The buggy, “despite added improvements” and under remarkable security, gave an unremarkable performance. On September 6,
at 10:02, a wire was connected from the batteries on the car to the coil, and after five minutes of cranking, at twenty-five turns every ten seconds, the motor started to run, with but few misses. The wires from the batteries were disconnected at 10:08, and the car was run from the room to the large storage room in the garage under its own power….It was then pushed on an elevator and taken to Forty-ninth Street. On electric ignition it started on the first turn of the crank.25
Without the electric ignition, which had not been part of Selden’s patent, the engine could not start. Even with electric ignition, the buggy could do no better than putter along for short distances before overheating, dying out, or suffering some other mishap. Repeat trials on September 12 and 16 were no more successful. “How long this litigation will last it is, of course, impossible to say, but what it is proving, except the general incapacity of Exhibit 89 to perform the tests witnesses said it made in Rochester and the lack of desire on the part of the complainants to end the suits, is more than uncertain.”26 The buggy had proved so difficult to start that Horseless Age could not resist attaching the moniker “Cranky Louis” to the buggy’s operator, Louis Gibson, for “his frequent performances in that line.”*4
Whether or not the lackluster performance of both putative Selden machines would invalidate Selden’s patent would be the decision of the trial judge, but as 1906 drew to a close, ALAM could not have looked back on it as a particularly good year. They were to find, however, that 1907 would be worse.
* * *
*1 Part of patent law at that time was the concept of a “pioneer” invention, which was one that represented such a radical departure from the previous state of the art that the inventor was entitled to licensing fees not just from those who used his specific invention but from anyone who employed even the general principles used by the pioneer inventor. Such a patent, if granted, would be immensely valuable, but the standards under which the courts applied the rule were extremely vague. Thus anything the Selden forces could do to establish that Selden’s invention was truly groundbreaking would help tilt the case in their favor.
*2 The journal was forced to admit that the buggy had been “pushed by hand to the street.”
*3 Selden’s sons might have had some involvement in “an engineering capacity.”
*4 Ford’s team, in an attempt to demonstrate that the Lenoir motor could be made to operate an automobile, which would invalidate Selden’s pioneer status, built a car that they also demonstrated on the streets of New York. The Ford-Lenoir, as it was called, employed a “non-compression motor” and performed a good deal better than the Selden buggy, but it was no more reflective of the original Lenoir design than was Selden’s of his own.
CHAPTER 20
Less than three months after George Selden’s quixotic appearance in New York, Ford announced the “consolidation of the present Ford Motor Company, the Ford Manufacturing Company, and other allied interests in one mammoth concern,” and plans for a major expansion, so “the various plants now building the Ford car will all be under one roof.” The Ford Manufacturing Company was indeed to be a paper fiction—Ford had kept his promise to John Gray—and the entire operation would be moved to what “promises [Detroit] the largest automobile factory in the world…of sufficient capacity to manufacture every part of the Ford cars from motors to tires.”1
With the Model N, Ford was on the verge of a great breakthrough, and he decided, regardless of any legal complications, that he needed a manufacturing facility that would allow him to press his advantage. So Ford, John Dodge, and Couzens spent weeks scouring the Detroit area to find a location of sufficient size, at least one hundred acres, with access to both labor and railroads “sufficient to meet the needs of the company in the future.”
They would eventually settle on a 60-acre site (which would later quadruple) in Highland Park, a small island of a city almost fully surrounded by Detroit.2 The building would take three years to complete and would, as the article implied, make Ford Motor Company the largest automaker in the world, the final break from being a stubborn little David engaged in a noble battle with the ALAM Goliath.*1
Motor Way, which had generally been sympathetic to Ford and the independents, was effusive about Ford Motor’s prospects, albeit somewhat shaky on the facts.
The success of this Detroit concern has been phenomenal and the advent of the sensational $500 Ford four-cylinder runabout has added impetus to it. About one thousand of these cars have been delivered to date and they are now coming through at the rate of thirty-five per day. Inside of sixty days, runabouts will be turned out at a rate heretofore unprecedented, over one hundred cars per day. Ten thousand of this model are now under way and another ten thousand more will follow immediately.
In fact, the ten thousand number was vastly inflated and it would be years before Ford could meet the hundred-car-per-day quota. But even with an output of thirty-five, he had become the industry leader. The journal had bought into other company propaganda: “Ford believes he has so perfected and simplified the design of this runabout it will be unnecessary to make any changes for several years.” (He would change the design the following year.) “It has been frequently asserted by competitors that the car could not be manufactured at the price, and that after a few hundred were delivered and the quality of the car been demonstrated, the price would be raised. This report has been emphatically denied.” (The price was raised to $600 almost immediately.) But the most important statement in the article was true: “It is claimed by the Ford company that by reducing the manufacturing of automobiles to the same terms as are applied to the making of sewing machines, typewriters and other machines in immense quantities, a fair profit can be made at the price and give better quality than can be incorporated in a car by more crude methods.”
And finally, Motor Way noted that the man who would become famous for his loathing of the patent system was not above exploiting it when it offered an advantage. “Many features of the Ford cars are broadly covered by patents in all countries of the world, and some of them are so comprehensive as to constitute basic claims. Without infringing on these patents it is impossible to attain the degree of simplicity which makes the Ford prices possible.” This was also overstatement, but the tooling developed by Walter Flanders, much of which had been patented under the Ford Motor umbrella, gave the company, at least for a time, a sizable competitive edge.
With all their success, however, Ford and Couzens never lost sight of the corporate image: if you were marketing yourself to the common man as an underdog, it was important to continue to be seen as an underdog. In fact, the split between the independents and ALAM had evolved into one based on price. “Virtually all of the expensive automobiles made by American manufacturers [were] licensed under the Selden patent….In any given year between 1903 and 1911, the ALAM never had more than four makes selling for less than $1,000.” The independents, on the other hand, generally produced the less expensive models. “By 1909, the independents offered twenty-six models costing $1,000 or less.”3 ALAM, therefore, was coming more and more to be identified with the rich, “not interested in producing a poor man’s automobile.” Of the independents, because of their vocal and public opposition to the oligarchs, Ford and to a lesser extent Rambler were the most prominent—a position that had served Ford remarkably well. “In all of the great industrial conflicts over patent rights in American history, nothing parallels Ford’s shrewd instinct for marshaling popular feeling to his side.”4
The split in product cost was not coincidence. ALAM members, who had thought themselves secure in the fortress of the Selden patent, had far less incentive to innovate than independents, who were operating in a more uncertain environment. Since virtually all the ALAM members had catered to the wealthy, they simply continued to do so. In fact, if ALAM won its infringement suit, its members would be i
n the position, through high fees and restriction of licenses, to force the public to pay whatever it chose for a product marketed to whichever segments of society it wished. But lethargy had its costs—in its decision to litigate rather than innovate, ALAM was strengthening rather than inhibiting its opponents.
“Probably nothing so well advertised the Ford car and the Ford Motor Company as did this suit,” Ford wrote in My Life and Work. “It appeared that we were the underdog and we had the public’s sympathy….Prosecuting that suit was probably one of the most shortsighted acts that any group of American businessmen has ever combined to commit.”5 Couzens added, “The Selden suit was probably better advertising than anything we could put out.”6
Part of the company’s strategy to foster the heroic everyman role had taken shape the year before, in the wake of ALAM’s decision to exclude nonlicensees from the auto show. To demonstrate solidarity in the struggle against injustice, Ford and Couzens, possibly at the instigation of John Gray, had decided to form a trade group comprising firms that would not knuckle under to the ALAM bullies. At a secret meeting at the Ford plant, a group of prominent independents—not including Thomas Jeffery, who still refused to join any organization—formed the American Motor Car Manufacturers Association (AMCMA). Although the group promised to use its combined influence in the marketplace to outmaneuver ALAM, members were specifically exempt from contributing either money or resources to aid Ford in contesting the infringement suit. Many of the smaller firms would never have joined an organization that thrust them into an ongoing and open-ended legal battle, and Couzens and Ford were perfectly content to be seen as standing alone against the juggernaut. By the end of 1906, of course, the Ford Motor Company had become something of a juggernaut itself, willing to allow its smaller, more fragile members to be pulled along in the wake.
But there was also value in being seen within the industry as the leader of a movement. At a members’ lunch in New York in early December 1906, preceding the second ACA (non-ALAM) auto show, Couzens, who had been appointed chairman of the AMCMA management committee, addressed the troops:
We are followers of that great American doctrine that ultimately brings the best results in an industry of any sort. We see before us many examples of unsuccessful combinations and we who own or control our plants are easy in mind for the outlook for future business. Although we are competitors in business, there are certain mutual interests which can be best cared for by a central association and that was the main reason for the formation of this association and counts largely for its increased strength the past few years….In my opinion, every manufacturer of motor-cars who is an exhibitor at the present show should be included in the ranks of the American Association. There is not one of you who likes to be in the position of a man who wants to secure benefits without shouldering his part of the work.7
—
The Model N, while not reaching the dizzying production or sales numbers that Ford spokesmen had been throwing about, accounted for almost all of the more than fivefold increase from the company’s previous year’s sales, to 8,423 cars, placing the Ford Company for the first time in the number one position in the industry. Ford’s sales were more than double Cadillac’s and three times Rambler’s. But to naysayers, Ford was still aiming at a segment of the market that most industry professionals were certain would be stagnant at best, while higher-priced, more luxurious automobiles, by then often costing $5,000 or more, would garner the greatest profit in an era of unbridled prosperity.
Woman learning to drive; by this time, the automobile had become integral to American life
But as 1907 progressed, growth began to slow—until, in October, the economy collapsed. In what would become known as the Panic of 1907, a failed attempt to corner copper in a fragile, highly leveraged stock market precipitated a cascade of business and bank failures. Before the crisis ended, there would be an 11 percent decline in gross national product, industrial production would drop by 16 percent, and unemployment would almost double. The nation was saved only when that noted man of the people J. P. Morgan, with the support and acquiescence of President Theodore Roosevelt—although the two men loathed each other—stepped in and single-handedly pumped liquidity into the system. As a result, to replace Morgan before the next catastrophe, Congress initiated the Federal Reserve System to help smooth out economic swings.
Although the nation suffered greatly, the effects were not felt evenly. The impact was most acute on stockholders, at that time predominantly upper-income individuals and families. And in a nation that was still largely agrarian, people who grew their own food, sewed their own clothes, and canned their own preserves were better equipped to weather the storm. Consequently, the market crisis was felt disproportionately by city dwellers and the wealthy, precisely the markets that ALAM members were targeting for their expensive cars.
The economy had gone as flat as this Buick’s tire
But Ford was perfectly placed. Tales of the automobile continued to be splashed across the front pages of American newspapers and, as with other examples of new technology, a financial crisis did little to depress demand.8 Thus, in marketing a car that received accolades for performance and reliability, all at a remarkably low price, the company actually increased production, to more than fourteen thousand cars, for the 1907–8 model year. (In this success, Ford was not alone—REO, Rambler, and a newcomer in the lower-priced car market, Buick, also saw their production numbers rise. However, Cadillac and virtually every other high-end carmaker were forced to cut back.)
As orders rolled in for the Model N—and its spiffed-up and slightly more expensive successors, the Models R and S—Ford Motor expanded its workforce both on the production side and in sales and marketing. The wisdom of seeking out a larger facility became manifest as the Piquette Avenue plant strained at the seams only three years after it had been constructed. As the company grew, tasks became more specialized, with Ford and Couzens of one mind about continuing to find the best people for each job. Again demonstrating that he was happy to employ people who were not at all like him, Ford hired a former convict as his sales manager and a flamboyant circus promoter to be the company’s first head of advertising. Both would be pivotal in the company’s growth.
The ex-con was Norval Hawkins, who had been imprisoned after embezzling $8,000 from a previous employer, Standard Oil. Hawkins, a self-proclaimed “good liver” who made no apologies for his crime, was a man so well liked and of such enduring charm that a crowd of well-wishers met him at the prison gates on his release, then helped him establish a successful accounting firm. Hawkins was the perfect salesman, exhibiting “extraordinary talent” for his job. An “astute Detroit attorney” later described Hawkins as “the greatest salesman that the world ever knew.”*2, 9
But Hawkins was no huckster. He knew as much about salesmen as he did about selling, and he deftly set car dealers competing with one another by posting and then manipulating both results and quotas. Hawkins also had a good deal to say about production, since the company would need to turn out enough cars to meet dealer orders. He made certain that the best-performing dealers got the quickest and most reliable deliveries, and that underperforming dealers knew it. He both cemented the Ford name in public awareness and gave an increasingly far-flung enterprise a sense of community by having the company publish a weekly newspaper, Ford Times, which packaged corporate propaganda in homey prose.
His most significant contribution was in expanding, organizing, and standardizing the sales force, although he wasn’t the first to do so and likely had borrowed the innovations from a competitor. He introduced contracts with dealers that “gave the company substantial control over distribution without the financial and organizational burdens of ownership. Contracts established the resale prices of cars and parts, responsibility for service, and the number of cars and parts that dealers were required to take and the prices they would have to pay.”10 Thus, when the Model T was rolled out, the company had a structured nation
al network of dealers ready to sell them.
The advertising man was E. LeRoy Pelletier, a showman who knew how to catch someone’s eye. He was described as a
little fellow [with] a great head; he is fairly charged with nervous energy; is a brilliant, plausible, rapid-fire conversationalist and a clever writer, and is hospitable, ingratiating and likable to a degree and resourceful far, far beyond the average. In the course of a varied career, he has had experience in the Klondike and as an advance agent for a circus, which partly may be accountable for the fact that in the art of “putting them over” he has few peers. Even the great Barnum himself would have found him a valuable assistant. For he can almost make himself believe there are moonbeams in cucumbers—and induce others to share his near-beliefs.11
Pelletier created perhaps the most notable of all of Ford Motor’s advertisements and certainly its most enduring slogan. In 1908, he commissioned a giant billboard set on the roof of the Detroit Opera House in, of all places, Cadillac Square, which featured a huge Model N with turning wheels and burning headlamps. One of the car’s passengers was a woman wearing a long scarf that draped behind her and fluttered in the wind. Beneath the automobile, in flashing lights of different colors, were the words “Watch the Fords Go By.”
Drive!: Henry Ford, George Selden, and the Race to Invent the Auto Age Page 27
