Ford takes control of his company
Ford Motor Co. had moved to a larger factory on Detroit's Piquette Avenue at the beginning of the year. It also had moved upmarket.
At Malcomson's insistence, Ford and his associate, C. Harold Wills, had designed the Model K, a luxury touring car with a six-cylinder engine. Industry sales were growing faster for more expensive cars than for cheaper models, and a pricier product meant higher profits per unit.
But the Model K failed. Ford Motor's profits dropped one-third from the year before. Henry Ford and James Couzens, whose skills as the company's business manager had become invaluable, determined that their erstwhile financial angel had to go.
Their plan was simple. Ford Motor's engines, chassis, brakes, gears and axles were assembled by the Dodge brothers and shipped to the Ford plant, meaning the Dodges profited from both their supply contract with Ford and their investment.
If Ford were to set up its own manufacturing operation, it would help shift the company to high-volume, low-price production.
The shareholders who supported Ford and Couzens could drain the profits from the existing company, funneling them to the new entity by raising the prices Ford Motor had to pay the new company for its parts.
Malcomson wouldn't be invited to the party.
On Nov. 22, 1905, Ford Manufacturing Co. was incorporated. Malcomson went ballistic. Typically, his money moved faster than his brain. He promptly announced the formation of Aerocar Co., and began building a factory intended to turn out 500 touring cars a year.
Now he, and not Henry Ford and Couzens, had been cast as the villain. On Dec. 6, a resolution proposed by Horace H. Rackham and seconded by Henry Ford called for Malcomson's resignation as company treasurer and director. He refused. But by May, Malcomson was negotiating terms, and in July, he sold his shares to Henry Ford for $175,000.
Four other stockholders went with him, including Albert Strelow, who sank his profits into a British Columbia gold mine that went bust. Years later, he was seen in a Ford employment office, seeking work as a laborer.
Under Ford Motor's charter, stock had to be sold to existing shareholders. When the dust settled, Couzens had 109 shares and Ford had 585. John S. Gray, who owned 105 shares, died, and Ford was elected to succeed him as president. Ford's control over his company was then absolute, remaining that way for four decades.
Ford got a ride home with an employee on the day of Malcomson's exit. "This is a great day," he told the man, a mechanic named Fred Rockelman. "We're going to expand this company, and you will see it grow by leaps and bounds. The proper system, as I have it in mind, is to get the car to the multitude."
You can reach Jeff Mortimer at (Unknown address).