Enterprise of Henry Ford: the auto magnate demonstrated the power of free enterprise as a force for good. He not only made himself rich but put America on wheels and raised the lot of workers. (History--American Ingenuity).

This June, the Ford Motor Company commemorates the 100th anniversary of its founding.--Editor

In 1903 there was little indication that the first sales of a buggy-like Ford two-seater would lead to anything significant. The capital raised by founder Henry Ford, then age 40, amounted to a modest $28,000 in cash. But in 23 years that had been turned into more than $900 million in profits. An early stockholder, the sister of one of Ford's business geniuses, invested $100 for one share of the new venture. "That one hundred dollars was eventually to bring her $355,000," biographer William Adams Simonds noted in his book Henry Ford.

While 1,500 American auto manufacturers tried and failed, Mr. Ford proved he had a better idea.

The great industrialist (1863-1947) also had ideas about peace, prohibition, publishing, and politics that kept him at the center of national attention. He loved the publicity, loved being a public man, though he was anything but a competent speaker. Indeed, Ford was not an easy man to categorize. In My Forty Years With Ford, Charles E. Sorensen, a longtime associate who became Mr. Ford's head of production, described the founder of the Ford Motor Company as follows:

He was unorthodox in thought but puritanical in personal conduct.

He had a restless mind but was capable of prolonged, concentrated work.

He hated indolence but had to be confronted by a challenging problem before his interest was aroused.

He was contemptuous of moneymaking, of money-makers and profit seekers, yet he made more money and greater profits than those he despised.

He defied accepted economic principles, yet he is the foremost exemplar of American free enterprise.

He abhorred ostentation and display, yet he reveled in the spotlight of publicity.

He was ruthless in getting his own way, yet he had a deep sense of public responsibility.

He demanded efficient production, yet made place in his plant for the physically handicapped, reformed criminals, and human misfits in the American industrial system.

He couldn't read a blueprint, yet had greater mechanical ability than those who could.

He would have gone nowhere without his associates, we did the work while he took the bows, yet none of us would have gone far without him.

He has been described as complex, contradictory, a dreamer, a grownup boy, an intuitive genius, a dictator, yet essentially he was a very simple man.

Capitalist Cornucopia 

That was the "simple man" who determined to produce a "car for the great multitude" and gave America the Model T--the most famous and beloved automobile that was ever built. Within a few years of its introduction in 1908, the Ford Company was producing half of the cars in the world. By the early '20s, Ford made a full 60 percent of the automobiles manufactured in the United States. More than 15 million Model Ts, the "universal car," were produced. So enthralled did the American public become with Henry Ford's cars that when production of the T was halted in 1927, in order to retool for the Model A, more than 400,000 buyers ordered the new model, sight unseen. When that car was introduced in December of 1927, ten percent of the U.S. population stormed showrooms on the first day to get a look at it.

All of this made Henry Ford quite wealthy of course. But Ford "the dreamer" ploughed his profits back into the company to assure maximum growth. This would, he said, "build more and more factories, to give as many people as I can a chance to be prosperous."

Surely the most dramatic proof that he meant what he said was when Ford doubled the pay of his employees, reducing their work hours simultaneously, all without raising the already inexpensive price of his superior product. This introduced the five-dollar day. While such a figure seems insignificant in the greatly inflated money of today, this announcement of a doubling of the minimum wage in Ford plants for every laborer, reaching right down to the sweepers, shook the whole business community in 1914. The Ford publicists predicted it would "inaugurate the greatest revolution in the matter of rewards for its workers ever known to the industrial world." That was hardly hyperbole.

This revolutionary increase was to come from profit-sharing of the next year's income, which Ford figured at a minimum of $10 million. Even the buyer of Ford cars would share in the benefits: a $50 rebate would go to each purchaser if enough cars were sold. * And to keep up with expected demand, production hours were to be increased by replacing two nine-hour shifts with three shifts of eight hours each.

Henry Ford, who was not even listed in Who's Who of 1913, suddenly became known worldwide. Not everyone was an admirer. The Wall Street Journal, for example, declared on January 5, 1914: "If the newspapers of the day are correctly reporting the latest invention and advertisement of Henry Ford, he has in his social endeavor committed economic blunders if not crimes. They may return to plague him and the industry he represents, as well as organized society...." If Ford had nothing but contempt for Wall Street, the feeling was mutual.

Predictions of Ford bankruptcy were rampant, but the great industrialist said he would rather keep the families of his 15,000 workers happy than please those of 30 millionaires. Moreover, Ford contended: "This is neither charity nor wages, but profit sharing and efficiency engineering." And, as it turned out, the actual distribution of profits was even higher than expected, amounting to $12 million.

Even as far back as 1948 the revolutionary nature of that 1914 five-dollar day needed to be interpreted in terms of the cost of living and the decline in the value of the dollar. As William C. Richards noted in his book The Last Billionaire in 1948, "A generation accustomed to spiraling prices may not grasp why a good 95 percent of the world reacted to Ford's minimum-wage announcement as if a new holy child had been born, but a worker in manufacturing at the time got 22 cents an hour and weekly earnings averaged $11 though the Ford rate was slightly higher. Ford's program, like his manufacturing methods, was to change the face of the earth."

Here was a businessman, a capitalist, who had become an international hero. And for good reason. Ford had brought mobility and productivity to both the urban worker and the farmer. And not with his cars and trucks alone. He called his tractor the Fordson, observing: "The planning of the tractor really antedated that of the motor car." Ever since he had been a boy on the farm it had been a Ford goal "to lift farm drudgery off flesh and blood and lay it on steel and motors." When he added to this achievement a labor policy so generous that it literally took firehoses to control the mobs of men flooding into Detroit to work for Ford, his name was one of the most respected in America. "The people admire Ford from a sense of gratitude," said Archibald Henderson in his Contemporary Immortals in 1930.

Allan Nevins and Frank Ernest Hill summarize in Ford, their impressive trilogy on the Ford Company: "To have fought so stubbornly to get an automobile factory started; to have toiled still more stubbornly to devote that factory to just one durable, versatile, and very cheap car [the Model T]; to have assembled a staff which pioneered so creatively in mass production; to have welcomed competition, battled in the long Selden [patent] suit for full freedom to produce, scorned protective tariffs, fought clear of Wall Street, and remained a man of the people--all of this was impressive enough. But, while doubling the prevalent wage rate, to proclaim that the roughest day laborer could be made worth $5 a day was even more appealing; it touched men's imaginations."

Ford became, in essence, the country's top advocate of both labor and consumers. Profits, he found, could be made by setting low prices for high volume--and the highly productive auto worker could be well paid so he too could afford to buy a Tin Lizzy. At the same time, reports John Chamberlain in The Roots of Capitalism, the rise in wages at Ford attracted more efficient workers and improved the productivity of those already on the job. It directly increased "the output of given machinery by some twenty percent. The higher wage, by virtue of its 'leverage' on worker attitude, thus paid for itself."

The impact of this was felt worldwide. In France the scholarly Father R.L. Bruckberger exulted that when "Henry Ford put America on wheels, he rescued the farmer from his isolation and brought him within reach of railroads to carry his produce to New York or San Francisco and carry back machines and city goods.... Ford created an unlimited national market." How I wish, said Bruckberger, "I could find words to impress the reader with the importance of that decision of the five-dollar day! It means infinitely more than a mere raise in wages." The timing of the decision "cut away the ground from under Marxist revolution."

Advocate for Peace

By 1915 the Ford Motor Company was selling four times as many cars as its closest competitor, but Henry Ford had another pressing thought on his mind: the Great War in Europe. Indeed, Mr. Ford was so opposed to American involvement in the war that he declared he would rather bum down his factory than supply war materiel. In the face of constant war propaganda this sentiment was not universally held, even within company management. In fact, treasurer and vice president James Couzens resigned shortly after Henry Ford opined: "To no better purpose can the pages of the 'Ford Times' be given than to voice the mission of peace."

It was this sentiment which produced the expedition of the famous Peace Ship, an enterprise in which Ford led a group hoping to mediate a solution to the European war and keep American men off of the battlefields. Ford obtained an appointment with President Woodrow Wilson, through the offices of Colonel Edward House, to try to obtain the president's support for the mission of Oscar II, a Scandinavian-American liner. He "urged Wilson to appoint a neutral commission, offering to finance it," even offering his steamship to the president. But Woodrow Wilson, who was committed to U.S. involvement in the war, declined. "Ford was only regretful that the President had missed a great opportunity. 'He's a small man,' he said." (Nevins and Hill, Ford.)

The mission was hailed by such prominent Americans as Ford's hero and friend Thomas Edison and resigned Secretary of State William Jennings Bryan, but the criticism from a press dominated by the Eastern bankers was brutal. In Road to War, Walter Millis commented that "the Peace Ship was launched, to the undying shame of American journalism, upon one vast wave of ridicule."

Despite Henry Ford's expenditure of some $465,000, the mission was a failure. But the industrialist never publicly expressed regret. Typically he said: "I wanted to see peace. I at least tried to bring it about. Most men did not even try."

As U.S. military involvement became a reality, however, Mr. Ford contributed mightily to the war effort. "I am a pacifist," he explained, "but perhaps militarism can be crushed only by militarism. In that case I am in on it to the finish." Political writers were years later to criticize Ford for making a profit during the war, when he alone had made the unique promise to return all such gain. When his country needed him, Ford was willing and able.

The war record of the Ford Company in totality," wrote historians Nevins and Hill, "was impressive. As was to have been expected, the Ford factories had supplied a large number of cars, ambulances, and trucks to the American and Allied forces--about 39,000 all told. It had dispatched caissons, helmets, submarine detectors, tubes for use by Allied submarines, shells, armor plate, and helped to develop gas masks. It had produced 3,940 Liberty motors and 415,377 cylinders for such motors. It had built 60 Eagle Boats and developed two types of tanks which it was ready on Armistice Day to produce in quantity.... Ford tractors helped to meet the food needs of both Britain and America, while Ford cars, trucks, and ambulances won wide applause for their behavior in battle zones."

Trials and Tribulations

As peace came, Henry Ford once more opted for expansion, only to be sued by two major stockholders--the Dodge brothers--who preferred that the war profits be distributed as dividends to fund their own plant in competition with Ford. Mr. Ford found that his ownership of 58.5 percent of the company was not enough to assure his expansion policy as the case was decided in favor of the Dodges. He resigned as president of Ford Motor Company in 1918, with his son Edsel named to replace him, though he remained on the board of directors. Soon news came that Mr. Ford would start another company. As the Los Angeles Examiner reported on March 5, 1919: "His idea is to make a better car than he now turns out and to market it at a lower price, somewhere between $250.00 and $350.00 and to do it through another company than the Ford Motor Company."

Rumors and speculation abounded, but what was happening was that Ford agents were buying out Henry's other stockholders, who were of course now worried about the potential competition of a new Ford company. The outcome was that all Ford Motor Company activities fell into the sole possession of Henry, his wife, and his son. No one man had ever personally controlled such an empire--not even John D. Rockefeller or J.P. Morgan. The man who had constructed the first Ford engine on a kitchen table and in 1896 built his first auto --comprised of a frame on bicycle wheels --owned factories in 1919 worth approximately half a billion dollars.

The name of Henry Ford was by now mentioned frequently in political circles as a potential candidate for president. In 1918 Ford had been narrowly defeated for the U.S. Senate in a race against former Secretary of the Navy Truman Newberry. Ford had been nominated in both Republican and Democrat primaries, finishing second to Newberry in the GOP race, and topping the vote on the Democratic side. The showing was more remarkable in that Ford ran in the November election as a Democrat in a strong Republican state, and with virtually no campaigning.

Though he lost the suit to the Dodge brothers, Henry Ford did win a judgment of six cents in a libel suit against the jingoistic Chicago Tribune which erroneously reported that Ford would fire workers mobilized and sent to the Mexican border. The trial embarrassed him when as a witness he seemed to prove the sincerity of his opinion that history is "bunk" by revealing his ignorance of some basic facts about early America. At about this time Ford also became publisher of the Dearborn Independent, though virtually all the material attributed to him was ghostwritten. The paper printed a variety of anti-Jewish articles before Ford issued a formal apology and promised he would publish no more such diatribes. He had wondered why his longtime friend and neighbor, Rabbi Franklin, had been cool of late.

Though he had a penchant for putting his foot in his mouth, sometimes roaring ahead on public issues without thinking, he was a businessman and not a politician. He certainly knew what to do when hard times hit during 1920-1921. Despite inflation, Ford ordered a price cut for his automobiles, but demand was still insufficient and a number of Ford plants had to be shut down. Rumor had it that a huge loan was being negotiated. But Ford, who thought New York bankers were nothing short of vultures, was determined not to fall into their hands. Indeed, in his book My Life and Work, Ford wrote: "My idea was then and still is that if a man did his work well, the price he would get for that work, the profits and all financial matters, would take care for themselves and that a business ought to start small and build itself up out of its earnings.... I determined absolutely that never would I join a company in which finance came before the work or in which bankers or financiers had a part."

Ford's view of bankers as predators seemed to be borne out when, with the car market depressed, one after another lined up to offer their "help" in return for his surrender of independence. The game was clear enough to Mr. Ford. One representative of a Morgan-controlled bank in New York came forward with a plan to "save" Ford that involved dictating who would be company treasurer. Charles Sorensen says in My Forty Years With Ford that the banker was promptly told to leave and the next day Edsel was instructed to become treasurer as well as president.

Ford saved his company by turning to his dealers, to whom he now shipped his cars collect in spite of the slowness of the market. Some had themselves to go to their bankers, but eventually demand grew, as did sales, and the plants were reopened. The reopening itself "gave a lift to public confidence," explained Nevins and Hill. "So did the fact that he did not borrow. In general, the public saw only that Ford had outwitted the bankers, and applauded him." And the credit of the dealers was sufficient, though there were some grumbles. They had made such a good thing out of the Ford franchise for 12 years, observed John Chamberlain in The Enterprising Americans, "that virtually none of them cared to risk losing favor with the Dearborn autocrat. And what they lost in 192021 they soon recovered in 1922-24, when the Model T sold better than ever."

Automation and Innovation

The key to the concept behind automation was "flow," and this flow was desired on an unprecedented scale for the huge new complex on the River Rouge. It meant an uninterrupted supply of raw materials and transportation. Accordingly, the Ford empire was to expand vertically to coal mines, timber, glass manufacture, rubber plantations, aircraft factories that built the Ford trimotor, and even railroads. Henry Ford acquired the troubled Detroit, Toledo & Ironton line and rebuilt it, upped safety standards, and reduced the labor force while increasing the wage of those who remained. So satisfied were the Ford-era employees that when a nationwide strike hit, D.T.&I. was the only line in the U.S. on which the workers refused to participate. But, as Nevins and Hill recounted, Henry Ford "found the regulations of the I.C.C. and compliance with Federal law annoying, and in 1928 began negotiations with the Pennroad Corporation (associated with the Pennsylvania), finally selling the D.T.&I. to that company for $36,000,0 00; more than seven times what he had originally paid for it."

Throughout all of this, it was a Ford principle that the workplace should be as pleasant as possible. As a result of this, the open hearth was revolutionized by Henry Ford and transformed from one of the dirtiest work areas to one that was spotless. Visiting steel men razzed Ford, then emulated him. "It cleaned up every steel plant in the country, not only open hearths but rolling mills as well."

Because such innovations kept Ford in the news, he was forever being boomed for president. Ford, said many, is the man to run the country. The death of President Warren Harding, and the subsequent sympathetic support for his successor Calvin Coolidge, cooled the fever. In any case, Henry Ford supported Coolidge, who said the business of America was business.

But the Ford mystique ran deep. "The Nebraska Senate," noted Nevins and Hill, invited Ford to visit the State to develop its waterpower; a body of Michigan fruit-growers petitioned the President to buy all the American railroads and hand them over to Ford for really efficient operation; the New York State Waterways Association called on him to persuade Congress to improve the Hudson River; the price of stock in important corporations rose or fell with reports that he would or would not become a director or investor." In Congress, however, the Senate voted to kill Henry Ford's plan privately to develop water power on the Tennessee River--a move Ford thought due in part to the animosity toward him by the politically powerful Eastern bankers. Later, of course, the same body would approve of the socialist Tennessee Valley Authority.

Overseas, Ford Motor Company mushroomed in more than a score of countries--even in Bolshevik Russia, where an estimated 85 percent of the trucks and tractors were Ford built. Henry was apparently fooled by the Reds' peace propaganda even though dealings with Amtorg lost the company $578,000 between 1929 and 1935.

Henry Ford was never so shortsighted in the country he knew. Roger Burlingame, the historian of technology, commented in his book Henry Ford: "It is hard to deny that Henry Ford was ridden by two obsessions: mechanical perfection and the 'common man.'" Naturally the New York Times called him "an industrial fascist--the Mussolini of Detroit." The head of his so-called Sociological Department reported that Ford "wanted it known his plan is for every family working for him a comfortable home, a bath tub in it, and a yard with a little garden, and ultimately, he wanted to see every employee of his owning an automobile." But not necessarily a Ford, he said. That would be up to the worker.

Mr. Ford was concerned for his employees, but he didn't believe in the philosophy of something for nothing. "I do not believe in charity," he said, "but I do believe in the regenerating power of work in men's lives, when the work they do is given a just reward. I believe that the only charity worthwhile is the kind that helps a man to help himself. And I believe that I can do the world no greater service than to create more work for more men at larger pay."

His immigrant workers were taught American ways by Ford and instructed at his English School; destitute young men continually knocked at the door of the Henry Ford Trade School, which provided them with such skills that graduates were much in demand. An American who wanted to work knew he could find a job with Mr. Ford. Nevins and Hill noted: "The company continued to treat Negroes with more liberality than any other large corporation, and in 1923 employed about five thousand. It continued to hold an honorable primacy in employing the lame, blind, ailing, and other physically handicapped persons."

Dreams to Reality

To reflect on all of this is certainly sad and ironic considering the funding by the Ford Foundation of useless and revolutionary causes after Henry's death. Especially since the great industrialist had declared emphatically: "Endowment is an opiate of imagination, a drug to initiative. One of the greatest curses of the country today is the practice of endowing this and endowing that.... No, inertia, smug satisfaction, always follow endowments."

Here was a man who loved America and personally proved the merit of its economic system. Here was a patriotic man who created the historic Michigan Greenfield Village and purchased and renovated the magnificent Wayside Inn in Massachusetts, where Long-fellow wrote his famous poem about Paul Revere. Had he lived to see what the Ford Foundation has done to subvert his patriotic and economic principles, it would have killed him or he it.

And Ford was a fighter. He went nose to nose with F.D.R.'s New Deal and the unconstitutional National Industrial Recovery Act (NRA), which he defied in 1933, the year after introducing the famous Ford V-S. In fact, said Henry Ford, "I am not going to sign away my constitutional rights in recovery' s name."

Failure to kowtow, said bureaucratic Washington, could lead to seizure of Ford plants by NRA Administrator General Hugh Johnson--despite the fact that Ford was paying workers more than the government code required. Henry Ford's "ability to sense signs of the times and to counteract forces that showed danger signs was almost uncanny," wrote top associate Charles Sorensen. "In the early days of the New Deal he was threatened with all sorts of government reprisal for defying the National Industrial Recovery Act, that the government would take over his company if he didn't sign up and display the Blue Eagle. He replied, 'Go ahead. The government will then be in the automobile business. Let's see if they can manage it better than I can.'"

Sorensen noted: "That stopped General 'Iron Pants' Johnson and President Roosevelt."

Humorist Will Rogers commented: "You can take the rouge from female lips, the cigarettes from the raised hands, the hot dogs from the tourist's greasy paw, but when you start jerking the Fords out from under the traveling public you are monkeying with the very fundamentals of American life."

Death came to the great American capitalist in 1947. Henry Ford left us this message: "Man can do whatever he can imagine...."

* This was not a shabby percentage as the price of the Model T fell as low as $260.

RELATED ARTICLE: Legendary Friends

Henry Ford (left) had once been chief engineer at the Edison Illuminating Company of Detroit. And he and Thomas Edison (center) became friends, neighbors, and traveling companions. Frequently joining these two were tire magnate Harvey Firestone (right) and the famous, whitebearded naturalist John Burroughs (not shown). A no doubt apocryphal story is told of how the four were forced to stop at a small garage for repairs. Was it the piston? asked the mechanic. "No," said one, "I'm Henry Ford, and it isn't due to motor trouble." Perhaps the tires? "No," said another, "I'm Harvey Firestone, and the tires are all right." Well, then; could it be the wiring? "No," said a third voice, "I'm Thomas Edison, and the electric system is working fine." Sure, said the now disbelieving garageman. "Ford! Firestone! Edison! And I suppose you'll tell me that's Santa Claus riding with you!"

This article originally appeared under the title "Henry Ford: The Capitalist as Benefactor" in the April 1978 issue of American Opinion, a predecessor of THE NEW AMERICAN.