Keller Motor Car Company
Reprinted from Special Interest Autos, September/October 1975, pp. 31-40, p. 59
Keller Prototype, circa 1948*
Keller under restoration, 1996
Keller Production Line
Keller Promotional Postcard
Keller Car Production Line
Keller Car Production Line
Keller Car Production Line
Keller Car Production Line
Keller Car Production Line*Huntsville Arsenal, circa 1948 (Redstone Arsenal Historical Function Archives) Get the specs here (PDF) In the spring of 1945, the hastening end of World War II brought chaos and disruption to the San Diego area. Returning servicemen vied for non-existent jobs at dozens of peace-ravaged companies which had made their livings from defense contracts. At the giant Consolidated Vultee aircraft plant, lay-offs and short hours replaced overtime seven day weeks. John Liefeld, a 32-year-old former Chrysler engineer who'd spent the war years at Convair, knew it was only a matter of days before he too would be let go. Anxious to get back into the automobile business, he began looking for a new job. Liefeld's brother introduced him to a strange character he'd met in a bar, named S.A. Williams. Williams was basically a promoter, who had dabbled in dozens of money-making schemes. In 1945, he was making a handsome living by buying up poorly-managed restaurants, upgrading them and reselling at a profit. Williams thought he saw a rare opportunity for his talents in the hungry postwar car market, and had some vague notion of building his own small car. He agreed to bankroll Liefeld in the production of a prototype minicar. They set up a small shop on India Street in San Diego, where Liefeld and a few friends from Convair began to construct a simple rear-engine Dodg'em car, powered by a 16 hp two-cylinder Briggs and Stratton engine. This was connected to the rear wheels through a rudimentary centrifugal clutch and chain arrangement. With a bulbous fiberglass body, the whole car weighed less than 600 lbs. Liefeld christened it the "Iron Monster," though officially, it was called the "Bobbi-Kar" after Williams' son. It was painfully inadequate. Liefeld's group immediately began work on a successor, this time using a Hercules ZXB, the venerable 25 hp Four that found its way into many a postwar minicar prototype. Its dull powerplant and lumpy body notwithstanding, the Bobbi-Kar did incorporate some interesting technical features. It used an "X" frame tubular chassis, suspended by B.F. Goodrich's "torsilastic" suspension. (Very simply, the suspension consisted of a central steel core encased in a rubber cylinder encased in a steel shell. A trailing arm was attached to the outside shell, the inner steel connected to the chassis and the rubber acted as both spring and shock absorber.) Automotive Industries commented, "The power application contains several innovations, The engine, flywheel, clutch and housing, transmission and differential (all of which were proprietary parts) have been combined into a single compact unit... suspended on three point rubber mountings between the side members of the frame. Propeller shafts extend from the differential to the driving spindles of the rear wheels. Each propeller shaft has two universal joints. By removing four bolts from the flange of each inner universal joint, and three engine mount bolts, it is possible to remove the entire power unit from the automobile in a matter of minutes." Williams now showed his fantastic sales ability. He contacted the four major movie Newsreel studios--the mass market media in the pre-TV days of 1945--and managed to get news clips about the Bobbi-Kar into all four. Newspapers picked the story up as well, and soon, according to Liefeld, people from all over the world started sending in money to buy Bobbi-Kars. On his lawyer's advice, Williams opened a separate bank account for these funds, holding them until such time as there were Bobbi-Kars to sell. But the overwhelming public reaction spurred him to bigger plans. Solar Industries, another of San Diego's bankrupt defense contract companies, had a large plant for sale. Williams bought it late in 1945 for $80,000, and installed Liefeld and staff in a small corner. Huge new signs plastered the outside, however, taking full advantage of Bobbi-Kar's impressive new home. But it wasn't big enough for Williams. Consolidated Vultee plant #2--the very building Liefeld and his friends had worked in throughout the war--was now lying empty. Williams leased it through the War Assets Administration and moved his still-tiny group into the administrative offices of the huge aircraft complex. Liefeld remembers in amazement that less than a year after he'd labored at Convair as merely one of hundreds of young engineers, he was back in the same building, installed in what had been the office of Major Fleet, the owner of Consolidated Vultee. Leftover machinery lined the Convair plant, so Liefeld was instructed to make it look as if Bobbi-Kar was preparing to use it in the production of their new car. With this impressive establishment behind him, Williams started selling franchises for future "kars" to eager would-be dealers. His lawyer advised him that since the Bobbi-Kar agreement clearly specified that the franchise earned dealers the right to handle kars only "if and when" such kars were built, Williams had every right to be selling them. Some 800 investors took the plunge. The California Commissioner of Corporations was not as sanguine as Williams' lawyer. Soon the SEC was also on his trail, greatly interested in his announced intention of selling unregistered stock. In the ensuing investigation, it was revealed that Williams had previously served prison time on another swindle. His operations in California were virtually shut down. Undaunted, Williams attempted to form another corporation under the lenient Delaware laws, but was unable to obtain a needed clearance from the State of California. Had this gone through, he intended to float a $5.5-million stock issue. As it was, Bobbi-Kar was stuck between its creditors and the SEC. Around the same time, in February, 1946, George Keller showed up in Liefeld's office. Keller was then in his mid-Fifties, a veteran of 28 years at Studebaker in South Bend. Vice-president of Sales, he had clashed with manager Ken Eliot over the question of distribution, and left the company. Ted Zenzinger, Keller's assistant at Studebaker, says "Keller was known as 'Big George.' He was extremely honest, and known throughout the industry as a dynamic salesman." Gene Hardig, the chief of Studebaker engineering at the same time, remembers Keller as "very well thought of at Studebaker, well liked and an aggressive salesman." Keller had stalked out of Studebaker with not much more than an impressive list of contacts in the automobile industry and the shirt on his hack. When he came to visit Liefeld, he was working as a salesman in his father-in-law's San Diego Buick agency. Ever since the late Thirties, however, Keller had been thinking about forming his own car company, and had often discussed with Zenzinger what he called "the ideal car for the poor man." His rationale was simple. The big car makers controlled the major market areas, but none was interested in trying to produce a really inexpensive car that was no more than basic transportation. Said Keller, "When you're bucking Detroit, you're bucking a stone wall." He dreamed of tunneling under it at the low-price end. Liefeld hired Keller as an advisor. Almost the same week, Williams let drop a news story that was picked up by many papers. Bobbi-Kar, he said, was looking for a new locale where they could build cars without interference. The Birmingham, Alabama Chamber of Commerce was trying to find industries to replace the now-closed Huntsville Arsenal and Bechtel-McCone Aircraft Corporation, which between them had furloughed thousands of Northern Alabama workers. A representative flew out to talk to Williams, and Williams then flew back to Alabama. Within the week, Liefeld received a telegram which said simply, "Put everything on a flat car." George Keller had now begun to challenge Williams for control of the company. Keller later wrote that "the investigation of the Alabama facilities was made quickly-overnight as it were-and an immediate decision was made to move everything to Birmingham. Williams reported back to the San Diego newspapers that he was making the move because he had located better plant property, and besides, it was easier to sell stock in Alabama than in California. Nothing could be more absurd. Except that Williams, without any automobile experience, could determine whether or not the Bechtel-McCone buildings were suitable for the production of Bobbi-Kars... but since Williams was the sole owner, other employees were powerless to do anything but move according to his wishes, right or wrong." Williams' prison record followed him to Alabama, and he was told that be could never be a director or officer of any Alabama corporation. By now, in addition to Keller, Liefeld and his handful of former Consolidated Vultee engineers who had been with the company right along were ready for a change. According to Keller, "There were a lot of other members of this organization besides Williams who had given freely of their time and effort for very little financial gain, and who were more responsible for the product than Williams-who was neither an engineer nor a designer..,, nor does he have any background of automotive experience." Keller and his Bobbi-Kar mutineers were ready to join up with anyone who could pay the freight until Bobbi-Kar production could begin. On September 13, 1946, Bobbi-Kar of Alabama was established. The entire California company's assets were transferred to the new corporation, in exchange for capital stock. The two Bobbi-Kar companies between 1945 and 1947, collected some $292,677.50 for dealer franchises, $126,599.50 as loans from prospective distributors and customer deposits totaling $38,125.00. According to a later stock prospectus, "all these funds were expended in connection with the development and promotion of an automobile and a dealer organization." At this point, however, Williams was still in control. But in March, 1947, a group of Alabama investors succeeded in making Williams an offer he couldn't refuse. (He subsequently returned to Southern California and was involved in two similar small car schemes, the Towne Shopper and the Elektrakar. Later still, he was reportedly convicted for his part in a nationwide ring that distributed counterfeit $20 bills.) The confederates now owned Bobbi-Kar of Alabama, one and the same company as Bobbi-Kar of California. But this presented a problem, for the new owners weren't sure they wanted to inherit the 800 franchise dealers--many of them less than solid representatives--that Williams had assembled. Accordingly, on July 8, 1947, the Dixie Motor Car Corporation was founded to take over the assets of Bobbi-Kar for $30,000 in cash and a promise to pay back the $38,500 received for customer deposits on never-delivered Bobbi-Kars. Most of the corporate officers of the two companies were the same, but the dealers had been neatly cut off. The pocketbook behind this takeover was Hubert Mitchell, a wheeler-dealer from Hartselle, Alabama with at least as much promotional experience as Williams. As a boy, he built an airplane which he successfully flew... having never before seen a real plane, only photographs. He later ran everything from a small-town airport to a roadside cafe, a string of movie theaters to a theatrical agency. In the late Thirties, he claimed to have found the outlaw Jesse James in prison, obtained his release and booked the 90-year-old desperado into a string of Deep South grits circuit theaters. At the time he acquired the Bobbi-Kar, he operated the world's largest theatrical supply house and a failing furniture factory he'd bought for the war. It was the furniture factory that got him interested in cars. According to Mitchell, "I'd been making seats and upholstery for light aircraft. During the war, the government requisitioned all civilian planes and converted them for military use. They threw away the original seats, and I had contracts to build replacements in my old factory. The manufacturers of the Globe Swiftner light aircraft, for example, had $100,000 worth of seats on order when the war ended. They went out of business in 1946, and I was stuck with the seats. I was looking around for something else to do with them." Mitchell had ninety employees and a 40,000 square foot factory. Acting on a tip from the Chamber of Commerce, he went down to the Betchtel-McCone plant that Bobbi-Kar had taken over and spoke to George Keller. At that point, Keller, with almost no funds, some 40 employees and an absurdly large 735,000 square foot aircraft factory, was trying to hold things together long enough to attract investors. "At first," says Mitchell, "I was only interested in their car as a place to sell my surplus seats, but George showed me how easily I could buy the whole thing. These people were desperate. They didn't even have the money to leave Alabama. I had to personally loan Keller money to live on. These people were innocent victims. They were car people, and they were interested in staying in the industry they'd been raised in. When Bobbi-Kar declared bankruptcy, I decided to help. "Keller wanted to call it the Mitchell Motor Corporation. 'Hell,' I said, You're the man. We'll use your name.' Dixie Motor Car was only an interim thing, and we quickly sold out to the new Keller Motors Corporation. The Bobbi-Kar had had some bad publicity with potential stockholders, so we thought we'd better change the name." Keller Motors was incorporated in Delaware on November 25, 1947. Keller was the president, Mitchell executive vice-president. They controlled a majority of the stock. Keller Motors acquired (for $90,000) the assets of Dixie Motor Car, which included the 25 hp prototype Bobbi-Kar that Liefeld had constructed long ago in San Diego, a second roadster and a more conventional front-engine woodie station wagon, powered by a 49 hp Continental powerplant. There were also two chassis, one front-engine, one rear. Mitchell determined to get the company rolling as quickly as possible, for as he says, "During that time I was subsidizing the whole crew, Keller included. I loaned them money until we started selling stock." Early in 1948, Mitchell and Keller took the station wagon, a roadster and the rear-engine to New York. They rented the lobby of the Pennsylvania Hotel, and distributed a barrage of press releases and brochures prepared by an advertising agency run by friends of Keller's in New York. Said Buchanan & Company, "The Keller is America's most needed car in size, performance and price." The copy then dwelled on George Keller's 28 successful years in the automobile industry, making him out to be Walter Chrysler, Charlie Nash and the Dodge Brothers all in one. The flamboyant copy was all in the service of drumming up interest in the "new" car, and resultant sale of dealer franchises. In many ways, it was Bobbi-Kar of California all over again. The times were still ripe for that sort of scheme. Detroit wasn't taking any new dealerships in 1948, since the factories couldn't keep their current dealers supplied. But not only were there legions of people ready to pay inflated postwar prices for new cars, there were hundreds too, with money saved throughout the war, ready to enter the automobile business. To these people, even the unassuming little Keller looked like the ticket of admission to the Big Time. The ticket wasn't even very expensive. Mitchell and his Alabama sales force took franchise orders on a city by city basis. In fact, deposits were often taken from a number of people for the same territory. "That way," says Mitchell, "we could choose the best potential dealer. Of course, we returned the deposits to the rest." According to Mitchell, "We didn't know how well we could sell franchises, but cars were hard to come by and the people appeared willing to pay." Keller Motors took in over $450,000 on their first ten-day trip to New York. As Mitchell recalls, "We wanted seven dollars per car. For an area that we figured would accept a thousand cars a year, we'd ask for $35,000 for a five year contract." Franchise fees, at first, were a fraction of that amount. Andy Pappas of Shreveport, Louisiana, for example, says he paid only $20,000 for the right to sell Kellers in twenty Louisiana parishes. He, in turn sold the rights to some of these counties to other individuals for $1000 per parish. But this was early in the Keller story. As the franchise scheme succeeded, the potential of each territory was deemed greater, and the price rose accordingly. Following the astounding New York success, Mitchell and Keller began showing the cars all around the country. The roadster, station wagon and chassis were shown in hotel lobbies, civic centers, trade fairs-anywhere an audience might form. From Baltimore to Davenport, Milwaukee to Los Angeles, Mitchell and Keller barnstormed the country with their prototypes throughout 1948. Although the publicity releases promised production cars "in four or five months" at a retail price of $848, Keller Motors was a long way away from actually making cars. A great deal of the franchise money was spent on development of Liefeld's original design. Along with the huge plant in the Huntsville Arsenal that Williams had first leased and Keller now staffed with a skeleton crew, another office was opened in Detroit, close to the center of the auto industry. Keller was unsure about Liefeld's design, and demanded that friends of his--qualified engineers from Chrysler, Packard and Studebaker-should look over every aspect of the prototypes. In addition, since the Bobbi-Kar--and hence the Keller--had been deliberately designed to use as many proprietary parts as possible, it made good sense to have a Detroit office in direct contact with the suppliers, most of whom were clustered around the Big Three. Liefeld soon had a staff of nearly 70 designers, engineers and purchasing agents on the payroll. According to him, in the aftermath of the unfavorable publicity that swirled around the Tucker, Davis and Playboy stock schemes, the SEC kept a close watch on Keller Motors. In order to prove that the company did in fact intend to make cars, Liefeld was required to obtain quadruplicate copies of all design drawings, purchase orders and letters of commitment from suppliers, noting exactly what parts, how many and when they would supply these items to Keller. The actual design of the car was changed very little over the years except that the rear-engine roadster was dropped in favor of a conventional convertible to go along with the station wagon as to better use proprietary parts. According to Liefeld, they received a lot of help from major industry figures, mostly through Keller's contacts. But the Detroit firms, he says, "were definitely not interested in getting into the small car business. They told us in effect, 'there is a market for a small car, but it is a limited market, and we don't want to touch it unless we're absolutely forced to. We think a small company like yours is the right company to do this and we'll do all we can to help.'" Keller's contacts soon gave their approval to Liefeld's straightforward design. The car, it seems, was deemed acceptable. The franchise dealer network, too, was rapidly becoming a reality. The real problem--and the principal cause of delay--was the need for some $5-million to pay for production tooling and initial supply of parts. A common stock sale was the only solution. The father of Keller's account executive at Buchanan & Company was the head of Allen and Co., a major stockbroker. He agreed to handle the stock sale, but in turn, subcontracted with Greenfield, Lax & Co.--an affiliate of Lehman Brothers--to sell the $5-million worth of stock. "For a period of two and a half years," says Liefeld, "we were on the defensive with the SEC. Playboy, Tucker and Davis all had indictments against them. Keller was the only company that--throughout the period--stayed clean. After $130,000 in attorney's fees, the SEC said in effect, 'we're awfully sorry, fellows, you're clean as a whistle." When the final approval was granted, Greenfield, Lax wasted no time in issuing an extremely detailed prospectus. Dated September, 1949, this document indicates that Keller Motors had spent some $1.25-million, divided equally between promotional expenses, design and development and the establishment of some 1,523 dealer outlets (the final number of dealers signed up was 1,689). In typically-guarded stock prospectus language, the firm indicated that while it had made substantial progress in development, it did not "represent or infer that it has solved the principal problems of the business in which it intends to engage." Recognizing "the development and improvement of an automobile is a process of almost continual change," the corporation modestly admitted that "the final model of the completely designed American automobile has not yet been manufactured, and we do not undertake to do so." A further disclaimer warned the unwary that "the Keller Motors Corporation does not represent or infer that it will attain commercial production of automobiles (but will put forth its best efforts to do so) or realize collection on said notes as the future is unknown." Throughout the prospectus--as on every dealer franchise agreement and application form--it was stated very clearly that no money would be refunded should the corporation's efforts fail and no cars be sold. This scarcely seems to have deterred investors. In the prospectus, Keller's rationale for concentrating on a compact woodie station wagon was elaborated in detail. They argued that the population shift towards the suburbs would guarantee an expanding market for station wagons, a true enough assumption as it turned out. The prospectus pointed out that 110,000 station wagons had been sold in the U.S. in 1948. Keller scheduled production for 16,000 its first year. If this first hurdle could be overcome, they intended to produce 72,000 cars per year... capturing a whopping three-quarters of the existing market. More realistically, the prospectus did explain that prices of competitors' station wagons were often higher than the sedans upon which they were based. Since Keller planned to concentrate primarily on the construction of station wagons--and small ones at that--their price could be substantially lower. Low enough, they hoped, to attract buyers away from more expensive marquees. Keller did admit, however, that such a plan was ambitious, and since low-price competitors (notably Plymouth and Dodge) had already introduced all-steel wagons, this might constitute real competition which "could adversely affect the company's position." Actually, building the Keller bodies of wood solved a number of problems. Wood bodies meant that expensive tools and dies would not be needed. Cheap Alabama labor could screw and glue together all the bodies that Keller might use. In addition, of course, Hubert Mitchell already had his rather inadequate wood working plant that he was only too ready to unload on the corporation. At the same time he was supporting the members of the company with personal loans, he sold his furniture factory to the corporation for nearly three times its assessed valuation, a fact brought out only later. Of course, by late 1949, when the stock prospectus was issued, the wood-bodied station wagon was already an anachronism. Wood bodies needed careful upkeep, they were slow to produce-requiring much hand labor-and they were prone to rot, squeak and sag. For Keller, the woodie was an acceptable short term answer in order to quickly get into production, but disastrously limited in the long run. And seemingly, Keller had no ideas for subsequent models. No plans, prototypes or even sketches were made for the cars that would necessarily have had to follow the station wagon in succeeding years. If anything, the Keller line was shrinking. George Keller himself never believed in the roadster-with engine in front or rear-and although the sales team continued to show it in hotel lobbies across the nation, it had privately been dropped from production plans. On June 30, 1949, Liefeld closed the Detroit design office and moved back to Huntsville. Although he stated that all was in readiness to begin production, at the time of the stock sale no contracts formally existed with suppliers of parts, raw materials or labor unions. He did indicate that he thought pans and labor would be no problem. At this same time, George Keller finally realized that the Mitchell furniture factory was much too small for body production. Instead, it would become the final depot where completed cars were crated for shipment. As the summer of 1949 rolled on, Keller Motors prepared for the autumn stock issue that would decide its fate. Dealers continued to sign up. Of the 1,523 franchises put out, 117 were already handling competitive makes, 150 were used car dealers, 91 were service station owners, 391 owned garages and the remaining 846 "have had experience in the sale of new and used cars and in such related businesses as tractors and farm implements, auto parts and accessories." The dealer mix resembled that of Davis, Tucker and Playboy. . . predominantly little folk who saw in Keller a cheap ride down the road to riches. The stock sale began in late September, 1949. And within days, Greenfield, Lax had sold half the issue. The Keller people were ecstatic. Finally, it seemed, after three years of travail, they were about to reach the payoff. Most of the officers of the company were in Manhattan for the sale, keeping a euphoric count as each hinder came into the broker's office. There was no stopping them now. They celebrated with a festive dinner on the fourth of October. George Keller was late coming down to breakfast on October 5, 1949. Worried friends rushed to his sumptuous room in the Hotel Algonquin, and found him still in bed. Dead of a heart attack, the coroner said. He was 56-years-old. Fate had cruelly pulled the plug on Keller Motors. Hubert Mitchell's idea to build the company and the advertising around Keller rather than the car had succeeded beyond his wildest dreams. With Keller gone, rightly or wrongly, Allen and Co., Greenfield, Lax, Buchanan & Company, many dealers and even most of the employees believed there was no one left who could guide them, even though the car design was set, the dealer network established, the stock partly sold. Despite the pleading of Mitchell and Liefeld, the stock was withdrawn from sale. To Mitchell's horror, the Buchanan copywriters had believed their own hyperbole, and convinced the others, too. The brokers gave Mitchell 90 days to find another Keller. Says he, "We hired a legal firm, the best one in Huntsville. We put out feelers in Detroit, we looked everywhere, but we couldn't find anyone to take over. If I had it to do over again, I'd have built the business and the advertising around the car, not around any one person. But at the time, it seemed like the thing to do. "You can't imagine how hard it is when you want to help people--you see their excitement and eagerness--but you just can't. We spent our three months looking around. Then we put the company into receivership. We had to. Finally, early in 1950, we went out of business. It took a lot out of me physically and mentally, and of course, I lost a lot of money. We had high hopes, and came very close. But it wasn't to be." "What we did," says John Liefeld, "was fold our tents. We had about $66,000 in assets left and we had about $53,000 in debts. We paid everyone off, and that was it. What it amounted to was that with Keller gone, we had no spark plug left in the engine." In retrospect, it's probably fortunate that no one stepped forward to regroup the Keller's leaderless forces. By late 1949, when George Keller died, his "ideal car for the poor man" was already a fallacious concept. Time had passed him by. In 1945, when Williams and Liefeld began, in 1946 when Keller joined them, even as late as 1947 and '48 while they dithered with the SEC, the homely little wagon built of proprietary parts might have sold long and well enough to get them started in the car business. In those years the competition was still selling prewar designs, and the assembly lines could not move fast enough to fill the demand. But by 1949, real postwar competition had appeared, and the Keller stood revealed as an ungainly little anachronism, hopelessly outmoded. The Keller organization was never too strong. They had few experienced car people. They had no future plans. They had a weak dealer network, largely composed of amateur speculators hoping to turn a quick buck in the car-hungry postwar period. And too, the Keller staff foolishly acted like nouveau riche heirs, riding in corporate Cadillacs and Buicks, crisscrossing the country to attend expensive openings, maintaining hundreds of employees in three different locations all to produce prototypes of a ear that had been mostly designed before Keller Motors, per se, existed. Although they had taken in nearly $2-million in dealer franchise fees, Keller went under with little more than $10,000 in the coffers. Indeed, finances were so tight that at the end, the Hotel Buckingham in New York was forced to sell off a station wagon prototype that had been displayed in its lobby in order to cover Keller's outstanding bills. If anything was wrong with Keller Motors, it was an all-too-familiar combination of inexperience, poor timing and over ambition. Keller was certainly no different from many others who ached to build their own automotive empires in the fair spring days that followed close behind the cold years of war. Indeed, George Keller had more hope of accomplishing his goal than most, though he was never in the same league with Henry Kaiser and Joe Frazer, and they too were unsuccessful. But Keller could not lead his inept confederates to success merely by strength of will. And without him, it seems, they were nothing. Perhaps indeed, the stockbrokers' assessment was right after all. "Le Patron est mort, la voiture est morte aussi."
