History of The Better
Business Bureau
and The Pan Motor Company
Presentation to the Annandale History
Club
May 6, 2013
Ron Graham
Ron Graham
worked full time for the Minnesota North Dakota Better Business Bureau from
1959 to 1998. He was CEO the last 25
years. He is currently an
operations consultant for the Better Business Bureau serving Nebraska,
Kansas and South Dakota and directs a national training program at BBB
University. He has been
associated with the Better Business Bureau for 54 years and is a BBB
historian.
2012 was the 100th anniversary of the Better
Business Bureau, which started in 1912 as the Associated Advertising Clubs
of Minneapolis. It was organized because there were no laws to ensure
truthful advertising and no vigilance committee to ensure that health and
performance claims could be substantiated.
The name was changed to the Better Business Bureau in 1916.
The Fight for Truth in
Advertising was written in 1936
by Hurnard J. Kenner, the first manager of the BBB.
The BBB is not government sponsored.
It was created by business people who commit to a set of ethical
standards. There is an elected
board of directors who appoint a CEO.
Currently there are 10,000 businesses in Minnesota
providing financial support through membership fees based on their size.
A complaint report to the BBB has a good record of getting closure,
because businesses want to have a good reputation.
The Minnesota North Dakota Better Business Bureau responded to 24,000
complaints from consumers last year. The BBB is non-profit. There is never a
charge for a company reliability request at www.BBB.org or by phone.
When the BBB receives a complaint, they always go to the business to
see if it can be resolved before going public.
In 1917 the Pan Motor Car case in St. Cloud, Minnesota,
was the first major publicity for the BBB.
Sam Pandolfo
and the Pan Motor Company
Sam Pandolfo (1874-1960) was a teacher, school
superintendent, and life insurance salesman.
In 1916 the automobile manufacturing business was in full swing.
From 1896-1917 there were about 2,000 car manufacturers.
Anyone could buy parts and begin assembling autos.
1916:
Sam Pandolfo began selling his proposed automobile company stock.
1917:
In March, St. Cloud, Minnesota, is designated as the site for the Pan
Car Company. The
first Pan automobile is introduced on July 4 at a barbeque.
10 prototypes were assembled by hand in Indianapolis and driven to
St. Cloud. At the July 4
barbeque, 120 of Pandolfo’s salesmen worked the huge crowd.
Certificates sold that day and over the next few months netted over a
million dollars for the company.
There were 9,000 stockholders by 1917.
The emerging Better Business Bureau started looking at
Pandolfo’s claims and advertising. Pandolfo was asked to prove the claims
were truthful. The BBB was rebuffed.
When a request doesn’t bring ethical conduct, the matter is referred
to the authorities.
Pandolfo sued the BBB for a million dollars in 1917.
The lawsuit was dismissed.
The publicity furthered the work of the BBB.
1918:
To prove their road worthiness, three Pan Cars were test driven to
Pikes Peak, Colorado. The Pan
Car was a sturdy touring car built for travelers.
The dashboard had such innovations as a gas gauge, built-in clock,
and electric starter. The
canvas roof retracted easily and the front and back seats each folded down
into a bed. In back it had a
trunk and even a built-in icebox.
Eventually, about 750 Pan Cars were made in St. Cloud
and the plant had valuable government contracts for other goods during World
War I.
Pandolfo purchased 47 acres in north St. Cloud for his
plant. He built 14 buildings,
including the largest drop forge plant west of Chicago, offices, and massive
production buildings all connected by tunnels. He also built and sold to his
workers 58 first-class homes in six square blocks called “Pantown.”
He brought running water and sewer
lines out to Pantown and to his plant.
There was a tunnel from Pantown to the plant.
Pandolfo built a hotel and planned to build a hospital and school.
$9.5 million ($173 million today) of Pan Motor Company
stock was sold by 1918. 700,000
people bought shares of stock.
The Minnesota Securities Commission ordered Pandolfo to stop selling stock.
Charges that Pandolfo was pocketing half of every stock certificate
sale were dropped. The stock
certificates sold for $10 were clearly marked par value $5.
$5 went to the capital account and the rest to Pandolfo, promotional
materials and sales commissions.
1919: Sam
Pandolfo was indicted by a Chicago Federal Grand Jury for mail fraud (using
the mail in furtherance of a swindle).
He was found guilty on four counts and was sentenced to ten years and
fined $4,000.
1922:
In March 1922, the last Pan car was assembled in the Pan plant. The
Pan Motor Company struggled as it produced car parts for other companies
until closing.
1923:
In April 1923 Sam Pandolfo exhausted his appeals and was sent to
Leavenworth Prison for a ten year term.
He was paroled after serving three and one-half years.
Pan Motor Company is officially out of business in
August 1923. About 700 people
had been employed at Pan companies.
The facilities were used for a time as Mutual Motors, Diamond Motor
Parts (1925-1928), and Aluminum Industries (1929-1932).
1926:
Marching bands and cheering crowds were waiting at the station to
greet Pandolfo when he returned to St. Cloud on October 25, 1926.
1927:
Sam Pandolfo sold stock in the Pan Health Food Company featuring
Pan’s Greaseless Do-Nuts. He
started several restaurants and sold greaseless donut cookers.
He advertised that “Three Pan’s do-nuts a day will keep the doctor
away.” He was investigated
again.
1930:
Pan Health Food offices were moved to Denver.
Pan Health Food Company’s St. Cloud café closed.
1931:
Pan Health Food Company went into receivership.
1938:
Sam Pandolfo started the Old Line Insurance Shares Corporation in New
Mexico.
1942:
Pandolfo’s stock sales were investigated by the federal government,
and he was convicted of using the mails to defraud.
He was sentenced to ten years.
He returned to Leavenworth on November 20, 1942.
1945:
In June 1945 the Pan manufacturing plant was sold to Franklin
Manufacturing Company, which produced freezers and refrigerators.
1946:
Pandolfo was released on parole March 16, 1946, at age 71.
He returned to selling insurance in Colorado.
1956:
Sam Pandolfo visited St. Cloud in March 1956 on his way to Alaska.
1958:
Sam Pandolfo and others incorporated the Alaska Reserve Underwriting
Corporation in Fairbanks, his final enterprise.
1960:
Sam Pandolfo died in Fairbanks, Alaska, January 27, 1960, at age 85.
Shortly before he died, Sam Pandolfo wrote the following in his
“Brief History” booklet: “ …I am not
proud of nor pleased about the two convictions that have been outlined here,
but I have taken for myself a full measure of consolation, and may I say
pride, in the knowledge that had the two described ventures been permitted
to continue, all present evidence in my opinion, points to the conclusion
that investors would have been well rewarded.”
1984:
The Pan Motor Company Office and the Sheet Metal Works building
(435-437 33rd Avenue N., St. Cloud) were added to the National
Register of Historic Places. The office building is now a chiropractic
clinic and the sheet metal building was used by the Stearns County Highway
Department and is now owned by the Brock White Company.
2003:
After 35 years of research, author John Dominik published his book,
The Legend of Sam Pandolfo.
The book can be purchased at the Stearns History Museum at 235 South
33rd Avenue, St. Cloud. There is a
copy at the Great River Library. Many
people in St. Cloud still think of what might have been and that Sam
Pandolfo didn’t deserve what happened to him and the Pan Motor Company.
2011:
Sam Pandolfo’s remains were brought from Alaska and reburied in St.
Cloud. In a November 1926
newspaper statement thanking the people of St. Cloud, Pandolfo wrote, “For
the information of all, when I die I desire to be buried here.”
2013:
Two of the 14 Pan Motor Company buildings and 57 of the Pantown
houses remain. The houses are
between 30th and 33rd Avenues and 8th and
10th Streets North.
The St.
Cloud Auto Club (Pantowners)
www.pantowners.org
The St. Cloud Antique Auto Club, the “Pantowners,” was
formed in 1971.
There are at least six existing Pan cars of the 750
manufactured in St. Cloud.
These six cars are pictured on the St. Cloud Auto Club’s website under Pan
Automobile Registry. There are
four Pan cars in St. Cloud and one in Annandale.
A Pan car owned by the Pantowners is at the Stearns History Museum’s
Pan Motor Company exhibit. The
Pantowners are always interested in finding more Pan cars, Pan car parts or
additional history about Sam Pandolfo.
Notes by Annandale History Club Secretary