The Corner of Wall Street and Main Street
The air waves and newspapers are filled with stories of Wall Street and Main Street. The economy certainly demands our close attention. But there is another, potentially more important story that you probably will not see or hear. It is a story about the corner where Wall and Main Streets meet, where American ingenuity was met by American risk capital and changed our lives forever.
One hundred years ago today, the first Model T rolled off the assembly line of the Ford Motor Company’s factory on Piquette Avenue in Detroit. The “Tin Lizzie” was a four cylinder, 20 horse-power vehicle. Its low cost of $825 made driving affordable for average families. The car’s simple, standardized design made rapid manufacture feasible: “Customers can have whatever color they choose,” Henry Ford said, “as long as it’s black.” By 1924 ten million Model T’s had been shipped. By 1927, when production stopped, fifteen million had been sold.
Like so many success stories, it took Henry Ford some fifteen years before the Model T became an overnight sensation. It is worth pausing to reflect on the primary ingredients of Ford’s success and what they teach us about modern business. Given my interest in our young retail energy industry, it is ironic that Ford came out of the utility business. His first big job was as an engineer for Detroit Edison, the Michigan utility. Indeed, he met Thomas Edison when he was tinkering in his garage with one of his first experimental cars. “Young man, you have the right idea,” Edison said to him. “Keep right at it.”
Ford first saw a coal-fired steam engine-driven tractor when he was 12. At 16 he joined the utility and worked with turbines generating electricity. At 28 he sketched his first internal combustion engine on the back of a sheet of music and at 30 he started his first engine in the kitchen sink. Working in his garage he assembled his first prototype and at 2 a.m. on June 4, 1896, he emerged onto the streets of Detroit driving his first car.
Ford did not invent the gasoline powered engine or create the first car. Karl Benz in Germany and the Dureyea brothers in the United States took those prizes. For years Ford fought off a lawsuit claiming infringement of a patent for a gasoline engine granted to a Rochester lawyer in 1879. He finally won that lawsuit in 1911 when the Court of Appeals in New York observed that the lawyer’s patent only extended to his specific design. The decision unshackled Ford, and all inventors since: Innovation is a continuous process of modification and improvement. It would be unfair if we let the caveman who invented the stone wheel get a piece of every tire manufactured since!
No, what Ford did was take the basic ingredients – engine, wheels, axels, transmission – and assemble them in an inexpensive, efficient manner. He did not create mass production or the assembly line. But there, too, he took the manufacturing techniques of others and improved on them. One of his favorite sayings is an article of faith at MXenergy: “Everything can always be done better than it is being done,” he said. He also gave credit to others for his inspiration. He attributed one of his greatest achievements – the mobile assembling line, in which workers stood in place as the parts came to them -- to watching a carcass being “disassembled” cut by juicy cut at the Chicago Stockyards. He pulled some scrap metal out of the wreckage of a French race car and discovered vanadium, a tough but light-weight steel alloy that he would incorporate in his Tin Lizzie.
He also was willing to break the mold. When he saw turnover in his ranks – in 1913 he needed to hire and train 963 workers for every 100 he retained – he raised wages from $2.38 for a nine-hour day to $5 for an eight hour day. Other employers were stunned but Ford maintained that a healthy workforce was good business. Indeed, now his employees could even afford the cars they were manufacturing! And when other auto makers were looking to fatten their profits Ford lowered the price of his car, to as low as $99 in 1914. Lo and behold, sales increased and profits improved. The very conception of the Model T was revolutionary, putting the automobile within the reach of the common man and not only an exclusive perquisite of the wealthy.
It was not always smooth sailing. Ford quit his job at the Edison Illuminating Company, the predecessor of today’s Detroit Edison. But his first venture as the head of the Detroit Automobile Company did not fare well. The company went into receivership (it later emerged as the Cadillac Motor Car Company) and Ford was out of a job. Fortunately Ford also had an interest in car racing and the avocation helped bring him his first important seed capital. After beating an Ohio car manufacturer in a ten-mile race in 1901, he attracted the attention of a wealthy investor who backed him to start the company that would bear his name. Fortunately for Ford his backer decided to start another company, lost his shirt, and was forced to sell his shares to Ford and others. The economic panic of 1907 helped Ford refocus his energies on the mass market; the recession made him realize that making cars for the wealthy few was a ticket to the poorhouse.
Henry Ford was not a Saint, don’t get me wrong. He was imperious and controlling. When his workers came up with a new design intended to hold off competition from new market entrants like Chrysler, Ford allegedly broke the windshield and stomped on the hood. It took him years to give up on his Model T. His politics were nasty, inclined to anti-Semitic rants about international conspiracies.
But Ford’s legacy remains the Model T: As creative as its standardized design; as tough as the vanadium of its hull; as commanding as the backfiring of its engine. Without the Model T we might all be like the French sans-culottes, standing in the dusty streets watching the aristocracy pass in their shiny Cadillacs. When you turn the key this evening think of Henry Ford cranking up the Tin Lizzie on Piquette Avenue in Detroit and stop for a moment to think about the corner of Wall Street and Main Street.
One hundred years ago today, the first Model T rolled off the assembly line of the Ford Motor Company’s factory on Piquette Avenue in Detroit. The “Tin Lizzie” was a four cylinder, 20 horse-power vehicle. Its low cost of $825 made driving affordable for average families. The car’s simple, standardized design made rapid manufacture feasible: “Customers can have whatever color they choose,” Henry Ford said, “as long as it’s black.” By 1924 ten million Model T’s had been shipped. By 1927, when production stopped, fifteen million had been sold.
Like so many success stories, it took Henry Ford some fifteen years before the Model T became an overnight sensation. It is worth pausing to reflect on the primary ingredients of Ford’s success and what they teach us about modern business. Given my interest in our young retail energy industry, it is ironic that Ford came out of the utility business. His first big job was as an engineer for Detroit Edison, the Michigan utility. Indeed, he met Thomas Edison when he was tinkering in his garage with one of his first experimental cars. “Young man, you have the right idea,” Edison said to him. “Keep right at it.”
Ford first saw a coal-fired steam engine-driven tractor when he was 12. At 16 he joined the utility and worked with turbines generating electricity. At 28 he sketched his first internal combustion engine on the back of a sheet of music and at 30 he started his first engine in the kitchen sink. Working in his garage he assembled his first prototype and at 2 a.m. on June 4, 1896, he emerged onto the streets of Detroit driving his first car.
Ford did not invent the gasoline powered engine or create the first car. Karl Benz in Germany and the Dureyea brothers in the United States took those prizes. For years Ford fought off a lawsuit claiming infringement of a patent for a gasoline engine granted to a Rochester lawyer in 1879. He finally won that lawsuit in 1911 when the Court of Appeals in New York observed that the lawyer’s patent only extended to his specific design. The decision unshackled Ford, and all inventors since: Innovation is a continuous process of modification and improvement. It would be unfair if we let the caveman who invented the stone wheel get a piece of every tire manufactured since!
No, what Ford did was take the basic ingredients – engine, wheels, axels, transmission – and assemble them in an inexpensive, efficient manner. He did not create mass production or the assembly line. But there, too, he took the manufacturing techniques of others and improved on them. One of his favorite sayings is an article of faith at MXenergy: “Everything can always be done better than it is being done,” he said. He also gave credit to others for his inspiration. He attributed one of his greatest achievements – the mobile assembling line, in which workers stood in place as the parts came to them -- to watching a carcass being “disassembled” cut by juicy cut at the Chicago Stockyards. He pulled some scrap metal out of the wreckage of a French race car and discovered vanadium, a tough but light-weight steel alloy that he would incorporate in his Tin Lizzie.
He also was willing to break the mold. When he saw turnover in his ranks – in 1913 he needed to hire and train 963 workers for every 100 he retained – he raised wages from $2.38 for a nine-hour day to $5 for an eight hour day. Other employers were stunned but Ford maintained that a healthy workforce was good business. Indeed, now his employees could even afford the cars they were manufacturing! And when other auto makers were looking to fatten their profits Ford lowered the price of his car, to as low as $99 in 1914. Lo and behold, sales increased and profits improved. The very conception of the Model T was revolutionary, putting the automobile within the reach of the common man and not only an exclusive perquisite of the wealthy.
It was not always smooth sailing. Ford quit his job at the Edison Illuminating Company, the predecessor of today’s Detroit Edison. But his first venture as the head of the Detroit Automobile Company did not fare well. The company went into receivership (it later emerged as the Cadillac Motor Car Company) and Ford was out of a job. Fortunately Ford also had an interest in car racing and the avocation helped bring him his first important seed capital. After beating an Ohio car manufacturer in a ten-mile race in 1901, he attracted the attention of a wealthy investor who backed him to start the company that would bear his name. Fortunately for Ford his backer decided to start another company, lost his shirt, and was forced to sell his shares to Ford and others. The economic panic of 1907 helped Ford refocus his energies on the mass market; the recession made him realize that making cars for the wealthy few was a ticket to the poorhouse.
Henry Ford was not a Saint, don’t get me wrong. He was imperious and controlling. When his workers came up with a new design intended to hold off competition from new market entrants like Chrysler, Ford allegedly broke the windshield and stomped on the hood. It took him years to give up on his Model T. His politics were nasty, inclined to anti-Semitic rants about international conspiracies.
But Ford’s legacy remains the Model T: As creative as its standardized design; as tough as the vanadium of its hull; as commanding as the backfiring of its engine. Without the Model T we might all be like the French sans-culottes, standing in the dusty streets watching the aristocracy pass in their shiny Cadillacs. When you turn the key this evening think of Henry Ford cranking up the Tin Lizzie on Piquette Avenue in Detroit and stop for a moment to think about the corner of Wall Street and Main Street.
posted by MXpressions @ 9:07 AM
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