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  < Back to Table Of Contents  < Back to Topic: Automotive … Planes and Trains Too

article number 234
article date 05-14-2013
copyright 2013 by Author else SaltOfAmerica
Henry Ford II, Creates a New Ford Motor Company, 1946
by Keith Sward
   

From the 1948 book, The Legend of Henry Ford.

1

THE FOUNDER of the Ford Motor Company never came to grips with the New Order, however, for the republic survived. But before this triumph at arms had been won, Henry Ford was overtaken by a misfortune of a more personal nature. He was stricken in 1943 by the untimely death of his only son, Edsel. To prepare a successor, the octogenarian manufacturer turned in haste to the eldest of his three grandsons, Henry Ford II, then in the service of his country as a Navy ensign, who was released from military duty within a matter of weeks. This young man, along with his mother and Harry Bennett, straightway took a seat on his grandfather’s board of directors. He was likewise promptly installed as executive vice-president of the Ford Motor Company.

Pushed to the top overnight, young Ford had many well-wishers. He had as well a number of assets which seemed to fit him for his role as heir apparent to the largest family-held corporation in existence. From all reports, Henry Ford II was something like his father Edsel, on the quiet side, easy and pleasant of manner. He was looked upon in industry circles as a moderate, or even a liberal, who would very likely prove to be “Edsel’s boy” rather than a third-generation copy of his grandfather.

Edsel Ford, to be sure, had never had a chance during his lifetime to show his wares entirely on his own. This much was clear about his make-up, however. In his young manhood, Edsel had had no difficulty getting along with the partners whom his father shed. He had never endorsed later on the school of management personified by Liebold, Sorensen and Bennett. So long as his father remained in control, he had been unable to bring about any basic changes at the Ford Motor Company.

On a number of occasions, however, Edsel Ford had quietly pushed in that direction. He disapproved his father’s anti-Semitism in the 20’s. By contrast with his father who opposed charity in any form, the younger Ford had been for years one of the largest donors to the Detroit Community Fund. Had Henry Ford listened to his son, he would have avoided the languishing of the Model T and the subsequent outmoding of the Model A.

The son had looked askance at the personnel policy which caused the loss of so many of the company’s more talented executives. It was Edsel who had been primarily responsible, during the war, for the betterment of labor relations at the Ford Motor Company and, along with Mead L. Bricker, for much of the eventual success of the great Ford undertaking at Willow Run. By the time of his death, Henry Ford’s only son was identified throughout the trade as the leader of the liberal wing within the Ford hierarchy.

   
While Edsel Ford was President of Ford Motor Company, his father would overrule his management opinions. He was actively involved in new designs like the Lincoln Continental. (This one believed to be a 1939.)

The father of Henry Ford II had been at odds with the founder of the motor company in still another sphere of life. Unlike Grandfather Ford who once said that all the art in the world was not worth five cents, Edsel had been an avid and cultivated patron of the arts. He was an accomplished landscape painter in his own right. His wife and he had been privately tutored by the noted art critic, Dr. W. R. Valentiner.

In his later years the younger Ford had served as President of the Detroit Arts Commission. He had also become the chief financial supporter of the Detroit Institute of Arts. It was during this phase of his career that Edsel commissioned Diego Rivera to paint the great murals which adorn the walls of the Detroit Institute of Arts. Rivera’s patron and Dr. Valentiner had also courageously held their ground when a spirited minority in the city of Detroit attacked the frescoes and demanded their removal.

As the son of Edsel, Ford prepared to take over the vast responsibilities of managing the Ford Corporation, he exhibited a refreshing degree of humility. He was frank to say that he had everything to learn, remarking after he had been in office for a number of months that he was still “green and reaching for answers.”

Young Ford could point to a three-year record in the Navy. Though assigned to land duty, just before his father’s death the young ensign had applied for a transfer so that he could go to sea. Four years earlier, a month after his graduation from Yale University, he had married Anne McDonnell, the charming and vivacious daughter of an eastern broker. His bride was the granddaughter of the late Thomas E. Murray who had bequeathed to his heirs a fortune of $50,000,000.

At the same time, the new executive vice-president of the Ford Motor Company had certain evident limitations. He was extremely young and had almost no industrial experience. Nor could anyone be sure that the young man’s talents were equal to the task of managing the far-flung Ford Empire. Up to this point, said Life magazine, Henry Ford’s eldest grandson had shown “no pronounced aptitude” or given any indication to speak of that he “had one hidden.” Nor were his chances of “finding himself” particularly bright at the moment.

As Henry Ford II stepped into his father’s shoes late in 1944, grandfather Ford, with a tight grip on 58 per cent of the voting stock, was still at the controls of the business, and as domineering as ever. Newsweek could report that most “lesser Fordlings” still “stepped lightly and fearfully in an air of hushed intrigue.” Regardless of the title which the senior Ford had conferred upon his eldest male heir, the sycophants were in the saddle and Harry Bennett, newly rewarded with a seat on the board, was apparently still the man to reckon with at the Ford Motor Company.

   
Lieutenant Henry Ford II with Grandma & Grandpa Ford.

Neither Henry Ford II nor his mother could have been expected to relish this state of affairs. Both mother and son had the best of reasons for not liking Eleanor Ford, Edsel’s widow, made no secret of her feeling for the former pugilist who had harassed her husband and made his life miserable for fifteen or twenty years. Henry Ford II was no fonder of the “director of Ford administration” who had been leaning over backwards to court him in recent years. Young Ford, rumor had it, not only shared his mother’s feelings but had sufficient reasons of his own for resenting the executive whom his grandfather had favored above all men.

As a child, Henry Ford II had been hounded by operatives of the Ford Service Department. Reports on his comings and goings as a young man had reached his grandfather’s ears through the channels of Ford Service. During the early months of his own tenure of office, “Edsel’s boy” was confronted with the fact that Grandfather Ford and Bennett still meant to run the show their way. Hence Eleanor Ford and her oldest son seemed to be caught in a situation which they disliked but were powerless to change. For the time being at least, it looked as though the lot of young Ford was no better than that which had befallen his deceased father. In taking over at the Ford Motor Company, Henry the Second was to all appearances head man in name only, another king without a scepter.

Meanwhile the job that confronted the 27-year-old vice-president of the Ford Corporation was enough to try the most brilliant and seasoned of business executives. Every student of the trade was convinced that the house that Ford built was in a shaky state, that its postwar outlook was anything but bright. By contrast with General Motors or Chrysler, the Ford organization was badly managed. The morale of its labor and executive personnel was at low ebb.

In point of sales the company had taken a back seat for years.* GM and Chrysler, the two alert corporations that had walked away with much of Ford’s business and had proved themselves to be far more skilled than Ford in making change-overs, were now closing in for what they hoped would be the kill. Neither of these competitors was particularly disturbed over the arrival at Dearborn of Henry II, whose hands were more or less tied by Harry Bennett and a stubborn octogenarian.

*In 1941, the last full year of prewar production, GM alone had sold 47 per cent of the country’s new automobiles.

   
The 1941 Ford Sedan was a decent car but Ford’s production methods were out of date.

Before many months had passed, however, the rivals of the Ford Motor Company had reason to lose some of their complacency, and Henry Ford II lost some of the fetters that had kept him within bounds. This change came about when superannuation finally overtook the doughty founder of the Ford Empire. Henry Ford, turning eighty-three, suffered the first sharp mental and physical decline of his career in the spring of 1945. From then on, he continued to fail so noticeably that any real participation on his part in the affairs of his business was out of the question.

The Ford heirs proceeded to take up the slack in the reins that were slipping from the founder’s grip. Eleanor Ford, with little experience outside her home and immediate social circle, started to make her presence felt at meetings of the Ford board of directors. Her son, now more or less on his own, began to breathe new life into the corporation. His initial successes in this direction were so emphatic that Newsweek took occasion to observe in a summer issue that one could already detect a definitely “brighter atmosphere” at Ford’s.

By early fall it was clear that the ailing grandfather would have to step aside for good. Thus in mid-September, authority within the company passed to the heirs of the aged industrialist, and for the first time a Ford other than the original Henry became the dominant power at Dearborn, in fact as well as in title. Henry Ford II, now twenty-eight, was promptly elevated to the presidency of the corporation. Benson, the grandson next in line, was quickly added to the board. William, the youngest of Edsel’s three sons, would, it was announced, enter the business later on.

Thus entrenched and thoroughly assured of his grandfather’s retirement, Henry Ford II did something which—some say—his father would have done, had he ever had a similar opportunity. Young Ford, with the energetic support of his mother, made a lightning move to have it out with Harry Bennett. The showdown occurred at a meeting of the board at which Eleanor Ford is reported to have taken the floor and flung at Bennett the accusation that she had watched him ruin her husband’s life and had no intention of letting him do the same thing to her eldest son.

   
Henry Bennett with Henry Ford. Bennett was removed by Henry Ford II as part of a massive purge.

Bennett was removed on the spot as “Director of Administration.” It first appeared that he would stay on in an advisory capacity, keeping his seat on the board. Henry Ford II was quoted as saying that he intended to make further use of Bennett because of the man’s “excellent background and knowledge.” Within the next ten days, however, even this remaining tie was broken. It was now certain that the ex-boxer who had served the elder Ford for twenty-eight years was ignominiously trudging along the road onto which he had forced so many hundreds of other Ford men.

By the middle of October the Detroit papers were making no bones of the fact that Bennett had been discharged and that most of his former friends at Dearborn had also undergone or were about to suffer a similar fate. Bennett had set himself up in the meantime as a manufacturer’s agent, forced for a change to eat humble pie. Yes, he announced meekly late in October, he did have several accounts and he would “like” to continue to sell to the Ford Motor Company.

Then, vested by the board with absolute powers, young Ford quickly went to the roots of the machine that Bennett had left behind. The shake-up that followed was quite as thoroughgoing as any of the purges for which grandfather Ford is famous. But in this case it was more the deadwood and an inner political machine that was being pruned away. The grandson cut through his organization with a program of discharges and demotions that reached from the highest executive posts at the Rouge down to the foreman level, carrying over even to the branch plants and to the company’s far-flung sales agencies in the field?

   
The Rouge, on the Rouge River, Dearborn Michigan, was a giant complex built in the 1920’s. Along with the complex came a giant organization.

Before he was through, Henry Ford II succeeded in cleaning out the bulk of the men of any consequence who had been at all close to Bennett or were regarded as “Bennett appointees.” All this while young Ford moved at breakneck speed, guided by a blueprint that must have been quietly worked out to the last detail months ahead of time. The job was substantially finished by the end of October. The young president had been in office for slightly more than a month.

Among the few survivors of the Bennett regime was John S. Bugas, who at thirty-seven became Ford’s director of industrial relations. The new overseer of Ford labor was reputedly capable. He had come into the corporation originally as Bennett’s administrative assistant. Before this, he and Bennett had been social intimates and colleagues in crime detection. The new supervisor of labor relations, it will be remembered, had other ties as well prior to his first employment at Dearborn. Bugas served in the Detroit area for some years as regional director of the FBI.

From young Ford’s point of view, such a background may have been all to the good in Bugas’ case. Perhaps no other candidate for Ford officialdom could have been better prepared for keeping an eye on any possibly disaffected members of the defunct Bennett machine.

As the purge proceeded, Henry Ford II began to bring in new faces to replace the old. He re-staffed his executive and dealer roster. For the first time in years the flow of talent reversed itself at the Rouge. The Ford organization began to import any number of competent outside specialists and administrators, cutting into the ranks of its competitors just as its own personnel had been repeatedly raided in the past. Many of the replacements came from within. They consisted of able and tried members of the Ford staff.

Soon thereafter the grandson announced that in sundry sales and management policies he intended to bring the Ford organization up to date. In this realm, he candidly admitted, he had much to learn from his principal competitors, Chrysler and GM.

The weeklies and trade journals began to report, meanwhile, that Ford morale was soaring. From all accounts, even the lowliest production worker at the Rouge could sense the change. Finally, young Ford took issue with his grandfather who had once exclaimed, as his sales were slipping from first position in the trade to third, that he “didn’t care” how many cars he sold. From now on, said the grandson, every effort would be made to place Ford sales at the point where they had stood once upon a time—at the head of the list.

All this came as something of a shock to Chrysler and General Motors. These organizations could now foresee some real competition from a rival they had all but given up for dead. Ford’s main competitors “who haven’t really feared the company in fifteen years,” said Life magazine on October 1, 1945, “are watching very closely now.”

   
World War II production contracts, like the B-24 production at Willow Run, kept Ford profitable. With the War over, Henry Ford II would have to change the way that Ford Motor Company operated.

2

Not the least of the worries which beset the two leading members of the Big Three was how far, and in what direction, the Ford Motor Company intended to go on the question of postwar wages and prices. By the time young Ford finished the job of putting his house in order, this problem was the nation’s Number 1 domestic issue; it was about to precipitate the bitterest tug-of-war between management and labor, with Washington uneasily in the middle.

Within the automobile industry proper, management as a whole, with GM and Chrysler in the lead, had already served notice of its intent to make a killing in the immediate postwar period. It took the offensive, first of all, against OPA (Office of Price Administration). With their eyes on a market that had seen no new cars to speak of in four long years, the motor manufacturers, moving in concert shortly after V-J Day, had long since requested price increases ranging from 6 to 60 per cent.

In a determined effort to wrest concessions from OPA or to eliminate the agency altogether, the owners and managers of the automobile industry were not acting alone. They were joined by big business as a unit. The National Association of Manufacturers was pressing Congress and the Administration to do away with price controls at the earliest possible moment. The pressure for inflation was being brought to bear by what news commentators described as the largest and most powerful lobby ever seen in Washington. Among these petitioners for higher price ceilings, or no ceilings at all, was the National Association of Automobile Dealers.

The leading controllers and operators of American business, in and out of the automobile industry, also seemed generally ready to administer a setback to labor. This turn of events would insure higher prices at the expense of wages. Not a few employers were envisioning a return to the 20’s. Certain spokesmen for the automotive industry said as much at this juncture.

It was not until November 1945, however, that the automobile manufacturers were able to feel any real confidence in the success of their drive for postwar profits. Their doubts were stilled in that month when Congress passed its first important postwar tax measure. Thanks to this revenue act—with its carry-back provision and its repeal of the wartime excess profits tax—the nation’s financiers and industrialists now had the leverage they needed for the two-edged fight against OPA and labor.

   
Shoppers in World War II were protected from inflation by OPA (Office of Price Administration) controls. The transition to peacetime economics was contested in Washington.

Meanwhile, the prime movers of the automobile industry, notably the directors of GM and Chrysler, became restive lest any of their number break ranks. More particularly, these colossi began to cast anxious glances in the direction of the Ford Motor Company. Here, as ever, was that anomaly of a monolithic, family-held corporation which had no strings attached to its earnings and could afford to go its competitors one better in wages or prices or in the caliber of its product.

All the more unsettling, from the standpoint of GM or Chrysler, was the fact that the Ford Corporation was no longer in the grasp of its founder. Henry Ford, the elder, was on the sidelines. His permanent retirement was announced early in December. The wealth and productive power Ford left behind him—one billion dollars’ worth—was now in the hands of a little-known young man who had majored in sociology at Yale and who was at this moment finishing a “palace revolution” that seemed to stamp him as a management liberal.

Would “Edsel’s boy” go on from here to make bold concessions to labor and the public? Would this stripling dare to take issue with a united front which included nearly the entire top hierarchy of American business?

Then, by some of the things he said, Henry Ford II all but confirmed these fears on the part of his larger competitors. Throughout the summer of 1945, he had talked over Bennett’s head, addressing himself to labor in language that was anything but combative or unfriendly. He was sure, said Henry Ford II in June, that the postwar labor problems of the Ford Motor Company could be “amicably” worked out. “The majority of union men,” he remarked, “are personable and anxious to cooperate for our mutual good.”

On the eve of the clash between the UAW and the automotive employers, the youthful president of the Ford Motor Company gave his business rivals real cause for concern. He minced no words, coming out in favor of the very things against which industry was generally up in arms. He had a talk with Secretary of Labor Schwellenbach sometime in October. In the course of this conversation, it was reported, young Ford broke ranks. He averred that he was a confirmed believer in collective bargaining, that he had been planning to raise wages for some time, and that in his opinion, some system of price control was still essential if the country were to avoid the calamity of inflation.

   
Under Bennett, fights like this occurred with UAW people. Henry Ford II supported collective bargaining and began negotiations although he was a tough in bargaining.

Though heartened by this verbal heresy on the part of their youthful employer and by many real changes for the better which had already taken place on the Ford assembly line under his auspices, the employees of the Ford Motor Company proceeded nonetheless to take a vote on the UAWs general demand for a 30 per cent increase in take-home pay. The results of this poll were later announced. Ford’s men by a margin of 11 to 1, it appeared, had authorized their representatives to call a strike in the event that the Ford management declined to discuss these and other terms with the union or declined to negotiate at all.

At this point—much to the surprise of certain labor leaders and contrary to the forecasts of many journalists and newspapermen—Henry Ford II did an about-face. His own negotiations with the union were to start within the week. The GM strike was still in the offing. All Detroit was tense with expectation. Whereupon young Ford, who up to now had been talking the language of conciliation and preaching his grandfather’s doctrine of high wages and low prices, began to reverse himself.

This was no time to tamper with wages, he announced on November 15, six days before the onset of the General Motors strike. Were the UAW to present him with any demands for a 30 per cent increase in take-home pay, Ford said, he would not even deign to discuss the issue. These sentiments were reinforced by a public statement from the Ford Motor Company to the effect that the company’s four-year relationship with the UAW had been a most “unhappy” one, owing to the union’s complete irresponsibility.*

* Over in Canada, young Ford was already deeply involved in a labor dispute. He had also proved that he could be quite as stubborn as his grandfather. The employees of the Ford factory at Windsor had been on strike for nine weeks. These Canadian workers were asking that they be granted the same recognition and the same working conditions that had been conceded four years earlier to the men of the Rouge on the opposite bank of the Detroit River.

But on November 21, General Motors rather than the Ford Motor Company became the center of the mounting conflict over the country’s reconversion policy. The UAW, pressed by a restive rank and file and urged on by a powerful contingent of its leadership, took on its largest adversary. The union struck GM. On the same day, Ford took a seat at the conference table with his employees. He began talking things over with the union.

As the Dearborn negotiations wore on, it became clear once more that Henry Ford II had no immediate intention of coming to terms with labor or of leaving strike-bound General Motors high and dry. To be sure, a lack of tension, even a spirit of good will, seemed to pervade the Ford negotiations. But on fundamentals, the Ford Motor Company stood pat from the outset; it fell in with the basic strategy of big business. For the next two months, young Ford and his advisers made no real moves to break the stalemate. They sat tight on wages.*

*While the UAW would strike General Motors, they were more friendly with Ford which paid better wages than GM or Chrysler.

   
Workers on strike at General Motors.

After bargaining with the union for nearly a month, John Bugas, Ford’s new industrial relations chief, asserted that the company would be in no position to talk wage rates for the next 60 to 90 days.

A few days later the company changed its position. It offered to raise wages by slightly more than 12 per cent, but only under conditions which the union found “completely unacceptable.” One of the strings which was tied to the offer was the proviso that the union must agree not to reopen the wage issue, should the company succeed in getting higher prices for its product through OPA relaxation of price control at any future date. On other points as well the UAW soon discovered in Ford one of the hardest bargainers it had yet encountered.

On the other hand, though he seemed to have cast his lot with GM, Henry Ford II was suddenly being hailed in many quarters as the rising young labor “statesman” of the reconversion period. The press was flooded with rumors to the effect that the Ford Motor Company would at any moment throw over the traces. The research director of the company let it be known that the idea of guaranteeing annual employment to all men was “an objective worth working for.” The following day a feature writer for the Detroit News advised his readers to “keep their eyes on Ford,” for Dearborn was about to offer its employees a 30 per cent wage increase or something “equally spectacular.”

From Eleanor Roosevelt’s pen several days later came the word that Dearborn was the “one bright spot” in the domestic labor picture, and that among the “revolutionary” things which were currently expected from Ford was the offer of a guaranteed annual wage. Finally, Henry Ford II in person helped to drive home the feeling that he alone among the automotive employers, was still ready to meet labor and the public half-way. On January 9 Ford gave an address before the Society of Automotive Engineers, entitled “The Challenge of Human Engineering.” The young man’s remarks, which the company later circulated in a specially printed brochure, added up to an eloquent condemnation of the industrialist who could be charged with neglecting the “human factor” in his business.

For two months, however, none of these hopes or promises implicit in what Ford or the men around him said, could be discerned in what Ford did. The union and representatives of the Ford Corporation continued to meet off and on in a comparatively friendly atmosphere. But apart from that, the new and youthful overseer of the Ford interests rose to the defense of his fellow industrialists.

When the UAW asked to “see the books” and offered to adjust its wage demands to fit GM’s capacity to pay, and GM retorted that in wanting to “stick its fingers in the pie” the union was talking “socialism,” Henry Ford II spoke up plainly for property and General Motors. There are certain things, Ford said at the time, which “management must manage;” they are none of labor’s business.

Simultaneously, he joined with the many bitter enemies of OPA. He hit the roof when OPA announced in November that the only concessions it could allow him were a 2 per cent price increase on the over-all Ford line and a 22 per cent increase on one-ton Ford trucks. On those terms, Ford exclaimed, his company would be forced to close out the year 1946 with a net loss of $35,000,000.

President Truman seemed to think otherwise. His Office of War Mobilization had already estimated that industry could afford to raise wages 24 per cent without necessitating any price adjustments. The OWM had gone further than that; it had issued a warning that unless such wage increases were forthcoming, the annual purchasing power of the country would suffer an immediate decline of 30 billion dollars.

The Administration was apparently dead set on “holding the line.” Industry, on the other hand, was just as determined to have it otherwise. In fact, by December the franker trade journals and the financial news services had made it more than plain that big business meant, and could well afford, to sit down until it was sure of gaining its point at the expense of labor and the public. The Christian Science Monitor remarked in November that certain large sections of American industry were “holding back production for higher prices and lower wages.”

   
1946 Steel Workers strike. Controls during World War II gave way to a wave of strikes.

In such a setting, the grandson of Henry Ford went out of his way to gloss over industry’s real intentions, as well as his own. Labor was lying down on the job, he complained in the course of his address on “The Challenge of Human Engineering.” Man-hour productivity at the Ford Motor Company, Ford said, had declined by more than 34 per cent during the war years. “Irresponsible labor groups” were at the bottom of many of our reconversion difficulties, he asserted on December 2. Here, the young industrialist seemed to be speaking for industry as a whole and not from his own experience. At any rate, two weeks after he offered this analysis of the situation, the Detroit Free Press could report that Ford had had no reconversion labor problems to speak of in his own domestic plants. The Ford Motor Company, said the Free Press on December 17, had not had a single unauthorized strike from V-J Day on.

The bitter contest over wages, in which the Ford Motor Company bad consistently thrown its weight into the scales on the side of management, was finally eased by the Administration. The long-delayed compromise was embodied in the report on the General Motors situation, submitted by a special fact-finding board appointed by the President. After making a brief study of the union’s demands and of GM’s capacity to pay, the board recommended that General Motors should settle its differences with the UAW by sanctioning a wage increase of 18.5 cents an hour. The fact-finding committee had nothing to say on the companion issue of prices and OPA.

Thus industry was given the kind of answer it had been fighting for—a formula that closed the wage issue for the time being, while leaving the question of prices open. The suggested wage increase of 18.5 cents was little more than one-half of what the ClO and the UAW had asked for originally. Moreover, industry could now give its full attention to the unresolved half of the economic equation. It began, therefore, to concentrate its fire on OPA.

GM and the United States Steel Corporation, meanwhile, still refused to talk wages, holding out to the last for higher prices.

Any number of other corporations, however, hurriedly came to terms with labor. These concerns appeared to be satisfied with the President’s suggested compromise on wages. They also seemed more or less assured that the OPA dike would yet be broken, thanks to the combined pressure of GM and United States Steel.

Ford, as well as Chrysler, were among the great industrial establishments which promptly entered into wage agreements with this or that branch of organized labor. Ford and Chrysler signed their contracts on January 21. Countless other corporations quickly followed suit.

General Motors, however, carried on the fight, fortified for the struggle, by the presence of U. S. Steel at its side and by the knowledge that its competitors would be forced to mark time because of the lack of metal. Consequently, the GM strike, then in its 67th day on January 21, continued.

   
Ford Production line.

This time the Ford contract contained no new basic provisions to distinguish it from any other major agreement in the field. Both the Ford agreement and the Chrysler contract dealt solely with the question of wages. All other issues were postponed for later negotiation. In the specific hourly rates of pay agreed to, both contracts were likewise modeled after the report of the President’s fact-finding committee. Chrysler accepted without change the recommended wage increase of 18.5 cents an hour. The Ford people settled for 18 cents, in view of the union’s willingness to concede that the level of wages at Ford’s was already somewhat higher than the scale at Chrysler’s.

At this point Henry Ford II made his most important gesture in behalf of postwar profits. He was now in a position to speak up as the fair-minded industrialist who had been one of the first to meet labor half-way. With this aura about him, and again making the most of the great prestige of his grandfather’s name, young Ford redoubled his attacks on OPA.

Prices on consumer goods and services, as of 1946, had already risen by a margin of 33 to 50 per cent or more since January 1941. The youthful manufacturer declared war on the government’s efforts to check any further inflationary spiraling. He argued his case in the newspapers. He took it to Washington.

In February, Ford made a personal appearance before the House Banking Committee. He asked that body to support the policy of removing all price controls up and down the line in the automobile industry. Young Ford then sent a wire to the White House. He remarked in this communication that even “a little Government price control” was a dangerous thing. At current OPA prices, he said, he was losing $300 on every car that left the Ford assembly line.

Two government officials felt obliged to answer Ford directly. President Truman replied on the 1st of February that he would have to oppose Ford’s views and that he for one was still resolved to hold the line in order to stave off wild inflation. Two weeks later Economic Stabilizer Chester Bowles took issue with the publicity of the Ford Motor Company in a manner which left no doubt of the role Henry Ford II had been playing from V-J Day forward.

Ford, Bowles charged, was guilty of making many “irresponsible statements.” The young man’s contention that low price ceilings in the parts industry were holding up automotive production had no basis in fact, Bowles said. The coordinator of stabilization went on to explain that price controls had already been lifted for the parts plants and that he was “surprised” that Henry Ford II did not know this.

More than that, Bowles said, the automobile manufacturers themselves, Ford included, were not producing anything to speak of. Without any normal production figures to back him, he asked, how could Ford speak of losing $300 or any other sum on each of his cars at current OPA prices? He knew of no “intelligent industrialist,” said Bowles, who would think of using Ford’s insignificant present volume as a fair long-term measure of pricing or of estimated future costs and profits. Yet such was the nature of the case that Ford was so vigorously prosecuting.

   
President Truman with Henry Ford II. While they were adversaries Henry approached any situation for results without malice.

Moreover, Bowles said, the Ford Motor Company’s eagerness to abolish price control was nothing new; it had manifested itself all along. When all the automobile manufacturers applied for price changes some six months earlier, he said, the Ford interests had made “outrageous” demands; they had asked for government permission to boost prices on the Ford line by a margin of 55 per cent. Thus, according to the Bowles disclosures, it would seem that Henry Ford II had been pushing for inflation from the beginning; he had hoped in 1946 to get 55 per cent more than he charged for his product in 1942, and his 1942 prices had stood well above the pre-war level.

The selling price he requested for a Ford four-door sedan in the summer of 1945 was more than 100 per cent higher than the figure he had sold the same car for in 1938. By contrast with such a policy, put forward in this instance in the name of Ford management, labor’s subsequent demand for a 30 per cent increase in take-home pay seemed meek indeed.

The price administrator then went to the heart of the Ford postwar philosophy. He implied that by leaguing together with the defenders of property against the public interest, the principal heir to the Ford fortune had failed the first great test of his career. So judged, said Chester Bowles, Henry Ford II was deserting the tradition of high wages and low prices which the world had come to associate with the name of the first and more celebrated Henry Ford.

Young Ford’s deviation from the “Ford philosophy” was to continue after Congress had removed all price controls. In the fall of 1947 the Ford Motor Company followed the lead of General Motors by raising prices on its entire line. The increases ranged from $20 to $97 on Ford passenger cars and trucks, and from $86 to $229 on Lincoln and Mercury cars. They were significantly larger than the price reductions which Ford had put into effect the previous January.

The increases were announced at a time when a different application of the Ford philosophy would have been particularly appropriate. The new schedule went into effect on August 25, 1947. By this date Henry Ford II was rapidly approaching, if he had not already passed, the break-even point. All along, like his grandfather before him, he had no outside stockholders who could have demanded the declaring of any profits at all. More than that, the rise in Ford prices took place at a point where the processes of inflation seemed to be well on their way, in the opinion of disinterested government economists, toward another catastrophic depression.

At the same time, Henry Ford II gave further signs of departing from quite another set of tenets in the Ford philosophy. He continued to take issue with his grandfather’s concept of feudal management. Acting on excellent advice, he finished the palace revolution that had begun with the removal of Harry Bennett and a thousand other Ford officials of greater or lesser importance. In the course of revitalizing the Ford Motor Company on the executive level, young Ford went on defying still another precedent that had guided his grandfather for 30 years or more. He continued to reach outside his own organization for the administrative talent so badly needed at the Ford Motor Company.

Among these outside recruits were any number of top-level men of unusual capacity. Ernest R. Breech, a brilliant young GM executive, left the presidency of the Bendix Corporation to become Ford’s executive vice-president. Breech had been regarded in trade circles as the probable future president of General Motors. To direct his planning and control division, Ford drew in Lewis D. Crusoe, inducing Crusoe to give up his position as controller of another key GM subsidiary. Albert J. Browning became the new vice-president in charge of purchasing at Ford’s. Browning had had a vast experience in his field both as merchandising manager for Montgomeiy Ward and as the officer who directed all the purchasing for the United States Army during the second World War.

Ford then dispensed with the services of his grandfather’s old favorite, William J. Cameron, and engaged the highly intelligent firms of Elmo Roper and Earl Newsom and Co. Inc., to handle his public relations. Finally, the alert young president of the Ford Motor Company brought to the fore many capable, old-line Ford executives like Mead L. Bricker, who had never been able to make full use of their talents during the Bennett regime.

   
Ford is back on track.

Within a matter of months the new group of Ford administrators succeeded in bringing the operations of Ford Motor Company into line with the principles of modern scientific management. What these men inherited at Ford’s, Fortune remarked in May 1947, was an “amorphous administrative mess.” When Fortune made this comment, however, the Ford organization had already been transformed on the top levels; the company was making effective use of the best financial and executive procedures that had long been taken for granted in other great industrial establishments like General Motors or Standard Oil of New Jersey.

Modern accounting and budget methods were now the order of the day in the $900,000,000 corporation which had relied in the past on “a set of books that would put a country storekeeper to shame.” Henry Ford II was in a position to judge, for the first time in the history of his company, which operations were making money and which were not. With this information at his elbow he proceeded to dispose of the white elephants within his organization. The company let go of a score or more of its less efficient outlying plants. It dropped a number of other unprofitable operations such as the soybean work at Dearborn and the Ford rubber plantations in Brazil.

The new set of Ford officials did their most basic work, attacking the chief disease from which the top-heavy Ford Motor Company had suffered for more than a generation. They decentralized and divisionalized operations, rapidly bringing to a close the long period during which the Ford enterprise, like a feudal dynasty, had been governed by “an embittered, mutually distrustful group of executives—most of them without titles—with no clear lines of authority or responsibility anywhere delineated.”

Ably staffed and thoroughly reorganized at the top, Henry Ford II seemed equally determined, meanwhile, to usher in a new day in labor relations at the Ford Motor Company. His most striking success in this direction occurred in July 1947, during the Ford negotiations for a new two-year contract with the union. At this time the company was guided by an adroit sense of public relations, and the union agreed on a Ford pension plan, the cost of which was to be shared, as is the case with federal social security benefits, by both management and labor.

This concession to a group of factory workers—a familiar one in a good many other large-scale corporations—was progressive for the automobile industry. Everything else in the new Ford contract was, as Business Week observed, “insignfficant.” The fact remained that in 1946 and 1947, under the aegis of Henry Ford II and John Bugas, the Ford vice-president in charge of labor relations, the labor policies of the Ford Motor Company became unrecognizable. Fortune was probably close to the truth when it remarked in May 1947 that Ford’s successes in dealing with his workers were “second to none in the tense Detroit area.”

These sweeping changes at the Ford Motor Company were interrupted by the death of Henry Ford, the elder. The ailing manufacturer died of a cerebral hemorrhage on April 7, 1947, at the age of 83. The value of the personal holdings which he bequeathed to his heirs and assigns, said the New York Times, lay somewhere between 500 and 700 million dollars.

   
People pay homage to Henry Ford at Dearborn Michigan, April 1947.

When the body of this legendary American, whose career had symbolized for countless millions both the rise and fall of the American Dream, lay at Greenfield Village, a hundred thousand persons filed past for a last look. At a prearranged hour on the day of Ford’s funeral, the workers in every industrial establishment in the state of Michigan were asked to stand in silence at their benches for one moment in his honor.

The present Ford family and their heirs will retain complete control of the operations of the Ford Motor Company. As things now stand, however, the bulk of the future declared profits of the company will be siphoned off to the coffers of the Ford Foundation. It will be up to Eleanor Ford and her four children to decide, with the advice of the court and a hand-picked, self-perpetuating board of directors, just what to do with the Foundation’s income. To date, the Foundation has paid the expenses of operating Greenlield Village, the Edison Institute and the Henry Ford Hospital.

Up to now, the elder of “Edsel’s boys” has not acted like a man who is bent on repudiating the canons of business-as-usual or of going over to the opposition of entrenched privilege. His term of office has been brief, however. No one can presume to chart his future course or to forecast with any assurance his ultimate role in the American economy. Time must decide whether Henry Ford II is, at bottom, a man of good will with a broad social outlook or simply a refined, contemporary copy of his grandfather.

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