The History of American Technology -- Fall 1998
The Automobile Industry, 1900 - 1909
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Just 1 in every 9,500 Americans owned an automobile. 40% were steam powered; 38% were electric; and just 22% were powered by gasoline burnt in an internal combustion engine.
There were 13,824 automobiles on the road in the U.S. when the year ended.
Worldwide, fewer than 10,000 cars were produced.
Ransom Olds opened the first automobile factory in Detroit. During the first year of operations (1901), the company produced 425 cars. The 3-h.p., curved-dash Oldsmobile thus became the first real success among commercially sold U.S. automobiles. Ransom E. Olds became the first automobile manufacturer to gear up for genuine volume production. He introduced the curved-dash Olds priced at just $625 in an attempt to attract buyers. His plan worked for several years. Olds sold 425 the first year and 5,000 units by 1905, but as Henry Ford would ultimately discover with the Model T, mass production can set a dangerous trap. Changes in styling and consumer taste quickly stranded Olds with a huge investment in plant and equipment trying to sell the 'old-fashioned' curved-dash Olds.
By 1908, the market had shifted almost entirely away from the older 'horseless carriage', or 'surrey', look of the curved-dash Olds in favor of the modern 'motorcar' look embodied in the Model T. The Ford T, introduced in late 1908, would manage the trick of carrying the 'motorcar' look into 1927, when the stylish new GM lines rendered it hopelessly 'old-fashioned' in its turn.
The Detroit Automobile Co. went bankrupt after selling fewer than a half dozen cars in 2 years. The financiers who bought out the company's assets fired Chief Engineer Henry Ford. When the unemployed Ford started winning auto races, former stockholders in Detroit Automobile financed the formation of a new Henry Ford Co., in which they give Ford a 1/6 interest. Ford left the new company a short time later and created the Ford Motor Company in 1903.
First appearance of 'license plates' on U.S. automobiles.
At least 50 new firms began manufacturing automobiles in the U.S.
With the financial backing of Alex Y Malcomson, 40-year-old Henry Ford (d. 1946) formed the Ford Motor Company in Detroit, Michigan. The company was chartered on June 16 to produce automobiles in the intermediate-price range. The company was capitalized with just $28,000 and issued stock with a par value of just $100,000. Ford and Malcomson each held 25% of the stock. They took on James Couzens as Business Manager for 11% of the stock. The new company employed only about a dozen workers who worked in an assembly plant that measured just 250 feet by 50 feet. Ford depended on suppliers for components, and the company was more an assembler than a manufacturer. An important key to success lay in the arrangement Ford struck with John and Horace Dodge. In exchange for stock, the Dodge brothers agreed to cancel their contract to supply engines to Ransom Olds and become the exclusive supplier of engines to Ford.
Dr. Horatio Nelson Jackson, an intrepid soul from Vermont, made what many call the first transcontinental crossing in a motor car. The trip, in a two-cylinder, open-top Winton, consumed 65 days. Dr. Jackson was accompanied on the trip by his faithful dog named Bud and an equally faithful mechanic named Cocker. The trio--including Bud--wore goggles throughout the traveling portions of the journey. At the conclusion of their Odyssey, the three were described as national heroes.
The Association of Licensed Automobile Manufacturers formed as the exclusive licensee of the Selden patent. Henry Ford refused to join the 10 member association. George Selden immediately sued the Ford Motor Company, launching an eight-year legal battle in which James Couzens played a key role in developing legal strategy for Ford.
The U.S. surpassed France in the production of automobiles, becoming the worlds largest producer--a position the U.S. held until Japan surpassed U.S. production in 1980.
Henry Leland created the Cadillac Motor Car Co. in a reorganization of Detroit Automobile.
Between 1904 and 1908, at least 240 firms were established to manufacture automobiles in the U.S.
Henry Ford helped establish the fledgling Ford Motor Company's reputation for engineering excellence (and speed) by personally piloting a 1904 Ford Model B to a new land speed record of 91 m.p.h. Such showmanship, and a reputation for engineering quality based heavily on the Dodge led the new Ford Motor Company very rapidly to profitability.
William C. Durant, a prosperous carriage maker, bought the bankrupt Buick Motor Car Company in his home town of Flint, Michigan. Already a successful businessman, Durant was trying to boost the local economy by preventing unemployment at the Buick plant. By 1908 he built Buick into the largest car manufacturer in the world, selling 9,000 units during a year in which Henry Ford sold 6,000.
Some prices: The new Brush motorcar -- $800; a Ford Model K --$2,800; a good horse -- $150 -$300.
U.S. produced 25,000 automobiles.
Sylvanus F. Bowser invented a workable pump for gasoline, and opened what he called a "filling station"--the first of its kind.
Ransom Olds introduced a "no-frills" model that sold 5,000 units the first year.
The advantages of gasoline powered automobiles were by no means clear cut. A Stanley Steamer set the new speed record for automobiles at 127 m.p.h.
The Ford Motor Company was worth $1 million dollars. Henry Ford soon bought out Alex Malcomson and consolidated his personal control with ownership of 55.2% of the stock. The Dodge brothers and James Couzens remained as significant minority share holders.
Annual U.S. output of automobiles reached 43,000.
The Paris daily newspaper sponsored the first truly long distance rally for automobiles. Five entries left Beijing, China, bound for Paris on June 10. The winner, driving an Italia, arrived in Paris on August 10.
Already successful with the Buick Motor Car Company, which he had bought in 1904 and brought back from bankruptcy, William C. Durant wasn't satisfied with operating the world's largest car company (9,000 Buicks sold in 1908). Spurred by the success of the Ford Model T, Durant formed General Motors, which was based in the combination of Buick, Cadillac, and Oldsmobile. Ford's phenomenal growth over the next several years kept Durant at work on a remarkable trajectory of growth by acquisition. Good profits in the first two years ($29 million and $49 million) convinced Durant that expanding sales would always provide the capital necessary for acquisitions and very rapid growth.
October 1, Henry Ford put the first of his Model T's on the road. The 4-cylinder, 20-horsepower Model T was available in two styles. The runabout sold for $825, the touring model for $850. During the last three months of 1908, the Ford Motor Company sold 6,000 cars. William C. Durant sold 9,000 Buicks during 1908.
Introduction of the Ford Model T late in the year. Ford sold 10,000 units in the first year (by late 1909). Since 1903, the Ford Motor Company had produced eight different models: A, B, C, F, K, N, R, and S. The company was profitable, but none of its models had been spectacularly successful. Ford had built a reputation for high quality, powerful vehicles. Ford had also built an early reputation for service, sending factory-trained mechanics into the field as early as 1904. The combination of reputation, quality, and low-price helped the Model T become the first true car for all classes of Americans.
In Kansas City, entrepreneur George Pepperdine opened the Western Auto Supply Co. as a mail order house supply parts for the Model T. Business was good because the Model T was sold without tires, fenders, a top, a windshield, or lights. A buyer of the Model T could spend as much on such aftermarket accessories as the car itself cost.
Ford's success with the T (sales nearly doubled from the 10,000 sold in the first year of production) caused him to stop production of higher priced models in order to concentrate on the T.