The Great Events by Famous Historians [Volumes 1-14]

Now began the "shoe-string" period, the most picturesque in the whole dazzling story of the automobile. There could be no god in the car without gold. Here, then, was the situation—on the one hand was the enthusiastic inventor; on the other was the conservative banker.

"We will make four thousand machines this year," said the inventor.

"Who will buy them?" asked the banker in amazement; he refused to lend the capital that the inventor so sorely needed.

The idea of selling four thousand motor-cars in a year seemed incredible. Yet within ten years they were selling fifty times as many, and were unable to supply the demand. No fabulous gold strike ever had more episodes of quick wealth than this business. Here is an incident that will show what was going on:

A Detroit engineer, who had served his apprenticeship in an electric-light plant, evolved a car which he believed would sell for a popular price. He tried to interest capitalists in vain. Finally, he fell in with a stove-manufacturer, who agreed to lend him twenty-seven thousand dollars.

"But I can't afford to be identified with your project," said the backer, who feared ridicule for his hardihood.

That small investment paid a dividend as high as thirteen hundred per cent. in a year. To-day the name of the struggling inventor is known wherever cars are run, and his output is measured by thousands. This, in substance, is the story of Henry Ford.

A young machinist worked in one of the first Detroit automobile factories, earning three dollars and fifty cents a day. One day he said to himself: "I can build a better car than we are making here."

He did so, and the car succeeded. Then he went to his employers, and said: "I am worth three thousand dollars a year."

They did not think so, and he left, to go into business on his own account. A manufacturer staked him at the start. Later, through a friend, some Wall Street capital was interested. Such was the start of J.D. Maxwell, whose interests to-day are merged in a company with a capitalization of sixteen million dollars.

A curly haired Vermont machinery salesman, who had sweated at the lathe, became factory manager for a Detroit automobile-maker. His genius for production and organization made him the wonder and the admiration of the automobile world. He was making others rich. "If I can do this for others, why can't I do it for myself?" he reasoned one day.

With a stake of ninety-five thousand dollars, supplemented with a hundred thousand dollars which he borrowed from some bankers, he built up a business that in twenty months sold for six millions. This was the feat of Walter E. Flanders. I might cite others. The "shoe-strings" became golden bands that bound men to fortune.

All the while the years were speeding on, but not quite so fast as the development of the automobile. The production of ten thousand cars in 1903 had leaped to nearly twenty thousand in 1905. The thirty-thousand mark was passed in 1906. Bankers began to sit up, take notice, and feed finance to this swelling industry, which had emerged from fadhood into the definite, serious proportions of a great national business.

The reign of the inventor-producer became menaced, because men of trained and organized efficiency in other activities joined the ranks of the motor-makers. With them there came a vivifying and broadening influence that had much to do with giving assured permanency to the industry.

But other things had happened which contributed to the stability of the automobile. One was the fact that automobile-selling, from the start, had been on a strictly cash basis. Yet how many people save those in the business, or who have bought cars, know this interesting fact?

No automobile-buyer has credit for a minute, and John D. Rockefeller and the humblest clerk with savings look alike to the seller. It was one constructive result of those early haphazard days. Every car that is shipped has a sight draft attached to the bill of lading, and the consignee can not get his car until he has paid the draft.

Why was the cash idea inaugurated? Simply because there was so much risk in a credit transaction. If a man bought a car on thirty days' time, and had a smash-up the day after he received it, there would be little equity left behind the debt. The owner might well reason that it was the car's fault, and refuse to pay. Besides, the early makers needed money badly. In addition to the cash stipulation, they compelled all the agents to make a good-sized deposit, and these deposits on sales gave more than one struggling manufacturer his first working capital.

Another reason why the business developed so tremendously was that good machines were produced. They had to be good—first, because of the intense rivalry, and then because the motor-buyer became the best informed buyer in the world.

This reveals a striking fact that few people stop to consider. If a man owns a cash-register or an adding-machine, it never occurs to him to wonder how, or of what, it is made. But let him buy an automobile, and ten minutes after it is in his possession he wants to know "what is inside." He is like a boy with his first watch. Hence the automobile-purchaser knows all about his car, and when he buys a second one it is impossible to fool him.