11. CAPITALISM ... AND INDUSTRIAL GROWTH

MORE MATERIAL PROGRESS GOING INTO THE 20th CENTURY

Ford grew up on a farm in Michigan, but disliked farm life and instead in 1879 at age sixteen took up the work as a machinist apprentice in Detroit.  But three years later he returned to his father's farm and there familiarized himself with the Westinghouse portable steam engine, leading him to be hired by Westinghouse to service their machinery.  On his off-time he studied bookkeeping at a business college, giving him knowledge of the world of business and finance.  In 1891 he went to work for the Edison Illuminating Company, becoming a chief engineer in 1893.  At the same time, he began his experimental work on gasoline engines, which in turn led him to produce in 1896 a motor-driven four-wheeled cycle.  Encouraged by Edison to develop his work further, he finished a second vehicle in 1898, and with some outside financial backing the next year he left the Edison company and founded the Detroit Automobile Company, which however did not succeed and which he had to shut down in 1901.

Not one to be discouraged easily, he built yet another model soon after and which he raced successfully, leading his financial backers to support him in forming in 1901 yet another manufacturing company, the Henry Ford Company.  But he left the company the next year (which became the Cadillac Automobile Company) to build a new eighty horsepower automobile, which Barney Oldfield raced famously to victory that same year.  He now partnered up with a Detroit-area coal dealer, and he proceeded to work on developing an inexpensive model which would market well within the rapidly growing world of automobile ownership.  But although financing was still tight, he secured some additional backers, and in 1903 formed the Ford Motor Company.  He then had Oldfield drive his car around the country, attracting wide interest in the Ford model.

Then in 1908 he introduced the Model T Ford, inexpensive and easy to drive and repair. It was $825 in its 1908 offering, with Ford being able to drop the price every year after that as he streamlined production and established an efficient system of dealerships.  The efficiency jumped even more in 1913 when he introduced the moving assembly line in his factory.  Also his introduction in 1914 of the unheard-of $5 per day wage rate for his workers had the effect of stabilizing and motivating his work force to double their productivity.  That same year he sold over 250,000 of his cars to the public.  And by 1918, half the cars on the road were Model Ts.

In 1918 he made a move to buy up the stocks held by other investors, ultimately succeeding in making the Ford family the sole owners of his company.

Also during these years he established manufacturing plants abroad in Europe and by 1929 he had plants operating on all six continents.  He believed firmly that bringing the benefits of modern technology to the world would promote peace in the best way possible. Indeed, Ford was an economic idealist, something becoming more prevalent in those days.  After the unprecedented disaster of the Great War, the hunger for international peace was immense, and business leaders found it easy to believe that prosperity extended to the people of the world would make the world a happier place. Certainly this was the case for Ford.

During the mid-1920s the Model T found itself falling behind in technology as other manufacturers added new features to their models, and Ford was forced (pressured in part by his son Edsel) to think past the Model T. And thus the Model A was born in 1927, reaching 4 million in sales over the next four years.  From that time on, Ford made it a policy to introduce new models annually (a policy which General Motors had just previously put into practice).

Much of the credit of his grand success as a businessman goes to the fact that he was as mindful of his social responsibilities as he was of his engineering, financing and production.  Not only did he offer high wages to his workers (who themselves could now afford to buy their own Fords), he also introduced profit-sharing to his (qualified) workers and in 1926 the five-day work week.  But at first he insisted that his workers live responsibly and offered his profit-sharing to only those who could demonstrate a respectable life-style (he had inspectors constantly looking into his workers activities).  Eventually he backed away from his paternalism and simply made his policies a general practice to all his workers, regardless of their private lives.

He was at first adamantly opposed to labor unions and did what he could to keep the United Auto Workers (UAW) union out of his operations.  He believed that the union bosses were too easily intoxicated by their own power and merely a disruptive influence on business.  He hoped that his fair treatment of his workers would suffice to keep the unions away.  For a while he was successful, though not without incidents of violence as the UAW sought eagerly to unionize the Ford Motor Company.  Finally facing the possibilities of a sit-down strike in 1941, he yielded and signed his first union contract.  Perhaps surprised to discover that this did not bring down his business, he in fact subsequently became one of the most generous with respect to workers' contracts.

He had also in the meantime ventured into the new field of commercial flight, putting into production in 1926 his own commercial plane able to fly (uncomfortably) 12 passengers.  Almost 200 of the planes were sold, before he closed the business in 1933 due to the Great Depression.  Then with America's entrance into World War Two in 1941 he turned to the business of producing the B-24 bomber at his Willow Run plant, at the height of production turning out a B-24 every 58 minutes, for a total of 9,000 planes or half the total built in America during the war.

But by the time the war was over he was losing his mental powers, his son Edsel had died in 1943 and the company was facing bankruptcy, when his grandson, Henry Ford II, took over the business and brought it back to life.

In 1947 Ford died at age 83.