MTFCA Forum

Expanding on Leo’s comments on this thread:

viewtopic.php?f=2&t=11556


FMC was humming right along in the late fall of 1905. Models A, B, C and F had been financial successes. Investors had made back several times over their initial 1903 investment in dividends, and Ford was preparing to roll out two revolutionary models, a big, powerful six cylinder touring car and fast, good looking inexpensive four cylinder runabout, models K and N.

Then “it” happened. The Detroit Free Press reported December 3rd that A.Y. Malcomson, wealthy Detroit coalman and Ford investor, was starting a new automobile company, Aerocar:


Not only was Malcomson one of the two largest investors in FMC (he and Henry Ford held 255 shares each, owning half the company together), he was Treasurer on the Board of Directors. Imagine, one of your board of directors and officers charged with guiding the fortunes and future of FMC, is the primary investor and leading force is a direct competitor.

The Board of Directors reacted quickly, sending a letter to Malcomson following an unscheduled board meeting on December 6th, 1905:


The board members present, including Henry Ford and John Dodge, agreed to send the attachment below to A. Y. Malcomson:


This is where history becomes “murky.” Let’s pay attention to the details of this letter, and then we’ll do the same in depth review of Malcomson’s response. The BOD letter, attachment “A,” demands that Malcomson resign his position as a director and officer on the board, within five days. No more, no less. In all reality, quite reasonable.

Next, Alex’s response.

Alexander Malcomson responded to the Board or Directors demand that he resign from the board:



I typed alongside due to the poor copy, and highlighted what i think are interesting portions of his reply.

On a related note, a friend has begun restoring the only known 40 hp 1907 Aerocar that I’m aware of in the world. It looks like it will be a beautiful, large powerful touring car and I know he’ll tour with the car on the New London to New Brighton tour when the cars ready. He’s a member of MTFCA but I don’t think he’s posted on the forum before. With his permission I’ll post pics of his “Ford cousin.”

As the plot thickens! An interesting turn of events I had not read before. I always enjoy reading the results of your research. However, this has a bit of intrigue attached to it.

Definitely will second what Wayne said.

Eagerly tuned in waiting for the next installment- popcorn is ready!

Great find ! this digging in archives can be very addictive..

Thanks guys. Books written about this period of Ford history tell us that A. Y. Malcomson “forced” Henry Ford to build the Model K, and some the Model B. Most writers also tell us that Henry Ford created Ford Manufacturing Co. for the purpose of circumventing Malcomson and depriving him of profits. At first glance, his response appears to support this notion.

A. Y. Malcomson wrote:
”The most striking instance of this tendency of the management of the Ford Motor Company, is the organization of the Ford Manufacturing Company comprised and controlled by the holders of the majority both of stock and directorships of the Motor Company, and designed, as I am reliably informed, to sell it’s products to the Motor Company — presumably not without profit.”


However, I believe the next sentence of his response to FMC Board of Directors opens the door to an entirely different interpretation:

“In this new company the minority stockholders were not invited to join.”

As Malcomson pointed out earlier in his response letter, and as we all know, he was not a “minority stockholder.” Why would he write this? My suspicion is that he was indeed invited to be a shareholder in Ford Manufacturing! There, I’ve said it. I’ve thought this for some time, but not written about it before. Had he been “excluded” the offer of shares, he should have written “stockholders were not invited to join,” not “minority stockholders.” Also, if he were so “impotent” regarding stopping Ford Manufacturing Co. incorporation, how could he be responsible for “forcing” Henry Ford to build the six cylinder Model K at the same time in Ford history? One can’t have it both ways, forcing HF to build a model he (Ford) was opposed to, but unable to stop Ford Motor Company from contracting with Ford Manufacturing Company.

The next question becomes; why wouldn’t he have bought stock? If he were “invited” to buy into the new company, why didn’t he? I think there’s an answer, or at least explanation why he may not have wished to become more committed to the Ford plan. When I dig up the next document, I’ll be back...............

Dun dun dunnnnnn

The plot thickens!

Thanks Jason. My “theory” why Malcomson didn’t buy into Ford Manufacturing Company.

Below are excerpts from Malcomson’s appeal due to a suit by Reeves Pulley Co. against he and his failed company, Aerocar. The suit was brought in 1909, and reveals much about their business arrangement. Malcomson contracted on November 1, 1905, for 500 20hp air-cooled motors from Reeves Manufacturing. A few things we learn from this information:


1. If Malcomson were the driving force behind the six cylinder Ford Model K, to come out in early 1906, why would he choose a 20 hp air cooled motor for his creation, Aerocar? The Model K would produce 40-50 hp from it’s six cylinder 405 cubic inch power plant.

2. Was Malcomson already financially tied up with his November 1, 1905 commitment to Reeves for 500 motors (Aerocar wasn’t incorporated until December 1, 1905, it was his name on the contract), and too strapped and/or committed to his new enterprise to entertain buying into another Ford company?

Meanwhile, Ford Motor Co. was doing what FMC did, making money hand over fist:


3. We also learn, Aerocar projected building 500 touring cars with it’s large, new factory for 1906. In fact, Malcomson and investors initially incorporated with $400,000 capitalization, and added to that number during the summer of 1906. They also built a second factory during the summer of 1906, in addition to their large, new fully equipped factory completed early in 1906. However, this suit points out Aerocar only took 319 of the 20 hp motors over three model years, 1906 - 1908.

4. Historians have reported Malcomson was “forced out” of Ford Motor Co. Could it be that Malcomson negotiating $175,000 for his shares (initial investment of $5,000) was to bankroll his new company? At the time, the Detroit Free Press reported on the stock sale, speculating that was well over market value, appearing to show that Malcomson had negotiated a good deal for himself.

Malcomson, and Aerocar did everything wrong, compared with Ford Motor Company. They took on massive debt prior to any sales. They built new, and paid for a large marketing network and national advertising campaign before any sales were on the books. Quite a contrast to Ford, who capitalized with less than $50,000 (I believe only $28,000 actual cash), and expanded as receipts/sales allowed.

By 1907, Ford would become the largest auto manufacturer in the world, while Aerocar would file their first of two bankruptcies. This advertisement speaks volumes about the direction of the two companies; Ford-Canada stock offered at $100 per share, Aerocar stock - $10/share:

A tale of two cities.

Good stuff, Rob!

To note- Scotten-Dillon I believe was a tobacco company (cigars), which was a huge industry in Detroit at the time.
And Great Lakes Engineering Works built ships, notably the SeeandBee, which was converted to an aircraft carrier to train Naval pilots on Lake Michigan during WWII.

Fascinating stuff to see all going on at the same time.

Thanks for the history lesson!

And the "Olds Motor Works" was only four dollars seventy-five cents! I would suspect that may not have been the company officially building the Oldsmobile automobiles. Been awhile since I read their early history, but the Olds Motor Works was as I recall Ransom E Olds' Father's company (gives new meaning to "not your father's Oldsmobile"?). The Oldsmobile (as the Olds Motor Vehicle Company, founded 1897) was originally Ransom's company (so as to not endanger the established business with a crazy new idea), but then later the two were merged. I don't recall what year they merged, but was thinking it was before 1906. I did look up the year Oldsmobile became part of General Motors. That was later in 1908. So one can wonder just what the Olds Motor Works listed here really is.

So much interesting stuff!
Thank you Rob!

Link to a 1907 Aerocar


https://www.facebook.com/groups/1190871 ... 125637481/