|Chronicles of America:The Age of Big Business|
source ref: ebook.html
In many manufacturing lines, American genius for organization and large scale production has developed mammoth industries. In nearly all the tendency to combination and concentration has exercised a predominating influence. In the early years of the twentieth century the public realized, for the first time, that one corporation, the American Sugar Refining Company, controlled ninety-eight per cent of the business of refining sugar. Six large interests--Armour, Swift, Morris, the National Packing Company, Cudahy, and Schwarzschild and Sulzberger--had so concentrated the packing business that, by 1905, they slaughtered practically all the cattle shipped to Western centers and furnished most of the beef consumed in the large cities east of Pittsburgh. The "Tobacco Trust" had largely monopolized both the wholesale and retail trade in this article of luxury and had also made extensive inroads into the English market. The textile industry had not only transformed great centers of New England into an American Lancashire, but the Southern States, recovering from the demoralization of the Civil War, had begun to spin their own cotton and to send the finished product to all parts of the world. American shoe manufacturers had developed their art to a point where "American shoes" had acquired a distinctive standing in practically every European country.
It is hardly necessary to describe in detail each of these industries. In their broad outlines they merely repeat the story of steel, of oil, of agricultural machinery; they are the product of the same methods, the same initiative. There is one branch of American manufacture, however, that merits more detailed attention. If we scan the manufacturing statistics of 1917, one amazing fact stares us in the face. There are only three American industries whose product has attained the billion mark; one of these is steel, the other food products, while the third is an industry that was practically unknown in the United States fifteen years ago. Superlatives come naturally to mind in discussing American progress, but hardly any extravagant phrases could do justice to the development of American automobiles. In 1899 the United States produced 3700 motor vehicles; in 1916 we made 1,500,000. The man who now makes a personal profit of not far from $50,000,000 a year in this industry was a puttering mechanic when the twentieth century came in. If we capitalized Henry Ford's income, he is probably a richer man than Rockefeller; yet, as recently as 1905 his possessions consisted of a little shed of a factory which employed a dozen workmen. Dazzling as is this personal success, its really important aspects are the things for which it stands. The American automobile has had its wildcat days; for the larger part, however, its leaders have paid little attention to Wall Street, but have limited their activities exclusively to manufacturing. Moreover, the automobile illustrates more completely than any other industry the technical qualities that so largely explain our industrial progress. Above all, American manufacturing has developed three characteristics. These are quantity production, standardization, and the use of labor-saving machinery. It is because Ford and other manufacturers adapted these principles to making the automobile that the American motor industry has reached such gigantic proportions.
A few years ago an English manufacturer, seeking the explanation of America's ability to produce an excellent car so cheaply, made an interesting experiment. He obtained three American automobiles, all of the same "standardized" make, and gave them a long and racking tour over English highways. Workmen then took apart the three cars and threw the disjointed remains into a promiscuous heap. Every bolt, bar, gas tank, motor, wheel, and tire was taken from its accustomed place and piled up, a hideous mass of rubbish. Workmen then painstakingly put together three cars from these disordered elements. Three chauffeurs jumped on these cars, and they immediately started down the road and made a long journey just as acceptably as before. The Englishman had learned the secret of American success with automobiles. The one word "standardization" explained the mystery.
Yet when, a few years before, the English referred to the American automobile as a "glorified perambulator," the characterization was not unjust. This new method of transportation was slow in finding favor on our side of the Atlantic. America was sentimentally and practically devoted to the horse as the motive power for vehicles; and the fact that we had so few good roads also worked against the introduction of the automobile. Yet here, as in Europe, the mechanically propelled wagon made its appearance in early times. This vehicle, like the bicycle, is not essentially a modern invention; the reason any one can manufacture it is that practically all the basic ideas antedate 1840. Indeed, the automobile is really older than the railroad. In the twenties and thirties, steam stage coaches made regular trips between certain cities in England and occasionally a much resounding power-driven carriage would come careering through New York and Philadelphia, scaring all the horses and precipitating the intervention of the authorities. The hardy spirits who devised these engines, all of whose names are recorded in the encyclopedias, deservedly rank as the "fathers" of the automobile. The responsibility as the actual "inventor" can probably be no more definitely placed. However, had it not been for two developments, neither of them immediately related to the motor car, we should never have had this efficient method of transportation. The real "fathers" of the automobile are Gottlieb Daimler, the German who made the first successful gasoline engine, and Charles Goodyear, the American who discovered the secret of vulcanized rubber. Without this engine to form the motive power and the pneumatic tire to give it four air cushions to run on, the automobile would never have progressed beyond the steam carriage stage. It is true that Charles Baldwin Selden, of Rochester, has been pictured as the "inventor of the modern automobile" because, as long ago as 1879, he applied for a patent on the idea of using a gasoline engine as motive power, securing this basic patent in 1895, but this, it must be admitted, forms a flimsy basis for such a pretentious claim.
The French apparently led all nations in the manufacture of motor vehicles, and in the early nineties their products began to make occasional appearances on American roads. The type of American who owned this imported machine was the same that owned steam yachts and a box at the opera. Hardly any new development has aroused greater hostility. It not only frightened horses, and so disturbed the popular traffic of the time, but its speed, its glamour, its arrogance, and the haughty behavior of its proprietor, had apparently transformed it into a new badge of social cleavage. It thus immediately took its place as a new gewgaw of the rich; that it had any other purpose to serve had occurred to few people. Yet the French and English machines created an entirely different reaction in the mind of an imaginative mechanic in Detroit. Probably American annals contain no finer story than that of this simple American workman. Yet from the beginning it seemed inevitable that Henry Ford should play this appointed part in the world. Born in Michigan in 1863, the son of an English farmer who had emigrated to Michigan and a Dutch mother, Ford had always demonstrated an interest in things far removed from his farm. Only mechanical devices interested him. He liked getting in the crops, because McCormick harvesters did most of the work; it was only the machinery of the dairy that held him enthralled. He developed destructive tendencies as a boy; he had to take everything to pieces. He horrified a rich playmate by resolving his new watch into its component parts--and promptly quieted him by putting it together again. "Every clock in the house shuddered when it saw me coming," he recently said. He constructed a small working forge in his school-yard, and built a small steam engine that could make ten miles an hour. He spent his winter evenings reading mechanical and scientific journals; he cared little for general literature, but machinery in any form was almost a pathological obsession. Some boys run away from the farm to join the circus or to go to sea; Henry Ford at the age of sixteen ran away to get a job in a machine shop. Here one anomaly immediately impressed him. No two machines were made exactly alike; each was regarded as a separate job. With his savings from his weekly wage of $2.50, young Ford purchased a three dollar watch, and immediately dissected it. If several thousand of these watches could be made, each one exactly alike, they would cost only thirty-seven cents apiece. "Then," said Ford to himself, "everybody could have one." He had fairly elaborated his plans to start a factory on this basis when his father's illness called him back to the farm.
This was about 1880; Ford's next conspicuous appearance in Detroit was about 1892. This appearance was not only conspicuous; it was exceedingly noisy. Detroit now knew him as the pilot of a queer affair that whirled and lurched through her thoroughfares, making as much disturbance as a freight train. In reading his technical journals Ford had met many descriptions of horseless carriages; the consequence was that he had again broken away from the farm, taken a job at $45 a month in a Detroit machine shop, and devoted his evenings to the production of a gasoline engine. His young wife was exceedingly concerned about his health; the neighbors' snap judgment was that he was insane. Only two other Americans, Charles B. Duryea and Ellwood Haynes, were attempting to construct an automobile at that time. Long before Ford was ready with his machine, others had begun to appear. Duryea turned out his first one in 1892; and foreign makes began to appear in considerable numbers. But the Detroit mechanic had a more comprehensive inspiration. He was not working to make one of the finely upholstered and beautifully painted vehicles that came from overseas. "Anything that isn't good for everybody is no good at all," he said. Precisely as it was Vail's ambition to make every American a user of the telephone and McCormick's to make every farmer a user of his harvester, so it was Ford's determination that every family should have an automobile. He was apparently the only man in those times who saw that this new machine was not primarily a luxury but a convenience. Yet all manufacturers, here and in Europe, laughed at his idea. Why not give every poor man a Fifth Avenue house? Frenchmen and Englishmen scouted the idea that any one could make a cheap automobile. Its machinery was particularly refined and called for the highest grade of steel; the clever Americans might use their labor-saving devices on many products, but only skillful hand work could turn out a motor car. European manufacturers regarded each car as a separate problem; they individualized its manufacture almost as scrupulously as a painter paints his portrait or a poet writes his poem. The result was that only a man with several thousand dollars could purchase one. But Henry Ford--and afterward other American makers--had quite a different conception.
Henry Ford's earliest banker was the proprietor of a quick-lunch wagon at which the inventor used to eat his midnight meal after his hard evening's work in the shed. "Coffee Jim," to whom Ford confided his hopes and aspirations on these occasions, was the only man with available cash who had any faith in his ideas. Capital in more substantial form, however, came in about 1902. With money advanced by "Coffee Jim," Ford had built a machine which he entered in the Grosse Point races that year. It was a hideous-looking affair, but it ran like the wind and outdistanced all competitors. From that day Ford's career has been an uninterrupted triumph. But he rejected the earliest offers of capital because the millionaires would not agree to his terms. They were looking for high prices and quick profits, while Ford's plans were for low prices, large sales, and use of profits to extend the business and reduce the cost of his machine. Henry Ford's greatness as a manufacturer consists in the tenacity with which he has clung to this conception. Contrary to general belief in the automobile industry he maintained that a high sale price was not necessary for large profits; indeed he declared that the lower the price, the larger the net earnings would be. Nor did he believe that low wages meant prosperity. The most efficient labor, no matter what the nominal cost might be, was the most economical. The secret of success was the rapid production of a serviceable article in large quantities. When Ford first talked of turning out 10,000 automobiles a year, his associates asked him where he was going to sell them. Ford's answer was that that was no problem at all; the machines would sell themselves. He called attention to the fact that there were millions of people in this country whose incomes exceeded $1800 a year; all in that class would become prospective purchasers of a low-priced automobile. There were 6,000,000 farmers; what more receptive market could one ask? His only problem was the technical one--how to produce his machine in sufficient quantities.
The bicycle business in this country had passed through a similar experience. When first placed on the market bicycles were expensive; it took $100 or $150 to buy one. In a few years, however, an excellent machine was selling for $25 or $30. What explained this drop in price? The answer is that the manufacturers learned to standardize their product. Bicycle factories became not so much places where the articles were manufactured as assembling rooms for putting them together. The several parts were made in different places, each establishment specializing in a particular part; they were then shipped to centers where they were transformed into completed machines. The result was that the United States, despite the high wages paid here, led the world in bicycle making and flooded all countries with this utilitarian article. Our great locomotive factories had developed on similar lines. Europeans had always marveled that Americans could build these costly articles so cheaply that they could undersell European makers. When they obtained a glimpse of an American locomotive factory, the reason became plain. In Europe each locomotive was a separate problem; no two, even in the same shop, were exactly alike. But here locomotives are built in parts, all duplicates of one another; the parts are then sent by machinery to assembling rooms and rapidly put together. American harvesting machines are built in the same way; whenever a farmer loses a part, he can go to the country store and buy its duplicate, for the parts of the same machine do not vary to the thousandth of an inch. The same principle applies to hundreds of other articles.
Thus Henry Ford did not invent standardization; be merely applied this great American idea to a product to which, because of the delicate labor required, it seemed at first unadapted. He soon found that it was cheaper to ship the parts of ten cars to a central point than to ship ten completed cars. There would therefore be large savings in making his parts in particular factories and shipping them to assembling establishments. In this way the completed cars would always be near their markets. Large production would mean that he could purchase his raw materials at very low prices; high wages meant that he could get the efficient labor which was demanded by his rapid fire method of campaign. It was necessary to plan the making of every part to the minutest detail, to have each part machined to its exact size, and to have every screw, bolt, and bar precisely interchangeable. About the year 1907 the Ford factory was systematized on this basis. In that twelvemonth it produced 10,000 machines, each one the absolute counterpart of the other 9999. American manufacturers until then had been content with a few hundred a year! From that date the Ford production has rapidly increased; until, in 1916, there were nearly 4,000,000 automobiles in the United States--more than in all the rest of the world put together--of which one-sixth were the output of the Ford factories. Many other American manufacturers followed the Ford plan, with the result that American automobiles are duplicating the story of American bicycles; because of their cheapness and serviceability, they are rapidly dominating the markets of the world. In the Great War American machines have surpassed all in the work done under particularly exacting circumstances.
A glimpse of a Ford assembling room--and we can see the same process in other American factories--makes clear the reasons for this success. In these rooms no fitting is done; the fragments of automobiles come in automatically and are simply bolted together. First of all the units are assembled in their several departments. The rear axles, the front axles, the frames, the radiators, and the motors are all put together with the same precision and exactness that marks the operation of the completed car. Thus the wheels come from one part of the factory and are rolled on an inclined plane to a particular spot. The tires are propelled by some mysterious force to the same spot; as the two elements coincide, workmen quickly put them together. In a long room the bodies are slowly advanced on moving platforms at the rate of about a foot per minute. At the side stand groups of men, each prepared to do his bit, their materials being delivered at convenient points by chutes. As the tops pass by these men quickly bolt them into place, and the completed body is sent to a place where it awaits the chassis. This important section, comprising all the machinery, starts at one end of a moving platform as a front and rear axle bolted together with the frame. As this slowly ,advances, it passes under a bridge containing a gasoline tank, which is quickly adjusted. Farther on the motor is swung over by a small hoist and lowered into position on the frame. Presently the dash slides down and is placed in position behind the motor. As the rapidly accumulating mechanism passes on, different workmen adjust the mufflers, exhaust pipes, the radiator, and the wheels which, as already indicated, arrive on the scene completely tired. Then a workman seats himself on the gasoline tank, which contains a small quantity of its indispensable fuel, starts the engine, and the thing moves out the door under its own power. It stops for a moment outside; the completed body drops down from the second floor, and a few bolts quickly put it securely in place. The workman drives the now finished Ford to a loading platform, it is stored away in a box car, and is started on its way to market. At the present time about 2000 cars are daily turned out in this fashion. The nation demands them at a more rapid rate than they can be made.
Herein we have what is probably America's greatest manufacturing exploit. And this democratization of the automobile comprises more than the acme of efficiency in the manufacturing art. The career of Henry Ford has a symbolic significance as well. It may be taken as signalizing the new ideals that have gained the upper hand in American industry. We began this review of American business with Cornelius Vanderbilt as the typical figure. It is a happy augury that it closes with Henry Ford in the foreground. Vanderbilt, valuable as were many of his achievements, represented that spirit of egotism that was rampant for the larger part of the fifty years following the war. He was always seeking his own advantage, and he never regarded the public interest as anything worth a moment's consideration. With Ford, however, the spirit of service has been the predominating motive. His earnings have been immeasurably greater than Vanderbilt's; his income for two years amounts to nearly Vanderbilt's total fortune at his death; but the piling up of riches has been by no means his exclusive purpose. He has recognized that his workmen are his partners and has liberally shared with them his increasing profits. His money is not the product of speculation; Ford is a stranger to Wall Street and has built his business independently of the great banking interest. He has enjoyed no monopoly, as have the Rockefellers; there are more than three hundred makers of automobiles in the United States alone. He has spurned all solicitations to join combinations. Far from asking tariff favors he has entered European markets and undersold English, French, and German makers on their own ground. Instead of taking advantage of a great public demand to increase his prices, Ford has continuously lowered them. Though his idealism may have led him into an occasional personal absurdity, as a business man he may be taken as the full flower of American manufacturing genius. Possibly America, as a consequence of universal war, is advancing to a higher state of industrial organization; but an economic system is not entirely evil that produces such an industry as that which has made the automobile the servant of millions of Americans.
The materials are abundant for the history of American industry in the last fifty years. They exist largely in the form of official documents. Any one ambitious of studying this subject in great detail should consult, first of all, the catalogs issued by that very valuable institution, the Government Printing Office. The Bureau of Corporations has published elaborate reports on such industries as petroleum (Standard Oil Company), beef, tobacco, steel, and harvesting machinery, which are indispensable in studying these great basic enterprises. The American habit of legislative investigation and trust-fighting in the courts, whatever its public value may have been, has at least had the result of piling up mountains of material for the historian of American industry. For one single corporation, the Standard Oil Company, a great library of such literature exists. The nearly twenty volumes of testimony, exhibits, and briefs assembled in the course of the Federal suit which led to its dissolution is the ultimate source of material on America's greatest trust. As most of our other great corporations--the Steel Trust, the Harvester Company, the Tobacco Company, and the like--have passed through similar ordeals, all the information the student could ask concerning them exists in the same form. The archives of such bodies as the Interstate Commerce Commission and Public Utility Commissions of the States are also bulging with documentary evidence. Thus all the material contained in this volume--and much more--concerning the New York traction situation will be found in the investigation conducted in 1907 by the Public Service Commission of New York, Second District.
American business has also developed a great talent for publicity. Nearly all our big corporations have assembled much material about their own history, all of which is public property. Thus the American Telephone and Telegraph Company can furnish detailed information on every phase of its business and history. Indeed, one's respect for the achievements of American industry is increased by the praiseworthy curiosity which it displays about its own past and the readiness with which it makes such material accessible to the public. Despite the abundance of data, there is not a great amount of popular writing on these subjects that has much fascination as literature or much value as history. The only book that is really important is Miss Ida M. Tarbell's "History of the Standard Oil Company," 2 vols. (new edition 1911). Of other popular volumes the present writer has found most useful Herbert N. Casson's "Romance of Steel" (1907), "History of the Telephone" (1910), and "Cyrus Hall McCormick: His Life and Work" (1909); J.H. Bridge's "Inside History of the Carnegie Steel Company" (1903); "Henry Ford's Own Story" as told to Rose Wildes Lane (1917).
For Chapter V, the author has drawn from articles contributed by him in 1907-8 to "McClure's Magazine" on "Great American Fortunes and their Making;" and for Chapter IV, from an article contributed to the same magazine in 1914, on "Telephones for the Millions."