The Yellow Cab story is continued from Page 1

While all of Yellow Cab’s drivers were issued permits, a corresponding percentage of Checker driver’s were denied. Although the permit situation was eventually resolved, the resulting bad blood between Yellow and Checker’s rank and file came to a head midway through 1920 as reported by the Associated Press on July 27, 1920:

“Taxicabs Used as Tanks In Fierce Street Battle Between Rival Concerns

“Hundreds of Shots Fired By Drivers of Vehicles During Early Morning Hours in Streets On West Side of Chicago—No Casualties.

“CHICAGO, July 27, 1920 - A battle between fleets of taxicabs, in which the vehicles were maneuvered according to the best strategy of tank warfare while their drivers fired hundreds of shots at each other, raged through the early morning hours on the streets of Chicago's west side today. The battle was the result of longstanding differences between drivers of the Yellow Cab company and the Checker Taxicab company, a rival concern.

“Real Mobile Warfare.

“For hours the battling drivers played every trick of mobile warfare against each other that they could think of. Strings of Yellow Cabs, in line, rushed past the headquarters of the Checker company at breakneck speed, emptying revolver broadsides into the latter's offices. Rallying, the black and white checkered cabs of the attacked concern dashed out en masse and ripped into the Yellow for counter attacks according to the best tactics of shock action.

“While these major engagements were being fought, numerous individual battles were fought by drivers, who, racing their taxicabs hub to hub, emptied their pistols at each other at close range.

“Started by Fist Fight - The battle started in a bit of fist skirmish in which two southside drivers of the rival concerns were engaged. The engagement then moved to the west side sector, and became general. The first, powder action began when a lone machine, acting as a scout, moved on a branch garage of one of the companies. Occupants of the machine fired into the garage. This fire was promptly returned, the machine was driven off amid a regular barrage. A few minutes later a dozen cabs in close formation roared by the branch garage of the other company, with pistols of the occupants cracking like machine guns. The garage defenders replied with several volleys, and sent a fleet of their cabs in pursuit. Another branch garage was attacked by a patrol of three cabs, and from then on numerous individual encounters were reported until daybreak.

“So far as the police could learn, there were no casualties. Three of the drivers were arrested.”

One week later the violence returned as reported by the August 5, 1920 Madison Capital Times:

“Chauffeur Shot In Taxicab War

“Chicago, Aug. 5, 1920 - Chicago’s Taxicab war broke out anew this morning when a chauffeur for one of the two taxi lines was shot and probably wounded while standing in a doorway of the company’s garage. A touring car sped by the building and a gunman seated in it emptied his revolver into the garage. Chauffeurs of the two rival companies fought battles in one evening recently. Armed squads would speed by the opposition garage and fired through doors and windows. The trouble is said to have started when 50 cabs of the two lines jockeyed for positions in line before a loop theater several days ago.”

The wire services reported further violence on August 7, 1920:

“Checker Chauffeurs Renew Street Fight

“CHICAGO, Aug. 7, 1920 - Fighting was resumed today between chauffeurs of the Yellow and Checker taxi companies resulting in the wounding of two men. The trouble, it is said, was caused by the difference in rates and the fact that the drivers of one company are non-union”

The Checker-Yellow violence had subsided by the end of 1920 and Hertz' mind turned towards more productive activities. With a proven track record and no shortage of investors Hertz decided it was time to start manufacturing his own line of passenger cars and light trucks. The announcement was made to the trade on January 1, 1921:

“YELLOW CAB CO. LAUNCHES CHICAGO BUILDING FIRM

“Plant Will Turn Out Passenger Cars and Light Trucks, Plan

“CHICAGO, Ill.—The new year brings Chicago its first great automotive industry. John Hertz, president of the Yellow Cab Manufacturing Co., today announced that his organization will begin immediately the manufacture and distribution, on a tremendous scale, of passenger cars and light trucks.

“Manufacture will be in the great new factory of the Yellow Cab Company at Menard and Dickens st., northwest. The new industry will mean an investment of several million dollars and employment of several hundred more workers, within a few months.

“The Yellow Cab Co. has been for several years turning out about 2,000 of its famous cabs a year, for use in this and other cities. Now the Yellow Cab Manufacturing Co., developed from the cab organization, is going into the passenger and truck field on a mammoth scale.

“The star of the company's line will be a 12-cylinder car, called the Ambassador, which Mr. Hertz this morning characterized as ‘the most beautiful car ever made.’ Greatest production, however, will be on a 4-cylinder car, of moderate price, worked out on the Yellow Cab chassis. To complete the line, the Yellow Cab Manufacturing Company will get out a one-ton speed-wagon truck and a ton and one-quarter speed truck. Types of all these various cars have been turned out behind closed doors at the Yellow factory and are ready for exhibition at the Chicago automobile show, Jan. 29 to Feb. 5.

“‘In planning these new cars,’ President Hertz said this morning, ‘we forgot entirely the element of price and remembered only one thing, an ideal. We decided to build automobiles and trucks which would have more than one season, more than two, more than three or four, in fact, and still remain good, serviceable outfits.’”

The September 7, 1921 NY Times reported that at a meeting of the stockholders of the Walden W. Shaw Corp. a vote was made to change the name of the company to the Chicago Yellow Cab Co., Inc. The Shaw Corp. was the portion of the organization that operated the taxicabs, and was not directly related to the Yellow Cab Manufacturing Co.

The confrontations subsided due to an increased police presence, but the violence returned during the second week of June, 1921 as reported by the United Press Syndicate:

“TWO MEN WOUNDED IN RENEWAL OF TAXI WAR

“Chicago, June 10, 1921 (UP) - Chicago's taxicab war broke out again Saturday. Four clashes between the forces of the Yellow and Checker Taxi company drivers were reported. Two men, one a passenger, were injured. The passenger was hurt in a serious smashup when a Checker cab, alleged by its driver to have been surrounded and forced off the street, crashed over a curbstone. Philip Fox, Checker driver, who repudiated his confession that he was in the cab from which Thomas Skriven, a Yellow driver, was slain, was booked this morning at the detective bureau on charges of murder and assault to kill.

“Five other employees implicated in Fox's confession, are reported also to have had truebills voted against them by the state grand jury Friday.”

An article in the June 11, 1921 Eau Claire Leader detailed the City Council’s efforts to stem the violence:

“CHICAGO ACTS TO CHECK BITTER TAXICAB FEUD

“Search Every Machine for Weapons; Five Are Indicted for Slaying.

“CHICAGO, June 10, 1921 - A search of every taxi-cab in the business district for weapons was begun by the police tonight in an effort to halt the taxi-cab war which has resulted in one murder, scores of shootings and many wrecked cabs in the past few days.

“The city council also took action to end the bitter feud between drivers of the Checker and Yellow cab companies by adopting a resolution which declared that unless the condition of lawlessness, crime and disorder was ended immediately the police would revoke the licenses of the drivers for both companies.

“The shooting and killing of a Yellow cab driver several days ago resulted today in the voting of five true bills by the grand jury charging five Checker taxi-cab employees with murder, assault to kill and criminal conspiracy, according to the state's attorney's office.”

An investigation undertaken by the Chicago Tribune revealed that 20 year-old Philip Fox had been summoned to pick up a friend and fellow driver named Morris Stuben and three others at the Checker garage by Michael Sokoll, Checker’s business manager. Fox was told that Stuben had been hit with a brick during a fight with Yellow cabbies at the Hotel Sherman and that Sokoll wanted to get even. The three other men, all unknown to Fox at the time, were enforcers provided to Sokoll by an unknown member of the Chicago crime syndicate.

Stuben’s injury was the culmination of a day-long clash between Checker and Yellow cabbies that included a car accident, a minor shooting, and a vandalized cab. The Chicago Tribune reported that a Checker driver had intentionally rear-ended a Yellow cab at the Hotel Sherman cab stand which resulted in the fight that injured Stuben. A Yellow cabbie was reportedly shot in the foot while waiting for a fare in Logan Square while a Checker Cabbie claims to have been driven of the road by a group of Yellow cabs. A fourth incident earlier in the day involved a Checker cabbie that was attacked by a group of Yellow drivers who proceeded to break all of his windows.

Once he arrived at the Checker garage Fox and Stuben were told to take the back seat inhabitants of a Stutz touring car on a survey of neighboring Yellow cabstands. The fact that the occupants in the rear seat of the Stutz were concealed by curtains did not concern the two cabbies who proceeded to the Yellow cabstand located at the corner of Roosevelt Rd. and Kedzie Ave.

Once they arrived the concealed men, Charles Goldstein, James Mogley (aka Jimmie Mogley), and Max Podolsky, opened fire on the waiting Yellow cabs, fatally shooting Yellow driver Thomas Skirven. Witnesses to the 1:00 AM shooting identified Fox and Stuben as the front seat occupants of the Stutz and the pair were picked up by Chicago’s finest later that morning and within twenty-four hours both men had confessed to the shooting.

Although Fox repudiated his confession two days later, stating he was beaten into signing the document, both men were tried on the charges. A 1922 trial resulted in a mistrial, but the prosecution made sure they got a conviction in the second 1925 trial after which the pair were sentenced to life imprisonment. Although the actual shooters were implicated during the second trial the prosecution deemed the evidence against them to be insufficient and they were acquitted. Fox and

Although Checker’s attorney were less than helpful at the trial, once convicted, they worked behind the scenes to get the “fall guys” released and in late 1928 the pardon board recommended that the governor commute the life sentences and the pair were released in late December.

Michael Sokoll, the man directly responsible for Fox’s involvement in the affair, remained in charge of the Checker Cab Association’s operations until 1935 when he became president of the reorganized Checker Cab Company, a post which he retained into the 1950s.

By 1921 unrelated Checker and Yellow companies were operating competing operations in Racine, Madison, Milwaukee and Janesville Wisconsin and on September 17, 1922 Yellow and Checker taxicab drivers in Madison, Wisconsin launched a war of their own that resulted in a number of injuries. Similar Yellow-Checker wars sprung up all around the country during the next couple of years with injuries and fatalities reported in New York City and Detroit.

At that time the future head of Checker, Morris Markin, had no direct connection with the Checker Cab Company aside from the fact that he had recently purchased the assets of Commonwealth Motors, the manufacturers of the Mogul taxicab, the preferred conveyance of the association’s owner-drivers.

Hertz was the keynote speaker at the January 1922 National Association of Taxicab Owner’s Convention as reported in the January 23, 1922 issue of the Freeport Journal Standard (Illinois):

“ARCADE COMPANY'S TOY TAXI MAKES BIG HIT IN CHICAGO

“Miniature Yellow Cab, Elaborately Finished, Presented to John Hertz, Founder of Yellow Cab Company, at Banquet Given By Mr. Hertz at Cab Owner's Association Banquet

“In the Tiger Room of the Hotel Sherman, one of Chicago's largest and most popular hostelries last Friday evening, Mr. John Hertz, founder and president of the Yellow Cab Manufacturing company and the Yellow Cab company, both of Chicago, Ill. was host to members of the National Association of Taxicab Owners, holding its regular semi-annual convention in that city. Mr. Hertz was ably assisted in the entertainment of the evening by members of the official staffs of both companies. The Yellow Cab organizations of Chicago have always been very enthusiastic members of the Association of Taxicab Owners, and represent the highest and most efficient type of taxicab makers and operators in this country. The remarkable growth of these two concerns is shown by the present market quotation of corporate stock of the Yellow Cab Manufacturing company, nearly $200.00 per share, with par value of only $10.00.

“The entertainment provided by Mr. Hertz for his guests was both novel and attractive in many features. Judge G.A. Farabaugh of South Bend, Ind., acted as toastmaster in a most able capacity. John J. Boobar, president of the Cab Owners' Association, was overcome with feelings of appreciation on presentation to him of $1,000.00 in money for his untiring efforts in behalf of the Association during its three years existence.

“Arcade ‘Taxi’ for Hertz

“The Arcade Manufacturing company, of this city, makers of the toy Yellow cab — which toy is also finished in any color desired — suburban blue, black and white, Murphy  brown, battleship grey, checkered taxi or any of the many different colors used by operators over, the country — sprang a surprise on Mr. John Hertz, the host. The toastmaster in an eloquent manner presented Mr. Hertz in behalf of the Arcade Manufacturing company, with a silver-plated miniature taxi cab, modeled to a degree of fine mechanical perfection after the type manufactured by Mr. Hertz' company. Mr. Hertz received the cab in a very gracious manner and the further good wishes of the donor were extended to Mr. Hertz and his guests, members of the National Taxicab Owners' Association by an official of the Arcade company.

“One of the favors presented to the guests at the banquet was a miniature taxicab of the Arcade manufacture, finished in UIP color design of the cab used by each of the recipient operators. The members of the Cab Owners' Association attending this convention were gathered from all parts of the United States—from Maine to California and from Texas to Central Canada. The slogan of these men is ‘Service to the Public’, and they carry it out.

“It will be of local interest to know that a feature exhibit of the convention, was a large size Yellow Cab placed near the center of the ground floor main lobby of the Hotel Sherman; and alongside of this cab was shown a pleasing display of the miniature cabs by the Arcade company. The Sherman management placed the small cabs on sale at their Lobby cigar stand, and in less than 30 hours while the stand was open for business, sold several hundred of these novelties. Thousands of people thronged the hotel lobby and corridors; there being many other convention meetings last week at the Sherman Hotel and throughout the city.”

In evolving a sturdy taxicab, Hertz had uncovered a nation-wide demand. Orders for the Yellow Taxicab began to come in from all over the nation, and production rose to twenty-five cars a day. Yellow even established a Canadian subsidiary in 1922, The Yellow Cab Co., Ltd., Montreal, Quebec in order to keep up with the demand north of the border.

"Yellow Cab Earnings Jump One-Third - Earnings of the Yellow Cab Mfg. Co., Chicago, for 1923 were $4,005,365 after all deductions, an increase of nearly 33%.”

Among his many contributions to controlling costs for taxicab operators, Hertz pioneered the practice of leasing tires, and his engineers helped manufacturers in developing longer lasting and better riding tire and wheel combinations as evidenced by the following item in the March 4, 1923 San Antonio Express:

“Small Diameter Wheel and Large Tire Developed

“YELLOW CAB EXPERIMENTING WITH LARGE OVERSIZE TIRE; CLAIM MANY ADVANTAGES

“CHICAGO, Ill., March 3., 1923 - A new development appears in the automotive industry in the small diameter wheel with the large oversize tire, having, its sponsors claim, many advantages over the present sizes of pneumatic tires.

“It was pioneered by the Yellow Cab Manufacturing Company of this city, who have given it a thorough try-out in their testing laboratory, the Yellow Cab Company of Chicago, which operates more than 1,000 cabs.

“The yellow Cab is built and operated on a cost per mile basis that is not equaled. It is said, in the automotive industry. The company's fixed policy is low cost of operation to give the public low rates of fare. It is now announced that Yellow Cabs can be operated at less cost per mile than the average citizen can operate a touring car.

“It was with this in view that two years ago the company started experimenting with the small diameter wheel and the large oversize tire. Today Yellow Cabs going to the large municipalities, it is reported, are equipped with a 29-inch wheel, either Disteel or Budd type, with either a 29 x 4 ½  Firestone or Goodyear tire, or a 30 x 5 inch tire. Both tire companies, it is said, now manufacture these sizes.

“In addition to these two sizes, the above tire companies are conducting experiments with other sizes of big oversize tires. Home of the large passenger car manufacturers are conducting experiments and it is said that some time during 1923 the small wheel and big tire will come into general use among the prominent passenger car manufacturers. On a 20-inch rim the following tire sizes will fit: 29 x 4½ inches; 30 x 5 inches; 32 x 6 inches, and 34 x 7 inches. Although Firestone and Goodyear are the only companies known to the Yellow Cab organization who are going after this oversize tire business strong. It is reported, on good authority, that all the big manufacturers will hit for this advancement in tire manufacturing.

“Decreasing the wheel size and increasing the cross section diameter of the tire decreases ‘unsprung weight.’ The improved riding qualities, it is claimed, are so marked that other improvements, soon to be announced by the Yellow Cab engineers, will make the public feel that the cabs are springless. The present development marks the passing, it is claimed, of shock absorbers, rebound checks and similar devices which have come into existence in an attempt to prolong the life of an automobile and make driving more comfortable.

“With the new type tire there is no lost energy; every explosion is translated into travel. By the same token there is less wear and tear on the tires. With the large new oversize tires the car, it is reported, literally floats along on a cushion of air - the resiliency is so perfect that all road inequalities are smoothed out by the tires themselves. Travel over rutty country roads, it is said, is without terror, while the danger of skidding, even without chains is practically nullified.

“An additional advantage is the ease in which sand and mud can be negotiated, in the tire size as created, the air pressure is less, the life is longer and the general advantages so many that, it is reported, this development is one of the many of a sensational character that will be announced by the Yellow Cab Manufacturing Company, who have and are conducting- tests that are attracting the attention of the entire automotive world. A 34 x 7 tire on a 29 x 4½ rim weighs only 68 pounds, including the wheel, tire, tube and flap. In experiments conducted by the Yellow Cab in Chicago, it is reported that 29 x 4½ –inch tires have thus far given 14,000 miles of service and are still good for many more, and it is further pointed out this is regular service for these tires, not special cases picked out. Gasoline consumption in the oversize tires has been increased from three to five miles per gallon, not only in tests with Yellow Cab, but also with passenger cars.”

The war between Checker and Yellow cabbies continued into 1923 as evidenced by the following two wire service reports:

“CHICAGO'S TAXICAB WAR BREAKS ANEW

“CHICAGO, Apr. 16, 1923 - Chicago's taxicab war was believed by police to have broke out afresh today when four men in a Checker taxi, fired, on J. S. Ringer, superintendent of the Yellow Taxi Company. Ringer was uninjured. The men in the Checker car fled, firing at pursuing policemen as they went.”

Whoever was causing the violence, the fact remained that working for Chicago's Checker or Yellow Cab Companies could be hazardous to your health. Between 1920 and 1932, countless Chicago cabbies were injured, some seriously, and at least a dozen persons associated with the taxi business lost their lives.

In early 1922 the American Yellow Taxi Operators Inc., one of New York City's larger taxicab operators, placed the following advertisement in a number of New York newspapers:

"The American Yellow Taxi Operators, Inc., is advertising the news that the New York Supreme Court has granted it an injunction restraining a rival operator from using the same or similar design and color scheme on its taxicabs in New York newspapers.

"Steps are being taken to remove the other numerous imitators that are trading on good-will at your and our expense."

Manhattan's two largest Yellow Cab operators, American Yellow Taxi Operators Inc. and the Yellow Taxi Corporation were merged on July 21, 1922. American Yellow Taxi Operators had been founded by Ernest H. Miller, a  Yellow Cab operator from Newark, New Jersey.

Born in Marion, Ohio, Miller started his business career as an office boy at the Marion Daily Star, a newspaper owned by Warren Harding, the 29th president of the United States. He entered the taxicab business in 1919 by organizing the Yellow Cab Company of Newark, N. J. serving as it president for the next decade. In 1921 Miller helped organize the American Yellow Taxi Operators Inc. a Manhattan operator which was subsequently merged into the Yellow Taxi Corporation, another Manhattan operator, in 1922. Fifteen months later (November 9, 1923), the Yellow Taxi Corporation was merged into a new firm, the Yellow Taxi Corporation, New York and three years later Miller was elected president.

March 24, 1922, NY Times

“1,000 TAXIS FACE CHANGE OF PAINT; Yellow Taxicab Company Wins Injunction Against Imitator of Its Distinctive Color.

“William E. McGuirk, Treasurer of the American Yellow Taxi Operators, Inc., 145th St and Lenox Ave, said yesterday that approximately 1,000 taxicabs would be obliged to change color as the result of a ruling just made by Justice Joseph E. Newburger in Part 1 special term of the Supreme Court. Justice Newburger has granted a temporary injunction restraining Thomas Hanges, owner of two taxicabs, from using the design of the American Yellow Taxi Operators, Inc.

“‘I know of no clearer case of attempting to mislead the public as the defendant admits he has done,’ said Justice Newburger. ‘The motion for an injunction bust be granted.’

“The defendant is restrained ‘from using or employing or operating for hire taxicabs designed or painted or colored in imitation or colorable simulation of plaintiff’s taxicabs’, also from ‘adopting, using, or employing the taxicabs and names, devices, finish, color or get-up, style, or dress calculated to be confused with or mistaken for taxicabs of the plaintiff.’ Hanges, in his answer, said that he bought the two taxicabs from the New York Yellow Cab Company, a sales agency, of 123 West Sixty-fourth Street; that he was assured that the color design was that of the concern from which he bought the cars.

“Mr. McGuirk explained that his concern started in 1921 with 26 taxicabs, and that the number since had been increased to approximately 200. He added. ‘After building up our business with careful chauffeurs and a clean system, hundreds of imitators sprang up, copying our cars and our name, and even appropriating our telephone number. We let them go just so far, and now the ruling of the Court will put a stop to it.’”

Walter Howey, an old friend of John D. Hertz and now editor of Hearst’s Boston American newspaper, approached Joseph Kennedy for help in the spring of 1924. Kennedy and Howey had become friends two years earlier while Kennedy was soliciting support for his father-in-law’s (John F. Fitzgerald) bid for governor of Massachusetts. Hoewy’s paper had come out in support of Fitzgerald over the incumbent, Channing Cox, and although Cox won the election, Kennedy was grateful for the assistance and the pair became close friends.

Howey and Hertz had worked together during Hertz’ early days as a sports reporter and when Yellow Cab was formed, Howey invested the bulk of his savings in Yellow Cab stock.

In January 1924 Yellow Cab Company’s stock had been trading at 63; by the end of March it had slipped to 60; by the middle of April it was falling off nearly a point each day, reaching a low of 50 on April 18, 1924. In the same period a similar fate had befallen the stock of Hertz’ Yellow Cab Manufacturing Company.  Opening the year at 90, Yellow Cab Mfg.’s stock had dropped into the 70s by early April and was now declining at an even more rapid rate than Yellow Cab.

Yet the profits and earning of both companies were up from the previous year and stood to increase still more in the coming year, inasmuch as Hertz was negotiating a merger with New York’s Fifth Avenue Coach Co.

Hertz was currently in Manhattan working on the Fifth Ave merger and had met with Howey who had taken the train from Boston in order to meet up with him to discuss the matter.

Watching the stock ticker, both Howey and Hertz had concluded that a pool of New York operators was deliberately trying to force the Yellow stock down, in what was known as a bear raid. They believed the precipitous drop and heavy sales were originating from the Broadway offices of Block, Maloney and Company. While the identity of raid’s sponsors could not be proved, Hertz believed that Checker Cab was trying to sabotage his ongoing negotiations with Fifth Avenue Coach.

Howey arranged an emergency meeting between the three men to see if Kennedy might be able to help Hertz reverse the downward spiral of Yellow’s stock. Kennedy met with Hertz and Charles McCulloch, Yellow’s vice-president, for breakfast at the Waldorf Astoria’s North Café after an overnight Boston to New York journey via a Pullman Sleeper.

Yellow Cab’s stock had fallen another 3 points the previous day to a record low of 57. Hertz revealed he had been buying up a much Yellow stock as he could in order to keep the stock from collapsing and proposed that Kennedy do the same on a much larger scale.

Kennedy agreed to help Hertz out, but suggested an alternative approach. Rather than keep the value of the shares stable, his proposal required the value of the stock become more volatile, the more volatile the better. Kennedy believed that by randomly buying and selling large blocks of shares in a multitude of transactions emanating from cities all across the country, the raiders would get nervous and start unloading the shares, as their future value could no longer be predicted.

Hertz saw the brilliance in Kennedy’s scheme and gave him control of all his shares, which were valued at roughly $5 million at the time. Edward Moore, Kennedy’s personal assistant, booked a suite of rooms in the Waldorf which were specially outfitted with a battery of telephones lines and a ticker tape machine.

For the next month Kennedy holed up in the suite, spending the bulk of his time on the phone, ordering brokers all across the country to either buy or sell Yellow shares at a carefully determined price schedule.

One day he might decide to flood the market with Yellow shares, and purchase them all back at the end of the day, after the price had fallen due to the earlier sell-off. The procedure might be repeated the next day, or he might decide to buy a bunch of shares, only to sell them off at days end. The goal was to make the stock so unpredictable, that the raiders would get cold feet and sell off all of their holdings.

At the same time Hertz was issuing favorable press releases detailing the progress of Yellow’s negotiations with Fifth Avenue Coach as well as its’ favorable quarterly earnings report which showed a 25% increase over the previous year’s quarter. Long term Yellow shareholders were reassured by the favorable press and held onto the stock. As Kennedy predicted, the raiders ignored the favorable information and eventually unloaded the shares.

By the middle of May the descent had been halted and the values returned to their pre-raid amounts. Kennedy received hefty cash reward for his efforts as well as a sizeable sum of Yellow stock. In June the grateful Hertz invited Kennedy to get in on the formation of Hertz’ Drivurself system, and later that year his Omnibus holding company which resulted from his successfully acquisition of Fifth Ave. Coach.

Yellow shares suffered another precipitous fall near the end of the year after word got out that its value had been manipulated. Later in life Hertz stated that he suspected that Joe Kennedy had contributed to the second decline by selling short.

It’s ironic that although Hertz spent most of his early working life revolutionizing the taxicab industry, his lasting legacy is the Hertz rental car, which in hindsight was a footnote when compared to the rest of his automotive business adventures.

The formation of the Hertz Drivurself Corp. was announced with the following press release which was published in the September 28, 1924 San Antonio Express:

“DRIVE-IT-YOURSELF SYSTEMS GROWING FAST

“Revival of Livery Stables of Former Days. Transportation Modernized.

''In the number of Drive-It-Yourself and Rent-a-Car systems that are springing up all over the country, is found a revival of the livery stables of former days. The pendulum has swung back and an old phase of transportation, motorized and modernized, is being brought to light. Although the companies already operating have had a large volume of business, due to the fact that they do not employ specialized cars, maintenance costs are exorbitant, profits barely cover expenses and failures in business are frequent.

“However, a certain portion of the public likes to serve itself when it can be done  economically, as is attested by the popularity of serve self restaurants, serve-self grocery stores, etc.; so now John Hertz, the guiding genius of the Yellow Cab Manufacturing Company, which from the first has specialized in building revenue-producing vehicles, has recognized this definite need and built the car necessary to the success of a Drive-it-Yourself business.

“Is New Development.

“It is over two years since Mr. Hertz first began his investigations of this new development of motor transportation. He saw at a glance that a specially-built car of fine appearance and dependable qualities was necessary for the successful operation of Drive-it-Yourself service. That car, the Ambassador Drive-Yourself five-passenger sedan, is now ready for sale. But Mr. Hertz didn't stop there. He realized that the business needed a system of operation, and the Yellow Drive-It-Yourself system, in which the Yellow Cab Company of Chicago, the operating company — not the Yellow Cab Manufacturing Company, is financially interested, was formed in that city. Four different stations operating Drive-Yourself vehicles have been the testing ground for this new car, and its operation has proved to be economical and profit-building. During the month of August alone the net profit from this business was $12,000. Now the Yellow Cab Manufacturing Company, through its various subsidiaries and branches is ready to make a concentrated drive throughout the country for the development of this sound business. Soon every large city will have many Drive-It-Yourself companies operating on a large scale, with new, modernized, specially-built automobiles and financially sound organizations behind them. Already operations are under way in Chicago and Louisville. Plans are prepared for every operator of Yellow Cab products to go into business, and the Ambassador Drive-Yourself, a specially-built automobile that cannot be distinguished from privately-owned machines, will be sold to every Drive-It-Yourself company in the United States as well.

“Many Uses for Service.

“To hire the car the public will pay but a small rate per mile. Traveling salesmen will use Drive-It-Yourself service to cover territory. Government officials will find it invaluable going from place to place on investigations. In the old days young folks did their courting in a hired rig. Now they have the entire resources of the Drive-It-Yourself companies at their command. There are hundreds of uses for this, service. Women who like to drive a smooth-running automobile will avail themselves of the new system on their shopping tours; delivery boys, collectors and public officials will use it; companies who have hesitated about putting into service cars of their own will hail it with satisfaction. Automobile repair stations will get more business now that the private owner can have a car to drive while his own machine is being overhauled. Drive-It-Yourself is a business that offers big opportunities with a minimum of responsibility and less effort than any other phase of the automobile business. Now that the right car is available for the operation of such a business, the men who realize that the old adage regarding the early bird catching the worm still holds true, are the men upon whom success is certain to smile.”

During the early twenties Manhattan fleet operators established their own public relations firm, the Empire State Taxicab Chamber of Commerce, whose director, Frederick H. Elliott issued pamphlets such as 1925’s ‘Ten Commandments for Taxicab Operators.’ Another organization, The Taxicab Chamber of Commerce, headed by Henry Weiss, former head of Checker Cab Service, and H.A. Inness Brown, editor of ‘The Taxi Weekly’ served a similar purpose during the Depression.

The National Association of Taxicab Owners served a similar duty on a national scale. In the June 1925 issue of the Rotarian, Arthur Melville wrote about a NATO sponsored study in his Gasoline Alley column:

“It may be of interest to note how the Chicago Yellow Cab Company has succeeded in cutting down its accidents 34 per cent by applying three simple psychological test for the 6,000 drivers employed.

“These tests were devised by Dr. A.J. Snow, of the staff of Northwestern University, who is a consulting psychologist for several firms, and are an excellent example of specialized test for vocations. Beside their present use by this cab company, to which the plan was suggested by the safety committee of the National Association of Taxicab Owners, these tests have aroused considerable interest in various other transportation circles. They are now being studied by the Illinois legislators, possible with the idea of incorporating something of the sort in one of the sixty-seven assorted bills concerning automobiles which await the attention of the present legislature.

“The psychologist began by taking a job as a taxi-driver for several weeks. This personal experience was supplemented by an examination of the best drivers to determine their predominant qualities. Dr. Snow found that the good drivers had three essential characteristics; common sense, habitual carefulness, and emotional stability – which means simply the ability to respond to emergencies without hysterics. Then he prepared three tests to determine whether applicants had these desirable qualities.

“First comes a written intelligence test. There are no trick questions, in fact a 14-year-old boy made 128 points on this test, yet certain adult applicants could not make 50 points in twenty-five minutes, this lack of normal mentality being enough to eliminate them at the beginning.

“Next is the emotional-stability test, which is given with the aid of an electrical apparatus. The applicant is seated in a cabinet before a table with a switchboard, two big electric cells, and a spark gap. His feet are firmly planted on two pedals. While he is occupied with lighting little signal lamps at the switchboard, he is told that something may happen – and if it does he is to press down on a third pedal and move a switch with his right hand. Then the door closes behind the man giving the test, and the applicant continued to busy himself with his signal lamps. Suddenly without any warning, the man outside throws a switch. A streak of electricity shoots across the spark gap in front of the candidate, and he has to do something – fast. Most applicants react in about two seconds, remember their instructions, and shut off the spark, but some go to pieces completely. For instance in one group of a hundred applicants, twenty of them took fifteen seconds to rally round, and thereby lost their chance of a job. When you consider that a car going thirty miles an hour moves 660 feet in fifteen seconds, you can see why.

“The third test sorts out the habitually reckless, although it is deceptive in its simplicity. There is a large pile of miscellaneous articles. The applicant is told to places these all on a small table – and not to waste any time about it. Here the old proverb about ‘haste makes waste’ gets emphasis. The chap who is forever taking chances is quite apt to drop a book into a pan of water – to dump a heavy bag of salt on top of the eggs – or otherwise to ‘spill the beans’. And the man who does such things is also apt to be one of the 18 per cent of the drivers who have 46 per cent of the accidents. Or more accurately he would be - if he got the job!

“The Chicago Yellow Cab Company, I might add, is responsible for the innovation of the red, amber and green traffic lights on the famous Michigan Boulevard. They were installed with the understanding that if the signals worked well the city would adopt the scheme, buying the lighting system; if not, the cab company would pay the original cost plus that of having the synchronized lights removed. After due trial on this thoroughfare, where automobiles run three and four abreast in each direction, it was found that the stop-and-go lights reduced accidents 75 per cent. The city now has similar lights on practically all busy boulevard sections.”

Just as the memory of Checker’s internal cab war had faded, the original Yellow vs. Checker battle resumed in September of 1928:

“ONE SHOT DEAD IN TAXICAB WARFARE

“Gun-Play Concludes Free-for-all Participated in by Chicago Drivers

“CHICAGO, Sept. 22, 1928—(AP) Taxicab warfare which police say has been brewing for several days broke out today at a cab stand at Cottage Grove avenue and 68th street, near the Granada cafe. Eugene Thivierge, 35, a driver for the Checker Cab company, was shot dead.

“Bernard Reishter (Reister), a Yellow Cab driver, was arrested shortly afterward. His face and body bore the marks of recent battle, police said. He told officers he had seen the fight but had no part in the gunplay.

“Word reached Checker Cab company headquarters last night that some of their drivers had been threatened when they attempted to park their cabs at a stand near the cafe. Several drivers, armed with automobile nacks, went to the scene, police were told. The dispute continued until there was a general fight, terminating only when Thivierge had been shot down.

“Police Lieutenant Dubach said the first indication of trouble between the cab drivers came a week ago when several drivers of the Checker company were arrested after a pistol fight with police who had sought to question them. Three drivers were arrested and charges of assault with intent to kill were placed against them.

“The trouble is attributed by police to the desire of rival cab drivers to keep to themselves cab stands advantageously located.”

Within the week Checker henchmen retaliated by dynamiting two Yellow Cab garages:

“Chicago Taxicab War Is On

“SHOOTING OF CHAUFFEUR ENDS IN BOMBED GARAGES

“Chicago, Sept. 30, 1928— (AP)—Two Yellow Cab company garages were bombed simultaneously tonight. Police fear the outrages are reprisals for the fatal shooting last week of a Checker taxicab driver by a Yellow cab chauffeur.

“No close approximation of the damage could be obtained from the Cab Company, the explosion of the bomb at the garage in the 5400 block of Broadway was heard as far north as Evanston and shattered windows in nearby buildings. Guests at the Edgewater Beach Hotel, three blocks away, were alarmed by the detonation. Several cabs stored in the garage were damaged though Company officials said the loss would not be considerable, only a few employees were in the building when the dynamite, placed at the rear entrance, exploded, and none of them was seriously hurt.

“It was 15 minutes later that a bomb exploded at the rear of the Yellow Cab Company's garage and repair shop at 3300 North Halstead Street. Police believe the same hands that placed the Broadway Garage bomb, hurled the dynamite that damaged the building on Halstead Street. Two men were seen to run from both places and drive away in a roadster.

“Thomas Hogan, vice president of the Yellow Cab company, immediately issued a statement denying the report that the bombing indicated a renewal of the taxicab war which swept Chicago four years ago. "Absolutely nothing to it," said Hogan. "I haven't any idea of the reason for those bombings. We have no labor troubles and there's no reason to suspect business rivals. As a matter of fact, the only damage done was the shattering of the glass in four or five cabs."

“Score of Cabs Wrecked.

“Police, however, reported that 17 cabs were wrecked, and detective bureau squads were dispatched to search for friends of Eugene Thieverge, 35, Checker taxi driver, who was fatally shot September 21 in a row over parking space on the south side.

“Following the shooting, Bernard Reichter, a Yellow Cab driver, was arrested and charged with the crime. Reichter admitted being in a fight at the scene of the shooting but denied firing the shot. Police were seeking Robert Mooney, another Yellow Cab driver, in connection with the affair.

“Only a portion of the dynamite placed at the Broadway garage exploded. Two bundles of the explosive, one containing 16 sticks, and the other 18, were found in the alley. A sputtering fuse attached to them was stamped out by a company employee.”

Unfortunately Checker’s henchmen didn’t know when to quit and on the night of October 3, they bombed John D. Hertz’ prized stables in suburban Cary, Illinois, destroying 11 of his wife’s prized racehorses.

Checker attorneys put the blame for the Yellow bombings on “race track rivals of Hertz”. Hertz was not amused and soon after Robert E. Crowe of the Illinois attorney general’s office announced an official inquiry into the affairs of Checker:

“CHARGES MADE AGAINST CROWE

“Checker’s Concern Says Attorney Unqualified to Conduct Cab Inquiry.

“CHICAGO, Oct. 4, 1928- (AP) — Charging that Robert E. Crowe, state's attorney, is unqualified to conduct an inquiry into a taxicab war here because he is a stockholder in the Yellow Cab company, officials of the Checker Taxi company today appealed to Judge John L. Sullivan, chief justice of the criminal court, for a special grand jury and a special

prosecutor to investigate the trouble.

“The Checker company acted after Mr. Crowe yesterday ordered all its records seized and its officials to appear before the grand jury following two bombings of Yellow Cab company garages and the burning of the racing stables of John Hertz, head of the Yellow company, with a loss of more than $200,000 through the death of 11 race horses.

“Charles Dougherty, assistant state's attorney, told Judge Sullivan that neither Mr. Crowe nor any members of his family owned Yellow Cab company stock. The hearing was continued until tomorrow. Checker company lawyers said they expected to present evidence of graft and corruption on the part of the public officials, aimed, they declared, at destroying all rivals of the Yellow company in Chicago.

“The petition charged that many public officials owned Yellow Cab company stock. Trouble between the two companies came to a head a week ago, when a Checker driver was shot to death during a quarrel over cab stand privileges. A Yellow driver was arrested for the shooting.

“Judge Harry Fisher ruled today that seizure of the Checker company's books and records by the state's attorney constituted virtual "theft and larceny" and said he would instruct attorneys what steps to take to regain possession of them if the records were not returned by tomorrow.”

Checker’s henchmen clearly didn’t know when to quit and midway through October Hertz reported that his life had been threatened:

“Yellow Cab Head Threatened With Death, He Says

“CHICAGO, Ill., Oct. 17, 1928 (AP)—John Hertz, president of the Yellow Cab Company, reported to police today that his life had been threatened and that he had been warned his grandchild would be kidnapped.

“Acting State's Attorney George E. Gorman, following the complaints of Hertz, prepared subpoenas for Robert McLaughlin, head of the Checker Taxi Company, and attorneys Arthur Albert and Edgar Cook, representing the Checker Company.

“Two weeks ago Yellow Cab garages were bombed and racing stables of Hertz were burned, destroying 31 thoroughbred racehorses at a loss of $200,000. The trouble was described as outgrowth of a taxi war after a Checker driver was shot and killed.”

The very next day subpoenas were issued to Checker Cab’s president, Robert McLaughlin:

“'Bomb Trust' Under Probe; Checker Taxi Head Summoned by Jury

“Chicago Oct. 18, 1928 (AP) —A threat against the life of John Hertz, president of the Yellow Cab Company, has stimulated Grand Jury action to rid Chicago of its "bomb trust" and taxicab war.

“Hertz told police yesterday he had received warnings that his life would be taken. Subpoenas were prepared at once for Robert McLaughlin, president of the Checker Taxi Company, and two Checker Company attorneys.

“A Grand Jury will question them concerning alleged disputes between employees of the two companies. Following the fatal shooting of a Checker driver, two Yellow Cab garages were bombed three weeks ago.

“A few days later the Hertz racing stables at Cary, Ill. were destroyed in a $200000 fire in which 11 thoroughbred horses were burned.

“The Grand Jury, whose work is to begin tomorrow, will investigate not only the reputed taxicab war, but all bombings of the past few weeks. An appeal has been made to inaugurate a drive to curb outbreaks or violence, which have included 73 bombings so far this year.”

Checker Cab’s henchmen responded by placing a bomb in front of a Hertz’ subsidiary:

“FIND BOMB NEAR TAXICAB OFFICE

“Chicago ‘Warfare’ Continues; Takes New Angle.

“CHICAGO, Oct. 18, 1928 (AP)—An unexploded dynamite bomb was found today in an alley back of the Chicago Motor Coach Company offices. The Motor Coach Company is affiliated with the Yellow Cab Company of Chicago, of which John Hertz is the head.

“Police expressed the belief an attempt had been made to blow up the offices.

“Mr. Hertz yesterday reported that threats had been made against his life and that he had received warnings his grandchild would be kidnapped.

“A grand Jury investigation has been ordered into an alleged taxi war between the Yellow Cab Company and the Checker Taxi Company of Chicago, as a sequel to the bombing of two Yellow Cab garages and the burning of racing stables owned by Mr. Hertz. The bombings followed the slaying of a Checker Taxi driver.”

Three days later Checker’s attorneys withdrew a motion to investigate Yellow Cab’s alleged scheme to put Checker out of business:

“Checker Company Withdraws Motion for Investigation In Chicago

“CHICAGO Oct. 21, 1928 (AP) —An investigation of rivalry between the Yellow Cab Company and the Checker Taxi Company of Chicago by the grand jury was dropped Saturday when attorneys for the Checker Company withdrew the motion before the chief justice of the criminal court asking for the inquiry. The chief justice John J Sullivan said there was little evidence that could be presented to the jury falling within its jurisdiction and advised the Checker Company to wait until the states attorney had been elected next month before going ahead with any inquiry.

“The Checker Taxi Company charged attempts were being made to force it out of business. A Checker driver was shot to death and subsequently two Yellow Cab garages were bombed and racing stables owned by John Hertz, president of the Yellow Cab Company were burned and 11 race horses valued at $200000 were destroyed, but the stables were located outside Cook county and an investigation of the fire would not come under the jurisdiction of the Cook County grand jury.

“It was at first reported the grand jury would investigate reported threats on the life of Mr. Hertz but no steps were taken to do so.”

Within the week Checker’s attorneys were back in court asking for an investigation into the misappropriation by City officials of $6,000 paid in 1926 as the Checker company's vehicle license fees. Chief Justice John J. Sullivan responded by impounding Checkers books:

“Records of Checker Cab Are Impounded

“Chicago, Oct. 30, 1928—(AP)—Books and records of the Checker Taxi company showing its business transactions since 1925 were impounded by Chief Justice John J. Sullivan of the criminal court as evidence in the grand Jury inquiry into the company's charges of corruption in the city government. Attorneys of the company had accused city officials of diverting $6,000 paid in 1926 as the Checker company's vehicle license fees. The grand Jury subpoenaed the books last Friday.”

In 1928 Ernest H. Miller, president of Yellow Taxi Corporation, New York, which operated Yellow Cabs in New York City, initiated negotiations which led to Parmelee’s formation. These negotiations, commencing in 1925, took place against a background of voluntary withdrawal commencing in 1925 by substantial interests of the Yellow organization in Chicago. He entered the taxicab business in 1919 by organizing the Yellow Cab Company of Newark, N. J. serving as it president for the next decade. In 1921 Miller helped organize the American Yellow Taxi Operators Inc. a Manhattan operator which was subsequently merged into the Yellow Taxi Corporation in 1922. Fifteen months later (November 9, 1923), the Yellow Taxi Corporation was merged into a new firm, the Yellow Taxi Corporation, New York whose capital stock was issued through the Seaboard National Bank of New York. In 1926 Miller was elected president of the Yellow Taxi Corporation, New York. He was also a director of the Alamo Coal Co. as well as the Reliance Casualty Insurance Co., a Newark, N.J., firm that specialized in automobile liability and commercial insurance.

In 1925 Hertz sold the Yellow Cab Manufacturing Company to General Motors Corporation, who merged it with their truck manufacturing operation and reorganized them as the Yellow Truck & Coach Corp. Although its corporate headquarters remained in Chicago, all manufacturing was subsequently relocated to Pontiac, Michigan.

The sale to General Motors did not involve the Chicago Yellow Cab Company, nor the Yellow Taxi Corporation of New York, two totally separate firms controlled by Hertz that operated taxicabs in their respective communities.

The Yellow Cab Company of Chicago was a subsidiary of the Chicago Yellow Cab Company, a public holding company that also included a maintenance subsidiary and insurance company. The shares of Chicago Yellow were equally divided amongst Hertz, Parmelee and a small group of other investors.

For a number of years Ernest H. Miller had been partners with Morris Markin and two others in a scheme to slowly take control of the independently-owned Checker Taxicab Company of Chicago.

1928 Autobody Magazine:

“Yellow Taxi Corporation, New York, has changed the seats of more than 200 of its 1200 cabs to cane seats, instead of the leather or plush which has heretofore been used. This change was made because the cane seats are both cool in appearance and in fact. The company has just ordered 100 new Model O6 cabs from General Motors Truck Company to replace some of their present cabs.”

By 1928 Hertz had grown tired of having to deal with Chicago mobsters and wanted out of the taxi business. He was aware that Markin was interested in acquiring it and as Miller was a friend of Markin’s he asked him to try and put together a deal. Chicago attorney Paul C. L'Amoreaux, a business partner of Miller and Markin’s, was asked to come up with a business plan that would suit all interested parties which would have to include Charles A. McCulloch, the head of the Parmelee Transfer Company. (Although their last names were similar, Parmelee’s McCulloch was unrelated to Checker Cab’s criminally-minded McCullough brothers.)

While L’Amoreaux worked out the details, Markin began looking for the money that would be required to finalize the transaction. He turned to the New York investment firm of J.A. Sisto & Co., the underwriters through whom Checker Cab Manufacturing had recently effected its second public issue of stock.

After weeks of preparation L’Amoreaux presented a complicated plan that was eventually approved by all three principals. It involved a carefully planned sequence of events whereby the minority shareholders of the four firms wouldn’t be alerted to the ultimate goal of the transaction until after it had occurred, thereby keeping the value of the various shares as stable as possible.

Hertz and McCullough were longtime friends and business partners. Both were early investors in the Chicago-based Balaban and Katz movie theater chain and in 1929 had helped form the Manhattan-Dearborn Corp., a real estate investment firm. McCulloch was also an early Yellow Cab investor and John D. Hertz had similarly invested in Parmelee stock.

At the time of the acquisition, McCulloch was vice-president of Chicago Yellow Cab and both men owned approximately 30% of each other’s shares. McCulloch was also friends with Markin and had been investing in shares of Parmelee’s preferred stock since the mid-twenties.

L’Amoreaux presided over lengthy private negotiations amongst Miller (representing Hertz), McCulloch, Markin, and J.A. Sisto & Co. and it was decided that the first transaction would involve the sale of Hertz’ share of Yellow Cab to McCulloch, whereby McCulloch would become Yellow’s chief stockholder. That transaction didn’t take place until April 12, 1929 but was publicly announced on January 7, 1929 in the hopes of ending the violence that had recently been directed towards Hertz:

“TAXICAB KING TO PLAY FOR AWHILE

“JOHN HERTZ SELLS INTEREST IN YELLOW TAXICAB

“Organized Business In Chicago in 1915 Which Has Brought Him Immense Wealth

“Chicago, Jan. 8, 1929 (AP) - John Hertz, who was peddling papers not so many years ago, has retired from business, his wealth rated in millions. His retirement from the chairmanship of the Yellow Cab company board yesterday was accompanied by announcement that his control of that organization had been sold to another one time newsboy — Charles A. McCullough, president of the Parmelee Transfer company.

“Hertz disposed of his entire holdings in the cab company. Those that did not go to McCullough were either given to about 60 employees who started in business with him or sold to them under an arrangement of deferred payments.

“Plans Few Years of Play.

“Still under 50, Hertz plans to cap years of work with play. A few months in Florida then a summer in Europe are among his immediate plans. In England Mr. and Mrs. Hertz will watch their horse, Reigh Count, winner of the Kentucky derby, in competition with the best thoroughbreds of the old world. Hertz, who was born in Ruttka, Austria (now Czechoslovakia), founded the Yellow Cab company of Chicago in 1915. The Chicago Motor Coach company and the People's Motorbus company of St. Louis followed in the next seven years. Later he effected the merger of the Yellow Cab Manufacturing company and the truck division of General Motors.

“Started with Old Cars.

“It is related that after a varied career selling papers, driving a delivery wagon, promoting events and writing of sports for newspapers. Hertz became an automobile salesman. During his first year Hertz made $15,000 in commissions. Only about $800 of this was in cash, however, the remainder being taken out on old limousines. These automobiles, his friends said today, were the nucleus of the company which for the year just closed had net earnings of approximately $1,825,000, equivalent to $4.56 a share of the capital stock.

“Stables House Famous Horses.

“Many famous runners are housed in the Hertz racing stables near Cary, Ill. Several months ago the stables were swept by fire which destroyed horses valued at $200,000. The fire, presumably of incendiary origin, was blamed upon a ‘taxicab war’ in Chicago.”

After the fire Hertz abandoned all of his taxicab-related enterprises electing to concentrate on less hazardous business opportunities.

Apr 18, 1929:

"The financing of the new Parmelee Transportation company, holding company for a corporation which will operate some of the principal motor transport and cab companies of the United States, was announced last night."

4-30-1929 AP:

“New Taxicab Fleets Result of Merger

“Chicago. April 30 (AP)—New fleets of taxicabs for Chicago, New York and other cities will result from the recent merger of the Chicago Yellow Cab Company, Inc., the Yellow Taxi Corporation of New York, and the Parmelee Company of Chicago, officials of the Chicago Yellow Cab Company have announced.

“Montreal, Pittsburg, Washington and Cleveland are among the cities in which the Parmelee Company plans to establish taxicab concerns in the near future. Thomas B. Hogan, vice president and general manager of the Chicago Taxi Company, said.

“One thousand new taxicabs for Chicago and 1,300 for New York are planned immediately. After that Montreal probably will be the first city entered by the Parmelee Company, it was said.”

TIME Magazine - Monday Sep 22, 1930

“In Parmelee, Checker has long had a large investment through debentures and preferred stock. Last week it was arranged to return these holdings to Parmelee in return for sufficient common stock to give Checker control. Likewise, Parmelee will be given control of New York's Motor Cab Transportation, operating 2,050 taxis. Altogether, the fleet under Checker's control will now come to 10,000 taxis (operated by Parmelee), one-tenth of the total in the U. S., enough to insure the company of a large replacement business.”

Parmalee’s president was Charles A. McCulloch, a long-time Parmalee employee who had risen up through the ranks. Sometime around 1919 he had purchased a controlling interest in the firm and like Hertz, had become quite wealthy.

Hertz and McCullough were longtime friends and business partners. Both were early investors in the Chicago-based Balaban and Katz movie theater chain and in 1929 had helped form the Manhattan-Dearborn Corp., a real estate investment firm.

Journalist Herbert Bayard Swope was the sole Manhattan-based representative of the firm, whose other Chicago-based directors included McCulloch, Hertz, ad man Albert Davis Lasker, Chicago Cubs owner William Wrigley Jr., and Balaban and Katz’ chairman Herbert L. Stern. Unfortunately its creation was ill-timed and between 1929 and the end of 1932 Manhattan-Dearborn's investors lost $11,000,000.

Luckily Hertz had invested his money in several other firms, one of which was Lehman Brothers, the Wall Street Investment banker. Robert Lehman sold a minority share in his family’s firm to Hertz soon after General Motors had acquired a controlling interest in Yellow Cab.

Balaban and Katz was absorbed by Famous Players-Lasky in 1926 the resulting firm being reorganized as Famous Players-Lasky. In 1927 it was renamed Paramount-Famous Lasky Corp. and after a 1930 merger with the Publix theater chain, Paramount-Publix Corp.

As Hertz was a major shareholder in both firms, he spearheaded a Lehman Brothers-backed reorganization of the movie studio as Paramount Pictures in 1931, serving as Lehman’s representative on the Paramount board. As chairman of Paramount’s finance committee Hertz succeeded in reducing costs by streamlining distribution, cutting salaries and cutting back on production. Apparently Hertz was not in tune with the movie-going public and Paramount’s revenues declined forcing him to resign his position just prior to the firm’s 1933 receivership.

Hertz remained a Lehman Brothers partner until his death and was instrumental in the firm’s sponsorship of Hertz Rent-a-Car’s IPO in the mid 50s. Prior to that time Hertz had been privately owned by the Omnibus Corporation another Hertz-controlled firm which had purchased the company from General Motors in 1953.

© 2004 Mark Theobald - Coachbuilt.com

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