The People's Tycoon: Henry Ford and the American Century (Vintage) (19 page)

As the company geared up for production, Couzens set up an office on the first floor of the Mack Avenue plant and began to grapple with key issues facing this fledgling firm on the business front: payment of bills for parts, purchasing, meeting the payroll, and particularly sales. His support staff was small—a stenographer, a secretary, and a one-armed bookkeeper named Talmadge. Couzens took care of everything that smacked of business and worked heroic hours in doing so. “In those days,” reported
Ford Times,
the company magazine, a few years later, “J.C. was the entire office management—he hired and fired—he kept the books, collected, spent, and saved the cash, established agencies, and dictated policies.” Everyone at the Ford plant perceived the clear division of responsibility at the top: Ford handled engineering and production, Couzens handled business matters.
²⁶

He made one crucial move in setting up a sales structure for the new Ford vehicles. He began attending automobile shows held in big cities throughout the United States and scoured their displays and meetings looking for sales agents. Within a short time, Couzens had secured agents in nearly all major urban areas, such as the Duerr-Ward company in New York, the William L. Hughson Company in San Francisco, and McCord and Company in Chicago. By the fall of 1905, he had signed up more than 450agencies to sell Ford automobiles. He handpicked dealers and salesmen, looking for men who shared his devotion to the work ethic. Couzens also played the innovator in shaping his sales force, placing salaried employees, rather than independent agents, at key points, and setting up a system of incentives and bonuses to reward the diligent. One day, an individual from the West Coast visited the Piquette Avenue plant to order a single car as a first step in becoming a Ford dealer. “Mr. Couzens asked him for the population of his town and when he learned the answer, said, ‘For a town that size you ought to order 100cars!’ He talked the man into doing just that, and what's more, collected in advance for the ordered cars.”
²⁷

Ruling his business fiefdom from the hub of the Ford operation, Couzens established a larger-than-life image. Attired in a dark business suit and bow tie, with his habitually severe expression highlighted by steel spectacles, he imposed his will on nearly everyone with whom he dealt. Subordinates entered Couzens' domain gingerly, aware of his tough temperament and his ability to “squeeze a penny and watch it as carefully as any living
human being could.” Workers suffered similar fates. Fred Rockelman, a Ford mechanic, described the business manager as “a terrific man-handler” when confronted with personnel problems and complaints. “In the old days, we always called him the fire hydrant. We went in enthusiastically and he opened up the hydrant on us and cooled us off.” To many, Couzens appeared tough but fair, brooking no nonsense from employees but also encouraging those who worked hard and believed in the future of the company. For others, however, his domineering ways caused resentment. “I called Couzens ‘Sunny Jim’ because he was so God-damn mean,” Frank Bennett once noted. “There were a great many people who didn't like 'Sunny Jim.’ ”
²⁸

But Couzens' hard-driving intensity was not of the bullying sort. He did not just torment those lower on the food chain at the factory, but applied the same standards to everyone, regardless of rank. He established a rigid sales policy and grew angry when he discovered Malcolmson had violated it by giving a business friend a discount on the sale of a car. At the next stockholders' meeting, Couzens denounced this practice so vigorously that a chagrined Malcolmson agreed to pay the difference out of his own pocket. Years later, Couzens explained his attitude. “I am one of those who hold that it is not worthwhile to attempt to be popular,” he wrote in
System: The Magazine of Business.
“I should prefer to be a hard taskmaster—but a fair one. Popularity is more often a liability than an asset.”
²⁹

As the Ford Motor Company accelerated its production and sales and broke into the car market after 1903, one factor in James Couzens' evolving role proved essential—his relationship with Henry Ford. Originally, he made little impact on the company's namesake. But Ford soon sensed that this manager could be an invaluable ally. After an early organizational meeting of the board of directors, Ford offered Couzens a ride home in his own automobile. As the two drove along, they discussed plans for the new company, and the issue of salaries arose. Then Ford posed a question. “What do you think we ought to ask from
those fellows
?” he asked. Couzens immediately grasped the implications of Ford's wording: “
those fellows,
” or the stockholders not really involved in the actual work of the company, stood on one side; he and Couzens, the workhorses of the enterprise, on the other. They agreed that a figure of $3,000 for Ford and $2,400 for Couzens would be reasonable. Couzens immediately sensed that his future no longer lay with Malcolmson but with the clear-sighted man sitting next to him. Instinctively, they entered into an unofficial partnership that blended distinct talents into a larger, fruitful whole.
³⁰

First at the Mack Avenue plant, and then at the facility on Piquette Avenue, the Ford-Couzens alliance emerged in force. Though outwardly
formal—they commonly addressed each other as “Mr. Ford” and “Mr. Couzens”—the two acted in friendly concert regarding company affairs. Couzens took Ford's side in all differences of opinion regarding manufacturing and development, and Ford nodded silently when Couzens spoke on business issues. A Chicago dealer who observed the two in action at the Ford factory noted that “they were like brothers.”
³¹

Ford's organization of the manufacturing process, and Couzens' skillful erection of a supporting financial structure, prompted an explosive rate of growth. During Ford Motor Company's first three months of operation, it earned a profit of $37,000, and on November 21, 1903, it paid out a 10 percent dividend to stockholders. Over the next nine months, the company realized nearly $100,000, and by the autumn of 1904, sales were averaging $60,000 per month. Gross sales for the year October 1, 1904, to September 30, 1905, were nearly $2 million. During this start-up period, the company was selling roughly seventeen hundred motorcars per year. As Couzens told the Detroit
Journal
in the spring of 1905, “We are now turning out twenty-five machines a day on average and giving employment to three hundred men.”
³²

But prosperity brought problems. Malcolmson, observing the company's success and the tight relationship between his partner and his business manager, grew nervous and moved to reassert himself. He asked Couzens to return to the coal company so he himself could take over the directorship of the car company's business affairs. When Couzens balked, Malcolmson asked the board of directors to discharge him. But Ford convinced the board to oppose this move. “I told Malcolmson that I did not want him but that I wanted his man Couzens,” he explained later with typical candor. Couzens made his own sentiments clear. “I did not want to change, and H.F. and the Dodge Brothers stood by me. So I stayed.”
³³

Yet this brewing controversy involved more than personalities and power. A deeper issue lying dormant during the first few years of the Ford Motor Company gradually came to life and fueled dissension as the company expanded rapidly. It involved a vision of the Ford automobile—what kind of car would the company develop, manufacture, and market?—and questions about how to capitalize on that vision. At the heart of things stood a growing difference of opinion between the two majority stockholders, Malcolmson and Ford. That difference swelled and festered, forcing stockholders to one side or the other, until it finally reached an explosion point. James Couzens' role in resolving this larger policy dispute would prove critical for the fortunes of the company.

Malcolmson, though standing on the sidelines during the company's early years of growth, knew exactly the kind of car he wanted to make—an expensive, luxury automobile aimed at prosperous buyers and promising a larger profit margin. Henry Ford sized up the situation quite differently. In mid1903, describing to John W. Anderson his vision of an inexpensive, simple, lightweight car for a mass audience of buyers, he said he believed the best way to make such cars was to simplify and standardize the manufacturing process.

For the first two years of the company's existence, Ford and Malcolmson papered over their differences. In the 1904–5 season, the company offered to the public two different styles of automobile. The Model A and its successors, the Model C and Model F, represented Henry Ford's vision of a light, inexpensive, two-cylinder car. At Malcolmson's insistence, however, the company also built and marketed the Model B, a much heavier, faster, and more expensive four-cylinder touring car. Henry Ford's models were bought up by consumers as quickly as they could be made; the Model B sold only moderately well.
³⁵

Bolstered by the popularity of the lightweight runabouts, Ford and his engineers focused attention during the 1905–6 season on a new model that became the workhorse of the company: the light, durable, inexpensive four-cylinder Model N. Out of deference to Malcolmson, they also developed the six-cylinder Model K, a more powerful and expensive model. Whereas the Model N weighed 1,050 pounds and sold for $600, the Model K weighed some eighteen hundred pounds and cost $2,800. Ford and Malcolmson continued to stand by their respective positions. Ford pointed to sales figures and volume of demand for his smaller, affordable motorcar. But Malcolmson believed that another fact pointed up the company's path to future prosperity—in 1906, two-thirds of cars sold in the United States were larger, more expensive models, and these brought a greater profit margin. The two increasingly found themselves at loggerheads over this issue. Board-of-directors meetings throughout 1905 and 1906 turned acrimonious
as the stockholders, following the lead of the two partners, quarreled over the company's future direction. Malcolmson gained support from several board members, but Ford's argument proved persuasive to a sizable majority.
³⁶

As tensions accompanying this disagreement increased, Henry Ford began to sour on his partner. Memories of the Detroit Automobile Company resurfaced, with the images of wealthy investors trying to force him in certain directions against his better judgment. He was determined to avoid a replay of this situation. His private comments turned harsh as he told associates that “anyone who did not have a part in the manufacturing of the company was actually not contributing and was a parasite.” On the board of directors, Couzens was a key ally, of course, as were John Dodge, who did not like Malcolmson, and John Gray, who agreed with the long-term logic of Ford's position.
³⁷

As the situation grew more contentious, it became clear that a resolution needed to be found. Late in 1905, Ford and Couzens decided upon a clever maneuver that would serve two purposes at the same time. Thinking strategically, they had become convinced that the company should manufacture its own parts as another source of profit. As parties to a struggle for power within the company, they also were faced with what they saw as the wrongheaded thinking of an intransigent partner. So Ford and Couzens proposed to create a new entity, the Ford Manufacturing Company, that would solve both problems. It would produce Ford engines and parts, thus capturing the profit from selling them to the parent company that theretofore had gone to the Dodge Brothers. Equally important, it would be organized without the participation of Malcolmson. The ploy was ingenious. This new company and its stockholders would receive profits on the manufacture of engines and gears for the new Ford Model N, and henceforth Malcolmson would realize profits only on the
sale
of the completed vehicle. Thus Ford Manufacturing Company was incorporated on November 22, 1905, and the operation was set up in a rented facility on Bellevue Avenue. A stockholder election made Henry Ford its president, John F. Dodge vice president, and James Couzens treasurer. The intent was transparently clear. As John Gray noted to a skeptical stockholder, “I have Mr. Ford's promise that when things get straightened out with Mr. Malcolmson, the Ford Manufacturing Company is to be taken into the Ford Motor Company, just as if it had never existed.”
³⁸

Malcolmson immediately understood the thrust of this move, and he fought back. He dashed off a long, angry letter to the board of directors, denouncing its actions as calculated