Story of the automobile, its history and development from 1760 to 1917, with an analysis of the standing and prospects of the automobile industry
1917 7b>37 COPTRIOS^ 1917. BT H. I* BABBBSR » fc • V *<• » ^ w V « O • • • « w • • •-• ••  there ia no book in circu- lation that tells, in concise form, the atory of the mechanical and commercial evolution of the automobile, mirrors its sudden leap into popu- lar use, and shows how it has demonstrated, in a most amazing way, the power of money to make money, describes its benefits to the world, and forecasts the future possibilities of the automobile industry as an investment. This book, the "Story of the Automobile," shows the struggle of man for one hundred and fifty years to devise a means of propelling a vehicle without animal power. It describes the various stages of the evolu- tion of the idea of motive force other than ani- mal power, in France, England, Germany and the United States, and its triumphant culmina- tion in a successful horseless vehicle. And it makes clear how, when the automobile became of practical use, its successful commercializa- tion became most profitable in the shortest period of time of that of any product of man's ingenuity supplying an article to meet human wants. But if this were all that could be recorded of , the story of the automobile, this book would not STOEY OF THE AUTOMOBILE have been written. The automobile's success demonstrates all this, and something more — something that would not ordinarily occur to a person unless his attention was called to it. The astonishing history of the automobile's success affords one of the most convincing and the best modern instance of the opportunities that are being constantly presented for invest- ing for profit. It is a signal example kept in our hearing every day by the Niagara-like roar of the cars along our boulevards, of the fact that this is the age of golden opportunities for making money make money— of opportunities that disclose themselves, sometimes unexpectedly, and, when embraced, are apt to respond with a veritable avalanche of profits. For was it not an avalanche of profits that overwhelmed the man who in thirteen years made $200,000,000 and was offered another $200,000,000 for only a small part of his busi- ness? And this great fortune made by Henry Ford did not exhaust the Ford automobile's possibilities, for millions are still being taken out of the business, one investor of $2,000 hav- ing received over half a million dollars out of i1 lately. When men who are not 40 years old todaj came out of high school they either did noi [2] PREFACE know what an automobile was or, if they had seen one of the very earliest samples, they had no vision of what it would develop into — no conception of what the future had in store for the wabbly horseless vehicle, zig-zagging down the street, as a potential money-maker. And in the early days of the automobile's struggles for recognition as a promising invest- ment, no banker or other moneyed man could be 1 brought to believe' that it held out any reason- I able hopes of great gain. No one could foresee, ' not even the inventors of the automobile, that in less than two decades the business done through its comparative perfection would rank fourth in order of the industries of the United States. And still less was there anybody so foresighted in the possibilities that lie in money to make r more money, as to vision the billions of dollars r of profits to be paid out by this one idea of a \ horseless vehicle. We can find few instances which so forcefully ' show, as the automobile industry shows, the chances for profitable investment in a short time which may come from sources supplying the needs or pleasures of the great mass of the people. The chapters of the "Story of the Automo- tbile" devoted to its commercialization make dear that its greatest success has been due to [3] I! i t: ; STOEY OF THE AUTOMOBILE the production of automobiles at a price within reach of people of ordinary means. For this the one man most responsible is Henry Ford. He has demonstrated in a manner of many mil- lions that the most money is to be made out of things used by the greatest number of people — things that become common needs. The enduring truth of the profitableness of Philip D. Armour's apothegm, **Make and sell things that are *et* up/* is not discredited by the automobile industry, for the use of the auto- mobile **eats*' up steel, brass, wood, rubber, leather, gasoline and many other natural resources. The automobile wears out and has to be replaced, so it properly comes in the category of things **et'* up. This truth, that the greatest profits lie in products that can be given general distribution, with a consequent large sale, which is one I have maintained in my book, ^ ' Making Money Make Money,'* in my magazine, ** Investing for Profit,** and in all my teachings on the science of investing, finds a splendid exemplification in the automobile industry *s success as a phe- nomenally profitable form of investment, and the circumstances of this success are but cumu- lative evidence of the soundness of my doctrine. And the success of the automobile industry in the measure and with the speed it has achieved I PREFACE verifies not only this claim I have made and maintained, but confirms my contention of the value of co-operation. I have preached co-operation as urgently as I have advocated, as the best objects of invest- ment, the value of things used popularly and in quantities. The "Story of the Automobile" could not have had written into it the glamour of the golden guerdons of Goleonda but for Ford's idea of quantity production, reinforced by co-operative standardization of parts. Co-oper- ation between the manufacturers produced standardization, and standardization enabled quantity production, and the low price which quantity consumption warranted has caused automobiles to be bought by millions, and the purchase of the automobile in millions, instead of thousands, has made the hundreds of millions of dividends which this wonderful mine of profits has yielded. The "Story of the Automobile" is one of the best and most notable proofs of two of my con- victions bedded in the concrete of experience, namely, that the most promising investments are those made in natural resources and enter- prises which the largest number of people can patronize, and that co-operation Is one of the most effective forces in nature, and, therefore. STOEY OF THE AUTOMOBILE applicable to the affairs of men as a beneficent influence, and, if efficient, the handmaiden of success. The story of the automobile has herein been treated in a way that not only presents a graphic relation of the automobile *s develop- ment as an invention, its commercialization, its benefits to man and the position it occupies as a notable example of earning power, but in a man* ner that develops the many morals taught by its success. The method of treatment of the sub- ject matter is uncommon, and, for this reason, interesting, I trust, to those who read the book. The chapter contributed by Mr. Edward G. Westlake, automobile editor of the Chicago Evening Post, is a resume of automobile condi- tions from the intimate viewpoint of a writer who has specialized in the automobile, and enjoys a deserved reputation as the dean of the automobile editors of the daily newspaper press. Every one interested in automobiles will derive information and entertainment through read- ing Mr. Westlake 's presentation of the amazing features of automobile industrial figures. In it he states interesting facts not stated elsewhere in the volume. The book^s interest and value as a contribu- tion to automobile literature, of which there is not much in book form, would be less than they [6] » PREFACE are, but for the participation in its preparation by the Business Bourse International, Inc., New York, whose \ice-president, Mr. J. George Frederick, is one of the highest authorities on business eeonoraics. The chapter by the Business Bourse deals with the automobile industry from the stand- point of the financial and investment aspects of the automobile, accessory and tire manufac- turers' securities, and Mr. Frederick's reputa- tion in the financial world is a guarantee of the authoritative accuracy of the facts presented in this chapter. Credit for salient facts in the history of the automobile, obtained and used in the "Story of the Automobile," is given to a large volume of nearly 500 pages, "The Eomance of the Auto- mobile Industry," by James Rood Doolittle, issued lately by The Klebold Press, New York city. This volume is the most exhaustive work in book form yet published on the automobile, and covers graphically every phase of its devel- opment and popularization. It is virtually a textbook and reference guide of facts of motor ear history, and devotes particular attention to the personnel of the founders of the industry and those engaged in it, and the association features. II can only hope that the work entailed in pre- J i STORY OF THE AUTOMOBILE senting this, the ^ * Story of the Automobile^ ' ' has been done sufficiently well to make it interesting and instructive to those who read it. H. L. Babbeb. Wheaton, HI., April 2, 1917- [8] CONTENTS Preface 1 Inteoduction 11 Chaptee I. Introductory — Antomobile Figures Are Amazing 27 Industrj reaebes two billion dollar mark — optimiatio at future increase — point of saturation far off — reliabilitj contest a. factor in popularizing automobiles — ForJ, the wizard wbo cocverted tbe indnatry to price reduction — installment plan of payment — part machining plays in low good roads now tllff Industry's greatest aid — farmers as available proapectfl. Chapter II. Mechanical Evolution of the Automobile ... 49 First harseloas vehicle constructed by Cugnot, a French- man, over 150 years ago — indention traced in different countries, il™ti in t^ia fii^t ^ni^peaafnl pi^inlini. aiitnynnhiln pronibitlve laws in England discouraged invention there — EvanB in 1784 first American to experiment in horaelesa vehicles — French and German inventors' part in develop- ment — Selden Srat patenter of gasoline motor — inventor 'a difficulties in interesting capital — electrics appear — ateam preceded both electrics and gasoline. Chapter III. » Commercializing tlie Automobile 77 steam and electric types outstripped by gasoline car — co-operation partly popularized motor ear — standardization enabled price reduction — tungsten and other alloys, beat treatment of steel, advertising and invalidation of Selden 'a patent, in the induatry's development — reaaous for United States* supremacy in industry. Chapter IV. I Automobile Industry As an Investment. . .139 Industry had little original capital invested in it — pres- ent investment largely made up of profits — diEBcultioa in STOBY OF THE AUTOMOBILE getting empitel— dealcfB pat op monej to finance distribii- tion — prodoetion not reached its height— commercial ears and tracton promise great opportunities — indnatiy a sor- prise to economists — large as it is, indostry still in com- paratire infancy. Chapteb V. Benefits Conferred by the Automobile 155 A medinm of exchange of knowledge and ideas by bring* ing people together — uproots bigotry and remores preju- dice — ^revolationizes thought and habits, and liberalizes mind — emancipates woman from drudgery of domesticity — ^creases social amenities — a health giver; saves human life; aid in eugenics — stimulates better roads^-saving in war. CHAPtEB VL Beports on Automobiles, Automobile Acces- sories and Tire Manufacturers Securities from a Financial and Investment Stand- point 171 Economic history, and its relation to stock trading in the automobile industry — securities traded in on New York stock exchange and curb — securities on exchanges in other cities, and data for 1916 — principal securities not generally traded in — prices and terms — ^newer entrants — security issues of tire companies — comparison of automobile with other securities — present and possible future trend — graphic charts and comparative tables. Chapter VII. Passenger Automobiles Manufactured in the United States , 219 Bange of priceti in effect April 1, 1917. Chapteb VIII. Gasoline Trucks and Delivery Cars Manu- factured in the United States 231 Bange of prices and other data prior to April 1, 1917. — Courtesy of Everybody's Magazine. [10] \ INTRODUCTION. **What did Benjamin Franklin have to do with the automobile T ' a great many readers of this book will ask. Benjamin Franklin was many-sided, and he had a great deal to do with much that affects the birth of the American nation ; and if it had not been for what he and other patriots, statesmen and diplomats did, the automobile business might have been in this country today exactly what it is in England today — and that is a very insignificant industry. Among other things Franklin was a signer of the Declaration of Independence, and it was the American Revolution that made the automo- bile industry of today possible; for, had there been no revolution, we would probably still be a dominion of Britain beyond the seas, and it is pretty certain that England would have had in force in the colonies the laws she kept on her statute books until 1896, practically prohibiting, by the imposition of excessive road tolls, the use of the public highways to horseless car- riages. For, strange as it may seem to us in this coun- try, which Emerson epitomized as another name for opportunity, the English horse owners and [11] STOEY OF THE AUTOMOBILE people generally resented, as early as 1840, the progress represented by the automobile, and stifled all development of it from that time to a date when France, Germany and the United States had made it a real factor in transporta- tion. If, therefore, Franklin had not helped to free this land from the British yoke, the automobile industry might have been in the United States what it is in England today. France and Ger- many might now have been doing the automobile business of the world, with England and this country buying from them, as England and France are now buying from the United States, whose automobile supremacy at this date is unquestioned. While the gasoline type of automobile today is the most popular, this is not to say that the electric type is not a success scientifically and commercially. Indeed, the future extent of the automobile *s use for commercial purposes is said by experts to depend largely on the elec- tric driven type. And who will deny that but for Franklin the electric motor would not have been, for it was he who wrested the thunderbolt from heaven, as well as the sceptre of dominion over our land from the tyrant. Franklin as the dis- coverer of electricity may well be accorded the [121 INTRODUCTION credit for the electric automobile, which has played no small part in the development of the automobile industry, a fact which every student of automobile history will concede. It is, however, on an even firmer foundation than either of the causes mentioned that Ben- jamin Franklin stands as contributing to the success of the automobile industry. The in- ventors could invent and the manufacturers could make the automobile, but who, pray, was to buy it, if it was to be in general use, if not the common people! And how, may we ask, were the people going to buy it without money t As the great teacher of frugality and thrift, Franklin laid the cornerstone, 150 years ago, on which the superstructure of the American automobile industry has been erected. For, assuredly, had the seed planted by him failed to germinate and ripen in the American conscious- ness, we could as well have been today a nation of spendthrifts as a people self-denying, thrifty and frugal. He inculcated those principles of temperance and economy in the lives of our forefathers which have been handed down to us from one generation to another, to our ad- vantage and as an aid to our saving habits, by which we are enabled to buy automobiles. tMany a motor car today owes its ownership the teachings of Franklin. Many an auto- [131 STORY OF THE AUTOMOBILB mobile buyer would never have become one had he not heeded Franklin's Injunction, to ^^Bemembery a patch on your coat and money in your pocket is better and more creditable than a writ on your back and no money to take it off," and the investor would not have put money in stocks of automobile companies if he had not learned the truth of Franklin's teaching that ^^ Money makes money, and the money that money makes, naakes more money.'' Franklin having done what he could to pre- pare American citizens to economize and save against the day of the automobile, and to invest their money in its manufacture, and the Ameri- can citizen having followed his teachings and accumulated enough to buy at least a Ford, and perhaps a few shares of automobile company stocks, the man appeared who produced the first gasoline automobile in the United States. That man was Charles E. Duryea. His reputation rests on the fact that, though there were steam and electric automobiles in existence, and the gasoline motor had been developed, he was the first to put gasoline motor and buggy body into co-ordination and make the first run the second. To Duryea, the constructor of the **buggy-aut," is accorded the credit, by automobile history, of being the father of the American gasoline car. Following Duryea by only one year, came the [14] INTRODUCTION genius who put into general (arcolation the universal car. A reading of Henry Ford's biography dis- closes that his first idea, that the big money was in production in quantity — that a million articles sold at a profit of 50 cents each was a better paying transaction than ten thousand sold at $3.00 each — was in connection with a watch. Watches and clocks were the first things that Ford subjected to the mechanical prompt- ings of his boyish mind, and he had it all planned out to make a 50-cent watch before IngersoU had conceived the commercial possi- bilities of a dollar one. 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 auto- mobile, for he it was, who, by the chance remark, "What you want to do to make money is to I make quantity," started Ford on his down- ward 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 [16] lilding a ■ I STOET OF THE AUTOMOBILE renounced the idea. When, after building motor that was a success and commanded the attention and capital of moneyed men in Detroit, Ford formed his first company to build hie 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 fabu- lous 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 prob- ably 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. 1161 INTRODUCTION 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 eereal 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 fea- ture 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 con- sumption of gasoline and the use of oil by ships could not be foreseen. [IT] STORY OF THE AUTOMOBILE The field for iBvestment 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 ulti- mate will not have been reached. The oppor- tunities 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 cre- ated things is on a crescendo scale. The financial successes in the automobile business, great as they are, have followed the C18J INTRODUCTION 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 invest- ment subscription. Money-making opportun- ities 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 opportun- ity. 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 enter- [ prise 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 ^k not; he that hath not, wants," ^1 im I ] STORY OP THE AUTOMOBILB The antomobile industry illustrates gn^phio- ally that when an enterprise develops to fhe point where it is well grounded and has reached a period of age and steady eanung 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 busi- ness that shows as many people in it now, who were in it at the start, as the automobile busi- ness. This applies to manufacturers, distrib- utors 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 jthe 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 finandal history of the automobile. While quantity production and the co-oper- ative spirit which led to standardization were the keystones in the structure of the present day automobile success, the history of the sue- oessful development of the automobile demon- [20] ^ INTEODUCTION Btrates another fact, which is a vital one in the realm of investment. This fact is that most great financial suc- cesses 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 insur- ance company, but this can be said of the auto- mobile 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 ears would not sell in quantities, and the gasoline from petroleum was needed to give the automobile its great vogue, once by tungsten, vanadium and chromimn, again by the quantity pro- duction 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, STORY OF THE AUTOMOBILE vanadium and aluminum^ all natural resourceSi 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 alum- inum 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. Of the future of the automobile and of prod* ucts 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 pas- senger 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 supe- riority over horse power for haulage, ground cultivation, and other uses to which the horse is now put. Elements which will hasten this [22] I INTRODUCTION awakening are the scarcity of man labor and the workings of the immutable law of economaca. 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-mak- ing possibilities of investment in the motor tractor and the motor truck. Their adapta- tion 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 milUon acres of tillable land that have never felt the coid steel of a chilled plow. There are two hundred million more acres in timber that will, much of it, ulti- mately come under the plow. Besides crippling; the labor supply in this country, the European 123] t of our aup- " STOEY OF THE AUTOMOBELB war has taken a million horses oat ( ply. The case in favor of the tractor coming nltimately into common use seems from all this to be completely made out — its adoption in large numbers being only a question of get- ting 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 auto- mobile industry have never been compiled. It IB 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. r F( INTRODITOTION 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 Can- ada 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 divi- dends earned, is the record of the Willys-Over- land Company. John North Willys founded the success of thia great money-making business on his personal check of $500, cashed at great trouble during the panic of 1907, when the Over- land company was ready to go into bankruptcy. Besides the dividends applied to increasing the EftHnital, an immense amount in profits has been jursed by this enterprise. The dividends mi STOET OF THE AUTOMOBILE 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 Com- pany has paid over $50,000 on an investment of $1,000. These three are not by any means all the automobile companies which have con- tributed to make the automobile industry a sig* nal example of the earning power of money, but they represent the leaders of t^e popular or quantity-production-through-low-pricc type. There are about 150 passenger automobile com- panies 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. 1261 CHAPTER L INTBODnorOBY — AX7T0M0BII.E INDUSTBIAI. FiaUBES ABE AMAZINa. By Edward G. Westlake, Automobile Editor, The Chicago Evenmg Post. During the year 1916 the automobile industry in the United States entered the ^^ billion dol- lar class," and manufacturers who have mem- bership 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 finan- cial stage set for starring the ^^Big Billion," and they never permit themselves to see a pos- sibility of a recession unless steel becomes too great to be kept within bounds — ^in short material price is the only problem the venture- some automobile maker will put down for earnest discussion. {27] OLE ■ ecords of m STORY OP THE AUTOMOBILE Accurate figures spread on the records ■ 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 on more than 2,000,000 to the total of cars in opera tion in the United States. Pbice Drop In One Yeah. Weight decreased, as the engineers hadl planned, and the average price of cars de- 1 creased in one year from $671 to $605, In the I eight previous years the average price of auto- J mobiles had dropped from $2,125 to $814. Wa] Street, which once had only the cold shouldei for the automobile producer, took a permaneM seat at the table where daily the industry waj dissected, analyzed, weighed, discussed and reviewed; and, as a result, it is as difficult 1 keep from the financial eyes of Wall Street t operations of the great automobile factories e FIGURES ARE AMAZING 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 surveil- lance — not that they mistrust the manufactur- ers, but that they have found the industrial situation is so firmly linked to the dollars and centa 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 figur- ing on the "probable saturation point." It ia 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 mi STOBY OF THE AUTOMOBILE of the industry, and sits as the oongress of the Bepublic 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, bad failed in the last twelve years, the automo- bile industry had been a big paying one. Pio- neers who remain and whose works annually pay dividends, accepted the failures as the necessary concomitant of a great business Uiat 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 manu* facturer has spent his money wisely in equip- ping his plant with plenty of large-quantity [80] I FIGTJEES ARE AMAZING 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 ade- quate organization and builds a pleasure car or truck that is as good as specified and who per- mits 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 80 much that its cost was prohibitive to the big family of "Necessity." The car simply had to be "had" by men of large incomes. Auto- mobiles were not sold by intensive salesmen in those days — the family bought them, even as a fine jewel was purchased at the great jewelry tuaea. Tremendous prices were paid, in com- [31] I Story of the automob: iitomobile ^ ir n pariBon 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 cov-j ers, fine upholstery and the name plate on the I car told a big and varied story. Immediately following the craze to buy the-1 high priced cars, developed the "man Friday'*'! of the industry — the chauffeur. And the chauf- fer 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, styloj of life that the owner of the foreign car elected to affect, and the United States manufacture!! of ears was not at all prepared to put out « car that would correct the desire of American]; to drive around in an imported article. But the domestic car had a friend in thia contingency. Economical living was that friend Ruin often followed the extravagance of those who bought the high priced and, as manj experts said, inferior imported cars. Home! were mortgaged and all the financial trails wer« traversed in the effort to maintain an imposslblt extravagant Ufe. The hanker began to deteai W FI FIGURES ARE AMAZING the automobile. It seemed to Mm that it was madermining the life of the nation. Something had to be done to correct, also, the tone of the domestic automobile maker's life. He devel- oped a desire for watered stock. Over capitalization of hia plant was suspected by the banking interests, and on every hand the motor ear 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. Organiza- tion, 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 [33] STORY OP THE AUTOMOBILE of the product was re^stered at $93,400,000,1 This was the highest total of value for the out- J put of the industry so far reached in the Unitedl 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 I cost production in the plants, effective steps 1 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 produc- tion 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 becameu keener, but the output increased. VALxra OF Reliability Contests. 