There he was. That feeling of a sudden epiphany sent tingles up his spine. Henry Ford had a problem. Combustion engines fueled by gasoline couldn’t be mass produced. One day, the inspiration was right there before his eyes.
Body parts of animals moving along a conveyor belt.
Part 19: The Dark Side of Henry Ford.
Last week on Methods of Prosperity:
Conspiracy theories are often rooted in misinformation and poor judgment. Rather than hard-to-vary explanations, conspiracy theories are nonsense. Authority bias is justification for simple minds. Nazi propaganda is an example. Nazi campaigns against the Rothschild family portrayed them as manipulative and greedy. During WWII, the Nazis seized and looted assets of the Rothschild family. The Nazis held Louis Nathaniel von Rothschild hostage from March until July 1938. Today, Jacob Rothschild is the head of the dynasty. Today, many cousins have divided the family’s wealth. Conspiracy theories continue to spread online about the Rothschilds. One such claim is that they funded the Nazis. Where does that come from? Let me make an educated guess. Louis Nathaniel von Rothschild paid a ransom to secure his release from Nazi captivity of $21,000,000.
The following is Methods of Prosperity newsletter number 19. It was originally deployed October 26, 2023. As of July 4, 2024, original subscribers have received up to issue number 55 (Sir Richard Branson, continued).
TL;DR
Henry Ford’s inspiration for the assembly line came from observing a slaughterhouse. He considered the systematic, efficient processes of both environments. In the early 20th century, Ford revolutionized automobile manufacturing. He did this by implementing the moving assembly line and using vanadium steel. This reduced costs and increased output.
Born in 1863 in Michigan, Ford had an early interest in mechanics. He worked at the Detroit Edison Illuminating Company. There, Thomas Edison led him to develop his first prototype, the Quadricycle. Success in the 1901 Sweepstakes Race helped him gain investors. His first car company failed due to management issues. His second company also faced disputes. Former partners from that venture founded Cadillac. Ford introduced his Model T in 1908. Assembly line production made it affordable. Ford reduced its price over the years.
Henry Ford held anti-Semitic opinions. He disseminated his ideology through his newspaper, The Dearborn Independent. His newspaper and other writings influenced Nazi ideology. In 1938, Adolf Hitler awarded the Grand Cross of the German Eagle to Henry Ford. This was the highest honor Nazi Germany could give to any foreigner. It represented Hitler’s personal admiration and indebtedness to Ford.
Ford offered high wages to attract workers. His goal was to avoid labor unions. Ford used various methods to suppress labor organization. Violent confrontations, such as the Battle of the Overpass, damaged his reputation. Ford Motor Company recognized the UAW in 1941.
Ford's vertical integration and social engineering techniques increased efficiency and worker loyalty. This contributed to his immense wealth. By the time of his death in 1947, he was one of the wealthiest individuals in history.
Key lessons:
Efficiency without empathy is detrimental to your business.
Vertical integration streamlines efficiency.
Don’t be a jerk.
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A slaughterhouse and an assembly line share some eerie similarities. Both are places where a systematic process unfolds, each step leading to a final product. In the case of a slaughterhouse, it’s the transformation of animals into meat. An assembly line churns out products like cars or appliances.
First, there's the element of efficiency. An assembly line aims to maximize productivity. A slaughterhouse strives to process animals. Both are efficient. Both settings rely on a well-orchestrated sequence of tasks. Workers perform specific roles to keep the process moving.
Second, there’s the notion of specialization. An assembly line assigns specific tasks to workers. They become experts in their particular area. A slaughterhouse isn’t much different. You’ll find individuals skilled in different aspects of the process. Skills could be stunning, butchering, or packaging, executing each step with precision.
The last similarity is the undeniable sense of repetition. Workers repeat the same actions over and over on an assembly line. This creates a rhythm that can be both hypnotic and monotonous. The process of slaughtering and processing animals follows a similar pattern. Each animal goes through the same sequence of steps.
Combustion engines fueled by gasoline couldn’t be mass produced. All automobiles were custom manufactured, which resulted in high prices and limited availability. Demand for automobiles was low. The assembly worker moving towards the vehicle is inefficient.
What if assembly of the vehicle moves towards the worker?
In 1908, Ford invented assembly line manufacturing for the Model T. It was a breakthrough. Henry Ford imagined a slaughter house in reverse. It was the way to lower costs and increase output of automobile manufacturing. Around the same time, he discovers a kind of lightweight steel coming out of Peru. Vanadium steel is a type of steel alloy. It incorporates the element vanadium as an alloying element. This material would give his cars a competitive advantage. Vanadium steel is lighter and stronger than Carnegie steel.
Henry Ford was born on July 30, 1863, in Springwells Township, Wayne County, Michigan. He was the eldest of six children in a family of four boys and two girls. His father, William Ford, was a native of County Cork, Ireland. His mother, Mary Ford, was the youngest child of Belgian immigrants. Ford showed an early interest in mechanics and, by the age of 15, had constructed his first steam engine. Fascinated by machines, he learns how to repair watches and clocks. He idolized Thomas Edison, who was 10 years his senior. Henry Ford worked for Thomas Edison’s company, the Detroit Edison Illuminating Company. During that era, Ford invented his first prototype, the Quadricycle. It was four bicycle wheels on a gas engine which he sold to a buyer for $200. Edison encouraged Ford to produce affordable cars.
Henry Ford won the 1901 Sweepstakes Race. That was a significant event that helped him attract investors to start his car company. In this race, Ford competed against the foremost driver of his day. His competitor’s name was Alexander Winton. Ford emerged as the victor, despite being the underdog. Ford’s victory demonstrated his engineering ability. That event made him famous enough to receive financial backing. Investors backed out of Henry Ford’s first company, the Detroit Automobile Company.
Henry Ford founded The Detroit Automobile Company in 1899. It failed for several reasons. Ford resisted board supervision and the investors’ pressure to increase production speed. Instead, he obsessed over design features. Ford had a problem managing the production process.
Henry Ford founded his second company, the Henry Ford Company, in November 1901. It was short-lived and faced disputes between Ford and his investors. Ford had an attitude of autocracy. He believed that he knew better than his shareholders about running the business. That led to conflicts. This would be a recurring theme. He chose to outsource the production of the first Ford cars to the Dodge brothers. This arrangement led to conflicts. Ford bought out the Dodge brothers’ shares to remove them from the company's ownership.
The origins of Cadillac traces back to the remnants of Henry Ford’s second, failed business. Ford got into an argument between investors Lemuel Bowen and William Murphy. That was in March 1902. Ford left the company, taking vital partners with him. Bowen and Murphy then approached Henry Leland. He was an engineer at Leland and Faulconer Manufacturing Company. They hired him to appraise the equipment, tools, and manufacturing plant for liquidation. Leland convinced the investors to revive the plant. Leland developed his own single-cylinder engine. They founded the Cadillac Automobile Company five months after Ford’s departure.
You could argue that Ford is a hero for innovating the assembly line and giving us affordable cars. The Model T was affordable. Priced at $825, it became accessible to a larger population than other cars. Ford produced the Model T between 1908 and 1927. The car went through several price reductions. That was due to two factors. The implementation of assembly line production and standardized interchangeable parts. By 1915, the price of a Model T had dropped to $440. By 1925, customers could buy one for $290. Now, let’s explore the dark side of Henry Ford.
There was a nefarious, anti-Jewish publication issued in the early 20th century. We talked about it two weeks ago, in Methods of Prosperity number 17. That document is the source of many conspiracy theories: The Protocols of The Elders of Zion. Guess who believed in and spread this document? Yep. Our hero of the American middle-class, Henry Ford.
Henry Ford disseminated The Protocols of the Elders of Zion. He believed this fraudulent text was true. Between 1920 and 1922, The Dearborn Independent published a series of articles. Henry Ford derived these articles from The Protocols of the Elders of Zion. These articles were later compiled into four-volume book. Titled, The International Jew: The World’s Foremost Problem, it inspired Hitler. The Dearborn Independent had a wide circulation. Anti-Jewish sentiments spread. There were at least 16 translations of the book. The International Jew gained acclaim from both Adolf Hitler and Joseph Goebbels.
I’m not claiming that Henry Ford shared personality traits of a diabolical cult leader. A fascist dictator? Ford was able to shape public opinion and spread anti-Jewish sentiments. He did this through The Dearborn Independent and The International Jew publications. He disseminated The Protocols of the Elders of Zion. Ford’s anti-Semitic views were part of his larger ideology. He used these opinions to justify his actions and gain support.
In 1938, Adolf Hitler awarded the Grand Cross of the German Eagle to Henry Ford. This was the highest honor Nazi Germany could give to any foreigner. It represented Hitler’s personal admiration and indebtedness to Ford. Karl Kapp was the German consul in Cleveland. Fritz Heller was the German consular representative in Detroit. They presented the award. Hitler admired Ford for his anti-Semitic views and his business acumen. Hitler had a framed photo of Ford in his office and quoted him in Mein Kampf. He was also inspired by Ford’s ideas about the production and sale of cars. Fords ideas influenced the development of Volkswagen.
Welfare capitalism is a term which refers to treating workers to certain standards. The purpose is to decrease a high turnover rate. One of the problems with assembly lines is the rote, mind-numbing physical labor. When Ford started offering jobs for $5 per day, it was more methodical than it was generous. His assembly lines reduced manufacturing time down to under twenty minutes per car. That was unheard of. But it required hard, specialized work from each worker. And it required many workers. Many workers quit. So it was worth paying double the salary of Ford’s competition to attract workers. Ford offered a high paying job in tough economic times. Under the condition that his workers followed strict guidelines not only at work but at home.
Welfare capitalism had another purpose. It prevented the emergence of a welfare state. It’s a way to resist government regulation of markets. It prevented strikes, and other expressions of labor collectivism. It prevented independent labor unions from organizing. Welfare capitalists went to great lengths to quash independent trade unions. It did this through a combination of violent suppression, worker sanctions, and benefits. All in exchange for loyalty.
With strong opposition to labor unions, Ford fought against unionization throughout his life. He took various measures to keep his factories union-free. The Industrial Workers of the World (IWW) attempted to unionize Ford workers in 1913. In response, Ford increased wages to $5 a day to appease the workers. As unions continued to try to gain a foothold in the plant, Ford fought back harder. He established a faux union. Called the Knights of Dearborn, it was both anti-union and anti-Semitic. The Knights’ newspaper and newsletter spread Ford’s message of anti-Semitism. The UAW (United Autoworkers Union) launched a campaign to unionize Ford workers. This was in 1937. They distributed leaflets to workers at the Ford Rouge complex in Dearborn, Michigan.
During this campaign, a confrontation known as the Battle of the Overpass took place. Ford’s security chief was Harry Bennett. He and Ford Service Department members attacked UAW leaders. The labor storm broke loose that day at the Rouge Plant. It produced a torrential flood of blood and vicious violence. Walter Reuther was a union leader. Henry Ford’s private security forces pummeled him into a bloody pulp. This event gained national attention and stimulated a change in public opinion. This event damaged Ford’s reputation for years.
In July 1941, NLRB hearings found Ford in violation of the Wagner Act. This prohibited employers from interfering with workers’ efforts to organize into unions. The NLRB ordered Ford to stop interfering in union organizing efforts. After a major eight-day strike and election, Ford Motor Company recognized the UAW in May 1941.
In conclusion, Ford implemented a system of vertical integration. He owned and controlled all aspects of the production process. Everything from raw materials to the finished product. This allowed him to streamline operations. His systems increased efficiency, and reduced costs. That, in turn, enabled him to pay his workers higher wages. Manipulating workers with a $5 workday had the effect of increasing consumer demand. His workers could now afford to buy the products they were producing. Ford was one of the first employers to offer his workers benefits. He offered paid vacations, health care, and retirement plans. He also implemented a profit-sharing program. Workers received distributions of the company’s profits. These benefits and profit-sharing programs helped to create a loyal and dedicated workforce.
Ford implemented social engineering and control techniques. His goal was to assimilate his workers and create a loyal and dedicated workforce. These techniques included the establishment of the Sociological Department. It monitored and controlled the personal lives of Ford’s workers. He designed the Ford English School. It taught immigrant workers the English language and American values. Workers accepted his surveillance and manipulation techniques.
Henry Ford was one of the wealthiest individuals in history. He amassed a significant fortune. His contributions to the automotive industry and innovative business practices are noteworthy. In the 1920s, the estimation of Ford’s personal wealth was around $1.2 billion. In today’s dollars, that equates to around $17 billion. At the time of his death in 1947, Henry Ford had an estimated net worth of $200 billion, adjusted for inflation.
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