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And Then There Were Two - And Then There Were Two Debt can...

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And Then There Were Two Debt can help a company acquire the things it needs to grow, but it is often the very thing that kills a company. A brief history of Maxwell Car Company illustrates the role of debt in the U.S. auto industry. In 1920 Maxwell Car Company was on the brink of financial ruin. Because it was axle-deep in debt and unable to pay its bills, its creditors stepped in and took over. They hired a former General Motors executive named Walter Chrysler to reorganize the company. By 1925 he had taken over the company and renamed it Chrysler. By 1933 Chrysler was booming, with sales surpassing even those of Ford. But the next few decades saw Chrysler make a series of blunders. During the 1940s, while its competitors were making yearly design changes to boost customer interest, Chrysler made no changes. During the 1960s, when customers wanted large cars, Chrysler produced small cars. During the 1970s, when customers wanted small cars, Chrysler offered big “boats.” By 1980, with its creditors pounding at the gates, Chrysler was again on the brink of financial ruin.
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