The Ghosts of Detroit

By David Glenn Cox

For the most part they have been forgotten; they are just empty, vacant

memories like the empty, dilapidated homes which line her once proud

streets. It was a land once ruled over by giants, captains of industry

and labor and political thought.

Of course, some remember the

obvious ones, Ford or Durant. Yet there were so many more who, by their

brains and backs, created out of thin air an economic powerhouse

unrivalled anywhere in the world. Young Mr. Ford was a tinkerer working

away in his barn, but he dreamed of building race cars. His opportunity

came in 1901 when Ford raced a 26-hp car of his own design in a

challenge race. He was considered a farm boy out of his league, but

when the other car broke down Ford won the race and became a local

celebrity.



He had formed his first car company, The Detroit

Automobile Company in 1899, and based on his local acclaim, backers now

supplied the 26-year-old with capital. The company folded in 1901

because, according to backers who were requesting a car for basic

transportation, Ford instead tinkered with race cars and squandered

their money. Later the same year, with new backers Ford opened The

Henry Ford Company, but this time there were strings attached to the

financing. Aware of Ford’s foibles and inability to handle projects,

the backers hired Henry M. Leland to oversee the company and to keep an

eye on Ford.

Leland had been apprenticed as a gunsmith during

the Civil War and had witnessed the birth of firearm mass production,

using identical pieces joined to identical pieces. Under Ford’s

management, pieces that weren’t an exact fit were either ground down,

sanded or pounded with a hammer to fit. Ford’s tolerances were to 1/8

of an inch; Leland’s tolerances, with his background as a gunsmith,

were to .010. But Ford was a wild bull; he resented suggestions, he

resented oversight, and most of all he resented Leland. Ford quit the

company that carried his name in 1902, and at the suggestion of Henry

Leland the company was renamed in honor of the great explorer and

founder of Detroit, Antoine Laumet de La Mothe Cadillac.

The

original Cadillac models were mid-priced cars, but because the fit and

finish were far superior to other models, and they ran so smoothly

because of the fit, they were quickly repriced upwards. Leland’s

tolerances were quickly copied by other manufacturers and he was

acclaimed as the finest machinist in all of Detroit, and that title

earned him the lifetime enmity of one Henry Ford.

The third Ford

Motor Company began life as Ford & Malcomson. Malcomson was a local

coal baron with connections to capital. The plan was to self-finance,

but Malcomson then learned what previous investors had learned. It

always cost more and took longer than whatever Henry Ford said it

would. Ford was again working on race cars, building an 80-hp auto that

set a new land speed record of 91.3 mph. It captured headlines and

convinced race car driver Barney Oldfield to drive the Ford “999.”

Outside

of headlines and pictures in the paper, Ford & Malcomson were in

financial trouble. Malcomson had gone through his fortune and became so

worried about his name being associated with yet another Ford failure

that he had his name removed from the business. With his reputation for

being difficult to work with and his repeated business failures, Ford

found himself at the end of his rope. He was forced to make deals with

suppliers to supply him parts or it was the end of what most certainly

would have been the last Ford Motor Company.

Across town Ransom

E. Olds and David Buick were building cars, and since Henry Leland was

now occupied with Cadillac, they turned to what was considered the

second-best machine shop in Detroit to supply their parts. The owners,

brothers Horace and John, had cut their teeth working on steam engines,

and like the Wright Brothers they had built bicycles. They sold their

bicycle company and opened the Dodge Brothers Machine Shop. At first

they would work on anything and everything, but in 1902 they began to

supply exclusively to their best customer, Ransom Olds, who had sold

over 2,000 of his curved-dash Olds models, making him the top car

producer in the country.

The Dodge Brothers had their own ideas

about making cars, so when Henry Ford came to see them, hat in hand,

they listened politely. Ford laid out his drawings for a new model

called the model “A” Fordmobile. The brothers liked the concept and

showed Ford their plans for a new transmission and a fragile

partnership developed. The Dodge Brothers would supply Ford with parts,

but they demanded cash up front on the first order, and rather than 60

days to pay, Ford was given 15 days. If, after that time, Ford

defaulted on the debt, all parts installed or uninstalled reverted back

to the Dodge Brothers. Ford had no choice; it was this or nothing.

Malcomson,

sensing a reprieve from the financial gallows of Henry Ford, offered

the Dodge brothers a 10% stake in the company for $7,000 in parts and

$3,000 in cash. Malcomson was overjoyed to recoup some of his cash and

a chance to sell his near worthless Ford stock. The Dodge brothers

eventually, in the years to come, earned over $34.5 million on their

original $10,000 investment.

Less than a month after the

brothers had thrown in with Henry Ford; the Ford Motor Company had just

$223 left in the bank with payroll coming due. On July 15, 1903 Ford

sold his first model A to a dentist for $895.00 cash. And from that

point forward the sales numbers exploded. In 1906, 1599 cars; 1907,

8,000 cars. By 1912, 78,000 cars and by 1914 Ford was building 1,000

cars for every workday. And Ford was not alone.

At the same time

Ford was attempting to build race cars, an insurance salesman named

Billy Durant saw a horse-drawn cart on the road. Durant was so

impressed by the design of the cart that he purchased the rights and

manufactured the carts along with a former hardware store clerk named

Dallas Dort. They founded the Flint Wagon Works and in the space of two

years the company had 14 factories and sold over 75,000 carriages a

year.

David Buick had made his fortune in plumbing fixtures

and held thirteen patents, including the process for affixing porcelain

to cast iron bathtubs. Yet David Buick was neither businessman nor

automotive inventor. By 1903 Buick had signed over his car company to

his largest supplier, the Briscoe brothers. The Briscoes wanted their

money and not a car company, so to them it seemed only logical that

perhaps Durant-Dort might be interested.

Billy Durant was the

antithesis of Henry Ford; Durant had the Midas touch and was considered

an industrial genius. In 1904 they pushed David Buick to the back of

the boardroom and put Durant in charge. The company was almost broke,

but with Durant in charge they were able to raise $1.5 million for a

company that had sold fewer than a hundred cars. Under Durant’s

leadership in just two years the company was selling 250 new Buicks

every week and still couldn’t keep up with their orders.

In 1907

a financial panic devastated the fledgling automotive industry. Durant

proposed a scheme where the four largest auto manufacturers would

exchange equal amounts of stock in each other’s companies, thereby each

would own all and each other. It was a scheme that was destined to

failure as well as being monopolistic. Henry Ford killed the deal,

since he was the largest manufacturer. He demanded more from each, plus

cash to boot. Inside the mind of Billy Durant was the germ of an idea.

The more cars you build the less expensive each car becomes, and if you

own the suppliers as well, you can control your costs even further.

On

September 1, 1908 Durant founded General Motors and purchased the Olds

car company, which had fallen on hard times. When Durant visited the

Olds factory to see what plans they had made for new models, he was

shocked to find out that there weren’t any. He remarked, “We just spent

a million dollars for road signs.” Durant was undeterred, he returned

to the Olds factory with a new Buick and ordered the workers to cut it

into four quarters. He then moved the sides six inches further apart

and lengthened the car by a foot. He then instructed them to use an

Oldsmobile radiator and hood and told them, “There, that is your new

car.”

The new Oldsmobile was priced $250.00 higher than the

Buick and sold so well that Oldsmobile was profitable by the end of the

year. Later the same year Durant bought the Oakland Car Company, which

was also on the ropes. Their models had been disasters, except for one,

which was so popular that it kept the company afloat all by itself. The

model was called the Pontiac, and Durant cancelled all the other models

and changed the name of the company to Pontiac. Durant then repeated

what he had done with Oldsmobile before moving on to purchase Cadillac.

End of part 1

Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.