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.

It was expected that the industry would climb into the billion dollar fold—men said that the fourth industry in the country had the financial stage set for starring the “Big Billion,” and they never permit themselves to see a possibility of a recession unless steel becomes too great to be kept within bounds—in short material price is the only problem the venturesome automobile maker will put down for earnest discussion.

Accurate figures spread on the records of the National Automobile Chamber of Commerce indicate that retail sales of motor vehicles in 1916 totaled $1,068,028,273. This total includes a production of 1,525,578 cars and 92,130 trucks. The passenger cars were valued at $921,378,000 and the trucks were listed at $166,650,275. When the statisticians of the national organization compared figures and found the gain was 80 per cent, and paused long enough to find that the gain the year previous had been 36 per cent, they talked about the complete automobilization of the country and the inevitable addition of more than 2,000,000 to the total of cars in operation in the United States.

PRICE DROP IN ONE YEAR.

Weight decreased, as the engineers had planned, and the average price of cars decreased in one year from $671 to $605. In the eight previous years the average price of automobiles had dropped from $2,125 to $814. Wall Street, which once had only the cold shoulder for the automobile producer, took a permanent seat at the table where daily the industry was dissected, analyzed, weighed, discussed and reviewed; and, as a result, it is as difficult to keep from the financial eyes of Wall Street the operations of the great automobile factories as it would be to hide the clearing house reports. The keenest financial and commercial experts of the United States have learned to keep the motor car industry constantly under surveillance—not that they mistrust the manufacturers, but that they have found the industrial situation is so firmly linked to the dollars and cents program of the country’s economy that nothing may successfully act to deprecate the importance of the auto industry. Time was when General Motors sold as low as 40—what Stock Exchange expert would expect to see this stock sell for less than 105?—and if conditions were to become so chaotic that General Motors, with its prosperous units, were to break to a point or two under par, what financial student would not search for something akin to a Black Friday?

Immutable laws work in the automobile industry. The maker daily takes a course in the University of Production, because an army of selling factors constantly is attending to the absorption facilities of the country’s markets and he rarely permits himself the task of figuring on the “probable saturation point.” It is a wonderfully important thing to the maker that the national Organization gets official reports, guides the policies of standardization, holds an indefinable influence over the engineers of the industry, and sits as the congress of the Republic of Motor Car Production. The auto industry of today is, perhaps, the most intricate thing in the country, and yet so responsive to the law of supply and demand that there is not an element of guesswork in it.

Although more than two hundred automobile concerns that had entered the arena of business, developing from the “blue print stage” to manufacturing concerns of considerable output, had failed in the last twelve years, the automobile industry had been a big paying one. Pioneers who remain and whose works annually pay dividends, accepted the failures as the necessary concomitant of a great business that only showed an output of 3,700 cars in 1899 and only 11,000 vehicles in 1903, the amount growing to 485,000 cars in the year 1913.

“Our house is a generally well ordered one,” the maker delighted in saying. “The industry is like a science. The engineer has brought standardization to almost finality, the matter of styles and body designs is an exact science, the tire companies have been keen rivals but beneath their terrific competition they have permitted the stream of co-operation in tire standardization to run smoothly, and the manufacturer has spent his money wisely in equipping his plant with plenty of large-quantity type of machinery and increased his plant to enable him to handle the large production. Increased production in economically managed plants spells the maximum of profit.”

POINT OF SATURATION FAR OFF.

And with experts bold enough to say that the field of prospects facing the industry numbers 5,000,000 probable buyers, little thought is given to imminence of “saturation” and a consequent rehabilitation of the motor manufacturing and distributing plans. In the plainest language that it is possible for the automobile maker to use he says today: “The maker who has an adequate organization and builds a pleasure car or truck that is as good as specified and who permits no retrogression in his organization, will succeed.”

“Luxury and necessity.” The automobile maker is willing to have his product classed in this way. For the early years of the industry the car was a clear cut “luxury.” It weighed so much that its cost was prohibitive to the big family of “Necessity.” The car simply had to be “had” by men of large incomes. Automobiles were not sold by intensive salesmen in those days—the family bought them, even as a fine jewel was purchased at the great jewelry houses. Tremendous prices were paid, in comparison to the set prices of the automobile industry at this day. The “make” of the car that stood in front of the owner’s home often was accepted as a basis for rating the social position of the owner. Seat cushions, slip covers, fine upholstery and the name plate on the car told a big and varied story.

Immediately following the craze to buy the high priced cars, developed the “man Friday” of the industry—the chauffeur. And the chauffeur worked readily with the wealthy man, often advising the purchase of the foreign machine upon which Uncle Sam collected a very large duty. But the foreign made car had its stamp of distinction, perhaps much easier to utilize in the form of extravagant, even snobbish, style of life that the owner of the foreign car elected to affect, and the United States manufacturer of cars was not at all prepared to put out a car that would correct the desire of Americans to drive around in an imported article.

But the domestic car had a friend in this contingency. Economical living was that friend. Ruin often followed the extravagance of those who bought the high priced and, as many experts said, inferior imported cars. Homes were mortgaged and all the financial trails were traversed in the effort to maintain an impossible extravagant life. The banker began to detest the automobile. It seemed to him that it was undermining the life of the nation. Something had to be done to correct, also, the tone of the domestic automobile maker’s life. He developed a desire for watered stock. Over capitalization of his plant was suspected by the banking interests, and on every hand the motor car industry was decried. Waste and inflation stalked arm in arm through many plants. It even was said that the industry was only a “game”; that incompetent executives kept their eyes on the broker’s tape, while corps of associates in the factories were ready to play the “game” for all it would stand.

Few were blind to the prospects in the motor industry at that time, if the financial interests of the country were estranged; but no one was able to withstand the developments. The fire of criticism cleaned out the dross. Organization, the big thing needed to eliminate the “game” and give the industry the foundation upon which the large “billion dollar business” subsequently was built, began to come into being. Men of energy and brains got to work. These characters have remained. There are those veterans of the industry who say that the year 1907 marked the start of the business on the basis of a real industry. In that year 44,000 cars was the total output, and the value of the product was registered at $93,400,000. This was the highest total of value for the output of the industry so far reached in the United States.

The next year the industry built 85,000 cars, valued at $137,800,000, and quantity production, efficient buying of material, strict attention to cost production in the plants, effective steps toward standardization, engineering methods that abolished a great deal of weight, etc., began to be set standards among car makers. The official statements of the industry show how well the improvements fitted in. In 1909 the production of automobiles amounted to 126,500, valued at $164,200,000. The following year the output climbed above the 200,000 mark, and since then the production figures have mounted steadily. Automobiles were _sold_ and competition became keener, but the output increased.

VALUE OF RELIABILITY CONTESTS.

With the new era of development in the early nineties came into prominence farseeing manufacturers who paid heed to the thought that the best way to put a fit and efficient motor car into the hands of the public was to test the car, its material and its mechanical practices, in some officially conducted series of reliability contests. Besides, it was urged there was a “romance of business” attached to the motor car industry that would lead to a greatly increased amount of publicity in the press.

The national annual reliability competitions grew into wonderful favor. Makers strove hard to win the reliability titles. The “Glidden” tours became the tests that attracted not only the attention of every automobile man, but the general public. The whole country became the testing ground. For several years these national events did well the work they were expected to perform. Automobile building received, perhaps, its most practical aid. Makers learned. They took advantage both of the mechanical data and the publicity. A complex but valuable adjunct of the national tours became popular—every region in which the American Automobile Association was a factor, and this organization continues to be a powerful aid to the industry, had its reliability or its endurance classic.

It has been said that the manufacturers of automobiles lost interest in national reliability tours after the test of 1911. Perhaps many did. But the truth, as told by a wonderfully efficient engineer, is that there remained nothing more that a national tour could teach the car builder. He had measured the power of his steel to withstand shock, he had calculated the efficiency of his motor to stand its daily tasks on a strenuous schedule, he had learned of the troubles of his rivals and he had spent his money liberally, at the direction of his engineering department, to make a car that would do anything a less skillful driver than a national tour pilot could ask of the machine. The national tour became a luxury. It was revived in 1913 on the long and strenuous grind from Minneapolis to the Rocky Mountains, and an immense amount of valuable information was the result. But the national tour seems to be now chiefly remembered by the occasional discourse of an engineer who tells of the long struggles in the mud and the hardships of sand and dust storms.

With the added development of the plants, came another reason why the national tour was not necessary. Testing tracks were added to the maker’s plant assets. Testing on the roads followed the block tests of the motors, and it began to be accepted as an axiom in the industry that the engineer knew to a hair’s breadth what his engine could do before it went out of the secret room where the chief engineer worked.

Meanwhile prices constantly were beaten down. The field of opportunity to own a car widened. It was, even then, so much bigger, in comparison to that in the Old World, that even the clerk and small salaried man in general looked with a smile toward the day when he would own a car.

It is recalled that when the manufacturer began boldly to put the farmer in the class of available prospects—openly declared his idea of building a car that he could sell in the agricultural districts as readily as cars were sold in the city districts, one man who this year is making 750,000 automobiles, gave to the world his edict which resulted later in the United States court sustaining his contention that the “Selden patent” under which the organization of makers was maintaining its official life, “was not basic, in fact was not worth the paper it was printed on,” and he would refuse ever to recognize the right of the national organization to grant licenses to make the internal combustion engine and the chassis that went with it.

The public read with a strange feeling, the record of the great litigation against the “basic patent.” It seemed like a battle of Titans, and ordinary folk thought it might result in danger to the industry. But only the lawyers were strenuously engaged. They argued and submitted briefs for more than two years, the national organization of the makers who accepted the license of the “Selden patent,” honoring their national organization by paying to the treasury their pro rata on the amount of cars made.

An enormous fund grew. But the man who wanted to make from 200,000 to 750,000 cars a year was determined. He won in the Federal court and almost immediately the “licensed association” began to break up. The contributions of license fees ceased and soon the association was a thing of history. It was succeeded by the National Chamber of Commerce which has become the senate, house of congress—the parliament, if you please—of the automobile industry in the United States. Some, there were, who had a very poorly defined idea of the actual mission of the “licensed association,” believing that it was a “trust,” called its function destructive. They thought that the officers of the association would lay an embargo upon certain manufacturers and allot a more liberal figure on annual output to the larger and stronger firms in the organization.

FORD, A “WIZARD” AND “GENIUS.”

Unfortunately at that time, the licensed association had not the grasp on patent protective measures, engineering work, standardization, etc., that obtains in the present national organization, and the real mission of the licensed association never became wholly evident to the public. But the organization did its part in laying the foundations of the industry. It made the handwriting on the wall for popular price so large, that every man who subsequently invested a dollar in automobile making read, pondered and agreed. It placed popular price and standardization of mechanism in the same category—linked them so that the words of the Detroit automobile manufacturing wizard became axioms. The Detroit genius had proved that the depth and capacity of the automobile market was exactly in ratio to the possible price reduction. Amazing but true, the big men said, was the field that the lower priced car opened to the thoughtful maker of cars. Manufacturers began to talk of some day building and selling as high as a million automobiles in one year. Others calmly declared that when the motor car sales in cities began to “slow up,” there would be still more than 5,000,000 prospects in the agricultural districts. Others drew diagrams intended to show that there would be a market for any priced cars that were built in this country, the few persons with large incomes assimilating all the high priced cars, and the many with average incomes absorbing the quantity production at popular prices. All allowances were made for the increase in the cost of labor, materials such as steels and other metals, leather, etc., and some even went far enough to include the possibility of a foreign war on large proportions and its effect upon the industry.

No one gave concrete thought at that time to the possibility of a skillfully conducted partial payment organization of a national nature that would aid the small salaried man in buying his automobile on time payments. But that came about and still is working out its part in the great economic scheme of distribution of the factory output. The makers did not essay digging into the dealers’ and distributors’ plans for moving cars delivered to them for cash from the factories, and they were not bold enough to say they could finance any time payment and chattel mortgage plans. But many of them admitted the great value of the plan, if a distributer, through a proper alliance with his banker, could make sales in that manner and realize his money. The public learned well, early, that the maker of cars rarely consigned any automobiles to a dealer. The maker sold for cash—the draft had to be presented by the dealer or distributer before he could unload the freight car. It would be legitimate business, the public said, for any automobile dealer to finance himself so that he could sell cars on time. On time today is a mighty big phrase in the industry. It means many a car added to the annual output.

With the growth of incomes in the United States the statisticians found there were more than 6,000,000 people in this country with annual incomes of more than $1,200, and 3,500,000 with annual incomes of more than $1,800. All these things aided in installing confidence in the big men of the motor industry. Quantity production became the password for the manufacturer. A new development in distribution was wonderfully improved—dealers from all over the country were brought to the factory of the car maker, and after a convention of a few days, the dealers were invited to sign up for the coming year, nominating the number and type of models they would buy. The maker pored over his order blanks when the dealers left, made his plans for material accordingly, and there was only prosperity in each automobile factory, as a rule, for the remainder of the year. The orders were indicative of, safely speaking, sixty per cent of the signed total. Some makers took chances and built very close to the total agreed on by the dealers, and, except in few cases, the scheme worked out. Today the maker studies all conditions and accepts the orders of his dealers, setting the figure of output after numerous factory conferences.

Makers who could point to an annual production of, say 400 cars, took counsel among themselves, and some 50 increased their factory efficiency and financial responsibility that they can now point to an output of as many cars in one day as they made early in their manufacturing experience in one season.

The writer recalls one manufacturer who, about nine years ago, had an output of about 500 cars for one season. Only recently he paid close to a quarter of a million dollars, if indeed his extra expenses did not bring the total to $300,000, to conduct a twenty-one day convention at his factory covering a site of seventy-nine acres, at which dealers from the four quarters of the country were entertained. He had daily meetings in the big halls of his administration building, and his lieutenants carefully outlined to all the plans of the company for the year, and exploited the line of models.

“We have $30,000,000 in materials purchased, and expect to get all this material when we need it for manufacturing cars,” said the big man to his dealers. “But the war in Europe has caused many problems of price and quantify to arise, and heaven only knows what the material situation will be after July 1. I advise you to order all the cars you need—think well of your requirements—and stick by that number. Then you will not be like many are bound to be, who are indifferent to manufacturing conditions—you will have cars to meet the biggest demand the industry ever has known.”

That automobile president had the pleasure of meeting thousands of dealers, speaking to more than one thousand of them daily, and with his factory production manager he figured the probable needs of his country-wide organization of dealers and branch houses for the year. It is significant that the few changes he made on his early winter production table, which the writer was permitted to scan, were made only in the “increase columns.”

THE PART MACHINING PLAYS.

It would lead to the exhaustion of the reader were many details to be given showing how the makers made quantity production and economy of factory operation an assured thing. The largest rooms of wholly automatic machinery were equipped, so that a large amount of crude steel wires, rods, etc., practically go into a factory at one end and come out at the other, fully machined and ready to go into the assembly of a machine. Cylinder boring, all with one operation, takes the place of operations that required many hours. Progressive types of assembly of the finished components of the cars make factories look like the “last words in manufacturing.” Machining crankcases and work of that nature that required hours, is done in minutes. Aluminum, that magic metal of the early days of the automobile industry, when it was comparatively cheap, now enters so largely into engine and other parts that at its greatly increased price it is more than a magic metal. It is no uncommon thing to find in an automobile factory that a machine costing more than one hundred times the maker’s cost of an automobile, has been installed to hasten production.

In all the field of manufacturing there has not been wrought such magic as in gear cutting. Forges pound out tons of steel forms, but the most important machinery of a plant soon has these forms turned into gears and other machined parts for the assembly.

The medium priced car of today stands as the best exemplification of the approval of the Society of Automobile Engineers. This is an organization that has done so much for the manufacturer that most of the makers of cars are members. They point to the self-starter and the electric lighted car as the triumph of the Society of Automobile Engineers. And certainly from the original starter and the early lighting effects, enormous strides have been made in the industry. Fully equipped cars predominate now, where only a few years ago even tops were not provided with the car as sold on the floor.

The self-starter is considered one of the greatest of the improvements added to a good automobile. With this feature the car has become so useful to women that the manufacturers have realized big returns. Better than that, say some critics, is the verdict that the self-starter returned—the chauffeur is no longer an indispensible feature in car driving. Women master the handling of a car and with the machines requiring less mechanical attention, one might say, every season, woman accepts the gasoline car as her own. The number of women drivers has grown so wonderfully that the makers of cars have registered the woman driver as a constant factor. There’s no cranking of the car necessary, and the wearing of fine raiment and white shoes is Milady’s prerogative, even if she drives her car to the party herself. She handles a multi-cylinder car quite as readily and with the confidence of a man. The tires, always a problem, have demountable rims, or they may be set in spare wire wheels, and troubles on the road from blowouts and punctures no longer deter the woman driver. It would be difficult to get the details on the number of women drivers added to the list each season, but one of the best known automobile makers says that it is so large that he would make his fortune safe if he only made cars henceforth for women pilots. The entrance of the woman in such an important manner in the automobile driving situation has made the gas car maker lose all fear of the greater development of the electric car. Woman has played an important part in the real estate world, distinctly due to her eagerness to drive cars, by starting a movement towards suburbs. The suburbs are “farther out and yet closer” as one maker put it.

GOOD ROADS INDUSTRY’S GREATEST AID.

When the full effect of the work of good roads advocates is felt in this country, and regular appropriations are to be available in a regularly scheduled manner in most of the states, the biggest thing the automobile industry ever had to help it will have taken up its task in earnest. Less than ten per cent of the roads in this country are improved, say the good roads statisticians. One says that at least two-thirds of the reasons for present road developments are automobile reasons. When the proportion rises and the Lincoln Highway and scores of other long distance highways, intended to add to the cross country touring practice, are made into complete roads that make for genuine touring pleasure, the automobile industry will reap great benefits—more than the most enthusiastic ever dreamed would come from concrete, brick and other forms of specially prepared highways.

The war? Makers have varied opinions on the effect of the termination of the war in Europe. A majority have expressed the opinion that our exports of trucks and pleasure cars will take a big jump soon after peace is declared. But seeking for a peace after the years of warfare has become the least of the American auto maker’s trouble. Great war orders have been received and filled by the American makers of trucks. In 1914-15 the war orders rose to 14,000 trucks, as compared with only 784 in the season 1913-14. War orders still are being filled by some American truck makers, or were until the “ruthless submarine warfare” broke out anew, and after millions of dollars worth of the old models bought up in the United States and absorbed by the European powers had been swallowed in the mystery of the continent, United States truck makers began on later design models. In that way they are able to admit that the war has been a great blessing to the motor truck feature of the industry. “All a part of the great scheme of economics that makes for the approach of the complete automobilization of the country,” is the way one manufacturer puts it.

The automobile industry is set—it is fourth in importance in the United States. It will handle itself, so to speak. The makers know they must give value for every car and truck they build, and the people have become ready to continue in the industry every maker who plays the industry as it should be—not as a “game.”