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Wall Street History
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08/15/2003
The Model T
A few weeks ago I was at the Henry Ford Museum in Dearborn,
Michigan (a must see if you’re in the area). While a major
purpose of my trip was to catch a few Detroit Tigers games
(don’t ask why), this year also represents the 100th anniversary of
the Ford Motor Company. So, it only seemed right to say a few
words about the early years of the company, specifically the
rolling out of the Model T and its impact on America in the early
1900s.
While the following doesn’t delve into Henry Ford’s early life,
he was born in 1863, the son of an immigrant Irish farmer. It
wasn’t until he was 40 that he founded Ford Motor with some
private investors, capitalizing it to the tune of $100,000, with
Ford himself owning about 25% of the shares.
The first car Ford produced was the Model A, selling for $950,
with the initial one purchased by Dr. E. Pfenning, a Chicago
dentist on 7/15/03. Ford was far from realizing his goal to be the
world’s largest auto producer at this time, especially with the
likes of Ransom Eli Olds who that same year was in the process
of selling 2,500 “Merry Oldsmobiles.”
But in 1905, Ford split with the money men in his operation, the
latter wanting the company to be more of a luxury car
manufacturer. He then reorganized and took total control.
Whereas in the company’s first years it was buying engines,
chassis, brakes and axles from the Dodge brothers, now Henry
Ford made the parts in his own factory in an effort to streamline
production for a new operation he was beginning to
conceptualize. An important part of this plan was Ford’s
discovery the following year of a new steel, vanadium, that made
cars stronger, lighter and faster than any built before.
It was at this time that Henry Ford locked a few men in a room in
his headquarters, including Edward “Spider” Huff, Charles
“Adonis” Sorensen and Joseph Galamb. The mission? Develop
the Model T.
For a year, the team worked day and night, with Ford sitting in a
rocking chair for hours, scrawling his ideas on a blackboard for
his associates to mull over. Everything he came up with, such as
the cylinder head, springs, and high undercarriage worked.
The first Model T rolled out in October 1908, priced at $805
($850 is another commonly noted figure) and by the end of 1910,
over 18,500 had been sold. Ford, in his words, set out to
“democratize the automobile. When I’m through everybody will
be able to afford one, and about everyone will have one.”
Of course for him to meet this goal he needed to streamline the
assembly process, as annual demand for the Model T soared to
168,000 in 1913, 248,000 the following year.
Ford wasn’t the first to come up with a regimented
manufacturing process. You already had the likes of Cyrus
McCormick and his reapers, Isaac Singer and the sewing
machine, as well as Samuel Colt with the revolver. But it was
Ford who perfected the whole process.
The gains were amazing. For example, in 1913 it took 12 hours
and 30 minutes to assemble a Model T, but the next year the
production time was reduced to a mere 96 minutes. By 1914,
almost 50% of the cars on the road were Fords, yet the company
had just 13,000 workers, compared with 66,000 at the other
plants.
Efficiency allowed Ford to reduce the price, and the Model T of
1908 that cost a little over $800 was selling for just $440 in
1914. By 1924, the price was down to $290. Yes, now
everyone could afford one.
As to this last point, it was in January 1914 that Ford’s financial
maven James Couzens “horrified the business world” by
doubling the basic pay of an assembly line worker to $5 a day.
The Wall Street Journal called this immoral and the application
of “spiritual principles where they don’t belong.” The New York
Times said Ford was “crazy.” [Harold Evans] But now Ford
workers could buy the product themselves!
Not everyone was crazy about automobiles in general, though. A
1906 article from The North American Review stated the case
‘against’ along societal lines.
“Unfortunately, our millionaires, and especially their idle and
degenerate children, have been flaunting their money in the faces
of the poor as if actually wishing to provoke them. The rich
prefer to buy immense cars which take almost all of a narrow
street or road, and to drive them on all streets, narrow or wide, at
such speeds as imperils (sic) the lives and limbs of everybody in
their path.” [Douglas Brinkley]
On the other hand, the affordability and ease of use of the Model
T was particularly good for women. One analysis of the times
said that the car “broadened her horizon – increased her
pleasures – given new vigor to her body – made neighbors of
faraway friends – and multiplied tremendously her range of
activity. It is a real weapon in the changing order. More than
any other – the Ford is a woman’s car.” [Douglas Brinkley]
The automobile transformed society, and American business, in
so many ways, rippling through the entire economy. The
production process, for example, consumed large amounts of the
nation’s steel, rubber, glass and textile output, and it was a huge
boon for the petroleum industry.
And then you had the issue of roads. There was obviously a new
need for them, which benefited the cement industry, among
others. In 1918, 71 million barrels of cement was produced,
while in 1929 it was up to 172 million barrels. By the mid-
1920s, road building ranked 1st or 2nd in every state budget. And
thanks largely to the Model T, the auto “conferred an egalitarian
freedom of movement on a restless mass democracy.” [Harold
Evans]
The 1920s saw a boom in suburban and resort housing as the
auto made outlying areas near major cities more accessible.
Rural America was no longer isolated, farmers had access to new
markets, and the rural-urban migration was under way, including
the Dust Bowl farmers to California during the Great Depression.
The advent of the auto also wasn’t just good for traveling
salesmen and mail carriers; it increased the access to consumer
goods. For example, you had the first self-service grocery store,
Piggly-Wiggly (Memphis, 1916), the first mall, Country Club
Plaza (Kansas City, 1923), restaurant chains, such as White
Tower and A&W Root Beer (1924) that catered to the motoring
public, and the first “motel” (motor hotel) (San Luis Obispo, CA,
1926). Later on, even Reverend Robert Schuller opened a drive-
in church in Garden Grove, CA in 1954, calling it a “shopping
center for Jesus Christ.”
Oh, there was a downside to automobiles, though, and by 1926
cars had become the 5th leading cause of fatalities. [By the end
of the century, 2 million Americans had been killed in accidents.]
And in 1914 we had the first traffic jams, forcing Cleveland to
introduce the first traffic light, while a Detroit police sergeant,
Harry Jackson, can lay claim to creating the first octagonal stop
sign.
All of this was inevitable, of course, but it was Henry Ford and
the Model T that sped the whole process up.
And while I didn’t set out to delve into the darker side of Ford,
the man, one comment of his in 1931 concerning the Great
Depression was rather bitter, blaming it on the premise that “the
average man won’t really do a day’s work unless he is caught
and cannot get out of it. There is plenty of work to do if people
would do it.” A few weeks later he laid off 75,000. [Howard
Zinn]
Next week we’ll take a look at a figure whose theories were
employed extensively by Ford in the manufacturing process,
Frederick Taylor.
Sources:
“The American Century,” Harold Evans
“A People’s History of the United States,” Howard Zinn
“Oxford Companion to United States History,” edited by Paul S.
Boyer
“The Pursuit of Wealth,” Robert Sobel
American Heritage - June/July 2003, Douglas Brinkley
Brian Trumbore
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