Story of the Automobile. 1760 to 1917

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“What did Benjamin Franklin have to do with the automobile?” a great many readers of this book will ask.

Benjamin Franklin was many-sided, and he had a great deal to do with much that affects the birth of the American nation; and if it had not been for what he and other patriots, statesmen and diplomats did, the automobile business might have been in this country today exactly what it is in England today—and that is a very insignificant industry.

Among other things Franklin was a signer of the Declaration of Independence, and it was the American Revolution that made the automobile industry of today possible; for, had there been no revolution, we would probably still be a dominion of Britain beyond the seas, and it is pretty certain that England would have had in force in the colonies the laws she kept on her statute books until 1896, practically prohibiting, by the imposition of excessive road tolls, the use of the public highways to horseless carriages.

For, strange as it may seem to us in this country, which Emerson epitomized as another name for opportunity, the English horse owners and

 people generally resented, as early as 1840, the progress represented by the automobile, and stifled all development of it from that time to a date when France, Germany and the United States had made it a real factor in transportation.

If, therefore, Franklin had not helped to free this land from the British yoke, the automobile industry might have been in the United States what it is in England today. France and Germany might now have been doing the automobile business of the world, with England and this country buying from them, as England and France are now buying from the United States, whose automobile supremacy at this date is unquestioned.

While the gasoline type of automobile today is the most popular, this is not to say that the electric type is not a success scientifically and commercially. Indeed, the future extent of the automobile’s use for commercial purposes is said by experts to depend largely on the electric driven type.

And who will deny that but for Franklin the electric motor would not have been, for it was he who wrested the thunderbolt from heaven, as well as the sceptre of dominion over our land from the tyrant. Franklin as the discoverer of electricity may well be accorded the

 credit for the electric automobile, which has played no small part in the development of the automobile industry, a fact which every student of automobile history will concede.

It is, however, on an even firmer foundation than either of the causes mentioned that Benjamin Franklin stands as contributing to the success of the automobile industry. The inventors could invent and the manufacturers could make the automobile, but who, pray, was to buy it, if it was to be in general use, if not the common people? And how, may we ask, were the people going to buy it without money?

As the great teacher of frugality and thrift, Franklin laid the cornerstone, 150 years ago, on which the superstructure of the American automobile industry has been erected. For, assuredly, had the seed planted by him failed to germinate and ripen in the American consciousness, we could as well have been today a nation of spendthrifts as a people self-denying, thrifty and frugal. He inculcated those principles of temperance and economy in the lives of our forefathers which have been handed down to us from one generation to another, to our advantage and as an aid to our saving habits, by which we are enabled to buy automobiles.

Many a motor car today owes its ownership to the teachings of Franklin. Many an automobile

 buyer would never have become one had he not heeded Franklin’s injunction, to “Remember, a patch on your coat and money in your pocket is better and more creditable than a writ on your back and no money to take it off,” and the investor would not have put money in stocks of automobile companies if he had not learned the truth of Franklin’s teaching that “Money makes money, and the money that money makes, makes more money.”

Franklin having done what he could to prepare American citizens to economize and save against the day of the automobile, and to invest their money in its manufacture, and the American citizen having followed his teachings and accumulated enough to buy at least a Ford, and perhaps a few shares of automobile company stocks, the man appeared who produced the first gasoline automobile in the United States. That man was Charles E. Duryea. His reputation rests on the fact that, though there were steam and electric automobiles in existence, and the gasoline motor had been developed, he was the first to put gasoline motor and buggy body into co-ordination and make the first run the second. To Duryea, the constructor of the “buggy-aut,” is accorded the credit, by automobile history, of being the father of the American gasoline car.

Following Duryea by only one year, came the

 genius who put into general circulation the universal car.

A reading of Henry Ford’s biography discloses that his first idea, that the big money was in production in quantity—that a million articles sold at a profit of 50 cents each was a better paying transaction than ten thousand sold at $3.00 each—was in connection with a watch. Watches and clocks were the first things that Ford subjected to the mechanical promptings of his boyish mind, and he had it all planned out to make a 50-cent watch before Ingersoll had conceived the commercial possibilities of a dollar one.

An accident which his father met with called him from Detroit to the Michigan farm, and this accident deprived the country of a 50-cent watch and gave it a $350 automobile instead. And most people will agree that it was a fair exchange and no robbery. Thomas A. Edison, strange as it may sound, was responsible for the practically universal use of the Ford automobile, for he it was, who, by the chance remark, “What you want to do to make money is to make quantity,” started Ford on his downward price career. We have it from Mr. Ford himself that he heard this statement by Edison, and that it so impressed him that he made it the rule and guide of his life; that he never

 renounced the idea. When, after building a motor that was a success and commanded the attention and capital of moneyed men in Detroit, Ford formed his first company to build his car, this great idea was obstinately adhered to by him, and was the cause of his falling out with his moneyed partners. They could not see the light which has given Ford his halo—the great white light of quantity production. This light burns with steady brilliancy because it is generated by the great principle of the greatest good to the largest number. Ford’s associates in his first company were not believers in this principle, evidently, because when they fell out with Ford about it, and Ford got out of the company to start the one he now controls, they went ahead making cars that sell today for from $2,300 to $3,900. But though they have made fair profits, they have not made the fabulous sums that Ford has, and one can only wonder how they feel about it, and if they realize the error of their views. They are probably wiser if not richer.

The success of Ford’s idea of quantity sales demonstrates a great fact in the affairs of life. It is that fields of human endeavor are not exhausted or worked out until the human race has ceased to exist. Take any line of enterprise you will, and it has as many facets as a prism.

 An idea only is needed, which, if the right one, illustrates the enterprise as lights thrown on the prism cause it to sparkle in many colored rays.

We think, for instance, that the acme has been reached in the making and marketing of bread, but along comes a man with an idea for making bread of bran, and he is immediately ushered into the inner sanctum of the temple of great profits. Or we imagine that the last word has been said in cereal foodstuffs, when lo, and behold, the man with the right idea proves that the field has room and to spare for a financial success in so simple a thing as rice dressed in a palatable and salable form. And so it is in everything, automobiles especially. The man who conceives the idea of a sport car supplies a want that others have neglected. There may be many automobile tractors on the market, but the human brain conceives one with some feature lacking in others, such, for instance, as making a Ford automobile interchangeable into a farm tractor, and it has an immediate and large success. And if anybody had an idea that the profits from producing petroleum might be limited by the use of gas and electric light, it was because the automobile’s enormous consumption of gasoline and the use of oil by ships could not be foreseen.

The field for investment is kept constantly fallow, and ready for the seed that is to fructify into great profits, by the human brain which is ever active—ever thinking. If its product is not an elemental, it is a supplementary idea, as the rubber tire, the demountable rim and the self-starter for automobiles. Until the world has arrived at perfection in all things, the ultimate will not have been reached. The opportunities of today and tomorrow are as great as they were yesterday. It is a question whether they are not greater, for if the quotation ascribed to Emerson is true, that the world will beat a path to the door, though it be in a forest, of him who makes a mouse trap better than his neighbor, the future possibilities of enterprise are favored by increased population and the element of the cumulative nature of the wants of man. As inventions and articles of use increase in number, new needs which demand supplementary products are created. Each new thing given to the world brings in its train other new things. The crank of a Ford auto creates a demand for a self-starter. The increase in population and wealth brings in its train a multiplication of human units whose use of created things is on a crescendo scale.

The financial successes in the automobile business, great as they are, have followed the

 inexorable law that the richest returns in all investments are the ground floor ones. The history of no big business demonstrates more clearly that the way to make money is to invest in new companies when they are offering the first authorized capitalization for investment subscription. Money-making opportunities for new investors are always greatest in enterprises whose development is ahead and in the future. If they have reached the stage where development is already producing great profits, the door is closed to the new investor, or else he must pay a premium to sit in such paying company.

In the ground floor days of the Ford money-making machine, Miss Couzens “risked” $100 on Ford. That $100 produced $100,000 in cold cash. But it did so only because the inception of the Ford enterprise provided the opportunity. Having made its half a billion, or more, the Ford enterprise is no longer enterable on any basis that would give such returns for each dollar invested. When money is needed enterprise is willing to pay liberally for its use. When enterprise has all the money it wants, money’s value to it is less. This is the most natural law. It is a law that operates in other things besides money. “He that hath, needs not; he that hath not, wants.”

The automobile industry illustrates graphically that when an enterprise develops to the point where it is well grounded and has reached a period of age and steady earning capacity, it is not new investors who may come in and gather the richest plums, but the old ones, those who helped to give it its start, who stood by it when the future was obscure, and the ultimate outcome not certain. There is probably no business that shows as many people in it now, who were in it at the start, as the automobile business. This applies to manufacturers, distributors and investors, and is, to a certain extent, due to the industry’s newness. The original Ford investors are practically all intact. It is the original investors who have reaped the reward of their courage in embarking in new enterprise, and who have shared in the division of the juicy melons the automobile companies have cut in the form of huge stock and other dividends. We need no better proof of the fact that ground floor investments promise the greatest returns on money invested than the financial history of the automobile.

While quantity production and the co-operative spirit which led to standardization were the keystones in the structure of the present day automobile success, the history of the successful development of the automobile demonstrates

 another fact, which is a vital one in the realm of investment.

This fact is that most great financial successes are built on our natural resources. This is peculiarly so of the automobile industry. The steel, wood, rubber, leather and glass of which the automobile is composed, are all products of the ground, the forest or the farm. It could not be said that the products of the earth directly make the profits of a stock life insurance company, but this can be said of the automobile industry, and its history discloses that the automobile business of the United States was four times rescued from failure, first, by petroleum, for steam and electric cars would not sell in quantities, and the gasoline from petroleum was needed to give the automobile its great vogue, once by tungsten, vanadium and chromium, again by the quantity production theory, and finally by co-operative standardization.

At one period of automobile development, the manufacturers were ready to give up in despair because cold-rolled and high carbon steels only were available, and these made the weight of the car and the price obstacles to its popular adoption. At the stage when failure to produce a car at popular price was imminent, there entered on the scene tungsten, chromium,

 vanadium and aluminum, all natural resources, and they, combining with standardization, made quantity production possible. Tungsten, alloyed with steel for valves, chrome steel for springs, vanadium in steel to impart purity, and aluminum for lightness, reduced the weight of the automobile 25 per cent, enabled motors to be made smaller, tires lighter, original cost less, and cut down upkeep cost to the users of cars. Quantity production thus was made possible, and natural resources again vindicated their claim to being premier possibilities of profit.

Of the future of the automobile and of products allied with it or sharing in its construction and prosperity, as continuing money-makers, all indications are that the profits already taken out of the motor car industry in the United States are but placer croppings, and that the years to come will record the workings of the real vein. This real vein, in the opinion of the man who looks ahead, is in the use of passenger cars, haulage trucks and motor tractors by the fifty million of the population of this union of states who are on or of the farm.

As yet, the farmers have not risen to the full possibilities of motor power in economic superiority over horse power for haulage, ground cultivation, and other uses to which the horse is now put. Elements which will hasten this

 awakening are the scarcity of man labor and the workings of the immutable law of economics. There is not enough food being produced by the world to supply the demand. If there were, prices would be lower. Prices will remain high as long as the supply falls below the demand. As long as they remain high, the stimulation to greater production will continue, and this urge can have but one result, which is to force the producer to adopt the most economical method of production.

It has been determined that motor power is cheaper than horse power. It is, therefore, only a question of time when the horse will go from the farm as he is disappearing from the cities. In this evolution will be found the money-making possibilities of investment in the motor tractor and the motor truck. Their adaptation to the smallest as well as the largest needs of the tiller of the land is now being assured.

With the horse, the farmers of the United States have been able to break up only 70 per cent of the cultivable land not in timber. There are over two hundred million acres of tillable land that have never felt the cold steel of a chilled plow. There are two hundred million more acres in timber that will, much of it, ultimately come under the plow. Besides crippling the labor supply in this country, the European

 war has taken a million horses out of our supply. The case in favor of the tractor coming ultimately into common use seems from all this to be completely made out—its adoption in large numbers being only a question of getting the price down to a basis which will insure quantity production. As this was done with passenger automobiles, it would be folly to say it will not be done with tractors and trucks.

Figures showing the total amount of money that has been taken in profits out of the automobile industry have never been compiled. It is a business that has developed so rapidly and feverishly that the water churned up by the commotion it has made has not yet settled. But there is a record of enough individual instances of gigantic profits to prove that the largest individual appetite for dividends should have been satisfied by the ratio of earnings already made in automobile manufacture.

But in every case the greatest profits were in the stock of those companies that complied with Edison’s rule of large money-making—“What you want to do to make money is to make quantity.” And they were also companies which made an automobile that could be “‘et’ up,” as Armour put it, by time and use, in less time than it takes time and use to eat up a higher priced machine.

Ford, Overland, Reo—you will recognize this trinity as the leaders in sales, and by the same token they have been the leaders in profits. When it is stated that Henry Ford made $200,000,000 in thirteen years, and was then offered a like amount for only a small part of his enterprise, we may well believe that he credits his own statement that “anything for only a few people is no good. It’s got to be good for everybody or it won’t survive.” Other Ford investors profited on the basis of $5,000,000 for each $10,000 invested. After the parent Ford company had established a record of a million dollars a week in profits in the United States alone, Ford stepped across the river into Canada and organized a company there which is earning fifty per cent a year on its capital of $10,000,000.

Profits of $52,000,000 in capital stock alone which has been built up almost entirely of dividends earned, is the record of the Willys-Overland Company. John North Willys founded the success of this great money-making business on his personal check of $500, cashed at great trouble during the panic of 1907, when the Overland company was ready to go into bankruptcy. Besides the dividends applied to increasing the capital, an immense amount in profits has been disbursed by this enterprise. The dividends

 in 1916 were $11,000,000, over 20 per cent of the capital. This year they will likely be nearly double that amount. The Reo Motor Car Company has paid over $50,000 on an investment of $1,000. These three are not by any means all the automobile companies which have contributed to make the automobile industry a signal example of the earning power of money, but they represent the leaders of the popular or quantity-production-through-low-price type. There are about 150 passenger automobile companies that are profitable in varying degrees, proportioned to their price, not to say anything of trucks and tractors, in the marketing of which fortunes are also being made.

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25 de octubre
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Babafemi Titilayo Olowe

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