Did GM Try to Squelch a Classic?

By Hardy Green


The Making of Alfred P. Sloan's

My Years with General Motors

By John McDonald

MIT Press -- 202pp -- $24.95

There's no such thing as bad publicity, say PR pros, but some executives don't agree. Among others, the DuPonts, the Versace family, and, most recently, Wall Street's James J. Cramer have halted or interrupted distribution of unflattering exposés. Few businesses, though, have been accused of attempting to kill a book that made them look good--until now.

A Ghost's Memoir, by former Fortune writer John McDonald, asserts that in the 1950s, GM attempted to quash Alfred P. Sloan's My Years with General Motors, a volume that came to be regarded as an indispensable work on American industrial management. McDonald's new book, published four years after his death, is a fascinating, if occasionally legalistic, account of a contentious and little-known affair. It also offers interesting portraits of such renowned figures as GM Chairman Sloan, Time Inc. Editorial Director Hedley Donovan, and the megalawyers at Cravath, Swaine & Moore.

In 1954, Sloan and ghostwriter McDonald set out to pen a memoir on Sloan's years at GM (GM ), then the world's largest corporation. From the start, it was understood that Fortune would publish excerpts. After settling on McDonald's fee and a split of royalties, the duo, along with assistant Catharine Stevens, began interviewing and gathering material from corporation executives. The project expanded, becoming more of a heavily researched corporate history than a simple life story. In 1956, they sold the book to Doubleday.

Three years later, they had a finished 800-page draft in hand that Doubleday's editor-in-chief called "magnificent." At that point, GM persuaded Sloan to shelve the book. A Ghost's Memoir says that it took a lawsuit and negotiations stretching over almost five more years to get the work into print.

Why? According to McDonald, GM's lawyers worried that Sloan had made admissions that could come back to haunt the company in federal antitrust litigation. (McDonald acknowledges that GM was under intense federal antitrust scrutiny during these years.) But the more he tried to figure out exactly which statements worried GM attorneys, the more mysterious it all became to McDonald.

As My Years would show, beginning in 1908, William C. Durant put GM together as a loose collection of auto- and auto-parts makers. Its lines included Buick and Cadillac, followed in time by Chevrolet, Oldsmobile, and others. Durant's financial troubles led, in 1920, to a takeover of the company by DuPont, and Sloan, who had worked at GM for only two years, became one of four top execs. He began to implement a plan for better integration of operations--for "decentralization with coordinated control." This, McDonald believed, was Sloan's unique historical contribution: constructing the modern corporation on primitive foundations.

A fresh marketing strategy came in the form of a 1921 study, also quoted in My Years, that recommended "covering the market for all grades of automobiles that can be produced and sold in large quantities." This meant a separate car for each of several suggested "price steps." By the mid-'20s, GM's five basic lines were set: Chevrolet, competing with the upper tier of Ford production; Pontiac, which would compete with a Hudson model; followed by Oldsmobile, Buick, and Cadillac.

McDonald speculates that this was the document that so troubled GM's lawyers. Although the 1921 study asserted that "a monopoly is not planned," it showed clearly that GM anticipated taking on all comers, wielding the cudgel of vast economies of scale. But no one ever said to McDonald or Sloan that this was the smoking gun.

Failure to publish the book, McDonald claims, was a disaster for his career. Deprived of his share of royalties, he also found himself in "disgrace" at Fortune, with his salary held to its 1954 level. So in 1962, with the three-year limit for damage litigation approaching, McDonald filed suit against GM for suppressing Sloan's book.

Once the lawsuit was under way, the author says, Time Inc. "entered the game." Editorial Director Donovan warned McDonald that if he didn't drop the action, his career would be in jeopardy. Here, McDonald's account gets very juicy. Time was concerned about both the loss of GM ads and damage to Fortune's reputation. But its legal advice came from a conflicted source: Cravath, Swaine & Moore's Maurice "Tex" Moore, who was chief counsel at Time, a member of a firm that represented GM, and Sloan's personal lawyer. "Tex Moore reveled in conflict of interest as a way of life," the author says.

At this point, GM suddenly turned from confrontation to offer a settlement: a revised version of the book that it approved for publication. But McDonald says the new work contained "endless changes"--numerous "inaccuracies, deflected meanings, misleading statements"--that followed no perceptible pattern. This was not only unacceptable to McDonald and Sloan as a finished product but also had the effect of concealing GM's true objections, making counterproposals nearly impossible.

Just how McDonald ends the battle--and gets the book published in December, 1963--provides the final twists in this nonfiction thriller. Suffice it to say that he was an accomplished gambler and author of a book entitled Strategy in Poker, Business, and War. His contest with GM wound up benefiting everyone: My Years with General Motors became a New York Times best-seller and a classic of management literature.

Green is Books Editor.

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