L. Cord and Morris Markin. “During the period beginning on or about November 7, 1935, and ending on or about July 21, 1936, defendants Errett L. Cord and Morris Markin, directly and indirectly, by the use of the mails and by means and instrumentalities of interstate commerce and the facilities of the New York Stock Exchange…

…effected alone and with other persons a series of transactions in Checker stock which created actual and apparent active trading in such stock and raised the price thereof, for the purpose of inducing the purchase of such stock by others …”

Rather than engage in costly litigation, legal representation for the two industrialists negotiated a cease-and-desist order and a consent decree, a document that did not admit to wrongdoing but that did outline penalties for future violations.

This hearing marked the end of an era, at least concerning the swashbuckling corporate endeavors of taxicab manufacturers. Only a few independent manufactures such as Studebaker, Hudson, and Packard, and the “Big Three” remained as the manufacturers of taxicabs and vehicles for use as taxis. For each of these companies, however, except for Checker, taxis were merely a sideline, an outlet for fleet sales that contributed to the companies’ bottom line.

Written by Jim Hinckley of jimhinckleysamerica.com