Crosley: Two Brothers and a Business Empire That Transformed the Nation.
Book Review by: Timothy Whisler
For Citation: Business History Review 83 (Winter 2009): 851-853.
Nearly a century after the golden age of the American industrial titans, Henry Ford, John D. Rockefeller, Andrew Carnegie, Harvey Firestone, and Thomas Edison remain topics of discussion. The Crosley brothers, Powel Jr. and Lewis Crosley, are not commonly associated with this group, in spite of having built a diversified home-appliance and automobile-manufacturing and broadcasting enterprise based in Cincinnati that achieved similar fame and fortune. In the 1920s and 1930s, the Crosley Corporation’s radios and refrigerators became household fixtures, and its pioneering AM station, WLW, dominated the airwaves. Powel, the elder sibling and architect of the empire, possessed the mansions, private islands, airplanes, automobiles, and major-league baseball team, the Cincinnati Reds, that he needed to mingle with the country’s industrial and social elite. Attention from national media and radio-enthusiast publications, supplemented by corporate press releases, raised Powel’s profile to such a level that he was named in a public-opinion poll in the 1930s as the industrialist most capable of becoming president.
While he held no political ambitions, Powel craved the attention and wealth that did not interest Lewis. Authors Rusty McClure, David Stern, and Michael Banks suggest that the relative obscurity that now surrounds Powel and his firm is an ironic twist of fate. They seek to discover why the “Henry Ford of radio,” as Powel was commonly referred to by contemporaries, has not been remembered in the way that Ford has been. The authors suggest several reasons. They point to a series of tragedies that deprived the Crosleys of direct heirs to lead the enterprise. They argue that Powel’s inability to derive satisfaction from his achievements and relentless need to prove his worth to others resulted in a restless and, occasionally, disjointed corporate strategy. For example, Powel sold the cash-cow appliance and broadcasting divisions in 1945 to finance his dream of building automobiles. The future of the firm and the Crosley legacy rested upon the unlikely prospect of his wresting market share from Detroit.
Crosley is a popular biographical and psychological study intended for a general audience, rather than a corporate analysis designed for the serious business historian. The book has the look and feel of historical fiction. Historical precision has been sacrificed for readability. The extensive bibliography is not reflected in the scant endnotes. Unverifiable details and sensational stories abound throughout the text. Academics will, no doubt, be unimpressed by the simplistic explanations and the emphasis upon personal rather than organizational capabilities. Nonetheless, the flowing prose, well-crafted narrative, and fascinating tale make the work excellent leisure reading.
The themes chosen by the authors are clear and consistent. The brothers’ contrary but complementary personalities and skills created a dynamic entrepreneurial team. As McClure and his coauthors repeat throughout, “Powel, Jr. dreamt it. Lewis built it” (p. 13). The brothers learned from their father’s experience to rely upon retained earnings, rather than loans, to expand the enterprise and to establish clear profit benchmarks for each product line. McClure claims that the father and sons symbolized the American dream. They overcame early failures through unwavering perseverance, efficient manufacturing methods, and acute readings of market signals to achieve their objectives.
Powel and Lewis were sons of an entrepreneur who regained the fortune he lost in the 1893 panic. Growing up at the dawn of the second industrial revolution, the inseparable brothers were fascinated by newly emerging mechanical and electrical affairs. Their personalities and skills were considerably different. Powel was the visionary, interested in risk-taking, marketing, promotion, and deal-making. Ominously, Powel’s first business, the Marathon Car Company, followed numerous other carmakers into liquidation during the panic of 1907. Lewis, who was two years younger than his brother and, unlike Powel, was quiet, humble, and meticulous, studied engineering. He floundered in achieving his boyhood dream of becoming a farmer before honing his skills in the Army Engineering Corps in France. When he returned from World War I, he accepted Powel’s offer to manage his brother’s new and rapidly expanding automobile accessory company.
Unlike Edison, the Crosleys were not inventors. They built their empire by spotting pioneer products in growth markets that could be reverse engineered to reduce manufacturing costs. Lewis achieved economies of scale by simplifying product and production designs and purchasing off-the-shelf components. Powel creatively and incessantly promoted the lower-priced good. Like Ford, the market target was the “masses, not the classes.” The wireless radio receiver was the firm’s signature product and revenue producer during the 1920s. Low priced and relatively reliable, the Crosley “Harko” was the radio equivalent of the Model T. It was the first radio to exploit the mass market. Powel acquired one of the first broadcasting licenses simply in order to increase sales of radio units by providing owners with reception. Crosley’s applications for ever-increasing transmission wattage supported his national and international distribution of radios. WLW, dubbed the “Nation’s Station” by the 1930s, pioneered the program format and often provided aspiring performers an avenue to stardom. Powel used radio profits to venture into a wide array of consumer durables, with varying results.
While Lewis questioned the feasibility and profitability of car production, Powel remained wedded to his dream of becoming Henry Ford’s rival. The firm applied its appliance product strategy to car development. Unveiled at the 1939 World’s Fair, the small and spartan Crosley was the lowest-priced car in the market. Sales exceeded expectations in the immediate postwar market characterized by pent-up demand and supply shortages. It was clear by 1949, however, that the Crosley was not the Model T, and that Powel was not Henry Ford. Powel had misread market trends. Once normal production resumed, buyers preferred Detroit’s styling, power, and comfort to the Crosley model’s low price and operating costs. Moreover, the poor quality of purchased components, particularly the engine, created an unsalvageable brand image. After production ceased in 1952, Powel presided over the Reds and took comfort in the success of the subcompact car in the early 1960s. Lewis, realizing his boyhood dream, managed his new dairy farm.
In keeping with the authors’ themes, Crosley reflects Powel Jr.’s flair for marketing big ideas to the masses. We will have to wait for a scholarly investigation of the firm that mirrors Lewis’s methodical and probing approach.