The dawning of the taxi and rental car business in the United States.

10a) 1920s Checker factory DOL IMG_0034.JPG

THE last of the truly independent American automobile manufacturers had its origins in a Joliet, Illinois based body manufacturer.

This obscure company would serve as the cornerstone for the quintessential American taxi brand – Checker. The foundation was the DeSchaum Motor Syndicate of Buffalo, New York established by William A. Schaum in 1908. The first restructuring of this company occurred the following year when as the DeShaum Motor Buggy Company production of the Seven Little Buffalo automobile commenced.

Almost immediately after commencement of production, DeSchaum announced that the company was being reorganized and relocated. But before the ink had dried on the arrangement to reorganize as the DeSchaum-Hornell Motor Car Company and relocate to Hornell, New York, DeSchaum instead moved the company to Ecorse, Michigan and commenced production of the Suburban.

The Suburban Motor Car Company proved to be another short-lived endeavor. Production abruptly ended abruptly in 1912. Charges of embezzlement, an audit that found large sums of money unaccounted for, and Schaum’s immediate resignation decimated the company. In the hopes of salvaging their investment, the board of directors appointed Randall A. Palmer as the manager.

Palmer had earned a reputation in Detroit after taking the helm at the Carter Car Motor Car Company and restoring the company to solvency. His best efforts proved to be a matter of too little too late and in 1915 the Partin-Palmer Motor Car Company entered bankruptcy.

The sales manager, Charles C. Darnell, gained control of the company then located in Chicago and reorganised it as the Commonwealth Motors Corporation. Knowing that the primary asset was in the nickel-steel alloy frame developed for the Partin-Palmer, Darnell strengthened it and began marketing the Commonwealth as “The Car with a Foundation.” He then launched a marketing campaign that targeted independent Chicago taxicab operators and fleet owners.

Building on his initial success Darnell relocated to Joliet, Illinois and began manufacturing a second line of vehicles, Mogul Taxi. It was an assembled car that utilized purpose-built bodies supplied by Lomberg Auto Body Manufacturing Company. To fill the Commonwealth order, the body company launched an ambitious expansion of manufacturing facilities.

As the company was financially overextended, Lomberg Auto Body Manufacturing Company founder Abraham Lomberg, a Russian immigrant, turned to Morris Markin with an offer of a limited partnership. Markin, a fellow immigrant from Czarist Russia in partnership with his uncle had made a small fortune in the manufacturing of uniform pants under contract to the United States Army during World War I.

Unbeknownst to Lomberg, Commonwealth Motors Corporation was also in a dire financial condition. Mogul Taxi sales had fallen short of expected projections. Commonwealth built automobile sales were less than anemic.

When Commonwealth Motors Corporation collapsed, Lomberg and Markin were left in a precarious financial position. Magnifying the problems with these companies was the post WWI economic recession. Companies that utilized the services of Lomberg Auto Body Manufacturing. Production began cancelling contracts.

Commonwealth Motors was on the cusp of bankruptcy with production dropping to fewer than a dozen cars per week. An order placed by Checker Taxi Company, a consortium of independent operators in Chicago postponed the inevitable by a few months.

Markin had fortuitously initiated a complicated series of legal maneuvers in mid 1920 to protect his investment. The first of these was the reorganization of Lomberg Auto Body Manufacturing Company into the Markin Body Company, and appraisal of assets at $182,703. With the collapse of Commonwealth Motors in the early fall of 1921, Markin then offered shares of stock in exchange for the primary assets of the failed manufacturer.

In October 1921, receivers approved the offer with reservation. Markin quickly merged the two companies into the newly reorganized firm of Checker Cab Manufacturing Company and initiated the sale of 25,000 shares. The questionable appraisal, merger, and sale of stock sparked an investigation that later resulted in the indictment of Markin and the company’s treasurer. An appeal that resulted in reversal and acquittal later played a role in an investigation pertaining to bribery and malfeasance that ended in a major political scandal.

There is the very distinct possibility that the desire to protect his investment was only part of Markin’s motivation in the creation of Checker Cab Manufacturing Company. As a shrewd entrepreneur, he was obviously aware of the success of John D. Hertz Sr. and the fact that by 1920 he dominated the taxi market in Chicago without serious competition.

Hertz, a Hungarian immigrant, arrived in Chicago at age five in 1884, and his first gainful employment was the selling of newspapers. His diverse employment history included a stint as a successful amateur boxer and reporter for the Chicago Morning News. In 1904, he took the first steps toward the creation of an empire with the selling of used cars for the Walden W. Shaw Livery Company even though he was unable to drive.

Resultant of dramatic technological advancements, a glut of used automobiles made them a commodity almost impossible to sell. This coupled with the generally exorbitant price of taxi fares inspired Hertz to create a cab company utilising used cars under the auspices of his employer in 1907.

The enterprise proved so successful that in 1910, Hertz became a partner in the company and ordered nine new cars from E.R Thomas Motor Company; a Buffalo, New York based automobile manufacturer with a special request that they be yellow in color. The Hertz business model proved to be correct and in 1915, he boldly launched the Yellow Taxicab Manufacturing Company.

Assembled in the shops of Walden Shaw utilizing Continental engines, Timken bearings and axles, Brown-Lipe transmissions and other quality components the cars sold well. However, what really distinguished the company from other manufacturers of assembled cars and taxis was a brilliant strategy developed by Hertz.

Cars utilised by the Hertz taxi enterprise received a bright yellow coat of paint. Cars sold to competing operators were painted to the customer’s specifications. Hertz also offered a financing arrangement, interest on the loan or on credit in exchange for a percentage of profits. A third option was a percentage of the company to substitute as down payment.

To protect his investment in taxi companies each fleet operator that purchased vehicles received a business operation manual, instruction manual for the vehicle, and discounted maintenance at a Hertz owned garage. In the first month of operation the company sold 150 taxis.

Sales skyrocketed the following year. Then Hertz turned his attention to the sale of Yellow Cab franchises that utilised the template that had proved so successful in Chicago. Soon, taxis manufactured by the Yellow Cab Manufacturing Company were rolling through the streets of Detroit and Los Angeles, San Francisco, Cleveland, and most American cities. Further expansion came with establishment of Chicago Motor Coach Company, a pioneering city bus service in Chicago in 1917.

Hertz was so successful that by 1917, he had eliminated almost all competition within the city of Chicago area and surrounding communities. And he was well on the way to dominating the taxi business in other cities as well.

In August of 1917, the following advertisement appeared in newspapers in most major metropolitan areas. “We have 80 new 5-passanger limousine Dodge cars, formerly in the service of the Frank Parmelee Transfer Co. They have been driven less than 3,000 miles. Suitable for taxicab purposes or private use. Price $1250. Also 40 used 6-passenger Garfords at $400 each. Also 8 1916 White taxicabs at $800 each. All f.o.b Chicago. In perfect running condition. For terms and particulars call or write Walden W. Shaw Livery Co., 1008 S. Wabash Ave., Chicago.”

In 1919, Frank Dilger, initiated an effort to counter the Hertz monopoly with the establishment of Checker Cab Company in Oak Park, Illinois. Unlike Yellow Cab Company, Checker was an association of independent owner-operators working under a single livery. Accompanying their order for Mogul taxis manufactured by Commonwealth Motors Corporation was the request for a distinctive green and cream two-tone paint with the colours separated by a band of black and white squares.

By late 1920, the Checker Cab Company under the direction of Michael M. Sokoll remained the last obstacle to complete dominance of the Chicago taxi service industry by Hertz. Morris Markin most likely sensed an opportunity in the confrontation.

During the initial months of operation in the fall of 1921, Checker Cab Manufacturing Company produced Mogul taxis and passenger cars under the Commonwealth name and offered special financial arrangements to operators working under the Checker Cab Company umbrella. Then on June 18, 1922, Markin introduced the Checker Model C, with the green and cream two-tone paint and checkerboard beltline to the Checker Cab Company operators, streamlined operations to manufacture only this car, and followed in the footsteps of Hertz by offering financing.

The initial success of the Checker inspired Markin to seek larger facilities suitable for expansion of production. Additional incentive for relocation may have come with the violence on the streets of Chicago between factions of Checker Cab Company men and those operating under the Yellow Cab Company franchise, and the fire bombing of Markin’s house.

Hertz turned to dark political partnerships to squeeze the competition. Hertz was a major contributor to Mayor William H. Thompson’s campaign, as well as other candidates. After several clandestine meetings, the Chicago city council, with little fanfare, amended the 1895 ordinance that required cabbies to obtain a city issued permit before working from a municipal cabstand. The subsequent review policy resulted in more than ninety percent of Yellow Cab Company drivers receiving permits while denial or delays plagued drivers for the Checker Cab Company.

Meanwhile through the winter of 1923, Markin evaluated numerous manufacturing facilities including the former Mitchell Motors factory, an antiquated facility in Racine, Wisconsin, and the Dort Auto Body plant. He finally settled on the relatively modern Handley-Knight factories in Kalamazoo, Michigan. As added incentive for relocation the City of Kalamazoo offered to provide generous tax and zoning deferments.

The city also had a large skilled, currently unemployed workforce readily available. James Stout and Leland F. Goodspeed, automotive engineers with a stellar reputation were counted among these men.

Goodspeed had played an instrumental role in the successes of Roamer, a Kalamazoo based manufacturer and parent company of the Barley. The introduction of the Pennant taxi that utilized the Barley chassis debuted in the summer of 1923, and with a major showing at the New York Auto Show in January of 1924.

Initially the Pennant taxi appeared to be the cornerstone for revitalization of the faltering Roamer. Diamond and Murphy, a New York City based company placed an order for $19 million dollars’ worth of taxis with delivery scheduled over a five-year period with the first 1,500 to arrive before the end of 1923. A capital shortfall and subsequent reorganization in 1924 resulted in abandonment of Pennant taxi manufacturing. Production ceased in mid-1925.

In addition to the Handley-Knight facility, Markin initiated negotiation for the purchase of the 200,000-square foot Dort facility after an engineering evaluation deemed it one of the best-equipped body manufacturing plants in the country. The negotiations with James Handley for the purchase of production facilities, the adjoining heating plant, and more than thirty acres of land were complicated and confusing.

Motor World, May 2, 1923 – “A deal is now under consideration and will probably be worked out whereby the Checker Cab Manufacturing Company will build the Handley car, of which I (James Handley) will direct the sales. The Handley Motors Company is now practically free from debt and has sufficient cash in the bank to operate without any extensive financing at this time.”

Additional details are conflicted but after April 23, Handley production ceased. This was the third automotive endeavor by Handley to fail in nine years. In May of 1931, Handley committed suicide on a train in Texas after a mediocre stint as a salesman of Chrysler and Maxwell automobiles in Brooklyn, New York.

Written by Jim Hinckley of jimhinckleysamerica.com