CHAPTER VII
THE FORD MOTOR COMPANY
Similarly driven by ambition, Malcomson also was restless. He had lately invested some money in an icebox scheme, only to suffer a failure that cost him several thousand dollars. Couzens lost in the venture too, having put in $100.
In 1902 Malcomson eyed a new business, in connection with which he was seeing much of the spare, angular man named Henry Ford.
Malcomson had known Ford from the days when Ford had been employed as an engineer by the Detroit electric light company and had bought coal for the light company from Malcomson. After resigning that job in 1899, Ford continued to buy coal from Malcomson for his home.
By 1902 Ford had already been in and out of two automobile ventures. His first was the Detroit Automobile Company, formed by a group of Detroit businessmen to produce automobiles from a model that Ford had developed. Later Ford referred to his backers in this company as “a group of men of speculative turn of mind,” whose “main idea seemed to be to get the money.”1 They had an agreement with him to build at least ten automobiles on a budget of $10,000, yet this sum “didn’t pay for one.”2
The main trouble apparently was that Ford was “a perfectionist.” He could not bring himself to the point of letting the company go into production, for he kept wanting to make changes.3 An illustration of this trait of Ford’s occurred when Henry B. Joy, who later formed the Packard Motor Company, wanted to buy a car and was discouraged from doing so by Ford himself, who said his car was not yet good enough. Little wonder that the “men of speculative turn of mind” became impatient. They gave Ford, as it was put, “an opportunity to resign.”4 As some of these men went on to form the company which became the Cadillac Motor Company, the first Cadillac was, in a sense, really a Ford.5
In November 1901 the Henry Ford Company was incorporated, organized around still another car designed by Ford and including some of the men who had been in the Detroit Automobile Company. A company which most histories of Ford ignore, the Henry Ford Company apparently turned out only one or two racing machines; then, as stated in a newspaper article, it died of inanition.6
So in 1902 Ford was at loose ends, but still hopeful. He had won some fame as an automobile racer. But many called him a “nut,” while some persons derided him as “Crazy Ford.”7
Malcomson had about the same esteem for Ford the man as other businessmen in Detroit at this time—that is to say, he did not esteem him highly. The general attitude can be illustrated by an incident which occurred when Ford was working on his first car. He had to buy parts from Strelinger’s hardware store, where his credit was strictly limited to fifteen dollars. He wanted to make a larger purchase. “Fifteen is the limit,” the storekeeper said.8
But Malcomson had made some careful inquiries about the kind of automobile Ford had designed, a runabout with an opposed-type two-cylinder motor in the rear. What he learned impressed him. He began thinking about financing Ford’s car. Ford was more than willing. After many cautious talks, Malcomson decided in August 1902 to give Ford a third whirl at the automobile “game.” But it was Malcomson’s idea to “promote” Ford’s car by himself—no other financial backers were to be in the scheme—and this appealed to Ford.
Ford had calculated that it would take $3,000 for him to complete a new model. Malcomson agreed to put up this amount, and also to arrange for any further financing that might be necessary. Malcomson was to have a half interest in the car, and he and Ford “were to share the emoluments and the profits of their joint venture equally.” There was to be no “Ford Motor Company”—only a Malcomson-Ford partnership.9
That was the way the agreement was drawn up on the hot Saturday afternoon of August 16, 1902, in the law offices of John Wendell Anderson and Horace Rackham, two young members of the Detroit Bar whose main client was Malcomson’s coal company, for which they handled, principally, the “bad accounts.”10
2
And what about Malcomson’s chief clerk? Couzens did not share his employer’s enthusiasm for automobiles. Several times he had noticed Ford, then wearing a mustache, in the Malcomson office, and he knew that Ford was a customer. But he paid very little attention to him, not finding him then a man worth much attention. Back about 1892, when Couzens was still living at the Amos House, his path had crossed Ford’s, for Couzens used to visit the gym of the Railroad Y.M.C.A. and, for a time, Ford taught a class in mechanics there to earn some extra money.11 It is certain that Couzens would have paid no attention to Ford’s class at the “Y,” for he had not the slightest mechanical bent. “Malcomson used to take me out in his car sometimes and frequently he turned something on the dash board, explaining to me that he was changing the mixture,” he once said. “I thought that he meant he was mixing water with the gasoline, and I continued to think so for a long time.”12
But Couzens was greatly interested in Malcomson’s new plans. They were bound to affect him, for he understood that Malcomson was prepared to pledge all his credit to get this automobile venture going. And if the automobile business failed, the coal business would go under too. But if the automobile venture succeeded, Couzens might find himself running the coal company, for Malcomson had already hinted that he planned to devote nearly all his time to the exciting new business. He had told Couzens that he would give him more responsibility at the coal office, a raise in pay, and a bonus of $1,000, if the coal office did a business of a certain amount in the next twelve months.13
3
There was another factor that brought Couzens directly into the picture. Malcomson wanted his dealings with Ford kept secret. He was afraid his credit with the banks would be injured if it were publicly known that he was backing anything “so risky” as an automobile venture.14
So Malcomson’s money for the Ford project was placed in a bank in Couzens’ name.
Malcomson also assigned to Couzens the duty of “checking up” on Ford’s expenditures. “As Ford’s bills piled up and finally went over the $3,000 limit, I warned Malcomson many a time,”15 he said. Before long, Couzens was so much a part of the project that Malcomson brought him into most of the negotiations for getting cars produced.
He was no passive onlooker. This came out explosively at a meeting with John and Horace Dodge. These brothers, later to be famous as motorcar makers in their own right, owned a machine shop and were brought in to make the chassis for the Ford cars, as they already were doing for Ransom E. Olds.16 At a session with Malcomson, Ford, and Couzens, John Dodge asked for certain provisions in the contemplated contract.
“I won’t stand for that!” Couzens declared.
Not many persons had ever dared to talk that bluntly to muscular, brusque John Dodge.
“Who in hell are you?” demanded Dodge.
“That’s all right,” Malcomson said, “Couzens is my adviser in this.”17
4
When finally signed, the contract called for the Dodge brothers to produce, within a year, 650 chassis at $250 each—a commitment, in this one instance, of $162,500. Other parts, such as bodies, wheels, and tires, plus costs for promotion, brought the total of Malcomson’s obligations to about $350,000.18
No such sum was in Malcomson’s possession. He even lacked, in ready cash, the $10,000 which he had agreed to pay the Dodges, on account, once they started actual production.
Malcomson counted on “a perfect craze” for automobiles on the part of the public to carry him through safely.19 He expected to sell the completed cars as soon as they were assembled, and then pay off his suppliers out of sales. He determined—a crucial decision—that a factory would not be needed, only a place for assembling the various parts, work for which even a barn would do. Everything would be made outside the assembly plant. Thus no investment in machinery would be required. By selling the cars for $850 (the price of the Cadillac) he figured on a profit of at least $95,000 on the first lot.20
On paper Malcomson’s optimism seemed wholly justified. Soon, however, trouble developed. Couzens advised him that “Ford’s bills” totaled $7,000, or $4,000 above the agreed limit. Then the Dodge brothers began demanding the $10,000 payment. Malcomson succeeded in stalling them for a time. But as the Dodge brothers grew more insistent, Malcomson decided to trim his sails somewhat. In November 1902 he moved to enlist some outside financial support after all. His plan was to sell some shares in his half of the partnership. He had new articles of partnership drawn up; these provided for a company to be called “The Malcomson-Ford Company, Ltd.”21
“But everybody shied off from his stock,” so Couzens said later,22 and the original precarious arrangement had to stand—at least for a while.
5
In February 1903 Malcomson persuaded the Dodges to wait for their $10,000 until they had delivered some chassis. He boldly inserted large advertisements in trade papers concerning what he called “The Fordmobile,” advertisements signed “The Fordmobile Company, Ltd.” There was no such car and no such company. Both were merely reflections of Malcomson’s desperate hope that this advertising would bring some advance orders for the car—and perhaps some cash in advance.23
He did get orders—but no cash.
As the date neared for the Dodge brothers to deliver the first chassis, Malcomson lost some of his nerve. He talked with the owners of the Daisy Air Rifle Company about having them take over his commitments, with the view of making the Ford car in their air-rifle plant at Plymouth, Michigan. He offered to give them half his interest.
There was some earnest talk of the car being called “The Daisy.” But Ford objected and told Malcomson his car had to be called a “Ford.” The plan fell through anyway, when the Daisy people decided against taking the chance. The whole business of making automobiles seemed too risky. Besides, one of the air-rifle company principals was interested in putting money in some land in one of the Southern states. Mississippi land seemed to him a much better bet than the Ford-Malcomson automobile deal.24
Then the Dodges issued an ultimatum. If Malcomson could not live up to his contract with them, they would produce and market the car themselves.25
Facing this threat, Malcomson decided he had to abandon the partnership idea entirely. He would have to make a clean breast of things to his bankers and organize a stock company after all. He called on John S. Gray, president of the German-American Bank of Detroit, who was related to him and whose bank did most of Malcomson’s coal-business financing. Malcomson wanted two things from banker Gray. He wanted money—enough to pay the Dodge brothers—and he wanted Gray himself to join the company, for he believed that Gray’s name would serve to attract other investors.
6
John Gray was aghast. Only a short time before, Malcomson had obtained considerable credit from Gray’s bank for another merger, consolidation of the Malcomson Fuel Company with Jewett, Bigelow and Brooks.26 Gray now suspected that he had cause to be worried about that loan.
“I want you to go out to the Dodge place this afternoon and see what is being done,” Malcomson urged.
Gray went, but when Malcomson urged him to join in the venture, the banker refused.27 “Invest in a horseless carriage?” he snorted. “Asinine folly!” Now it was Malcomson who seemed “crazy.”
“Put up some money and I’ll guarantee it to you any time within a year,” Malcomson said.
“You mean if I am dissatisfied, at any time, I can call on you for the money?” Gray asked.
“Yes,” said Malcomson.28
Under this arrangement, what did Gray have to lose? He agreed to put up $10,000 personally, but he still had profound misgivings despite Malcomson’s “guarantee,” never dreaming that what would later be known as “the fabulous Gray estate” was being founded by him that day.
7
On the strength of Gray’s interest, Albert Strelow, who ran a carpenter shop, was persuaded by Malcomson to put up $5,000, and also to provide the shack in which the automobiles were to be assembled. Vernon Fry, a dry-goods merchant whom Malcomson knew as a fellow church member, was taken for a ride in Ford’s runabout in an effort to interest him. He “was scared to death,” but finally told Malcomson to put him down for $5,000 too. Charles T. Bennett of the Daisy Air Rifle Company then agreed to invest $5,000 as a personal matter, and the two lawyers, Anderson and Rackham, agreed to pledge $5,000 each.
To get his $5,000, young Anderson, who had studied at Cornell and graduated from the University of Michigan Law School—a spare, well-dressed barrister who parted his hair stylishly in the middle—wrote a glowing letter to his father, a physician in LaCrosse, Wisconsin. Dr. Wendell Anderson was “somewhat skeptical.” But having a strong affection for his lawyer-son, he could not bear to turn down the touch.29 Rackham, who always looked like something of a farmer, raised his $5,000 by selling a piece of Detroit land he had acquired. “What finally decided me,” Rackham recalled, “was a bundle of letters, most of them bona fide orders for cars, which Malcomson and Couzens showed me.”30 C. J. Woodall, a junior clerk at Malcomson’s, put up $1,000. And the Dodges finally said that, in lieu of the $10,000 owed them, they would take $10,000 worth of shares.31
8
And Couzens? In his and Margaret’s bank account, he had just $400.
He told John Anderson that he intended to “beg, borrow, or steal” all the money he could, to be well represented in the venture.32 But from whom?
His wife’s mother had a nest egg of $15,000. He talked with her about a loan of a size that would have made him one of the biggest investors of all. There was a family meeting on the question. Mrs. Manning hesitated, for she recalled “Jim’s icebox failure,” the venture with Malcomson.
In the end, however, she agreed to a loan of some figure, but suddenly, at that moment, he decided that he could not bring himself to borrow from his mother-in-law after all. He simply could not be beholden to her in that way.33
9
There was his father in Chatham, but to borrow from him struck Couzens as being almost as distasteful. Yet he swallowed his pride and made the trip across the river to Chatham. He knew that, like his mother-in-law, his father had a nest egg, though not as much as $15,000. The elder Couzens had come a fairly long way from the time when he was a dollar-a-day laborer at a soap works. But he quickly and tartly demonstrated that he had no intention of parting with any of his funds, not even on a loan, for any such foolish enterprise as his son described to him.
“You should not even invest your own money!” the elder Couzens exclaimed.34
Rosetta Couzens had $300, saved from her earnings as a public-school teacher in Chatham. She was willing to lend that to her brother. But again, the father raised heated objections. Finally, Rosetta compromised and offered $150. “But he wanted it in even hundreds, so I gave him $100.”35
Couzens returned to Detroit with the disappointing conviction that all he could invest was $500—his $400 and his sister’s $100. Luckily, he found Malcomson in one of his expansive moods. Malcomson agreed to advance him $500 on his expected bonus, and also arranged for acceptance of a promissory note of $1,500. Thus, among the twelve shareholders—Alex Y. Malcomson and eleven disciples, so to speak—Couzens finally was recorded as a holder of $2,500 worth of stock.36 In Couzens’ view, there actually should have been thirteen shareholders, counting his sister Rosetta. But Ford objected strenuously to a woman being allowed in the enterprise—any woman—so Couzens carried Rosetta’s one share in his own name.37
It irked Couzens that, except for the junior clerk, Woodall, he was low man on the shareholders’ list, and it is probable that he suspected Woodall’s interest was really a “blind” for Malcomson—a way for Malcomson to have a bigger interest than Ford. But there was no way for Couzens to improve his position at the time, and so he made the best of it, while making a mental note to correct this matter some time in the future.
10
On June 16, 1903, the Ford Motor Company was incorporated. Two days later, the twelve stockholders held an organizational meeting at the Russel House, a Detroit hotel.
Malcomson had expected to be chosen president. But that office went to banker Gray—an irony, in view of Ford’s later attitude toward bankers—and Malcomson was named treasurer.
Ford was not even considered for president. Everyone concerned, even Ford, agreed that to have Ford as president would probably have been fatal to the financial rating of the new company. Instead, he was given the title of vice-president and general manager in charge of mechanics and production.38
The posts of business manager, in active charge of all business affairs of the new company, as well as of secretary, went to Couzens.39 This was another disappointment for Malcomson, who had intended to be the business manager himself. His plan was to have Couzens run the coal office, but John S. Gray, still worrying about his bank’s loans to the Malcomson Fuel Company, decided matters otherwise. “I am putting up my money because you are a good coal man,” Gray told Malcomson. “You must stay in the coal business.”
Malcomson argued that the coal business would be safe with Couzens in charge. He praised Couzens’ extraordinary ability. “If Couzens is so good,” said Gray, “then you can send him to the automobile business. He can watch that for you.”40
Malcomson had no answer to this, and the decision that was finally made was in line with John Anderson’s report on June 4, 1903, to his father in LaCrosse:
“Mr. Couzens . . . is going to leave the coal business, for the present at least, and devote his entire time to the office and management of the automobile business. And he is a crackerjack.”41
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