A Brief History of
The First 100 Years of the Automobile Industry
in the United States

Chapter 4 - A homespun genius and an empire builder

by Richard A. Wright

The residents along Bagley Ave. between Grand River and Clifford may have been startled by the commotion in the middle of a June night in 1896, but they soon figured out it must be Henry Ford and that contraption of his. It was.

About 2 a.m., Henry's wife, Clara, was probably not too surprised to see that the strange and brilliant man she had married was battering down a brick wall in the shed in which he had been building his "quadricycle," the name he gave his horseless carriage.

It was perhaps typical of Ford's genius that he had figured out how to build this complex machine, but had not planned how he would get it out of the shed when it was finished.

So he broke down the wall with an ax, pushed the quadricycle out onto Bagley and spun the flywheel. It coughed into action as Ford drove it down the street in a test run that would change the world forever.

Ford was not the first to build a car that worked, not even the first in Detroit. Three months earlier, Charles B. King had driven the first car on the streets of the city. In Chicago, Frank and Charles Duryea had raced their car and had begun producing it in Massachusetts. Ransom E. Olds, Elwood Haynes and Alexander Winton had all built automobiles in the United States and in Europe a number of cars were already in production.

But Ford envisioned building cars for everyone, not just the rich. He did not intend to build them one at a time, he wanted to mass-produce them from interchangeable parts.

William Durant, unlike most of the early automotive pioneers, was not a tinkerer or a mechanic or an inventor - he was a salesman. In fact, he was a superb salesman; he could, in the words of one associate, "charm the birds from the trees."

Grandson of a Michigan governor and a self-made millionaire in the horse-drawn carriage manufacturing business, Durant did not like the new automobiles that were beginning to appear around his home town of Flint. They were noisy and smelly, he said, and they frightened the animals.

His feeling that the new machines were obnoxious was not a reaction against something that might threaten his Durant-Dort Carriage Co., largest maker of horse-drawn carriages in the country. He was a success, no doubt about it, a millionaire several times over. He did not fear innovation, he thrived on it. In fact, he drove a steam-powered Mobile car in 1902, not because he might want to buy one, but because he might want to sell them. He was unimpressed with it and with automobiles generally. Until, that is, he drove a car in 1904 built by David Dunbar Buick.

Buick was an innovative fellow who had made a fortune in the plumbing business, largely because he figured out how to porcelainize cast iron for tubs and sinks. He began to manufacture gasoline engines in 1900 and decided to design an automobile. But his business foundered. He tinkered a lot, but he did not produce cars commercially.

In 1903, Benjamin and Frank Briscoe took over Buick's business, then sold it to J.H. Whiting, owner of the Flint Wagon Works. Whiting convinced Durant to drive the Buick car, which featured a valve-in-head engine. Durant was impressed.

In 1904, Durant reorganized Buick Motor Co. and embarked on a remarkable adventure of empire building in which he created General Motors, lost it, created Chevrolet and took GM back. He finally lost it again, but he had a good time and he never lost heart.

After a couple of false starts (including the Henry Ford Co., which later became Cadillac), Ford founded the present Ford Motor Co. in 1903 backed by 12 investors, including Detroit coal dealer Alexander Malcolmson, his bookkeeper James Couzens and John and Horace Dodge, who had built transmissions for Olds and were now to supply engines to Ford.

It did not take long for Ford's chronically stormy relationship with investors to begin. Irked by Malcolmson's investment in another auto company, he formed a subsidiary, Ford Manufacturing Co., in 1905 to produce engines and other components, but mainly to cut Malcolmson out. Malcolmson owned no interest in the new subsidiary, the entity which paid dividends.

In rapid succession, Ford sold his first car on July 23, 1903, set a world record by driving his Old 999 racing car at 91 miles per hour on frozen Lake St. Clair in 1904, went international with formation of Ford Motor Co. of Canada in 1904, acquired over half of Ford Motor Co. stock in 1906 and, on Oct. 1, 1908, introduced the Model T. The automotive revolution was under way.

The car was priced at $850 and it was Ford's notion of a "universal" car - small, light, inexpensive and reliable. The Ford Model T, the beloved "Tin Lizzie," made Henry Ford the world's leading industrialist and a folk hero.

The Model T was produced with only minor changes for 19 years. When production ended in 1927, more than 15 million were built. In some years, the Model T accounted for more than half of the cars sold in the United States. To meet the enormous demand for the car, Ford built the River Rouge complex. He plowed so much money into the venture that the Dodge brothers led a stockholders' revolt and finally sold out to Ford for $25 million. Ford bought out all the stockholders for an estimated $100 million and the company was entirely family-owned for 35 years.

Ford was not content to write automotive history with his product alone. He refused to pay royalties to holders of the Selden patent. George B. Selden, a Rochester, N.Y., attorney and inventor who had never built a car, applied for and received a patent for the automobile in 1895. Most auto makers produced cars under a license and paid royalties to holders of the patent. Ford refused.

After a long legal battle, the U.S. Court of Appeals ruled in 1911 that the four-cycle engines Ford was building were not covered by the patent. Since most builders were making four-cycle engines, the patent was broken and Henry Ford's status of folk hero was enhanced.

In 1914, he announced the $5 day for workers at his company and thereby enraged fellow industrialists, but the people loved him. He expounded a consumerist economic theory -- if more cars are to be sold, people must be able to afford them.

He kept cutting the price of the Model T until it reached $265 for a roadster in mid-1923. Some people thought he was crazy, but most thought he was a great humanitarian and a genius.

In 1914, he sent rebate checks to buyers of Model Ts, an unprecedented act. That same year, a group of pacifists talked him into financing a "Peace Ship," which would seek to halt the war in Europe. This peace enterprise, as so many do, split up in quarrels and Ford went into his stateroom and refused to talk to anyone. But his prestige was such that his naivete was forgiven and he was widely praised.

After achieving success with the Buick car, Durant formed General Motors in New Jersey in 1908 and it bought Buick. With breathtaking speed, Durant's new GM acquired Oldsmobile, Cadillac and Oakland (later to be Pontiac), plus some supplier firms and a few lesser auto makers. In its first year of existence, GM had put together all of its current car-producing divisions except Chevrolet.

In its first two years, Durant had brought 30 firms into GM, including 11 auto makers. Not all of Durant's ventures were successful, however. He bought the Heany Electric Co., which was based on John Albert Heany's patent for an electric light bulb. General Electric sued and before the case was over, Heany, his lawyer and a patent office clerk were indicted on charges of falsifying the application. Heany was later exonerated, but the others went to jail and Durant lost faith in the inventor.

GM lost a lot of money in the Heany affair and it was undoubtedly a factor in the corporation's weakened financial condition which led to the ousting of Durant. A group of Eastern bankers agreed to bail out GM. They favored dissolving the company, but Wilfred Leland talked them out of it. Instead, the bankers were to receive an enormous bloc of stock and control of the board of directors. Durant was to resign and a five-man committee would run GM for the duration of the loan. Durant had lost his empire.

Durant did not retire from action, however. He formed a number of companies, including Chevrolet Motor Co. in partnership with Louis Chevrolet. Durant met Louis and Arthur Chevrolet when they came to America as part of a French racing team. (Louis was the more aggressive and more successful race driver of the two, so the prudent Durant hired Arthur as his chauffeur.)

Louis Chevrolet had built a high-quality car with his name on it. While Chevrolet was visiting Europe in 1913, Durant changed the design to a smaller car in an attempt to achieve high volume. The Royal Mail and the Baby Grand were the first to sport the now-famous Chevrolet "bowtie" insignia, a design motif Durant reportedly had seen in some wallpaper in a Paris hotel. Chevrolet didn't like what Durant had done. He quit the company.

Meanwhile, Durant's Chevrolets were a great sales success. The company grew rapidly and Durant used profits to buy up GM stock. GM, meanwhile, was coming back out of trouble under the guidance of Charles Nash, a Durant protege who had once headed Buick and now was president of GM, and the new head of Buick, Walter P. Chrysler.

By the time of the board meeting in 1916, Durant's Chevrolet had bought up almost half of the outstanding GM stock. Nash, unaware of that, called Durant aside before the meeting. The trust agreement was running out and the majority of the board had agreed to renew it, Nash told Durant. "So let's not have any trouble."

"There won't be any trouble, Charlie," Durant said. "We won't renew the agreement, but there won't be any trouble. It just so happens that I own General Motors."

Durant nominated Pierre du Pont, who was trusted by the bankers, as chairman. Chevrolet was to be merged into GM. By the following May, the deal was complete and Durant had GM again. He met with Nash.

"Well, Charlie, you're through," he told his former employee who he felt had thrown in his lot with the bankers.

Durant became president of GM for the first time. He would lose it again, but in early 1917, GM was strong and the future looked bright.

Copyright 1996, Richard A. Wright
Published by Wayne State University's Department of Communications