An accident which his father met with called him from Detroit to the Michigan farm, and this accident deprived the country of a 50-cent watch and gave it a $350 automobile instead. And most people will agree that it was a fair exchange and no robbery. Thomas A. Edison, strange as it may sound, was responsible for the practically universal use of the Ford automobile, for he it was, who, by the chance remark, “What you want to do to make money is to make quantity,” started Ford on his downward price career. We have it from Mr. Ford himself that he heard this statement by Edison, and that it so impressed him that he made it the rule and guide of his life; that he never renounced the idea. When, after building a motor that was a success and commanded the attention and capital of moneyed men in Detroit, Ford formed his first company to build his car, this great idea was obstinately adhered to by him, and was the cause of his falling out with his moneyed partners. They could not see the light which has given Ford his halo—the great white light of quantity production. This light burns with steady brilliancy because it is generated by the great principle of the greatest good to the largest number. Ford’s associates in his first company were not believers in this principle, evidently, because when they fell out with Ford about it, and Ford got out of the company to start the one he now controls, they went ahead making cars that sell today for from $2,300 to $3,900. But though they have made fair profits, they have not made the fabulous sums that Ford has, and one can only wonder how they feel about it, and if they realize the error of their views. They are probably wiser if not richer.
The success of Ford’s idea of quantity sales demonstrates a great fact in the affairs of life. It is that fields of human endeavor are not exhausted or worked out until the human race has ceased to exist. Take any line of enterprise you will, and it has as many facets as a prism. An idea only is needed, which, if the right one, illustrates the enterprise as lights thrown on the prism cause it to sparkle in many colored rays.
We think, for instance, that the acme has been reached in the making and marketing of bread, but along comes a man with an idea for making bread of bran, and he is immediately ushered into the inner sanctum of the temple of great profits. Or we imagine that the last word has been said in cereal foodstuffs, when lo, and behold, the man with the right idea proves that the field has room and to spare for a financial success in so simple a thing as rice dressed in a palatable and salable form. And so it is in everything, automobiles especially. The man who conceives the idea of a sport car supplies a want that others have neglected. There may be many automobile tractors on the market, but the human brain conceives one with some feature lacking in others, such, for instance, as making a Ford automobile interchangeable into a farm tractor, and it has an immediate and large success. And if anybody had an idea that the profits from producing petroleum might be limited by the use of gas and electric light, it was because the automobile’s enormous consumption of gasoline and the use of oil by ships could not be foreseen.
The field for investment is kept constantly fallow, and ready for the seed that is to fructify into great profits, by the human brain which is ever active—ever thinking. If its product is not an elemental, it is a supplementary idea, as the rubber tire, the demountable rim and the self-starter for automobiles. Until the world has arrived at perfection in all things, the ultimate will not have been reached. The opportunities of today and tomorrow are as great as they were yesterday. It is a question whether they are not greater, for if the quotation ascribed to Emerson is true, that the world will beat a path to the door, though it be in a forest, of him who makes a mouse trap better than his neighbor, the future possibilities of enterprise are favored by increased population and the element of the cumulative nature of the wants of man. As inventions and articles of use increase in number, new needs which demand supplementary products are created. Each new thing given to the world brings in its train other new things. The crank of a Ford auto creates a demand for a self-starter. The increase in population and wealth brings in its train a multiplication of human units whose use of created things is on a crescendo scale.
The financial successes in the automobile business, great as they are, have followed the inexorable law that the richest returns in all investments are the ground floor ones. The history of no big business demonstrates more clearly that the way to make money is to invest in new companies when they are offering the first authorized capitalization for investment subscription. Money-making opportunities for new investors are always greatest in enterprises whose development is ahead and in the future. If they have reached the stage where development is already producing great profits, the door is closed to the new investor, or else he must pay a premium to sit in such paying company.
In the ground floor days of the Ford money-making machine, Miss Couzens “risked” $100 on Ford. That $100 produced $100,000 in cold cash. But it did so only because the inception of the Ford enterprise provided the opportunity. Having made its half a billion, or more, the Ford enterprise is no longer enterable on any basis that would give such returns for each dollar invested. When money is needed enterprise is willing to pay liberally for its use. When enterprise has all the money it wants, money’s value to it is less. This is the most natural law. It is a law that operates in other things besides money. “He that hath, needs not; he that hath not, wants.”
The automobile industry illustrates graphically that when an enterprise develops to the point where it is well grounded and has reached a period of age and steady earning capacity, it is not new investors who may come in and gather the richest plums, but the old ones, those who helped to give it its start, who stood by it when the future was obscure, and the ultimate outcome not certain. There is probably no business that shows as many people in it now, who were in it at the start, as the automobile business. This applies to manufacturers, distributors and investors, and is, to a certain extent, due to the industry’s newness. The original Ford investors are practically all intact. It is the original investors who have reaped the reward of their courage in embarking in new enterprise, and who have shared in the division of the juicy melons the automobile companies have cut in the form of huge stock and other dividends. We need no better proof of the fact that ground floor investments promise the greatest returns on money invested than the financial history of the automobile.
While quantity production and the co-operative spirit which led to standardization were the keystones in the structure of the present day automobile success, the history of the successful development of the automobile demonstrates another fact, which is a vital one in the realm of investment.
This fact is that most great financial successes are built on our natural resources. This is peculiarly so of the automobile industry. The steel, wood, rubber, leather and glass of which the automobile is composed, are all products of the ground, the forest or the farm. It could not be said that the products of the earth directly make the profits of a stock life insurance company, but this can be said of the automobile industry, and its history discloses that the automobile business of the United States was four times rescued from failure, first, by petroleum, for steam and electric cars would not sell in quantities, and the gasoline from petroleum was needed to give the automobile its great vogue, once by tungsten, vanadium and chromium, again by the quantity production theory, and finally by co-operative standardization.
At one period of automobile development, the manufacturers were ready to give up in despair because cold-rolled and high carbon steels only were available, and these made the weight of the car and the price obstacles to its popular adoption. At the stage when failure to produce a car at popular price was imminent, there entered on the scene tungsten, chromium, vanadium and aluminum, all natural resources, and they, combining with standardization, made quantity production possible. Tungsten, alloyed with steel for valves, chrome steel for springs, vanadium in steel to impart purity, and aluminum for lightness, reduced the weight of the automobile 25 per cent, enabled motors to be made smaller, tires lighter, original cost less, and cut down upkeep cost to the users of cars. Quantity production thus was made possible, and natural resources again vindicated their claim to being premier possibilities of profit.