The Wild Wheel

FIVE THE MAGIC LEVER

THE X piece comes here. A small mind’s-eye etching may help to get it right side up.

This is something you might see in New England. On a fine hill is the dilapidation of what was once a rich man’s house. In the valley below it the elements are gnawing at what is left of an abandoned textile mill and scattered around are some small dwellings falling apart. There is nowhere a sign of human activity. It is one of industry’s deserted villages, with no one to sing its elegy. Yet elsewhere, even in this valley, the textile industry is flourishing.

What happened here? The mill in the valley built the house on the hill, and then both the mill and the house died. Simply, the owner, to build his house, took too much out of the mill. He thought what he took was profit. He was wrong. The penalty of mistaking it for profit was that he lost everything, both his income and his capital, and lost, moreover, that sense of satisfaction that may come from providing a livelihood for maybe hundreds of mill workers.

This therefore was the job that devoured itself.

What should he have done with what he thought was profit? He should have put it back. He should have used the money to buy the latest and most efficient textile machinery, to improve his methods of manufacture, to hire the talent that could design new fabrics and the engineers who could have told how to reduce his costs. His profits would have increased, and still he should not have taken them out. Instead he should have raised wages in order to get better workers, and then he should have reduced his selling prices to attract more customers, thereby increasing the volume of his business, which of course would have obliged him to enlarge the mill. What was left after all that he might call profit, and although he might have had to wait for his grand house, there would have been a growing and prosperous textile business in the valley.

Does it follow that profit is an illusory thing? Not at all.

As there is a law of compound interest so there is a law of compound profit.

Compound interest on a dollar invested at 5 per cent in the time of Caesar would now be more money than there is in the whole world. A thousand nabobs could not spend it. So with profit. If instead of taking it out you put it back you get richer and richer. If the man on that New England hill had put his profits back, more and more, he might have become the richest textile manufacturer in New England, or in the whole world, with earnings at the latter end so large that the cost of a palatial dwelling could have been no more than a thimbleful.

This is what Ford did. He dispraised the profit motive.

Any business that thought first of earning a fixed dividend was bound to fail. Either profits would come from doing the job well or they would not come at all. A properly conducted business could not fail to return a profit.

Then he made this cryptic saying: “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”

The growth of the Ford Motor Company was of this order:

To build the first million cars took nearly twenty years.

To build the next four million took six years.

To build the next five million took only three years, and the capacity then was two million cars a year.

All of that growth, from a rude frame building where a few perspiring mechanics assembled eight or ten cars a day to a self-contained empire with a capacity of two million cars a year—the industrial monster on the River Rouge, plants all over the world, mines and plantations and forests and ships, and even a railroad of its own—all of this had been bought and paid for out of earnings. The original capital was twenty-eight thousand dollars; and never in its life did the Ford Motor Company borrow a dollar.

As he put the earnings back, with the passion of a parlay gambler, he kept saying it was the public’s money, not his. The public provided the capital, he said, not by way of buying Ford stock or Ford bonds but as it bought more and more Ford cars.

Each year there had been a profit. Nearly all of it had gone back into the business to provide the means further to reduce the cost of making a car. But it was not an investment on which the Ford Motor Company was entitled to receive interest.

That money, he believed, was the public’s money. As the public, having confidence in him, bought his product, so it provided his capital. Where else could the money have come from, since he did not borrow it? He felt he had no right to charge the public interest on its own money.

When earnings were used to buy a mine, for example, the profit from the mine belonged not to the company but to the public.

In raw materials there was a profit. A coal profit, a limestone profit, an ore profit, a lumber profit, a transportation profit, and so on. Was the manufacturer justified in collecting for himself each one of these profits and adding it to the profit he received for turning raw materials into articles of use? If he was a true businessman, operating on the principle of service, he abolished all subsidiary profits and gave the customer the benefit of them.

And what was true of a mine was true even of a machine bought out of earnings. That machine did not belong either to the man who bought it or to the man who operated it, but to the public. Neither the workmen nor the owner could get a profit from the machine except as it benefited the public.

2

HIS way with profits appears to have proceeded at first from intuition. Then he found that it worked. The theory came later, and the theory was this: If an article costs a dollar less to produce, and the dollar comes off the price, the result is that more people are able to buy. More buyers make a still larger business. A larger business still further reduces the cost, which in turn increases the business again. If, on the other hand, the one dollar saved is added to the manufacturer’s profit, the price to the consumer remaining the same, there will be no change in the volume of business. If the dollar saved is added to wages, there will be no change in the volume of business. But from sharing the profit with the public comes an immediate and great public benefit. There is a stimulating effect on the business, prices go lower, business increases, more men are employed, wages increase, profits rise.

The return to the public was in the price of the car.

The first Model T sold for $1,200. During its lifetime it sold as low as $295.

A Ford automobile for $295 was certainly the cheapest satisfaction of a material human want that ever appeared in the world.

His enthusiasm for cutting the price kept his engineers and managers in a state of delirium. Once he cut it when the demand was already running far in excess of the plant’s utmost capacity; and the only sane reason he could give for doing that was that the profits were awful.

“A business that makes too much profit,” he said, “disappears almost as quickly as one that operates at a loss.”

At that time he made the following statement to the press: “We could easily have maintained our price for this year and cleaned up $60,000,000 to $75,000,000, but I do not think it would be right to do so. We cut prices and are now clearing $2,000,000 to $2,500,000 a month, which is all any firm ought to make, maybe more, unless the money is to be used for expansion. I have been fighting to hold down income right along.”

Once he announced that if so many cars were sold in the year, every Ford buyer would get a refund, like a profit-sharing bonus, and every buyer did. There was some canniness in that. He knew that if his sales reached a certain volume his costs would be lower.

Sometimes he would set a price at which no profit was visible—a price actually below cost, just to see if they could make it, and they always did.

The shoemaker who, on being asked how he determined the price of a pair of shoes, said, “First I make the shoes and then I charge how,” stated the classic economic axiom. How else would you arrive at a price?

But Ford said the price came first. If you made the right price the cost would take care of itself.

That was paradox. Price before cost. No economist could have imagined cost as a function of price; and until four and four made five it couldn’t be. Ford made it make sense in practice, and afterward he gave the theory of it, thus:

“When we first reduce the price to a point where, as we think, more sales will result, then we go ahead and try to meet the price. The new price will force the cost down. The more usual way is to calculate the cost and then set the price. That method may be scientific in the narrow sense; it is not scientific in the broad sense. What use is it to know the cost if it tells you that you cannot manufacture at a price at which the article can be sold?”

But more to the point was the fact that although one might know what the cost was, no one knew what the cost ought to be. One of the ways to discover what the cost ought to be was to name a price so low as to force everybody in the shop to the highest point of efficiency. The low price made you dig for profits. Ford said he had made more discoveries under this forced method than he could have made by any way of calculating costs beforehand.

In My Life and Work he said it another way: “Reducing prices is taken by the short-sighted to be the same as reducing the income of the business. It is very difficult to deal with that sort of mind. For instance, I was once asked when contemplating a reduction of eighty dollars a car, whether on a production of five hundred thousand cars this would not reduce the income of the company by forty million dollars. Of course, if one sold only five hundred thousand cars at the new price, the income would be reduced forty million dollars—which was an interesting mathematical calculation that had nothing to do with business. Old time business went on the doctrine that prices should be kept up to the highest point at which people would buy. Modern business has to take the opposite view.”1

True to their race, his own minority stockholders had “that sort of mind.” In the thirteenth year he resolved to be rid of them. Although he himself owned a majority of the stock and could do with the company almost as he would, nevertheless they worried him.

3

OF THE twelve original investors, who had put up twenty eight thousand dollars among them, five had sold out early, leaving seven. From their penny-ante bets on Ford these seven had all become millionaires. They were not active in the business, excepting one; they contributed nothing in the way of ideas. They regarded the Ford Motor Company simply “as a money-making machine.”

The capital each one had put in at the beginning had been returned to him a thousand times; incredible as that was, still it was not enough, because on the visible earnings it might have been more. To all of them, Ford’s way of putting the earnings back, instead of dividing them, was a kind of plowman’s folly. The results so far had been amazing; that was so. Yet they held among them the uneasy feeling that he was a dangerous fantast, touched with megalomania. Riding with him was like moving at high velocity in a vehicle that could not stop. He said he could see the road ahead. They couldn’t see it and they had only his word for it that he could. But they could all be immediately richer if only he would divide the earnings.

The cards were cut the day he set his heel in the marsh of the River Rouge and said: “We’ll put it here.” A few days later he announced that the Ford Motor Company had set its sights for an expansion program that would cost one hundred million dollars.

The minority stockholders turned pale. They very well knew where the money would come from. It would come out of earnings. And that would mean one hundred million less ever to be divided as profit.

The two most difficult minority stockholders were a pair of hard Scots named Dodge—John and Horace Dodge—brothers, who used to go every night to the Detroit Athletic Club in long black coats, eat two steaks just alike, mellow from monosyllables to utter silence, then rise arm in arm and support each other on the way to bed. A solemn ritual that came to be treated with a kind of sentimental reverence.

They were marine engine builders at first, with a reputation for the finest machine shop practice in Detroit. They took the contract to make the first Ford engines, from Ford’s blueprints. There was supposed to be some risk in the contract because the Ford Motor Company had almost no capital, and to make the engine the Dodge brothers had to buy new equipment. As a kind of insurance they took one hundred shares of stock, not for cash but on their promissory notes; and the notes were paid off later out of earnings, so that in fact the Dodge brothers put into the Ford Motor Company no cash at all, nor, for that matter, did Ford. He didn’t have any. His contribution to the original capital was his name, his work and his mechanical designs. But for toughness, willingness and sheer love of martyrdom, the Ford engines that came from the Dodge brothers’ machine shop were the best that were ever made, and much of the success of the first Ford cars was owing to that fact.

The Ford contract turned out to be enormously profitable for the Dodge brothers. It lasted ten years. When Ford moved to the big Highland Park plant and began to make his own engines it was terminated. But besides the profit they had made during ten years on the contract, the Dodge brothers still had the stock they had acquired in the beginning—the stock they bought with ten thousand dollars of self-liquidating promissory notes—and on that stock they had already received dividends of ten million dollars.

After Ford began to make his own engines they decided to go into the automobile business for themselves, and very successfully brought out the Dodge car, at a higher price than the Ford car. That was when one of the Dodges said, “Think how many Ford buyers would like to have a real automobile for a little more money.” The only Ford car at that time was still Model T.

All of this was in the grain when Ford announced that he was going to spend one hundred million dollars of the company’s earnings on the evidence of things unseen. His output at that time was half a million cars a year. His voices were telling him to make it a million a year—two million a year. And the voices were right.

John Dodge called Ford on the telephone and invited him to visit the Dodge plant, which Ford had never seen. Ford took along a witness. It was going to be a duel and somebody would get hurt. Both men understood that. For a while they talked warily of things they were not thinking about, as one mechanic to another, and as old friends besides, with specious amiability. John Dodge made the first feint. That was only to say he was sorry Ford had found it necessary to break with Jim Couzens.

Those were not innocent words.

From the beginning until just then James Couzens had been the great he-person in the Ford organization. His gifts were four—a genius for the role of ringmaster in the arena of business, an immense store of surplus energy, a terrible temper and leonine roaring pouches. He was a clerk in the office of the coal dealer Malcomson who was Ford’s No. 1 backer, and Malcomson put him into the Ford Motor Company to watch the books. Couzens was a young believer. With nine hundred dollars of his own money, one hundred dollars of his sister’s money and his promissory note for fifteen hundred dollars he bought twenty-five shares of the original stock. Almost from the first the understanding between Ford and Couzens was that of a brotherhood of two against the others. Their working relationship had a certain pattern. As the business grew in its fabulous way Couzens’ place more and more was in the spotlight, which he loved, and Ford’s place was in the background, where for a long time he preferred to be. Many were misled to think Couzens was in fact the king gear he seemed to be. Even some of the minority stockholders got that notion, and it was a comfort for them, for they knew Couzens to be a conservative at heart, no matter what he might say to the contrary; and so long as he was there, so long as he was the indispensable man on whom Ford relied for sound judgments, he could be trusted to exert a restraining influence.

Ford did nothing to hurt that little fable. It amused him to play up to it with acts of exaggerated deference. He would sometimes approach Couzens’ door on tiptoe, with a finger on his lips, and whisper, “Is the old ogre in?” Yet when the break came it was like touching the end of a lighted cigarette to a piece of taut cotton twine. One morning Couzens delivered himself of an ultimatum, touching something unpopular Ford was going to say about World War I in his weekly, the Dearborn Independent. He said: “If that is printed, I quit.” Ford said: “All right, Jim. You’d better go.” After that Couzens was just another minority stockholder, with a mind more like theirs than like Ford’s, and the Ford Motor Company went on as if nothing had happened.

Now here was John Dodge saying to Ford he was sorry that Jim Couzens had to go. What he meant was that it had been an act of folly for the Ford Motor Company to throw away the only braking mechanism it had.

Ford took it that way and replied lightly. It was a good thing, he said, for “now we can go ahead and do what we want to do.”

“What are you going to do?” Dodge asked.

Ford said: “Double the plant, double the output and cut the price of the car in half.”

Dodge said: “If you are going to do that and run the business with no regard for the minority stockholders you ought to buy them out. We will sell you our stock right now.”

Ford said he wasn’t buying anybody’s stock. He already owned a majority of it, and he would run the business as he pleased.

On that note the visit ended. No blood yet.

4

THE next thing the seven minority stockholders heard from Ford was very bad news for their pockets. From then on, Ford told them, the Ford Motor Company would pay dividends of only $1,200,000 a year. Roughly, that was one tenth of what it had been paying; and they could take it or leave it. All earnings over that would be returned to the business.

The Dodge brothers went to court, seeking an order to compel Ford to distribute the Ford Motor Company’s earnings to its stockholders; pending the outcome of the action they asked that the one-hundred-million-dollar expansion program be enjoined.

The trial was a transposed version of “Who Stole the Tarts?” Sense made nonsense and nonsense made sense and the sanity of language was imperiled.

Seven investors who had already got their capital back a thousand times were hurt and demanding relief because their dividends had been reduced to 60 per cent a year.

The greatest profit maker of the age was in flight from profits and always had been and that was how he made them.

A company might make awful profits in spite of itself. Its profits might get so big that it could not afford to distribute them.

The Mad Hatter said it all began with the twinkling of the tea.

“The twinkling of what?” said the king.

“It began with the tea,” the Hatter replied.

“Of course, twinkling began with the tea,” said the king. “Go on.”

“I’m a poor man,” the Hatter went on—

Ford said: “We don’t seem able to keep profits down. It has been my policy to force the price of the car down as fast as increased production would permit.”

The Dodge lawyer said: “Your conscience would not let you make such awful profits?”

Ford said: “I don’t know that my conscience has anything to do with it.”

The Dodge lawyer said: “Why did you say it wasn’t right to make such awful profits if it wasn’t your conscience?”

Ford said: “It isn’t good business.”

The Dodge lawyer said: “You started in to make money, didn’t you? That was why the company was organized?”

Ford said: “I didn’t give it much thought. The best way to make money in business is not to think too much about making it.”

The Dodge lawyer said: “But you got a lot of money out of it, didn’t you? And you still do, don’t you?”

Ford said: “The money is not mine to do with as I please. The men who work with me have helped to create it. After they have had their wages and a share of the profits, it is my duty to take what remains and put it back into the industry to create more work for more men at higher wages.”

The Dodge lawyer said: “Your controlling idea, since you have all the money you want, is to employ a great army of men at high wages, reduce the selling price so that a lot of people can buy a car cheap—give everybody a car who wants one?”

Ford said: “If I did all that the money would fall in my lap. I couldn’t get away from it.”

The Dodge lawyer wanted to know what Ford meant to do with the money he was withholding from his stockholders.

Ford said, for one thing, he was going to make castings direct from the ore at one melt. That would be a great saving.

The Dodge lawyer said: “Who is doing that now?”

Ford said: “Nobody.”

The Dodge lawyer said: “And you are going to experiment with the Ford Company’s money to do something nobody has even tried to do before?”

Ford said: “There wouldn’t be any fun for us if we didn’t try things people say we can’t do.”

The Dodge lawyer asked if it wouldn’t be better to keep the money as a reserve against bad times.

Ford’s lawyer made the interjection that if the money were paid out in dividends they wouldn’t have it, either in the form of new assets or as a reserve against bad times.

Ford, looking over at John Dodge, said: “Maybe we could ask the stockholders to give the dividends back if we needed them. How about it, John?”

The court took refuge in arithmetic. The Ford Motor Company’s profits that year had been above fifty-two million dollars, and Ford was proposing to give his stockholders hardly more than one fiftieth of them.

The court said: “It is not within the lawful power of a corporation to shape and conduct its affairs for the merely incidental benefit of shareholders and for the primary purpose of benefiting others.”

And it ordered him to declare forthwith a dividend of $19,275,000. That one dividend was $688 for each one dollar of cash originally invested in the Ford Motor Company, or 68,800 per cent. On the par value of $100,000, which was the Ford Motor Company’s original capitalization, it was a dividend of 19,275 per cent. Stated thus in percentages the figures are of course grotesque.

5

BUT the seven minority stockholders were not happy for long. Ford announced his retirement from the Ford Motor Company and went to California, ostensibly to study nature with his friend John Burroughs, who hated mechanical things and had been seduced by the gift of a Model T.

That automobile, Ford loved to say, changed the old naturalist’s life. He began to observe nature from behind a steering wheel. He learned that instead of having to confine himself to a few miles around Slabsides, the whole country was open to him. Out of that automobile grew their friendship.

Although Ford fancied himself as a bird lover, his whole mind was not on the wild life of California. He was preparing a scare for his minority stockholders.

One day he hinted darkly to the reporters who were assigned to keep track of him that he was not through. That was news. Anything he said was news. When reporters in strength came back for more, pressing him to say what he was thinking of, he let it out little by little. Nobody knew yet how really to build an automobile. But if he were to put everything he had learned about it into a new company, starting from scratch, no bankers and no minority stockholders to hinder him, it would certainly be a humdinger. It might well be that nobody had seen anything yet. That was what he was thinking of.

News of this thinking out loud in California caused a panic in the minds of the seven who had just got their big dividends back. If they had thought of selling out privately, now their market was ruined. Who would buy a minority interest in the Ford Motor Company with Ford threatening to become its competitor? If they tried to peddle it in Wall Street, rumors would rise and make matters worse.

But it was a strange thing that men representing unknown principals kept coming around to ask them what they would take for their Ford shares in cash. They named high figures—more than they supposed anybody would pay—and were astonished to find that the anonymous buyer was willing to pay what they asked. One by one they agreed to sell, if the actual money appeared, which it promptly did, without revealing its source—all save Couzens, who wouldn’t sell until he knew who the buyer was. He found out. The buyer was Ford. Couzens settled with him personally and got more than anybody else.

There was a sequel, and the high point of it was that a man who held honorary membership in the American Society of Money Cranks performed a feat of financial wizardry that left the bankers begging for air.

To buy out his minority stockholders cost him ninety million dollars. He had to pay them in cash, and he didn’t have the money. So he borrowed seventy million from Eastern banks on his notes.

That was his first experience as a borrower. It was a personal matter and did not involve, or at least it ought not to have involved, the Ford Motor Company. However, he did expect to pay off the notes out of its earnings. There he was disappointed. Part of them he did pay out of earnings, but as the latter half of them began to come due business went into a slump. Besides the notes, he owed the government eighteen million dollars on account of income taxes and seven millions more to the employees as their annual bonus. All together he owed fifty-eight millions, and in the company’s treasury there was only twenty.

Under the law he could not make a secret of his balance sheet. The facts were there for anybody to see. The Ford Motor Company had to find thirty-eight million dollars in some haste. Where could it get that sum of cash if not from the leering money barons of Wall Street? Their day had come. They would make him forget some of the things he had said about their ways and morals; and Ford on his part thought he could hear them testing their tools of torture.

There were bad rumors that Ford was in trouble. Then he began to suspect that although the rumors came in news dispatches from all over the country, they might perhaps be traced to a single source. This suspicion was confirmed when he learned that “a very fat financial editor was at Battle Creek, sending out bulletins concerning the acuteness of our financial condition.”

The very fat financial editor was Clarence W. Barron, owner of a financial news ticker service in Boston and New York and publisher of the Wall Street Journal, who was resting at Battle Creek. He was in fact publishing such bulletins; they were very live news.

Something Ford never told was what took place one morning in his office.

A Wall Street banker appeared—a most agreeable man, optimistic, concealing a bedside manner. He represented himself and others. They understood that owing to an awkward combination of circumstances the Ford Motor Company was in need of a large sum of money. Such things often happened. They understood it perfectly; and they were prepared to provide the money, on one little condition. They would have to insist on naming a treasurer of their own.

Sorensen was present, listening. He saw with his eyes what Ford was thinking. The next ten seconds were memorable in that banker’s life. Sorensen said to him: “Dear sir, you may not know it, but you are in danger here. Serious danger. You’d better go while you can. Pardon me, I’ll give you a little help.”

With that he forcibly propelled the banker out of the room.

6

IN THIS bad dilemma Ford remembered one of his tall maxims. It was that a healthy manufacturing business must be able to create its own capital. When it needed money the shop must produce it. If the shop could not produce it, and you had to go to the bank, then there was something wrong with the shop, and you were probably already sunk. Borrowing could only postpone the day.

So, as he said afterward, he called on the shop, and the shop “raised a larger sum of money than any bank in the country could lend.”

Owing to the war work that had been going on—war work being always wasteful—and to the postwar lassitude of labor, and owing somewhat besides to the growing myth of Ford opulence, the shop had got fat. The first thing was to make it lean again.

The iron ball began to swing. The office force was cut one half. The other half was not fired; only those who were unwilling to go back to overalls. The new rule was: Everybody must produce or get out. To produce meant to work on the automobile. The Statistical Department was abolished because never yet had statistics produced an automobile. Three in every five telephones were torn out because talking about the car did not build it. Hundreds of blank forms were discontinued; it took too much time to fill them out. Where there had been one foreman to every five workers, henceforth there would be one for every twenty; the unwanted foremen could go back to the machines where they came from. The assembly line went faster. As men began to be worried about their jobs they were willing to work harder. The total number of men employed, divided by the number of cars produced each day, was reduced from fifteen to nine.

By all of this within the shop, and by a terrific speeding up of transportation outside, the cycle of manufacture—the time from the raw material to the finished car—was cut from twenty-two to fourteen days. The overhead, that is, the constant cost above the cost of manufacture, was reduced from $146 to $93 per car.

So far so good. A lot less money was going out. That, however, did not solve the problem. A lot more money had to be coming in.

Suddenly all buying stopped. On hand were large quantities of raw materials and parts. Out of the stockpiles and out of the bins cars were manufactured at frantic tempo and as fast as they were made they were shipped out to Ford dealers all over the country, until there was nowhere in the whole Ford plant an automobile or the makings of one. The cars were shipped to the dealers with sight drafts attached, which meant that the dealers had to pay cash for them on delivery, whether they wanted them or not. Business was generally bad. Most Ford dealers were already overstocked and wanted no more cars. That was their trouble.

When the stockpiles were gone and the bins were empty the plant closed down, ostensibly to take inventory; but there was nothing to take inventory of. Then no money at all was going out. By every mail it came pouring in.

It worked like this.

In Kansas, Illinois, Texas, anywhere at all, a Ford dealer would come awake to find that during the night a certain number of Ford cars had been delivered to him—a carload or a trainload according to the size of his territory—and that was his allotment. Sight drafts attached. Please remit.

The dealer would push his breakfast away and go straight to the bank. To the banker he would say: “I’ve got to take some more cars. They are out there on the track. Here is the draft and I can’t pay it. You will have to lend me the money.”

The banker would say: “But you haven’t sold the last lot.”

The dealer would say: “I know it. I’ve still got five on the floor and ten in the warehouse. But if I don’t take these I’ll lose the agency. That’s what it means.”

The banker would say: “Can you sell them?”

The dealer would say: “I’ve got to sell them. I think maybe if I put them up at auction I can come out even, and that’s all you have to worry about. I’ll not make any profit on them.”

The banker would be thinking: I’ve often loaned this dealer the money to pay his Ford draft. It has always worked out before. He has always been able to sell the cars. This is stiff. But if I refuse him now he’ll lose the agency and I’ll lose a good customer; and, moreover, if I don’t do it the Ford Motor Company will know, and when it makes deposits again in this territory it will pass me by.

It was a well-known practice of the Ford Motor Company to deposit its surplus funds in a large number of relatively small banks, just to keep them scattered, and every banker wanted to be on its list.

Reluctantly therefore the banker would lend the Ford dealer the money, and the dealer would forget his hat as he propelled himself forth to find some new salesmen, resolved to make two Ford buyers grow where only one grew before.

Once it was done the simplicity of it was absurd. Instead of borrowing the money in Wall Street, Ford obliged thousands of bankers all over the country to lend it to his dealers and the dealers remitted in cash. However, it was doubtful whether any other automobile maker could have done it, even if he had thought of it. The car made it possible. By that time Model T was an economic staple, like cotton or corn; give it time and it would sell itself.

On January 1 the Ford treasury had twenty millions and owed fifty-eight.

On April 1 it had eighty-seven millions, which was enough to pay everything it owed, and twenty-nine milions over.

That was finding it in the shop. Never again did the Ford Motor Company borrow a dollar.

If you say it was a ruthless business, so it was; but Ford would have said that although it was hard on many people, still an insolvent Ford Motor Company or a Ford Motor Company in the hands of Wall Street bankers would have been worse for a great many more. Which would you have?

After that he was entirely free. From where it all started, in the duel with the Dodge brothers, the plant doubled and doubled again, the output doubled and doubled again, but the price of the car never was cut in half. That part never came true, because when he said it he was thinking of Model T, as if it might go on forever. Model T gave way to Model A, and Model A to the V-8.

The earnings went on increasing. A time came when he did not know what to do with them. The business could no longer absorb them. It is forbidden that one tree shall grow to Heaven. When he died he left, besides the Ford empire intact, the largest trust fund in the world. That now is the Ford Foundation, devoted to the welfare of mankind, in ways some of which he would have withered with comment while he lived.

 

2My Life and Work, by Henry Ford. Copyright 1922 by Doubleday & Co., Inc.

• 1* Today and Tomorrow, by Henry Ford. Copyright 1926 by Doubleday & Co., Inc.
• 2That was in his book Today and Tomorrow,* which he did in collaboration with Samuel Crowther in 1926. The complete theory had by that time arrived—the theory, namely, that the wage earner is more important as a consumer than as a producer. How much of that formulation was Ford’s and how much of it Crowther’s one cannot say. They wrote several books together, with Ford speaking in the first person as I or we, and the ideas were entirely his own, but as he conceived them they were wordless revelations or sudden flashes of insight. It was Crowther’s part to clothe them with reason and argument and house them in proper premises.