Of course, some remember the obvious ones, Ford or Durant. Yet there were so many more who, by their brains and backs, created out of thin air an economic powerhouse unrivalled anywhere in the world. Young Mr. Ford was a tinkerer working away in his barn, but he dreamed of building race cars. His opportunity came in 1901 when Ford raced a 26-hp car of his own design in a challenge race. He was considered a farm boy out of his league, but when the other car broke down Ford won the race and became a local celebrity.
He had formed his first car company, The Detroit Automobile Company in 1899, and based on his local acclaim, backers now supplied the 26-year-old with capital. The company folded in 1901 because, according to backers who were requesting a car for basic transportation, Ford instead tinkered with race cars and squandered their money. Later the same year, with new backers Ford opened The Henry Ford Company, but this time there were strings attached to the financing. Aware of Ford’s foibles and inability to handle projects, the backers hired Henry M. Leland to oversee the company and to keep an eye on Ford.
Leland had been apprenticed as a gunsmith during the Civil War and had witnessed the birth of firearm mass production, using identical pieces joined to identical pieces. Under Ford’s management, pieces that weren’t an exact fit were either ground down, sanded or pounded with a hammer to fit. Ford's tolerances were to 1/8 of an inch; Leland’s tolerances, with his background as a gunsmith, were to .010. But Ford was a wild bull; he resented suggestions, he resented oversight, and most of all he resented Leland. Ford quit the company that carried his name in 1902, and at the suggestion of Henry Leland the company was renamed in honor of the great explorer and founder of Detroit, Antoine Laumet de La Mothe Cadillac.
The third Ford Motor Company began life as Ford & Malcomson. Malcomson was a local coal baron with connections to capital. The plan was to self-finance, but Malcomson then learned what previous investors had learned. It always cost more and took longer than whatever Henry Ford said it would. Ford was again working on race cars, building an 80-hp auto that set a new land speed record of 91.3 mph. It captured headlines and convinced race car driver Barney Oldfield to drive the Ford “999.”
Outside of headlines and pictures in the paper, Ford & Malcomson were in financial trouble. Malcomson had gone through his fortune and became so worried about his name being associated with yet another Ford failure that he had his name removed from the business. With his reputation for being difficult to work with and his repeated business failures, Ford found himself at the end of his rope. He was forced to make deals with suppliers to supply him parts or it was the end of what most certainly would have been the last Ford Motor Company.
Across town Ransom E. Olds and David Buick were building cars, and since Henry Leland was now occupied with Cadillac, they turned to what was considered the second-best machine shop in Detroit to supply their parts. The owners, brothers Horace and John, had cut their teeth working on steam engines, and like the Wright Brothers they had built bicycles. They sold their bicycle company and opened the Dodge Brothers Machine Shop. At first they would work on anything and everything, but in 1902 they began to supply exclusively to their best customer, Ransom Olds, who had sold over 2,000 of his curved-dash Olds models, making him the top car producer in the country.
The Dodge Brothers had their own ideas about making cars, so when Henry Ford came to see them, hat in hand, they listened politely. Ford laid out his drawings for a new model called the model “A” Fordmobile. The brothers liked the concept and showed Ford their plans for a new transmission and a fragile partnership developed. The Dodge Brothers would supply Ford with parts, but they demanded cash up front on the first order, and rather than 60 days to pay, Ford was given 15 days. If, after that time, Ford defaulted on the debt, all parts installed or uninstalled reverted back to the Dodge Brothers. Ford had no choice; it was this or nothing.
Malcomson, sensing a reprieve from the financial gallows of Henry Ford, offered the Dodge brothers a 10% stake in the company for $7,000 in parts and $3,000 in cash. Malcomson was overjoyed to recoup some of his cash and a chance to sell his near worthless Ford stock. The Dodge brothers eventually, in the years to come, earned over $34.5 million on their original $10,000 investment.
Less than a month after the brothers had thrown in with Henry Ford; the Ford Motor Company had just $223 left in the bank with payroll coming due. On July 15, 1903 Ford sold his first model A to a dentist for $895.00 cash. And from that point forward the sales numbers exploded. In 1906, 1599 cars; 1907, 8,000 cars. By 1912, 78,000 cars and by 1914 Ford was building 1,000 cars for every workday. And Ford was not alone.
At the same time Ford was attempting to build race cars, an insurance salesman named Billy Durant saw a horse-drawn cart on the road. Durant was so impressed by the design of the cart that he purchased the rights and manufactured the carts along with a former hardware store clerk named Dallas Dort. They founded the Flint Wagon Works and in the space of two years the company had 14 factories and sold over 75,000 carriages a year.
David Buick had made his fortune in plumbing fixtures and held thirteen patents, including the process for affixing porcelain to cast iron bathtubs. Yet David Buick was neither businessman nor automotive inventor. By 1903 Buick had signed over his car company to his largest supplier, the Briscoe brothers. The Briscoes wanted their money and not a car company, so to them it seemed only logical that perhaps Durant-Dort might be interested.
Billy Durant was the antithesis of Henry Ford; Durant had the Midas touch and was considered an industrial genius. In 1904 they pushed David Buick to the back of the boardroom and put Durant in charge. The company was almost broke, but with Durant in charge they were able to raise $1.5 million for a company that had sold fewer than a hundred cars. Under Durant’s leadership in just two years the company was selling 250 new Buicks every week and still couldn’t keep up with their orders.
In 1907 a financial panic devastated the fledgling automotive industry. Durant proposed a scheme where the four largest auto manufacturers would exchange equal amounts of stock in each other’s companies, thereby each would own all and each other. It was a scheme that was destined to failure as well as being monopolistic. Henry Ford killed the deal, since he was the largest manufacturer. He demanded more from each, plus cash to boot. Inside the mind of Billy Durant was the germ of an idea. The more cars you build the less expensive each car becomes, and if you own the suppliers as well, you can control your costs even further.
On September 1, 1908 Durant founded General Motors and purchased the Olds car company, which had fallen on hard times. When Durant visited the Olds factory to see what plans they had made for new models, he was shocked to find out that there weren’t any. He remarked, “We just spent a million dollars for road signs.” Durant was undeterred, he returned to the Olds factory with a new Buick and ordered the workers to cut it into four quarters. He then moved the sides six inches further apart and lengthened the car by a foot. He then instructed them to use an Oldsmobile radiator and hood and told them, “There, that is your new car.”
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