No Wonder GM Went Broke… They Gave my Great-Grandfather $49 billion…

Well, that’s $49 billion in today’s currency, based on compounded interest at seven percent.

 What General Motors actually paid my great-grandfather, Louis Henry Perlman, was $3 million for his invention, at a time before there was any income tax.

Had Louis taken the money and left it in the bank (a stable, reliable one, at that) it would have propelled his heirs – me included – into the stratosphere of wealth shared by Bill Gates and Warren Buffet. $49 billion is a lot of cash.

The invention that made Louis Henry Perlman wealthy?

Believe it or not: the spare tire.

Or the “demountable rim for motor-car wheels,” as it was called in 1906, when my great-grandfather filed his application with the US Patent Office. 

Until Louis Perlman invented the spare tire, early motorists had to pry a punctured, deflated tire off the fixed rim of a car wheel, replacing it with a new pneumatic tube. They then had to huff and puff, and inflate the new tire on the spot. The whole process was laborious and dirty.

Louis Henry Perlman, inventor, journalist, photographer – and my great-grandfather.

Perlman’s invention permitted motorists to carry a spare rim on their car, with tire affixed and already inflated. My great-grandfather’s invention enabled drivers, for the first-time ever, to take the wheel off the axle by removing  a few bolts. How ingenious. How simple. How quickly stolen by several manufacturing companies. More about this saga in a minute. First, the family lore.

Louis Perlman was a kindly man, according to stories my mother told. But also an eccentric man, a wealthy man, and in the end, a destitute man.

Louis H. Perlman, my mother, Anne, on the left, and her sister, Grace, at Montrose, NY, circa 1925 or 1926. 

I was inculcated with family lore about Louis Perlman whenever we visited the property in Montrose NY, which he had owned and which my grandfather maintained through the 1960s.

Montrose was a wooded, 55-acre estate which Perlman bought from former Secretary of State William Seward’s family with the cash that he made selling his demountable rim to General Motors in 1904. My family said that they first put it on their car, called a Welch, in 1906.

In addition to getting $3 million in un-taxed cash and GM stock, Perlman was also promised one new GM car each year for the rest of his life, without having to return any of the previous year’s cars.

I vividly recall the barn extension at Montrose, which workmen added to annually, to cover each new car, which my great-grandfather was given. There were dozens of one-year-driven models, lined up side by side, in the long barn extension, with an overhanging roof to keep the cars dry and clean.

My mother (left) and her older sister, Grace, at Montrose, NY, in front of one of their grandfather's GM cars.

 Along the way, family lore seems to have covered up some of Perlman’s strengths and weaknesses, as evidenced by some recently discovered historical material.

Lore may also have mis-attributed the source of Perlman’s wealth. It may not have come directly from General Motors, as my family said, but there sure as hell was major GM money in Perlman’s life; by 1916, my great-grandfather was president of the Perlman Rim Corporation, capitalized with $10 million of private money.

One of Perlman’s business partners was W. C. Durant, president of General Motors. Although they headquartered Perlman Rim Corp. in New York, the firm built the largest – and only exclusive – demountable rim plant in the world, in Jackson, Michigan. The plant, covering five acres, produced 5,000 sets of demountable rims every day, according to an out-of-print Who’s Who of American Industrialists. Enough rims to equip 1.5 million cars annually.

 

Louis H. Perlman and my mother, Anne, at the family home in Montrose, NY, beside the barn. 

Had great-grandfather Perlman just socked the dough away that he made for his heirs, of whom I am one, the family fortune today would dwarf the wealth of many of today’s Forbes-listed billionaires. But fate wasn’t kind to grand-pappy Perlman; he lost most of his wealth in the stock market crash of 1929 and the ensuing years of the depression and my grandfather was still paying off Louis’ debts in the 1950s, as my mother used to tell me.

But, oh! Was my great-grandfather colorful. Certainly as memorable as a Diamond Jim Brady, or an early Rockefeller, though Perlman’s story, unlike theirs, has been lost in space and time. 

Perhaps a few highlights of his career need to be added here, simply to set the record straight. (And to tease any would-be movie producers looking for a good story for the Big Screen; be sure to call napaman for the screen rights!)

My great-grandfather was born November 26, 1861, in Kovno, Russia. Louis was one of three children born to Lesser and Celia Perlman. Lesser, his dad, was a rabbi, who deeming it essential to seek a better life for his family, emigrated to America in 1862, several years ahead of the rest of the family.

Once landing in the US, Lesser moved across the face of the nation, a virtual serial spiritual seeker. He found or started new congregations in Cincinnati, then  in St. Louis and then in Charleston, SC. Within two years Lesser had saved enough funds to bring his family to America. They moved to Utica, NY, where Lesser found a newer, larger congregation.

In his father’s snaking spiritual shadow, young Louis also lived in Providence, RI and New York City.

The younger Perlman, my future great-grandfather, completed his elementary education at Christie Street Public School No. 7 at the age of 15 and then enrolled in the College of the City of New York, where he majored in stenography, bookkeeping and accounting. 

Perlman’s skills in stenography led him to a career in journalism and photography (I appear to have his journalist’s DNA and his entrepreneurial spirit… just not his money…).

Perlman was a co-founder of the Pictorial Associated Press, the first-ever agency to syndicate images and photos to newspapers across the country. My great-grandfather even took and sold the first half-tone illustration ever published in the New York Sun – a portrait of congressman Holman of Indiana.

While the idea of a demountable rim came quickly to my great-grandfather, the financial windfall from it did not. Family lore has it that Perlman got his cash up front from GM in one fell swoop. According to records, which have recently come to light, this was not the case.

In fact, Perlman had to litigate and scrape his way through appellate courts for years to get what was rightfully his from the start.

Although Perlman’s patent application for the demountable rim was dated May 21, 1906, a number of manufacturing firms began to infringe on the application. Records indicate that Perlman was (you should pardon the term) tireless in his pursuit of justice; he defended his patent application in court after court and after seven long, wearying years, at the appeals circuit level, he was finally granted, on February 4, 1913, US Patent 1,052,270 for “the demountable automobile rim.”

In October of the same year, after months of trying to persuade large manufacturers who were making demountable rims, and infringing on his patent rights, granddaddy Perlman sued the Standard Welding Company of Cleveland, Ohio, the nation’s leading maker of demountable rims in the US District Court of New York.

Back into the courts, Perlman waited for a verdict; it came two years later, in August, 1915, when the court ruled that Standard Welding had indeed infringed on the patent. Standard appealed the case but an appeals court, in 1916, ruled in favor, yet again, of Perlman and ordered Standard  Welding to pay my great-grandfather millions of dollars in back royalties.

With his earnings, Perlman decided that it was time to by a suitable, sizable tract of land. He chose Montrose, NY, a tiny hamlet that is actually within the jurisdiction of Cortlandt, a small town located, for those without access to Google Maps, near Croton-on-Hudson, in Westchester County. Now do you picture it?

Montrose had been owned in succession by two Sewards. First, by William H. Seward (1801-1872), who had been Secretary of State for Abraham Lincoln. Then by his son, Frederick Seward (1830-1915).

For the record: Seward the Elder was responsible for purchasing Alaska from Russia for $7 million. At the time, the seemingly goofy acquisition was called "Seward's Folly," or "Seward's Icebox."

 

WIlliam Seward, former Secretary of State under Abraham Lincoln.

Frederick, the son, was a journalist and diplomat. Like his dad, he became politically active and was named Assistant Secretary of State, working under – who else? -- his father. Long live nepotism!

When Seward the Younger died, the estate was put up for sale. Along came my great-grandfather.

According to Wikipedia, the Seward Estate covered 30 acres, though I remember my parents telling me that it was a 55-acre estate. It had a stately, rolling, verdant, manicured front lawn that swaled from the huge main house down to the gray waters of the Hudson River, which lapped at the foot of the property.

The mansion, in which I spent summers with my own cousins and an uncle who was one year older than me, had a large dining room, and an adjacent restaurant-sized kitchen. Oh, and let’s not forget what else it had: that barn out back with the added-on-extensions to cover all of Louis Perlman‘s General Motor cars.

Louis was a reasonably private person and does not appear to have had many close friends. My mother always told the story that before he lost all his money in the Depression, Louis would go to New York City, hire a huge ballroom at the Essex Hotel, and invite upwards of 2,000 people off the street to join him for a festive party in the hotel. These were complete strangers.

I can’t determine whether this is strictly family folklore, but I can attest that it was told to me -- it’s what my family recounted when I was a boy.

Louis went on to lose everything in the stock market crash, and left family, not funds, as his only legacy. He had a daughter, Grace Helen Perlman, who was my mother’s mother, and he had a son, Jesse Burke Perlman, who was an ensign in the US Navy.

I remember my mother recounting stories about Jesse’s skills at playing cards, especially bridge and canasta. About the rest of the family, or Louis’ wife, I know very little. 

What any of this has to do with Napa Valley, I haven’t a clue. Except, perhaps, that I am the multi-generational byproduct of Louis Perlman and I live in Napa Valley…  and as I have no other place to tell this story, so it will be told here.

Comments

[James Kramer]

Interesting! We share a great-great grandfather - Rabbi Lesser Perlman! Making us - what - 4th cousins? I had come across some old family photos after my father passed away recently, and found one of my late mother as a young girl in the 1930's, with her grandparents Isadore and Sarah Block. From that photo I learned for the first time that Sarah's maiden name was Perlman. My mother never was clear on the details, but I remembered her saying that she had a very rich uncle who had invented something to do with tires. So I Googled Perlman and tires and found this! Great story, very well told, cousin.

[Sandi Mansfield Richard]

i found this story while searching for historical photos of my home town.
my grandmother bought the Perlman home in the 1960's. the home remains in my family to this day. I am not sure if its the same home you spoke of in the article or another structure on the property. i have always been fascinated by the history of this home and the Perlmans are an integral part of that history. Mrs Perlman left a treasure trove of items behind when she moved to England. furniture, antiques (dressers and tables are what i remember) as well as clothing from the late 19th century and an autograph book belonging to one Fanny Adler which dates to the civil war. i am wondering if there are any other historical pictures of the home(s)/structures on the original property? i would love to see an old photo of my family home.

[Wine Club Guy]

That's a great story...the spare tire is certainly something most of us think as something which didn't need to be "invented"

Maybe thought of....in any case great story and I always enjoy stories about people's personal lives or family stories

[Ken Atchity]

Loved this story, Jim. More like this! I had no idea your family was so interesting, though clearly I might have guessed--you being the amazing human being that you are! Will treat my spare tire with more respect now!

[keith branscombe]

Hi Jim Wow what a story about your G.grandfather! And the painting a day guy—a real artist. Speaking of do you see much of dear Carlo M? Suzanne I & stayed at Villa Ca’ Toga (slept in cat through a cage room)years ago, so good to bump into your contagious enthusiasm for everything you encounter.

[Howard Rosenberg]

Great story Jim.
Thank you for sharing.
I'll think of this story the next time I call CAA to Pearlman my car....
Howard

[Karl Gray]

A story that perhaps could only have happened in America. And only to someone with the grit, entrepreneurial spirit, and
vision that personified Louis Perlman

[Lesley Keffer Russell]

Great story! Over the years, I would have "thanked Louis" if I'd known who he was.