FIGHTING THE SELDON PATENT
By sheer force of an idea, backed only by hard work, Henry Ford had
established a new principle in mechanics; he had created new methods in
the manufacturing world--methods substantially those which prevail in
manufacturing to-day; now he entered the legal field. His fight on the
Seldon patent--a fight that lasted nearly ten years--was a sensation not
only in the automobile world, but among lawyers everywhere.
The intricacies of the case baffled the jurists before whom it was
tried. Time and again decisions adverse to Ford were handed down. Each
time Ford came back again, more determined than before, carried the
contest to a higher court and fought the battle over again.
On one side the Association of Licensed Automobile Manufacturers was
struggling to save patent rights for which they had paid vast sums of
money, to maintain high prices for automobiles, and to protect their
combination of manufacturing interests. On the other, Ford was fighting
to release the industry from paying tribute to a patent which he
believed unsound, to smash the combination of manufacturers, and to keep
down his own factory costs so that he could make a still cheaper car.
With the first adverse decision, the A. L. A. M. carried the fight into
the newspapers. Most of us can recall the days when from coast to coast
the newspapers of America blossomed with page advertisements warning
people against buying Ford cars, asserting that every owner of a Ford
car was liable to prosecution for damages under the Seldon patent
rights.
Those were chaotic years in the industry. The hysteria which followed
the huge profit-making of the first companies, checked only temporarily
by the panic of 1907-8, mounted again in a rising wave of excitement.
Dozens of companies sprang up, sold stock, assembled a few cars, and
went down in ruin. Buyers of their cars were left stranded with
automobiles for which they could not get new parts.
It was asserted that the Ford Motor Company, unable to pay the enormous
sums accruing if the Seldon patent was upheld, would be one of the
companies to fail. Buyers were urged to play safe by purchasing a
recognized car--a car made by the licensed manufacturers.
Ford, already involved in a business fight against the association and
its millions, thus found himself in danger of losing the confidence of
the public.
The story of those years is one which cannot be adequately told. Ford
was working harder than he had ever done while he was building his first
car in the old shed. He was one of the first men at the factory every
morning, and long after Detroit was asleep he was still hard at work,
conferring with lawyers, discussing with Couzens the latest disaster
that threatened, struggling with business problems, meeting emergencies
in the selling field, and always planning to better the factory
management and to lower the price and increase the efficiency of the
car.
The car sold. Ford had built it for common men, for the vast body of
America's middle-class people, and it was cheap enough to be within
their reach. Ford knew that if he could keep their confidence he could
win in the end.
He met the attack of the A. L. A. M. by printing huge advertisements
guaranteeing purchasers of his cars from prosecution under the Seldon
patents, and backed his guarantee by the bond of a New York security
company. Then he appealed the patent case and kept on fighting.
In 1908 the farmer boy who had started out twenty years before with
nothing but his bare hands and an idea found himself at the head of one
of America's largest business organizations. That year his factory made
and sold 6,398 cars.
Every machine sold increased his liabilities in case he lost the patent
fight, but the business was now on a firm foundation. Agencies had been
established in all parts of the world, orders came pouring in. Profits
were rolling up. Ford found his net earnings increasing faster than he
could possibly put them back into the business.
At the end of that year he and Couzens sat in their offices going over
the balance sheets of the company. The size of the bank balance was most
satisfactory. The factory was running to the limit of its capacity,
orders were waiting. Prospects were bright for the following season.
Ford leaned back in his chair.
"Well, I guess we're out of the woods, all right," he said. He put his
hands in his pockets and looked thoughtfully at the ceiling. "Remember
that time in the Mack avenue place," he began, "when that Chicago check
didn't come in, and we couldn't pay the men?"
"I should say I do! And the day we got the first order from Cleveland.
Remember how you worked in the shop yourself to get it out?"
"And you hustled out and got material on sixty days' time? And the boys
worked all night, and we had to wait till the money came from Cleveland
before we could give them their overtime? That was a great bunch of men
we had then."
They began to talk them over. Most of them were managers of departments
now; one was handling the sales force, another had developed into a
driver and won many trophies and broken many records with the Ford car;
Wills was superintendent of the factory.
"I tell you, Couzens, you and I have been at the head of the concern,
and we've done some big things together, but if it hadn't been for the
men we'd be a long way from where we are to-day," Ford said at last.
"Now we have some money we don't need for the business, we ought to
divide with them. Let's do it."
"I'm with you!" Couzens said heartily, and reached for his pencil.
Eagerly as two boys, they sat there for another hour figuring. They
began with checks for the men they remembered, men who had been with
them in the first days of the company, men who had done some special
thing which won their notice, men who were making good records in the
shops or on the sales force. But there seemed no place to draw the line.
"After all, every man who's working for us is helping," Ford decided.
"Let's give every one of them a Christmas present." Couzens agreed.
"We'll have the clerical department figure it out. The men who have been
with us longest the most, and so on down to the last errand boy that's
been with us a year. What do you say?"
Ford said yes with enthusiasm, and so it was settled. That year every
employee of the company received an extra check in his December pay
envelope. Ford had reached a point in his business life where he must
stop and consider what he should do with the money his work had brought
him, and those extra checks were the first result.
For twenty years Ford had spent all his energy, all his time and thought
in one thing--his work. If he had divided his interests, if he had
allowed a liking for amusement, ease, finer clothes, admiration, to
hinder his work in the old shed, he would never have built his car. If
he had cared more for personal pleasure and applause than he did for his
idea, he would have allowed his factory plan to be altered, twisted out
of shape and forgotten when he first found capital to manufacture the
car. But from the day he left his farm till now he has subordinated
everything else to his machine idea.
He applied it first to an engine, then to a factory. He fought through
innumerable difficulties to make those ideas into realities. He
destroyed old conceptions of mechanics and of factory management. He
built up a great financial success.
Now he found himself with a new problem to face--the problem of a great
fortune piling up in his hands.