The essence of the pioneer concept was that a patent holder advanced a technology in such a fashion as to create an entirely new perspective and set of potential applications; to, in effect, forge a new trail into a previously impenetrable forest. Selden had done that by applying an internal combustion engine of the “liquid hydrocarbon compression type” to road locomotion. It was a great breakthrough and no American had previously thought to do it. Whether the engine that powered such a conveyance was an Otto or a Brayton was surely secondary.
This is not to say that Selden “deserved” such a broad patent, or that except during the roughly fifteen-year period that the pioneer concept was accepted jurisprudence, one would have been granted.*4 But Judge Hough was correct in his view that as the law was then interpreted, the model on which the engine was based was incidental to Selden’s construct.
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After the judgment was rendered, ALAM released a statement that said, “As the courts have disagreed on the merits of the Selden patent on gasoline automobiles, it was announced yesterday that the Columbia Motor Car Company and George B. Selden are arranging to apply for a writ of certiorari, with a view of having the case go to the United States Supreme Court for final decision.”*5 Within days, however, they reconsidered and announced that no further appeals would be undertaken.
Benton Crisp also issued a statement:
There is one thing about the decision…that is certain: The Ford Motor Company has never infringed the Selden patent. That fact is plain. It is also interesting to note that the court finds that Mr. Ford is one of the pioneer manufacturers of automobiles in this country; that he gained nothing from the Selden patent when it actually came out of the Patent Office, and that he owes nothing to the patent or to Mr. Selden either legally or morally.
After years of tiptoeing uncomfortably along the fence, the trade magazines now hailed the decision as if it had been handed down by Solomon. Motor World, for example, proclaimed, “Selden Routed,” and praised the “learned judges” for deciding that “while the patent did not lack invention or utility, it was not such as to entitle Selden to rank as an inventor.” Ford was equally acclaimed for “at no time showing symptoms of wavering” despite “the formidable interest arrayed against him.”19
Once again, however, the most entertaining reaction was from the editors of Horseless Age, who, under the banner headline “Selden Decision Reversed by Court of Appeals,” demonstrated that they could reverse course every bit as well. After commending ALAM for its “wise” decision not to pursue the matter to the Supreme Court, the editors wrote:
The outcome of the litigation will certainly prove to the advantage of the industry as a whole, and Henry Ford and the Ford Motor Company, who carried the burden of the defense, deserve the unqualified commendation of the industry for having had the courage of their convictions and for keeping on fighting dauntlessly against great odds. The abandonment of the patent will save the industry considerable sums, but above all it will remove barriers in the trade which have been most obnoxious, to say the least.20
The best characterization of the Ford-Selden battle, however, came from Charles Sorenson. “The Ford fight against the Selden patent is a milestone in the history of the automobile industry. I believe it is one of the greatest things Mr. Ford did not only for Ford Motor Company, but for everybody in the automaking business. All of us around him took only minor parts in this long-drawn-out case. He carried full responsibility for success or failure on his own shoulders with little or no encouragement from members of his board. He rarely had a pleasant moment inside or outside his organization as long as this uncertainty lasted. Yet the affair did as much to inspire him as anything that had occurred up to that time. He knew that he could battle with the best there was in the country and not be stopped.”21
So, as a result of his principles, his self-confidence, or simply his stubbornness—and with a healthy dollop of good luck thrown in—Henry Ford, who was by this time selling tens of thousands of Model Ts each year, with revenues in the millions and millions of dollars, could keep every penny.
* * *
*1 The price, although more than double the previous offer, would prove to be quite a bargain since a consortium of bankers would soon value the company at more than $30 million, although much of that would be based on future sales.
*2 Within a year after the bank syndicate ousted him from the management of General Motors in 1910, Durant had started a new consortium, teaming up with Louis Chevrolet, who had moved from racing to design. Chevrolet enjoyed solid success, which allowed Durant to use the profits to quietly buy General Motors stock. By 1915, although he had fallen out with Chevrolet, Durant, in a brilliant ploy, gained control of the company under the noses of the bankers who had thrown him out. But Durant simply could not restrain himself. On the verge of turning General Motors into a genuine challenger to Ford, he once again expanded too quickly and with the same result. In 1921, he left the company for good. He began his own car company, which went bust in the crash. In 1936, Durant declared bankruptcy and, until his death in 1947—the same year as Ford’s—lived on a $10,000-a-year pension granted to him by friends, supplemented by whatever he could earn doing odd jobs. But whatever his failings, Durant was remembered with affection and admiration by almost everyone who had known him.
*3 Possibly spurred by Durant’s success in promoting Buick through racing, Ford had finally gotten back into the sport. In 1909, he entered two Model Ts in a New York–to–Seattle race, staged to commemorate the Alaska-Yukon-Pacific Exposition. Thirty-five entrants were expected, but only six left the starting line on June 1 at 3:00 P.M.—directly under the window of the courtroom in which the infringement trial was taking place. The other four entries were the sort of large, heavy machines that had won the other long-distance races, but twenty-three days after the start, it was a Model T that arrived first at the finish line. Although the Ford car was eventually disqualified because the drivers had changed an axle in Idaho, the publicity was priceless, establishing that the light, small Model T could withstand the rigors of a drive across the United States.
*4 Pioneer patents technically remain part of patent law. While some legal scholars contend that some form of pioneer status has been granted in contemporary patent litigation, inventions on a par with the automobile or the airplane have long since been denied the sort of controlling breadth that Selden sought.
*5 Columbia Motor Car was the successor to Electric Vehicle, which had been dissolved.
On December 1, 1913, at the Highland Park plant, the Ford Motor Company initiated production on a fully functional, eighty-four-station assembly line, and the era of mass production had officially begun. Henry Ford was—and still is—almost universally credited as the inventor of the system that would transform both manufacturing and consumption, and he would later be asked to write the Encyclopedia Britannica article on the subject. (Harking back to his early days, Ford subcontracted the task out to Samuel Crowther.)*1 In the next model year, 1914, Model T production topped 300,000, almost double the previous year’s and greater than all other American automobile manufacturers combined. By 1921, the Ford Motor Company, by then in an even larger plant in River Rouge, would produce almost 1.25 million automobiles.
Just weeks after initiating mass production, the Ford Motor Company instituted a policy of paying each of its workers $5 per day for eight hours of work. The wage was higher and the hours fewer than for almost any other factory in the United States; so generous, in fact, that many Ford workers were able to purchase Ford automobiles, which Ford later claimed had been his intention.
Like the assembly line, the $5 day has become synonymous with Henry Ford, but the origin of the idea remains as indistinct as most of the Ford legacy. Ford always maintained that he thought of it, and Sorenson backed him up, recalling a meeting at which Ford, seemingly out of nowhere, announced his intentions:
The plan was worked out in his office one Sunday morning, January 4, 1914. Unt
il this writing, all existing accounts of what went on that morning are, at the nearest, second or third hand….It has been said that the idea originated with Mr. Couzens, but he knew nothing about it until Mr. Ford told him. Myth also surrounds the participants at that Sunday morning meeting. Couzens, Wills, and Hawkins were said to have been there. They were not. The only ones present were Mr. Ford, Ed Martin, Lee, and I. The events of that day are still very clear in my mind, which is understandable, for this was a milestone in industrial and economic history. I am the only man alive who took part in that meeting; and since none of the others ever set down their accounts, mine is the only first-hand recollection.1
Sorenson further claimed that Ford decided that Couzens should announce the plan and that Couzens agreed because it would help him in his plan to be elected governor of Michigan.
But Couzens insisted that there had been a good deal of discussion before Ford’s ad hoc announcement and that the spur for the $5 day had been layoffs at the Ford plant in the winter of 1913. “I sat in my office on the second floor of the Ford building and every time I looked out the window, I saw a sea of faces looking up. There were men shivering in the cold with their coat collars turned up.” His first notion was to suggest a pension plan, which he discussed in December with the muckraker Ida Tarbell, but he decided that a more immediate program was needed. He then thought, as he recalled, “Why shouldn’t the Ford Motor Company take a decided lead in paying the highest wages to its workers, thus enabling them to enjoy better living conditions?” He claimed to have talked it over with Ford as Christmas 1913 approached, but Ford refused. After a good deal of wrangling, however, Ford agreed to have the idea introduced at a directors’ meeting just after the New Year. Couzens lobbied for support among the other directors and found that Horace Rackham was also in favor of the wage increase. A meeting was held on January 5, 1914, and the company minutes bear out that Horace Rackham made the motion, supported by Couzens, and that “after considerable discussion,” with no other directors present, Ford went along.2
To whichever of the chicken-or-egg interpretations one subscribes, the $5 day gave Ford perhaps his greatest boost of positive publicity and helped establish him as a champion of the workingman at the same time as he was building the workingman’s car. Less public was that, no matter how much they were paid, workers on the Ford assembly line often burned out quickly from the pressure of endless repetition of a single task and were replaced like so many oxen in a team.*2 This clash of wage and workplace would not come to a head for decades, until the rise of the union movement, when Ford’s image among workers would become quite different.
At the same time that Model T sales were soaring, Ford was shedding longtime associates. He never took the initiative in breaking off a relationship—he didn’t have to. He had become so autocratic, so difficult to work with, so unwilling to share credit, that those most responsible for his success left on their own.
The first to go were John and Horace Dodge. In July 1913, the Dodges, despite having eight years remaining on their long-term contract, gave Ford one-year notice of their intention to end the affiliation. John Dodge resigned as a director, but both brothers retained their Ford stock. By late 1914, the Dodges were producing their own automobiles, in which, unlike Ford, “they did not intensify work and drive their employees to their physical and mental limits.”3 Ford was loath to finance his competitors and so tried to squeeze them by suspending special dividends, which had been as much as $10 million per year. He announced that he intended to use the money for an additional, enormous expansion of the company at a new plant at River Rouge, which would include a smelting facility to fabricate his own steel. Ford Motor was sitting on more than $60 million in cash at the time, so on November 2, 1916, the day after the Dodges had attended Edsel Ford’s wedding, they served papers on Henry “for a decree requiring Ford Motor Company to distribute to stockholders at least 75% of the accumulated cash surplus, and to distribute in the future all of its earnings ‘except such as may be reasonably required for emergency purposes.’ ”4 The Dodges also wanted Ford enjoined from building the smelting plant. The Dodges initially won on both points, although Ford won a reversal of the smelting plant ruling on appeal. In 1918, Ford was ordered to distribute approximately $19 million in dividends, the court ruling that “a business corporation is organized and carried on primarily for the profit of the stockholders.” The Dodges, who held 10 percent of the stock, received a like share of the distribution. Ford, ironically, was forced to pay 60 percent of that sum to himself, more than sufficient to finance River Rouge.
Dodge immediately vaulted into the top five bestselling automobiles and the Dodges continued to produce them until 1920, when both men died of Spanish flu, Horace’s illness compounded by cirrhosis. Five years later, with the company continuing to maintain a prominent position among the also-rans behind Ford, their widows sold out to an investment company for almost $150 million.
In 1915, it was James Couzens’s turn. He and Ford had come to openly despise each other, and with Ford insisting on making the decisions, Couzens’s role had become largely one of caretaker. On October 12, saying he had “had enough of [Ford’s] goddamn persecution,”5 Couzens quit. After an angry meeting, Couzens wrote out in longhand a letter of resignation, which Ford returned, dropping it back on Couzens’s desk. According to a co-worker, at that point Couzens stood up, “put on his hat, and walked out of the office. He went downtown and notified a newspaper friend.” To Ford’s intense irritation, Couzens’s resignation, like the Dodges’, did not affect Couzens’s stock holdings. Even more annoying was that Couzens did not resign his seat on the board of directors.
Couzens never became Michigan’s governor, but in 1919 he was elected mayor of Detroit. As mayor, ironically, he was noted for installing a system of mass transit—street railways—to ease Detroit’s growing traffic problem. He left the mayoralty in 1922 for an appointment to complete a term in the United States Senate. He then won two terms in his own right and served until his death in October 1936. After he left Ford, Couzens became noted for his philanthropic work, giving millions of dollars to various efforts to help the disadvantaged, particularly children.
By 1919, with Couzens and the Dodges gone, John Gray’s heirs passive stockholders, and Horace Rackham and John Anderson no longer involved in running the company, Ford decided to buy them all out. He wanted to be the sole owner of his company, and after spending more than $350 million, he was. Anderson, who had cajoled $5,000 from his father to buy Ford stock, sold his shares to Ford for $12.5 million, as did his fellow Malcomson lawyer Horace Rackham. The Dodge brothers parlayed their $10,000 contribution in materials, labor, and some cash into $25 million, although neither would live to enjoy their riches. John Gray’s heirs were paid $26.25 million for their shares. The biggest winner, of course, was James Couzens, who received $29,308,857.90. His sister Rosetta, who had invested $100, was paid $262,036.67.
Also in 1919, Ford’s penultimate link to his original design team was cut when Harold Wills, tired of being increasingly marginalized, resigned as well.6 Ford gave him a severance package of more than $1 million, a tiny fraction of what Wills’s participation had been worth to the Ford brand. Wills also began his own automobile company, Wills Sainte Clair, which remained in business only six years. Although his product was well built, sturdy, and reliable, Wills, who had been so brilliant in design, showed a total lack of competence in production.
Only the ultraloyal Spider Huff remained. Huff, who was made head of the electrical laboratory, was with Ford until his death in 1933.
The Model T remained in production until 1927 and was one of the most successful consumer products in history. It eventually became available in a variety of styles and was adapted to everything from trucks to delivery wagons to ambulances, with total production of 15 million vehicles from 1909 until its demise.
The Model T did not simply alter the manner in which cars were engineered and manufactured. By introd
ucing an automobile whose success was dependent on volume, Ford modernized marketing, sales, production, and worker compensation. It is quite possible that never before in human history did a single product so transform the business model for industry. And changes in the business model bred changes in the society that adopted it.
As a result, Henry Ford had enough money to buy anything he wanted, finance anything he wanted, and fund any idea he wanted, brilliant or crackpot. He did all of that and more. He began to see himself as the man who could solve the world’s problems and tell other people how to live.
In 1915, for example, Ford, a self-styled pacifist—sentiments he would not extend to union members in the years to come—decided that he could end the war in Europe by Christmas. He financed a “Peace Ship,” in which he sailed across the Atlantic with a ragtag group of peace activists—more-prominent Americans such as Thomas Edison, William Jennings Bryan, and Jane Addams declined to go—certain that his very presence in such a venture would create the moral push to get the warring parties to the negotiating table. The venture failed miserably, with squabbling among the participants, and the press dubbed the ocean liner on which they sailed the “Ship of Fools.”
Ford returned home ill and dispirited, but by 1918 he had recovered enough to run for the Senate. His opponent, Truman Newberry, was also rich—although not in Ford’s league—and had made his money largely as a financier. Ford, who disdained public speaking, proved a poor politician, while Newberry was a quite effective one. He harped on the deferment Ford had obtained for Edsel during World War I, accusing Ford of protecting his son while others did the dying. Although his profligate spending and dubious oversight of contributions would later cause him to be indicted, Newberry won by 8,000 votes out of nearly 450,000 cast. In 1921, Newberry was convicted of campaign fraud, the prosecution’s case buttressed by dirt raked up by detectives Ford had hired, but the conviction was later overturned 5–4 by the Supreme Court. Newberry resigned his seat anyway and to Ford’s even greater irritation, was replaced by another nemesis, James Couzens.
Drive!: Henry Ford, George Selden, and the Race to Invent the Auto Age Page 34
