Of the future of the automobile and of products allied with it or sharing in its construction and prosperity, as continuing money-makers, all indications are that the profits already taken out of the motor car industry in the United States are but placer croppings, and that the years to come will record the workings of the real vein. This real vein, in the opinion of the man who looks ahead, is in the use of passenger cars, haulage trucks and motor tractors by the fifty million of the population of this union of states who are on or of the farm.
As yet, the farmers have not risen to the full possibilities of motor power in economic superiority over horse power for haulage, ground cultivation, and other uses to which the horse is now put. Elements which will hasten this awakening are the scarcity of man labor and the workings of the immutable law of economics. There is not enough food being produced by the world to supply the demand. If there were, prices would be lower. Prices will remain high as long as the supply falls below the demand. As long as they remain high, the stimulation to greater production will continue, and this urge can have but one result, which is to force the producer to adopt the most economical method of production.
It has been determined that motor power is cheaper than horse power. It is, therefore, only a question of time when the horse will go from the farm as he is disappearing from the cities. In this evolution will be found the money-making possibilities of investment in the motor tractor and the motor truck. Their adaptation to the smallest as well as the largest needs of the tiller of the land is now being assured.
With the horse, the farmers of the United States have been able to break up only 70 per cent of the cultivable land not in timber. There are over two hundred million acres of tillable land that have never felt the cold steel of a chilled plow. There are two hundred million more acres in timber that will, much of it, ultimately come under the plow. Besides crippling the labor supply in this country, the European war has taken a million horses out of our supply. The case in favor of the tractor coming ultimately into common use seems from all this to be completely made out—its adoption in large numbers being only a question of getting the price down to a basis which will insure quantity production. As this was done with passenger automobiles, it would be folly to say it will not be done with tractors and trucks.
Figures showing the total amount of money that has been taken in profits out of the automobile industry have never been compiled. It is a business that has developed so rapidly and feverishly that the water churned up by the commotion it has made has not yet settled. But there is a record of enough individual instances of gigantic profits to prove that the largest individual appetite for dividends should have been satisfied by the ratio of earnings already made in automobile manufacture.
But in every case the greatest profits were in the stock of those companies that complied with Edison’s rule of large money-making—“What you want to do to make money is to make quantity.” And they were also companies which made an automobile that could be “‘et’ up,” as Armour put it, by time and use, in less time than it takes time and use to eat up a higher priced machine.
Ford, Overland, Reo—you will recognize this trinity as the leaders in sales, and by the same token they have been the leaders in profits. When it is stated that Henry Ford made $200,000,000 in thirteen years, and was then offered a like amount for only a small part of his enterprise, we may well believe that he credits his own statement that “anything for only a few people is no good. It’s got to be good for everybody or it won’t survive.” Other Ford investors profited on the basis of $5,000,000 for each $10,000 invested. After the parent Ford company had established a record of a million dollars a week in profits in the United States alone, Ford stepped across the river into Canada and organized a company there which is earning fifty per cent a year on its capital of $10,000,000.
Profits of $52,000,000 in capital stock alone which has been built up almost entirely of dividends earned, is the record of the Willys-Overland Company. John North Willys founded the success of this great money-making business on his personal check of $500, cashed at great trouble during the panic of 1907, when the Overland company was ready to go into bankruptcy. Besides the dividends applied to increasing the capital, an immense amount in profits has been disbursed by this enterprise. The dividends in 1916 were $11,000,000, over 20 per cent of the capital. This year they will likely be nearly double that amount. The Reo Motor Car Company has paid over $50,000 on an investment of $1,000. These three are not by any means all the automobile companies which have contributed to make the automobile industry a signal example of the earning power of money, but they represent the leaders of the popular or quantity-production-through-low-price type. There are about 150 passenger automobile companies that are profitable in varying degrees, proportioned to their price, not to say anything of trucks and tractors, in the marketing of which fortunes are also being made.
CHAPTER I.
INTRODUCTORY—AUTOMOBILE INDUSTRIAL FIGURES ARE AMAZING.
By Edward G. Westlake,
Automobile Editor, The Chicago Evening Post.
During the year 1916 the automobile industry in the United States entered the “billion dollar class,” and manufacturers who have membership in the National Automobile Chamber of Commerce which holds the industry, as it were, in the hollow of its great hand, made no more ado over this significant, almost amazing development than to meet in the annual banquet and reiterate their statements that the critic did not live who could predict, with certainty, the gain that might be made in 1917.