By Peter J. Seymour.
In 1893, at the age of 16 and with £4 as working capital, William Richard Morris (later Lord Nuffield and for simplicity known hereafter in this account as WRM) set up his first business in a brick building at the rear of his father’s house in James Street, Oxford, repairing bicycles. The business expanded and by 1901 he could advertise himself as: ‘W.R. Morris, Practical Cycle Maker and Repairer, 48 High Street and James Street, Oxford’. During 1902, WRM entered into a partnership with another bicycle maker, so that he could expand his business even further and proceed with the making of motor-cycles, but, within a year, the partnership had failed.
WRM then started repairs on motor cars and he entered into another partnership in 1903, trading as ‘The Oxford Automobile & Cycle Agency’ but, once again, the partnership failed when the Agency became bankrupt in 1904 due to the excesses of one of the partners. WRM lost heavily and he had to attend an auction of the Agency’s assets in order to buy back his own set of tools with money he had borrowed.
With characteristic determination and with financial assistance from a tobacconist, George Cooke, WRM resumed trading under his own name and he continued with his cycle and motor-cycle business until 1908 when he sold the enterprise together with the rights to manufacture the Morris motor-cycle. This enabled him to concentrate on developing his motor car business at a premises in Longwall which became known as The Oxford Garage*.In addition to hiring cars and operating a taxi service, the business held agencies for several makes of car and motor-cycles and the Oxford directory then listedWRM as ‘a motor car engineer and agent and a garage proprietor’.
* The Oxford garage was re-named The Morris Garage in 1910 and it became known as The Morris Garages (incorporated in 1927) after additional premises had been acquired in 1913.
Having operated The Oxford Garage successfully for a number of years, WRM began to pursue his idea of making motor cars in about 1910. WRM decided to obtain the component parts for the car from specialist manufacturers, thereby keeping his costs down as the need for expensive plant and machinery was avoided, and that he would undertake their assembly in the same way he had built bicycles and motor-cycles.
W.R.M. MOTORS LTD.
By 1912, the design of WRM’s first car, the 10hp. Morris Oxford, had been completed and orders had been placed with several manufacturers for the car’s components, including White & Poppe Ltd. of Coventry for the supply of engines and gearboxes. With a financial investment from the Earl of Macclesfield and with a loan from Gilletts bank, together with deposits taken for the car at the 1912 Olympia Motor Show, production of the 10hp Morris Oxford commenced at the Cowley factory of W.R.M. Motors Ltd., a company that had been formed in August 1912 for the manufacture of motor vehicles. The first 10hp. Morris Oxford was despatched from this factory on 29th March 1913.
In order to market the cars made by W.R.M. Motors Ltd., it was decided to appoint two agents. Consequently, H.W. Cranham was given the agency for the northern part of the United Kingdom while W.H.M. Burgess was given the agency for the southern part of the country, with the exception of Oxfordshire, Buckinghamshire and Berkshire which were retained for The Morris Garages. Burgess’s agency agreement also authorised him to deal with all of W.R.M.Motors’ export business.
As they already held agencies to handle the products made by White & Poppe Ltd., it made sense for Burgess and Cranham to be given an agency by W.R.M. Motors Ltd. and in fact, White & Poppe Ltd. may have made this a condition before agreeing to make engines and gearboxes for the 10hp. Morris Oxford. Being an agent for White & Poppe’s products, Burgess agreed to give W.R.M. Motors Ltd. credit on the engines and gearboxes that he was to supply to the company.
Some nine months after the outbreak of the First World War, W.R.M. Motors Ltd. introduced another model, the Morris Cowley which was to gain considerable popularity. The first of these cars appeared in April 1915 and they were fitted with engines, gearboxes and other components that had been imported from the U.S.A. As well as making motor cars at this time, W.R.M. Motors’ factory at Cowley was also engaged in making mine sinkers (of which some 50,000 were made) and other munitions to support the War effort under Government contracts.*
*An article in the Bullnose Morris Club’s Magazine no. 160 entitled ‘Morris Cowley Production 1915-1919′ ,not only contains details about these cars but it also gives information regarding the importation of engines from the U.S.A.,and an article in no. 306 of the same Club’s Magazine gives information about the munitions made at the Cowley factory during the First World War.
At the end of First World War in November 1918, WRM, who was then aged 41, was suffering from poor health owing to the intensive work and stresses that had been placed on him during the War. To restore his health, he then spent six weeks in a clinic and this was when he faced difficulties concerning his business that required his attention.
Soon after the end of hostilities, Government contracts for munitions were terminated abruptly and the Ministry of Munitions vacated the Cowley factory of W.R.M. Motors Ltd. taking with it their equipment which had been installed. The factory was left in poor condition, after four years of War production, while its own plant had suffered heavy wear and tear. WRM needed, therefore, to re-organise the factory including the re-establishment of its capital equipment and its workforce, so that the production of Morris Cowleys could be continued; the 10hp. Morris Oxford having ceased production in 1917, after 1,475 examples had been made. In addition to these issues, there were two more aspects that needed WRM’s attention.
Firstly, the Continental Motor Manufacturing Corporation of Detroit decided to take no further orders for their Type ‘U’ engine, which the company had been supplying for the Morris Cowley, as it was not of a type which was called for in the United States. Secondly, import duties of 33 1/3%, that were designed to conserve foreign exchange and to prevent the importation of goods not necessary for the War effort, had been imposed by the Government during the War. This meant that the cost of components imported from the U.S.A. for the Morris Cowley were increased by one third, so the price advantage over British made components diminished.
Having purchased the drawings and some of the tooling for the Continental Type ‘U’ engine and for a gearbox that the Detroit Gear & Machine Company had been supplying for the Morris Cowley, WRM searched for a company to make these components in Britain so inquiries were addressed to British manufacturers. An order was subsequently placed with Hotchkiss et Cie. of Coventry who agreed to manufacture engines and gearboxes from the American designs, production of which started during the summer of 1919. Axles and steering boxes for the Morris Cowley, which had also been imported from the U.S.A., were broken down into their separate parts. These parts were then supplied by British manufacturers and assembled at Cowley while other components for the car, such as radiators, bodywork and electrical items, continued to be ordered from British firms.
MORRIS MOTORS LTD.
Now that he had secured the supply of components for the ongoing production of Morris Cowleys, together with a new model derived from the Morris Cowley, the Morris Oxford, WRM made the far-reaching decision to change the structure of his business which not only created good fortune for the business itself but also for WRM personally.
W.R.M. Motors Ltd. was, therefore, put into voluntary liquidation and the successor company, Morris Motors Ltd., was incorporated in July 1919 to take over its assets. The primary reason for this change was get rid of the onerous agency agreements that W.R.M. Motors Ltd. had with W.H.M. Burgess and H.W. Cranham as these agreements prevented the company from setting up its own network of dealers and from controlling its own export business. WRM realised that such a network was needed if he was to sell the volume of cars he hoped to produce.
The cash requirement before the reformation of the company could take place was considerable as Burgess had to be paid a substantial compensation, due to his action for the loss of his agreement, and the accounts held by the creditors of W.R.M. Motors Ltd. had to be settled. The fact that WRM made these payments indicates the importance he attached to being able to establish a new dealer network.
The role of a dealer, in WRM’s opinion, was such that it had to combine salesmanship and management skills coupled with a sound financial ability. In order to achieve these pre-conditions, WRM chose a person rather than an organisation so the dealer contracts issued by Morris Motors Ltd. during the 1920s were usually with named individuals.
WRM divided the home market into territories and a dealer, who usually operated in large towns or cities, was appointed for each. The dealer was responsible for sub-dividing his territory into smaller areas and allocating each to a sub-dealer. As WRM preferred to keep the sales and service departments at Cowley small, only dealers had direct contact with the factory on a routine basis while the sub-dealers were administered by the dealers. Vehicles and spare parts were sold to the dealers ex-works and no vehicle or spare parts could leave the factory until they had been paid for in full in cash or by bankers order. Cheques were only accepted if they had been tendered in advance and allowed to clear before a vehicle or spare parts were released. If there was a suggestion that a dealer was in financial difficulties, WRM requested a further bank reference
By 1924, Morris Motors Ltd. had appointed 114 dealers who, in turn, had appointed over 400 sub-dealers in the U.K.* The new distribution system continued to expand for many years thereafter and it was soon to develop into a world-wide network. The Morris franchise held by these companies was considered to be a prized asset owing to the demand for Morris Cowleys and Morris Oxfords, the price** of which was being reduced annually due to the economies created by a rapidly increasing level of production. During their first Season ***, between July 1919 and November 1920, Morris Motors Ltd. produced a total of 1994 vehicles. In 1925, the company was making nearly 1000 vehicles each week, which represented 41% of the U.K’s ‘Total Industry Volume’ and as a consequence, Morris Motors Ltd. became Britain’s market leader in only six years since its formation.
* From 1931, Dealers and Sub-dealers were known as Distributors and Dealers.
** In October 1920, a Morris Cowley 2-seater was being advertised for £465 whereas in September 1926 the price of a similar car, but with an improved specification and with a year’s insurance, was £162-10-0.
*** The ‘Model Year’ or ‘Season’ usually ran from one London Motor Show to the next.
After the formation of Morris Motors Ltd., WRM’s business expanded and in 1923, he bought three of Morris Motors’ suppliers notably, Osberton Radiators Ltd., Hotchkiss et Cie., which became Morris Engines Ltd., and the bodywork manufacturers, Hollick and Pratt Ltd. In addition, The M.G. Car Co. Ltd. * was formed in 1930 and the firms of Wolseley Motors Ltd., E.G. Wrigley & Co. Ltd., which became Morris Commercial Cars Ltd., ** the S.U. Carburetter Co. and Riley (Coventry) Ltd. were also acquired by WRM.
* The M.G. Car Company Ltd. was formed in July 1930, with WRM as its Governing Director, to purchase the assets of the M.G. Car Co. which had been set up in 1928 as a branch of The Morris Garages Ltd.
** The first Morris-Commercial, a ‘T’ Type one-ton truck, was introduced in 1924. Morris Commercial Cars Ltd. subsequently introduced a range of commercial vehicles, military vehicles and buses. By the end of the 1930s, the company had become the largest manufacturer of commercial vehicles in Europe. .
MORRIS MOTORS (1926) LTD.
Until 1926, Morris Motors Ltd. had been owned by WRM but on 29th June of that year a public company, Morris Motors (1926) Ltd., was registered; the suffix (1926) was discontinued in August 1929. The new company acquired the assets and goodwill of Morris Motors Ltd. and those of Morris Engines Ltd., Osberton Radiators Ltd. and Hollick & Pratt Ltd. These three companies then became branches of Morris Motors (1926) Ltd. WRM became the sole Ordinary shareholder in the new company, over which he therefore retained full control, and £3 million (about £165 million at 2017 values using the Retail Prices Index) in cumulative Preference shares were issued to the public for cash. The financial records of Morris Motors Ltd. and that of its predecessor company, W.R.M. Motors Ltd., demonstrated the achievements of the business to the public and the floatation was oversubscribed.
Apart from financial reasons and the money it would secure him personally, WRM decided to form Morris Motors (1926) Ltd. because both he and his advisers were becoming increasingly concerned by the effect of Estate Duties on his personally owned companies. At that time, the Duties on large estates were 40% and immense wealth can also bring other problems, which in the case of WRM, included an assessment for Super Tax that was paid in addition to Income Tax for those with particularly large incomes.
Unlike Income Tax, which was levied at a fixed rate, Super Tax rose progressively with rising income and as companies paid the standard Income Tax rate, there were advantages in leaving money in a company. Since starting the business, one of WRM’s financial policies was to plough profits back into his companies, for their development. The Inland Revenue claimed that WRM had used his position to retain these profits in his companies in order to avoid paying Super Tax which would have been due if the profits had been distributed and become part of his income. The appeal, which was won by WRM, was heard in November 1926. Several witnesses were brought to the Court, including Ernest Payton the finance director of the Austin Motor Co. Ltd., to demonstrate the perilous position of the motor industry and its requirement for large financial reserves.
Even though WRM had formed a holding company, Morris Industries Ltd., in July 1927 to enable the movement of money between his companies without incurring tax liabilities, he faced another Super Tax assessment in respect of the two years ended December 1927 and December 1928. The appeal, which was heard in 1929, was once again won by WRM and he later became convinced that, by change in the law or otherwise, it may be impossible to continue his policy of keeping back profits if the equity continued to be his personal property. If these profits were to become liable to Super Tax, Morris Motors’ reserves might suffer a very heavy and sudden depletion, so he decided to merge some of his remaining personally-owned companies and to offer shares on the London Stock Exchange, when conditions were favourable. These actions were considered the best way of minimising WRM’s Estate Duties and possible Super Tax liabilities.
Between 1927 and 1933, Morris Motors Ltd. expanded its product range from two models, the Morris Cowley and the Morris Oxford of 11.9hp and 13.9hp respectively, with ten bodywork styles, to nine models with 26 bodywork styles in an attempt to reverse the slump in its market share due to changes in taxation, that involved motor vehicles, and shifts in buyers’ preferences. As a result, the ‘up to 10hp’ sector of the market showed a steady growth between 1927 and 1933, whereas the ‘11hp to 14hp’ sector showed a decline during the same period, so the introduction of the 8hp Morris Minor in 1928 was, therefore, an important addition to the Morris range.
The 8hp Morris Minor remained in production until 1934 when it was replaced by the Morris Eight to counter the increasing competition in the small car market particularly from Ford. The Morris Eight was good value, easy to maintain, spacious enough to make it a proper family car and, unlike its main competitor the Ford Eight, it had hydraulic brakes. Owing to their popularity, over 220,000 Morris Eights, including vans, had been made by the time the Series II of the model had ceased to be produced in 1938, more than any other British car of the 1930s.
By 1937, the range of Morris cars had been reduced to five while the number of bodywork styles was pruned to ten, to bring about economies in production, and a £500,000 (about £30 million at today’s values) extension and modernisation plan for Morris Motors’ Cowley factory had been put into effect. Four mechanised assembly lines were installed, incorporating the most modern techniques available, and Morris cars were once again leading the market for quality and value. On 22nd May 1939, the millionth Morris car was driven off its production line making Morris Motors Ltd. the first British motor manufacturer to reach this milestone.
THE NUFFIELD ORGANISATION.
The general recovery in trade by 1935, following the depression of the early 1930s, brought better stock market conditions which made it feasible for WRM to sell some of his shares and some of his personally-owned companies. During 1935 and 1936, therefore, Morris Motors Ltd. acquired Wolseley Motors Ltd., The M.G. Car Co. Ltd., Morris Commercial Cars Ltd., Morris Industries Exports Ltd. (later Nuffield Exports Ltd.) and The S.U. Carburetter Co. Ltd. thereby creating a business which became known as the Nuffield Organisation. The only companies then left in WRM’s personal ownership were The Morris Garages Ltd. and Wolseley Aero Engines Ltd.
Although permission to deal was given to the whole Ordinary stock – i.e. 2,650,000, five shilling (25p) units – WRM decided to retain three-quarters himself and to sell the balance to the public. The shares were made available at £1-17-6 (£1.87) and dealings commenced at £1-19-0 (£1.95). Public demand was strong and after a hectic first day’s trading, the shares closed at £2-1-10 (£2.09).
When the Second World War broke out in September 1939, the Nuffield Organisation was the largest manufacturer of cars and commercial vehicles in Britain and it was operating in twelve factories with a workforce of 20,000. However, when the War ended in 1945, even though much of its workforce had been called up had been ‘called up for the duration’, the number of the Organisation’s employees had increased to 30,000 and it was operating in sixty three factories, which had been making military vehicles, tanks, aircraft, guns, torpedoes, mines and many other products to support the War effort.
After the War, Morris Motors Ltd. introduced three new models including the Morris Minor * of which some 1.3 million examples were made. The company continued to make motor vehicles until 1952 when it merged with the Austin Motor Co. Ltd. to create the British Motor Corporation with WRM, who was then aged 75, as its chairman. On its formation, the Corporation was the third largest motor manufacturing business in the world.
* It is often said that WRM did not like the Morris Minor, but it was the prototype of thecar, known as the Mosquito, that he disliked and which he likened it to a poached egg. Following this remark, four inches were added to the car’s width to improve its proportions. One of the legacies of this change is the raised four-inch wide centre section that can be seen on the bonnets of Morris Minors.
During the time it was in operation, Morris Motors Ltd. made large contributions to the U.K’s. economy and it provided employment for thousands of persons, both in the U.K. and overseas. The company also created great wealth for WRM, some £30 million of which (i.e. about £1 billion at current values) he donated to hospitals, universities, Trusts for the benefit of the Forces of the Crown and to the setting up of the Nuffield Foundation, which remains in being today for the advancement of health, the advancement of social well-being, the care and comfort of the aged poor and the advancement of education, in addition to providing benefits for his employees, aid to depressed areas and financial support to numerous other good causes for the advantage of many.
The significance and the importance of WRM’s decision to form Morris Motors Ltd. a century ago in 1919, cannot be overstated.