I have just completed reading the book, Ford – The Men and Machine, which I found extremely interesting as an insight on how things were at the turn of the century. Though the book contained a detailed description on how Henry Ford came to be known as the father of the assembly line, what I found of interest is what was happening outside of the auto industry. What I enjoyed reading about was the period between 1910 to 1940 and the economic situations that happened during this period of time.
What I recognized was something that I learned in college while taking a history class. The professor asked the class why we studied history? Though I didn’t raise my hand, I thought the reason was to bore us silly with dates and facts we would most likely never remember. But we all know that the real answer is so we can avoid our past mistakes. We also know that we human beings seems to like to ignore our past and do in fact continue to make the same mistakes over and over.
A few facts which I read seem to ring true today as it did over 60 years or more ago. Henry Ford was one of the first Detroit car builders to introduce the $5 a day wage and also the 8 hour work day, which was unheard of at the time. Most auto workers in Detroit made about one-half that amount at the time. But what isn’t told is that the assembly line had been speed-ed up to the point that the workers were busting their buns to get the cars built. Though the $5 a day wage was innovative, Ford himself was making millions from his model T cars. His philosophy of building more cars at a cheaper price paid off while at the same time offering his workers a live able wage. No unions were allowed at Ford since Henry Ford knew how to take care of his workers, or so he believed. This is what the Japanese and Korean car companies have done at their assembly plants in the U.S. They pay their employees a solid living wage without the U.A.W., forcing higher and higher concessions that just about put Detroit out of business.
There was also a chapter about the recession that hit the U.S. around 1920. Originally Ford dealerships were sent new cars and replacement parts on a pay when it was sold policy. Ford would get their money when a car was sold which worked well until the recession hit. Ford found themselves with new cars and car parts that nobody wanted and the car company was in trouble. So the company sent the new cars, plus more cars than what the dealer wanted and car loads of parts as well. The dealers were ordered to pay cash on the barrel head or lose their dealerships. This forced the dealerships into getting loans at their local bank to pay for the shipments. Ford had bailed themselves out while the dealers suffered the cost of borrowing from the banks. During the recession of 1920-21 is was estimated that unemployment was between 9% to 11%.
When FDR became president Ford didn’t like the new President because democrats were not business friendly. He was against FDR’s policies including a fear that the government would nationalize the banks. To protect the banks of Detroit, Ford and other wealthy folks placed huge sums of money in the banks to keep them solvent and hopefully to keep the banks from being taken over by the Feds. The plan worked.
But when one looks at what happened it does sound like the same things that are happening today. Which makes me wonder why we do not learn from our mistakes?