Refuting Obama: The Story of Henry Ford

Everyone is by now familiar with President Obama's famous collectivist speech in Roanoke, Virginia.

Governor Romney promptly reacted to these statist sentiments, saying, "The idea that Steve Jobs didn't build Apple, that Henry Ford didn't build Ford Motor, that Ray Kroc didn't build McDonald's, is not just foolishness; it is insulting to every entrepreneur, every innovator in America. And it's wrong."

Truly, in addition to their efforts, entrepreneurs did get help, but it was from private -- not government -- investors and employees, who in turn were rewarded with pay, promotions, and dividends.

Romney's Ford Motor Company example is worth exploring.  Mr. Ford's company literally transformed, in an immense, economically positive way, the American landscape with his cars, which linked directly to roads and bridges.

Today, few people are aware of Ford's start.  Consider Obama's "great teacher" archetype.  Ford's education took place in a one-room schoolhouse via McGuffey Readers grade-school texts, so there was no "great teacher" miracle worker.  If one individual gave Ford personal encouragement growing up, it was his mother, to whom he was devoted.

As Ford grew up, he was fascinated by mechanics.  At the turn of the 20th century, motor cars were capturing the public's attention, and Ford determined that he would find his career calling in that field.  After some failed starts, Ford Motor Company was incorporated June 16, 1903, when he was 40 years old -- proof again that you're never too old to pursue your dream.

Obama believes that private-sector success means that "someone else made it happen," and he thinks government is that someone.  In Ford's case, business acquaintances invested $100K.  Actual cash was $28,000, the balance being IOUs.  About a month later, company cash on hand was only $226.23, but factory landlord Albert Strelow delivered his $5K investment.  Cars began selling, and in August, the company was $23K ahead.  Investors took a risk with zero guarantee that they would see any money, let alone dividends, paid back.  It was classic capitalism.  

As company engineer, Ford knew the car he wanted to build to sell "to the multitude" [1], and in 1908, the Model T put Ford Motor Company on the map.  It was simple, durable, and quality-built.  Ford knew that to sell, the Model T needed to be inexpensive, hence development of the assembly line.  A five-year sample of production figures  illustrates Ford's success:

  • 1911: 34,858
  • 1912: 68,773
  • 1913: 170,211
  • 1914: 202,667
  • 1915: 308,162

Here's where Obama sounds like a fool and Romney is right. Ford built his company through vision, motivation, and daily decision-making.  Honestly, Ford didn't build his cars alone; employees contributed their talents.  Machinists C. Harold Wills and Edward S. Huff worked alongside Ford fabricating prototype Model T parts.  Charles E. Sorensen was Ford's production manager for 40 years.  Naturally, there were tens of thousands of factory workers, and Ford's profit-based entrepreneurism allowed them to earn a prosperous living.  To my knowledge, there was no government investment or "help."

Obama regularly invokes the holy "your government in action" grail of road and bridge investments.  So did this help Ford succeed commercially?  I doubt it.  In the classic "which came first, cars or good roads" conundrum, road-building played catch-up with consumer automotive demand.  

It shouldn't be surprising that private citizens saw the need for all-weather roads.  A Good Roads Movement started in about 1870, ostensibly for bicyclists, and expanded to include automobiles.  One major populist road improvement example was the Lincoln Highway, connecting New York City with San Francisco.  According to the association, founded in 1913, most roads were dirt and didn't always connect where people wanted to go.  Search YouTube, and you'll find period films of Model Ts navigating rutted dirt roads turned into axle-deep mud rivers after a rain.

Entrepreneur Carl Fisher -- there's individual initiative again -- who built the Indianapolis Motor Speedway, envisioned this coast-to-coast graded highway.  His idea was to privately fund the $10-million project from auto manufacturer contributions.  Ironically, Henry Ford was opposed to the idea, thinking that the public should learn to fund roads.  Congress finally got on board with the passage of The Federal Aid Road Act of 1916, which provided states with matching construction funds.  Tin Lizzy production that year, by the way, totaled 501,462.  For eight years after the first Model T puttered to life, Ford prospered without government infrastructure "investment."

Romney highlighted individuals who transformed their ideas into success via hard work coupled with employee dedication.  As the Declaration of Independence so eloquently put it, everyone engaged in his own "pursuit of happiness."  Success is rarely simple or easy, but I'll take Romney's vision of prosperity over what Obama's sellin' any day.

[1] Lacy, Robert. Ford: The Men and The Machine, Little, Brown and Company, Boston-Toronto, 1986. Page 84.