Henry Ford
Henry Ford built the Ford Motor Company on the basis of sound productive and business practices that stress continuous improvement of methods of production to reduce costs and prices and that emphasize high quality, durable, and reliable products. He paid high wages to his workers, whom he viewed as partners who ought to share in the profits of the business. He was opposed to labor leaders for their tendency to retard technological development in order to protect jobs, thus undermining the generation of new employment in the long term. He formulated a critique of prevailing business practices, rejecting their emphasis on money and profits at the expense of the economic and social development of society. He developed a factory system that provided equal opportunity (for men) in accordance with ability and desires, regardless of level of education or prior criminal record, and independent of physical condition. He believed that individuals should receive from society what they contribute to it in the form of work, and that everyone is entitled to the basic necessities and a share of luxuries in exchange for work. He was committed to peace among nations, and he was opposed to imperialist interference in the economies of nations in development.
However, Henry Ford’s potential for leadership was undermined by the prejudices of an Ivy League educated elite toward a man with a farm background who left school at the age of 16 to work as a mechanic, yet who possessed the audacity to formulate intelligent and experience-based critiques of their perverse business practices. And above all, his potential was undermined by his antisemitism, difficult to understand, given his highly developed sense of morality in all other respects. I will address Ford’s antisemitism in the conclusion of today’s commentary.
The Ford Motor Company was founded in 1903 to produce and market cars designed by Henry Ford, with Ford serving as vice-president, designer, master mechanic, and general manager. In 1906, Ford used his earnings from the company to buy stocks that gave him majority control. In 1919, Ford’s son Edsel bought the remaining 41.5% stock, giving the Ford family 100% ownership. Ford considered control of the company important, because his methods of production and management were not consistent with prevailing business practices, and many of his associates were not in agreement with his decisions and policies. The Ford Motor Company remains under the control of the Ford family to this day.
With the assistance of Samuel Crowther, Ford wrote My Life and Work, which was published by Doubleday, Page and Co. in 1922, when Ford was 59 years old and at the height of his powers and capacities. The book is a critique of capital and labor, formulated on the basis of Ford’s considerable experience as a successful carmaker and business leader. My commentary today is based on Ford’s autobiography.
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Ford’s development of the method of modern manufacturing
Ford maintained that agriculture, manufacturing, and transportation (growing things, making things, and carrying things) are the foundation of society and social progress, and that labor is the foundation and the driving engine of all economic activities. Labor is natural for human beings, because it is the source of prosperity, which Ford defines as a situation where the largest number of people are getting all they need and can legitimately consume, with a few luxuries.
In Ford’s view, labor that uses the modern manufacturing method is especially important in driving human productivity; and particularly important is the industrialization of the family farm, which makes food cheaper. The concentration of industry and the creation of large cities, he observed, has been a necessary stage, which has made possible the learning of many secrets of production. But in the future, humans will learn how to produce in a decentralized form, reducing the social problems associated with big cities. Smaller communities will be the norm, because decentralized production will be the least expensive. He envisioned the development of flour mills where the grain is grown; pork, ham, and bacon produced where hogs are grown; and cotton mills near the cotton fields. Railroad transportation should be used not to connect the growing to the processing, but to transport the processed product to other regions that do not grow grain, hogs, or cotton. Local communities would be more complete in themselves, and living would be less difficult with less in the way of urban concentration.
Ford declared in 1909: "I will build a motor car for the great multitude. It will be large enough for the family but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one—and enjoy with his family the blessing of hours of pleasure in God's great open spaces."
The key to good modern manufacturing, Ford observes, is to develop through experimentation a good product, and to continue to produce and sell the same product, but improving the process of production by making the same product better in quality but cheaper. Once the article has been created and ready for sale, the focus should be on improving the method of manufacturing.
Ford illustrated the method with the Ford Model T, which was Ford’s “universal car,” for the great multitude. It has the following attributes. (1) Quality in material, so that it will be in use for a long time. In investigating materials, Ford workers found that Vanadium steel is the strongest, toughest, and longest lasting of steels. (2) Simplicity to operate and maintain, because the masses are not mechanics. (3) Power in sufficient quantity for necessary speed and acceleration. (4) Complete reliability, including in a variety of road conditions. (5) Lightness, because unnecessary weight consumes power; lightness enables movement through mud, snow, water, up hills, and across fields and roadless plains. And the more a car weighs, the more fuel and lubricants it consumes. (6) Control, so that speed is maintained, and the car is able to respond in any emergency and contingency.
Henry Ford had designed and built eight models before the Model T. Nearly all the characteristics of the Model T had been designed and tested in one or more of the previous models, so that when the Model T was made, its characteristics had been previously tested. Ford was confident that it possessed the necessary requisites of the universal car.
Ford offered the Model T for sale in the 1908 and 1909 market season, when the company was five years old. In its first season, the Model T completely outsold its predecessors, Models R and S. In that season, Ford sold 10,607 cars, a number larger than any car manufacturer had previously sold. The Model T was offered in five styles, a touring car at $850, a town car at $1000, a roadster at $825, a coupe at $950, and a landaulet at $950.
Most managers and salespersons in the automobile business at that time viewed the automobile as a luxury item for the wealthy. They therefore believed that the Ford Motor Company would fail when it announced that it would be offering only one model. They believed that most customers were interested in style and in new lines of cars with different styles. Henry Ford maintained that the industry was catering to 5% of the customers. He believed that 95% of the customers were much more concerned with issues such as price, quality, and reliability. Ford was proven right. The Company sold 18,664 cars in 1909-1910 and 34,528 in 1910-1911.
For Henry Ford, the key to success in the automobile business was not “monkeying with styles” but “the application of intelligently directed power and machinery.” With attention to improving methods of production, the price of the Model T was reduced almost every year, and sales increased. Ford believed that there was a market for a car for business, professional, and family that had sufficient speed and was compact, simple, safe, convenient, and reasonably priced. He believed in the commonsense intelligence of the consumer, if offered an intelligently designed and reasonably priced product.
Having developed the Model T, Ford sold some version of it for fifteen years, arriving to the production and sale of fifteen million vehicles by 1927. Ford workers worked collectively to continually search for cheaper ways to produce the Model T’s constituent parts and assemble them. In 1927, with sales beginning to decline, the Ford Motor Company developed the Model A.
The moving assembly line for which Ford is famous was developed by Ford and his workers during 1913 and 1914. Prior to the assembly line, a car was put together at a spot on the floor, and the workers brought the parts to that spot, as is done in constructing a house. In observing this process, Ford was aware that the workers spend more of their time walking about for materials and tools than they do in working. The basic idea of the assembly line is to take the work to the worker rather than the worker to the work. In redesigning this work process, two general principles were applied: a worker should never take more than one step, and no worker should need to stoop over.
The experimental redesign began with the assembly of component parts. The tools and the workers were placed in sequence, and each component part should travel the least possible distance while being assembled. Using work slides or some other form of carrier, the worker completes the operation, and places the part always in the same place for movement, by gravity if possible, for the next operation. The design eliminates the need for thought on the part of the worker and reduces movements to a minimum. Once the parts are assembled, they are shipped to the point of distribution for the assembly of the car.
The system was tested for the first time with the assembly of the fly-wheel magneto. In the usual method, assembly took twenty minutes. With the first experiment involving a moving assembly line, assembly was reduced to thirteen minutes. Subsequent experiments in improving the line reduced the assembly time to five minutes.
The assembly line was applied to the automobile itself. Assembly with a stationary chassis took twelve hours twenty-eight minutes per chassis. The first experiment of assembly with the chassis drawn by a rope reduced assembly time to five hours fifty minutes per chassis. Subsequent modifications in the line reduced the assembly time to one hour thirty-three minutes.
The assembly line must be carefully designed, Ford notes, on the basis of observation. The work should not be hurried, but neither should seconds be wasted. The factory is organized such that each department does one thing or assembles a single part, and five hundred departments were developed.
The Ford factory also followed the concept of vertical integration, in which the Company assembles cars using raw materials and parts supplied by departments within the Company, without dependence on outside suppliers. The system was fully developed in the enormous River Rouge factory complex that began production of the Model A in 1927.
Henry Ford believed in maximizing wages to the limit that the business would endure, which is defined by the marketability of the product. High wages are good for the process of production, because it promotes worker satisfaction and elevates the quality of work. And high wages are good for the country, because they elevate the buying power and the prosperity of the nation. Since the wage is set by calculations concerning the income from sales, workers have an interest in contributing to the reduction of production costs and the maintenance/elevation of quality. High wages defined by collective productivity gives the workers a stake in the company. Ford sustained that an intelligent employer maintains an advantage over competitors not through low wages but through cost efficient production of high-quality goods.
On January 5, 1914, Ford announced a wage of $5 per day for an eight-hour workday, replacing the Company’s previous pay of $2.34 for a nine-hour day. The new pay was twice that earned by workers at other auto companies. The following day, 10,000 people presented themselves at the Ford employment office seeking work. In 1922, the Ford Motor Company paid workers a minimum of $6 a day, with additional income possible through promotion to higher levels, significantly higher than the average in the industry. A wage of $7 per day was introduced on December 1, 1929.
Henry Ford’s employment and promotion procedures would be called today inclusive. Ford employed persons regardless of whether they previously had been college graduates or prison inmates. He believed that ex-prisoners had the right to another chance. And he believed that college graduates ought to be able to go ahead faster, but they have to begin at the bottom and prove their ability.
The work process possessed a built-in structure for workers to advance according to ability and desire. In the first place, in the quest for improvements in production, an informal suggestion system was developed. Ford noted that most workers suggested modifications that made their work easier, which were welcome and supported, but many also suggested ways to reduce time and costs.
In addition, there was a normal process of advancing through levels of work as well as moving from one task to another in the same level. Jobs were classified in Classes A, B, and C, with Class C, where every new worker begins, having repetitive work. With some experience, workers can move into Class B and Class A, with the latter involving toolmaking or some supervisory position. Workers can request the level and work task, and they are accommodated if they are capable and to the extent possible, because worker satisfaction is viewed as important for the productive process.
In observing this process, Ford learned that all workers are not equal in ability or skill. The workers with more ability become leaders in the productive process, and their good management of the system enables those with less ability to work and live better. In addition, Ford observed that most workers do not want the greater responsibility of a more advanced position, even though they are paid more.
Ford maintained that critiques of the assembly line as destroying true creative human work have been formulated by persons with a mindset that could not possibly endure the same repetitive task all day. The critiques mistakenly assume that the majority of people have the same creative mindset. In reality, Ford maintained, the majority of workers prefer repetition and routine, and they opt for such roles in their selection of tasks. All workers begin with repetitive kinds of work when they are newly employed, but they do not have to stay in it if they do not like it. All workers who do not like their work can submit a transfer card to the Employment Department.
In addition, Ford observed that most workers are more interested in a steady job than in advancement. About twenty-five percent of workers are willing to serve as straw bosses, a middle level position which carries with it more pay. Some workers with a mechanical orientation opt for tool making, rather than the greater responsibility of production. Only five percent are oriented to higher positions in management and design. Ford sustains that the method of production designed by the Ford Motor Company puts able and skilled persons in planning, management, and toolmaking, in a productive system that creates possibilities for less skilled workers to receive good and steady wages for productive work of a more routine and repetitive nature, a satisfactory arrangement for most workers.
The Ford Motor Company in 1922 denied no one work on the basis of physical condition. The Company has a great number of tasks that must be performed by someone and can be performed by persons with some physical incapacity or other, and those in this situation receive the full salary for their work, thus enabling their independence. In an analysis of 7,882 different jobs in the factory, it was determined that 670 were men without legs, 2,637 were men with one leg, two were men without arms, 715 were men with one arm, and ten were blind men. All were receiving full wages, which were above average in the community.
Ford notes that “today we have skilled mechanics in plenty, [but] they do not produce automobiles—they make it easy for others to produce them. Our skilled men are the tool makers, the experimental workmen, the machinists, and the pattern makers. . . . The rank and file of men come to us unskilled; they learn their jobs within a few hours or a few days.” Some forty-three percent of all jobs require no more than one day of training; 36% require from one day to one week; 6% require from one to two weeks; 14% require from one month to one year; and one percent, including highly skilled work such as toolmaking and die sinking, require one to six years to master. All workers are encouraged to find the class and level which they desire.
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Ford’s critique of capital and labor
Ford maintained that capitalists improve the means of production, and therefore, they are the foundation of society. Their function is to produce for consumption, in response to consumer demand, and not for money or speculation. This function implies that the most moral and commercially successful capitalists will strive to produce articles of high quality and low price.
The fundamental orientation of the capitalist, therefore, is service to the people, that is, producing articles in response to the needs and desires of the people. Money, therefore, arises naturally out of service. The money earned through service creates the opportunity to perform more service. A well-conducted business enterprise places service to the needs and desires of the people above profit. Profit eventually and inevitably comes as a reward for good service.
Ford believed that monopoly, by distorting the balance between producer and customer in favor of the producer, undermines the service that is the fundamental orientation of good business practices.
The state cannot directly act to eliminate poverty and abolish special privileges, in Ford’s view. Only the development of the productive forces of the society can accomplish these goals, by establishing their foundation. However, the state has an important role to play in coordinating the activities of business enterprises, thus promoting the general good. Governments, businesses, and the people ought to cooperate in service to the people. “We cannot live without business, and we cannot live without government. Business and government are necessary as servants, like water and grain; as masters they overturn the natural order.”
In many business enterprises, business is “a mere money-making game,” with little thought given to the interests of the public in having quality, durable goods at the lowest possible price. Many erroneously define a good business as one in which profits exceed losses, so they sell products at the highest price that can be had. “Old-time business went on the doctrine that prices should always be kept up to the highest point at which people will buy. Really modern business has to take the opposite view. Bankers and lawyers can rarely appreciate this fact. . . . It is perfectly beyond their comprehension that the price should ever voluntarily be reduced.”
Ford declared that nearly everything made is more complex than it needs to be. When we develop an article that serves and is convenient to use, we fail to search for ways to eliminate its useless parts, in order to reduce the cost of making it. The mandate to seek simplicity applies to everything we produce—shoes, dresses, houses, machinery parts, railroads, steamships, and airplanes.
Ford held “experts” in special disdain. He maintained that experts had studied past attempts to do things, and they therefore knew many reasons why something could not be done. He considered them to be a constraint on creativity, boldness, and progress.
Early in his career, before he established the Ford Motor Company, Ford joined with a group of auto investors to form the Detroit Automobile Company in order to produce and sell Ford’s car. As the chief engineer and the owner of a small amount of stock, Ford had limited authority, and he could not persuade the company to focus on making better cars that would be sold to the general public. The orientation of the company was to “make to order” for rich customers, getting the highest price possible for each car made. They were only interested in making money, rather than making better cars. Ford felt compelled to leave the company so that he could focus on improving the quality of his car through investigation and experimentation. He was surprised to learn early in his career that the auto business was more oriented to making money than to making cars; it paid more attention to finance and little attention to serving the automobile needs of the general public. The auto industry was indifferent to improving manufacturing methods; it was more interested in how much money could be earned. It was indifferent to whether or not customers were satisfied with the cars they had bought.
Ford maintained that reducing production costs by cutting wages is the easiest and most slovenly way to handle a situation of depression or stagnating sales, where the consumers do not have sufficient funds to purchase goods produced. A far better approach, in accordance with sound business practices, is to make production better, to bring the price down to the buying power. A company should serve the needs of the customer, either by increasing the quality of the product or improving production in order to decrease the price. At the same time, reducing the price without reducing the cost of production through improved methods of production is in effect reducing the income of the business, which would not be sustainable.
Profits should go primarily to operating costs, rather than dividends. Dividends should not be excessive. Therefore, “the stockholders, to my way of thinking, ought to be only those who are active in the business and who will regard the company as an instrument of service rather than as a machine for making money. If large profits are made—and working to serve forces them to be large—then they should be in part turned back into the business so that it may be still better fitted to serve.”
Because of this policy, two of Ford’s original investors, John and Horace Dodge, filed a civil suit against the directors of Ford Motor Company, maintaining that the Company had violated the interests of the stockholders. In testifying at the trial on November 2, 1916, Henry Ford declared:
In the first place, I hold that it is better to sell a large number of cars at a reasonably small margin than to sell fewer cars at a large margin of profit. I hold this because it enables a large number of people to buy and enjoy the use of a car and because it gives a larger number of men employment at good wages. . . .
And let me say right here, that I do not believe that we should make such an awful profit on our cars. A reasonable profit is right, but not too much. So it has been my policy to force the price of the car down as fast as production would permit, and give the benefits to users and labourers—with resulting surprisingly enormous benefits to ourselves.
This policy does not agree with the general opinion that a business is to be managed to the end that the stockholders can take out the largest possible amount of cash. Therefore I do not want stockholders in the ordinary sense of the term—they do not help forward the ability to serve. My ambition is to employ more and more men and to spread, in so far as I am able, the benefits of the industrial system that we are working to found; we want to help build lives and homes. This requires that the largest share of the profits be put back into productive enterprise. Hence we have no place for the non-working stockholders. The working stockholder is more anxious to increase his opportunity to serve than to bank dividends.
In the nation and the world, Ford lamented, there is a tendency toward centralization of banking institutions, either government banks or a group of private financiers that are closely allied with the government. As a result, trading in money becomes a lucrative business. “When money itself becomes an article of commerce to be bought and sold before real wealth can be moved or exchanged, the usurers and speculators are thereby permitted to lay a tax on production.”
In Henry Ford’s view, then, the auto industry is characterized by wrong business motives and bad financial methods. He maintained that the Ford Motor Co. attained success by departing from the prevailing way of doing business.
Ford believed that capital and labor are partners. They need each other; and it is foolish for capital and labor to struggle against each other. If an employer refuses to pay the wage that the business can manage, the solution is not the strike, but the long-term enlightened self-interest of capital and labor in the business. Instead, what emerges are propagandists for capital and propagandists for labor, who reinforce conflict.
In Ford’s view, union leaders provoke permanent conflict, because their role is persistent denunciation of injustice and permanent provocation. Ford believed that, instead of calling the workers to strike and sabotage, labor leaders ought to call the workers to work productively, in order to strengthen the business, in accordance with the common interests of capital and labor. I note parenthetically that exhorting the workers to productive work is the task undertaken by leaders of workers in socialist Cuba.
In April 1941, 50,000 Ford employees refused to work until Ford agreed to meet union demands calling for higher wages, overtime pay, and job security. Ford initially resisted, but under pressure from Edsel Ford and the government, Ford agreed to the demands and declared a union shop.
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Ford’s antisemitism
In his critique of prevailing business practices, Ford does not even hint that he considers nefarious business practices to be a result of Jewish influence. Indeed, Ford was criticizing the practices of financial and industrial institutions that were managed almost exclusively by so-called White Anglo-Saxon Protestants (WASPs).
However, near the end of My Life and Work, Ford devotes a little more than one page to a controversial article he had published in 1920 on the Jewish question. He insists that anyone who reads the article will see that it contains no prejudice, except for a prejudice in defense of the principles of American civilization. He maintained that it is necessary to challenge “a nasty Orientalism which has insidiously affected every channel of expression” in American society, the influences of which can be traced to one racial source. He commends the intelligent people of the race in question for the steps they have taken to cease their protection “of the more flagrant violators of American hospitality,” but more must be done to stop the “economic and intellectually subversive warfare upon Christian society.” He calls upon Jews to “labour to make Jews American, instead of labouring to make America Jewish.”
I do not have Ford’s writings on this question. I find his comments in the autobiography mystifying, in that I do not know what specific expressions he finds insidious. I will confine myself to the observation that the notion that American Jews were distorting the cultural evolution of the American Republic cannot be defended with historical evidence. Jews were part of the second wave of European immigration to the USA, which occurred from 1865 to 1925. Jews were joined in this process by Catholics and Orthodox Christians from Southern and Eastern Europe as well as a second wave of Irish Catholic immigration. In the United States, Jewish immigrants were disproportionately represented in an emerging ethnic merchant class, separate from and of lower status than the WASP-controlled banks and industrial enterprises. Like the other immigrants of the era, Jews accepted the norms of Americanization, involving the development of urban villages with distinct religious practices and popular cultures, accompanied by a quest for full and equal participation in the economic and political life of the nation, conducted in the official language of English and developed in accordance with the founding principles of the American Republic.
In 1918, Ford purchased his hometown newspaper, The Dearborn Independent, which published a series of articles blaming Jews for problems in American society. A libel suit was brought against The Dearborn Independent, and in the trial, there was testimony by some witnesses to the effect that Ford was not the author of the articles and was not fully informed of their content. Ford shut down the newspaper in 1927 and wrote a public letter of apology to Sigmund Livingston, president of the Anti-Defamation League. Ford’s apology was well received by the public. In January 1937, Ford sent a statement to The Detroit Jewish Chronicle disavowing any connection to a publication in Germany known as The International Jew, which was a collection published in Germany of The Dearborn Independent articles. The distribution of The International Jew was halted in 1942 through legal action by Ford. On January 7, 1942, one month after World War II began, Ford wrote another letter to Sigmund Livingston disclaiming direct or indirect support of "any agitation which would promote antagonism toward my Jewish fellow citizens." He concluded, "My sincere hope that now in this country and throughout the world when the war is finished, hatred of the Jews and hatred against any other racial or religious groups shall cease for all time."
Ford’s erroneous and prejudicial views with respect to American Jews were not the only factor undermining Ford’s influence in American political culture. In addition, there has been a prevailing American tendency to turn a deaf ear and/or discredit all voices who critique the prevailing national norms that place money and profit above people, national wellbeing, and the common good of humanity. To what extent has this occurred with respect to Henry Ford?
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