Enterprise of Henry Ford - morganhighhistoryacademy.org
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Enterprise of Henry Ford - morganhighhistoryacademy.org
Ford ofHenry Enterprise the powerof freeenterpriseas a forcefor good.He not The auto magnatedemonstrated only madehimselfrich but put Americaon wheelsand raisedthe lot of workers. by WilliamP.Hoar This lune, the Ford Motor Company commemorates the 100th anniversary of its - Editor founding. n 1903 there was little indication that the first sales of a buggy-like Ford two-seaterwould lead to anything significant. The capital raised by founder Henry Ford, then age 40, amounted to a modest $28,000 in cash. But in 23 years that had been turned into more than $900 million in profits. An early stockholder,the sisterof one of Ford'sbusinessgeniuses. invested $100 for one share of the new venture. "That one hundred dollars was eventually to bring her $355,000,"biographerWilliamAdams Simonds noted in his bookHenry Ford. While 1,500 American auto manufacturers tried and failed, Mr. Ford proved he had a better idea. The greatindustrialist(1863-1947)also had ideas about peace, prohibition, publishing, and politics that kept him at the center of national attention. He loved the publicity, loved being a public man, though he was anything but a competent speaker. Indeed,Ford was not an easyman to categorize. In My Forty Years With Ford, Charles E. Sorensen,a longtime associate who became Mr. Ford's head of production. described the founder of the Ford Motor Company as follows: o o o O b ! He was unorthodox in thought but puritanical in personal conduct. He had a restlessmind but was capable of prolonged, concentrated work. He hated indolence but had to be confronted by a challenging problem before his interest was aroused. This article originally appeared under the title "Henry Ford: The Capitalist as Benefactor" in the April 1978 issueo/American Opinion, a predecessor o/ THE NEw AMEPJCAN. 34 I He was contemptuousot moneymaking, of money-makersand profit seekers,yet he made more moneYand greaterprofits than thosehe despised. He defiedacceptedeconomicPrinciples, yet he is the foremost exemplar of American free enterprise. He abhorred ostentation and display, yet he reveledin the spotlight of publicity. He was ruthless in getting his own way, yet he had a deepsenseofPublic responsibility. He demandedefficient Production, yet made place in his Plant for the physically handicapped, reformed criminals, and human misfits in the American industrial system. He couldn't read a bluePrint, Yet had greater mechanical ability than those who could. He would have gone nowhere THENEWAMERICANO JUNE2, 2OO3 without his associates,we did the work while he took the bows, yet none of us would have gone far without him. He has beendescribedas complex, contradictory, a dreamer, a grownup boy, an intuitive genius,a dictator,yet essentiallyhe was a very simple man. Gapitalist Gomucopia That was the "simple man" who determined to produce a"car for the great multitude" and gave America the Model T the most famous and beloved automobile that was ever built. Within a few years of its introduction in 1908, the Ford Company was producing half of the cars in the world. By the early '20s, Ford made a full 60 percent of the automobiles manufactured in the United States.More than 15 million Model Ts, the "universalcar." were produced. So enthralled did the American public becomewith Henry Ford's cars that when production of the T was halted in 1927, in order to retool for the Model A, more than 400,000buyers orderedthe new model, sight unseen.When that car was in- troduced in December of 1927, ten percentof the U.S. population stormed showrooms on the first day to get a look at it. A11 of this made Henry Ford quite wealthy ofcourse. But Ford "the dreamer" ploughedhisprofirsbackinro the companyto assuremaximum growth.This would.he said, "build more and more factories, to give as many people as I can a chanceto be prosperous." Surely the most dramatic proof that he meant what he said was when Ford doubled the pay of his employees,reducing their work hours simultaneously,all without raising the alreadyinexpensiveprice of his superior product. This introduced the five-dollar day.While such a figure seems insignificant in the greatly inflated money of today, this announcementof a doubling of the minimum wage in Ford plants for every laborer, reaching right down to the sweepers,shookthe whole businesscommunity in 1914.The Ford publicists pre- Marxism, withhis dicted it would "inaugurate the greatest revolution in the matter of rewards for its workers ever known to the industrial world." That was hardly hyperbole. This revolutionary increasewas to come from profit-sharing of the next year's income,which Ford figured at a minimum of $10 million. Even the buyer of Ford cars would share in the benefits: a $50 rebate would go to eachpurchaserif enoughcars were sold.x And to keep up with expected demand, production hours were to be in+ This was not a shabbypercentageas the price of the Model T fell as low as 9260. c o E o O o b o o u B e f o ] e " F o r d n ' : T h e y o u n g m a n d e s t i n e d t o p u t A m e r i c a o n w h e eq l sut a aO k enschyio cstufeitr,tsotrcaasrp, ti fnr,eH e b u i l t t h e c a r i n l g g 6 , years seven before founding FordMotorCompany. THENEW AMERICAN . JUNE 2. 2OO3 35 whohad mobilityandPra creasedby replacing two nine-hour shifts with three shifts of eight hours each. Henry Ford, who was not even listed in Who's Who of 1913, suddenlYbecame known worldwide. Not everyone was an admirer. The Wall Street Joutnal, for example,declaredon January5, 1914:"Ifthe newspapersof the day are correctly reporling the latest invention and advertisement of Henry Ford, he has in his social endeavorcommitted economic blunders if not crimes. They may return to plague him and the industry he represents,as well as organrzedsociety...." If Ford had nothing but contempt for Wall Street, the feeling was mutual. Predictions of Ford bankruptcy were rampant, but the great industrialist said he would rather keep the families of his 15,000workers happy than pleasethose of 30 millionaires. Moreover, Ford contended: "This is neither charity nor wages,but profit sharing and efficiency engineering." And, as it turned out, the actual distribution of profits was even higher than expected,amounting to $12 million. Even as far back as 1948 the revolutionary nature ofthat 1914 five-dollar day needed to be interpreted in terms of the cost of living and the decline in the value of the dollar.As William C. Richardsnoted in his book The Last Billionaire in 1948, 'A generation accustomed to spiraling prices may not grasp why a good 95 percent of the world reacted to Ford's minimum-wage announcementas if a new holy child had been born, but a worker in manufacturing at the time got22 centsan hour and weekly earningsaveraged$1 1 though the Ford rate was slightly higher. Ford's program, like his manufacturing methods, was to changethe face of the earth." Here was a businessman,a capitalist, who had become an international hero. And for good reason. Ford had brought mobility and productivity to both the urban worker and the farmer. And not with his 36 cars and trucks alone.He called his tractor the Fordson, observing: "The planning of the tractor really antedatedthat of the motor car."Ever sincehe had beena boy on the farm it had been a Ford goal "to lift farm drudgery off flesh and blood and lay it on steel and motors." When he added to this achievementa labor policY so generousthat it literally took firehosesto control the mobs of men flooding into Detroit to work for Ford, his name was one of the most respectedin America. "The people admire Ford from a senseof gratitude," said Archibald Henderson inhis Contemporary Immortals in 1930. Allan Nevins and Frank Ernest Hill summarizein Ford, their impressivetrilogy on the Ford Company: "To have fought so stubbornly to get an automobile factory started;to have toiled still more stubbornly to devotethat factory tojust one durable, versatile, and very cheap car lthe Model Tl; to have assembleda staff which pioneeredso creatively in massproduction; to have welcomed competition, battled in the long Selden [patent] suit for full freedom to produce, scorned protective tariffs, fought clear of Wall Street, and remained a man of the people - all of this was im- pressiveenough. But, while doubling the prevalentwage rate, to proclaim that the roughestday laborer could be made worlh $5 a day was even more appealing; it touchedmen's imaginations." Ford became,in essence,the country's top advocateofboth labor and consumers. Profits, he found, could be madeby setting low prices for high volume - and the hi-ehly productive auto worker could be well paid so he too could afford to buy a TinLizzy. At the same time, reports John Chamberlain in The Roots of Capitalism, the rise in wagesat Ford attractedmore efficient workers and improved the productiviq' of those already on the job. It directlf increased "the output of given machinery by some twenty percent. The 'leverage'on higher u.age.by virtue ofits u'orker attitude. thus paid for itself." The impact of this was felt worldwide. In Francethe scholarly FatherR.L. Bruckberger exulted that when "Henry Ford put America on u heels.he rescuedthe farmer from his isolation and brought him within reach of railroads to carr)' his produce to NerrYork or SanFranciscoand carry back machinesand citl'-soods....Ford createdan unlimited national market." How I wish, .'I said Bruckber-qer. could find words to impress the readerwith the importance of the A FordRunabout, ofthe1903Model hereatthewheel Henry Fordisshown Thelirst"Fgrd'n: automobile. firstproduction c0mpany's THENEW AMERICAN . JUNE 2, 2OO3 A betteridea:Henry Fordperfected automation andtheassembly line,moving theproduct onrollers witheachmandoing jobasthecarproceeded a dilferent t0the frontdoor. 5 ; : ' = : ! 9 i that decision of the five-dollar davl It meansinfinitely more than a mere raise in wages."The timing of the decision "cur away the ground from under \'Ian<ist revolution." Advocate forPeace By 1915 the Ford Motor Company was selling four times as many carsas its closest competitor. but Henry Ford had another pressin_e thought on his mind: the Great War in Europe. Indeed, Mr. Ford was so opposedto American involvement in the war that he declaredhe would rather burn down his factory than supply war mat6riel. In the face of constantwar propagandathis sentimentwas not universallyheld, even within companymanagement.In fact, treasurerand vice presidentJamesCouzensresigned shortly after Henry Ford opined: "To no better purposecan the pagesofthe 'Ford Times' be given than to voice the mission of peace." It was this sentimentwhich produced the expedition of the famous PeaceShip, an enterprise in which Ford led a group hoping to mediate a solution to the European war and keep American men off of the battlefields. Ford obtained an appointment with President Woodrow Wilson, through the offices of Colonel Edward House, to try to obtain the president'ssupport for the mission of Oscar II, a Scandinavian-American liner. He "urged Wilson to appoint a neutral commission, offering to finance it," even offering his steamship to the president. But Woodrow Wilson, who was committed to U.S. involvement in the war, declined. "Ford was only reTHENEWAME?ICAN. JUNE2,2005 gretful that the President had missed a great opportunity. 'He's a small man,'he said." (Nevins and Hill, Ford.) The mission was hailedby suchprominent Americans as Ford's hero and friend Thomas Edison and resigned Secretaryof StateWilliam JenningsBryan, but the criticism from a pressdominated by the Eastern bankers was brutal. In Road to War, Walter Millis commented that "the Peace Ship was launched, to the undying shame of American journalism, upon one vast wave of ridicule." Despite Henry Ford's expenditure of some$465,000,the missionwas a failure. But the industrialist never publicly expressedregret. Typically he said: "I wanted to see peace.I at least tried to bring it about. Most men did not even try." As U.S. military involvement becamea reality, however, Mr. Ford contributed mightily to the war effort. "I am a pacifist,', he explained, "but perhapsmilitarism can be crushedonly by militarism. In that case I am in on it to the finish." Political writers were years later to criticize Ford for making a profit during the war, when he alonehad madethe uniquepromisero retum all such gain. When his country needed him, Ford was willing and able. The war record of the Ford Comoanv "in totality," wrote historians Nevins ani Hill, "was impressive.As was to havebeen expected,the Ford factories had supplied a large number of cars, ambulances,and trucks to the American and Allied forces - about 39,000 all told. It had dispatched caissons,helmets, submarine detectors, tubes for useby Allied submarines,shells, armor plate, and helped to develop gas masks.It had produced3,94} Liberty motors and 415,371cylinders for such mo- J/ Rumors and speculation abounded,but what was happening was that Ford agents were buying out Henry's other stockholders,who were of coursenow worried about the potential competition of a new Ford company. The outcome was that all Ford Motor Company activities fell into the sole possessionof Henry,his wife, andhis son. No one man had everpersonallycontrolled such an empire - not evenJohn D. RockTrialsandltibulations As peace came, Henry Ford once more efeller or J.P.Morgan. The man who had opted for expansion,only to be sued by constructed the first Ford engine on a two major stockholders - the Dodge kitchen table and in 1896built his first auto brothers - who preferred that the war - comprisedof a frame on bicycle wheels profits be distributed as dividends to fund - owned factories in 1919 worth approxtheir own plant in competition with Ford. imately half a billion dollars. The name of Henry Ford was bY nou' Mr. Ford found that his ownership of 58.5 percentof the company was not enoughto mentionedfrequently in political circles as assurehis expansionpolicy as the casewas a potential candidatefor president.In I 9 I 8 decided in favor of the Dodges. He re- Ford had been narrowly defeated for the signed as presidentof Ford Motor Com- U.S. Senatein a race against former Secpany in 1918,with his sonEdselnamedto retary of the Navy Truman Newberry. Ford replace him, though he remained on the had been nominated in both Republican board of directors.Soon news came that and Democrat primaries, finishing second Mr. Ford would stananothercompany.As to Newberry in the GOP race, and topping the Los Angeles Examiner reported on the vote on the Democraticside.The showMarch 5, 1919: "His idea is to make a better car than he now turns out and 10 marketit at a lower Price.somewherebetween$250.00and $350.00 and to do it through another company than the Ford Motor ComPanY." tors. It had built 60 Eagle Boats and developed two types of tanks which it was ready on Armistice Day to produce in quantity....Ford tractorshelpedto meet the food needs of both Britain and America, while Ford cars, trucks, and ambulances won wide applause for their behavior in battle zones." Legendary Friends enryFord (left)had oncebeen at theEdisonIlchiefengineer luminating Companyof Detroit.And he andThomasEdisonlcenter) became triends, neighbors.and joinFrequently travelingcompanions. Harvey magnate were tire ing thesetwo Firestone(right) andthe famous,whitebeardednaturalistJohnBurroughs(not shown).A no doubt apocryphalstory is told of how the four were forced to stop at a smal1garagefor repairs.Wasit the piston?asked the mechanic."No," said one,"I'm Henry Ford, andit isn't due to motor trouble."Perhapsthe tires? "No," said another,"I'm Harvey Firestone,and the_tiresare all right." Well, then; could it be the wiring? "No," said a third voice' "I'm ThomasEdison,and the electricsystemis working fine." Sure,saidthe now disbelievinggarageman."Fordl FirestonelEdison!And I supposeyou'll tell me that's SantaClausriding with you!" I 3B ing was more remarkable in that Ford ran in the November election as a Democrat in a strong Republican state, and with virtually no campaigning. Though he lost the suit to the Dodge brothers, Henry Ford did win a judgment of six cents in a libel suit againstthe jingoisiic Chicago Tribune which erroneously reported that Ford would fire workers mobilized and sentto the Mexican border. The trial embarrassedhim when as a witnesshe seemedto prove the sincerity of his opirrion that history is "bunk" by revealing his ignorance of some basic facts about earl.vAmerica.At about this time Ford also became publisher of the Dearborn Independent, though virtually all the material anributedto him was ghostwritten.The paper printed a variety of anti-Jewish articles before Ford issued a formal apology and promised he would publish no more such diatribes. He had wondered why his longtime friend and neighbor, Rabbi Franklin. had been cool oflate. Though he had a penchant for putting his toot in his mouth, sometimes roaring aheadon public issueswithout thinking. he rvasa businessmanand not a politician. He certainly knew what to do u'hen hard times hit during l9l0-1921. Despiteinflation, Ford ordered a price cut for his automobiles. but demand was still insufficient and a number of Ford plants had to be shut dou'n. Rumor had it that a huge loan was being negotiated. But Ford. who thought NewYork = banliers were nothing short of vul^=tures. \\'as determinednot to fall into their hands. Indeed, in his book My Life andWork, Ford wrote: "My idea q'as then and still is that if a man did = his work well, the price he would get o for that work, the profits and all fic nancial matters, would take care for o I @ themselvesand that a businessought c ts to staft small and build itself up out b o of its earnings....I determined ab= solutely that never would I join a o O company in which finance came before the work or in which bankers or financiershad a part." Ford's view of bankers as predators seemedto be borne out when, with the car market depressed,one after another lined up to offer their "help" in return for his surrender of independence. The game was THE NEW AMERICAN O JUNE 2, 2OA3 Putting America onwheekwithinafel'ryearsof introducing theModel Fordwas I Henry producing halfthecarsinther,rtorid. hemade 60percent oftheautomobiles fu themid-1920s in theUnited States. Fordis shotrrn here'r'rith his10millionth Fordcar,a 1924Model T - andhis firstcar,builtin 1896priorto fte FordMotorCompanv. clear enough to Mr. Ford. One representative of a Morgan-controlled bank in \err' York came forward with a plan to "sate'' Ford that involved dictating who would be company treasurer.CharlesSorensensavs tn My Forty YearsWith Fordthatthe banker was promptly told to leave and the next da1 Edsel was instructed to become treasurer as well as president. Ford saved his company by turning to his dealers, to whom he now shipped his cars collect in spite of the slownessof the market.Somehad themselvesto go to their bankers, but eventually demand greq as did sales, and the plants were reopened. The reopening itself "gave a lift to public confidence,"explained Nevins and Hill. "So did the fact that he did not borrow. In general,the public saw only that Ford had outwitted the bankers, and applauded him." And the credit of the dealerswas sufficient, though there were some grumbles. They had made such a good thing out of the Ford franchise for 12 years, observed John Chamberlain in The Enterprising Americans, "that virtually noqe of them cared to risk losing favor witti the Dearborn autocrat.And what they lost in 19202I they soon recoveredin 1922-24"when the Model T sold better than ever." THENEWAMERICANo JUNE2, 2005 Automation andInnoyation The key to the concept behind automation q'as "flow," and this flow was desired on an unprecedentedscale for the huge new complex on the River Rouge. It meant an uninterrupted supply of raw materials and ftzlnsportation.Accordingly, the Ford empire was to expandvertically to coal mines, timber. glass manufacture,rubber plantations, aircraft factories that built the Ford trimotor, and even railroads. Henry Ford acquired the troubled Detroit, Toledo & konton line and rebuilt it, upped safety standards, and reduced the labor force while hcreasing the wage of thosewho remained. So satisfiedwere the Ford-eraemployees that when a nationwide strike hit, D.T.&I. was the only line in the U.S. on which the workers refused to participate. But, as Nevins and Hill recounted,Henry Ford "found the regulations of the I.C.C. and compliance with Federal law annoying, and in 1928 began negotiations with the PennroadCorporation (associatedwith the Pennsylvania), finally selling the D.T.&I. to that company for 936,000,000; more than seventimes what he had originally paid for it." Throughout all of this, it was a Ford principle that the workplace should be as pleasantaspossible.As a result of this, the open hearth was revolutionized by Henry Ford and transformedfrom one of the dirtiest work areasto one that was spotless. Visiting steel men razzedFord, then emulated him. "It cleanedup every steel plant in the country not only open hearths but rolling mills as well." Becausesuch innovations kept Ford in the news,he was forever being boomedfor president. Ford, said many, is the man to run the country. The death of President Warren Harding, and the subsequentsympathetic support for his successorCalvin Coolidge, cooled the fever. In any case, Henry Ford supportedCoolidge, who said the businessof America was business. But the Ford mystique ran deep. "The Nebraska Senate,"noted Nevins and Hill, "invited Ford to visit the State to develop its waterpower; a body of Michigan fruitgrowers petitioned the Presidentto buy all theAmerican railroadsand hand them over to Ford for really efficient operation; the New York State Waterways Association called on him to persuadeCongressto improve the Hudson River; the price of stock in important corporationsrose or fell with reportsthat he would or would not become a director or investor." In Congress,however,the Senatevoted to kill Henry Ford,s plan privately to develop water power on the Tennessee River - a move Ford thought due in part to the animosity toward him by the politically powerful Eastern bankers. Later, of course, the same body would approve of the socialist Tennessee Valley Authority. Overseas,Ford Motor Company mushroomed in more than a score of countries - even in Bolshevik Russia.where an estimated 85 percent of the trucks and tractors were Ford built. Henry was apparently fooled by the Reds'peacepropaganda eventhough dealings withAmtorg lost the 39 ic system. Here was a Patriotic man who created the historic Michigan GreenfieldVillage and purchasedand renovated the magnificent Wayside Inn in Massachusetts,where Longfellow wrote his famous Poem about Paul Revere.Had he lived to seewhat the Ford Foundation has done to subvert his patriotic and economic principles, it would have killed him or he it. And Ford was a fighter. He went company $578,000 between 1929 noseto nosewith F.D.R.'sNew Deal and 1935. and the unconstitutional National InHenry Ford was never so shortdustrial RecoveryAct (NRA), which sighted in the country he knew' he defied in 1933, the year after inRoger Burlingame, the historian of troducing the famous Ford V-8. In technology, commentedin his book fact, said Henry Ford, "I am not Henry Ford: "It is hard to denYthat going to sigl away my constitutional Henry Ford was ridden bY two obin recovery's name." righs sessions:mechanicalperfection and Failure to kowtow, said bureau'common man."'NaturallY the the cratic \\rashington, could lead to New York Times called him "an inseizureof Ford plants bY NRA Adthe Mussolini of dustrial fascist midstrator GeneralHugh JohnsonDetroit." The head of his so-called despitethe fact that Ford was paying SociologicalDepartmentreported workers more than the government that Ford "wanted it known his plan code required. Henry Ford's "ability is for every familY working for him to sense signs of the times and to a comfortable home, a bath tub in it, forces that showeddanger and a yard with a little garden, and Capitalist Ford counteract "l donotbelieve incharity," asbenefacton uncanny,"wrote top was almost signs power ofworkin ultimately, he wanted to see every said,.but intheregenerating ldo believe Sorensen."In the Charles associate just reward." a employee of his owning an auto- men's whentheworktheydoisgiven lives, Deal he was New of the days early pay," Ford larger "more workformoremenat mobile." But not necessarilya Ford, Bycreating of governall sorts manto owna TinLizzy. threatened with forthecommon it oossible he said. That would be uP to the made Nationthe defying for ment reprisal worker. the Act, that Recovery Industrial al Mr. Ford was concerned for his his company over take would govemment employees,but he didn't believe in the more liberality than any other large co{poand display the Blue ration, and in 1923 employed about five if he didn't sign up philosophy of something for nothing. "I 'Go ahead.The governreplied, He Eagle. honoran hold do not believe in charity," he said, "but I thousand. It continued to ment will then be in the automobile busido believe in the regenerating power of able primacy in employing the lame, blind, ness.Let's seeif they can manageit better handicapped physically other work in men's lives, when the work they ailing, and than I can."' persons." do is given a just reward. I believe that the Sotensennoted: "That stoppedGeneral that only charity worthwhile is the kind 'Iron Pants'Johnsonand PresidentRooto Reality helps a man to help himself' And I believe Dreams on all ofthis is certainly sad and sevelt." To reflect service greater no world the that I can do Humorist Will Rogers commented: the funding by the Ford considering ironic at men for more work more than to create can take the rouge from female lips, "You Foundation of useless and revolutionary larger pay." from the raised hands, the cigarettes the His immigrant workers were taught causes after Henry's death. Especially tourist's greasypaw, but the from hot dogs declared had American ways by Ford and instructed at since the great industrialist jerking the Fords out from you start when of opiate is an his English School; destitute young men emphatically: "Endowment you are monpublic the traveling under of the One initiative. to a drug continually knocked at the door of the imagination, of fundamentals very the with keying is the today country of the greatest curses Henry Ford Trade School, which provided life." American endowing and this practice of endowing graduates were them with such skills that Death came to the greatAmerican capmuch in demand.AnAmerican who want- that....No, inertia, smug satisfaction,alitalist in 1947. Henry Ford left us this ed to work knew he could find a job with ways follow endowments." Here was a man who lovedAmerica and message:"Man can do whatever he can Mr. Ford. Nevins and Hill noted: "The I company continued to treat Negroes with personallyproved the merit of its econom- imasine...." 40 THENEW AMERICAN O JUNE 2, 2OO3