Henry Ford Motor Company,,November 30,1901

I ran across this interesting piece of history on Henry Ford and thought you guys might find it interesting also,,

And it was 108 years ago today,,November 30 th. HRP



<CENTER>How the Ford Motor Company was Established</CENTER>
Much has been written about the Ford Motor Company, and in particular about its establishment in 1903. A number of excellent books are available and are well worth reading by anyone interested in an in-depth study of the subject.<SUP>1
</SUP>Yet, in spite of the wealth of information, we find few Ford enthusiasts who are aware of the interesting beginnings of the manufacturer of their favorite car. Almost universally we hear "Henry Ford founded the company in 1903," or "it was Henry Ford's efforts alone that pushed the company ahead, in spite of the many obstacles in his path." There are many more similar "old-wives&#8217; tales" but the fact remains that very few have heard anything at all about the fascinating early history of the Ford Motor Company.
All that has been written has been the result of considerable research, plus a good deal of educated guessing by the many authors. The early days of the Ford Motor Company were no different than they were for the most of us when it comes to detailing the story of our lives. We all go about our daily business without writing things down as they occur. Given the opportunity of reminiscing, we all tend to add and subtracts bits of information as our minds attempt the recreation of a past event. The authors who produced the histories for today's readers have done the same; they have taken the facts they could find and added a bit of "this is probably what took place" to pull the facts together. In addition, some authors have a different viewpoint from others, and the written results reflect their particular views.
In the story presented here we have used bits and pieces of information from the listed sources, as well as a few more we have collected over the years. In no way do we suggest that "this is the true story" and that all others are suspect. Far from it; we will just add our conjecture to the collection. The story presented is believed to be as accurate as is possible&#8230;.....as seen from a vantage point of almost a hundred years after the fact. Where this story might differ from another, it is just our interpretation of the data compared with that of someone else.

Let us first take a look at some of the commonly believed "facts":

• Henry Ford formed the Ford Motor Company, with some help from others.
• Ford pioneered with the first low-priced car for the masses.
• Ford manufactured all of his cars in his own plant.
• Ford alone designed his early cars.
• It was Henry Ford who invested great sums of money to form the company.

There are many more but these will do for a start. Are these statements true? No, they are not.
Prior to 1903 Ford spent much time in developing cars of his own design. His first car, built in his home coal shed, and first driven on about June 1896 (there are conflicting dates on this event) marked the culmination of several years of experiments. During this period, Ford was employed by the Edison Illuminating Company in Detroit as Chief Engineer. He had other jobs as well, but the job with Edison was the most significant.
On August 15, 1899, he left Edison to join the Detroit Automobile Company, a newly-formed organization which had been set up to manufacture an automobile based on Henry Ford's designs. The accepted story is that Ford's inability to settle on a fixed design for his car caused the backers to lose interest; the operation disbanded. The company folded in late 1900 and formally ended its operations on February 1, 1901.<SUP>2
</SUP>With the demise of the Detroit Automobile Company, several of the backers, still having faith in Henry Ford's ideas, again supported him for the development of his car.<SUP>3</SUP> By this time Henry Ford had met another mechanically inclined enthusiast, a man named Childe Harold Wills. Wills apparently was not too fond of his first name, using either C. Harold, or C. H. Wills. Wills shared Ford's enthusiasm, and this pair, with the help of others, began to build a race car. Ford apparently had become convinced that the builder of a winning race car would have little trouble finding backers for future automobile manufacturing efforts.
The racer was built. It had two cylinders, horizontally opposed, of seven inches bore and stroke. This racer was entered in a race at Grosse Pointe, Michigan, against Alexander Winton on October 10, 1901. Ford won the race.
This success encouraged Ford's backers to establish the Henry Ford Company, filing the papers on November 30, 1901. There were six investors involved in this company. Henry Ford was one of the six but contributed no money. The other five<SUP>4</SUP> invested $30,500. While these five men may have had grand ideas of future riches, Henry Ford did not, apparently. Rather than getting on with the finalization of his proposed automobile, he continued working on race cars &#8212; the results of which (later) were the famed "999" and the "Arrow."
After just four months, the Henry Ford Company found its namesake had resigned, or had been forced out. Whatever &#8212; Ford left the firm on March 10, 1902. He took the rights to his name, as well as his tools and other items with him. The five investors brought in Henry Leland (actually Leland had joined the company before Ford's departure), reorganized the operation, and the company became known as the Cadillac Automobile Company. (The same "Cadillac" that exists to this day.)
Henry Ford moved his material and tools to another location and resumed work on the 999 and Arrow racers. He, Wills, Ed "Spider" Huff, and Oliver Barthel, worked on the projects; no doubt there were others as well. Neither Henry Ford, nor any of the others, had any real money but they found a source of funds in a race driver named Tom Cooper. Cooper made them a deal; he would put up the cash but he would be the owner of one of the cars when they were completed.
The two cars were completed by summertime but neither Ford nor Cooper seemed interested in entering the cars in any races. They did run them in demonstrations against the clock but it was not until Cooper brought in Barney Oldfield that a real race was tried. The race was scheduled for October 15, 1902, almost a year after Ford's first race. Oldfield won by over a lap in the five mile event, setting a new American record. The race was for five miles on a one-third mile track. Oldfield's time was 5:28 for a new American record &#8212; just under sixty miles per hour average! He and Ford became relatively famous; certainly the name Barney Oldfield was to become the very symbol of speed for years to come.
It was at about this time that Ford and a man with the name of Alexander Malcomson joined forces. They had probably known each other for several years; Ford had purchased coal from Malcomson's firm while he, Ford, was chief engineer at Edison, and had continued to do so for his home. Alexander Malcomson was one of the largest coal dealers in Detroit. Using the slogan, "Hotter than Sunshine," he had specialized in quick delivery, using many smaller horse-drawn wagons instead of a few large ones. He apparently had several branches and even owned, or had interest in, a coal field in West Virginia, and a plant in Toledo, Ohio.
Malcomson had become interested in the automobile, not as a mechanic, but as a new and additional business endeavor. He had become interested in Henry Ford's efforts and as a result the two formed a partnership. The partnership agreement was drawn up in the law offices of Horace H. Rackham and John W. Anderson, Malcomson's attorneys, on August 16, 1902, and signed on August 20. Malcomson agreed to invest $3,000 towards the development of Ford's car, and began with a payment of $500. The $3,000 grew to about $7,000 during the next six or more months; no doubt a good part of it going into the two race cars.
The success of the 999 in October apparently added fire to Malcomson's enthusiasm because he not only made money a bit more available to Ford but he and Ford also formed a business under the name of Ford and Malcomson Company, Ltd. The business was set up with a capital stock of $150,000, divided into 15,000 shares at $100 per share. The two partners took 6,900 shares for their efforts to date, and in addition agreed to invest an additional $3,500. The plan was to now sell the remaining shares to outsiders. The company's bank account was established in the name of James Couzens, Malcomson's business manager. Malcomson was already heavily in debt and apparently did not want his bankers to know of this new adventure.
People were not standing in line in those days with cash in hand to invest in automobiles or their manufacture. Many new firms started and failed in those early days, and investment was generally considered a bad idea. This must have been Malcomson's discovery when he began trying to sell his company's stock.
Ford, of course, during this period was working on the two racers and on the proposed production car. Typical of Ford, though, the design never satisfied him and changes were being constantly made &#8212; at Malcomson's expense.
While Ford was working on the car, a number of other items needed attention. The new company would need a building in which the cars could be assembled, parts stored, and so forth. Outside suppliers for items such as bodies, tires, and most important, the running gear must be found.
In December of 1902, Malcomson had purchased a small coal business, on the property of which was a cabinet shop owned by Albert Strelow. Strelow was one of the larger building contractors in the city of Detroit at the time; the story being that he had the only equipment in the area necessary to build a building more than two stories high. Strelow, too, had met Ford earlier but the story goes that he was not impressed at the time. One item seems to come through, though; Albert Strelow was not particularly interested in automobiles, or their manufacture. In any event, the Strelow shop looked like an ideal spot for the new automobile plant. It was located on Mack Avenue next to a railroad line.
After a sales pitch and perhaps a little pressure, Strelow agreed to rent the building and to remodel it to make it more suitable for automobile assembly. Ford and Malcomson agreed to rent the place for $75 a month for three years. Ford moved into the new plant on April 1, 1903.
During this same period, the new company approached the two Dodge brothers, John F. and Horace E. The Dodges were quite successful machinists and among other things were producing engines and parts for Oldsmobile. The Dodges were quite impressed with Ford's design (Ford had developed a two-cylinder, horizontally-opposed engine while the Oldsmobile and most other cars in the price range were one-cylinder) and ultimately agreed to supply 650 complete chassis (less bodies, tires and wheels) at $250 each. An agreement was signed on February 28, 1903 in which Ford and Malcomson were to pay $5,000 on March 15 if the Dodges could show they had invested that much in tools and equipment for the Ford car. Another $5,000 was to be paid when the investment had reached $10,000, and so on. After deliveries had begun, payments were to be made twice a month. The agreement also said that if the new company should fail, all tools and product would become the property of Dodge Brothers.
Around February 1903, a man named Charles H. Bennett came into town intent on buying a new Oldsmobile. Bennett was the president of the Plymouth Iron Windmill Company, whose principal product was now not windmills, but air rifles &#8212; Daisy air rifles! He had stopped in at his tailor's shop and during the conversations he mentioned his interest in a new car. In the shop at the same time was a cousin of Malcomson and on hearing parts of the conversation he suggested Bennett look into the new automobile to be produced by Ford. Ford was summoned and arrived with a working sample of his new car. Bennett was impressed enough to hold off his purchase of the Oldsmobile in favor of the new car.
In fact he was so impressed with the new car he became interested in joining the venture. While he did not have the kind of money it would take to begin manufacturing, the Plymouth Iron Windmill Company did have. Apparently his associates in the business were not so impressed, or perhaps other interests in the windmill company had misgivings&#8212;or it is possible both were interested but the company couldn't afford it&#8212;whatever&#8212;the deal fell through. Bennett did not lose interest, though, and joined the venture himself. (In later years one writer suggested that had the deal worked out they might have given away a Daisy rifle with each Ford; and later, a Ford with each rifle.) (Or we could have been driving Model T Daisys today!)
Production had begun at the Dodge plant, and the Ford shop was ready for operations. Malcomson, no doubt with the aid of James Couzens, began looking for funds. The total number of persons and firms approached is unknown but the following did have enough interest to agree to invest in the venture.

The Ten New Stockholders​

John S. Gray. Gray was the president of the German-American Bank in Detroit, and was Malcomson's uncle as well as his banker. Gray knew well just how involved Malcomson was financially with his coal business, and no doubt tried to discourage further indebtedness, but Malcomson could not be discouraged. Gray finally consented to invest $10,000, with the provision that Malcomson would not only guarantee the money but that he would buy Gray out after one year if he (Gray) was not happy with the deal. Gray, in turn, discussed the investment with others and one, a Dr. Frederick E. Zumstein (also known as Dr. Jacob Zumstein in some sources), offered to buy five shares, and gave Gray $500 for this purpose.
Horace H. Rackham, Malcomson's attorney. Rackham had drawn up the Dodge agreement in February, and now agreed to invest $5,000.
John W. Anderson, Rackham's partner. Anderson borrowed $5,000 from his father, another doctor. The letter in which he asks for the loan is printed below and is well worth the reading.
Vernon C. Fry. Fry was Malcomson's cousin. He agreed to buy fifty shares, making a down payment of $3,000 on June 26, 1903.
Charles J. Woodall. Woodall was Malcomson's bookkeeper and under the apparent prodding of the boss he agreed to buy ten shares.
Charles H. Bennett. While the Plymouth Iron Windmill Company would not or could not invest, he committed himself to fifty shares, using his own money. He made his first payment of $2,500 on March 24, 1904, apparently out of his dividends from the Ford Motor Company.
John and Horace Dodge each agreed to take fifty shares.
James Couzens. Malcomson's secretary, Couzens was perhaps the man most responsible for the success of the Ford Motor Company in its early years. Couzens had become quite enthusiastic about the new venture but had only been able to save $400 up to that time. In seeking additional funds he went to his sister, Rosetta, a school teacher, who consented to help with $100. Malcomson also had promised him a bonus and he received $500 from this&#8212;a total of $1,000.
Albert Strelow. Strelow was the owner of the Ford "factory" building. Apparently quite skeptical about the deal, he seemingly was pressured by Malcomson into investing $5,000.
These ten men met with Malcomson and Ford on June 13, 1903 at Malcomson's office and agreed to form the new company, taking the name of the Ford Motor Company, apparently after Malcomson's suggestion. Gray offered his $10,000 and the $500 from Dr. Zumstein but the story goes that there was some superstition about thirteen stockholders and the doctor's offer was declined. Gray then raised his contribution to cover the $500, paying $10,500 for 105 shares.
Rackham agreed to pay $3,500 (and did so on the 26th of June), and gave a note for an additional $1,500. He paid the note in three installments: $800 on January 28, 1904; $200 on February 5, 1904; and $500 in July of the same year.
Anderson signed up for $5,000, which he paid on June 26, 1903.
Vernon Fry paid $3,000 on the 26th of June and gave a note for $2,000 which he paid in two installments: $1,000 in December 1903, and $1,000 in January 1904.
Albert Strelow, still apparently not too sure, gave his pledge but did not invest any money until July 11, at which time he paid $5,000.
Charles Bennett gave a note for $5,000. Playing it cool, he paid for his shares out of the profits; paying $2,500 on March 24, 1904, and $2,500 on June 22, 1904.
Couzens put in his $1,000, of which $100 was for his sister, Rosetta. He also gave a note for $1,500 and paid this out of his profits on July 31, 1904.
The two Dodges gave notes for $5,000 each. They, of course, had invested heavily in equipment and material and were the principal recipients of the company's money at the time. Their notes were paid on January 28, 1904.
Woodall gave a note for ten shares and paid this off on September 17, 1903.
Ford and Malcomson agreed to turn over the assets of the Ford and Malcomson Company in exchange for 255 shares each in the new company. Neither contributed any new money to the venture. Malcomson, of course, had supplied most of the cash to get the Ford automobile up to the production stage, including payments to the Dodge brothers under the terms of their contract. Some of this money he retrieved from the funds of the new company.
At this meeting they selected John S. Gray to be the president, Ford as vice-president, Malcomson as treasurer, and James Couzens as secretary.
The Ford Motor Company was officially established on June 16, 1903, with a capital stock of $100,000, at $100 per share. Of this, only $28,000 in cash was paid in initially.
It apparently had been Malcomson's intention to devote his full time to the Ford Motor Company, leaving Couzens in charge of the coal business. Perhaps Gray refused to go along with this because of his concern about Malcomson's debts to the bank, but in any event, Couzens made the move, becoming in effect the secretary-treasurer, and Malcomson went back to the coal business.
Gray, still president of the bank, went back to his profession, leaving Ford as the effective president of the Ford Motor Company. Of the twelve stockholders, only Ford and Couzens were to take an active part in the company. The Dodges, of course, would be working indirectly for the company&#8212;profiting not only from Ford, but also from their own business as supplier of Ford chassis.
Beginning with a fund of just $28,000, the roller coaster ride to riches began. It was rough at first. By July 11, 1903, the cash on hand had dropped to just $223.65. It was on that date that Albert Strelow made his first payment of $5,000, preventing perhaps the fastest bankruptcy of all time. On July 15, a Dr. E. Pfennig paid $850 cash for the first Ford automobile to be sold (but not the first one delivered to a customer). From here it was all uphill. By August 20 there was $23,060.67 in the Ford bank account.
In October Couzens issued a dividend of two percent. In November, another ten percent. In January, 1904, still another dividend of twenty percent. On June 16, 1904, on the first anniversary of the Ford Motor Company, a dividend of sixty-eight percent was declared &#8212; a total of $100,000 in dividends in the first year!
The early Fords were not particularly good cars. They had a number of faults such as a tendency to overheat, even on level roads. Henry Ford was aware of the problems and apparently was not in favor of selling the cars until they were "perfected." Couzens, on the other hand, knew that the cars must be sold if the company was to survive. "Make the sale and fix them later" was his decision. Had it not been for James Couzens, Henry Ford might have pushed the company over the brink as he had apparently done twice before. Ford was the engineer, and Couzens was the sales manager; the sales manager, fortunately, prevailed.
In retrospect, the Ford cars were no worse than a number of others at the time. All automobiles in those days were expected to give trouble. Improvements were made all the time and within just a few years the Ford Motor Company was one of the largest in the country.
And profitable! For those who held on to their stock it was a bonanza. Couzens' sister, for example, received $95,000 in dividends and then sold her single share to Ford in 1919 for $260,000. Not bad for an investment of just $100.
Thus we set the stage for the evolution of the Model T Ford. The Model T, of course, was not the first Ford automobile, but it was the most significant. The first Ford Motor Company product was the Model A (not to be confused with the Model A of 1928-31), followed by an alphabetical series during the first five years of the company's existence. There are a number of gaps in the alphabetical series; there seems to be no evidence of Models D, G, H, I, J, L, M, O, P, and Q. These designations may have represented experimental models but apparently there is no real evidence that any ever existed.
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<CENTER>John Anderson's Letter</CENTER>The following is a reproduction of John Anderson's letter to his father, in which he outlines the structure of the newly-formed Ford Motor Company, and its proposed car. Dad was apparently convinced, and furnished the money.

Detroit, June 4, 1903​

Dear Father:
Horace and I have an opportunity to make an investment that is of such character that I cannot refrain from laying the details before you for consideration.
Mr. Ford of this city is recognized throughout the country as one of the best automobile mechanical experts in the U.S. From the very beginning he has been interested in their construction and development. Years ago he constructed a racing machine which was a wonder, and since then he has constructed others in which he has raced all over the country, East, and has won numerous contests on many tracks. I simply mention this to indicate his reputation as his name is widely known in automobile circles everywhere and consequently a very valuable and favorable asset to any automobile Co. Several years ago he designed, perfected and placed on the market a machine. A Co. was organized, but not long after, desiring to devote his attention to a new model entirely, he sold out his patents and interest, and retired. The machine is known as the "Cadillac" (you will see it advertised in all the magazines) and is now being manufactured here by a large Co. The only condition Ford exacted in selling was that the Co. should not use his name in the Co.
He then turned his attention to the designing and patenting of an entirely new machine. Mr. Malcomson, the coal man, backed him with money and the result is they have now perfected and are about to place on the market an automobile (gasoline) that is far and away ahead of anything that has yet come out. He has had applications taken out on every new point he has designed and has just received word of 17 of them have been allowed, everyone of which are incorporated in the machine and, of course, cannot be duplicated in any other.
Having perfected the machine in all its parts, and demonstrated to their complete satisfaction and to the satisfaction of automobile experts, and cycle journal representatives from all over the country who came here to inspect it that it was superior to anything that had been designed in the way of an automobile, and that it was a sure winner, the next problem was how to best and most economically place it on the market. After canvassing the matter thoroughly, instead of forming a company with big capital, erecting a factory and installing an expensive plant of machinery to manufacture it themselves, they determined to enter into contracts with various concerns to supply the different parts and simply do the assembling themselves.
So they entered into contract with the Dodge Bros. here to manufacture the automobile complete&#8212;less wheels and bodies&#8212;for $250 apiece, or $162,500.00 for the 650 machines, which were to be delivered at the rate of 10 per day, commencing July 1st if possible, and all by Oct. 1st. I drew the contract, so know all about it.
Now Dodge Bros. are the largest and best equipped machine plant in the city, They have a new factory, just completed and it is not excelled anywhere as an up-to-date and thoroughly equipped machine shop. Well, when this proposition was made them by Ford and Malcomson, they had under consideration offers from the Oldsmobile, and the Great Northern automobile Co. to manufacture their machines, but after going over Mr. Ford's machine very carefully, they threw over both offers and tied up with Mr. F. and Mr. M.
Now, in order to comply with this contract, which was made last Oct., Dodge Bros. had to decline all outside orders and devote the entire resources of their machine shop to the turning out of these automobiles. They were only paid $10,000 on account, and had to take all the rest of the risk themselves. They had to borrow $40,000, place orders for castings all over the country, pay their men from last October (they have a large force) and do everything necessary to manufacture all the machines before they could hope to get a cent back. I go into this fully, so that you may understand the faith that these experts and successful machinists have in the machine itself, in staking their whole business, practically, on the outcome, because under the contract if Mr. F. and Mr. M. did not pay for them, Dodge Bros. were to have the machines in lieu of the money &#8212; thus making the risk entirely theirs.
In addition to this, contracts for the remaining parts of the automobile&#8212;the bodies, seat cushions, wheels and tires&#8212;were made so that they are supplied as wanted. The bodies and cushions, by the C.R. Wilson carriage Co. at $52 apiece and $16 apiece respectively. The wheels by a Lansing, Mich. firm at $26. per set (4 wheels). The tires by the Hartford Rubber Co. at $46.00 per set (4 wheels).
They found a man from whom Mr. M. rents a coal yard on the belt-line R.R., with a spur track running into it. He agreed to erect a building, designed by Mr. Ford for their special use, for assembling purposes (which will cost between 3 & 4 thousand dollars) and rent it for three yrs. to Mr. F. and Mr. M. at $75. per month. This building has been all completed and is a dandy. I went through it today. It is large, light and airy, about 250 feet long by fifty ft. wide, fitted up with machinery necessary to be used incidental to assembling the parts, and all ready for business. To this assembling plant are shipped the bodies, wheels, tires, and the machine from Dodge Bros., and here the workmen, ten to a dozen boys at $1.50 a day, and a foreman fit the bodies on the machine, put the cushions in place, put the tires on the wheels, the wheels on the machine and paint it and test it to see that it runs "o.k.," and is all ready for delivery. Now this is all there is to the whole proposition.
Now, as to the investment feature. You will see there is absolutely no money, to speak of, tied up in a big factory. There is the $75 a month rent for 3 years, and the few machines necessary in the assembling factory. All the rest is done outside and supplied as ordered, and this of course is a big savings in capital outlay to start with.
The machines sell for $750., without a tonneau. With a tonneau, $850. This is the price for all medium priced machines and is standard. It is what the Cadillac and Great Northern sell for here, and what other machines elsewhere sell for. Now the cost, figured on the most liberal possible estimate, is as follows:
<TABLE cellPadding=5 width=513><TBODY><TR><TD width=120>Machine</TD><TD align=right width=107>$250.00</TD><TD width=174>Fixed by contract</TD></TR><TR><TD width=120>Body</TD><TD align=right width=107>50.00</TD><TD width=174>Fixed by contract</TD></TR><TR><TD width=120>Wheels</TD><TD align=right width=107>26.00</TD><TD width=174>Fixed by contract</TD></TR><TR><TD width=120>Upholstering</TD><TD align=right width=107>16.00</TD><TD width=174>Fixed by contract</TD></TR><TR><TD width=120>Tires</TD><TD align=right width=107>40.00</TD><TD width=174>(all these fixed by contract)</TD></TR><TR><TD width=120>Cost of assembling</TD><TD align=right width=107>20.00</TD><TD width=174>This includes wages, rent, insurance and all incidentals at factory</TD></TR><TR><TD width=120>Cost of selling</TD><TD align=right width=107>150.00</TD><TD width=174>This includes advertising, all salaries, commissions, etc. 20% on each (It will be nearer 10 or 12%.)</TD></TR><TR><TD width=120>Total cost</TD><TD align=right width=107>$554.00</TD></TR><TR><TD width=120>Cost of tonneau</TD><TD align=right width=107>50.00</TD></TR><TR><TD width=120> </TD><TD align=right width=107>$604.00</TD></TR><TR><TD width=120>Selling price,
with tonneau</TD><TD align=right width=107>$850.00</TD><TD align=right width=174>Without tonneau</TD><TD align=right width=54>$750.00</TD></TR><TR><TD width=120>Cost price</TD><TD align=right width=107>604.00</TD><TD width=174><TD align=right width=54>554.00</TD></TR><TR><TD width=120>(Difference)</TD><TD align=right width=107>246.00</TD><TD width=174><TD align=right width=54>196.00</TD></TR><TR><TD width=120>Throwing off $46 (For any possible extra contingency)</TD><TD align=right width=107>46.00</TD><TD width=174> </TD><TD align=right width=54>46.00</TD></TR><TR><TD width=120>Profit</TD><TD align=right width=107>$200.00</TD><TD width=174> </TD><TD align=right width=54>$150.00</TD></TR></TBODY></TABLE>On the seasons output of 650 machines it means a profit of $97,000, without a tonneau, and more in proportion to those sold with tonneau, and of course the latter is almost always bought, as it adds so much to the capacity of [the] vehicle.
Now, the demand of automobiles is a perfect craze. Every factory here, (there are 3, including the "Olds"&#8212;the largest in this country&#8212;and you know Detroit is the largest automobile in the U.S.) [sic] has its entire output sold and cannot begin to fill its orders. Mr. M. has already begun to be deluged with orders, although not a machine has been put on the market and will not until July 1st. Buyers have heard of it and go out to Dodge Bros. and inspect it, test it and give their orders. One dealer from Buffalo was here last week and ordered twenty-five; three were ordered today, and other orders have begun to come in every day, so there is not the slightest doubt as to the market or the demand. And it is all spot cash on delivery, and no guarantee or string attached of any kind.
Mr. Malcomson has instructed us to draw up articles of incorporation for a $100,000.00 limited liability company, of which he and Mr. Ford will take at least $51,000.00 (controlling interest) and the balance he is going to distribute among a few of his friends and business associates, and is anxious that Horace and myself go in with him. Mr. Couzens, whom Spencer met, is going to leave the coal business, for the present at least, and devote his entire time to the office end and management of the automobile business&#8212;and he is a crackerjack. He is going to invest, as he expresses it, "all the money he can beg, borrow or steal" in stock. Mr. Dodge, of Dodge Bros., is going to take 5 or 10 thousand, and two or three others, like amounts. Horace is going to put in all he can raise, and I want to do the same if I can, because I honestly believe it is a wonderful opportunity, and a chance not likely to occur again. Mr. M. is successful in everything he does, is such a good business man and hustler, and his ability in this direction, coupled with Mr. Ford's inventive and mechanical genius, and Mr. Couzens' office ability, together with fixed contracts which absolutely show what the cost will be, and orders already commencing to pour in, showing the demand that exists, makes it one of the very most promising and surest industrial investments that could be made. At a conservative estimate the profits will be 50%, with a good sinking fund in addition. The machines are turned into money as fast as delivered and indicate a return on the whole original investment practically by Winter, if nothing were turned into the surplus account. It is a well known fact that the Oldsmobile Works, with a capital of $500,000, cleared up a million dollars last year and are now preparing plans to double their capacity for next year, which indicates, as strong as anything can, what the demand is throughout the country.
I went over the Dodge Bros. plant and the assembling rooms today, and even into the room where the half dozen draughsmen are kept under lock and key, (all the plans, drawings and specifications are secret you know) making drawings and blue-prints of every part, even to the individual screws, and was amazed at what has been accomplished since last October. Not another Automobile Co. has started and got its product on the market inside of three years before this.
​

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NOTES​

1. Ford, The Times, The Man, The Company. By Allan Nevins.
   The Legend of Henry Ford. By Keith Sward.
   The Last Billionaire: Henry Ford. By William C. Richards.
   Young Henry Ford. By Sidney Olson.
   The Public Image of Henry Ford. By David L. Lewis.
   Independent Man, The life of Senator James Couzens. By Harry Barnard
2. The Detroit Automobile Company was organized on July 24, 1899, capitalized at $150,000, with only $15,000 cash actually paid in. In the year that followed, the stockholders lost $86,000 in the operation, and gave up in late 1900. The stockholders were Frank R. Alderman, Clarence A. Black, Lem W. Bowen, Safford S. DeLano, Frank Woodman Eddy, Dexter Mason Ferry, Ellery I. Garfield, Mark Hopkins, Benjamin R. Hoyt, Everett A. Leonard, James, Hugh, and William C. McMillan, William C. Maybury, William Hubert Murphy, Frederick S. Osborne, Thomas Witherel Palmer, George Peck, and Albert E.F. White. All of these men were well known. Maybury, for example, was then Mayor of Detroit.
3. The five backers of the Henry Ford Company were Clarence Black, Lem Bowen, Mark Hopkins, William Murphy, and Albert White. It was this group that later brought in Henry Leland, and upon Ford's leaving, again reformed into the Cadillac Motor Car Company.</L1>
4. The five investors were Clarence Black, Lem Bowen, Mark Hopkins, William Murphy, and Albert White, who had also invested in the Detroit Automobile Co.

<HR><CENTER>More on the Original Investors</CENTER>Alexander Y. Malcomson. The real founder of the Ford Motor Company. He and Henry Ford each took 255 shares in June 1903 in exchange for their interest in the Ford and Malcomson Company. Neither contributed any cash to the Ford Motor Company. Malcomson took no active part in the management of the company. He was later forced out in 1906, and sold his 255 shares to Ford on July 12, 1906 for $175,000.
Albert Strelow. Strelow owned the building in which the Ford Motor Company began operations. Somewhat reluctant about the investment, he gave a note for $5,000 initially for fifty shares, and paid this note in full on July 11, 1903. He was the first to leave the company, selling out to Couzens in 1905 for $25,000. Strelow would seem to be the big loser in the affair. The story goes that he invested his money in a mine in British Columbia, and this investment failed. At the time of the formation of the Ford Motor Company, he was one of Detroit's largest building contractors, reputed to have had about 100 employees. He apparently lost everything in the mine investment, and was reported later as applying for a job as an assembler at the Ford plant.
John F. and Horace E. Dodge. The two Dodge brothers gave notes for $5,000 each, for fifty shares each. The notes were paid on January 28, 1904. The Dodges were the major suppliers of Ford chassis and parts (except for bodies, tires and wheels) until about 1913 when they brought out their own automobile. Ford purchased the Dodge Brothers stock in 1919 for twenty-five million dollars.
John S. Gray. The man with the greatest financial investment in the Ford Motor Company. He purchased 105 shares for $10,500 in June 1903. Malcomson guaranteed Gray's money, assuring Gray that he would give him his $10,500 back in a year if he wanted out. Gray died on July 6, 1906. The Gray estate kept his stock until Ford purchased it in 1919 for $26,250,000.
Horace H. Rackham. John Anderson's partner in the law office that handled Malcomson's affairs, as well as the legal affairs of the newly-formed Ford Motor Company. Rackham borrowed $5,000 on some property he owned and took fifty shares. He paid $3,500 on June 26, 1903, and gave a note for $1,500. He paid $800 on January 28, 1904; $200 on February 5; and the balance in July 1904. He sold out to Ford in 1919 for $12,500,000. He and Anderson each collected $4,935,700 in dividends during the sixteen years they held the stock.
John W. Anderson. Malcomson's attorney, and partner of Horace Rackham. Anderson borrowed $5,000 from his father (see accompanying letter) and paid this amount for fifty shares on June 26, 1903. Anderson sold out to Ford in 1919 for $12,500,000. It has been said that Anderson never owned a Ford automobile.
Vernon C. Fry. Fry was Malcomson's cousin. He paid $3,000 on June 26, 1903, and gave a note for another $2,000, for fifty shares. He paid $1,000 in December 1903 and another $1,000 in January 1904. He sold his stock to Ford on September 1, 1907, for an amount unknown to this writer.*
Charles H. Bennett. Bennett was president of the Plymouth Iron Windmill Company, Plymouth, Michigan, makers of the Daisy air rifle. He played it as safe as possible, giving a note for $5,000 for fifty shares. He made his first payment of $2,500 on March 24, 1904, and another of $2,500 on June 22, 1904, all of this apparently out of dividends from the Ford Motor Company. He sold out on September 1, 1907, selling thirty-five shares to Couzens and fifteen shares to Ford for an unknown amount.*
Charles J. Woodall. Woodall was Malcomson's bookkeeper at the coal office. He gave a note for $1,000 for ten shares, which he paid on September 17, 1903. Woodall sold to Ford in September 1906 for an unknown amount.*
* Bennett, Fry, and Woodall were close friends of Alexander Malcomson, and probably left because of Malcomson's forced departure. One story is that Malcomson later tried to buy back into the Ford company by taking (buying) this trio's stock. The initial agreement among the founders was that none could sell without first offering his shares to another stockholder. Malcomson, of course, had sold his shares to Ford earlier and was no longer a member of the firm, so the purchase was illegal. The three then sold out as indicated to Ford and Couzens.
James Couzens. Initially purchased twenty-five shares, paying $1,000 (of which $100 was for his sister, Rosetta Couzens) on June 26, 1903, and the balance of $1,500 out of his profits on August 31, 1904. He later bought Strelow's fifty shares (in 1905) for $25,000, and thirty-five shares from Bennett in 1907 for $24,500. Couzens sold out to Ford in 1919 for thirty million dollars (approximately: other sources list this figure at $29,308,858, and also at $13,444 per share), the highest price per share of all the stockholders.
(In October 1908 the capitalization of the Ford Motor Company was increased to $2,000,000, divided into 20,000 shares of $100 each. This action multiplied the number of shares held by the stockholders by a factor of twenty since no new stockholders were allowed to invest. Couzens' original 110 shares now became 2,200, and it is this number of shares that Ford purchased in 1919.)
Henry Ford. Ford took 255 shares in the company in June of 1903, in exchange for his patents and expertise. He contributed no money. Ford purchased Malcomson's 255 shares on July 12, 1906, for $175,000. In September 1907 he took Woodall's ten shares for an unknown amount. On September 1, 1907, Ford purchased fifteen of Bennett's shares for $10,500 (Couzens took Bennett's thirty-five other shares), and Fry's fifty shares. The price of these shares is unknown to this writer.
Ford now had controlling interest in the company, with a total of 585 shares. He bought out the remaining stockholders in 1919, paying $12,500 per share except to Couzens, who held out for and received some $13,000 per share (also see figures listed under Couzens.).

 

Cool read, the beginnings of Ford has always been interesting to me. Henry was good with engineering but bad with money!

JEFF

 

A very interesting read! Thanks for posting it.

Jim

 

that's just awesome. thanks for sharing!

 

Interesting read with a pretty good amount of information. Definitely written from a Ford perspective on the early days. A couple of years ago I wrote an article from the Cadillac perspective for the Horseless Carriage Gazette. As to Leland joining the firm prior to Ford's departure that is nonsense, the author simply did not do his homework. If he had read the Leland archives and the Barthel autobiography they would find no support for such a theory. There may have been a meeting in the spring of 1902 between Barthel and Leland regarding the casting of a two cylinder engine but that is pretty much the only contact. Murphy was the real guiding force behind the investors and when he found Ford spending an inordinate amount of time working on his latest racecar designs (according to Barthel they were Barthel's designs-who knows on that score) Ford moved on (true in March of 1902). Barthel was put in charge until late summer when he moved on to make a car of his own (not successful) and Murphy hired Patrick Hussey. When Hussey did not work out as planned they stepped up to Leland.

Here is a copy of the actual letter sent out regarding changing the name from Henry Ford Company (they still had the name in August of 1902) to Cadillac. I have copies of the actual minutes and documents changing the name.

The incorporators of the company were extremely proud of Ford's first racer "Sweepstakes" as was Ford (rightfully so) and that is why it was the centerpiece of their letterhead. The fact that Ford spent a lot of time on a new racer (actually two the 999 and the Arrow both named after east coast locomotives) should not have surprised anyone.

As a kid I visited with Oliver Barthel twice (a close friend of my grandfather) although I was too young to understand who he was and the history involved. Also in the sixties I spent a summer as a boarder at James Couzen's old mansion on the corner of Longfellow and Second in Detroit. It was an experience seeing on how the truly wealthy lived. The wood paneling in the house was unbelievable. Each room had different wood paneling much of it hand carved. The dining room sat about 20 and had doors for the waiting staff that were pretty much invisible when closed. The era they lived in was quite amazing.-Jim

 

Great Thread !

 

Interesting history, There's so much more to the story of any company that is successfull. The C.H. Wills mentioned in the first part of the article, who helped Ford with his first racer, went on to establish his own car company. He started the Wills St. Claire car company in Marysville Mi. just a few miles from where i live. The story is that he was also a perfectionist and could never let well enough alone and the company failed after a few years. There is a local Wills St.Claire museum here, the cars are really works of art. I wonder how many other people Ford helped or inspired to become involved in the early auto business.

 

Back in the 70's, Cars and Parts Magazine had a writer named Menlo Dirkson that did indepth articles like this on many of the original auto companies. Some of the best way to learn history.
Thanks for posting this. It brings back many memories.

 

any more I'm intrigued...d32

 

very cool,thats for the history lesson

 

Very good read, thank you for posting it.

 

thats awesome. always been kean on the early history of ford. heres a pic of their early emblems. ignore the others. my favorite has to be the first one.

 

I have often wondered how the Mopar guys feel, knowing that their roots go back to Ford.

 

Excellent reading.

 

Neat info thanks for posting! I love a good history lesson.

 

Seems to me he was pretty good with money. he wound up owning all the company and it remained in the family until he died.

 

I would have to agree with hotrod 1940 on this one. I believe Ford relied on others talents sometimes with the engineering (not saying he was bad but he knew others had some pretty good talents themselves). He had a vision and also I thought knew how to make a buck when he put his mind to it. He was a time study guy at heart. If you study his concept of adding conveyors to the assembly line (Olds had an assembly line more than ten years before Ford put his moving assembly line in action) it was about how many cars he could get out the back door in the shortest amount of time. His concept of having the Dodge Brothers ship the engines to him in specially designed crates was all about saving time and money. The crate would be disassembled and was used as the floorboards of the car. His $5 a day work day was not because he was magnanimous but rather he studied how he could speed up the process of building the car but pay the workers enough so they all did not walkout the door themselves.

He put the car in the hands of the masses (his greatest achievement) but he also was better at building a huge money making business that was not happenstance. There was a reason he was able to pay Couzens such a large satchel of dough.

As to engineering, he gave much of the credit of his early engineering to guys like Wills and Barthel so that is not a slight on Ford. Smart moneyed people know how to delegate what has to be done. That is how the rich get richer. He had some quirks but had some good points. Making money was one of them for sure.-Jim

 

Well it takes money to make money, i think he had the right people around him and that made him his $$, the first 2 of his ventures didnt work out very well.

JEFF

 

Here's the 999 race car that was previously mentioned



As posted in the Museum.......Henry Ford hope to gain public recognition and attract investors to his new company by building the fastest racing machines in the world. In 1902 and 1903, the "999" car driven by Barney Oldfieldbroke several records. In 1904, Ford achieved the publicity he sought by breaking the land speed record on frozen Lake St Clair Michigan with the "999's" sister car the "Arrow." At 91.4 miles per hour, Ford broke the mile record with a time of 39.4 seconds.

Henry and Barney

 

You nailed it, it takes money but you have to be able to sell your idea. Ford could sell his ideas even his bad ones. He did have good people around him, those were the days! I for one am glad he stuck to his guns.

 

Thanks for sharing that. I have most of the books on Ford history but, this was a good summary. Still in business with the family in control, not bad after all these years.

 

Ford was also a lier and cheat. There was a lawsuit in the late 1890's regarding a patent. Fuzzy memory but it goes something like this.....one gentleman applied for the patent, Ford came in and stole his idea and said he came up with the idea first and had a photo to prove it. Had something to do with the gasoline engine and the Quadricycle. It was later determined that the photo was taken months AFTER the original person applied for the patent. Anyone have more/better facts than mine??

 

cool post

 

This sounds like part of the Selden Patent case.........I'm sure Jim will be able to fill in the details. GREAT POST! Thanks for posting it HRP. here is a Selden Patent plate, the goal was to collect a payment on every car produced in the USA, Ford fought it and won. The Selden is now in the Ford Collection.

 

I refrained from answering somewhat because I did not want this thread to go downhill too fast. As a kid Ford was one of my heroes. The more I read though the more I started to question why I thought him to be a hero. He had many flaws but some good points as well. The Selden patent case was really a good thing in the end and I credit Ford with the fact that he went up against Selden and won. I have read much of the testimony and it went on for some time. Some interesting things were said in that case but it has been twenty years since I read it. I was searching for how many cars that Cadillac built in the fall of 1902 and low and behold it was in the testimony of Metzger.

Denise is certainly not the first to say that Ford's tactics were a tad questionable and I am certainly not going to say she is incorrect. We could start a thread on his downsides that could go on at length but I am not going to start or finish such an endeavor. Although I have a recollection of what she says, the first time I state what happened from a fuzzy memory then the sooner someone will label me with claims of bashing. It did remind me though of a story in Barthel's autobiography (which has a bit of a bitter tone, so I cannot take everything he says to the bank) wherein Ford called in Barthel and had him give particluars of one of his designs and according to Barthel, Ford had his assistant or secretary in the closet taking notes of everything Barthel said, so as to claim it for himself I suppose. How believeable it is is anyone's guess although in light of much that has been written about Ford it may have happened-who knows-good theater.

The Nevins book is actually a good read and shows some of his flaws, of which there were more than a few. I suppose the thing I dislike him most for was the way in which he treated his son Edsel. I am still a huge fan of Edsel and he deserved better, let me leave it at that. David Lewis was actually pretty fair with Ford although he held back a tad on Ford's faults maybe. David was a really good friend of my grandfather (and me as well), a super guy and spent much of his life on all things Ford.

I don't want to get sidetracked on the Selden case too much as I have to focus on a few other matters and that is a great story in itself.-Jim

 

Thanks guys, it was the Selden case that I was referring to. I think maybe I'll ask Santa to bring me that Nevins book for Christmas. I really would like to read more about the situation.

 

All of the early automobile manufacturers were liars and cheats. They had to be in order to sell their product to a public still not sure what to make of these contraptions and to stay ahead of their competitors. It would be easy to write a one thousand page book about the early French auto industry and the numerous patent and copyright 'thefts' but it was useless to file any sort of lawsuit only because the manufacturers were changing their designs almost on a monthly basis. The French are noted as the first to mass produce a car and there was pride at stake so eventually everybody involved swallowed their tongues and got on with the task at hand.

History is repeating itself again.

As to the the way in which Ford treated his son Edsel, one has to imagine what the company would be today if things were the complete opposite.
The great American tycoon Commodore Cornelius Vanderbilt also treated his son William with extraordinary harshness in order to teach him what lay ahead. When the old man passed away William found himself in court fighting his sister for the family fortune and eventually winning then adding 200 million dollars to the dynasty in a matter of months.
I think Henry Ford was no different.
Edsel was a great believer in motor racing which was the total opposite to his fathers philosophy. After beating Alexander Winton in a race Ford would afterwards remark at the stupidity of the contest which probably explains why bicycle racer Barney Oldfield would later steer the '999' racer. Oldfield himself said he would try anything once.

Later in life Ford admitted that racing was the best kind of advertising.

 

The Ford Motor Co. of today reflects much more the vision of Edsel than Henry the 1st in my estimation. Edsel was the guiding force behind the changeover from the T to the A. His father fought him on that concept and it was Edsel's vision which helped the company prosper with a higher end automobile. He also is rightfully credited with the catalog custom which without question helped diversify the company-Lincoln was a staid automobile-thanks to Edsel it became a tremendous vehicle that to this day carries a very high standard. With only the Model T the company would not have grown into the well rounded company it is today. The Model T was arguably the greatest car as it put the hands in the masses but it was time to move on and the A and that which followed was very affordable. To claim it was just a father being harsh for the sake of his son and what laid ahead may wash with others but you will never convince me. Edsel was the best thing to happen to Henry the 1st in keeping that company headed in the right direction. Thank God for Edsel's offspring, Hank the Deuce to step in and help rid the company of Bennett and his ilk which had been allowed to run through the head office like fools. I personally believe Edsel died of a broken heart no matter what the death certificate stated. A good guy-Jim

 

From my memory, Selden was a patent attorney and never built a car, but composed a patent to cover the general assembly of an automobile from the facts known at the time. He recieved a patent and had the whole industry in a strangle hold without ever building a car up to that point. Ford tried to join the association but was refused so he had no choice but to fight. He backed anyone manufacturer who would fight. He eventually won, and Seldens group was disbanded.
Whether Ford or Selden were liars is a not a point in the final court judgement. Being that Ford had a working driveable model and Selden didn't wasn't the point of the case.
I guess we would have to read many of the books on Ford, and still there would be questions.

 

I just joined, and was searching early Ford information. I'm currently researching the Ford six cylinder racer (1904-1909) and was/am hoping to find more photos and information.

This has been a good thread, thank you for posting. It's also one of the few early Ford histories I've read where A.Y. Malcomson isn't accused of forcing Henry Ford to build the large "pre T" Fords (Models B and K).

Thank you again,

Rob
Nebraska