Remembering Studebaker’s Bankruptcy: March 18, 1933
This year brings a couple of notable – and not particularly pleasant – anniversaries for Studebaker fans. Fifty years ago, in December 1963, the company closed its operations in South Bend, Ind. – where brothers J.M., Clement, Henry, Peter and Jacob founded the venerable firm more than 100 years before. While Studebaker built cars in Canada for a few more years, many say that the company really ended when it left its longtime home.
We also mark the anniversary of an earlier corporate struggle. Eighty years ago this month, Studebaker filed for bankruptcy. While many car companies went under during the Great Depression – and few recovered – Studebaker’s bankruptcy is a particularly sad story of poor management and human tragedy.
Albert Erskine joined Studebaker as treasurer in 1911 and assumed its presidency in 1915. He cut prices and boosted sales, leading to generally good years for Studebaker marked by stylish vehicles and progressive labor relations.
When the Depression hit and sales crashed, Erskine turned to South Bend’s closest thing to a superhero: Notre Dame football coach Knute Rockne. The football legend died in a 1931 plane crash, and Erskine named Studebaker’s new line of small, affordable automobiles “Rockne” is his honor. The Rockne was well-equipped for an inexpensive car and early sales were promising. But rather than concentrate all production in South Bend, Erskine built most of the Rocknes in Detroit. The two factories strained Studebaker’s shaky finances.
More troubling was Erskine’s insistence on paying high dividends to stockholders even in the Depression’s worst years. While other car companies hoarded cash to ride out the storm, Studebaker burned through it. Erskine simply refused to believe that the Great Depression was anything more than an economic hiccup.
Inevitably, Studebaker ran out of cash and, on March 18, 1933, entered receivership. Erskine was pushed out of the presidency in favor of more cost-conscious managers. His successors engineered a brilliant turnaround and led Studebaker out of receivership in two years. Sadly, Erskine’s ending was quite different. With his job gone, his Studebaker stock worthless, his personal debts mounting and his health failing, Erskine took his own life on July 1, 1933. While he may not have been wholly responsible – clearly the Board of Directors failed in its oversight – Albert Erskine paid the ultimate price for Studebaker’s ordeal.
Take a look at more of our Studebaker artifacts in our online Collections.
Matt Anderson is Curator of Transportation at The Henry Ford.