EIK - Session 10 Part 2
And Henry found himself being opposed by this General Motors group again, together, backed by J.P. Morgan by the big money. Henry, however, was extraordinarily ingenious in his mass production techniques, and making tools and so forth. And when the W.W.I did get going, and the English were trying so hard to get America to come in and help them. The Germans were trying equally hard to get America to come in, and get this enormous production which was obviously very greatly amplifiable in America whichever side it would come in on would really make the difference, and because the grand strategy was line of supply. And Americans might really be able out-produce in ships, and in one way or another get the goods there. England, without them, could not get on. And Germany, without them, really couldn't get on.
So, we have the Henry Ford completely distressed by the idea of that W.W.I. He said "War is just awful." So he, by this time he had learned from his first experience with the Cadillac group, he gradually bought in all the shares of all the people who backed him. It cost him a lot to do it, sometimes he paid a fantastic price, and some of the great fortunes in America come from what Henry Ford paid the stockholders but this gave to him, then, real complete control. He did not have to do things in the terms of what money makers and people who were only interested in making profits he could really, absolutely make a pure decision about how to really be efficient in production.
And, came then, this big World War, and the English as I said were so eager to have help. Henry Ford built a great he bought a very large ship ocean ship, and painted all over the sides. He made a peace ship and he sent it all around the world hoping he could convince people that we ought to have peace. Typical to me of about all you can do with protesting. He found it just didn't work. And, so, he said, "Inasmuch as it doesn't work, I don't like war, but then the thing to do is to get the war over with, so I find I can't stop it so what I'll do is I'll join up and I'll get it over with." So he told the English he would like to help them get it over with in a hurry.
And, he really didn't like the imperialism that he felt in Germany. He felt the English would be the best one to aid, so and he wanted to get it over with, so he told the English he was going to help them. He already had English factories and assemblies, and they were just overwhelmed with the difference that this was going to mean to them. So Henry really did help them very, very greatly.
There were I will then point out in, at the time of coming into W.W.I, we had, we just had something called mild steel, and different steel makers made different steel. They were really not classified, there were no standards operative in the industry at all, and steel rusted very badly, and everywhere when I was young, coming into Boston and so forth everywhere was rust. The outside of the I say today, we see big dumps and things but it was worse looking dumps there because everything was rusting and the brownness everywhere it was a very disagreeable sight. And, so, Henry Ford, then, was with the English, and the English had the grand command in England, was approached by one of the English scientists, and he said, "Wouldn't it be just as good, as getting so many guns to the front, if we could or, getting twice as many guns to the front if we could make the guns that do get to the front, last twice as long?" And they said, "Please don't bother us." And then they said "What did you say? How could you do such a nonsensical thing?" And he said, well we've had in the drawers here since 1854, and nobody has been interested in it, and they pulled out alloy steel." Now, I say, that what had happened was that the steel makers really, the first steel making came when the great, what I called "the great pirates" with you, then found that the wooden sailing ships which they had put the steam engines into, really weren't strong because they could drive them faster than what was really good for their wood. And it came into steel ships. And with the building of the steel ships, then, they got into very, very powerful capabilities, as you know. And then they got into the war buildings and so forth.
When the then it was simply the mass of the water ocean world who then used their resources to build the blast furnaces, the blast furnaces were making steel in America, and around the world, for 50 years. And the people, then, who had started who then were not only producing the steel for the ships, but then they found themselves needing electric generators, and they got themselves into boilers, and there was an enormous amount of manufacture of very special equipment going in that ship.
When there was then, saturation of the market of ships, then the owners of the blast furnaces, and the owners of the General Electrics and so forth found that there were other customers on the land that they had never thought about. They found then that municipalities would buy the electric generating equipment which they had thought was only good for battle ships, or for ships of the sea. So suddenly there were outlets, and this became a business in its own right. And they found, in contradistinction to the money they could make of the ships coming across the oceans bringing cargoes began to make much more money out of the manufacturing.
So steel making then became a very big this US Steel was a very fantastic all of the investing fantastic operation quite a lot of it went on actually here in Philadelphia. And, we have, it was the Pennsylvania game, and Pittsburgh very powerfully We have then, the steel men manufacturing steel. Scientists said to the bosses, I'll show you how you can make steel so it won't rust. And they said "You need to have your head examined. The more it rusts, the more we sell. Did you hear what I said? Take the papers away from that man, he's crazy and, call the doctor."
And, all the manufacturers simply, they had now a mechanical cow they could milk for money, and they didn't want any change nothing was more an anathema in the early days of American manufacturers this went really up to and through W.W.I. So, it was very much of a shock to the English grand strategy when the Generals who didn't know about the business money making side of it, were told by the scientists, "We have these alloys here, for all these years and are able to make these very much stronger steels, and they will last very much longer. So, the secret weapon of W.W.I was alloys. And it was kept very, very quiet, but suddenly the guns were out-shooting the Germans and it became a very, very important matter.
Henry Ford, being then privy to this, having gone into the mass production with the English, helping every way he could on production, became deeply acquainted with alloys. So he came back with, after W.W.I to his Detroit operation with a completely new way of looking at things in the way of alloys. So where you've often heard it said that Henry Ford was a stubborn old man who insisted on making a single little black the Model T, and he was just stubborn was not so. General Motors was immediately appealing to the customers by making a little fancier dash board, and more gears, and more instruments, and they were doing things very superficially. Henry Ford was changing his car much more rapidly than they were, but you couldn't see it. It was the beginning, as I told you about, of that invisible world.
By the time he went from Model T, to Model A in 1928, he had 54 different types of steel that he had been manufacturing to go into his Model T's exactly the right metal, for exactly the right function for the particular heats and the effects of pressures and the tolerances or whatever was logical. So, now those alloys were as different as rubies and diamonds, so Henry Ford said "I can't possibly afford to buy steel from US Steel," because the people who manufacture the steel, manufacture people wouldn't buy ingots, and they wouldn't buy the liquid steel coming out of the furnace, people needed forms, so they made sheets and plates, and so forth, and angle irons, and "I" Beams or whatever it may be, many sections they got out enough standards to seemingly satisfy most manufacturers that they have the stuff. So, Henry then said, "I can't possibly afford to buy sheet," and the only way he could get it from them was buying this sheet in some finished form, and I can't buy sheet or "I" beams and melt them up and start to make my alloys, so he said "I'm going to have to go into my own mining." So he then, he found that all the ships belonged to J.P. Morgan who rules the banks, he couldn't get use his ships to go to Masabi. So he had to he set up his own he built his own ships, and he bought his own iron range at Masabi, and he had to set up what he called the Toledo in Detroit and Ironton Railroad, and he then started actually manufacturing his own steel, and making the right alloys.
Now, this became very, very impressive to Henry. And Henry began then his car the reason Henry Ford prospered wasn't because he was a stubborn old man that just sold sort of a simple product for the simpleton people it was because his alloys did work, and the cars you could really abuse them, they could really be outdoors there and they weren't rusting, and the farmer really could use it, and he just didn't get into trouble. So the farmer just was for it and he bought it, and incidentally, at that time you bought the Ford for $450. It was a very nice price, and a beautiful product. And so, Henry, he had then to realize, once he was in alloys, he had then a research department going and finding better alloys. He became very much of an evolution in alloys. And this, then, told him, that, now remember these metals don't include don't come from the farm, and they don't come from the same hills at all. They came from all over the world. And gradually Henry Ford began to have ships coming from all over the world, and he began to have railroad cars coming from all over the world. And Henry, then, got up a very extraordinary idea. He said "I see, then, that if I were dealing in end products I could afford to keep a warehouse full of this resource that I am going to use, and a warehouse full of that, but inasmuch as I am going to change my design, overnight, from this alloy to that alloy, if I were to buy any amount of material and have it in the warehouse, then suddenly I've changed my formula and I don't use it. So I can't possibly afford to do that, and anything sitting in warehouses is simply liable to be absolutely lost capital all together." And he was having to play very tightly.