Yet Another Legendary Story About Henry Ford

[ericr]

I don't know how accurate it is. Supposedly at the low point of the Depression when banks were failing (though I heard that it was more the Building & Loans than banks), he was being consulted about making reassuring comments about the banks. I guess he had millions in banks but also a prejudice against high finance.

He was uncooperative. He told his visitors that he didn't care, that he was going down the next morning and withdraw every damn dime he had in the bank, etc....

The Governor of Michigan closed the banks that night.

[WTSHNN]

Believe you're referencing the 1933 "Bankers Holiday".

It's a bit more complex and less altruistic than that but, yes, Henry's threats led to Michigan banks being closed down for 8 days in February of that year.

http://www.historygrandrapids.org/ar...pin%20and%20Mr.

-Tim

[ericr]

Originally Posted by WTSHNN

Believe you're referencing the 1933 "Bankers Holiday".

It's a bit more complex and less altruistic than that but, yes, Henry's threats led to Michigan banks being closed down for 8 days in February of that year.

http://www.historygrandrapids.org/ar...pin%20and%20Mr.

-Tim

thanks for the clarification! in school I had an economics course and we discussed the Depression etc., , so I thought there was some accuracy to the story.

[ericr]

Originally Posted by WTSHNN

Believe you're referencing the 1933 "Bankers Holiday".

It's a bit more complex and less altruistic than that but, yes, Henry's threats led to Michigan banks being closed down for 8 days in February of that year.

http://www.historygrandrapids.org/ar...pin%20and%20Mr.

-Tim

PS his logic was so irrational, I wonder if he was in reality jockeying for some benefit, though no idea what his true goal could have been.

[rotorwrench]

Mr Ford had experienced quite a number of problems with investors, some of which were involved with banks prior to the second start up of Ford Motor Company. They would always think that they could manipulate him and would try to take over things when they weren't satisfied with the course that he wanted to take for his start up. He lost his first start up that way and the factory they were building became the Cadillac Motor Company. This left him almost completely intolerant of investors, bankers, and other money people. He was lucky in his second start up to have the right balance of investors since most of them were actually involved in the company to enough of a degree that they never tried to take over. Henry eventually bought them all out for fair sums of money. After that, he would always find ways to avoid money people to do what he needed to get done.

[Gene F]

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rotorwrench, I think when the Dodge brothers alleged that he was giving away their money when he raised the wages. I can't recall what wages were, and what they went to, but the Dodge's had a fit. He also went to 8 hour shifts.

https://fordauthority.com/2018/11/on...ed-henry-ford/

[40 Deluxe]

Originally Posted by Gene F

rotorwrench, I think when the Dodge brothers alleged that he was giving away their money when he raised the wages. I can't recall what wages were, and what they went to, but the Dodge's had a fit. He also went to 8 hour shifts.

https://fordauthority.com/2018/11/on...ed-henry-ford/

Wages went to $5 a day, with exceptions, and with strings attached.

[Bruce of MN]

Another story I've heard is that he demanded and got to be paid in full in gold up front by the Soviets for the auto plant he built in Russia.

[Crankster]

Originally Posted by 40 Deluxe

Wages went to $5 a day, with exceptions, and with strings attached.

I read about this in his biography. This was a huge deal at the time, and controversial in that his competitors were aghast, because it was roughly double the prevailing wage. Of course it doesn't sound like much money today but it was good money. Consequently huge numbers of people applied for a job, so many they had to use firehoses to disperse the crowd, and it was January in Detroit.

[jwilliams81]

He sure was shrewd!
That is interesting about the gold and Russia, I hadn't read that anywhere before... but I could see it being true.

[Crankster]

Not necessarily shrewd that was just common business practice. The Soviet after their revolution to overthrow the Russian government reneged on all the Czarist era bonds. I'm not sure at that time if the ruble traded on any recognized exchange. People have been trying to collect on pre-revolution bonds ever since. There were a lot of them.

[rotorwrench]

Ford had all the design work and equipment done here in the US to send the Soviets in 1929 but did not build anything at the NAZ (later GAZ) plants to be built at what became Gorky Novgorod and near Moscow. The Soviets paid the price agreed since they did not want to be viewed as a country that would welsh on a deal like that. The Soviets wanted to limit any exposure of its people to western influence so only a handful of US citizens were sent over in preparation. They may have paid in gold but the pay out process was done over time in installments so it wouldn't have been lump sum. They told Charlie Sorensen that they would start construction immediately but it didn't start till 1932. Charlie tried to contact the upper level managers of the project but he never heard back from them. He only found out basic information of them after the war started and he was involved in government dealings with the Soviets,

Ford shipped their entire tire manufacturing plant inventory over to the Soviet Union at the request of President Roosevelt and the War Department which compensated Ford for the cost. Plans were given on how to set it up and everything but they never set it up during the war. Charlie Sorenen knew they had problems with resources back in 1929 so he wasn't surprised to hear that the stuff was still crated and sitting in a warehouse after the war was over.

Henry loved the limelight so he would set up public appearances to get the best press he could. Henry always was aware of union strikes at other companies so he tried to stay a step ahead of that so that unions would leave the company alone. He only set up a tire manufacturing facility at the Rouge in order to avoid what strikes would do to the company. He would not count on one supplier for any given product so as to avoid strikes. Ford made a lot of things in house that they didn't have to just to avoid the possibility of work stoppage. When the unions finally forced their way in, it nearly killed him after his first stroke in 1938.

[ericr]

didn't his quarrel with the Dodge Brothers end with him pulling an elaborate scam that he was going to withdraw and start a new automobile company that would obsolete the Model T etc. Whoever held stock in the Ford Co.. went into a panic, as did his dealers. Edsel has to calm down the dealers.....father and son were both puuling in different directions.

[rotorwrench]

The Dodge brothers were heavy into producing parts to all sorts of automotive manufacturers at the time. Ford had to give them stock shares due to the debt that was accumulating from parts purchases that were made in the early years of the company. A lot of model T parts had the Dodge Brother's logo on them but they were making their money from the Ford dividends they received. They wanted Ford to make large expensive cars like the Model K and Henry wanted to sell mass produced affordable cars.

In Charles Sorensen's book, he mentions how they would cull Dodge supplied parts out for quality control problems and give them back to them. They would hum and haw about this but would eventually take them back. Later on a new shipment would come in from Dodge and those same parts would be in the new shipment. Henry was not a drinker and he knew that the Dodge brothers were so there was always a love-hate relationship there. The Dodge brothers were already building up their own competition for Ford and other manufacturers in Detroit and there was no way that could continue for long. I'm sure they knew that too and especially after the legal action they brought against Ford for reducing dividends to increase the company's output and infrastructure. They took away the capability to grow the company.

Henry came up with the plan to open a new plant under the Fordson name since he owned the Rouge property in Dearborn so he made it clear to all the investors that hadn't already been bought out that he was going to do this. He offered the Dodge brothers a lot of money for their shares so they took the offer and used that to build up their fledgling automobile manufacturing business that was already well established. Henry already had enough surplus assets and manufacturing to be able to come up with the funds to pay everyone off. The plan made things tight for a while but it worked. This was in no way a fraudulent or dishonest thing to do. I'm sure Henry would have done what he told them he was going to do if they didn't sell out. None of the remaining investors wanted to run the company and the Dodge brothers already had their own company to run.

The payout for the remaining investors was $105M with $25,000,000.00 going to the 10% share of the Dodge Brothers. The one that came out the best was James Couzens at a little over $29.3M but he had immeasurably helped build the company. He later became mayor of Detroit and eventually a Senator from Michigan.

[Keith True]

The payoff that always sticks in my mind is the one to Rosetta Couzens,James's sister.Initially James had $11,900 to invest,and his sister put in $100.to make it an even $11,000.I would have to read it again to get the numbers exact,but I believe she took out $95,000 in dividends,and her payout at the end was around $262,000.Good return on a $100.investment by a schoolteacher.Seems I remember too that James was not a man to be intimidated or scared by anybody,and played hardball.It was just a cheaper and practical matter to pay him more than to spend the time and money to fight him.

[mhsprecher]

Henry wanted to keep investing in the company and the stockholders sued him to get dividends paid. He lost that case and had to pay dividends. The original investors in what is now Ford Motor Company made a killing.

[rotorwrench]

Original investors in very successful companies generally always get a fortune for there original investment but not all companies grow to be as successful as Ford Motor Company did.

A lot of highly successful founders of such companies are sort of kooky guys that many folks would question investing in anything with them due to the way they act and not so much about what they want to do with the funds. There are a lot more frauds and hucksters out there than successful people.

The Dodge brothers are the ones that filed for an injunction against Ford because they were counting on the dividends to keep their own company afloat. The rest of the investors were basically behind Ford to improve the company further to make even more profit. Once one investor group balked then it came time to settle up or Ford would not have been able to become the company that it did.

[slatgrille]

Original investors in very successful companies generally always get a fortune for there original investment but not all companies grow to be as successful as Ford Motor Company did.

....like my Dad. Bought 50 shares of Tucker in Dec. 1947. I have the original certificate displayed next to my Tucker scale models....

...what COULD have been!

[burner31]

I keep less then 10% of my funds in banks...I just don't trust them to safeguard my money, guess I'm just old school

[Jim Brierley]

Henry worked for Cadillac for awhile, did He design the trans for Cadillac, and maybe it carried over to Olds? They all used a planetary trans for awhile.