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Blood In The Boardroom, Part Three

Blood In The Boardroom, Part Three

By on Aug 19, 2018 in automotive history | 0 comments

Forrest Keeton’s plans for transforming the moribund Keeton Company

imagesinto a taxicab manufacturing enterprise in 1923 were stillborn resultant of an inability to attract investors. However, at the very least Keeton had proven to be tenacious as well as persistent as he had initially founded the Keeton Town Car Works in Detroit, Michigan for the manufacture of taxicabs in 1908.

Resultant of under capitalization, Keeton entered into a limited partnership with Jewel Motor Car Company of Massillion, Ohio for the manufacture of the taxi he had designed. Production of the Jewell-Keeton taxi had barely commenced when Herbert A. Croxton, the primary financial backer for Jewell, reorganized the company as Croxton-Keeton Motor Car Company.

This proved to be a short-lived partnership and in a flurry of lawsuits and stock swaps, Keeton left the company, returned to Detroit, and established the Keeton Motor Car Company for the production of taxicabs in March 1912. Acquisition of the former Seitz Auto & Transmission Company facility allowed production to commence almost immediately.

The response received from drivers and operators, and subsequent sales, provided Keeton with the encouragement to purchase the Oliver Motor Truck Company factory in Detroit for the expansion of production in 1913. That planned expansion included the manufacture of passenger cars, with the production of taxicabs relegated to special orders. That proved to be a disastrous decision.

The Keaton entered in the 1913 Indianapolis 500, caught fire on the 55th lap. Even worse, resultant of the rapid expansion, Keeton developed an unfavorable reputation with creditors and parts suppliers as the company plummeted toward insolvency.

To keep the company afloat, he turned to Charles S. Shaffer, president of the American Voiturette Company, the manufacturer of the Car-Nation who had expressed interest into diversification with the building of a commercial car. Plans went awry almost immediately and Shaffer gained control of Keeton Motor Car Company, abandoned the idea of producing taxicabs, and appointed himself president of the new enterprise that did not include use of the Keeton name.

This was in January 1914. By September, American Voiturette was in receivership, bankruptcy, and liquidation almost immediately followed. Assets included six-hundred Car-Nations, and one-hundred Keetons, a handful of which were taxis.

Sam Winternitz, an investor in moribund automobile companies, purchased the majority of the company’s assets including manufacturing facilities. Keeton purchased select components from Winternitz several months later with the intention of establishing a repair facility for Jewell’s, Car-Nations, and Keeton’s, and limited production of a taxicab. Financing for the endeavor proved elusive and Keeton abandoned the endeavor after another failed attempt to secure investors in 1923.

By the closing years of the 1920’s, the American automobile industry had become a behemoth and the days of the independent manufacturer that could survive by hand building a few hundred vehicles a year or less, was rapidly drawing to a close. Even companies that specialized in the manufacture of niche market vehicles such as taxicabs fell by the wayside with the larger manufacturers left to fill the void.

Counted among the last of the successful independent companies to cater to the taxi industry during this period were largely the suppliers of components, specifically automotive bodies. A pioneer in the manufacture of such components was York Body Company, later the York-Hoover Body Corporation, initially established in York, Pennsylvania in 1892 by Peter Keller as York Wagon Gear Company.

The company specialized in the manufacture of sub assemblies for wagon builders including axles, bodies, and a variety of wood and metal components. During the companies infancy George W. Hoover’s firm and the Martin Carriage Works were two companies that later would play prominent roles in the regions development as a center for the production of commercial automotive bodies.

The Henney family launched their wagon and buggy building business in Freeport, Illinois in late 1878. By the closing years of the teens, the company was a preeminent builder of custom commercial automobile bodies with an emphasis on funeral coaches and hearses. The company launched an array of diversification initiatives in 1929 that included the modification of one hundred Ford manufactured Model A’s into taxis.

A Joliet, Illinois based body manufacturer would serve as the primary foundational component for the quintessential American taxi – Checker. The second instrumental element has its origins in 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 initiation of production, DeSchaum announced reorganization and relocation for the company. Before the ink had dried on the arrangement to reorganize as the DeSchaum-Hornell Motor Car Company and relocate to Hornell, New York, DeSchaum moved the company to Ecorse, Michigan and commenced production of the Suburban.

The short-lived Suburban Motor Car Company came to an abrupt end in 1912 with the discovery that large sums of money were unaccounted for, which resulted in Schaum’s resignation, and the board of directors appointing Randall A. Palmer as the manager tasked with salvaging and reorganizing the enterprise. Valiant efforts utilizing extensive business acumen garnered during his tenure at Carter Car Motor Car Company were to no avail and the Partin-Palmer Motor Car Company, built on the ruins of the Suburban Motor Car Company, the Palmer Motor Car Company during the initial reorganization, formerly the Motor Car Company entered into bankruptcy in 1915.

The sales manager, Charles C. Darnell, gained control of the company then located in Chicago and reorganized as the Commonwealth Motors Corporation. Knowing that the primary asset was in the nickel-steel alloy frame developed for the Partin-Palmer that had lent itself to a reputation for durability, Darnell strengthened it with five-inch flanges and heavily gusseted cross framing, began marketing the car as “The Car with a Foundation,” and initiated promotion targeted toward independent Chicago taxicab operators and fleet owners.

The initial success led Darnell to relocate to Joliet, Illinois and introduce a secondary line of vehicles under the Mogul Taxi name utilizing purpose built bodies supplied by Lomberg Auto Body Manufacturing Company. However, as this company was currently supplying bodies for a number of area manufacturers, a lack of additional capital for facility expansion to fill the Commonwealth order became a bottleneck.

After exhausting traditional venues for acquisition of capital, Lomberg Auto Body Manufacturing Company founder Abraham Lomberg, a Russian immigrant, turned to Morris Markin with an offer of a limited partnership in exchange for financial backing. 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.

When sales of the Mogul Taxi failed to meet projections, Commonwealth Motors Corporation faltered which in turn left Lomberg and Markin in a precarious financial position. Compounding the company’s problems was the post war recession that resulted in the negation of contracts from other companies that utilized the services of Lomberg Auto Body Manufacturing. Production plummeted to less than one dozen vehicles per week at Commonwealth Motors. Only an order placed by Checker Taxi Company, a consortium of independent operators in Chicago enabled the company to stave off the filing of bankruptcy, but only 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, as there were indications that the Markin Body Company was overvalued. 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, Michael Glassberg, by the criminal court of Cook County in 1924 after the discovery that the company had failed to list all debts and had purposely overvalued assets.

Conviction on all charges warranted a sentence of thirty days in jail, and a fine of $2,000. 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.

Watch for part 4, and the story of John Hertz

Cover photo, Taxicab Library

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