Many forum readers are aware of who Alexander Malcomson was, and his importance to the creation of Ford Motor Company. What many of us aren't aware of (myself included) is the relationship between Alex or A.Y. Malcomson and Henry Ford. A. Y. Malcomson formed his own car company at the end of 1905. The Ford directors immediately ordered his removal from the board in writing, and he promptly refused.
By the summer of 1906 Ford and Malcomson reached a purchase agreement and Malcomson's holdings were turned over to Henry Ford for $175,000.
What I don't know is, how did these two men interact following Malcomson's exit? Were they sworn enemies the remainder of their lives? Did they meet on occasion, or even remain friends or acquaintances?
This letter gives a glimpse of the dealings between the two men following the summer of 1906. Unfortunately I don't know the name of the author, however for some reason I thought it might be a Detroit reporter who was working for Henry Ford. Maybe someone will recognize the letter. I copied the text verbatim from a letter in one of the accessions at The Henry Ford, and thought it time to put it out where someone may recognize it and provide additional information.
I think the letter paints an interesting picture of Mr. Malcomson toward the end of his life. It seems he is blaming Henry Ford for his numerous business failures,,while still asking for a financial handout. I know it's a long piece, and if anyone has the time and inclination to read it, I hope you enjoy the letter:
"Following your telegraphic instructional communicated with Mr. A. Y. Malcomson and had a long interview with him at the Detroit Athletic Club on Monday Night and I am herewith endeavoring to communicate to you a condensed statement of his talk, which lasted several hours.
He seemed to be somewhat reticent to acquaint me with the details at first stating that he had given George, his son the papers and a letter to you, and sent him out to see you, and therefore did not consider it necessary to go into it with me, feeling that perhaps I not being familiar with what had transpired so long ago, I would not be in a position to view it from his standpoint. However after considerable talk he finally opened up and spoke along the following lines.
He felt that the active support he gave in assisting to finance the organization of the Ford Motor Company should have brought him more than he realized therefrom. He also stated that he had never bothered you about any business matters, but the time had finally come when he did not feel that he could let the opportunity pass to advise you of his feeling in the matter. He went over the early history of the organization of the Ford Motor Company, how he became acquainted with you and his efforts in getting other stockholders to contribute and organize the company. That he was obliged to guarantee the purchase of tires, steel etc. and also Dodge Bros contract who could not obtain any credit at their bank unless he did so, all of which he did willingly at the time. He went on to tell about the early differences arising about Mr. Couzens, and after the company had been organized and was proceeding, Mr. Couzens made an appointment to meet him one day and requested an option on all of his stock, and after spending an entire half day with him he finally gave him the option on his holdings in the Ford Motor Company for $75,000.00. The next day, he said, Mr. Couzens phoned him and said that Mr. Ford understood that the deal included the Canadian stock as well. Mr. Malcomson said that this was not so and did not so understand it, and would not consent to it, but after Couzens insisted and refused to go on with the deal he finally gave in. In the meantime he purchased the stock of Chas. H. Bennett and V. C. Fry to a total of 10 shares.
When the notes were about to become due (those given in payment of
his stock $75,000) Mr. Couzens phoned him and said Mr. Ford did not intend to pay them unless he gave over the rest of the stock he had acquired. This, he said was a great surprise to him. The notes had been discounted at his bank and he had used the proceeds, and the bank would therefor look to him to make good, but Couzens said that you were to get all of his stock and the notes would not be taken up unless he gave up the stock. He therefore felt that you had received his Canadian stock without paying for it, as he never intended to give it up in this transaction.
As time went on he was chided by bankers and other business men who told him he made a big mistake and that the deal was not just, and even up to this time he says it is quite frequent that people bring the matter to his attention and ask him how much he would have made out of his original investment had he not sold out, and mentioned that as near as he could estimate it would run up to about $75,000,000.00. He also made reference to this daughter Grace who died some time ago, that Mrs. Ford was the last one to bring flowers to her at the hospital. Shortly after her death you picked him up at the corner of Woodward and Seward Aves. and took him downtown to his office. It was while riding with you that he expressed a desire to build an office building on the site of the present Kresge Building, the lot which he then owned and this was to be a memorial for his daughter. This he said struck you as a splendid idea, and you promised to see him about it making an appointment setting the hour and date, but you did not keep the appointment. He could not understand this because you seemed to be in earnest about it.
He referred also to his last visit to the Ford Motor Company at which time he wanted to borrow some money in connection with a mine property he had optioned in Kentucky. As a result of your not granting the loan he lost somewhere in the neighborhood of $35,000.00 which represented the option price, engineers fees and other expenses included, which he could not afford to lose. This resulted in a very severe disappointment to him, and he felt quite bitter toward W. H. Smith, whom he thought had advised you not to consider it. This property had since been sold to parties in Atlanta, Ga. who cleaned up quite a sum of money out of it, which would have been his if you had extended the loan.
The business of A. Y. Malcomson Co. was consolidated with the
United Fuel & Supply Co. and I am told by him that he has a one-third interest in the company which represents total assets of about $3,500,000 with a bonded indebtedness of about $1,500,000 leaving a net worth of approximately $2,000,000, which leaves his interest valued at bout $666,000.000. He also bought the old Wayne County Bank Building on which he carries a mortgage of something like $160,000 or $170,000: This has been quite a burden to him owing to Oakman's Ford Boulevard scheme having met with failure. The Union Trust Company took over his (Oakman's) affairs and they consequently vacated his building at the time when it could not be rented which meant a loss of income from the building, notwithstanding the fact that taxes and interest had to be paid.
He bought out the H. Houghten Supply Co. and gave notes in payment of their business which have embarrassed him considerably as he expected to pay them out of his dividends which he expected to receive from the United Fuel & Supply Co. Owing to the poor year they had on account of the coal situation and the falling off of trade in building supplies they did not pay the dividend he expected to receive.
His salary is about $20,000 to $25,000 per year. His total debts aggregate about $1,000,000 or very close to this figure, which he claims is more than he can carry.
I am therefore inclined to believe that he is in a pretty close financial straits. He was worried considerably over it and is desirous of going away for a rest. He is rather nervous seems to show the strain, as a result of these matters preying on his mind.
People representing the Chicago Tribune have been to see him requesting a story of the Ford Motor Company or his early connection with it. Representatives of eastern papers have also tried to get him to talk but he says he has stood by you and steadfastly refused to say a word about it. He feels quite bitter toward Mr. Couzens, being of the opinion that Couzens has succeeded in turning you against him in the earlier days.
I tried to get him to make an expression as to what he really thought he was entitled to or what he expected you to do for him, and he answered that you had received his Canadian stock for nothing and this would have helped him out considerably, and if it had been retained by
him, the earnings as well as the appreciated value would have meant a great deal to him. He contrasted how little some of the other stockholders had contributed to the success of the company with the untiring efforts he gave and the risk he had undertaken, notwithstanding which they had become wealthy and he received but a nominal compensation for his interest therein.
He admitted that there was absolutely no legal responsibility on your part, never-less it was a matter of high moral consideration with him, and that your success was due primarily to what he had done and through his standing by you in the beginning, also that he had made a serious mistake in permitting himself to sell out on Couzen's solicitation.
I am very much of the opinion, as result of the interview, that the banks are somewhat worried about his financial affairs, and it would not at all surprise me if this is a scheme on their part to get him to go to you for assistance in order that they may get out from under.
His attitude however is not vindictive. He feels that the matter should be put up to you for your fair judgment, in which case he is of the opinion you will give him some liberal and substantial consideration.
I did not make any attempt to discuss the merits from any angle whatever believing that you merely desired a report in detail concerning the matter about which he wanted to reach you. Therefor I left him by saying that I thought the matter was one which could not be readily transmitted to you by mail and I thought it best to await your return, and will leave it rest unless you instruct otherwise.
Jan. 28th, 1919
No person other than myself is familiar with the contents of this report as i have written it at home and same has been forwarded to Mr. Edsel Ford by registered mail."
What a fascinating read. I am constantly amazed by the wealth of information you are able to find through your dogged research, (all things Ford related) and the value that these findings have on our collective knowledge of Henry Ford and the then fledgling Ford Motor Company.
I obviously have an interest in A.Y Malcomson through my friends 1907 Aerocar http://www.mtfca.com/discus/messages/331880/403024.html?1385474988 and am therefore always keen to learn as much historical information that I can.
I wonder though (and I am inexperienced at researching documents) do any of the banks of the day, that were providing capital for these ventures, have any archives that can be accessed to help shed further light on these mysteries.
Please keep continuing with your excellent research and I eagerly await what you come up with next.
Great reading. It's almost like Ford sent this reporter to check up on him to see how he was doing. It's like one sibling reporting to dad on the welfare of another.
Appears to state Malcomson was snubbed by Ford while trying to borrow money for a "mine" in Kentucky. Obviously Ford maintained a civil relationship if Malcomson thought he might borrow money from Henry, but on the other hand Henry did not actually loan Malcomson the cash.
Interesting and kind of sad.
Like everything in life-Hindsight is 20-20! Bud.
Thank you. How is your friend coming along with the Aerocar project? We had an informal discussion amongst Early Ford Registry Club members, and would like to encourage any Aeorcar owners and/or enthusiasts to join our group. There is almost a family relationship, and it would be good to include a car that "branched" out as a result of one of the Ford founders (Malcomson).
Dennis and Royce,
Yes, it does almost seem that HF was following up concerning Malcomson. And yes, I thought the story in many ways was a sad commentary of what became of Alexander Malcomson.
I was surprised to see a reference to a couple of exchanges between the Malcomson's and Ford's. Evidently Mrs. Ford visited Alex's dying daughter, and later Henry Ford gives A.Y. a ride, and they discuss a property A. Y. wishes to build an office building on.
Below are three articles following A. Y. Malcomson's death. Henry Ford acts as honorary pallbearer, postponing a planned vacation a day in order to attend the funeral. It seems to me the two families were at least cordial by this point, three and a half years after this report is written.
What I don't know (and we may never know) is, did Henry Ford "throw" some money to Malcomson after receiving the above information? In the oral reminiscences, a few Ford associates mention that Henry Ford would contribute generously to different groups and causes, with the stipulation that he remain anonymous, so who knows?
These articles certainly paint a different picture of the two men for me. I'm almost surprised Henry Ford would have any involvement with A. Y. Malcomson after he (Malcomson) started a competing company while still a director with Ford Motor Company. Then, to suggest years later that he should be compensated further because Ford stock has risen in value over the last thirteen years seems incredible.
There is another shady side of the stock sale. Charles Bennett, who is mentioned in the Malcomson letter (Daisey Air Rifle official and one of the original investors in FMC) reported what he received for his FMC stock when he sold it TO MALCOMSON in 1906 (Oral Reminiscences), and I believe the amount Malcomson received when he turned that stock over to Ford/Couzens was twice as much as Bennett reported selling the stock to Malcomson for. Interestingly, Bennett remained friends with both Malcomson and Ford for the remainder of their lives, and was the only original Ford investor to produce an "Oral History" in the early 1950's.
A lot more to learn.......
All is going well with the Aerocar. As mentioned previously the car is fully restored (except for the hood), and has done numerous runs here in Tasmania and attended a mainland (Victoria) rally. The Aerocar was Ken's only means of transport for that week long rally with only 1 minor problem on the last day.
The hood is all there and complete. The Aerocar is I believe like the early K model Fords in that it does not have a windscreen and relies only upon a roll down curtain for weather protection.
Interestingly the dash/firewall is still the original one and does not show any points of attachment for the roll down screen. We are in the process of determining how best to make it work whilst trying to keep it original to how it would have left the factory back in 1907.
As mentioned previously I believe the body is quite similar to a K model in design, and I wonder if it could not have been made by the same subcontractor that Ford used? Maybe someone who is quite good at researching for historical documents might be able to find out! lol.
An article has been written for publication in the HCCA gazette, complete with photographs, and hopefully it will be published in the near future.
As more information becomes available I will gladly post it here on the forum for those who are interested.
Interesting that the Ford directors objected so strongly to Malcomson's Aerocar involvement (an expensive car that would not directly compete with the Ford), yet John Dodge remained a Ford director after starting up a competing firm.
I believe John was no longer a director with FMC after 1913. I think the Dodges's remained shareholders (as Malcomson could have) for several years (1919?) and also were involved in a lengthy lawsuit against Ford and the Ford board of directors (1916?) during that time.
From memory, so take my guesses with a grain of salt. More on Aerocar in a bit,
I haven't encountered any reference to the body maker used by Aerocar. I did, however, find a few other interesting Aerocar items. Meanwhile, it was reported in trade journals that Ford bought Model K bodies from Wilson.
When Aerocar announced that they would manufacture cars in early 1906, reports said they intended to build 500 cars the first year (1906). The following ruling on a later lawsuit seems to confirm their (Aerocar) order for 500 air cooled engines from Reeves Pulley Company. Aerocar's first car used a 20-24hp air cooled engine manufactured by Reeves:
There are several interesting bits of information in this court record. The most striking tidbit (for me) is that A. Y. Malcomson entered into the contract for 500 engines with Reeves on Nov 1, 1905. This is earlier than the news was made public that Malcomson was president and major shareholder in Aerocar, and while he was still actively involved as the Treasurer and Director on the Ford Motor Company Board. The Aerocar contract was $320 per 20-24 hp engine. By comparison, the Ford Model K 40 hp engine cost $287.50 (Dodge brothers contract, 1906). It appears Aeorocar only accepted/used 319 of the Reeves engines through the summer of 1906, suggesting they fell well below the goal of 500 cars (1907 Aerocars were introduced in July 1906). Meanwhile, FMC sold just over 300 Model K through FY 1906 (FMC 1906 audit).
Needless to say, when the news of Malcomson's involvement with Aerocar was published (December 4th, 1905, Detroit Free Press) the FMC Board of Directors acted quickly and decisively, calling for Malcomson's immediate resignation from the board and as Treasurer:
Meanwhile, FMC is preparing to bring out a new lineup, Models K and N. Due to the way these events unfolded, it is difficult for me to believe Malcomson had any influence over FMC activities after December 1905, and certainly not during the years Models K and NRS were produced, 1906-1908. My belief is, if Malcomson "forced" Henry Ford to build the Model K, Malcomson would have built a car more along the lines of the "K" when introducing his (Aerocar) first car.
Sometimes correlations are drawn between the 1906 Aerocar and the Ford Model K. Following are two advertisements that appeared in the New York Sun newspaper, April 1906. While both cars have similar price tags, I think any similarities end there. The Aerocar is a much lower horsepower, air cooled car, using a three speed sliding gear transmission. I suspect the coachwork and appointments are superior to the Ford, while the speed and power fall on the side of the Model K:
The Model K used a new to the domestic market six cylinder engine, dual ignition, with longer wheelbase and standard Ford two speed planetary transmission.
A few of the Aerocar contrasting features, and the 1907 roadster, introduced in mid 1906:
(Message edited by Rob on October 18, 2014)
You're probably right. I do know that John Dodge vehemently objected to Ford profits being used to build the Rouge and to the directors' rubber-stamping it all. So it would seem that if he was still a director the -stamping would not have occurred. Of course Ford, and probably the other stockholders, would have been irritated at Ford profits being used to build up the Dodge car, so keeping the money out of Dodge hands would no doubt have been a strong motivating factor in rubber-stamping its use elsewhere.
R.V., Interesting theory.
Regardless of Malcomson's influence, Dodge Brothers had already spent perhaps six months designing and building foundry samples, tooling, and perhaps even building parts or engines prior to January 1906. No one could have foretold how poorly the K would sell at that point, so even if Malcomson had no vote ( and he did still have a vote) the Model K was still going to be produced in spite of Henry Ford not wanting to do so.
Again it is important to point out that every credible reference we can find says that Henry Ford wanted only to produce one model of car. Henry Ford wanted to produce a car that could be afforded by many people. Had Henry been in charge, there would never have been a Model K.
The low sales of the Model K in 1906 at perhaps 300 units did not apparently matter to Dodge Brothers, who already had an order from Ford for 1000 chassis, a number that Ford was never able to sell over the course of the 1906 - 1909 model years that the Model K was offered. Ford could have cancelled offering the cars, but since Dodge already had a firm order in hand Ford was obliged to accept the cars regardless of the cars being resold by Ford.
It is important to point out the fact that Dodge Brothers were the manufacturer of all Ford cars prior to the Model N. Ford Motor Company (Harold Wills) was the designer of the Ford cars including the Model K. Ford installed the outsourced bodies on the chassis prior to sale.
A news report on the suit brought by the Dodges's against Henry Ford over expansion in 1916. I can see why the Dodge brothers now wished profits turned into dividends, that they could then convert to the newly formed Dodge Brothers enterprise, instead of being used to strengthen their competitor (Ford) through expansion. Not that I agree, but I can see their angle.
I can also see Henry Ford being furious that two investors (and competitors) with only 10% interest are able to stop (injunction) his expansion plans:
Henry declared on the Dodge Brothers in 1913, and vice versa. The Dodge Brothers were not allowed on Ford property after they announced plans to stop supplying parts to Ford due to the need of their manufacturing facilities to build their own car.
Dodge did honor the terms of their contract with Ford Motor Company by giving the required 12 months notice. That is why you see Dodge Brothers marked parts through the entire 1913 model year, and into the 1915 model year as parts were used from stock until they were entirely depleted.
According to this 1914 article, looks as though being a stockholding business associate of Henry Ford's worked out well. Of the 44 people reporting incomes of one million or more, over ten percent gained their wealth through involvement with Ford Motor Company (Henry and Edsel Ford, John and Horace Dodge and James Couzens):
A few more Malcomson items:
Above, A. Y. Malcomson drives a Ford in races at Grosse Point MI in 1904. Also racing were Ford's primary race car driver, Frank Kulick and Barney Oldfield driving a Packard (who would have thought A. Y. Malcomson raced?).
Below, the only instance I've found in the Ford Motor Company minutes where Alex Malcomson won a vote and Henry Ford didn't. Ironically, Henry Ford seconded a motion by John Dodge for $25 dollars per meeting in Board pay, while A. Y. Malcomson moved for, and won, $3 per board meeting pay. In today's dollars, Henry Ford was seconding the equivalent of $500 per meeting. Malcomson's motion was approved, paying the equivalent of $75 per meeting: