Written by the legendary inventor and industrialist who pioneered the American automotive industry, My Life and Work is a unique combination of memoir and business treatise. In straightforward and inviting prose, Henry Ford describes his early life as a mechanically inclined farmer’s son, the inner workings of his famed motor company, and the development of the Model T. He provides analysis and commentary on some of his key business decisions, including his resolution to compensate workers well beyond the prevailing wage and his commitment to building a diverse workforce composed of “about the same proportions as a cross-section of a society in general.”
My Life and Work is an enduring American classic that captures the musings and philosophical considerations of one of the country’s greatest visionaries.
MY LIFE AND WORK
By Henry Ford
In Collaboration With Samuel Crowther
INTRODUCTION—WHAT IS THE IDEA?
I. THE BEGINNING
II. WHAT I LEARNED ABOUT BUSINESS
III. STARTING THE REAL BUSINESS
IV. THE SECRET OF MANUFACTURING AND SERVING
V. GETTING INTO PRODUCTION
VI. MACHINES AND MEN
VII. THE TERROR OF THE MACHINE.
IX. WHY NOT ALWAYS HAVE GOOD BUSINESS?
X. HOW CHEAPLY CAN THINGS BE MADE?
XI. MONEY AND GOODS
XII. MONEY—MASTER OR SERVANT?
XIII. WHY BE POOR?
XIV. THE TRACTOR AND POWER FARMING
XV. WHY CHARITY?
XVI. THE RAILROADS
XVII. THINGS IN GENERAL
XVIII. DEMOCRACY AND INDUSTRY
XIX. WHAT WE MAY EXPECT.
WHAT IS THE IDEA?
We have only started on our development of our country—we have not as yet, with all our talk of wonderful progress, done more than scratch the surface. The progress has been wonderful enough—but when we compare what we have done with what there is to do, then our past accomplishments are as nothing. When we consider that more power is used merely in ploughing the soil than is used in all the industrial establishments of the country put together, an inkling comes of how much opportunity there is ahead. And now, with so many countries of the world in ferment and with so much unrest every where, is an excellent time to suggest something of the things that may be done in the light of what has been done.
When one speaks of increasing power, machinery, and industry there comes up a picture of a cold, metallic sort of world in which great factories will drive away the trees, the flowers, the birds, and the green fields. And that then we shall have a world composed of metal machines and human machines. With all of that I do not agree. I think that unless we know more about machines and their use, unless we better understand the mechanical portion of life, we cannot have the time to enjoy the trees, and the birds, and the flowers, and the green fields.
I think that we have already done too much toward banishing the pleasant things from life by thinking that there is some opposition between living and providing the means of living. We waste so much time and energy that we have little left over in which to enjoy ourselves.
Power and machinery, money and goods, are useful only as they set us free to live. They are but means to an end. For instance, I do not consider the machines which bear my name simply as machines. If that was all there was to it I would do something else. I take them as concrete evidence of the working out of a theory of business, which I hope is something more than a theory of business—a theory that looks toward making this world a better place in which to live. The fact that the commercial success of the Ford Motor Company has been most unusual is important only because it serves to demonstrate, in a way which no one can fail to understand, that the theory to date is right. Considered solely in this light I can criticize the prevailing system of industry and the organization of money and society from the standpoint of one who has not been beaten by them. As things are now organized, I could, were I thinking only selfishly, ask for no change. If I merely want money the present system is all right; it gives money in plenty to me. But I am thinking of service. The present system does not permit of the best service because it encourages every kind of waste—it keeps many men from getting the full return from service. And it is going nowhere. It is all a matter of better planning and adjustment.
I have no quarrel with the general attitude of scoffing at new ideas. It is better to be skeptical of all new ideas and to insist upon being shown rather than to rush around in a continuous brainstorm after every new idea. Skepticism, if by that we mean cautiousness, is the balance wheel of civilization. Most of the present acute troubles of the world arise out of taking on new ideas without first carefully investigating to discover if they are good ideas. An idea is not necessarily good because it is old, or necessarily bad because it is new, but if an old idea works, then the weight of the evidence is all in its favor. Ideas are of themselves extraordinarily valuable, but an idea is just an idea. Almost any one can think up an idea. The thing that counts is developing it into a practical product.
I am now most interested in fully demonstrating that the ideas we have put into practice are capable of the largest application—that they have nothing peculiarly to do with motor cars or tractors but form something in the nature of a universal code. I am quite certain that it is the natural code and I want to demonstrate it so thoroughly that it will be accepted, not as a new idea, but as a natural code.
The natural thing to do is to work—to recognize that prosperity and happiness can be obtained only through honest effort. Human ills flow largely from attempting to escape from this natural course. I have no suggestion which goes beyond accepting in its fullest this principle of nature. I take it for granted that we must work. All that we have done comes as the result of a certain insistence that since we must work it is better to work intelligently and forehandedly; that the better we do our work the better off we shall be. All of which I conceive to be merely elemental common sense.
I am not a reformer. I think there is entirely too much attempt at reforming in the world and that we pay too much attention to reformers. We have two kinds of reformers. Both are nuisances. The man who calls himself a reformer wants to smash things. He is the sort of man who would tear up a whole shirt because the collar button did not fit the buttonhole. It would never occur to him to enlarge the buttonhole. This sort of reformer never under any circumstances knows what he is doing. Experience and reform do not go together. A reformer cannot keep his zeal at white heat in the presence of a fact. He must discard all facts.
Since 1914 a great many persons have received brand-new intellectual outfits. Many are beginning to think for the first time. They opened their eyes and realized that they were in the world. Then, with a thrill of independence, they realized that they could look at the world critically. They did so and found it faulty. The intoxication of assuming the masterful position of a critic of the social system—which it is every man’s right to assume—is unbalancing at first. The very young critic is very much unbalanced. He is strongly in favor of wiping out the old order and starting a new one. They actually managed to start a new world in Russia. It is there that the work of the world makers can best be studied. We learn from Russia that it is the minority and not the majority who determine destructive action. We learn also that while men may decree social laws in conflict with natural laws, Nature vetoes those laws more ruthlessly than did the Czars. Nature has vetoed the whole Soviet Republic. For it sought to deny nature. It denied above all else the right to the fruits of labour. Some people say, “Russia will have to go to work,” but that does not describe the case. The fact is that poor Russia is at work, but her work counts for nothing. It is not free work. In the United States a workman works eight hours a day; in Russia, he works twelve to fourteen. In the United States, if a workman wishes to lay off a day or a week, and is able to afford it, there is nothing to prevent him. In Russia, under Sovietism, the workman goes to work whether he wants to or not. The freedom of the citizen has disappeared in the discipline of a prison-like monotony in which all are treated alike. That is slavery. Freedom is the right to work a decent length of time and to get a decent living for doing so; to be able to arrange the little personal details of one’s own life. It is the aggregate of these and many other items of freedom which makes up the great idealistic Freedom. The minor forms of Freedom lubricate the everyday life of all of us.
Russia could not get along without intelligence and experience. As soon as she began to run her factories by committees, they went to rack and ruin; there was more debate than production. As soon as they threw out the skilled man, thousands of tons of precious materials were spoiled. The fanatics talked the people into starvation. The Soviets are now offering the engineers, the administrators, the foremen and superintendents, whom at first they drove out, large sums of money if only they will come back. Bolshevism is now crying for the brains and experience which it yesterday treated so ruthlessly. All that “reform” did to Russia was to block production.
There is in this country a sinister element that desires to creep in between the men who work with their hands and the men who think and plan for the men who work with their hands. The same influence that drove the brains, experience, and ability out of Russia is busily engaged in raising prejudice here. We must not suffer the stranger, the destroyer, the hater of happy humanity, to divide our people. In unity is American strength—and freedom. On the other hand, we have a different kind of reformer who never calls himself one. He is singularly like the radical reformer. The radical has had no experience and does not want it. The other class of reformer has had plenty of experience but it does him no good. I refer to the reactionary—who will be surprised to find himself put in exactly the same class as the Bolshevist. He wants to go back to some previous condition, not because it was the best condition, but because he thinks he knows about that condition.
The one crowd wants to smash up the whole world in order to make a better one. The other holds the world as so good that it might well be let stand as it is—and decay. The second notion arises as does the first—out of not using the eyes to see with. It is perfectly possible to smash this world, but it is not possible to build a new one. It is possible to prevent the world from going forward, but it is not possible then to prevent it from going back—from decaying. It is foolish to expect that, if everything be overturned, everyone will thereby get three meals a day. Or, should everything be petrified, that thereby six per cent, interest may be paid. The trouble is that reformers and reactionaries alike get away from the realities—from the primary functions.
One of the counsels of caution is to be very certain that we do not mistake a reactionary turn for a return of common sense. We have passed through a period of fireworks of every description, and the making of a great many idealistic maps of progress. We did not get anywhere. It was a convention, not a march. Lovely things were said, but when we got home we found the furnace out. Reactionaries have frequently taken advantage of the recoil from such a period, and they have promised “the good old times”—which usually means the bad old abuses—and because they are perfectly void of vision they are sometimes regarded as “practical men.” Their return to power is often hailed as the return of common sense.
The primary functions are agriculture, manufacture, and transportation. Community life is impossible without them. They hold the world together. Raising things, making things, and earning things are as primitive as human need and yet as modern as anything can be. They are of the essence of physical life. When they cease, community life ceases. Things do get out of shape in this present world under the present system, but we may hope for a betterment if the foundations stand sure. The great delusion is that one may change the foundation—usurp the part of destiny in the social process. The foundations of society are the men and means to grow things, to make things, and to carry things. As long as agriculture, manufacture, and transportation survive, the world can survive any economic or social change. As we serve our jobs we serve the world.
There is plenty of work to do. Business is merely work. Speculation in things already produced—that is not business. It is just more or less respectable graft. But it cannot be legislated out of existence. Laws can do very little. Law never does anything constructive. It can never be more than a policeman, and so it is a waste of time to look to our state capitals or to Washington to do that which law was not designed to do. As long as we look to legislation to cure poverty or to abolish special privilege we are going to see poverty spread and special privilege grow. We have had enough of looking to Washington and we have had enough of legislators—not so much, however, in this as in other countries—promising laws to do that which laws cannot do.
When you get a whole country—as did ours—thinking that Washington is a sort of heaven and behind its clouds dwell omniscience and omnipotence, you are educating that country into a dependent state of mind which augurs ill for the future. Our help does not come from Washington, but from ourselves; our help may, however, go to Washington as a sort of central distribution point where all our efforts are coordinated for the general good. We may help the Government; the Government cannot help us. The slogan of “less government in business and more business in government” is a very good one, not mainly on account of business or government, but on account of the people. Business is not the reason why the United States was founded. The Declaration of Independence is not a business charter, nor is the Constitution of the United States a commercial schedule. The United States—its land, people, government, and business—are but methods by which the life of the people is made worth while. The Government is a servant and never should be anything but a servant. The moment the people become adjuncts to government, then the law of retribution begins to work, for such a relation is unnatural, immoral, and inhuman. We cannot live without business and we cannot live without government. Business and government are necessary as servants, like water and grain; as masters they overturn the natural order.
The welfare of the country is squarely up to us as individuals. That is where it should be and that is where it is safest. Governments can promise something for nothing but they cannot deliver. They can juggle the currencies as they did in Europe (and as bankers the world over do, as long as they can get the benefit of the juggling) with a patter of solemn nonsense. But it is work and work alone that can continue to deliver the goods—and that, down in his heart, is what every man knows.
There is little chance of an intelligent people, such as ours, ruining the fundamental processes of economic life. Most men know they cannot get something for nothing. Most men feel—even if they do not know—that money is not wealth. The ordinary theories which promise everything to everybody, and demand nothing from anybody, are promptly denied by the instincts of the ordinary man, even when he does not find reasons against them. He knows they are wrong. That is enough. The present order, always clumsy, often stupid, and in many ways imperfect, has this advantage over any other—it works.
Doubtless our order will merge by degrees into another, and the new one will also work—but not so much by reason of what it is as by reason of what men will bring into it. The reason why Bolshevism did not work, and cannot work, is not economic. It does not matter whether industry is privately managed or socially controlled; it does not matter whether you call the workers’ share “wages” or “dividends”; it does not matter whether you regimentalize the people as to food, clothing, and shelter, or whether you allow them to eat, dress, and live as they like. Those are mere matters of detail. The incapacity of the Bolshevist leaders is indicated by the fuss they made over such details. Bolshevism failed because it was both unnatural and immoral. Our system stands. Is it wrong? Of course it is wrong, at a thousand points! Is it clumsy? Of course it is clumsy. By all right and reason it ought to break down. But it does not—because it is instinct with certain economic and moral fundamentals.
The economic fundamental is labour. Labour is the human element which makes the fruitful seasons of the earth useful to men. It is men’s labour that makes the harvest what it is. That is the economic fundamental: every one of us is working with material which we did not and could not create, but which was presented to us by Nature.
The moral fundamental is man’s right in his labour. This is variously stated. It is sometimes called “the right of property.” It is sometimes masked in the command, “Thou shalt not steal.” It is the other man’s right in his property that makes stealing a crime. When a man has earned his bread, he has a right to that bread. If another steals it, he does more than steal bread; he invades a sacred human right. If we cannot produce we cannot have—but some say if we produce it is only for the capitalists. Capitalists who become such because they provide better means of production are of the foundation of society. They have really nothing of their own. They merely manage property for the benefit of others. Capitalists who become such through trading in money are a temporarily necessary evil. They may not be evil at all if their money goes to production. If their money goes to complicating distribution—to raising barriers between the producer and the consumer—then they are evil capitalists and they will pass away when money is better adjusted to work; and money will become better adjusted to work when it is fully realized that through work and work alone may health, wealth, and happiness inevitably be secured.
There is no reason why a man who is willing to work should not be able to work and to receive the full value of his work. There is equally no reason why a man who can but will not work should not receive the full value of his services to the community. He should most certainly be permitted to take away from the community an equivalent of what he contributes to it. If he contributes nothing he should take away nothing. He should have the freedom of starvation. We are not getting anywhere when we insist that every man ought to have more than he deserves to have—just because some do get more than they deserve to have.
There can be no greater absurdity and no greater disservice to humanity in general than to insist that all men are equal. Most certainly all men are not equal, and any democratic conception which strives to make men equal is only an effort to block progress. Men cannot be of equal service. The men of larger ability are less numerous than the men of smaller ability; it is possible for a mass of the smaller men to pull the larger ones down—but in so doing they pull themselves down. It is the larger men who give the leadership to the community and enable the smaller men to live with less effort.
The conception of democracy which names a leveling-down of ability makes for waste. No two things in nature are alike. We build our cars absolutely interchangeable. All parts are as nearly alike as chemical analysis, the finest machinery, and the finest workmanship can make them. No fitting of any kind is required, and it would certainly seem that two Fords standing side by side, looking exactly alike and made so exactly alike that any part could be taken out of one and put into the other, would be alike. But they are not. They will have different road habits. We have men who have driven hundreds, and in some cases thousands of Fords and they say that no two ever act precisely the same—that, if they should drive a new car for an hour or even less and then the car were mixed with a bunch of other new ones, also each driven for a single hour and under the same conditions, that although they could not recognize the car they had been driving merely by looking at it, they could do so by driving it.
I have been speaking in general terms. Let us be more concrete. A man ought to be able to live on a scale commensurate with the service that he renders. This is rather a good time to talk about this point, for we have recently been through a period when the rendering of service was the last thing that most people thought of. We were getting to a place where no one cared about costs or service. Orders came without effort. Whereas once it was the customer who favored the merchant by dealing with him, conditions changed until it was the merchant who favored the customer by selling to him. That is bad for business. Monopoly is bad for business. Profiteering is bad for business. The lack of necessity to hustle is bad for business. Business is never as healthy as when, like a chicken, it must do a certain amount of scratching for what it gets. Things were coming too easily. There was a let-down of the principle that an honest relation ought to obtain between values and prices. The public no longer had to be “catered to.” There was even a “public be damned” attitude in many places. It was intensely bad for business. Some men called that abnormal condition “prosperity.” It was not prosperity— it was just a needless money chase. Money chasing is not business.
It is very easy, unless one keeps a plan thoroughly in mind, to get burdened with money and then, in an effort to make more money, to forget all about selling to the people what they want. Business on a money-making basis is most insecure. It is a touch-and-go affair, moving irregularly and rarely over a term of years amounting to much. It is the function of business to produce for consumption and not for money or speculation. Producing for consumption implies that the quality of the article produced will be high and that the price will be low—that the article be one which serves the people and not merely the producer. If the money feature is twisted out of its proper perspective, then the production will be twisted to serve the producer.
The producer depends for his prosperity upon serving the people. He may get by for a while serving himself, but if he does, it will be purely accidental, and when the people wake up to the fact that they are not being served, the end of that producer is in sight. During the boom period the larger effort of production was to serve itself and hence, the moment the people woke up, many producers went to smash. They said that they had entered into a “period of depression.” Really they had not. They were simply trying to pit nonsense against sense which is something that cannot successfully be done. Being greedy for money is the surest way not to get it, but when one serves for the sake of service—for the satisfaction of doing that which one believes to be right—then money abundantly takes care of itself.
Money comes naturally as the result of service. And it is absolutely necessary to have money. But we do not want to forget that the end of money is not ease but the opportunity to perform more service. In my mind nothing is more abhorrent than a life of ease. None of us has any right to ease. There is no place in civilization for the idler. Any scheme looking to abolishing money is only making affairs more complex, for we must have a measure. That our present system of money is a satisfactory basis for exchange is a matter of grave doubt. That is a question which I shall talk of in a subsequent chapter. The gist of my objection to the present monetary system is that it tends to become a thing of itself and to block instead of facilitate production.
My effort is in the direction of simplicity. People in general have so little and it costs so much to buy even the barest necessities (let alone that share of the luxuries to which I think everyone is entitled) because nearly everything that we make is much more complex than it needs to be. Our clothing, our food, our household furnishings—all could be much simpler than they now are and at the same time be better looking. Things in past ages were made in certain ways and makers since then have just followed.
I do not mean that we should adopt freak styles. There is no necessity for that Clothing need not be a bag with a hole cut in it. That might be easy to make but it would be inconvenient to wear. A blanket does not require much tailoring, but none of us could get much work done if we went around Indian-fashion in blankets. Real simplicity means that which gives the very best service and is the most convenient in use. The trouble with drastic reforms is they always insist that a man be made over in order to use certain designed articles. I think that dress reform for women—which seems to mean ugly clothes—must always originate with plain women who want to make everyone else look plain. That is not the right process. Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything—a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones we also cut down the cost of making. This is simple logic, but oddly enough the ordinary process starts with a cheapening of the manufacturing instead of with a simplifying of the article. The start ought to be with the article. First we ought to find whether it is as well made as it should be—does it give the best possible service? Then—are the materials the best or merely the most expensive? Then—can its complexity and weight be cut down? And so on.
There is no more sense in having extra weight in an article than there is in the cockade on a coachman’s hat. In fact, there is not as much. For the cockade may help the coachman to identify his hat while the extra weight means only a waste of strength. I cannot imagine where the delusion that weight means strength came from. It is all well enough in a pile-driver, but why move a heavy weight if we are not going to hit anything with it? In transportation why put extra weight in a machine? Why not add it to the load that the machine is designed to carry? Fat men cannot run as fast as thin men but we build most of our vehicles as though dead-weight fat increased speed! A deal of poverty grows out of the carriage of excess weight. Some day we shall discover how further to eliminate weight. Take wood, for example. For certain purposes wood is now the best substance we know, but wood is extremely wasteful. The wood in a Ford car contains thirty pounds of water. There must be some way of doing better than that. There must be some method by which we can gain the same strength and elasticity without having to lug useless weight. And so through a thousand processes.
The farmer makes too complex an affair out of his daily work. I believe that the average farmer puts to a really useful purpose only about 5 per cent of the energy that he spends. If any one ever equipped a factory in the style, say, the average farm is fitted out, the place would be cluttered with men. The worst factory in Europe is hardly as bad as the average farm barn. Power is utilized to the least possible degree. Not only is everything done by hand, but seldom is a thought given to logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. Farm products at their lowest prices are dearer than they ought to be. Farm profits at their highest are lower than they ought to be. It is waste motion—waste effort—that makes farm prices high and profits low.
On my own farm at Dearborn we do everything by machinery. We have eliminated a great number of wastes, but we have not as yet touched on real economy. We have not yet been able to put in five or ten years of intense night-and-day study to discover what really ought to be done. We have left more undone than we have done. Yet at no time—no matter what the value of crops—have we failed to turn a first-class profit. We are not farmers—we are industrialists on the farm. The moment the farmer considers himself as an industrialist, with a horror of waste either in material or in men, then we are going to have farm products so low-priced that all will have enough to eat, and the profits will be so satisfactory that farming will be considered as among the least hazardous and most profitable of occupations.
Lack of knowledge of what is going on and lack of knowledge of what the job really is and the best way of doing it are the reasons why farming is thought not to pay. Nothing could pay the way farming is conducted. The farmer follows luck and his forefathers. He does not know how economically to produce, and he does not know how to market. A manufacturer who knew how neither to produce nor to market would not long stay in business. That the farmer can stay on shows how wonderfully profitable farming can be.
The way to attain low-priced, high-volume production in the factory or on the farm—and low-priced, high-volume production means plenty for everyone—is quite simple. The trouble is that the general tendency is to complicate very simple affairs. Take, for an instance, an “improvement.”
When we talk about improvements usually we have in mind some change in a product. An “improved” product is one that has been changed. That is not my idea. I do not believe in starting to make until I have discovered the best possible thing. This, of course, does not mean that a product should never be changed, but I think that it will be found more economical in the end not even to try to produce an article until you have fully satisfied yourself that utility, design, and material are the best. If your researches do not give you that confidence, then keep right on searching until you find confidence. The place to start manufacturing is with the article. The factory, the organization, the selling, and the financial plans will shape themselves to the article. You will have a cutting, edge on your business chisel and in the end you will save time. Rushing into manufacturing without being certain of the product is the unrecognized cause of many business failures. People seem to think that the big thing is the factory or the store or the financial backing or the management. The big thing is the product, and any hurry in getting into fabrication before designs are completed is just so much waste time. I spent twelve years before I had a Model T—which is what is known to-day as the Ford car—that suited me. We did not attempt to go into real production until we had a real product. That product has not been essentially changed.
We are constantly experimenting with new ideas. If you travel the roads in the neighbourhood of Dearborn you can find all sorts of models of Ford cars. They are experimental cars—they are not new models. I do not believe in letting any good idea get by me, but I will not quickly decide whether an idea is good or bad. If an idea seems good or seems even to have possibilities, I believe in doing whatever is necessary to test out the idea from every angle. But testing out the idea is something very different from making a change in the car. Where most manufacturers find themselves quicker to make a change in the product than in the method of manufacturing—we follow exactly the opposite course.
Our big changes have been in methods of manufacturing. They never stand still. I believe that there is hardly a single operation in the making of our car that is the same as when we made our first car of the present model. That is why we make them so cheaply. The few changes that have been made in the car have been in the direction of convenience in use or where we found that a change in design might give added strength. The materials in the car change as we learn more and more about materials. Also we do not want to be held up in production or have the expense of production increased by any possible shortage in a particular material, so we have for most parts worked out substitute materials. Vanadium steel, for instance, is our principal steel. With it we can get the greatest strength with the least weight, but it would not be good business to let our whole future depend upon being able to get vanadium steel. We have worked out a substitute. All our steels are special, but for every one of them we have at least one, and sometimes several, fully proved and tested substitutes. And so on through all of our materials and likewise with our parts. In the beginning we made very few of our parts and none of our motors. Now we make all our motors and most of our parts because we find it cheaper to do so. But also we aim to make some of every part so that we cannot be caught in any market emergency or be crippled by some outside manufacturer being unable to fill his orders. The prices on glass were run up outrageously high during the war; we are among the largest users of glass in the country. Now we are putting up our own glass factory. If we had devoted all of this energy to making changes in the product we should be nowhere; but by not changing the product we are able to give our energy to the improvement of the making.
The principal part of a chisel is the cutting edge. If there is a single principle on which our business rests it is that. It makes no difference how finely made a chisel is or what splendid steel it has in it or how well it is forged—if it has no cutting edge it is not a chisel. It is just a piece of metal. All of which being translated means that it is what a thing does—not what it is supposed to do—that matters. What is the use of putting a tremendous force behind a blunt chisel if a light blow on a sharp chisel will do the work? The chisel is there to cut, not to be hammered. The hammering is only incidental to the job. So if we want to work why not concentrate on the work and do it in the quickest possible fashion? The cutting edge of merchandising is the point where the product touches the consumer. An unsatisfactory product is one that has a dull cutting edge. A lot of waste effort is needed to put it through. The cutting edge of a factory is the man and the machine on the job. If the man is not right the machine cannot be; if the machine is not right the man cannot be. For any one to be required to use more force than is absolutely necessary for the job in hand is waste.
The essence of my idea then is that waste and greed block the delivery of true service. Both waste and greed are unnecessary. Waste is due largely to not understanding what one does, or being careless in doing of it. Greed is merely a species of nearsightedness. I have striven toward manufacturing with a minimum of waste, both of materials and of human effort, and then toward distribution at a minimum of profit, depending for the total profit upon the volume of distribution. In the process of manufacturing I want to distribute the maximum of wage—that is, the maximum of buying power. Since also this makes for a minimum cost and we sell at a minimum profit, we can distribute a product in consonance with buying power. Thus everyone who is connected with us—either as a manager, worker, or purchaser—is the better for our existence. The institution that we have erected is performing a service. That is the only reason I have for talking about it. The principles of that service are these:
1. An absence of fear of the future and of veneration for the past. One who fears the future, who fears failure, limits his activities. Failure is only the opportunity more intelligently to begin again. There is no disgrace in honest failure; there is disgrace in fearing to fail. What is past is useful only as it suggests ways and means for progress.
2. A disregard of competition. Whoever does a thing best ought to be the one to do it. It is criminal to try to get business away from another man—criminal because one is then trying to lower for personal gain the condition of one’s fellow man—to rule by force instead of by intelligence.
3. The putting of service before profit. Without a profit, business cannot extend. There is nothing inherently wrong about making a profit. Well-conducted business enterprise cannot fail to return a profit, but profit must and inevitably will come as a reward for good service. It cannot be the basis—it must be the result of service.
4. Manufacturing is not buying low and selling high. It is the process of buying materials fairly and, with the smallest possible addition of cost, transforming those materials into a consumable product and giving it to the consumer. Gambling, speculating, and sharp dealing, tend only to clog this progression.
How all of this arose, how it has worked out, and how it applies generally are the subjects of these chapters.
THE BEGINNING OF BUSINESS
On May 31, 1921, the Ford Motor Company turned out Car No. 5,000,000. It is out in my museum along with the gasoline buggy that I began work on thirty years before and which first ran satisfactorily along in the spring of 1893. I was running it when the bobolinks came to Dearborn and they always come on April 2nd. There is all the difference in the world in the appearance of the two vehicles and almost as much difference in construction and materials, but in fundamentals the two are curiously alike—except that the old buggy has on it a few wrinkles that we have not yet quite adopted in our modern car. For that first car or buggy, even though it had but two cylinders, would make twenty miles an hour and run sixty miles on the three gallons of gas the little tank held and is as good to-day as the day it was built. The development in methods of manufacture and in materials has been greater than the development in basic design. The whole design has been refined; the present Ford car, which is the “Model T,” has four cylinders and a self starter—it is in every way a more convenient and an easier riding car. It is simpler than the first car. But almost every point in it may be found also in the first car. The changes have been brought about through experience in the making and not through any change in the basic principle—which I take to be an important fact demonstrating that, given a good idea to start with, it is better to concentrate on perfecting it than to hunt around for a new idea. One idea at a time is about as much as any one can handle.
It was life on the farm that drove me into devising ways and means to better transportation. I was born on July 30, 1863, on a farm at Dearborn, Michigan, and my earliest recollection is that, considering the results, there was too much work on the place. That is the way I still feel about farming. There is a legend that my parents were very poor and that the early days were hard ones. Certainly they were not rich, but neither were they poor. As Michigan farmers went, we were prosperous. The house in which I was born is still standing, and it and the farm are part of my present holding.
There was too much hard hand labour on our own and all other farms of the time. Even when very young I suspected that much might somehow be done in a better way. That is what took me into mechanics—although my mother always said that I was born a mechanic. I had a kind of workshop with odds and ends of metal for tools before I had anything else. In those days we did not have the toys of to-day; what we had were home made. My toys were all tools—they still are! And every fragment of machinery was a treasure.
The biggest event of those early years was meeting with a road engine about eight miles out of Detroit one day when we were driving to town. I was then twelve years old. The second biggest event was getting a watch—which happened in the same year. I remember that engine as though I had seen it only yesterday, for it was the first vehicle other than horse-drawn that I had ever seen. It was intended primarily for driving threshing machines and sawmills and was simply a portable engine and boiler mounted on wheels with a water tank and coal cart trailing behind. I had seen plenty of these engines hauled around by horses, but this one had a chain that made a connection between the engine and the rear wheels of the wagon-like frame on which the boiler was mounted. The engine was placed over the boiler and one man standing on the platform behind the boiler shoveled coal, managed the throttle, and did the steering. It had been made by Nichols, Shepard & Company of Battle Creek. I found that out at once. The engine had stopped to let us pass with our horses and I was off the wagon and talking to the engineer before my father, who was driving, knew what I was up to. The engineer was very glad to explain the whole affair. He was proud of it. He showed me how the chain was disconnected from the propelling wheel and a belt put on to drive other machinery. He told me that the engine made two hundred revolutions a minute and that the chain pinion could be shifted to let the wagon stop while the engine was still running. This last is a feature which, although in different fashion, is incorporated into modern automobiles. It was not important with steam engines, which are easily stopped and started, but it became very important with the gasoline engine. It was that engine which took me into automotive transportation. I tried to make models of it, and some years later I did make one that ran very well, but from the time I saw that road engine as a boy of twelve right forward to to-day, my great interest has been in making a machine that would travel the roads. Driving to town I always had a pocket full of trinkets—nuts, washers, and odds and ends of machinery. Often I took a broken watch and tried to put it together. When I was thirteen I managed for the first time to put a watch together so that it would keep time. By the time I was fifteen I could do almost anything in watch repairing—although my tools were of the crudest. There is an immense amount to be learned simply by tinkering with things. It is not possible to learn from books how everything is made—and a real mechanic ought to know how nearly everything is made. Machines are to a mechanic what books are to a writer. He gets ideas from them, and if he has any brains he will apply those ideas.
From the beginning I never could work up much interest in the labour of farming. I wanted to have something to do with machinery. My father was not entirely in sympathy with my bent toward mechanics. He thought that I ought to be a farmer. When I left school at seventeen and became an apprentice in the machine shop of the Drydock Engine Works I was all but given up for lost. I passed my apprenticeship without trouble—that is, I was qualified to be a machinist long before my three-year term had expired—and having a liking for fine work and a leaning toward watches I worked nights at repairing in a jewelry shop. At one period of those early days I think that I must have had fully three hundred watches. I thought that I could build a serviceable watch for around thirty cents and nearly started in the business. But I did not because I figured out that watches were not universal necessities, and therefore people generally would not buy them. Just how I reached that surprising conclusion I am unable to state. I did not like the ordinary jewelry and watch making work excepting where the job was hard to do. Even then I wanted to make something in quantity. It was just about the time when the standard railroad time was being arranged. We had formerly been on sun time and for quite a while, just as in our present daylight-saving days, the railroad time differed from the local time. That bothered me a good deal and so I succeeded in making a watch that kept both times. It had two dials and it was quite a curiosity in the neighbourhood.
In 1879—that is, about four years after I first saw that Nichols-Shepard machine—I managed to get a chance to run one and when my apprenticeship was over I worked with a local representative of the Westinghouse Company of Schenectady as an expert in the setting up and repair of their road engines. The engine they put out was much the same as the Nichols-Shepard engine excepting that the engine was up in front, the boiler in the rear, and the power was applied to the back wheels by a belt. They could make twelve miles an hour on the road even though the self-propelling feature was only an incident of the construction. They were sometimes used as tractors to pull heavy loads and, if the owner also happened to be in the threshing-machine business, he hitched his threshing machine and other paraphernalia to the engine in moving from farm to farm. What bothered me was the weight and the cost. They weighed a couple of tons and were far too expensive to be owned by other than a farmer with a great deal of land. They were mostly employed by people who went into threshing as a business or who had sawmills or some other line that required portable power.
Even before that time I had the idea of making some kind of a light steam car that would take the place of horses—more especially, however, as a tractor to attend to the excessively hard labour of ploughing. It occurred to me, as I remember somewhat vaguely, that precisely the same idea might be applied to a carriage or a wagon on the road. A horseless carriage was a common idea. People had been talking about carriages without horses for many years back—in fact, ever since the steam engine was invented—but the idea of the carriage at first did not seem so practical to me as the idea of an engine to do the harder farm work, and of all the work on the farm ploughing was the hardest. Our roads were poor and we had not the habit of getting around. One of the most remarkable features of the automobile on the farm is the way that it has broadened the farmer’s life. We simply took for granted that unless the errand were urgent we would not go to town, and I think we rarely made more than a trip a week. In bad weather we did not go even that often.
Being a full-fledged machinist and with a very fair workshop on the farm it was not difficult for me to build a steam wagon or tractor. In the building of it came the idea that perhaps it might be made for road use. I felt perfectly certain that horses, considering all the bother of attending them and the expense of feeding, did not earn their keep. The obvious thing to do was to design and build a steam engine that would be light enough to run an ordinary wagon or to pull a plough. I thought it more important first to develop the tractor. To lift farm drudgery off flesh and blood and lay it on steel and motors has been my most constant ambition. It was circumstances that took me first into the actual manufacture of road cars. I found eventually that people were more interested in something that would travel on the road than in something that would do the work on the farms. In fact, I doubt that the light farm tractor could have been introduced on the farm had not the farmer had his eyes opened slowly but surely by the automobile. But that is getting ahead of the story. I thought the farmer would be more interested in the tractor.
I built a steam car that ran. It had a kerosene-heated boiler and it developed plenty of power and a neat control—which is so easy with a steam throttle. But the boiler was dangerous. To get the requisite power without too big and heavy a power plant required that the engine work under high pressure; sitting on a high-pressure steam boiler is not altogether pleasant. To make it even reasonably safe required an excess of weight that nullified the economy of the high pressure. For two years I kept experimenting with various sorts of boilers—the engine and control problems were simple enough—and then I definitely abandoned the whole idea of running a road vehicle by steam. I knew that in England they had what amounted to locomotives running on the roads hauling lines of trailers and also there was no difficulty in designing a big steam tractor for use on a large farm. But ours were not then English roads; they would have stalled or racked to pieces the strongest and heaviest road tractor. And anyway the manufacturing of a big tractor which only a few wealthy farmers could buy did not seem to me worth while.
But I did not give up the idea of a horseless carriage. The work with the Westinghouse representative only served to confirm the opinion I had formed that steam was not suitable for light vehicles. That is why I stayed only a year with that company. There was nothing more that the big steam tractors and engines could teach me and I did not want to waste time on something that would lead nowhere. A few years before—it was while I was an apprentice—I read in the World of Science, an English publication, of the “silent gas engine” which was then coming out in England. I think it was the Otto engine. It ran with illuminating gas, had a single large cylinder, and the power impulses being thus intermittent required an extremely heavy fly-wheel. As far as weight was concerned it gave nothing like the power per pound of metal that a steam engine gave, and the use of illuminating gas seemed to dismiss it as even a possibility for road use. It was interesting to me only as all machinery was interesting. I followed in the English and American magazines which we got in the shop the development of the engine and most particularly the hints of the possible replacement of the illuminating gas fuel by a gas formed by the vaporization of gasoline. The idea of gas engines was by no means new, but this was the first time that a really serious effort had been made to put them on the market. They were received with interest rather than enthusiasm and I do not recall any one who thought that the internal combustion engine could ever have more than a limited use. All the wise people demonstrated conclusively that the engine could not compete with steam. They never thought that it might carve out a career for itself. That is the way with wise people—they are so wise and practical that they always know to a dot just why something cannot be done; they always know the limitations. That is why I never employ an expert in full bloom. If ever I wanted to kill opposition by unfair means I would endow the opposition with experts. They would have so much good advice that I could be sure they would do little work.
The gas engine interested me and I followed its progress, but only from curiosity, until about 1885 or 1886 when, the steam engine being discarded as the motive power for the carriage that I intended some day to build, I had to look around for another sort of motive power. In 1885 I repaired an Otto engine at the Eagle Iron Works in Detroit. No one in town knew anything about them. There was a rumour that I did and, although I had never before been in contact with one, I undertook and carried through the job. That gave me a chance to study the new engine at first hand and in 1887 I built one on the Otto four-cycle model just to see if I understood the principles. “Four cycle” means that the piston traverses the cylinder four times to get one power impulse. The first stroke draws in the gas, the second compresses it, the third is the explosion or power stroke, while the fourth stroke exhausts the waste gas. The little model worked well enough; it had a one-inch bore and a three-inch stroke, operated with gasoline, and while it did not develop much power, it was slightly lighter in proportion than the engines being offered commercially. I gave it away later to a young man who wanted it for something or other and whose name I have forgotten; it was eventually destroyed. That was the beginning of the work with the internal combustion engine.
I was then on the farm to which I had returned, more because I wanted to experiment than because I wanted to farm, and, now being an all-around machinist, I had a first-class workshop to replace the toy shop of earlier days. My father offered me forty acres of timber land, provided I gave up being a machinist. I agreed in a provisional way, for cutting the timber gave me a chance to get married. I fitted out a sawmill and a portable engine and started to cut out and saw up the timber on the tract. Some of the first of that lumber went into a cottage on my new farm and in it we began our married life. It was not a big house—thirty-one feet square and only a story and a half high—but it was a comfortable place. I added to it my workshop, and when I was not cutting timber I was working on the gas engines—learning what they were and how they acted. I read everything I could find, but the greatest knowledge came from the work. A gas engine is a mysterious sort of thing—it will not always go the way it should. You can imagine how those first engines acted!
It was in 1890 that I began on a double-cylinder engine. It was quite impractical to consider the single cylinder for transportation purposes—the fly-wheel had to be entirely too heavy. Between making the first four-cycle engine of the Otto type and the start on a double cylinder I had made a great many experimental engines out of tubing. I fairly knew my way about. The double cylinder I thought could be applied to a road vehicle and my original idea was to put it on a bicycle with a direct connection to the crankshaft and allowing for the rear wheel of the bicycle to act as the balance wheel. The speed was going to be varied only by the throttle. I never carried out this plan because it soon became apparent that the engine, gasoline tank, and the various necessary controls would be entirely too heavy for a bicycle. The plan of the two opposed cylinders was that, while one would be delivering power the other would be exhausting. This naturally would not require so heavy a fly-wheel to even the application of power. The work started in my shop on the farm. Then I was offered a job with the Detroit Electric Company as an engineer and machinist at forty-five dollars a month. I took it because that was more money than the farm was bringing me and I had decided to get away from farm life anyway. The timber had all been cut. We rented a house on Bagley Avenue, Detroit. The workshop came along and I set it up in a brick shed at the back of the house. During the first several months I was in the night shift at the electric-light plant—which gave me very little time for experimenting—but after that I was in the day shift and every night and all of every Saturday night I worked on the new motor. I cannot say that it was hard work. No work with interest is ever hard. I always am certain of results. They always come if you work hard enough. But it was a very great thing to have my wife even more confident than I was. She has always been that way.
I had to work from the ground up—that is, although I knew that a number of people were working on horseless carriages, I could not know what they were doing. The hardest problems to overcome were in the making and breaking of the spark and in the avoidance of excess weight. For the transmission, the steering gear, and the general construction, I could draw on my experience with the steam tractors. In 1892 I completed my first motor car, but it was not until the spring of the following year that it ran to my satisfaction. This first car had something of the appearance of a buggy. There were two cylinders with a two-and-a-half-inch bore and a six-inch stroke set side by side and over the rear axle. I made them out of the exhaust pipe of a steam engine that I had bought. They developed about four horsepower. The power was transmitted from the motor to the countershaft by a belt and from the countershaft to the rear wheel by a chain. The car would hold two people, the seat being suspended on posts and the body on elliptical springs. There were two speeds—one of ten and the other of twenty miles per hour—obtained by shifting the belt, which was done by a clutch lever in front of the driving seat. Thrown forward, the lever put in the high speed; thrown back, the low speed; with the lever upright the engine could run free. To start the car it was necessary to turn the motor over by hand with the clutch free. To stop the car one simply released the clutch and applied the foot brake. There was no reverse, and speeds other than those of the belt were obtained by the throttle. I bought the iron work for the frame of the carriage and also the seat and the springs. The wheels were twenty-eight-inch wire bicycle wheels with rubber tires. The balance wheel I had cast from a pattern that I made and all of the more delicate mechanism I made myself. One of the features that I discovered necessary was a compensating gear that permitted the same power to be applied to each of the rear wheels when turning corners. The machine altogether weighed about five hundred pounds. A tank under the seat held three gallons of gasoline which was fed to the motor through a small pipe and a mixing valve. The ignition was by electric spark. The original machine was air-cooled—or to be more accurate, the motor simply was not cooled at all. I found that on a run of an hour or more the motor heated up, and so I very shortly put a water jacket around the cylinders and piped it to a tank in the rear of the car over the cylinders. Nearly all of these various features had been planned in advance. That is the way I have always worked. I draw a plan and work out every detail on the plan before starting to build. For otherwise one will waste a great deal of time in makeshifts as the work goes on and the finished article will not have coherence. It will not be rightly proportioned. Many inventors fail because they do not distinguish between planning and experimenting. The largest building difficulties that I had were in obtaining the proper materials. The next were with tools. There had to be some adjustments and changes in details of the design, but what held me up most was that I had neither the time nor the money to search for the best material for each part. But in the spring of 1893 the machine was running to my partial satisfaction and giving an opportunity further to test out the design and material on the road.
WHAT I LEARNED ABOUT BUSINESS
My “gasoline buggy” was the first and for a long time the only automobile in Detroit. It was considered to be something of a nuisance, for it made a racket and it scared horses. Also it blocked traffic. For if I stopped my machine anywhere in town a crowd was around it before I could start up again. If I left it alone even for a minute some inquisitive person always tried to run it. Finally, I had to carry a chain and chain it to a lamp post whenever I left it anywhere. And then there was trouble with the police. I do not know quite why, for my impression is that there were no speed-limit laws in those days. Anyway, I had to get a special permit from the mayor and thus for a time enjoyed the distinction of being the only licensed chauffeur in America. I ran that machine about one thousand miles through 1895 and 1896 and then sold it to Charles Ainsley of Detroit for two hundred dollars. That was my first sale. I had built the car not to sell but only to experiment with. I wanted to start another car. Ainsley wanted to buy. I could use the money and we had no trouble in agreeing upon a price.
It was not at all my idea to make cars in any such petty fashion. I was looking ahead to production, but before that could come I had to have something to produce. It does not pay to hurry. I started a second car in 1896; it was much like the first but a little lighter. It also had the belt drive which I did not give up until some time later; the belts were all right excepting in hot weather. That is why I later adopted gears. I learned a great deal from that car. Others in this country and abroad were building cars by that time, and in 1895 I heard that a Benz car from Germany was on exhibition in Macy’s store in New York. I traveled down to look at it but it had no features that seemed worth while. It also had the belt drive, but it was much heavier than my car. I was working for lightness; the foreign makers have never seemed to appreciate what light weight means. I built three cars in all in my home shop and all of them ran for years in Detroit. I still have the first car; I bought it back a few years later from a man to whom Mr. Ainsley had sold it. I paid one hundred dollars for it.
During all this time I kept my position with the electric company and gradually advanced to chief engineer at a salary of one hundred and twenty-five dollars a month. But my gas-engine experiments were no more popular with the president of the company than my first mechanical leanings were with my father. It was not that my employer objected to experiments—only to experiments with a gas engine. I can still hear him say: “Electricity, yes, that’s the coming thing. But gas—no.”
He had ample grounds for his skepticism—to use the mildest terms. Practically no one had the remotest notion of the future of the internal combustion engine, while we were just on the edge of the great electrical development. As with every comparatively new idea, electricity was expected to do much more than we even now have any indication that it can do. I did not see the use of experimenting with electricity for my purposes. A road car could not run on a trolley even if trolley wires had been less expensive; no storage battery was in sight of a weight that was practical. An electrical car had of necessity to be limited in radius and to contain a large amount of motive machinery in proportion to the power exerted. That is not to say that I held or now hold electricity cheaply; we have not yet begun to use electricity. But it has its place, and the internal combustion engine has its place. Neither can substitute for the other—which is exceedingly fortunate.
I have the dynamo that I first had charge of at the Detroit Edison Company. When I started our Canadian plant I bought it from an office building to which it had been sold by the electric company, had it revamped a little, and for several years it gave excellent service in the Canadian plant. When we had to build a new power plant, owing to the increase in business, I had the old motor taken out to my museum—a room out at Dearborn that holds a great number of my mechanical treasures.
The Edison Company offered me the general superintendency of the company but only on condition that I would give up my gas engine and devote myself to something really useful. I had to choose between my job and my automobile. I chose the automobile, or rather I gave up the job—there was really nothing in the way of a choice. For already I knew that the car was bound to be a success. I quit my job on August 15, 1899, and went into the automobile business.
It might be thought something of a step, for I had no personal funds. What money was left over from living was all used in experimenting. But my wife agreed that the automobile could not be given up—that we had to make or break. There was no “demand” for automobiles—there never is for a new article. They were accepted in much the fashion as was more recently the airplane. At first the “horseless carriage” was considered merely a freak notion and many wise people explained with particularity why it could never be more than a toy. No man of money even thought of it as a commercial possibility. I cannot imagine why each new means of transportation meets with such opposition. There are even those to-day who shake their heads and talk about the luxury of the automobile and only grudgingly admit that perhaps the motor truck is of some use. But in the beginning there was hardly any one who sensed that the automobile could be a large factor in industry. The most optimistic hoped only for a development akin to that of the bicycle. When it was found that an automobile really could go and several makers started to put out cars, the immediate query was as to which would go fastest. It was a curious but natural development—that racing idea. I never thought anything of racing, but the public refused to consider the automobile in any light other than as a fast toy. Therefore later we had to race. The industry was held back by this initial racing slant, for the attention of the makers was diverted to making fast rather than good cars. It was a business for speculators.
A group of men of speculative turn of mind organized, as soon as I left the electric company, the Detroit Automobile Company to exploit my car. I was the chief engineer and held a small amount of the stock. For three years we continued making cars more or less on the model of my first car. We sold very few of them; I could get no support at all toward making better cars to be sold to the public at large. The whole thought was to make to order and to get the largest price possible for each car. The main idea seemed to be to get the money. And being without authority other than my engineering position gave me, I found that the new company was not a vehicle for realizing my ideas but merely a money-making concern—that did not make much money. In March, 1902, I resigned, determined never again to put myself under orders. The Detroit Automobile Company later became the Cadillac Company under the ownership of the Lelands, who came in subsequently.
I rented a shop—a one-story brick shed—at 81 Park Place to continue my experiments and to find out what business really was. I thought that it must be something different from what it had proved to be in my first adventure.
The year from 1902 until the formation of the Ford Motor Company was practically one of investigation. In my little one-room brick shop I worked on the development of a four-cylinder motor and on the outside I tried to find out what business really was and whether it needed to be quite so selfish a scramble for money as it seemed to be from my first short experience. From the period of the first car, which I have described, until the formation of my present company I built in all about twenty-five cars, of which nineteen or twenty were built with the Detroit Automobile Company. The automobile had passed from the initial stage where the fact that it could run at all was enough, to the stage where it had to show speed. Alexander Winton of Cleveland, the founder of the Winton car, was then the track champion of the country and willing to meet all comers. I designed a two-cylinder enclosed engine of a more compact type than I had before used, fitted it into a skeleton chassis, found that I could make speed, and arranged a race with Winton. We met on the Grosse Point track at Detroit. I beat him. That was my first race, and it brought advertising of the only kind that people cared to read. The public thought nothing of a car unless it made speed—unless it beat other racing cars. My ambition to build the fastest car in the world led me to plan a four-cylinder motor. But of that more later.
The most surprising feature of business as it was conducted was the large attention given to finance and the small attention to service. That seemed to me to be reversing the natural process which is that the money should come as the result of work and not before the work. The second feature was the general indifference to better methods of manufacture as long as whatever was done got by and took the money. In other words, an article apparently was not built with reference to how greatly it could serve the public but with reference solely to how much money could be had for it—and that without any particular care whether the customer was satisfied. To sell him was enough. A dissatisfied customer was regarded not as a man whose trust had been violated, but either as a nuisance or as a possible source of more money in fixing up the work which ought to have been done correctly in the first place. For instance, in automobiles there was not much concern as to what happened to the car once it had been sold. How much gasoline it used per mile was of no great moment; how much service it actually gave did not matter; and if it broke down and had to have parts replaced, then that was just hard luck for the owner. It was considered good business to sell parts at the highest possible price on the theory that, since the man had already bought the car, he simply had to have the part and would be willing to pay for it.
The automobile business was not on what I would call an honest basis, to say nothing of being, from a manufacturing standpoint, on a scientific basis, but it was no worse than business in general. That was the period, it may be remembered, in which many corporations were being floated and financed. The bankers, who before then had confined themselves to the railroads, got into industry. 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 care for themselves and that a business ought to start small and build itself up and out of its earnings. If there are no earnings then that is a signal to the owner that he is wasting his time and does not belong in that business. I have never found it necessary to change those ideas, but I discovered that this simple formula of doing good work and getting paid for it was supposed to be slow for modern business. The plan at that time most in favor was to start off with the largest possible capitalization and then sell all the stock and all the bonds that could be sold. Whatever money happened to be left over after all the stock and bond-selling expenses and promoters, charges and all that, went grudgingly into the foundation of the business. A good business was not one that did good work and earned a fair profit. A good business was one that would give the opportunity for the floating of a large amount of stocks and bonds at high prices. It was the stocks and bonds, not the work, that mattered. I could not see how a new business or an old business could be expected to be able to charge into its product a great big bond interest and then sell the product at a fair price. I have never been able to see that.
I have never been able to understand on what theory the original investment of money can be charged against a business. Those men in business who call themselves financiers say that money is “worth” 6 per cent, or 5 per cent, or some other per cent, and that if a business has one hundred thousand dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into the business he had put it into a savings bank or into certain securities, he could have a certain fixed return. Therefore they say that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the product of tools. Therefore money is worth what it will help you to produce or buy and no more. If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business—or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces—and not a fixed sum according to some scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before.
Business men believed that you could do anything by “financing” it. If it did not go through on the first financing then the idea was to “refinance.” The process of “refinancing” was simply the game of sending good money after bad. In the majority of cases the need of refinancing arises from bad management, and the effect of refinancing is simply to pay the poor managers to keep up their bad management a little longer. It is merely a postponement of the day of judgment. This makeshift of refinancing is a device of speculative financiers. Their money is no good to them unless they can connect it up with a place where real work is being done, and that they cannot do unless, somehow, that place is poorly managed. Thus, the speculative financiers delude themselves that they are putting their money out to use. They are not; they are putting it out to waste.
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. And further that, if there were no way to get started in the kind of business that I thought could be managed in the interest of the public, then I simply would not get started at all. For my own short experience, together with what I saw going on around me, was quite enough proof that business as a mere money-making game was not worth giving much thought to and was distinctly no place for a man who wanted to accomplish anything. Also it did not seem to me to be the way to make money. I have yet to have it demonstrated that it is the way. For the only foundation of real business is service.
A manufacturer is not through with his customer when a sale is completed. He has then only started with his customer. In the case of an automobile the sale of the machine is only something in the nature of an introduction. If the machine does not give service, then it is better for the manufacturer if he never had the introduction, for he will have the worst of all advertisements—a dissatisfied customer. There was something more than a tendency in the early days of the automobile to regard the selling of a machine as the real accomplishment and that thereafter it did not matter what happened to the buyer. That is the shortsighted salesman-on-commission attitude. If a salesman is paid only for what he sells, it is not to be expected that he is going to exert any great effort on a customer out of whom no more commission is to be made. And it is right on this point that we later made the largest selling argument for the Ford. The price and the quality of the car would undoubtedly have made a market, and a large market. We went beyond that. A man who bought one of our cars was in my opinion entitled to continuous use of that car, and therefore if he had a breakdown of any kind it was our duty to see that his machine was put into shape again at the earliest possible moment. In the success of the Ford car the early provision of service was an outstanding element. Most of the expensive cars of that period were ill provided with service stations. If your car broke down you had to depend on the local repair man—when you were entitled to depend upon the manufacturer. If the local repair man were a forehanded sort of a person, keeping on hand a good stock of parts (although on many of the cars the parts were not interchangeable), the owner was lucky. But if the repair man were a shiftless person, with an adequate knowledge of automobiles and an inordinate desire to make a good thing out of every car that came into his place for repairs, then even a slight breakdown meant weeks of laying up and a whopping big repair bill that had to be paid before the car could be taken away. The repair men were for a time the largest menace to the automobile industry. Even as late as 1910 and 1911 the owner of an automobile was regarded as essentially a rich man whose money ought to be taken away from him. We met that situation squarely and at the very beginning. We would not have our distribution blocked by stupid, greedy men.
That is getting some years ahead of the story, but it is control by finance that breaks up service because it looks to the immediate dollar. If the first consideration is to earn a certain amount of money, then, unless by some stroke of luck matters are going especially well and there is a surplus over for service so that the operating men may have a chance, future business has to be sacrificed for the dollar of to-day.
And also I noticed a tendency among many men in business to feel that their lot was hard—they worked against a day when they might retire and live on an income—get out of the strife. Life to them was a battle to be ended as soon as possible. That was another point I could not understand, for as I reasoned, life is not a battle except with our own tendency to sag with the downpull of “getting settled.” If to petrify is success all one has to do is to humour the lazy side of the mind but if to grow is success, then one must wake up anew every morning and keep awake all day. I saw great businesses become but the ghost of a name because someone thought they could be managed just as they were always managed, and though the management may have been most excellent in its day, its excellence consisted in its alertness to its day, and not in slavish following of its yesterdays. Life, as I see it, is not a location, but a journey. Even the man who most feels himself “settled” is not settled—he is probably sagging back. Everything is in flux, and was meant to be. Life flows. We may live at the same number of the street, but it is never the same man who lives there.
And out of the delusion that life is a battle that may be lost by a false move grows, I have noticed, a great love for regularity. Men fall into the half-alive habit. Seldom does the cobbler take up with the new-fangled way of soling shoes, and seldom does the artisan willingly take up with new methods in his trade. Habit conduces to a certain inertia, and any disturbance of it affects the mind like trouble. It will be recalled that when a study was made of shop methods, so that the workmen might be taught to produce with less useless motion and fatigue, it was most opposed by the workmen themselves. Though they suspected that it was simply a game to get more out of them, what most irked them was that it interfered with the well-worn grooves in which they had become accustomed to move. Business men go down with their businesses because they like the old way so well they cannot bring themselves to change. One sees them all about—men who do not know that yesterday is past, and who woke up this morning with their last year’s ideas. It could almost be written down as a formula that when a man begins to think that he has at last found his method he had better begin a most searching examination of himself to see whether some part of his brain has not gone to sleep. There is a subtle danger in a man thinking that he is “fixed” for life. It indicates that the next jolt of the wheel of progress is going to fling him off.
There is also the great fear of being thought a fool. So many men are afraid of being considered fools. I grant that public opinion is a powerful police influence for those who need it. Perhaps it is true that the majority of men need the restraint of public opinion. Public opinion may keep a man better than he would otherwise be—if not better morally, at least better as far as his social desirability is concerned. But it is not a bad thing to be a fool for righteousness’ sake. The best of it is that such fools usually live long enough to prove that they were not fools—or the work they have begun lives long enough to prove they were not foolish.
The money influence—the pressing to make a profit on an “investment”—and its consequent neglect of or skimping of work and hence of service showed itself to me in many ways. It seemed to be at the bottom of most troubles. It was the cause of low wages—for without well-directed work high wages cannot be paid. And if the whole attention is not given to the work it cannot be well directed. Most men want to be free to work; under the system in use they could not be free to work. During my first experience I was not free—I could not give full play to my ideas. Everything had to be planned to make money; the last consideration was the work. And the most curious part of it all was the insistence that it was the money and not the work that counted. It did not seem to strike any one as illogical that money should be put ahead of work—even though everyone had to admit that the profit had to come from the work. The desire seemed to be to find a short cut to money and to pass over the obvious short cut—which is through the work.
Take competition; I found that competition was supposed to be a menace and that a good manager circumvented his competitors by getting a monopoly through artificial means. The idea was that there were only a certain number of people who could buy and that it was necessary to get their trade ahead of someone else. Some will remember that later many of the automobile manufacturers entered into an association under the Selden Patent just so that it might be legally possible to control the price and the output of automobiles. They had the same idea that so many trades unions have—the ridiculous notion that more profit can be had doing less work than more. The plan, I believe, is a very antiquated one. I could not see then and am still unable to see that there is not always enough for the man who does his work; time spent in fighting competition is wasted; it had better be spent in doing the work. There are always enough people ready and anxious to buy, provided you supply what they want and at the proper price—and this applies to personal services as well as to goods.
During this time of reflection I was far from idle. We were going ahead with a four-cylinder motor and the building of a pair of big racing cars. I had plenty of time, for I never left my business. I do not believe a man can ever leave his business. He ought to think of it by day and dream of it by night. It is nice to plan to do one’s work in office hours, to take up the work in the morning, to drop it in the evening—and not have a care until the next morning. It is perfectly possible to do that if one is so constituted as to be willing through all of his life to accept direction, to be an employee, possibly a responsible employee, but not a director or manager of anything. A manual labourer must have a limit on his hours, otherwise he will wear himself out. If he intends to remain always a manual labourer, then he should forget about his work when the whistle blows, but if he intends to go forward and do anything, the whistle is only a signal to start thinking over the day’s work in order to discover how it might be done better.
The man who has the largest capacity for work and thought is the man who is bound to succeed. I cannot pretend to say, because I do not know, whether the man who works always, who never leaves his business, who is absolutely intent upon getting ahead, and who therefore does get ahead—is happier than the man who keeps office hours, both for his brain and his hands. It is not necessary for any one to decide the question. A ten-horsepower engine will not pull as much as a twenty. The man who keeps brain office hours limits his horsepower. If he is satisfied to pull only the load that he has, well and good, that is his affair—but he must not complain if another who has increased his horsepower pulls more than he does. Leisure and work bring different results. If a man wants leisure and gets it—then he has no cause to complain. But he cannot have both leisure and the results of work.
Concretely, what I most realized about business in that year—and I have been learning more each year without finding it necessary to change my first conclusions—is this:
(1) That finance is given a place ahead of work and therefore tends to kill the work and destroy the fundamental of service.
(2) That thinking first of money instead of work brings on fear of failure and this fear blocks every avenue of business—it makes a man afraid of competition, of changing his methods, or of doing anything which might change his condition.
(3) That the way is clear for any one who thinks first of service—of doing the work in the best possible way.
STARTING THE REAL BUSINESS
In the little brick shop at 81 Park Place I had ample opportunity to work out the design and some of the methods of manufacture of a new car. Even if it were possible to organize the exact kind of corporation that I wanted—one in which doing the work well and suiting the public would be controlling factors—it became apparent that I never could produce a thoroughly good motor car that might be sold at a low price under the existing cut-and-try manufacturing methods.
Everybody knows that it is always possible to do a thing better the second time. I do not know why manufacturing should not at that time have generally recognized this as a basic fact—unless it might be that the manufacturers were in such a hurry to obtain something to sell that they did not take time for adequate preparation. Making “to order” instead of making in volume is, I suppose, a habit, a tradition, that has descended from the old handicraft days. Ask a hundred people how they want a particular article made. About eighty will not know; they will leave it to you. Fifteen will think that they must say something, while five will really have preferences and reasons. The ninety-five, made up of those who do not know and admit it and the fifteen who do not know but do not admit it, constitute the real market for any product. The five who want something special may or may not be able to pay the price for special work. If they have the price, they can get the work, but they constitute a special and limited market. Of the ninety-five perhaps ten or fifteen will pay a price for quality. Of those remaining, a number will buy solely on price and without regard to quality. Their numbers are thinning with each day. Buyers are learning how to buy. The majority will consider quality and buy the biggest dollar’s worth of quality. If, therefore, you discover what will give this 95 per cent. of people the best all-round service and then arrange to manufacture at the very highest quality and sell at the very lowest price, you will be meeting a demand which is so large that it may be called universal.
This is not standardizing. The use of the word “standardizing” is very apt to lead one into trouble, for it implies a certain freezing of design and method and usually works out so that the manufacturer selects whatever article he can the most easily make and sell at the highest profit. The public is not considered either in the design or in the price. The thought behind most standardization is to be able to make a larger profit. The result is that with the economies which are inevitable if you make only one thing, a larger and larger profit is continually being had by the manufacturer. His output also becomes larger—his facilities produce more—and before he knows it his markets are overflowing with goods which will not sell. These goods would sell if the manufacturer would take a lower price for them. There is always buying power present—but that buying power will not always respond to reductions in price. If an article has been sold at too high a price and then, because of stagnant business, the price is suddenly cut, the response is sometimes most disappointing. And for a very good reason. The public is wary. It thinks that the price-cut is a fake and it sits around waiting for a real cut. We saw much of that last year. If, on the contrary, the economies of making are transferred at once to the price and if it is well known that such is the policy of the manufacturer, the public will have confidence in him and will respond. They will trust him to give honest value. So standardization may seem bad business unless it carries with it the plan of constantly reducing the price at which the article is sold. And the price has to be reduced (this is very important) because of the manufacturing economies that have come about and not because the falling demand by the public indicates that it is not satisfied with the price. The public should always be wondering how it is possible to give so much for the money.
Standardization (to use the word as I understand it) is not just taking one’s best selling article and concentrating on it. It is planning day and night and probably for years, first on something which will best suit the public and then on how it should be made. The exact processes of manufacturing will develop of themselves. Then, if we shift the manufacturing from the profit to the service basis, we shall have a real business in which the profits will be all that any one could desire.
All of this seems self-evident to me. It is the logical basis of any business that wants to serve 95 per cent. of the community. It is the logical way in which the community can serve itself. I cannot comprehend why all business does not go on this basis. All that has to be done in order to adopt it is to overcome the habit of grabbing at the nearest dollar as though it were the only dollar in the world. The habit has already to an extent been overcome. All the large and successful retail stores in this country are on the one-price basis. The only further step required is to throw overboard the idea of pricing on what the traffic will bear and instead go to the common-sense basis of pricing on what it costs to manufacture and then reducing the cost of manufacture. If the design of the product has been sufficiently studied, then changes in it will come very slowly. But changes in manufacturing processes will come very rapidly and wholly naturally. That has been our experience in everything we have undertaken. How naturally it has all come about, I shall later outline. The point that I wish to impress here is that it is impossible to get a product on which one may concentrate unless an unlimited amount of study is given beforehand. It is not just an afternoon’s work.
These ideas were forming with me during this year of experimenting. Most of the experimenting went into the building of racing cars. The idea in those days was that a first-class car ought to be a racer. I never really thought much of racing, but following the bicycle idea, the manufacturers had the notion that winning a race on a track told the public something about the merits of an automobile—although I can hardly imagine any test that would tell less.
But, as the others were doing it, I, too, had to do it. In 1903, with Tom Cooper, I built two cars solely for speed. They were quite alike. One we named the “999” and the other the “Arrow.” If an automobile were going to be known for speed, then I was going to make an automobile that would be known wherever speed was known. These were. I put in four great big cylinders giving 80 H.P.—which up to that time had been unheard of. The roar of those cylinders alone was enough to half kill a man. There was only one seat. One life to a car was enough. I tried out the cars. Cooper tried out the cars. We let them out at full speed. I cannot quite describe the sensation. Going over Niagara Falls would have been but a pastime after a ride in one of them. I did not want to take the responsibility of racing the “999” which we put up first, neither did Cooper. Cooper said he knew a man who lived on speed, that nothing could go too fast for him. He wired to Salt Lake City and on came a professional bicycle rider named Barney Oldfield. He had never driven a motor car, but he liked the idea of trying it. He said he would try anything once.
It took us only a week to teach him how to drive. The man did not know what fear was. All that he had to learn was how to control the monster. Controlling the fastest car of to-day was nothing as compared to controlling that car. The steering wheel had not yet been thought of. All the previous cars that I had built simply had tillers. On this one I put a two-handed tiller, for holding the car in line required all the strength of a strong man. The race for which we were working was at three miles on the Grosse Point track. We kept our cars as a dark horse. We left the predictions to the others. The tracks then were not scientifically banked. It was not known how much speed a motor car could develop. No one knew better than Oldfield what the turns meant and as he took his seat, while I was cranking the car for the start, he remarked cheerily: “Well, this chariot may kill me, but they will say afterward that I was going like hell when she took me over the bank.”
And he did go…. He never dared to look around. He did not shut off on the curves. He simply let that car go—and go it did. He was about half a mile ahead of the next man at the end of the race!
The “999” did what it was intended to do: It advertised the fact that I could build a fast motorcar. A week after the race I formed the Ford Motor Company. I was vice-president, designer, master mechanic, superintendent, and general manager. The capitalization of the company was one hundred thousand dollars, and of this I owned 25 1/2 per cent. The total amount subscribed in cash was about twenty-eight thousand dollars—which is the only money that the company has ever received for the capital fund from other than operations. In the beginning I thought that it was possible, notwithstanding my former experience, to go forward with a company in which I owned less than the controlling share. I very shortly found I had to have control and therefore in 1906, with funds that I had earned in the company, I bought enough stock to bring my holdings up to 51 per cent, and a little later bought enough more to give me 58-1/2 per cent. The new equipment and the whole progress of the company have always been financed out of earnings. In 1919 my son Edsel purchased the remaining 41-1/2 per cent of the stock because certain of the minority stockholders disagreed with my policies. For these shares he paid at the rate of $12,500 for each $100 par and in all paid about seventy-five millions.
The original company and its equipment, as may be gathered, were not elaborate. We rented Strelow’s carpenter shop on Mack Avenue. In making my designs I had also worked out the methods of making, but, since at that time we could not afford to buy machinery, the entire car was made according to my designs, but by various manufacturers, and about all we did, even in the way of assembling, was to put on the wheels, the tires, and the body. That would really be the most economical method of manufacturing if only one could be certain that all of the various parts would be made on the manufacturing plan that I have above outlined. The most economical manufacturing of the future will be that in which the whole of an article is not made under one roof—unless, of course, it be a very simple article. The modern—or better, the future—method is to have each part made where it may best be made and then assemble the parts into a complete unit at the points of consumption. That is the method we are now following and expect to extend. It would make no difference whether one company or one individual owned all the factories fabricating the component parts of a single product, or whether such part were made in our independently owned factory, if only all adopted the same service methods. If we can buy as good a part as we can make ourselves and the supply is ample and the price right, we do not attempt to make it ourselves—or, at any rate, to make more than an emergency supply. In fact, it might be better to have the ownership widely scattered.
I had been experimenting principally upon the cutting down of weight. Excess weight kills any self-propelled vehicle. There are a lot of fool ideas about weight. It is queer, when you come to think of it, how some fool terms get into current use. There is the phrase “heavyweight” as applied to a man’s mental apparatus! What does it mean? No one wants to be fat and heavy of body—then why of head? For some clumsy reason we have come to confuse strength with weight. The crude methods of early building undoubtedly had much to do with this. The old ox-cart weighed a ton—and it had so much weight that it was weak! To carry a few tons of humanity from New York to Chicago, the railroad builds a train that weighs many hundred tons, and the result is an absolute loss of real strength and the extravagant waste of untold millions in the form of power. The law of diminishing returns begins to operate at the point where strength becomes weight. Weight may be desirable in a steam roller but nowhere else. Strength has nothing to do with weight. The mentality of the man who does things in the world is agile, light, and strong. The most beautiful things in the world are those from which all excess weight has been eliminated. Strength is never just weight—either in men or things. Whenever any one suggests to me that I might increase weight or add a part, I look into decreasing weight and eliminating a part! The car that I designed was lighter than any car that had yet been made. It would have been lighter if I had known how to make it so—later I got the materials to make the lighter car.
In our first year we built “Model A,” selling the runabout for eight hundred and fifty dollars and the tonneau for one hundred dollars more. This model had a two-cylinder opposed motor developing eight horsepower. It had a chain drive, a seventy-two inch wheel base—which was supposed to be long—and a fuel capacity of five gallons. We made and sold 1,708 cars in the first year. That is how well the public responded.
Every one of these “Model A’s” has a history. Take No. 420. Colonel D. C. Collier of California bought it in 1904. He used it for a couple of years, sold it, and bought a new Ford. No. 420 changed hands frequently until 1907 when it was bought by one Edmund Jacobs living near Ramona in the heart of the mountains. He drove it for several years in the roughest kind of work. Then he bought a new Ford and sold his old one. By 1915 No. 420 had passed into the hands of a man named Cantello who took out the motor, hitched it to a water pump, rigged up shafts on the chassis and now, while the motor chugs away at the pumping of water, the chassis drawn by a burro acts as a buggy. The moral, of course, is that you can dissect a Ford but you cannot kill it.
In our first advertisement we said:
Our purpose is to construct and market an automobile specially designed for everyday wear and tear—business, professional, and family use; an automobile which will attain to a sufficient speed to satisfy the average person without acquiring any of those breakneck velocities which are so universally condemned; a machine which will be admired by man, woman, and child alike for its compactness, its simplicity, its safety, its all-around convenience, and—last but not least—its exceedingly reasonable price, which places it within the reach of many thousands who could not think of paying the comparatively fabulous prices asked for most machines.
And these are the points we emphasized:
Simplicity—most of the cars at that time required considerable skill in their management.
The ignition—which was furnished by two sets of six dry cell batteries.
The automatic oiling.
The simplicity and the ease of control of the transmission, which was of the planetary type.
We did not make the pleasure appeal. We never have. In its first advertising we showed that a motor car was a utility. We said:
We often hear quoted the old proverb, “Time is money”—and yet how few business and professional men act as if they really believed its truth.
Men who are constantly complaining of shortage of time and lamenting the fewness of days in the week—men to whom every five minutes wasted means a dollar thrown away—men to whom five minutes’ delay sometimes means the loss of many dollars—will yet depend on the haphazard, uncomfortable, and limited means of transportation afforded by street cars, etc., when the investment of an exceedingly moderate sum in the purchase of a perfected, efficient, high-grade automobile would cut out anxiety and unpunctuality and provide a luxurious means of travel ever at your beck and call.
Always ready, always sure.
Built to save you time and consequent money.
Built to take you anywhere you want to go and bring you back again on time.
Built to add to your reputation for punctuality; to keep your customers good-humoured and in a buying mood.
Built for business or pleasure—just as you say.
Built also for the good of your health—to carry you “jarlessly” over any kind of half decent roads, to refresh your brain with the luxury of much “out-doorness” and your lungs with the “tonic of tonics”—the right kind of atmosphere.
It is your say, too, when it comes to speed. You can—if you choose—loiter lingeringly through shady avenues or you can press down on the foot-lever until all the scenery looks alike to you and you have to keep your eyes skinned to count the milestones as they pass.
I am giving the gist of this advertisement to show that, from the beginning, we were looking to providing service—we never bothered with a “sporting car.”
The business went along almost as by magic. The cars gained a reputation for standing up. They were tough, they were simple, and they were well made. I was working on my design for a universal single model but I had not settled the designs nor had we the money to build and equip the proper kind of plant for manufacturing. I had not the money to discover the very best and lightest materials. We still had to accept the materials that the market offered—we got the best to be had but we had no facilities for the scientific investigation of materials or for original research.
My associates were not convinced that it was possible to restrict our cars to a single model. The automobile trade was following the old bicycle trade, in which every manufacturer thought it necessary to bring out a new model each year and to make it so unlike all previous models that those who had bought the former models would want to get rid of the old and buy the new. That was supposed to be good business. It is the same idea that women submit to in their clothing and hats. That is not service—it seeks only to provide something new, not something better. It is extraordinary how firmly rooted is the notion that business—continuous selling—depends not on satisfying the customer once and for all, but on first getting his money for one article and then persuading him he ought to buy a new and different one. The plan which I then had in the back of my head but to which we were not then sufficiently advanced to give expression, was that, when a model was settled upon then every improvement on that model should be interchangeable with the old model, so that a car should never get out of date. It is my ambition to have every piece of machinery, or other non-consumable product that I turn out, so strong and so well made that no one ought ever to have to buy a second one. A good machine of any kind ought to last as long as a good watch.
In the second year we scattered our energies among three models. We made a four-cylinder touring car, “Model B,” which sold for two thousand dollars; “Model C,” which was a slightly improved “Model A” and sold at fifty dollars more than the former price; and “Model F,” a touring car which sold for a thousand dollars. That is, we scattered our energy and increased prices—and therefore we sold fewer cars than in the first year. The sales were 1,695 cars.
That “Model B”—the first four-cylinder car for general road use—had to be advertised. Winning a race or making a record was then the best kind of advertising. So I fixed up the “Arrow,” the twin of the old “999”—in fact practically remade it—and a week before the New York Automobile show I drove it myself over a surveyed mile straightaway on the ice. I shall never forget that race. The ice seemed smooth enough, so smooth that if I had called off the trial we should have secured an immense amount of the wrong kind of advertising, but instead of being smooth, that ice was seamed with fissures which I knew were going to mean trouble the moment I got up speed. But there was nothing to do but go through with the trial, and I let the old “Arrow” out. At every fissure the car leaped into the air. I never knew how it was coming down. When I wasn’t in the air, I was skidding, but somehow I stayed top side up and on the course, making a record that went all over the world! That put “Model B” on the map—but not enough on to overcome the price advances. No stunt and no advertising will sell an article for any length of time. Business is not a game. The moral is coming.
Our little wooden shop had, with the business we were doing, become totally inadequate, and in 1906 we took out of our working capital sufficient funds to build a three-story plant at the corner of Piquette and Beaubien streets—which for the first time gave us real manufacturing facilities. We began to make and to assemble quite a number of the parts, although still we were principally an assembling shop. In 1905-1906 we made only two models—one the four-cylinder car at $2,000 and another touring car at $1,000, both being the models of the previous year—and our sales dropped to 1,599 cars.
Some said it was because we had not brought out new models. I thought it was because our cars were too expensive—they did not appeal to the 95 per cent. I changed the policy in the next year—having first acquired stock control. For 1906-1907 we entirely left off making touring cars and made three models of runabouts and roadsters, none of which differed materially from the other in manufacturing process or in component parts, but were somewhat different in appearance. The big thing was that the cheapest car sold for $600 and the most expensive for only $750, and right there came the complete demonstration of what price meant. We sold 8,423 cars—nearly five times as many as in our biggest previous year. Our banner week was that of May 15, 1908, when we assembled 311 cars in six working days. It almost swamped our facilities. The foreman had a tallyboard on which he chalked up each car as it was finished and turned over to the testers. The tallyboard was hardly equal to the task. On one day in the following June we assembled an even one hundred cars.
In the next year we departed from the programme that had been so successful and I designed a big car—fifty horsepower, six cylinder—that would burn up the roads. We continued making our small cars, but the 1907 panic and the diversion to the more expensive model cut down the sales to 6,398 cars.
We had been through an experimenting period of five years. The cars were beginning to be sold in Europe. The business, as an automobile business then went, was considered extraordinarily prosperous. We had plenty of money. Since the first year we have practically always had plenty of money. We sold for cash, we did not borrow money, and we sold directly to the purchaser. We had no bad debts and we kept within ourselves on every move. I have always kept well within my resources. I have never found it necessary to strain them, because, inevitably, if you give attention to work and service, the resources will increase more rapidly than you can devise ways and means of disposing of them.
We were careful in the selection of our salesmen. At first there was great difficulty in getting good salesmen because the automobile trade was not supposed to be stable. It was supposed to be dealing in a luxury—in pleasure vehicles. We eventually appointed agents, selecting the very best men we could find, and then paying to them a salary larger than they could possibly earn in business for themselves. In the beginning we had not paid much in the way of salaries. We were feeling our way, but when we knew what our way was, we adopted the policy of paying the very highest reward for service and then insisting upon getting the highest service. Among the requirements for an agent we laid down the following:
(1) A progressive, up-to-date man keenly alive to the possibilities of business.
(2) A suitable place of business clean and dignified in appearance.
(3) A stock of parts sufficient to make prompt replacements and keep in active service every Ford car in his territory.
(4) An adequately equipped repair shop which has in it the right machinery for every necessary repair and adjustment.
(5) Mechanics who are thoroughly familiar with the construction and operation of Ford cars.
(6) A comprehensive bookkeeping system and a follow-up sales system, so that it may be instantly apparent what is the financial status of the various departments of his business, the condition and size of his stock, the present owners of cars, and the future prospects.
(7) Absolute cleanliness throughout every department. There must be no unwashed windows, dusty furniture, dirty floors.
(8) A suitable display sign.
(9) The adoption of policies which will ensure absolutely square dealing and the highest character of business ethics.
And this is the general instruction that was issued:
A dealer or a salesman ought to have the name of every possible automobile buyer in his territory, including all those who have never given the matter a thought. He should then personally solicit by visitation if possible—by correspondence at the least—every man on that list and then making necessary memoranda, know the automobile situation as related to every resident so solicited. If your territory is too large to permit this, you have too much territory.
The way was not easy. We were harried by a big suit brought against the company to try to force us into line with an association of automobile manufacturers, who were operating under the false principle that there was only a limited market for automobiles and that a monopoly of that market was essential. This was the famous Selden Patent suit. At times the support of our defense severely strained our resources. Mr. Selden, who has but recently died, had little to do with the suit. It was the association which sought a monopoly under the patent. The situation was this:
George B. Selden, a patent attorney, filed an application as far back as 1879 for a patent the object of which was stated to be “The production of a safe, simple, and cheap road locomotive, light in weight, easy to control, possessed of sufficient power to overcome an ordinary inclination.” This application was kept alive in the Patent Office, by methods which are perfectly legal, until 1895, when the patent was granted. In 1879, when the application was filed, the automobile was practically unknown to the general public, but by the time the patent was issued everybody was familiar with self-propelled vehicles, and most of the men, including myself, who had been for years working on motor propulsion, were surprised to learn that what we had made practicable was covered by an application of years before, although the applicant had kept his idea merely as an idea. He had done nothing to put it into practice.
The specific claims under the patent were divided into six groups and I think that not a single one of them was a really new idea even in 1879 when the application was filed. The Patent Office allowed a combination and issued a so-called “combination patent” deciding that the combination (a) of a carriage with its body machinery and steering wheel, with the (b) propelling mechanism clutch and gear, and finally (c) the engine, made a valid patent.
With all of that we were not concerned. I believed that my engine had nothing whatsoever in common with what Selden had in mind. The powerful combination of manufacturers who called themselves the “licensed manufacturers” because they operated under licenses from the patentee, brought suit against us as soon as we began to be a factor in motor production. The suit dragged on. It was intended to scare us out of business. We took volumes of testimony, and the blow came on September 15, 1909, when Judge Hough rendered an opinion in the United States District Court finding against us. Immediately that Licensed Association began to advertise, warning prospective purchasers against our cars. They had done the same thing in 1903 at the start of the suit, when it was thought that we could be put out of business. I had implicit confidence that eventually we should win our suit. I simply knew that we were right, but it was a considerable blow to get the first decision against us, for we believed that many buyers—even though no injunction was issued against us—would be frightened away from buying because of the threats of court action against individual owners. The idea was spread that if the suit finally went against me, every man who owned a Ford car would be prosecuted. Some of my more enthusiastic opponents, I understand, gave it out privately that there would be criminal as well as civil suits and that a man buying a Ford car might as well be buying a ticket to jail. We answered with an advertisement for which we took four pages in the principal newspapers all over the country. We set out our case—we set out our confidence in victory—and in conclusion said:
In conclusion we beg to state if there are any prospective automobile buyers who are at all intimidated by the claims made by our adversaries that we will give them, in addition to the protection of the Ford Motor Company with its some $6,000,000.00 of assets, an individual bond backed by a Company of more than $6,000,000.00 more of assets, so that each and every individual owner of a Ford car will be protected until at least $12,000,000.00 of assets have been wiped out by those who desire to control and monopolize this wonderful industry.
The bond is yours for the asking, so do not allow yourself to be sold inferior cars at extravagant prices because of any statement made by this “Divine” body.
N. B.—This fight is not being waged by the Ford Motor Company without the advice and counsel of the ablest patent attorneys of the East and West.
We thought that the bond would give assurance to the buyers—that they needed confidence. They did not. We sold more than eighteen thousand cars—nearly double the output of the previous year—and I think about fifty buyers asked for bonds—perhaps it was less than that.
As a matter of fact, probably nothing so well advertised the Ford car and the Ford Motor Company as did this suit. It appeared that we were the under dog and we had the public’s sympathy. The association had seventy million dollars—we at the beginning had not half that number of thousands. I never had a doubt as to the outcome, but nevertheless it was a sword hanging over our heads that we could as well do without. Prosecuting that suit was probably one of the most shortsighted acts that any group of American business men has ever combined to commit. Taken in all its sidelights, it forms the best possible example of joining unwittingly to kill a trade. I regard it as most fortunate for the automobile makers of the country that we eventually won, and the association ceased to be a serious factor in the business. By 1908, however, in spite of this suit, we had come to a point where it was possible to announce and put into fabrication the kind of car that I wanted to build.
THE SECRET OF MANUFACTURING AND SERVING
Now I am not outlining the career of the Ford Motor Company for any personal reason. I am not saying: “Go thou and do likewise.” What I am trying to emphasize is that the ordinary way of doing business is not the best way. I am coming to the point of my entire departure from the ordinary methods. From this point dates the extraordinary success of the company.