Earlier the Investment, Greater the Profits.
These conditions being true, it should be clear that the earlier an investment is made in the industry, the greater will be the profits. Spectacular profits will be made before the saturation point is reached, and to get all the tremendous accretive values that accrue in this industry the investment must be made at the beginning. The further removed from the beginning the investment is made, the more the investment will cost and the lesser will be the accretive value as well as the income on the investment.
This is a fundamental principle in the science of investment.
When the saturation point is reached manufacturing automobiles will settle into an industry to supply a daily necessity. There will be keener competition, the price of cars will be lowered, and the profit on each will be correspondingly less. The industry will be similar to those of making hats, plows and shoes. It will carry a substantial profit, but not a spectacular one as now and for many years to come.
It seems, then, that, large as it already is, the automobile industry is still in its comparative infancy—that it has before it a reasonable possibility of more than doubling its present proportions.
While there are several large companies that will continue to produce large numbers of cars each year, it is not reasonable to expect that these companies will grow from this time forward as they have in the past.
The expansion of the industry may rather be looked for in younger and smaller companies that will put out cars to meet some particular demand.
The investor in the industry could scarcely be said to be using good judgment if he undertook to help to build a company to put out a car to compete with the Ford car, for illustration; that is, to put out a car at the same price and that he would expect the public to buy in preference to the Ford. It may be possible that the thing can be done, but off hand it would seem like taking an undue chance.
Nor is a Ford proposition necessary to make money in the automobile industry. This has been demonstrated sufficiently.
The Ford car fills a particular want of many people, but in the main it is a builder of the industry as applied to more elaborate and higher priced cars. It prepares a market for others.
The investor should seek to get into the business of supplying the demand in that market.
CHAPTER V.
BENEFITS CONFERRED BY THE AUTOMOBILE.
That the automobile is one of the greatest boons to mankind will probably be admitted if all its benefits are fully understood.
The best teacher, it has been demonstrated, is one’s own experience. In learning anything, the mind can never grasp the lesson it is told, with the same understanding it receives when the lesson is visualized by the eye.
Travel is acknowledged to be a good educator and to broaden the mind. This is because the eye sees and takes its own impressions, and does not depend on the impressions of others. Reading books of travel never instruct as does travelling itself.
The automobile is a healthful, exhilarating method of conveying people to persons, places and scenes that, before the automobile, they knew of only by hearsay, or by reading of them.
To estimate the extent to which this informs and instructs, we need only go back in memory to the isolated farm of a quarter of a century ago, and vision the limited horizon of the general knowledge at first hand of the farmer’s family. Practically all the current knowledge they had was from reading, occasionally going to town or through visitors whose appearance was rare and made at long intervals. Seeing a new face in those days was a rarity.
The situation with a majority of the people in the country, before the automobile, was very much like the isolated farm family. It was like that of the entire country before the advent of the railroad.
No greater agencies for instruction in first hand knowledge than the railroad, the steamboat and the telephone had been introduced into civilization up to the time of the automobile. Now the motor car penetrates into places where the railroad, the steamboat, or even the telephone does not go.