He kept the industry in a ferment for ten years or more, whether designedly or not, through his patent, the mere existence of which tended toward restraining its development by discouraging inventive expansion, and ceasing to exercise the depressing effects of a wet blanket on automobile growth only when the influence of his patent was neutralized by an adverse court decision.
The earlier commercialism of the automobile was characterized by many extravagances in expansive plans, high financing and even recklessness, not only on the part of manufacturers, but buyers of automobiles as well.
In getting the price down to a figure which is not excessive, the manufacturers removed the cause which militated most against popularization of the invention and provided one of the reasons for opposition to it by many people. To pay the prices which originally prevailed, men mortgaged their homes and women sold their diamonds and went bankrupt on the upkeep of the car. Manufacturers expanded too lavishly, overcapitalized, and attempted great stockjobbing consolidations, while incompetent officers were paid excessive salaries, until conservative financiers entered a protest and the banks called a halt.
The abuses which were co-existent with one of the eras of the automobile’s development caused the industry to be regarded by a class of the people as a luxurious outlaw and a menace to the well-being of the country.
Vice-President Fairbanks raised his voice to protest against the new manifestation of human nature’s appetite for joy and comfort.
James A. Patten declared a Kansas City bank held fifty-two mortgages on as many automobiles, and that that sort of loaning was going to be stopped.
Certain banks blocked, as far as possible, loans for purchases of automobiles. A prominent banker as late as 1910 declared that the initial cost of automobiles to American users, being $250,000,000 a year, with as much more for upkeep and incidental expense, was equivalent in actual economic waste each year to twice the value of property destroyed in the San Francisco earthquake.
A year after this statement was made, 1911, saw the dawn of the epoch of low priced cars, and the low priced car has reversed the condition from an economic waste, if such it was, to an economic gain, which it undoubtedly is.
Through all the storms of protest and criticisms, manufacturers went on their way, just as the automobile inventors had done under similar circumstances when men laughed and scoffed at them and called them crazy.
The depression of 1893 came too early to affect the automobile industry, but that of 1907 hit it at the time when it was by no means as strong as it was later; and yet, while in that year dozens of companies were bankrupted, and in 1910, fifty-two went out of business, it should be said that the great majority of them were not actually starters in the race. They were entrants that never toed the scratch. Their failure to make a start was due to lack of capital or inefficient organizers. A very large proportion of automobile companies that actually started in business have survived and are successful.