In many manufacturing lines, American genius for organization and large
scale production has developed mammoth industries. In nearly all the
tendency to combination and concentration has exercised a predominating
influence. In the early years of the twentieth century the public
realized, for the first time, that one corporation, the American Sugar
Refining Company, controlled ninety-eight per cent of the business of
refining sugar. Six large interests--Armour, Swift, Morris, the National
Packing Company, Cudahy, and Schwarzschild and Sulzberger--had so
concentrated the packing business that, by 1905, they slaughtered
practically all the cattle shipped to Western centers and furnished
most of the beef consumed in the large cities east of Pittsburgh. The
"Tobacco Trust" had largely monopolized both the wholesale and retail
trade in this article of luxury and had also made extensive inroads into
the English market. The textile industry had not only transformed great
centers of New England into an American Lancashire, but the Southern
States, recovering from the demoralization of the Civil War, had begun
to spin their own cotton and to send the finished product to all parts
of the world. American shoe manufacturers had developed their art to
a point where "American shoes" had acquired a distinctive standing in
practically every European country.
It is hardly necessary to describe in detail each of these industries.
In their broad outlines they merely repeat the story of steel, of oil,
of agricultural machinery; they are the product of the same methods, the
same initiative. There is one branch of American manufacture, however,
that merits more detailed attention. If we scan the manufacturing
statistics of 1917, one amazing fact stares us in the face. There are
only three American industries whose product has attained the billion
mark; one of these is steel, the other food products, while the third
is an industry that was practically unknown in the United States fifteen
years ago. Superlatives come naturally to mind in discussing American
progress, but hardly any extravagant phrases could do justice to the
development of American automobiles. In 1899 the United States produced
3700 motor vehicles; in 1916 we made 1,500,000. The man who now makes a
personal profit of not far from $50,000,000 a year in this industry
was a puttering mechanic when the twentieth century came in. If we
capitalized Henry Ford's income, he is probably a richer man than
Rockefeller; yet, as recently as 1905 his possessions consisted of a
little shed of a factory which employed a dozen workmen. Dazzling as is
this personal success, its really important aspects are the things for
which it stands. The American automobile has had its wildcat days; for
the larger part, however, its leaders have paid little attention to Wall
Street, but have limited their activities exclusively to manufacturing.
Moreover, the automobile illustrates more completely than any other
industry the technical qualities that so largely explain our industrial
progress. Above all, American manufacturing has developed three
characteristics. These are quantity production, standardization, and
the use of labor-saving machinery. It is because Ford and other
manufacturers adapted these principles to making the automobile that the
American motor industry has reached such gigantic proportions.
A few years ago an English manufacturer, seeking the explanation of
America's ability to produce an excellent car so cheaply, made an
interesting experiment. He obtained three American automobiles, all of
the same "standardized" make, and gave them a long and racking tour over
English highways. Workmen then took apart the three cars and threw the
disjointed remains into a promiscuous heap. Every bolt, bar, gas tank,
motor, wheel, and tire was taken from its accustomed place and piled up,
a hideous mass of rubbish. Workmen then painstakingly put together three
cars from these disordered elements. Three chauffeurs jumped on these
cars, and they immediately started down the road and made a long journey
just as acceptably as before. The Englishman had learned the secret
of American success with automobiles. The one word "standardization"
explained the mystery.
Yet when, a few years before, the English referred to the American
automobile as a "glorified perambulator," the characterization was not
unjust. This new method of transportation was slow in finding favor
on our side of the Atlantic. America was sentimentally and practically
devoted to the horse as the motive power for vehicles; and the fact that
we had so few good roads also worked against the introduction of the
automobile. Yet here, as in Europe, the mechanically propelled wagon
made its appearance in early times. This vehicle, like the bicycle, is
not essentially a modern invention; the reason any one can manufacture
it is that practically all the basic ideas antedate 1840. Indeed,
the automobile is really older than the railroad. In the twenties and
thirties, steam stage coaches made regular trips between certain cities
in England and occasionally a much resounding power-driven carriage
would come careering through New York and Philadelphia, scaring all the
horses and precipitating the intervention of the authorities. The hardy
spirits who devised these engines, all of whose names are recorded in
the encyclopedias, deservedly rank as the "fathers" of the automobile.
The responsibility as the actual "inventor" can probably be no more
definitely placed. However, had it not been for two developments,
neither of them immediately related to the motor car, we should never
have had this efficient method of transportation. The real "fathers"
of the automobile are Gottlieb Daimler, the German who made the first
successful gasoline engine, and Charles Goodyear, the American who
discovered the secret of vulcanized rubber. Without this engine to form
the motive power and the pneumatic tire to give it four air cushions
to run on, the automobile would never have progressed beyond the steam
carriage stage. It is true that Charles Baldwin Selden, of Rochester,
has been pictured as the "inventor of the modern automobile" because,
as long ago as 1879, he applied for a patent on the idea of using a
gasoline engine as motive power, securing this basic patent in 1895, but
this, it must be admitted, forms a flimsy basis for such a pretentious
claim.
The French apparently led all nations in the manufacture of motor
vehicles, and in the early nineties their products began to make
occasional appearances on American roads. The type of American who owned
this imported machine was the same that owned steam yachts and a box at
the opera. Hardly any new development has aroused greater hostility. It
not only frightened horses, and so disturbed the popular traffic of
the time, but its speed, its glamour, its arrogance, and the haughty
behavior of its proprietor, had apparently transformed it into a new
badge of social cleavage. It thus immediately took its place as a new
gewgaw of the rich; that it had any other purpose to serve had occurred
to few people. Yet the French and English machines created an entirely
different reaction in the mind of an imaginative mechanic in Detroit.
Probably American annals contain no finer story than that of this simple
American workman. Yet from the beginning it seemed inevitable that Henry
Ford should play this appointed part in the world. Born in Michigan in
1863, the son of an English farmer who had emigrated to Michigan and
a Dutch mother, Ford had always demonstrated an interest in things far
removed from his farm. Only mechanical devices interested him. He liked
getting in the crops, because McCormick harvesters did most of the work;
it was only the machinery of the dairy that held him enthralled. He
developed destructive tendencies as a boy; he had to take everything to
pieces. He horrified a rich playmate by resolving his new watch into its
component parts--and promptly quieted him by putting it together again.
"Every clock in the house shuddered when it saw me coming," he recently
said. He constructed a small working forge in his school-yard, and built
a small steam engine that could make ten miles an hour. He spent his
winter evenings reading mechanical and scientific journals; he cared
little for general literature, but machinery in any form was almost a
pathological obsession. Some boys run away from the farm to join the
circus or to go to sea; Henry Ford at the age of sixteen ran away to get
a job in a machine shop. Here one anomaly immediately impressed him. No
two machines were made exactly alike; each was regarded as a separate
job. With his savings from his weekly wage of $2.50, young Ford
purchased a three dollar watch, and immediately dissected it. If several
thousand of these watches could be made, each one exactly alike, they
would cost only thirty-seven cents apiece. "Then," said Ford to himself,
"everybody could have one." He had fairly elaborated his plans to start
a factory on this basis when his father's illness called him back to the
farm.
This was about 1880; Ford's next conspicuous appearance in Detroit was
about 1892. This appearance was not only conspicuous; it was exceedingly
noisy. Detroit now knew him as the pilot of a queer affair that whirled
and lurched through her thoroughfares, making as much disturbance as
a freight train. In reading his technical journals Ford had met many
descriptions of horseless carriages; the consequence was that he had
again broken away from the farm, taken a job at $45 a month in a Detroit
machine shop, and devoted his evenings to the production of a gasoline
engine. His young wife was exceedingly concerned about his health;
the neighbors' snap judgment was that he was insane. Only two other
Americans, Charles B. Duryea and Ellwood Haynes, were attempting to
construct an automobile at that time. Long before Ford was ready with
his machine, others had begun to appear. Duryea turned out his first one
in 1892; and foreign makes began to appear in considerable numbers. But
the Detroit mechanic had a more comprehensive inspiration. He was not
working to make one of the finely upholstered and beautifully painted
vehicles that came from overseas. "Anything that isn't good for
everybody is no good at all," he said. Precisely as it was Vail's
ambition to make every American a user of the telephone and McCormick's
to make every farmer a user of his harvester, so it was Ford's
determination that every family should have an automobile. He was
apparently the only man in those times who saw that this new machine was
not primarily a luxury but a convenience. Yet all manufacturers, here
and in Europe, laughed at his idea. Why not give every poor man a Fifth
Avenue house? Frenchmen and Englishmen scouted the idea that any one
could make a cheap automobile. Its machinery was particularly refined
and called for the highest grade of steel; the clever Americans might
use their labor-saving devices on many products, but only skillful hand
work could turn out a motor car. European manufacturers regarded each
car as a separate problem; they individualized its manufacture almost as
scrupulously as a painter paints his portrait or a poet writes his
poem. The result was that only a man with several thousand dollars could
purchase one. But Henry Ford--and afterward other American makers--had
quite a different conception.
Henry Ford's earliest banker was the proprietor of a quick-lunch wagon
at which the inventor used to eat his midnight meal after his hard
evening's work in the shed. "Coffee Jim," to whom Ford confided
his hopes and aspirations on these occasions, was the only man
with available cash who had any faith in his ideas. Capital in more
substantial form, however, came in about 1902. With money advanced by
"Coffee Jim," Ford had built a machine which he entered in the Grosse
Point races that year. It was a hideous-looking affair, but it ran like
the wind and outdistanced all competitors. From that day Ford's career
has been an uninterrupted triumph. But he rejected the earliest offers
of capital because the millionaires would not agree to his terms. They
were looking for high prices and quick profits, while Ford's plans were
for low prices, large sales, and use of profits to extend the business
and reduce the cost of his machine. Henry Ford's greatness as a
manufacturer consists in the tenacity with which he has clung to this
conception. Contrary to general belief in the automobile industry he
maintained that a high sale price was not necessary for large profits;
indeed he declared that the lower the price, the larger the net earnings
would be. Nor did he believe that low wages meant prosperity. The most
efficient labor, no matter what the nominal cost might be, was the
most economical. The secret of success was the rapid production of
a serviceable article in large quantities. When Ford first talked of
turning out 10,000 automobiles a year, his associates asked him where
he was going to sell them. Ford's answer was that that was no problem at
all; the machines would sell themselves. He called attention to the
fact that there were millions of people in this country whose incomes
exceeded $1800 a year; all in that class would become prospective
purchasers of a low-priced automobile. There were 6,000,000 farmers;
what more receptive market could one ask? His only problem was the
technical one--how to produce his machine in sufficient quantities.
The bicycle business in this country had passed through a similar
experience. When first placed on the market bicycles were expensive;
it took $100 or $150 to buy one. In a few years, however, an excellent
machine was selling for $25 or $30. What explained this drop in price?
The answer is that the manufacturers learned to standardize their
product. Bicycle factories became not so much places where the articles
were manufactured as assembling rooms for putting them together.
The several parts were made in different places, each establishment
specializing in a particular part; they were then shipped to centers
where they were transformed into completed machines. The result was that
the United States, despite the high wages paid here, led the world in
bicycle making and flooded all countries with this utilitarian article.
Our great locomotive factories had developed on similar lines. Europeans
had always marveled that Americans could build these costly articles so
cheaply that they could undersell European makers. When they obtained a
glimpse of an American locomotive factory, the reason became plain. In
Europe each locomotive was a separate problem; no two, even in the same
shop, were exactly alike. But here locomotives are built in parts,
all duplicates of one another; the parts are then sent by machinery to
assembling rooms and rapidly put together. American harvesting machines
are built in the same way; whenever a farmer loses a part, he can go
to the country store and buy its duplicate, for the parts of the same
machine do not vary to the thousandth of an inch. The same principle
applies to hundreds of other articles.
Thus Henry Ford did not invent standardization; he merely applied this
great American idea to a product to which, because of the delicate
labor required, it seemed at first unadapted. He soon found that it was
cheaper to ship the parts of ten cars to a central point than to ship
ten completed cars. There would therefore be large savings in making
his parts in particular factories and shipping them to assembling
establishments. In this way the completed cars would always be near
their markets. Large production would mean that he could purchase his
raw materials at very low prices; high wages meant that he could get the
efficient labor which was demanded by his rapid fire method of campaign.
It was necessary to plan the making of every part to the minutest
detail, to have each part machined to its exact size, and to have every
screw, bolt, and bar precisely interchangeable. About the year 1907
the Ford factory was systematized on this basis. In that twelvemonth it
produced 10,000 machines, each one the absolute counterpart of the other
9999. American manufacturers until then had been content with a
few hundred a year! From that date the Ford production has rapidly
increased; until, in 1916, there were nearly 4,000,000 automobiles
in the United States--more than in all the rest of the world put
together--of which one-sixth were the output of the Ford factories. Many
other American manufacturers followed the Ford plan, with the result
that American automobiles are duplicating the story of American
bicycles; because of their cheapness and serviceability, they are
rapidly dominating the markets of the world. In the Great War American
machines have surpassed all in the work done under particularly exacting
circumstances.
A glimpse of a Ford assembling room--and we can see the same process in
other American factories--makes clear the reasons for this success. In
these rooms no fitting is done; the fragments of automobiles come in
automatically and are simply bolted together. First of all the units are
assembled in their several departments. The rear axles, the front axles,
the frames, the radiators, and the motors are all put together with the
same precision and exactness that marks the operation of the completed
car. Thus the wheels come from one part of the factory and are rolled on
an inclined plane to a particular spot. The tires are propelled by some
mysterious force to the same spot; as the two elements coincide, workmen
quickly put them together. In a long room the bodies are slowly advanced
on moving platforms at the rate of about a foot per minute. At the side
stand groups of men, each prepared to do his bit, their materials being
delivered at convenient points by chutes. As the tops pass by these men
quickly bolt them into place, and the completed body is sent to a place
where it awaits the chassis. This important section, comprising all the
machinery, starts at one end of a moving platform as a front and rear
axle bolted together with the frame. As this slowly advances, it passes
under a bridge containing a gasoline tank, which is quickly adjusted.
Farther on the motor is swung over by a small hoist and lowered into
position on the frame. Presently the dash slides down and is placed in
position behind the motor. As the rapidly accumulating mechanism passes
on, different workmen adjust the mufflers, exhaust pipes, the radiator,
and the wheels which, as already indicated, arrive on the scene
completely tired. Then a workman seats himself on the gasoline tank,
which contains a small quantity of its indispensable fuel, starts the
engine, and the thing moves out the door under its own power. It stops
for a moment outside; the completed body drops down from the second
floor, and a few bolts quickly put it securely in place. The workman
drives the now finished Ford to a loading platform, it is stored away
in a box car, and is started on its way to market. At the present time
about 2000 cars are daily turned out in this fashion. The nation demands
them at a more rapid rate than they can be made.
Herein we have what is probably America's greatest manufacturing
exploit. And this democratization of the automobile comprises more than
the acme of efficiency in the manufacturing art. The career of Henry
Ford has a symbolic significance as well. It may be taken as signalizing
the new ideals that have gained the upper hand in American industry. We
began this review of American business with Cornelius Vanderbilt as the
typical figure. It is a happy augury that it closes with Henry Ford in
the foreground. Vanderbilt, valuable as were many of his achievements,
represented that spirit of egotism that was rampant for the larger part
of the fifty years following the war. He was always seeking his own
advantage, and he never regarded the public interest as anything worth
a moment's consideration. With Ford, however, the spirit of service
has been the predominating motive. His earnings have been immeasurably
greater than Vanderbilt's; his income for two years amounts to nearly
Vanderbilt's total fortune at his death; but the piling up of riches
has been by no means his exclusive purpose. He has recognized that
his workmen are his partners and has liberally shared with them his
increasing profits. His money is not the product of speculation; Ford
is a stranger to Wall Street and has built his business independently
of the great banking interest. He has enjoyed no monopoly, as have the
Rockefellers; there are more than three hundred makers of automobiles
in the United States alone. He has spurned all solicitations to join
combinations. Far from asking tariff favors he has entered European
markets and undersold English, French, and German makers on their own
ground. Instead of taking advantage of a great public demand to increase
his prices, Ford has continuously lowered them. Though his idealism may
have led him into an occasional personal absurdity, as a business man
he may be taken as the full flower of American manufacturing genius.
Possibly America, as a consequence of universal war, is advancing to a
higher state of industrial organization; but an economic system is not
entirely evil that produces such an industry as that which has made the
automobile the servant of millions of Americans.
BIBLIOGRAPHICAL NOTE
The materials are abundant for the history of American industry in the
last fifty years. They exist largely in the form of official documents.
Any one ambitious of studying this subject in great detail should
consult, first of all, the catalogs issued by that very valuable
institution, the Government Printing Office. The Bureau of Corporations
has published elaborate reports on such industries as petroleum
(Standard Oil Company), beef, tobacco, steel, and harvesting machinery,
which are indispensable in studying these great basic enterprises. The
American habit of legislative investigation and trust-fighting in the
courts, whatever its public value may have been, has at least had the
result of piling up mountains of material for the historian of American
industry. For one single corporation, the Standard Oil Company, a
great library of such literature exists. The nearly twenty volumes of
testimony, exhibits, and briefs assembled in the course of the Federal
suit which led to its dissolution is the ultimate source of material on
America's greatest trust. As most of our other great corporations--the
Steel Trust, the Harvester Company, the Tobacco Company, and the
like--have passed through similar ordeals, all the information the
student could ask concerning them exists in the same form. The archives
of such bodies as the Interstate Commerce Commission and Public Utility
Commissions of the States are also bulging with documentary
evidence. Thus all the material contained in this volume--and much
more--concerning the New York traction situation will be found in the
investigation conducted in 1907 by the Public Service Commission of New
York, Second District.
American business has also developed a great talent for publicity.
Nearly all our big corporations have assembled much material about
their own history, all of which is public property. Thus the American
Telephone and Telegraph Company can furnish detailed information on
every phase of its business and history. Indeed, one's respect for
the achievements of American industry is increased by the praiseworthy
curiosity which it displays about its own past and the readiness with
which it makes such material accessible to the public. Despite the
abundance of data, there is not a great amount of popular writing on
these subjects that has much fascination as literature or much value as
history. The only book that is really important is Miss Ida M. Tarbell's
"History of the Standard Oil Company," 2 vols. (new edition 1911). Of
other popular volumes the present writer has found most useful Herbert
N. Casson's "Romance of Steel" (1907), "History of the Telephone"
(1910), and "Cyrus Hall McCormick: His Life and Work" (1909); J.H.
Bridge's "Inside History of the Carnegie Steel Company" (1903); "Henry
Ford's Own Story" as told to Rose Wildes Lane (1917).
For Chapter V, the author has drawn from articles contributed by him
in 1907-8 to "McClure's Magazine" on "Great American Fortunes and their
Making;" and for Chapter IV, from an article contributed to the same
magazine in 1914, on "Telephones for the Millions."
End of Project Gutenberg's The Age of Big Business, by Burton J. Hendrick