MTFCA Forum

I'm making a timeline and comparing the activities, Ford Motor Co. related, of the two major shareholders, Henry Ford and Alexander Y. Malcomson. Of the board meeting meeting minutes I have (1903-1906 when both men were involved with company), I've found one instance where a director made a motion, and not only had the motion fail (infrequently occurred), but did not receive a second. The one instance this occurred was the August 22, 1904 FMC board meeting. All directors were present, and the motion was "the output for next year".

As written by Secretary James Couzens in the minutes page below, "it was moved by Mr. Malcomson that an order be placed with Dodge Bros. For 2,500 or our small cars." There are a few things to unpack here. Both Dodges were at this meeting, although only John Dodge was a board member, and could have seconded, and voted for Malcomson's motion. Also, the term "small cars" is used. Model B was introduced a few weeks later. My opinion is "small cars" refers to upcoming FY (Fiscal Year) 1905 models C and F.

The motion "was lost" because there was no second." I've been a board director on a multi-state corporation board of directors, and we very seldom made a motion without a second, and usually didn't make the motion if we weren't confident it would pass. On occasion a motion may not pass, because additional discussion brought information to light we had not discussed prior, but this was the exception rather than the rule.

The point being, if A. Y. Malcomson exercised the control over the board of directors, and direction of Ford Motor Co., as many historians write, it surprises me he (Malcomson) was unable to garner a second to his motion with all directors present, let alone receive the support to pass his motion. And this was an important motion, determining the upcoming production for FY 1905. The second part of this is, he was was the one pushing for 2,500 "small car" production. In spite of the Dodge's business interest in production of several components for future models C and F, including motors, Director John Dodge didn’t offer a second for an output of 2,500 machines. Furthermore, the Dodge's then "made a proposition to furnish us with 2,000 rigs....". Mr. Anderson moved and Henry Ford seconded this reduction to 2,000 "rigs."


Is it possible Malcomson's "control" of the company, and production, was less than many historians suggest?

As always, much to learn.
Cheers,
Rob

Are there records of any discussion on this topic, Rob ? I know discussion is supposed to follow the motion second, but in this case maybe there was some prior discussion. I'm wondering if the lack of support for Malcomson's motion was due to some sort of show stopper, such as lack of funds for the purchase. Something that Malcomson might not have been aware of.

Rob, Your hunch that Malcomson was less in control than many historians suggest seems right on. This had to be very disappointing for Malconson. Next, consider the timeline when Malcomson begins plans to make his own car. Compare this failed motion by Malcomson on August 22, 1904 to when we first see action by Malcomson to start his own company to make cars.

This is wonderful automotive history!!! Thank you for persuing it so well... BTW, hope you're getting over your Covid....

Keith

Rob,

Great sleuthing, good ideas. Just as a sounding board, I'd offer what could be a different reason? I even get to use politics on the forum...lol.

From just before 1900, the Progressives were gaining momentum in what today would be called 'game changer' ways. Ways that...um...were producing a potentially untenable economic 'bubble' but to the Progressives saw no end in sight!

I would think that AY just might have been 'bullish' on what 2005 might bring when he made the motion for 2500 small cars (at a time other historians might say it was he who wanted the K and not Henry)...but I can find nothing on his political affiliation. The Dodge Brothers on the other hand were died in the wool old Democrats, a party predicting in the press of the time that the bubble might burst.

In actuality, the long, long bull economy turned screaming bear in... end 1904... as the below chart shows.

Was the choice to not 2nd AY motion just everyone else deciding that the winter over was going to be tight in the new year, with monthly production by June back to normal? Perhaps your sleuthing trail will yield more insight,

Thanks for the good comments guys. I'll go one by one and give me opinions and impressions so far. One thing I've found when researching "history" is, it's a moving target. Like many things in life, once I think I know something.......

Dick, besides Board of Directors (BOD) minutes, the "Reminisces" produced by Ford Motor Co. during the 1950's seem to be my next most fertile information ground. I've not found much regarding day to day (or week to week) operations other than the minutes. And, they were written "in the moment" instead of 50 years later. Furthermore, like period news articles and advertisements, they weren't written/constructed to influence people reading them 50 to 100 plus years later. They were constructed "in the moment." That doesn't indicate accuracy, but it does reduce lack of reliability due to later bias and perception.

Kieth, thank you - yes, getting over COVID. I should be able to end quarantine today, if I under CDC guidelines correctly. I'll have another post focusing in on 1905, when things really come to a head regarding Malcomson, Ford and the beginning of their separate paths.

George, as always, you bring interesting "macro" perspectives to this story. I'm constantly trying to put things into context and perspective when researching/reconstructing history. It's easy to assign values and motives to people we really didn't know. While this help us try to understand them, I believe it also may do a real injustice if our perceptions today are incorrect. I"ve noticed many authors assigns comments and quotes to these figures that simply didn't happen or weren't true. I think for some authors, they believe it gives them credibility. The trouble is, future authors and historians latch onto these "facts" and they indeed become accepted history, even though an event or statement never occurred. An example is "Malcomson fell in love with the six cylinder." This line appears in a few well accepted (and later written) history's. Trouble is, Malcomson never had an interest in the "six cylinder" motor. He didn't choose one for his "dream car" when he contracted for Aerocars in late 1905 (more on this in the "1905" segment). And, when he added a 40 hp Aerocar touring car for the 1907 model year, it was also a 4 cylinder. Yet, this statement lives on, and is passed along by successive writers.


As early as 1902, A. Y. Malcomson is seen racing his Winton, in this example (below) against Henry Ford's former racer, Sweepstakes. By this time, W. C. Rands (tops and sundries) has purchased Sweepstakes and is racing it in the Detroit area:

Later, Malcomson races a Ford Model A in 1904. Frank Kulick is also racing during these Detroit races, as well as Barney Oldfield and other well known drivers and automakers (Event 2, finishing 3rd):

Meanwhile, 1904 has been a tremendous growth year for FMC. Dividends paid through the summer of 1904 equal 98 percent of capitalization. That works out to about $25,000 for both Henry Ford and Alexander Malcomson, if my math and memory are correct (I believe capitalization was $100,000, so dividends of of 10, 20 and 68% received by summer of 1904 should equal about this much. I welcome fact checking). $25,000 for Malcomson's actual initial investment of $7,000. Not a bad one year ROI..... $25,000 in 1904 was the equivalent of about $775,000 inflations adjusted today.

My guess is, all the investors should have been thrilled. Piquette was in the process of being built, and 1905 promised to be a big year, with three new models replacing Model A.

One last thing. In October, 1904, A. Y. Malcomson purchases a piece of property, apparently for a future coal yard. It's a long narrow piece of empty property, and ideal for a coal yard, with railroad access.

Or.............

To add to George M's historical context comments, I should point out that 1904 was an election year. Just ten weeks after the Malcomson non-vote meeting, an election was to be held. Teddy Roosevlet had assumed the Presidency in 1901 as the result of the assassination of William McKinley. The election of 2004 would determine whether TR should be elected in his own right. With that background, I'm sure there were lots of strong opinions as to the economic future of America.

Dick,
I looked into the recessions between 1900 and 1920, but I don't know how they did, or didn't affect the burgeoning (ballooning) automotive industry. The industry certainly grew, it appears every year, between 1903 and 1906 when Malcomson and Ford were partners.

Driving on, I wanted to post this, as I believe it will come into play when I move into 1905 (yes, sadly, theres more...... ).

While this thread focused on 1904, I think this article from 1903 will be important later when I bring in an "eye-witness" to the events as they unfolded between Henry Ford, Alexander Malcomson, and Ford Motor Company.

As of April, 1903, Detroit newspapers reported that A. Y. Malcomson was the largest coal dealer in both Detroit and Toledo, OH. By the time Ford Motor Co.. sold their first car, Malcomson was a busy man. 1905 will prove a pivotal year for the two men we are focusing on, and for the company they built. Items I hope we take away from 1904 include the immediate success Ford has with their first model. The company has already paid several times over the investors initial investments. In fact, several investors didn't make the full investment amount they pledged, until dividends were paid out.

As of 1903, Malcomson is the largest coal wholesaler and retailer in two growing major midwestern cities, Detroit and Toledo. As we'll see in 1905, he is a busy man, with business interests in several areas:


Malcomson's business advertising for 50 wagon teams for coal delivery in Detroit:

Interesting to me, is another connection to another car.
My dad bought a 1927 Paige 6-45 to be the great family project when I was fifteen. Unfortunately, my dad was big on ideas, but not so great about following through with them. So the car became one of those way too many projects begun but never finished. Eventually, it became mine, however family and other demands had me in no position to finish it either. I did some years ago make a bit of good progress on it, however, in spite of the fact I have restored nearly a dozen other cars, the Paige still sits less than half done in my garage.
All that to explain my interest in the history of the Paige automobile, which ran alongside the model T Ford! Barely hitting the market in 1908 with a 1909 model, Paige Detroit was manufactured into 1927, when they sold out to the Graham Brothers and became the Graham Paige.
I knew of Malcomson's being a coal merchant, and often wondered if there were any relationship to Harry Jewett, who for most of Paige's very successful years was president of Paige Detroit. Harry Jewett was a major investor in the beginning of the Paige automobile, having made his first major fortune as a coal merchant! And as was common among wealthy men invested money into an automobile company he knew little about (a personal friend recommended it).
Could this be the same Jewett in Jewett, Bigelow & Brooks? I know Harry Jewett continued working as a coal merchant for a few years beyond that 1903 company sale? While traveling around the country meeting with his coal customers, Harry Jewett would check on the local Paige dealers. They had formed a sizeable dealership network very early. What he found upset him greatly. Unhappy dealers and unhappy customers, due to poor quality manufacturing and design. Less than two years into production, Harry Jewett took over a stockholder's meeting, and announced loudly that the company was already bankrupt and didn't yet know it!
In about another year, Harry Jewett took over the company as its president, and corrected all the manufacturing, design, and quality issues. Already independently wealthy, Harry Jewett ran Paige Detroit until the decision by the board to sell out rather than replace Harry Jewett as president when he decided he needed to retire. From 1912 into 1927, Paige lost money in only one year! The same year in the post-war recession that Ford lost money on the model T! Paige Detroit was also one of the highest dividend payers in the automotive industry through all those years. Many years paid near hundred percent dividends to the stockholders. Very few companies in the automotive industry could make that claim, other than a few longtime manufacturers like Studebaker, Franklin, and Columbia/Pope.
By 1927, Harry Jewett decided he needed to retire, effectively for the second time. He had made a fortune in the coal markets in the 1890s, semiretired. Then with Paige Detroit, he made another fortune! He was well in his sixties, declining health, and most of the board had also become wealthy following his lead. When he decided to retire, nobody wanted to fill his shoes. So they decided to sell to the Graham Brothers (flush with cash from their settlements with the Dodge sellout!).

I just dug into one of my books. Yes, Harry Jewett's coal company was Jewett, Bigelow & Brooks.
Interesting connection to Malcomson and Ford.

Wayne,
I’m often surprised how Detroit appeared to be a city where everyone knew everyone else. As this story rolls on, that makes the moves made by Malcomson to form a new auto company that much more surprising.

I hope you get to that Paige someday.
Cheers,
Rob

Wrapping up 1904. As Ford Motor Co. and Henry Ford are completing their first full year in business, sales of the 10 hp Model A have gone well, and the company is growing and profiting. The Board, and shareholders have approved building a new factory at Piquette, and the future looks bright.

Meanwhile, the point of this last post for 1904 is to demonstrate what is occurring with Alexander Malcomson. As Henry Ford, James Couzens and C.H. Wills grow the business and design the three 1905 Ford models, Malcomson has his hands full too. Below are excerpts from Detroit newspapers reporting on Malcomson and his coal interests. Below, he is appointed agent for a large coal wholesaler for Michigan and Canada:

In February, 1904, his area is expanded to include Ohio and part of Indiana:

Malcomson also faces labor disputes and walkouts:

Below, he picks up coal contracts in Toronto:

Alexander Malcomson is wrapped up with labor issues, contract disputes, law suits, and overall management of the largest coal retailer and wholesaler in Ohio and Michigan, as well as a vendor for parts of Canada and Indiana. It would appear he's a busy man. This will come back at the end of this series.

Next, I'll go to a new thread and move on to 1905.