The People's Tycoon: Henry Ford and the American Century (Vintage) (12 page)

A few weeks later, in January 1901, after not quite a year and a half of operation, the board dissolved the Detroit Automobile Company outright.
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Thus Henry Ford's first adventure in car manufacturing crashed to earth after a high-flying start. All was not lost, however. Some of Ford's financial backers remained hopeful, including Murphy. This small group immediately purchased the Detroit Automobile Company's assets and continued to support Ford in developing an automobile for manufacture. So Ford experimented and tinkered for several months in a much-reduced shop at the same Cass Avenue facility. He abandoned the “delivery wagon” model and turned once again to a smaller, lightweight automobile.

He made progress, because on November 30, 1901, articles of incorporation were filed for the Henry Ford Company. Capitalization stood at $60,000, while Ford was given a thousand shares, a $10,000 interest, as compensation for his mechanical expertise to the company. Hope burned brightly once more. The Detroit
Journal
reported, “Mr. Ford has, in fact, with the backing of Mr. Murphy, succeeded in inventing an entirely new machine, departing in every respect from the lines of the old one and showing a vast improvement, as he believes, upon any automobile now on the market.” Ford, unlike most participants in the burgeoning, volatile new world of car manufacture, where failures were commonplace, had secured a second chance.
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But once again, his conduct scuttled a promising enterprise, and this time it happened much more quickly. A familiar problem set in: Ford failed to get a commercial model ready for manufacture. The dynamic this time was a little different—he had become interested in automobile racing, and began pouring most of his energy into developing a race car rather than a vehicle for market—but the result was identical. The company never finalized a design for a commercial car, let alone actually manufactured a car. Moreover, Ford harbored a growing resentment over his financial share in the company, which he considered to be paltry. As tensions and tempers flared, the situation increasingly focused on two people: the company's namesake, and his wealthy, influential backer, William H. Murphy.

Frederick Strauss, having followed his old friend into this new venture, provided an insider's view of the gathering crisis. According to him, in the months after the dissolution of the Detroit Automobile Company a team consisting of Ford; Ed Huff, his old assistant from the Bagley Avenue garage; C. Harold Wills, a young toolmaker and draftsman; and Strauss designed and constructed a new, small, commercial car. Murphy and the other investors were quite pleased with this prototype and assumed that Ford would push it into production. Though they were aware that Ford was also developing a racing automobile, they believed he was spending most of
his energy on the commercial vehicle. “Murphy had the idea that they were going on with the little car, and he didn't get onto us until we got that second car [the racer] about half machined up,” Strauss explained. “After he found out that we were making a different car altogether, he was very disappointed…. When Murphy found out what Henry was doing, he got dis-gusted.”
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Oliver Barthel provided additional information on the widening rift between Murphy and Ford. He confirmed that, as Murphy uncovered the truth about the situation, he grew angry. He confronted Barthel, and “he told me not to do it [work on the racer], and that he would fire me, and if I valued my job I'd better not do any work on it.” But Barthel, at Ford's insistence, continued to labor on the race car, a move that led to a series of acrimonious arguments over the course of several weeks between Murphy and Ford. The situation settled into an uncomfortable stalemate. According to Strauss, Murphy quit speaking to Ford entirely. “Murphy came in every morning before he went to his office, but he had nothing to do with Henry,” he reported.
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Eventually, Murphy acted decisively to resolve this contest of wills. Concluding that Ford had acted negligently in failing to develop a commercial automobile to the point of manufacture, he took the drastic step of bringing in an outsider to review the situation and restore order. Henry M. Leland, the director of Leland & Faulconer, a Detroit machine shop well known for its high-quality work, had been trained at Colt's factory, the Springfield Armory, and several other machine establishments in New England. By the 1890s, he had gained a reputation for the precision, elegance, and strength of his machined parts. Along with his son, Wilfred C. Leland, Henry Leland was producing motors for Ransom E. Olds and his car. Murphy knew Leland as a social acquaintance and convinced him to come to the Cass Avenue plant, inspect Ford's work, and offer advice and recommendations. Leland seems to have frankly criticized Ford's methods, vehicle, and lack of progress. According to William W. Pring, Leland miscalculated. “He figured he could tell Ford what to do,” Pring related, “but Mr. Ford wasn't the type of man to take it.” Not only did Ford bridle at Leland's critique, but he resented the board for undermining his authority. According to Charles T. Bush, his boss wanted to develop a car according to his own standards but now saw the board as a hostile, elitist group who wanted to constrain him.
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The situation proved untenable. Unwilling to have another mechanical expert looking over his shoulder, Ford grew even more sullen and uncooperative. The crisis came to a head within a few weeks, and Ford left the Henry Ford Company on March 10,1902, only three months after the
enterprise had been launched. Accounts differed, with some insisting that Ford resigned and others claiming that Murphy fired him. Whatever the case, the terms of Ford's departure were clear: he received a cash settlement of $900, the drawings and plans for his racing car, and assurances that Murphy and the board would discontinue using his name for their company. The agreement was kept. Following Ford's departure, the investors reorganized as the Cadillac Automobile Company—Murphy became its treasurer and largest stockholder—and they installed Henry Leland as its manufacturing supervisor. Cadillac began manufacturing reliable motorcars of high quality, and in 1909 it was purchased by the young General Motors Corpo-ration.
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In this unseemly fashion, Henry Ford, the mechanical inventor, and William H. Murphy, the prominent businessman, parted ways only two and a half years after the beginning of their promising alliance. At the time, there appeared to be considerable hard feeling on both sides, although as years went by animosities mellowed. Much later, for example, Murphy attended a social function at the Ford home where the host was overheard remarking that “he had always regretted Mr. Murphy had not gone along with him and the Ford Motor Company.” However, a curious twist of fate brought their relationship full-circle. In 1917, Henry and Wilfred Leland launched the Lincoln Motor Company, another enterprise devoted to making high-quality automobiles, with Murphy's support as a major stockholder. But the company went into receivership after a few years and was purchased by the Ford Motor Company. Within five months, Ford dismissed Leland and his son with two weeks' severance pay. Though Ford always claimed it was a business decision, it also seems clear that in a not-so-subtle way he got his revenge on the man brought in to discipline him two decades before.
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But in the spring of 1902, Henry Ford was in no position to visit revenge on anyone. To most observers, he appeared little more than another casualty of the viciously competitive motor-vehicle market. A carefully researched table compiled for
Motor
magazine by Charles E. Duryea, himself a pioneer carmaker, revealed that from 1900 to 1908, 501 companies were formed in the United States for the purpose of manufacturing automobiles. Sixty percent of them folded outright within a couple of years; another 6 percent moved into other areas of production.
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Despite Ford's impressive financial backing and his own mechanical expertise, he seemed but another statistic in the vagaries of enterprise. His only distinction lay in squandering not one but two golden opportunities.

But, curiously, Ford's resounding failures in this time period did not disturb him unduly. He apparently drew only positive lessons from these
disasters. He adopted an unconcerned, even lackadaisical attitude that showed twenty years later in comments during an interview:

These philosophical words offer little satisfaction to one seeking an explanation for Ford's early lack of success at automobile manufacture. For his prominent investors, the reason was apparent—he had wasted their money on excessive tinkering and refinement, and never brought a manufacturable prototype to market. He had engineered his own demise by a failure to perform.

Ford, however, offered a different assessment, one that reflected his developing sensibility as a businessman and an industrialist. He insisted that he was a victim of greed. The backers of the Detroit Automobile Company and the Henry Ford Company, in his view, harbored misplaced priorities. A couple of weeks after his final departure from the second of those ventures, Ford encountered Charles T. Bush, who had worked under him at Cass Avenue. Naturally, they fell into a discussion of the recent tumult, and Bush reported how Ford lashed out at his former backers:

Two decades later, Ford's analysis remained harsh. In
My Life and Work,
he argued that his early investors had no interest in making a quality product for the public but only wanted “to get the largest price possible for each car. The main idea seemed to be to get the money.” Ford rebelled and, in his own words, “resigned,
determined never again to put myself under orders.”
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Ford's reading of his early business reverses provides a revealing
glimpse into his psyche. As he took his first tentative steps into the manufacturing arena at the onset of the twentieth century, he clearly carried two deep commitments. First, he resented and resisted any attempt by wealthy business elites to direct his course of action. Second, he was stubbornly determined to follow his own instincts and values, to maintain his independence, and to keep control over his own destiny as a manufacturer. Both of these commitments would remain critical parts of Ford's mature personality in coming years, and they would shape, in many ways, his fabulous climb to success. But this dogged self-reliance and hostility to elites bespoke more than personal character. They also reflected larger historical pressures which bore down upon Ford.

His early adventures in car manufacture, it is important to remember, unfolded in the heart of a great transformation of socioeconomic life in the United States. Beginning in the late nineteenth century and extending into the twentieth, the country experienced what one historian has described as “the incorporation of America.” This broad process involved much more than the technical matter of corporate forms of ownership in business endeavors, which were spreading rapidly throughout the economy. It also gave rise to the rapid expansion of industrial capitalism across the United States, the development of accompanying transportation, communication, and bureaucratic systems, intensified urbanization, and the emergence of a managerial class of white-collar workers. Incorporation also generated a tremendous cultural impact. The vast “organizational revolution of the late nineteenth and early twentieth century,” according to scholars, created not only a different socioeconomic environment but “an altogether new outlook on life.” In the new corporatized America, old-fashioned, self-reliant individualism was increasingly subsumed by the concerns, ambitions, and opportunities generated by bureaucratic organizations.
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This profound reshaping of American social and economic life unquestionably brought great benefits—economic growth, with its explosion of industrial productivity, more available consumer goods, and a rising standard of living for American society as a whole. But it also created great strains and uncertainties. Many citizens worried about deeper inequality and class divisions in the United States, dubious business methods, and the threat that corporate institutions would reign unchallenged over national life. Incorporation also created intense cultural anguish. Even among the business groups propelling it forward, there appeared widespread anxieties about abandoning the values of the past. They worried about advancing luxury and materialism, urban anonymity and confidence games, overrefinement and isolation from real life, and declining opportunities for the self-made man.
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It seems clear that Henry Ford, as he struggled unsuccessfully to manufacture his automobile around the turn of the century, shared in large measure both aspirations and anxieties about the incorporation of America. In fact, his position was fascinating in its ambiguity. On the one hand, he was clearly attuned to the new business world of mass manufacturing and mass marketing, especially in its technological dimension. As events would soon prove, more than any other American business figure he grasped the vast economic potential of a mass-consumer economy. On the other hand, he remained in many ways a Dearborn farm boy rooted in the soil of William Ford's agricultural republic. He defined himself, in the best traditional terms, as a self-reliant individualist who owned his property, earned his way, and was beholden to no one.