The Pierce-Arrow Merger Proposal

Amalgamation with the American motor-car firm of Pierce-Arrow had already been considered on several occasions previously and the project was revived after Lord Northcliffe, then head of the British Mission in Washington, had heard of the American government’s final decision not to produce Rolls-Royce engines. Johnson was encouraged in this direction by the board’s reply to his dispatches and cable early in September, which confirmed their general agreement with his policy. Board share your jealous regard Company’s reputation which is first consideration. Not seeking large profits. Willing make every reasonable sacrifice equitable to shareholders considered necessary to win war. If engines made by others to our design with our assistance suggest 5% and all out of pocket expenses. Board fear amalgamation impracticable but of course would consider favourable proposal as your suggested terms appear to be, subject to proper investigation and valuation and terms as to control etc. The first official notification of what had happened was received in a letter to Johnson on 28 August from a Mr Deeds, a senior official of the Air Production Board. This informed Johnson that the Board had rejected the proposal mainly on the grounds that no production of aero-engines was likely for at least a year, and that it considered that fifteen to twenty million dollars, the cost of the Rolls-Royce scheme, could be better employed in the Liberty programme.