Early FMC - let's talk A. Y. Malcomson

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Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 9:08 am

My interest in early Ford history has led to several observations about one of the two primary (and equally largest shareholders), Henry Ford and Alexander Y. Malcomson. If one goes the "Google" route, the first impression of Malcomson's and Ford's relationship was one of antagonism, with A.Y.Malcomson "pushing" or even "forcing" Henry Ford to build either the Model K, or in some accounts, both models B and K.

Over the years, I've stumbled upon a few documents and accounts that may challenge "accepted history." These are my opinions and impressions, and remembrer, worth exactly what any reader is paying for them......... :shock:


I believe the photos of Henry Ford was taken in 1906 or 07, while the pic of A. Y. Malcomson is dated 1908 (both courtesy of THF, all rights apply, colorizing courtesy of me......). In either case, both were President of their respective motor car companies when the photos were taken, Ford Motor Company and Aerocar. In many ways, this is the tale of two cities (car makers):

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I'll take my time with this, as it takes me awhile to find where I hid files and copies of materials to protect them from my forgetting where I placed them.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 9:54 am

I suspect Henry Ford and A. Y. Malcomson probably knew of each other some time before joining forces in late 1902 and then putting FMC together in 1903. Malcomson appears at racetracks, occasionally driving what I presume was his vehicle in races. Below, he enters and drives a Winton in a late October 1902 race at Grosse Pointe. In this particular race, W. C. Rands drove what was formerly Henry Ford's first racer, today known as "Sweepstakes." My guess is, with business success in coal and an interest in racing, Malcomson was itching to get in the motor car business. Later, A.Y. Malcomson will occasionally drive Fords in local races.

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Below, both Malcomson and Frank Kulick drive Fords at September 1904 Detroit races:

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 10:21 am

Fast forward to mid 1905. Ford Motor Company has enjoyed incredible success, with investors receiving several times over their cash investments in dividends (not to be confused with the stock value they continued to hold, as the stock value undoubtedly growing exponentially). A question I've asked myself over the years, what investor would wish to "rock the boat" under these circumstances? While other car makers were coming, and going, FMC was taking off financially. Ford was marketing overseas, and Ford Canada was beginning to distribute cars to the commonwealth countries.

I'll refer to one of the investors own words, found in his Reminiscence. Charles Bennett, executive with Daisy Air Rifle, and early investor, was a life long friend of both A. Y. Malcomson and Henry Ford. This is what he reported regarding Mr. Malcomson's involvement with direction of Ford Motor Company in those early years (courtesy of THF, all rights apply):


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One other "nugget" in Mr. Bennett's report isn't related to the Malcomson Ford relationship, but offers an interesting insight into Henry Ford's reaction when a potential lender told him (Ford) an institution representative would have to be at FMC to monitor the lenders investment:

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What I like about Bennett's account is, he was in the room.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by KimDobbins » Tue Apr 13, 2021 10:28 am

Ford motor company original stockholders
Attachments
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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 10:40 am

Thanks Kim. I think it's good to notice both Henry Ford and Alex Malcomson held the same number of shares. However, I don't wish to intimate this made any difference regarding board actions. As mentioned on previous threads, Board of Director votes are not prorated based on the number of shares held, but usually as a one director-one vote basis. I'll also mention that from personal experience, the BOD usually don't chart the course of a company/institution, but provide oversight for the company's day to day leadership.

With that said, Charles Bennett occupies an interesting place among investors, due to his personal friendship with both Ford and Malcomson. He also held a unique position, in that he was an original FMC investor, and initially was an original Ford Manufacturing Company investor. However, he chose to relinquish his initial shares in Ford Manufacturing. He speaks about this change of mind in his Reminiscence (but that's for another time...).
Thanks again Kim,
Rob

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 11:10 am

Time to get into the weeds.

While no one at Ford Motor Company was aware of it, A.Y. Malcomson was a busy man in the fall of 1905. As FMC worked through initial production issues, advertising and developing their next models, K and N, Malcomson was also busy. However, it wasn't FMC that commanded his attention. Below, we see he secretly agreed to purchase 500 twenty horsepower air cooled motors from Reeves Pulley and Manufacturing Co. The document is a 1909 district court appeal, and gives us insight to what transpired in late 1905 and early 1906 between Ford and Malcomson.

On November 1, 1905, Malcomson contracted with Reeves for 500 motors. They were a tried and tested motor, offered for a couple of years by Reeves. Even Ford's agreement with Dodge Brothers for the price and number of Model K motors, and with the soon to be incorporated Ford Manufacturing Co. Model N motors had not been addressed by the Ford board of directors. We also learn from this document, that Malcomson, and the future Aerocar Co. were sued for not taking the 500 motors by 1909. That will be important later.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 11:30 am

The first of the month, December, 1905 is when newspapers reported the new concern, Aerocar. Below is a transcript of the lengthy report that appeared in the the Detroit Free Press:

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It didn't take the FMC Board of Directors long to react.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 11:51 am

FMC board of directors held an emergency meeting on December 6th, agreeing to send a letter demanding that A.Y. Malcomson resign his position and board position within five days of receipt of this letter:

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A. Y. Malcomson sent a lenghty and defiant response:

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Later today I wish to "dig down" into the contents of his response.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by ModelT46 » Tue Apr 13, 2021 12:00 pm

I do not see it listed here, but I thought Ford bought Malcomson's stock and was then able to be come the major stock holder in the Ford Co.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 12:30 pm

Darel,
Yes, later in 1906. Thank you for your posts,
Rob


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Re: Early FMC - let's talk A. Y. Malcomson

Post by Bud Delong » Tue Apr 13, 2021 3:25 pm

Thank you Rob, I like the facts of the deal!! Bud.
:D

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 3:34 pm

Back to A.Y. Malcomson's response to the FMC BOD letter demanding he resign his director position. Below is most of page two of his two and a half page response.

In the highlighted portion of his letter, Malcomson wrote "In this new company the minority stockholders were not invited to join."

Let that sink in a moment. A. Y. Malcomson, major shareholder, along with Henry Ford, wrote that one of his reasons for staying on as Treasurer and board director is to protect the minor shareholders at FMC who were not invited to buy into Ford Manufacturing Co..

Two things;
First, Malcomson was not a "minority shareholder." Sooooo, was he excluded from buying into Ford Manufacturing? As one of the two major shareholders, I don't think he would have said "minority shareholders" weren't allowed to buy in," if he were excluded from purchasing Ford Manufacturing shares.

Second, if Malcomson could force Henry Ford to build the Model K, and some historians claim Model B, why did he "allow" Ford to establish Ford Manufacturing, if he were so adamantly opposed? One can't have it both ways. Malcomson has enough support to force production of two major models of FMC, but not enough "clout" to stop the establishment of Ford Manufacturing.

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This is another take. Malcomson, during the fall of 1905, was heavily vested in starting his new company, Aerocar. If he signed a contract for 500 motors to power his new car on November 1, 1905 (and he did), he had to be planning and negotiating with Reeves long before that.

I believe Malcomson would have been offered stock in Ford Manufacturing, as most Ford Motor Company shareholders were. However, I believe he was already heavily invested in his new pursuit, Aerocar, and his funds and efforts would be pointed in that direction. Even if he wished to buy into Ford Manufacturing, I don't think he could. His money was committed toward Aerocar.

To add insult to injury, while Malcomson writes about Ford Manufacturing Company, "designed, as I am reliably informed, to sell it's products to the (Ford) Motor Company -- presumably not without profit." Of course Ford Manufacturing Co. was going to sell at a profit. As was Reeves, for the sale of 500 motors to Malcomson, soon to become Aerocar. And as Dodge Brothers and every other vendor of parts sold to Ford Motor Company since it's beginning in 1903. One could argue that Ford Manufacturing, similar to Dodge Bros., at least would have a much closer relationship with the parent Ford Motor Co. than any outside vendor.

Ford Motor Company was about to embark upon building a minimum of 10,000 runabouts, and 1,000 six cylinder touring cars, more cars than any company in the world had built over a three year period. The company had to have a vendor dedicated to making their motors, on their schedule, and Dodge Bros. was not large enough to take on the task. And DB did not suffer. In addition to producing the Model K motor, front axle and other components, they also produced the axles for the runabouts too.

Next, Ford and Malcomson go their separate ways.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by ModelT46 » Tue Apr 13, 2021 4:52 pm

The Dodge Bros and their Dodge Company were major players and vendors for the Ford autombiles up to and about 1912-13. My 1910 T has Dodge Bros stamped on the steering top unit. I understand that the engine was made by Dodge. I believe that the Ford Co. bought a casting company in 1909, so that the Ford Co could cast their own blocks.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 5:30 pm

Bud, thank you.

Darel, I'm going to take a big SWAG here, based on what (little) I know. Maybe Trent B. or someone more informed will jump in. Eclipse Foundry shows up in the accounts payable for Ford Manufacturing (Acc 123, THF, all rights apply). Of the four months of statements I have copies of, Eclipse Foundry has acct. payable of just over $37,000. Meanwhile, the Ford Manufacturing Co. audit of parts on hand (excerpt below) gives a value of $3 per jug (cast in pairs). At $6 per car (two pair), $37,000 would equate to just over 6100 cars ($6 dollars per NRS motor, divided into $37,000). So, that's my guess. However, I don't know anything about Eclispse Foundry, and reserve the right to be entirely off base.

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For some reason my often addled brain thought Ford bought a foundry sometime prior to beginning production of the Model T, but that may be fantasy........ :shock:

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 5:53 pm

Moving along, Ford did get models K and N out for 1906, although the N suffered extensive delays, and as a result wasn't much of a production factor in fiscal/model year 1906 (although it was a sensation, and stage was set for sales once production issues were overcome). The Model K was in full swing by the late spring and summer of 1906. In fact, Ford produced over 100 model K the month of May, 1906, the only time Ford delivered over 100 model K in one month.

Aerocar also ramped up production, and was delivering cars by the spring and summer of 1906. Initially Aerocar offered one model, a 105 inch wheelbase with the 20-24 hp Reeves air cooled motor Malcomson contracted for back in 1905. However, the writing was on the wall. Aerocar had originally announced a capitalization of $400,000. By the summer of 1906, they announced added capital of $100,000. Malcomson and his team were throwing money into the new marquee at an incredible rate.

By the summer of 1906, Malcomson agreed to a stock sale to Henry Ford and James Couzens, managing the sale of his stock, as well as Charles Bennett and a couple of other investors. This is how the newspapers of the day reported it. Malcomson was quoted saying he sold for "two excellent reasons." One was to devote all his time and effort to Aerocar, including the fact that his return on investment had been "a very handsome figure." In fact, he received $175,000 for all his holding in FMC (including his Ford Canada holdings). I believe he had invested about $7,000 cash, of which he had received several times back in dividends). That's a return of about 25 to 1. Put another way, $175,000 today would be the equivalent of about 4.4 million dollars. Not a bad return for a three year investment!

On the matter of reported bad terms between the two former partners, Malcomson diplomatically "expressed his regard for Mr. Ford personally in the highest terms."

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Later that summer, another reported wrote. It would appear both Henry Ford and Alexander Malcomson were winners regarding the company they started together. Henry Ford would go to become the wealthiest man the world had ever known, putting the world on wheels. The rest is history.

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However, for Malcomson, his troubles had just begun. His air cooled Aerocar was not a good seller. By the summer of 1907 the cars, parts and factory of Aerocar were in receivership. Malcomson bought back the factory and parts for pennies on the dollar, and continued production of Aerocar another year. For 1907 Aerocar added a 20-24 air-cooled roadster, as well as a 40 hp water cooled touring car. Aerocar announced a line for 1908 of essentially the same models, at reduced prices, but the die was cast. Malcomson continued to own the plant, which in about 1909 Hudson moved into.


That would be about all we know of Henry Ford and A. Y. Malcomson, except for one letter presented to Henry Ford years later.

That's next.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by Wayne Sheldon » Tue Apr 13, 2021 7:59 pm

So much more interesting stuff! A lot of honesty and history mixed in the minutia.
Some stuff I have known. Some things I didn't. Always adding more.
Thank you Rob!

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Tue Apr 13, 2021 8:35 pm

Wayne, thank you.

Years later, in 1919, a reporter acted as an intermediary between Henry Ford and A. Y. Malcomson. Below is the transcript of the letter to Henry Ford following the meeting with Malcomson. Click on individual pages to see a better copy. On page one, the letter explains that Malcomson felt he should have realized more from his sale of FMC stock years before. The letter mis-states the amount Malcomson received, reading $75,000 instead of the actual $175,000. He mentions his part in gaining investors for FMC, as well as helping to secure financing for Dodge Bros. too.
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Page 2: continuing with grievances against James Couzens, Ford Motor Company's CFA at the time, Malcomson also mentions how Mrs. Ford was the last to visit his daughter Grace in the hospital prior to her passing. He also went on to explain missed opportunities because Mr. Ford (who at one time gave him a lift) had not followed on investment opportunities for Malcomson.
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The letter essentially goes on, listing grievances, missed opportunities, and the losses he had incurred do to Henry Ford not helping him at different points in his career.

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All in all, quite a strange letter in my opinion. While asking for help, Malcomson appears to chastise and blame Henry Ford along the way. It seems like a strange way to ask for assistance, but A. Y. Malcomson was near the end of his career, and life.
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We'll probably never know what Henry Ford's reaction was. Initially, I thought he probably dismissed the claims. However, after reading some accounts about Henry Ford and his philanthropic side, who knows? His personal secretary for years said in his remberance that Henry Ford would often reach out and help people privately, without going through Ford Motor Company. I guess when your'e the wealthiest man in the world, you can do that.

We won't know. What we do know, is when Alexander Y. Malcomson died a few years later, Henry Ford was one of his honorary pallbearers.

And Ford delayed a scheduled vacation to do so.

That's all I know.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Wayne Sheldon » Wed Apr 14, 2021 3:15 am

I have many times wondered why Malcomson did what he did, in effect sneaking out and forming a competing company and therefore being pushed out of one of the most successful automobile companies of the day, or ever. I think, that this information paints a pretty accurate picture of the man. At least to people with some background knowledge of the human psyche. And a sad picture it is.
In automotive history, William Durant is often referred to as the man that made and lost more real fortunes than almost anybody else! Some people, just have a knack for making deals. Not really a bad thing. But it tends to tread into dangerous territory. They see opportunities, and make deals to position themselves to make that 'killing'. Unfortunately, too many deals, and not enough foundation usually leads to a proverbial 'house of cards'.
Malcomson had a great thing going with his investment in Ford's Motor company. Yet, by his own admission, he was too busy with several other investments to spend much real time securing that foundation that Ford offered. Several remembrances have mentioned how uninvolved he was. His own words "he had never bothered you (Henry Ford) about any business matters". While he builds up his early efforts in getting the company going and securing other investors, it would seem he lost interest after a short time, and began looking elsewhere for other interesting deals. This sort of behavior is common among many such people. Today we would refer to this as having a short attention span.
Underplaying the amount of money he received is another common trait among these types. As is overplaying the perceived injustices. Just as historians must consider history in the context of its time (not in our time where circumstances are quite different!)? Tales from people past also need to be considered, those sources scrutinized for accuracy of opinion. They need to be evaluated for their individual character and not just a simple overview.

Sadly, this is something I know way too much about. My dad was a brilliant engineer. He was known and respected for both power electrical (PG&E used to contact him sometimes when they needed an unimpeachable outside opinion), and subcomponent level electronics (he saved a friend's career and business by finding a design flaw in fire alarm panels that Underwrighters Laboratories and the New York city and state fire commissions had both missed). It is very rare for one man to be good at both those extremes. Unfortunately, he fancied himself a businessman. But he had NO head for business. I got sucked into working in the family business for more than thirty years. They paid me well, and I earned what I got paid. Sometimes they did okay. Sometimes, they didn't do well at all. The business survived for many years because as an engineer, he was great! And they barely survived, because he made too many bad deals (many of them I flatly told him to not take!). It was always assumed that I would eventually take over the company. But he had to do everything his way (I was not willing to be his partner!). And the last five years of his life, he totally destroyed the company.

As I read through these bits, pieces, and notes? I recognize things I had to deal with myself.
Interesting stuff!

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Wed Apr 14, 2021 7:17 am

Wayne,
Thank you for your post. I thought too, the statement in Malcomson's letter about "never troubling you (Ford) about business matters was telling.

I think A. Y. Malcomson was a wheeler-dealer, and the reason he had to help Ford (and himself) finance FMC was because his own finances were suspect in 1902-1903. Other publications write that Malcomson brought his uncle (not sure of the true family relationship between the two) John Gray into the enterprise to provide financial backing. It seems as if there was a sense of arrogance on his (Malcomson) part, believing with a big influx of money (ultimately from his FMC stock profit), he would make a better automobile. The truth turned out to be, the 1906 Aerocar used old technology (1903 built 20 hp air cooled engine) at a time when more powerful (hp to weight ratio) cars capable of higher speeds were in vogue. The only similarity between the 06 Aerocar and Ford Model K was price. The Ford was innovative, with several Ford designed features such as three point shaft drive, gear reduction steering, six cylinder, dual ignition, innovative Ford/Huff designed magneto and other features.

For the same money, the Aerocar was a 20-24 hp car with three speed sliding gear transmission, cone clutch, but with an attractive body including new for the time front fore or half doors.

I thought it particularly interesting (and sad) that Malcomson chided, blamed, and accused Henry Ford for his (Malcomson's) inability to put business deals together, while still "begging" for a handout.

The article below, dated September 3, 1905, reported that A. Y. Malcomson purchased a home valued at $45,000 including adjacent lots (1.1 million dollars in todays money value). Two other automobile personalities are mentioned too, named Metzger and Ford:

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Wed Apr 14, 2021 10:36 am

Reference an earlier post, it looks like Eclipse Foundry produced aluminum castings. Maybe they produced NRS crankcases and/or transmission frames.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by Bud Delong » Wed Apr 14, 2021 10:49 am

I remember reading Ford bought a foundry to make Vandume spelling optional steel. :D Bud.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by DHort » Wed Apr 14, 2021 1:18 pm

boston.jpg
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No house listed at 63 Boston Blvd, but this house is across the street at 70 Boston Blvd.
Only 2 miles away from the Piquette plant, and just off Woodward Avenue.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by TXGOAT2 » Wed Apr 14, 2021 2:54 pm

Best not to change horses in mid-race when you're riding the winner......


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Re: Early FMC - let's talk A. Y. Malcomson

Post by R.V.Anderson » Wed Apr 14, 2021 3:56 pm

I think Detroit re-numbered the houses many years ago. Malcomson's #63, if it exists, likely has a different number today.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by DanTreace » Wed Apr 14, 2021 4:15 pm

Rob

Super info, thanks so much. While at a nat'l club meeting got to visit the first home of Henry, Clara, and little Edsel at 140 Edison Ave.* .

They had always lived in rental homes up to this time, they bought the lots in an up and coming subdivision for the better to do folks and built this home. Of course it's modest compared to their later estate at Fairlane, but was their home during the Piquette days, as it was near the factory for Henry to be there daily.

Of interest is Henry build little Edsel a workshop above the garage in the right rear of the property, you can just see it on the right. Shop was complete with metal working machines, perhaps he and Edsel played up there when Henry found any time to be home ;)


Fords first home 140 Edison .jpg
* private home, not open to the public.
Last edited by DanTreace on Wed Apr 14, 2021 4:20 pm, edited 1 time in total.
The best way is always the simplest. The attics of the world are cluttered up with complicated failures. Henry Ford
Don’t find fault, find a remedy; anybody can complain. Henry Ford

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Re: Early FMC - let's talk A. Y. Malcomson

Post by George Mills » Wed Apr 14, 2021 4:18 pm

I think RV b right...

If you look at 121 e. Boston...you my have a eureka moment astthat is what 63 became (I think)

Malcomsons ownership became well overshadowed by the next guy that owned it.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Wed Apr 14, 2021 5:02 pm

George, that's what I found when I tried to cross reference it. I think Detroit re-numbered in 1921 (if i read it correctly).

The irony would be thick if it's the same place.............

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Re: Early FMC - let's talk A. Y. Malcomson

Post by George Mills » Wed Apr 14, 2021 5:21 pm

I’m pretty sure there is a dribble Drabble that exists where A Y M sold that very house. You know my feelings about how history wasn’t really bunk to Henry...he had it rewritten or written out! Lol. Interesting to see if your own sleuthing bears out that irony you mention


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Re: Early FMC - let's talk A. Y. Malcomson

Post by OilyBill » Wed Apr 14, 2021 10:16 pm

If you look at the Piquette Avenue Ford plant, just down the street on the next block, at the corner of John R street, was the EMF automobile company plant, that was owned by Metztger. It was there and you could still read the EMF logo on the back of the factory. I took pictures of it when I visited the Piquette Ford Plant on the 1903 Ford Centennial Tour. I understand it burned down in 2008 or so, and the site is now a parking lot.
I am of the belief that A.Y. Malcomsen was cheated out of his share of the Ford Motor Co.
He seems to have been the financial man who had the reputation to support the efforts of Henry Ford, and Ford should have certainly rewarded him more generously. If he had not provided the capital, and co-signed for the Dodge brothers for THEIR factory, there is no way they could have produced the parts needed to support Ford's production plans.
Malcomson owned 255 shares, to James Couzens 25 shares, Multiply what Couzens got by 10, and you have what Malcomsen shoule have received.
His payout from Henry Ford was pitiful.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by FreighTer Jim » Thu Apr 15, 2021 5:41 am

OilyBill wrote:
Wed Apr 14, 2021 10:16 pm
If you look at the Piquette Avenue Ford plant, just down the street on the next block, at the corner of John R street, was the EMF automobile company plant, that was owned by Metztger. It was there and you could still read the EMF logo on the back of the factory. I took pictures of it when I visited the Piquette Ford Plant on the 1903 Ford Centennial Tour. I understand it burned down in 2008 or so, and the site is now a parking lot.
I am of the belief that A.Y. Malcomsen was cheated out of his share of the Ford Motor Co.
He seems to have been the financial man who had the reputation to support the efforts of Henry Ford, and Ford should have certainly rewarded him more generously. If he had not provided the capital, and co-signed for the Dodge brothers for THEIR factory, there is no way they could have produced the parts needed to support Ford's production plans.
Malcomson owned 255 shares, to James Couzens 25 shares, Multiply what Couzens got by 10, and you have what Malcomsen shoule have received.
His payout from Henry Ford was pitiful.

Henry Ford had NO CREDIBILITY after not
once - but twice - squandering away the opportunity
to build his simple affordable car.


Before approaching Malcomson - he attempted
to have Oliver Barthel organize a group of investors
to finish Barthel’s design for a car - Ford offered
Barthel 10% of all future endeavors - Barthel turned
him down 👎

Without Malcomson - FMC would have never
been capitalized - it would not exist today.

If anyone has a serious interest in history
and wants to form their own opinion based
upon - in part - tangible pylhysical evidence ....

Drive to Auburn, Indiana ....
Visit The Early Ford V-8 Foundation Museum.
The first vehicle you see that greets you as you enter 👋

“ Alexander “

The only surviving example of The 1904 Ford Model B.

The 1904 Ford Model B was completed in 1904.
The first test drive review for a publication was in 1904.
The first recorded sale was in 1904.

The Piquette Plant was completed in 1904.

The 1904 Ford Model B was the first production
vehicle assembled at FMC’s first purpose built plant.

For FMC - it featured:

The first four cylinder motor.
The first engine forward car.
The first enclosed rear differential.
The first solid driveline.

Inspired - fought for - brought to realization by
Alexander Malcomson who Henry Ford
despised and - over time - destroyed.

After you study this vehicle in person ... 🙇‍♂️

Take a good look at a 1903 Ford Model A

That was Henry Ford’s car for the people.

Then look at a Model T .... 🤔

Then make your own conclusion as to which
vehicle is the predecessor to The Model T.

Henry Ford fought with Malcomson over
the future of FMC - Ford did not see a larger
car as the direction that the company should
move towards.

So Malcomson formed his own car company
to build a larger car.

Ironically - the market existed for both an
economical smaller car and a larger more
piwerful expensive car that The European Marker
was inspiring in the United States.

The profits from the initial sales of
The 1903 Model A paid for - in part
the design & production of The 1904 Model B.

But Henry Ford would not allow that to happen.

He turned The BOD of FMC against Malcomson
and ultimately forced him to sell his shares
at far below what they were worth.

FMC could have been far more successful
starting in 1904 by venturing into & securing
market share in luxury car sales if Henry Ford
would have allowed it.

I have educated myself & formed my own opinion.

The Disresect - Disdain - Disregard of
Alexander Malcomson continues today
on threads like this that perpetuate the
Speculative Historical Ignorance
of events that actually occurred 🙄

Henry Ford wielded the Power
To Create or Destroy Individuals

To alter events that occurred
To change recorded history
To favor his perspective

FJ
Google “ Model T Transport “
MTFCA - MTFCI - MAFCA Member

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Retro54 » Thu Apr 15, 2021 6:47 am

Rob, we always enjoy your thorough dives into this early history with carefully researched and thoughtful posts. It never escapes me how some of our contemporaries are a mirror to the past. If it seems as though AY has been misunderstood, other posts on this thread could appear to demonstrate the conclusions that the author of this thread has reached.

Cheers

AB

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Thu Apr 15, 2021 8:44 am

I'm not going to spend a lot of time or space on this (that's what I usually write, then 20 posts later..........).

Oily wrote: "I am of the belief that A.Y. Malcomsen was cheated out of his share of the Ford Motor Co.
He seems to have been the financial man who had the reputation to support the efforts of Henry Ford, and Ford should have certainly rewarded him more generously."

A few points to consider, and then some context:

First, Malcomson wasn't "cheated." He chose to sell his stock, which Henry Ford and James Couzens bought (this gets to a Couzens pont later). Why did Malcomson sell? For those reading above, the stated reason to the press were two fold. One, because he thought it was a good price (Detroit Free Press, 1906), and second, because he wished to devote all his efforts (i.e. money) to Aerocar. At the same time he sold his shares of FMC, Aerocar had another $100,000 (or $150, I'll have to look it up again) added to it's capitalization.

A 1903 to 1906 return on cash investment of $5,000 actual cash (or $7,000 according to some sources) by Malcomson, with a return of $175,000 plus cash dividends of about 200% of initial investment, is not, in my book, being "cheated."

Secondly, let's put this in context. Malcomson could not have chosen a more difficult time to expect maximum value of shares for his FMC shares. It was the summer of 1906. Sales were significantly down from 1905. Why? Because two new models had replaced 1905 models B and C (we'll get to that in a moment), and the Model N was terribly behind in production. In fact, by the time of the stock sale by Malcomson, no Model N had reached the public. Only the Model K and a few remaining Model F (plus a few leftover Model B) were sold up to that time. No dividends were issued, and cash flow to the company was limited. Not an easy time for Ford or Couzens to borrow money to fund the purchase of Malcomson (plus a few other shareholders stock, and we'll get to that in a bit too) shares.

But Malcomson chose, decided, went with, the sale. No one forced the sale. And I doubt any lender thought this was a great bargain considering FMC prospects in the summer of 1906, with a model that was highly anticipated and expected to carry the company not even on the market. And car sales then occurred in the late winter and early spring, because buyers bought cars primarily for summer use.

Now, fast forward several years. James Couzens bought some of the liquidated stock in 1906, adding to his shares. He continued as essentially CFO for the next decade and a half, overseeing the immense advances made by Ford Motor Company. No one, including Ford, Malcomson, Couzens, Dodge or anyone else could have foreseen what would happen in the future in 1906. Henry Ford became the wealthiest man the world had ever known. Couzens, the Dodge brothers and the other investors realized millions, instead of hundreds of thousands of dollars. They also risked their initial investments, staying with the company in 1906, through the financial recession of 1907, and through the development and again, delayed production of the Model T in late 1908. They stuck with Ford. And they were greatly rewarded, for both their sweat equity and initial investment.

I bought a farm several years ago. I had farmed it for several years, and the landowners told me they were going to sell the farm. I asked them how much, and they said they would have it appraised, and I could purchase it at that price. Otherwise, they were going to hire a realtor and get the best price available on the market, minus commission. I agreed to the appraised price. I was a relatively new farmer, and had virtually no equity to use, so securing a loan to buy a farm was tough (and interest rate high). But, I knew if I didn't buy it, I would no longer be able to farm it, and lose the sweat equity I had put into it, making it a better piece of property from improvements, as well as the annual income the farm provided me and my family.

Several years later, land prices began to rise dramatically. I was reaching an age, and had developed another business, to the point where I knew my farming days were mostly in the rear view mirror. A friend and neighbor offered me twice what I had paid for the farm. It was a little below fair market price, but he also let me have a five year contract to pay him rent to continue farming it. Like Malcomson, I could have chose to make, or not make the sale. However, like Malcomson, I had other places to put the money (including old cars...... :D ), so I made the sale.

Fast forward to now. The farm I sold has more than doubled again in value, but I had sold it. Unlike A. Y. Malcomson, I do not regret my sale. I was not cheated. In fact, coming from a dirt poor farming background (pun intended), I am still thrilled that over a few years, I doubled my investment, and was able to continue farming a piece of ground I really liked for a few more years.

Do some of my neighbors think I sold too soon? Probably. Do they think I was "forced" by the bank or lenders to make the sale? Maybe. Regardless, I made the choice, and knew at the moment I put my signature on the contract, that I would never look back. And I had money in the bank.

Now to "Alexander," the mis-named Model B. First, there were no 1904 Model B. Model B, and C and F, were 1905 Models. Model B and C were the first on the market, beginning in late October, 1904. By January 1, 1905 about 50 Model B had been delivered as well as several Model C. That doesn't make them "1904" models, any differently than there are no 1908 Ford Ts, although a little over 300 were delivered before January 1, 1909. Ford, like all automakers of the time (and to this day) announced models during the previous year, and often deliver them in the late summer, fall and early winter of the preceding model year. At the time, Ford model changes roughly coincided with the Fiscal Year, October 1 through September 30th of the following year.

Ford produced 500 Model B. The board of directors originally contracted for 250 B, then a month later (Ford BOD minutes) upped the number to 500. The B sold well, and most were sold by the end of 1905. A few were sold in FY 1906 and 1 or 2 (memory..) in FY 1907. I believe about 900 Model C were sold too. Interestingly, during 1905, FMC reduced the cost to dealers of two models due to agent/dealer complaints of poor sales (Board of Directors minutes). The two models that weren't selling? Models C and F. Not Model B. This speaks volumes to me, but that's just me.........

Probably last (one never knows, on these rants), credibility. I'll give Henry Ford credibility over any one reminiscence, particularly during the early years of FMC, every time. When I read (and reread) Oliver Barthel's reminiscence, it reminded me of Sorenson's book. They both seemed to write (or record, in the case of the reminiscences) that they were the primary driving force behind Ford Motor Company, and Henry Ford's success. In both cases, I'm not buying it. In Barthel's case, he wasn't"in the room" during most of the events he describes. Much of his reminiscence is a history of early Detroit automotive history, available in many versions from many authors. What his reminiscence, when combined with Sorenson's book, other period books and articles do, is begin to weave the many layers of fabric that make the story of Henry Ford, A. Y. Malcomson, John and Horace Dodge, James Couzens and the many many people who made Detroit the automotive capitol of the world, and Ford Motor Company the greatest auto producer of the first part of the 20th century.

There is one other "sleazy" aspect to Malcomson's stock sale I'll get to later, I need to re-research it first.

These are my opinions, based on what I know, and think I know, from information gleaned from this site, Early Ford Registry forum, period publications and published materials. I reserve the right to be completely wrong.
Respectively,
Rob

I've almost never said something I thought, or knew to be wrong. However, over time, I've learned that I often say things that turned out to be wrong................ :shock:


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Re: Early FMC - let's talk A. Y. Malcomson

Post by R.V.Anderson » Thu Apr 15, 2021 10:49 am

Personally, I'd like to know why, since "...he (Malcolmson) was largely the author of his own expulsion" (Nevins) due to his involvement with starting up Aerocar, the Dodge Brothers weren't also asked to resign when they started building their own car out of their Ford dividends about 10 years later.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Thu Apr 15, 2021 11:06 am

This is something I've had in the back of my mind for some time, but have not really fleshed it out before. As mentioned above, Charles Bennett, one of the original 12 FMC investors, is also one of the many Reminiscence authors on file at THF. It's also good to note here that several unpublished Reminiscences are available for viewing at Benson Library, THF, but are not online. The reasons vary, but ultimately it's because the author/subjects of the reminiscences did not sign off on them (some passed away before final drafts were typed and signed off on).

A. Y. Malcomson reportedly received $175,000 for his shares of FMC. What I'm not sure of is, what did that sale ultimately involve? As Malcomson states above in his 1919 interview and subsequent letter to Henry Ford, it included his Ford Canada stock. I think it may have also included Charles Bennett's stock, and possibly Fry, and maybe Woodall's shares. If so, the sale may have been for 355, or possibly 365 shares. Regardless, for a commitment of $100 per share, or (255 shares x $100) 25,500, plus the purchase price of Bennett's shares, plus (possibly) Fry and Woodall's shares, Malcomson received $175,000. I'm not sure at the moment how many shares of Ford Canada stock Malcomson held, but I don't believe the number was significant, and I know in 1906/07 Ford Canada shares were being publicly traded for about $10/share. Not significant in this argument.

I mentioned above Malcomson's "commitments) of $25,500. He actually put in no money, other than what he had spent up to the time of incorporation (he and Ford were already partners) in 1903. Both Ford and Malcomson received 52% of the shares for work, funds and patents contributed. They split up these shares equally, at 26% each, maintaining majority control as equal partners in FMC. The other investors provided the cash that made and kept the company solvent.

Things I don't know - maybe someone reading this may help? When a "commitment" is made in a stock issue, were Ford, Malcomson and the other investors responsible for the total amount of stock value? There was $100,000 of stock issued when FMC incorporated. However, I believe only about $24,000 - $28,000 was actually available in cash. Historians recount that FMC was down to just over $200 of cash on hand when the first car was sold. Did that mean the company would have folded had the first sales not been made, or would have simply meant the remained of the "capitalization" would have had to be paid in by the investors?

Anyway, Malcomson sold his FMC holdings in the summer of 1906 for $175,000. If he held Bennett's stock, plus one or two others, that would be included in the value he received. If he held Bennett's, Fry's and Woodall's stock, that would have been a total of 365 shares. For %175,000, that's almost $480 per share. Quite a windfall. All for an initial investment of $5,000 - $7,000. Plus, of course, what he paid Bennett and possibly the other two investors. So, did he pay them what he was to receive from Ford and Couzens? Or did he possibly create another windfall for himself? Below is what Charles Bennett said in his recorded Reminiscence:

2F33EF98-971B-4735-95E9-D03BEB24B91C.jpeg

This portion of the reminiscence regard Bennett arranging a meeting between Henry Ford and William Durant in regard to Durand (General Motors) purchasing Henry Ford's interest in FMC. During this portion of his reminiscence (Bennett had already said he sold his stock to Malcomson in 1906, because Malcomson told Bennett it would give him (Malcomson) greater bargaining power as he was fighting FMC regarding his leaving the board). Bennett reports receiving only $35 per share. Earlier he had reported receiving back more than he paid in for his FMC stock. Is it possible Malcomson played the other small investors he had been so concerned about in his letter to the FMC board of directors? If so, a little duplicity by Malcomson. It's something that is worth investigation for a serious historian. Anyway, another mystery from the first days of FMC.
(Charles Bennett Reminiscence, property of THF, all rights apply)

E47E11D2-A64B-4BE8-867A-FF3E4433533D.jpeg

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Re: Early FMC - let's talk A. Y. Malcomson

Post by George Mills » Thu Apr 15, 2021 11:10 am

Actually Rob, I for one would say you're on the trail...and the sniff is good. Time to see where it goes.

I'll share this...for most of my life I was a Ford-a-holic on the researched learn thing. I read everything there was to read in print, believed most of it, investigated further by finding what were Benson Ford Fellows and chatting them up and reading their own thesis and publications (Thats where I got the sniff that part of the X story does actualy exist in hard copy) . I searched for the Dodge Brothers litigation against Ford due diligence files that were donated by the legal firm to the Detroit Free Library---hoping to find a snippet of a file that magically had fallen from Fords own files through the later years...(that was a total waste of time...seems that somehow the Detroit Free Library claimed eventually to no longer hold those holdings complete...literally tons of copies of everything in FMC archives from day1 to the breakup were in the litigation file, maybe even those missing original invoices...and while never proven for sure, it seems it was suggested to me that somewhere along the line they had made their way to a certain 'institution' and I don't think it was Chrysler!) To the best of my knowledge, none of these files have ever surfaced again.

Then my wife decided that my Ford work was done, had to be done, she was afraid we'd move to Dearborn in retirement and I would head off to The Henry Ford and archives daily for a full day as if working there for the rest of my days. After all, I also had what is called an active 'stack pass' (something doctoral students have to get in and out of other institutions archives)...she decided that would NOT be the life for us/me! Then when our oldest son signed on as a prime corporate sponsor for Dearborn Days she really got in a tizzy as she feared I'd just go to 'work' for my son and take a room in the corporate townhouse..Fair enough...

So...in her infinite and oft proven wisdom, she also started sending me all the background published 'stuff' of equal proportion on Olds, GM, Dodge and a few others. WOW, the power of the pen! Many Ford factoids actually may have had a life of their own since these other company missives say things in different context or outright dismissal.

As with your K research...a thorough whitewash of the K experience for FMC has obviously been in effect and in some respects I believe it was systematic.

I think A Y was an investor who was not an emerging capitalist...and his reasons for doing anything were simply because he was a free-lance investor subject to the whims of his mind on any given day. Sort of like a today buying lots of bit-coin during the first week they came out on a just because/sounds good thought, finding out it is worth some 40,000 times what it was as your basis, having the world Bally-ho that it won't stop at until over 60,000 times and then just kicking back and thinking...40,000 is really good enough for me. I'll cash in and go play somewhere else. Not to get ahead of your story...but if you listen to the Ford folks..A.Y. dwindled away to nothing if not actually bankrupt (true), had to unload Aero Car fixed assets to Hudson just to survive the liquidation experience, and...if memory serves me right, after all that, by the time he died somewhere a decade and a half later...his probate was in excess of 2 million when he died! Yeah, fascinating stuff, full of rabbit holes to chase..often unanswered, but fun! Keep going!

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Thu Apr 15, 2021 11:11 am

R.V., I think it's important to consider, Malcomson was immediately asked to resign his Board of Directors and Treasurer position with FMC. He, like the Dodge's, could not have his stock taken away or devalued due to starting another competing automobile interest. And, he was not precluded from receiving dividends (although there were none during the first half of 1906, because of dismal sales, again due to production delays of the company's flagship Model N).
Just my guesses,
Rob


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Re: Early FMC - let's talk A. Y. Malcomson

Post by Dollisdad » Thu Apr 15, 2021 11:24 am

Great read Rob.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by Bud Delong » Thu Apr 15, 2021 11:59 am

I think the trouble with the Dodge Brothers was after they sued Ford about the royality's un payed when Ford wanted to use the money to build a tractor plant?? I think the Dodge Brothers were dead before Ford bought off their Widows?? Bud.
:oops:


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Re: Early FMC - let's talk A. Y. Malcomson

Post by ModelT46 » Thu Apr 15, 2021 12:19 pm

Henry bought out the other stock holders in 1919 after he said he was thinking of leaving the FMC and start a new company. The Dodge Brothers died in 1922(21?). The widows sold the Dodge Co. after that time to an investment group. Chrysler Co. both Dodge later on. There was a relationship of the Dopge Co. in the 1920s to the Graham Bros truck line.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Thu Apr 15, 2021 12:26 pm

Thanks Tom. Bud and Darel, good info, thanks.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by R.V.Anderson » Thu Apr 15, 2021 1:24 pm

Bud, you are right; the DBs sued in 1916 after Ford withheld, for the new plant, the dividends that the Dodges were counting on to use for their own plant. When they won, Henry resigned, saying he was going to build up a new car to compete with the Model T. Of course it was all hokus, to make the Dodges and the other stockholders more willing to sell, and at a lower price. It worked, but not quite so well with Couzens, who apparently "didn't scare so easily" (R.L. Lacey) and held out for a higher price, which he eventually got.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by ModelT46 » Thu Apr 15, 2021 4:10 pm

Cousins was on good terms with Henry according to some history writings He was well off as a result of the dividends FMC paid.


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Re: Early FMC - let's talk A. Y. Malcomson

Post by KLTagert » Thu Apr 15, 2021 6:19 pm

Rob and others - absolutely fascinating information. I've read numerous Ford and associated books (my library is about 180+ at the moment) and I continue - but loved reading the takes posted here ! Keep going - it adds to my discussions at shows with folks.

Kathy T

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Fri Apr 16, 2021 9:35 am

Thank you Kathy. Sounds like you have quite a Ford library.

After reviewing Charles Bennett's Reminiscence again, I was struck by his dislike for James Couzens. One thing I've learned from the Reminiscences I've read, there are many different views of people, motives and even "facts" presented by the different personalities represented. I guess that shouldn't surprise me. When I read a "fact" or nugget from a particular Reminiscence, I try to verify, or find additional information that confirms a claim.

Anyway, this has been an enjoyable subject to review and present. A few parting pieces.


This advertising appeared in the April 22, 1906 New York Sun newspaper. Both Ford and Aerocar advertised their new models for 1906. The first Model K were delivered in April, and by June deliveries rose to 100 in a month. I don't know what Aerocar's early production/deliveries were, but we do no Aerocar only took a little over 300 of the Reeves air-cooled motors between 1906 and 1908. Aerocar added a larger 40 hp water-cooled touring car and roadster to the 1907 and 1908 model line.

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Closeup of the two ads:

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By August, 1907, Aerocar had burned through over $500,000 of capitalization, and was placed in receivership:

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In a questionable move, Malcomson bid back the plant and owned Aerocar outright. Former investors later sued Malcomson for this move.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Wayne Sheldon » Fri Apr 16, 2021 4:09 pm

I like the Aerocar advertisement, "Aerocar, built by practical men". Perhaps a jab at his former boss's wild excursions into racing and claims of going to build cars in numbers never thought possible?

The 'legal notices' should carry some weight! Sounds like Malcomson was doing the kind of financial shenanigans he would accuse Henry of doing! Another common human failing/characteristic, is people tend to accuse others of the 'less than honorable things' that they themselves do. Liars almost always think everyone else lies. Cheaters almost always think everyone else cheats. It follows that someone that believes another has shuffled moneys around and cheated him of his rightful rewards may in fact think so more because he would do that than that the someone else actually did?

There are seldom two sides to every story. More likely there are dozens of viewpoints based on several sides. Sorting through them all and finding an ultimate truth is seldom a simple task. One must also remember that most viewpoints get retold and altered over time.

NO ONE MAN made the Ford automobile or its ultimate success! Not even Henry Ford. There were hundreds of people involved, many never even actual members of Ford's empire. Do not forget Thomas Edison, who employed and inspired Henry, and eventually fired Henry from Edison's General Electric in order to push Henry to seek his real potential (maybe more legend than truth?). The two previous attempts to found a 'Ford' company both built experience, and early developments. Numerous bankers and investors before and during the earliest days of the Ford Motor Company, as well as architects and other engineers. Henry studied technical magazines from all over the world seeking new developments, written and published by unknowns and famous alike.

In the end, it was Henry that had the vision, and put in the most hours, and for the most years, that did it!

Henry lived a long and extremely productive life! If one chooses to take the worst things he did and said, and paint a picture of an evil controlling and vindictive man? One can do so. But that picture does not look much like the man he was for most of his life. Not like the man that dreamed of building millions of cars for the masses. Not like the man that paid the highest wages in the automobile manufacturing industry of the time (which nearly all other investors and advisers said would destroy him).

Henry Ford was the one man that more than any other made it happen. Malcomson could have been replaced by any of a hundred other well connected banker/investor men. There were in fact hundreds of investors involved in hundreds of companies trying to get rich with that new thing called the automobile. Most of those investors lost more money than they made. Maybe Malcomson didn't do so badly from Ford after all.

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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Fri Apr 16, 2021 5:36 pm

Wayne, thank you for your insightful posts. This has been good thread for me to re-evaluate materials spread around my digital filing mess. The high point for me when trying to understand Alexander Malcomson was the letter sent to Henry Ford with his requests, only a few years before his death. In the letter, he took turns requesting Ford's generosity, while at the same time, blaming and cajoling Ford for his (Malcomson's) misfortunes. He even went so far as to accuse Ford of costing him the money he might have made had Ford loaned him money (when apparently no one else would).

In the same vein, it gave me an appreciation for Henry Ford I had not held before. In Malcomson's own backhanded way, he mentions how Mrs. Ford was one of the last to visit is dying daughter Grace's bedside in the hospital, as well as pointing out that Ford gave him a ride shortly after. I should have done this earlier, but i became curious when this occurred, assuming it was probably years after the Ford Malcomson split.

What I learned today surprised me. Malcomson's daughter Grace passed in early 1908. These two men were still competitors and the break and stock sale still fresh when Clara Ford was visiting Malcomson's daughter, and the impression it left on Malcomson lasted through to the 1919 letter.

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While A. Y. Malcomson claimed to be concerned with the smaller Ford Motor Compnay investors in his letter of response to the 1905 request that he resign from the board seems to have not been a factor to his own investors in Aerocar. It turns out Aerocar sold outside stock in late 1906 and 1907. My guess is as sales were a bust, the cash strapped company had to generate capital, and what better way than to offer stock.

The articles below include the sale of 250 shares of Aerocar stock in increased capitalization of the company to $750,000 in late 1906:

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As we know, by late summer 1907 Aerocar is bankrupt, and up for sale. Malcomson buys back the plant, parts and un assembled cars. Then announces a large auction to dispose of 1907 cars. For 1907 Aerocar offered three models, the same 20 hp touring that was advertised for $2800 in 1906 was now $2,000. Plus a $2,000 air cooled 20 hp roadster and new 40 hp water cooled touring for $2750:

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My guess is Aerocar stockholders were in for a bad surprise, as were most of the original investors. But Malcomson was set to begin production on the 1908 Aerocar. For 1908 the lineup stayed the same, with prices coming down again:
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Re: Early FMC - let's talk A. Y. Malcomson

Post by Rob » Fri Apr 16, 2021 5:44 pm

Again, by the summer of 1908, Aerocar fails. This time, creditors and stockholders come after Malcomson.


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Interestingly, he appears to have maneuvered to hold a major portion of shares, with little cash investment, similar to his initial investment years before in Ford Motor Compnay. However, the results weren't the same. Below is an excerpt from the article above:

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He did retain ownership of the Aerocar plant, and in 1909 rented it to Hudson.

That's about all I think I know about A. Y. Malcomson and his Ford and Aerocar years.

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