Welfare Capitalism- Part Five- Henry Ford

Ford-Edison Homes in Fort Myers.

Ford was born on a farm in Michigan. His father was Irish and his mother was American. Together they had 5 children. When Ford was 13 years old his mother died. His father expected him to take over the family farm eventually, but he despised farm work. He later wrote, "I never had any particular love for the farm—it was the mother on the farm I loved." The year before, his father had bought Ford a pocket watch. Ford was curious how it was that the watch worked. So he dismantled and resembled it for fun.

In 1879 Ford left home and was given an apprentice machinist position in Detroit. After less than a year he returned to his father’s farm where his dad let him operate a portable steam engine on the farm. Ford became very good at repairing it. Ford was always interested in how things work and saw fixing things as an exciting challenge. In his spare time he tinkered with electricity and machinery. He built his first primitive motor car at the age of 29. He wasn’t the first person to build a vehicle powered by a gasoline engine. That honor is attributed to Karl Benz of Germany, 8 years earlier and who would go on to found the car company Mercedes-Benz.

His wife Bertha Benz also gets a lot of credit. As the story goes, Bertha – supposedly without the knowledge of her husband – took the vehicle on a 104 km (65 mi) trip from Mannheim to Pforzheim to visit her mother, taking her sons Eugen and Richard with her. In addition to having to locate pharmacies along the way to refuel, she repaired various technical and mechanical problems. One of these included the invention of brake lining; after some longer downhill slopes she ordered a shoemaker to nail leather onto the brake blocks. Bertha Benz and sons finally arrived at nightfall, announcing the achievement to Karl by telegram. It had been her intention to demonstrate the feasibility of using the Benz Motorwagen for travel and to generate publicity in the manner now referred to as live marketing. Today, the event is celebrated every two years in Germany with an antique automobile rally.

European car brands, Peugeot, Skoda and Renault all predate Ford also.

 

Early Career

At 28 years old, Ford had been given a job at the Edison Illuminating Company of Detroit. He worked hard and 2 years later was chosen to be Chief Engineer. In his spare time he still tinkered with improving his car design. He named his newest, the Ford Quadricycle, because unlike many early cars, this one had 4 wheels instead of three. Ford showed his Quadricycle to Thomas Edison himself who encouraged Ford but wasn’t interested in investing in automobiles.

Instead Ford found financial support from a Detroit Lumber Baron, William H. Murphy. Ford quit his job and began making cars full time. This was a hugely frustrating time for Ford because although now his dream had come true, he was under pressure to produce a quality vehicle. The automobiles they were producing were lower quality and more expensive than Ford wanted and after 2 years the company was dissolved.

Teaming up with C. Harold Willis, Ford designed, built and successfully raced a 26 horsepower automobile. (Today’s SmartCar has 3.5x that. The 2021, Tesla Model S has 1,020 horsepower. 400 times that or Ford’s racecar.) With this successful new design, Ford’s old investor, William H. Murphy reinvested and founded the Henry Ford Company. Within months Murphy had brought in a fellow inventor named Henry Leland as a consultant. Henry Ford was upset by this decision and left the company that bore his name. After he left they renamed the company the Cadillac Automobile Company.

Next Ford designed a new 80 horsepower racecar. He received financial support from an old friend named Alexander Malcolmson who was a Detroit coal dealer. Together they formed a partnership “Ford & Malcolmson Ltd.” And Ford set to work designing an inexpensive automobile for the masses. Up to that point cars had been luxuries of the super wealthy and were often driven by trained chauffeurs. Ford, however, understood that there was an opportunity to sell many cars cheaply rather than selling expensive cars to few. Ford and Malcolmson rented a factory space with machines and equipment from John and Horace Dodge. After producing vehicles, sales were slow and the Dodge brothers wanted payment in advance. So Ford and Malcolmson suspended business with them and looked for new investors. The Dodge brothers would go on to found the Dodge Automobile Company.

Ford also faced a legal battle. One company owned the patent for the car design, despite the first car being invented by Benz in Germany. Anyone who wanted to build cars within the USA had to pay royalties to this company. Henry Ford and his friends refused to pay the fees and took the company to court.

https://youtu.be/fvBYsGRJ7x4 (15-39)

 

Ford Motor Company Founded

Malcolmson found a new group of investors, including some of Malcolmson’s family & friends and together they established the Ford Motor Company in 1903. Despite the company being named after Henry Ford, he was seen as volatile and unpredictable, so Malcolmson’s uncle was chosen as the company president.

Together they engineered a new design and demonstrated in on the frozen Lake St. Clair. The new design broke the land speed record of the time at 91.3 miles per hour. Convinced by this success, race driver Barney Oldfield took the car across the country as an attraction and in the process, made Ford a household name. A famous racing cyclist of the day, Tom Cooper raced the new model in several events including the early Indianapolis 500.

Model T

With the interest at its peak, Ford Motor Company designed the Model T. It was simple to drive, cheap and easy to repair and cheap for the middle class. The car was a huge success. Ford took the profits from car sales to publicize the car further. He placed newspaper ads selling the adventures of the American Road trip. He set up dealerships in almost every city in the country. Sales skyrocketed. Ford wasn’t selling cars, he was selling success (cars had previously been a luxury) and freedom. Crowded trains or slow horse carriages were the previous options when it came to travelling across country.

“Welfare Capitalism”

Henry Ford pioneered a system of “Welfare Capitalism”. In many ways it was the Ethical Capitalism that Adam Smith had hoped for when he wrote “The Wealth of Nations.” Ford’s plan was exactly what Smith had in mind, that the increased pay of the employees would bring him the best workers and keep the workers productive. If workers were happy, he didn’t have to waste as much time training new employees. He built lunchrooms for employees, facilitated the organization of company sports teams and even provided company doctors.

Ford astonished the world in 1914 by offering a $5 per day wage ($140 today), which more than doubled the rate of most of his workers. A Cleveland, Ohio, newspaper editorialized that the announcement "shot like a blinding rocket through the dark clouds of the present industrial depression". The move proved extremely profitable; instead of constant employee turnover, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs. Ford announced his $5-per-day program on January 5, 1914, raising the minimum daily pay from $2.34 to $5 for qualifying male workers. (To get the full amount you had to be male and white.) The higher pay also meant that many of Ford’s own workers could come to afford a Model T himself, bringing the money full circle. A condition of this generous salary was a requirement to live a temperate, moral and “Christian” lives. Workers were fined or fired for heavy drinking, gambling and not looking after their children. Ford established a “Social Department” to monitor his workers private lives. Henry Ford also made an interesting appointment as head of the Social Department: a former navy boxer.

In addition to raising his workers' wages, Ford also introduced a new, reduced workweek. In 1926 it was announced as five 8-hour days, giving a 40-hour week. Ford had decided to boost productivity, as workers were expected to put more effort into their work in exchange for more leisure time. Ford also believed decent leisure time was good for business, giving workers additional time to purchase and consume more goods. However, charitable concerns also played a role. Ford explained, "It is high time to rid ourselves of the notion that leisure for workmen is either 'lost time' or a class privilege.”

Henry Ford also hated labor unions and believed them to be a agitator to the businessman. My raising wages and giving extra time off he was squashing any Labor Union power over his workers. Ford thought he was getting one over on the Labor Unions but really he was just giving them what they wanted.

 

Prime Years

Thanks to Ford’s assembly line production, they could meet the increasing demand for vehicles. The assembly line production process was a collaborative effort between Ford and his senior executives. All new cars were black; as Ford wrote in his autobiography, "Any customer can have a car painted any color that he wants so long as it is black” because it took less time to dry.  Together they took efficiency to a the extreme and were able to assemble a new Model T in only 93 minutes. By 1918, half of all cars in the United States were Model Ts. 15 million Model T’s were built. In 1914, 48% of all cars in the US were built by Ford.

Ford wasn’t satisfied. He remained only a shareholder in his own company. So Ford came up with a plan. He placed his son Edsel in charge and said that he was stepping down to start a new company. Ford made a show of hiring his best engineers to a new company and shareholders began to panic. As the panicking shareholders began to sell, Ford bought up stocks in his own company. The trick worked and before they knew it they held sole ownership in the company.

 

Later Years

By the 1920’s, Edsel was looking to make his mark within Ford Motor Company. He has aspirations of designing a luxury car for an upscale market but Henry Ford had little interest in such an idea. Edsel repeatedly brought ideas to his father only to have them shot down in favor of the old ways. However, competition was fierce. General Motors and Chevrolet were breaking new ground with new designs and gadgets. Ford was adamant that the Model T was a masterpiece and a tried and true design. With the fresh competition, sales began slipping. Ford was forced to admit defeat and start work on a new model.

Edsel’s ideas were embraced by the design team and Ford relented to their insistence that Edsel’s ideas were good. They began work on the Model A in 1927. When the car was released sales were poor because of the great depression but Henry Ford blamed his executives including his son Edsel.  

 

Ford Hunger March

By 1932, the Great Depression his Detroit. Car sales were down by three quarters and the smart business decision was to cut back on the work force. Unfortunately, this smart business decision translated to letting hundreds of men go unemployed, taking away the income for their families and leaving them to fend for themselves. Bank closures caused by the depression took the life savings of many families. By 1932, foreclosures, evictions, repossessions and bankruptcies were commonplace, and the unemployed felt despair. Suicides in Detroit were up 400%. Workers felt betrayed and abandoned to poverty. So they organized a Hunger March outside Ford’s Factory.

The protesters announced their demands to Ford. They were:  to rehire the unemployed, provide funds for health care, end racial discrimination in hiring and promotions, provide winter fuel for the unemployed, abolish the use of company spies and private police against workers, and give workers the right to organize unions.

It was a cold March day and a crowd of 4,000 people marched on Ford’s factory. They held signs reading “Give us work”, “We Want bread Not Crumbs” and “Tax the Rich, Feed the Poor.” Their leaders urged the crowd to remain peaceful. When entering the city limits the police attempted to stop the march by firing tear gas into the crowd. When this didn’t work police began hitting marchers with clubs. One police officer fired a gun in the direction of the marchers, possibly as a warning shot. The unarmed crowd scattered into a field and some began throwing stones at the police. The now-angry crowd began marching again and who fire engines fired cold water at the already cold marchers from an overpass. When this didn’t cause them to turn back, the police were joined by Ford’s security guards and together began shooting into the crowd. Two men were killed and 22 others wounded by gunfire. The leaders of the march decided to call off the march and called for retreat. The Navy Boxer Ford had placed in charge of security drove after the protesters, opened a window and fired a pistol into the crowd. Protesters threw rocks at the car and hit the boxer. He got out and continued firing at the retreating marchers. Dearborn police and Ford then opened fire with machine guns on the retreating marchers. One man was killed and dozens of others wounded. 25 police officers were injured by thrown rocks but nobody had been hit by gunfire.

After it was all over, all of the seriously wounded marchers were arrested. Many were chained to their hospital beds. A nationwide search was arranged for the leaders of the protest but no Dearborn police or Ford security were arrested. The following day, Detroit newspapers reported sensational and mistaken accounts of the violence, apparently based on rumors or false police reports. The Detroit Times, for example, falsely claimed that Harry Bennett and four policemen had been shot. The Detroit Press said that "six shots fired by a communist hiding behind a parked car were cited by police Monday night as the match which touched off a riot at the Ford Motor Company plant." The Detroit Free Press wrote that "These professional Communists alone are morally guilty of the assaults and killings which took place before the Ford plant." The Mirror ran a headline saying "Red Leaders Facing Murder Trials".

In the following days, the local newspapers gathered more information and changed their tone, reassigning blame for the deaths and severe injuries of unemployed and unarmed workers. The Detroit Times, for example, said that "Someone, it is now admitted, blundered in the handling of the throng of Hunger Marchers that sought to present petitions at the Ford plant in River Rouge." The newspaper continued that 'The killing of obscure workmen, innocent of crime" was "a blow directed at the very heart of American institutions." The Detroit News reported that "Insofar as the demonstration itself had leaders present in the march, they appear to have warned the participants against a fight."

The four marchers were buried in Woodmere Cemetery, a hill from which you could see the Ford Factory. A fifth marcher, Curtis Williams died from his injuries three months after the strike. Woodmere Cemetery did not allow him to be buried there under its "whites only" policy of segregation. Curtis Williams' family arranged for his cremation, and his ashes were scattered in the area near the graves of his fellow marchers.

 

Battle of the Overpass

5 years later, dissatisfaction arose among Ford’s workers once again. A Union campaign of spreading leaflets among workers got the attention of Ford’s Security Forces. Union members stood outside the factory gates, handing out leaflets asking for higher pay and shorter hours. Around 2pm, a photographer showed up to take pictures and asked the men to pose. While they were posing Harry Bennett and Ford’s security showed up, came from behind and began to beat them. It’s believed there were at least four security guards attacking each of the three Unionists. The beatings were severe but the photographer caught all of it. The security forces attempted to destroy the images but the photographer switched cameras when they weren’t looking. The pictures were in every news paper except the Ford owned Dearborn Independent and destroyed Ford’s reputation as a man of the people.

Four years later, on April 11, 1941, after the economy had begun to recover and 40,000 Ford workers conducted a ten-day sit down strike, Henry Ford signed a collective bargaining agreement with the United Auto Workers union.

World War 2

Henry Ford was against the war. He publicly expressed the options that it was a terrible waste and not good for business. However, he was also outspoken against those who financed the war and believed that the whole thing was started by “German-Jewish Bankers”. Ford "insisted that war was the product of greedy financiers who sought profit in human destruction". In 1939, he went so far as to claim that the torpedoing of U.S. merchant ships by German submarines was the result of conspiratorial activities undertaken by financier war-makers. Henry Ford continued to do business in Nazi Germany right up until the US declared war on Germany. A Ford subsidiary in Germany is known to have used forced labor from a prisoner of war camp.

Ford was against violence against Jewish people but believed they brought it upon themselves. Ford purchased his own newspaper, “The Dearborn Independent” in 1918 and had been publishing articles named: The International Jew: The World’s Foremost Problem. Ford is well documented as blaming many problems on Jewish people. He blamed them for jazz music, “the trouble with baseball”, banking, and wars. The newspaper was widely distributed at the Ford Factory, the city of Dearborn and even got translated and distributed overseas. The segment was published monthly, for 8 years. In 1938, Gallup did a survey of public opinion of Americans that would be shocking to us today. 72% of Americans said "No" when Gallup asked: "Should we allow a larger number of Jewish exiles from Germany to come to the United States to live?" Just 21% said "Yes." Another poll showed that 54% of Americans agreed that "the persecution of Jews in Europe has been partly their own fault," with 11% believing it was "entirely" their own fault. Although most did disapprove of the harshness of the Nazis.

Ford is the only American mentioned favorably in Hitler’s book. Hitler is also believed to have kept a portrait of Ford in his office. In 1938, the German consul in America visited Henry Ford on his 75^th birthday and presented him with the award of the Grand Cross of the German Eagle, the highest medal Nazi Germany could bestow on a foreigner. The Volkswagen Beetle was commissioned by Hitler himself. Working with Ferdinand Porsche, in May 1934, he asked for a “Car where they can fit two soldiers with a machine gun, or two parents and one child.” It was modelled after Henry Ford’s concept in America and Volkswagen literally means “People’s Car”. Hitler was presented the first ever convertible Beetle by Porsche.

Ford received backlash from many Americans for his words, especially the Jewish community and liberal Christians. They held a boycott of Ford products. This damaged sales and so Ford shut down his newspaper and issued an apology. He did this to protect his business and the Ford brand but personally, he saw the public backlash and boycott as proof that the Jewish people held power over the American people.

When the US declared war on Germany, Ford disapproved of intervention but felt that Patriotism and Business required him to cooperate with the US government. The US government handed out contracts to build military vehicles. Ford built aircrafts known as “The Tin Goose”. They also made anti-submarine boats and bombers.

Final Years

Henry Ford’s son Edsel died of cancer in 1943. It made Henry Ford meaner and depressed. In 1945, he threatened to take the company down with him but was convinced to step down by his wife. They placed their grandson, Henry Ford II in charge and his first act of business was to fire Harry Bennett, the violent navy boxer who lead the security forces.

Historian, Robert Lacey wrote in Ford: The Men and the Machines that a close associate of Ford reported that when he was shown newsreel footage of the Nazi concentration camps, he "was confronted with the atrocities which finally and unanswerably laid bare the bestiality of the prejudice to which he contributed, he collapsed with a stroke – his last and most serious." Ford had suffered previous strokes and his final cerebral hemorrhage occurred in 1947 at age 83.

Post-Ford Detroit

The auto-industry left a huge impression on Detroit. Motown music, which originated in Detroit, is a compound of Motor and town. Many of Detroit sports teams have automotive imagery. However, what had built Detroit up would go on to destroy it. With the increase of minimum wage, vacation time and benefits employees had come to expect; industrialists sought increased profits. So they looked for cheaper and cheaper ways of producing things. With globalism and the efficiency of global travel and transportation, industrialists found it cheaper to produce goods elsewhere and ship them to America. Some car factories moved to Canada where the government healthcare meant the employers didn’t have to pay it. Others moved to Mexico, China and India where employees are paid less, don’t have as many rights to vacation and health benefits and facilities aren’t inspected by the government. Even though many vehicles are assembled in the USA, the majority of the parts are produced overseas. As a consequence, the number of jobs in industrial Detroit has dropped drastically. Capitalism brought Detroit prosperity and it brought Detroit poverty.