HENRY FORD    How he did it.

Born 1863 in rural Dearborn Michigan Henry was handy with machines and worked on early steam engines.

First car 1885 in Germany.

Car production begins in France.

1890 $45 per month is good wages.

1893 first American car by the Duryea brothers of Springfield Mass.

1893 Christmas, Ford has built a small gasoline engine that ran.

1894 Henry is made Chief Engineer at the Edison Electric Company for $100 per month. This was the age of steam engines.

1895 first American Auto race.

1896 Henry wants to build a car.

6-4-1896 his first car runs.

Other people where building cars and investors where hoping for a score. The Fords had come from Ireland, as had many others in the Detroit area. Some of Henry’s Ford relatives where successful and the family had good connections with the Irish community. One was a family friend and the Mayor of Detroit William C. Maybury whose family had become prosperous with real estate. All the great fortunes made by "self-made-men" are started when men of wealth backed the man with the idea. First generation fortunes are not made on their own. The "self-made-man" is a myth. Manufacturing requires vast amounts of Capital (money) and only the wealthy have it always ready.

In 1897 Maybury backed Ford in the building of a second car. Maybury also had many prominent friends and one of these was William H. Murphy (Downtown real estate, and an early backer of the Edison Illuminating Co). In 1899 Murphy told Henry that if he could build a car that could take him on a 60-mile round trip without a breakdown he would be interested. In July 1899 Henry took Murphy on that ride and Murphy declared "now we will organize a company."

August 5, 1899 the Detroit Automobile Co. started with Henry Ford as the "Mechanical Superintendent" It was the first in the area and was capitalized at $150,000 (millions in today’s dollars). The backers where William Maybury (real-estate, lumber, politics) William Murphy (real-estate, investing), James and Hugh McMillian (shipping, railroads, banks, insurance, telephone, Detroit Dry-dock shipbuilding), Dexter M. Ferry (seeds for crops), Senator Thomas W. Palmer, the Peck family (owners of Detroit’s Edison Illuminating Co franchise), Frederick Osborn (owner of Stock Brokerage firm), and Frank Woodman Eddy (businessman).

Henry Ford also took in some of his friends. Edward "Spider" Huff and Frederick Strauss where two of the first. Henry had not invented the gasoline engine or the automobile but he had a sense of what was the future and he knew what he wanted it to look like. He was also no young fool at 37 years of age and it did not take him long to realize that the backers wanted to make all the money and only thought of him as an employee. He knew that they could not make cars without him and if he give them all his ideas he would soon be out in the cold. So he held back waiting for a better deal but the investors would not give and in November 1900 the business closed at great loss to the investors.

William Murphy (one of the investors) told Henry he wanted a racing car of his own so he paid for Henry to build him a new car. Early auto racing was a sport like horse racing, only possible for the rich. Early American names are William K. Vanderbilt (wealthy family), Alexander Winton (wealthy Cleveland Ohio manufacturer) and others that could afford a rich mans toy like early autos. On Oct 10, 1901 a race was held in Grosse Pointe Michigan just outside Detroit. On a one mile track in five laps the "steamers" (steam powered cars) could go just under 2 minutes per mile, electric cars took around 4 minutes for a mile, Winston’s gas car went around the mile in 1 min 12.4 seconds. Now it was time for the big race and it was decided to shorten the race from 25 to 10 miles because of the small car count (only Winton and Ford started but I think the rich Winton knew his would not go 25 miles so he told them to shorten the race) at the start Winton shot to the lead and Ford seemed to be having trouble in the turns. By lap six the Ford was keeping pace and on lap six the Winton was beginning to smoke and was losing power, at the start of lap seven Henry Ford’s car passed Winton for the lead and began to pull way. Among the spectators as he won the race where the original investors who had set him up to design a car for them without him even knowing it.

A lot of the rich might not be able to hold on to their wealth but the gentlemen in the above story had only misjudged Henry and not given up; they still had a factory full of machinery. Seven weeks after winning the race Henry Ford was the owner of almost 17% of the new ‘Henry Ford Company’. The other five owners of the company where William Murphy, Henry Leland, and three others from the first venture. Within four months they had what they needed and threw Henry under the bus. They took the 17%, gave him $900 and changed the name of the company to the ‘Cadillac Automobile Company’ just a little later Henry Leland would change the name again to ‘General Motors’. They had stolen Henry’s car but not his engine.

Henry teamed up with a common man that had made some money to build another racecar; do an internet search for Barney Oldfield and the 999.

There have always been people with so much money that they can stand a large loss and then you have the people on the way up that might be in debt up to their eye balls; some of them will succeed. One was a coal merchant named Alex Malconson who knew he wanted in on the ground floor of this new industry of autos. He got together with Henry and they started the Ford Motor Co. Intending to only assemble parts that they would buy from other manufactures and call it a Ford.

Poor Henry had been conned again; what he thought was a 50/50 partnership soon changed. The need for cash brought in other investors, who where now partners also. The first was Malconson’s banker Uncle John Gray whom insisted on being president and receiving 105 shares at $100 each. Machine-shop operators the Dodge brothers who where building the engines and other parts came in for 100 shares, Malconson’s cousin Vernon Fry bought 50 shares as did Albert Strelow, lawyers John Anderson, and Horace Rackman. Two of Henry’s friends also bought shares, James Couzen 25 shares, and Charles Woodall 10 shares. One other investor that was not connected to Malconson’s bad debts was Charles Bennett. Malconson and Henry Ford would hold 255 shares each; together they held 51% of the Ford Motor Company on June 16, 1903 and it was felt that they would make $150 profit on each $750 car. With 1000 $100 shares they where capitalized at $100,000 in 1903 dollars.

Henry had been cheated once but he had also learned from the experience and this time he was not going to lose his 25%, no ! He knew that Malconson was on the same side as the other investors, so he was the outside man again. What he needed was complete control.

They hired workers at $1.50 per day ($468 per YEAR) and started assembling the parts, paying for them at delivery. Money was going out yet they had not sold the first car. They got down to $223.65 cash when it happened; the first car was paid for on July 15 1903 and the money poured in after that. By March 1904, 658 Fords sold. The investors took the profits and ran, by June of 1904 they had taken out as dividends their initial investment; from here on out it was all profit.

By1905 they were making 25 Fords a day and employing 300 men. Later at 600 cars per month Henry Ford had made the big time, he was rich, he would now be socially expectable, if he even cared.

Henry Ford was not the only one to make good with autos. Many parts suppliers also became today’s big companies; ever heard of a Holly Carburetor. Henry Ford worked with George Holly on an efficient carburetor. And when Henry realized he would need an engineering team he hired a draftsman named Harold Wills, and other skilled workers that stayed with him.

Making cars was Henry’s job but someone needed to sell them and the company was fortunate to have Malconson’s bookkeeper James Couzens, and he was responsible for creating the Ford Dealer program.

Henry Ford wanted to make inexpensive but reliable cars for the masses and his partner Malconson wanted to get into the growing market for higher priced models. The two men butted heads like mountain rams and even the other partners could not see that they could make both. So in the end Malconson was bluffed and bought out along with several others by the remaining investors and Henry wound up holding 585 of the 1000 shares. Just why anyone would sell a stock that had paid for itself in the first year is a mystery; there must be far more to this story as this was the key to Henry Ford becoming rich, he now had a controlling interest in the company that had his name on it. Henry Ford was 42 years old and had learned to play monopoly with the big boys. It was 1906.

The company started to produce the parts themselves and assemble them on a moving line where the worker stayed put and everything came to him; costs went down, profits up. In 1906 Ford built 1600 cars but in 1907 he built 8243 for a profit of one million dollars. In 1909 he built 10,000 cars at $825 each, the annual salary of a teacher. In 1910 18,664 cars, 1911 34,500, and in1912 78,400 cars using 6,850 employees. In 1913 over 150, 000 cars where built and in 1914 over 300,000 Ford came off the new assembly lines built by 13,000 workers. In 1916 $52 million dollars was given to the stockholders; this was before the income tax. In 1919 Ford had 44,500 employees. Fifteen million model Ts where built before Ford changed models in 1927.

In 1914 Henry Ford decided to double the pay of his workers to $5 per day and the rest of the rich corporate world held its breath, "was Ford crazy" they wanted to know. Why give the huge profits away to the workers when the "Investors" should get it all ? He also changed from a ten-hour workday to three eight-hour shifts. At the same time the small group of stockholders took $11 million dollars out as dividends. The real reason Ford raised wages was that the moving assembly line was dehumanizing and workers quit after only working a short time. If Ford wanted to keep trained worker he had to pay them more, he had no choice.

Henry Ford said he did not like war, stating wars were started for the benefit of Wall Street moneylenders and ammunition makers. He also said the every soldier was a murderer never stopping to think of the youths that were brainwashed by society and the draftees that had no choice. He also kept his own son from being drafted for WW1 and manufactured war materials in his factories making a lot of money. Sorry Henry but you were wrong on this point of soldiers being murderers, had you said professional soldiers you would have been closer.

Henry owned 58.5% of his company and he wanted it all so that he could do whatever he wanted. He had gotten rid of Alex Malconson and several other of the investors by starting the Ford Manufacturing Co. to make parts for the Ford Motor Co. the manufacturing company could charge the motor company whatever they wanted stripping the profits from the motor company, leaving Malconson with no dividends. Malconson fell for this and sold eventhough. Had he gone to court Henry would have lost. Now in 1916 Henry Ford tried to do the samething to his other investors by saying he was going to start a new car company. The investors did not bite this time and took him to court.

James Couzens owned 11% and the Dodge brothers 10% of the stock. John and Horace Dodge wanted to start their own car company and had planed to use the dividend dollars from their Ford stock to pay for it; 1 ¼ million in 1914 alone. Henry Ford had received his degree in tycoonery by now and he had a plan. He announced that as controlling partner he was not going to give out anymore dividend, instead he was going to use all the profits to expand; this cut off the Dodge brothers cash flow. Henry rebated $50 to each buyer of a Ford automobile lowering the profits by $11 million. Then he lowered the price of the new cars, reducing short-term profits. The price went from $825 in 1908 to $440 in 1914 then $345 in 1916. In 1915 Ford sold 390,000 units or 44-½ % of the U.S. market.

In 1919 after the courts ruled against Henry he bought his partners out. James Couzens had invested $11,000 dollars in 1903 and received $10,450,000 in dividends; he then got a little less that $30 million dollars for his shares. The Dodge brothers had $10k invested, had received $9-1/2 million in dividends and got $25 million for their stock. John Grays family had $10,500 invested got dividend worth almost $10 million and sold for $26-1/4 million. John Anderson and Horace Rackham had each put in $5000, received $4-3/4 million in dividends and sold their stock for $12-1/2 million dollars each. All the investors except Henry Ford had put in $41,500 in 1903 and had received $39,425,000 in dividend up to 1919 and sold their shares for $105,821,000. Henry Ford now owned his firm lock stock and barrel.

A greedy man would have been satisfied to take the large dividends and run. Henry Ford’s genius was partly the fact that he was not greedy. He had an image of what he wanted and he used the profits to build the company he wanted. Remember that Henry had started by building one car in his garage, then assembling components that others had built, he then machined and assembled his own components, now he wanted to start with the raw materials. He wanted to own his own coal and iron ore mines, his own ships to bring the raw materials to his own steel mill, cast and forge the parts, machine and assemble the parts, then put the cars together. And he wanted to do it all in one factory; raw materials would come in one end and finished cars would drive out the other end.

Pg 193

Pg 66, 73, 80 Harold Wills, draughtsman (variant of draftsman)

Pg 80 Spider Huff, electrical

Pg 96 Charles E. Sorenson, pattern maker, started at $3 a day.

Pg 72 James Couzens, bookkeeper for Malconson’s coal company.
He and Henry worked well together,


Pg 177 Resigned 10-13-1915

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