The last straw, Ford and Malcomson

[Rob]

This is the third of three recent threads on Henry Ford, Alexander Y. Malcomson, and their time together as equal co-investors in Ford Motor Company. As mentioned earlier, (thread 1), I've only found one instance when a Ford Motor Co. director made a motion that failed to gain a second, let alone pass (Malcomson, 1904). That led me to follow the two men during their time as directors and officers on the FMC board of directors (BOD). I finished thread 2 at the close of Fiscal Year 1905 (September 30, 1905). At that time, by some reports Ford Motor Co. produced the second or third largest number of automobiles in the world, a remarkable achievement for a relatively new company. Meanwhile, both Ford and Malcomson had received well over a million dollars in today's value from company dividends in 1905 alone.

The purpose of this thread is to examine, did A. Y. Malcomson influence, even "force" Henry Ford and Ford Motor Company to build the six cylinder Model K? In thread two we saw Henry Ford designing, and racing the six cylinder racer, through September, 1905. In the meantime, Ford and Malcomson made and seconded each other's motions at board meetings, giving the impression they were in agreement, or at least working toward the same goals as far as the company was concerned.

Now it gets a little more dicey...........

First, the shareholders meeting was held October 16th, 1905 (required at the end of each fiscal year by FMC bylaws). A comparison of 1905 and 1904 business was presented to investors, showing an increase of 1905 sales 160% over 1904. Malcomson motioned that the financial statements presented be accepted, and motioned a revisions to bylaws be changed. Both motions were seconded and carried.

Ford Motor Company had begun advertising the upcoming models for 1906. This early November 1905 advertisement describes the upcoming Model K, including Ford's own "Perfected Magneto," as well as price. Details on the Model N, including price, were not as detailed, but described:

The table is set. Ford Motor Co.had decided upon their upcoming models for 1906, carrying over the Model F, and introducing the country's first six cylinder production touring car, as well as what will be the lowest cost four cylinder runabout ever marketed.

Meanwhile, what is Alexander Malcomson up to? According to author Allan Nevins, (1954 book, Ford, "The Times, the Man, the Company,") "Malcomson, however, had fallen in love with the design of the much costlier six-cylinder Model K."

Had he? Was Alexander Y. Malcomson actually "in love" with the six cylinder Model K?

We have the good fortune to live in an Information age not before imagined. I suspect Ford history authors from the 1920's on would have written very different accounts had they had the benefits we have of the Information Age.

With that said, we now know what A. Y. Malcomson was indeed doing during this period Henry Ford, C. H. Wills and their assistants were attempting to finish, test and rush to market the upcoming models. In 1909, Malcomson was sued by Reeves (this was actually an appeal of a 1907 suit brought by Reeves agains Malcomson) that tells when Malcomson signed the contract for, how many, and the type of motor he contracted for.

As we saw earlier, Malcomson purchased ground with railroad access in 1904. At the time it was presumed that the undeveloped real estate was for a future Malcomson coal yard. However, it remained undeveloped. Now, we know, through court documents from 1909, what A. Y. Malcomson did on November 1, 1905, two weeks after the FMC shareholders meeting, and days before Ford announced their upcoming Models K and N.

He secretly contracted for 500 air-cooled motors with Reeves Pulley Co. of Columbus, IN. The air cooled motor was well tested, having been offered since late 1903. It was a 4" by 4" bore/stroke, 201 cubic inch air cooled motor rated at 20 horsepower. The contract was signed November 1, 1905. That tells me Malcomson had been looking for some time for the right motor for his future car, and then negotiated a contract prior to the signing date. We know Malcomson hired an assistant to take over all coal business in August 1905. My only question is, how long had he planned to start his own automobile company prior to this?

Below, August 1905 Reeves Pulley advertisement for the air cooled motor Malcomson chose to power his car:

I don't know how to put it delicately, so I won't. Who, in their right mind, with this information, would ever say that Alexander Malcomson fell in love with six cylinder motor, and furthermore, why would we, today, believe Alexander Malcomson "forced" Henry Ford to build and market the six cylinder, 405 cubic inch, 40 hp Model K, when he (Malcomson) chose a 20 hp 201 c.i. motor for his creation?

As far as I'm concerned (and I'm not always very diplomatic about this, but what the hell, I"ve been immersed in this since my first ride in Tim (RIP) and Joan Kelly's Model K), Malcomson showed no interest whatsoever in a big, fast six cylinder automobile.

But, like a Ginsu Knife commercial, wait, there's more...............

[Rob]

On December 3rd, 1905, the news breaks. Detroit will have a new automobile producer, and plant, in forty days. Aerocar is announced, with Alexander Y. Malcomson at it's head.

The new plant, similar in appearance to the new Ford plant at Piquette, is being built on the lots Malcomson bought early in 1904. One might imagine Henry Ford, C. H. Wills, Jas. Couzens or the Dodges opening their morning newspaper before heading off to the plant, and reading that one of your two largest investors, and Treasurer of your board of directors, has just announced his well laid and advanced plans to go into competition with you.

"The Automobile" magazine report, Dec 4, 1905:

While this may not seem cataclysmic to us today, Malcomson knew all Ford's agents, suppliers, and other business information. Furthermore, the model his new company will market, while different in appearance and mechanically, is priced to compete in the same market as Ford's new Model K.

Needless to say, Ford Motor Company will have something to say about this..........

[Robert Kiefaber]

Very interesting Rob.

[Rob]

The board reacted swiftly to the news of Alexander Malcomson's new company. A special meeting was called and held a couple of days after the news stories ran. Below, BOD Minutes, Dec 6th, 1905; "Moved by Mr. Rackham, Seconded by Mr. Ford that the resolution hereto attached be passed and copy sent to A. Y. Malcomson. Carried."

The reading of the minutes of the last meeting were dispensed with, and the board went right into the reason for the special meeting.

Resolution "A," prepared by the BOD and sent to A. Y. Malcomson: "THEREFORE, it is RESOLVED that the said Alex Y. Malcomson be requested to tender his resignation as Treasurer and Director aforesaid to the President of this Company writhing five days from the date he is requested to do, and that the Secretary of the Board give to him a copy of this resolution."

The lines have been drawn, the battle joined. The BOD sends a resolution condemning Malcomson's action, and demanding he step down from his leadership position on the Board of Directors. One thing that I suspect is often lost in this, Malcomson is not asked or told he must sell/relinquish/dispose of his shares. That's not the issue, and not something the board can demand. I believe many presume Malcomson is "being forced out." The reality is, he is being strongly requested to step down from his position on the board, an appropriate move in my opinion.

Of course, there is more to follow.

Next, as we enter 1906, Malcomson deflects, projects and declines.

[Rob]

It didn't take Alexander Malcomson long to respond to the Ford Motor Co. BOD. His response was filed with the company December 16, 1905. He acknowledged receiving the boards letter (attachment "A"), writing that "I had no proper notice -- requesting my resignation as treasurer and as a member of the Board of Directors of the Company."

He wrote "I am the owner of more than a quarter of the stock of Ford Motor Company which now is under proper management will continue to be a valuable property."

Next (highlighted, second page), and I believe of significant importance, is the next highlighted portion of his response to the directors.

Malcomson is about to "tear into" the creation of Ford Manufacturing Co. Ford Manufacturing Co. was created by a group of Ford people for the intention of manufacturing/building portions of the upcoming Model N. Many (most) Ford historians report (believe) this company was created as a way to "siphon" profits away from Malcomson and other investors. That's an argument for another day, however, this page gives us insights, and creates a question I think must be explored.

Ford Manufacturing Co. is created to build Model N motors and other components of the upcoming model. Ford plans to build 10,000 Model N, a number never attempted in a short period of time. The Piquette plant is already at full capacity, along with Dodger Brothers, which is now for all intents and purposes a Ford dedicated production plant (although privately owned by John and Horace Dodge). For Fiscal Year 1905 FMC (and Dodge, as well as suppliers such as American Ball Bearing, who made Model B differential and front axels) were at full capacity building 1745 cars (Ford 1905 audit).

For 1906, FMC intends to begin production of 10,000 Model N, as well as 1,000 Model K. Ford needed more capacity. And, if FMC was going to reduce reliance on completely independent suppliers such as American Ball Bearing, they need more control. I'm not arguing this is the entire reason Ford Manufacturing was created, but the need certainly appears to have been there. (See two slides below, for a closer look at Ford Manufacturing).

If you jumped ahead and looked into Ford Manufacturing, I hope a question comes to mind (it did for me). Malcomson's letter (below, page 2, middle highlighted paragraph) went on to report "the Ford Manufacturing Company comprised and controlled by the holders of both the stock and directorships of the Motor Company."

Wait a minute! Hold the phone! Hold on a gol darned minute (my best effort to sound excited, while not writing damned or other curse words......). Did you catch it?

HOW CAN ALEXANDER MALCOMSON "FORCE HENRY FORD AND FORD MOTOR COMPANY" TO BUILD THE SIX CYLINDER MODEL K, AND HE CAN'T:

A. Stop Henry Ford and the other investors from creating Ford Manufacturing Compnay?

B. Not, along with John Gray, be invited to participate in Ford Manufacturing Compnay? If, as he wrote in his letter to the board, "the Ford Manufacturing Company comprised and controlled by the holders of both the stock and directorships of the Motor Company," how is it that he (Malcomson) was not asked to participate in Ford Manufacturing? Furthermore, how is it that the 3rd largest FMC shareholder, John Gray, also was not 'invited" to participate in Ford Manufacturing?

Because, it didn't happen (in my opinion). No way did Henry Ford, the Dodge brothers, Couzens, Bennett and the two lawyers (plus the addition of Wills) forcibly exclude the other two largest shareholders, Malcomson and Gray, from being part of Ford Manufacturing. Furthermore, how could Malcomson hold the "clout" to "force" FMC to build the Model K (and in some historians view Model B), yet not be able to stop, or join, Ford Manufacturing Co.?

One can't have it both ways. Simply can't be. I believe Malcomson was using Ford Manufacturing as a wedge to attempt to gain future support from the shareholders not included on the board, in case this came down to a fight by him to retain his position, and/or his shares in Ford Motor Co..

For one moment, lets drill down into Ford Manufacturing Co.. Who did it benefit? The owners were several of the larger FMC investors, as written by A. Y. Malcomson in his letter. However, it was not all "larger investors." The initial shareholders of Ford Manufacturing Co. included Henry Ford, FMC attorneys and investors (and Malcomson Coal attorneys) Anderson and Rackham, Charles Bennett (remember that name, Daisy Air Rifle executive), the Dodges, and James Couzens. A new addition (non FMC shareholder) was C. H. Wills. Noticeably absent were A. Y. Malcomson and President of FMC (and number three in number of FMC shares) John Gray.

Diving even deeper in these "weeds," C. H. Bennett pulled out at the last minute, and the shareholders above were reduced by one. Now, who stood to benefit from Ford Manufacturing. Henry Ford held 58% of the company shares! The other shareholders all held 7% of the company shares. Financially, if size matters, Henry Ford was the guiding force in this company. This company benefited him, far and away more than anyone else. That's something to consider..........

Note: When Ford Manufacturing sold to parent Ford Motor Company in 1907 for $450,000, Henry Ford's share was $261,000. In todays dollars, over 8 million dollars. By comparison, each other shareholder received $31,500. Ford Manufacturing, while a significant benefit for the other investors, was over and above all else, a "vehicle" for Henry Ford.

At the end of the day, I believe Alexander Malcomson was "invited" to join Ford Manufacturing. However, I suspect he was, for one thing, strapped with his secret (to this point) efforts to prepare for construction of his automobile plant, contracting for auto components, and generally preparing for the launch of his dream, Aerocar. How could both Malcomson and Gray have been "frozen" out of Ford Manufacturing? I am positive neither chose to buy in. Malcomson's own letter doesn't say he was prohibited from joining, but that small shareholders were.

Instead of writing Malcomson was "in love with the six cylinder Model K," I believe it's obvious what car he was 'in love with." He chose the four cylinder 20 hp Reeves air cooled motor for his car. Of all the engines available, that was his choice, and no one else's.

As usual, there will be more to follow. In early January, 1906, Henry Ford will have his opportunity to stop, or limit production of the upcoming six cylinder Model K. We'll see how that works out.

Cheers,
Rob

[Ed Baudoux]

Great stuff, Rob! Thanks for sharing this.

[cwlittle]

Fascinating!

Where was Ford Manufacturing Company located? I can find nothing Googling it.

[Rob]

Thanks guys,
I believe this is where it was. I think addresses were changed sometime after 1907. If this is correct, there is only the hint of a foundation left. Ford Manufacturing, once observed by FMC, swapped places with the Model K production part of Piquette, and it became know as the "Six Cylinder Plant."

Colorized photo of Ford Manufacturing site after it was converted to the six-cylinder plant:

[Jerry VanOoteghem]

Rob,

I believe, but could be wrong, that the plant at Belleview & Mack Ave was what's commonly referred to as the "Mack Avenue Plant". I further believe that the Six Cylinder Plant was located somewhere else. The Mack Ave Plant was a wooden structure, not looking like the brick building in that great colorized photo.

https://www.macsmotorcitygarage.com/the ... nue-plant/

[Rob]

Jerry,
The 1906 article above reported that it was on Belvue south of Mack. Dan W. thought he located what was left of the foundation. We had trouble bring sure because of renumbering of streets after 1907.

From my notes, the photo below is from a 1908 Ford Times. The sales agreement on Ford Manufacturing letterhead listed the address as 773 Bellvue Ave. As I mentioned, I believe the street numbers were changed/updated at a later time, so I don't believe this address gets us there today.

Respectfully submitted,
Rob

[Jerry VanOoteghem]

Yes, Rob. The streets were renumbered in 1921.

[Wayne Sheldon]

More wonderful stuff Rob! And thank you Jerry for your contributions.
History often has odd ways of sabotaging itself! Renumbering addresses is one historic monkey wrench to be sure. Winchester Avenue in San Jose California used to be famous among local delivery services for its messed up numbering. The road is most famous for the Winchester mystery house, and dates back into the late 1800s.
It has been a long time since I worked in that area (did communication systems contracting, and had a few commercial accounts in the area). If I recall correctly, there were five or six different numbering systems used for addresses on a two mile section of the road! What was worse, was that there was no dividing line between addresses using city and county modern or city or county historic addresses! Coupled with even and odd numbers changing side of the street!
There were numbers known to date back into the 1800s on that street.
Every time the county or post office wanted to make changes, the backlash from people not wanting their addresses changed was incredible! Some people were proud of their historic addresses, and didn't want them changed, even if it would simplify delivery services.

W2, looking forward to further installments.

[Rob]

Wayne, thank you, and good points.

I was going to end with this thread, but, darn, there is so much to write....... Now I know how an editor must feel (movie or newspaper). What do you cut out or leave on the editing room floor, and what makes the final cut...... Anyway, I write these as much for myself as anyone else (although I hope a few people enjoy, and take something away, even if it's just an interest to look further into our Ford history), and when something doesn't quite make sense, to look further.

I'll finish this "segment" with the following. The last (this time I'm sure) segment will include an "eye-witness" who knew both Henry Ford and Alexander Malcomson all their working lives, and did business with both, and his observations about both men, and their contributions to Ford Motor Company.

I'll also end with the passing of A. Y. Malcomson, and a question that I don't know that we'll ever know the answer to.

But this segment can wrap up here. Below is a copy of the January 9, 1906 minutes. Malcomson, while still officially a director, and FMC treasurer, isn't at the meeting. Ford Motor Company is ready to unveil both new models for 1906, K and N. The board stamps their approval on the number of components to buy for each model. Director Rackham moved and John Dodge seconded "Ford Motor Company enter into a contract with Ford Manufacturing Co. for the purchase of 10,000 chassis less Cooler for Model "N" at a price not to exceed $206.00."

The same directors then moved "Ford Motor Company enter into a contract with Dodge Bros for 1,000 sets of "Model K" parts assembled as agreed upon by Mr. Ford and Dodge Bros. At $427.50 each."

I'll end with a few observations and questions.

A. Y. Malcomson is not at this meeting, with only Dodge, Ford, Gray and Rackham present. If Henry Ford didn't wish to build the Model K, wouldn't this have been the time to stop production? Or limit it to 500, same number as the Model B? If President John Gray, who was not a shareholder in Ford Manufacturing, had an issue with the newly created Ford Manufacturing, would he have voted for the contract for 10,000 Model N with the new company?

Back in my old "cop" days, when I went on the stand, the courtroom test was always, "what would a reasonable person think or do?" When i apply that test to these matters, i come to the same conclusion every time. But, that's just me.

And, I'm not finished with the "case" yet. I have a bit more to present. I'll let the jury (anyone reading this) take a break, and finish with my "closing" in a final thread.

Cheers,
Rob

[Jerry VanOoteghem]

Here is a cross reference to the street renumbering of Detroit in 1921, https://stevemorse.org/census/changes/DetroitManson.pdf

Looks like 773 Bellevue landed across the street from, and between, 3190 & 3220.
(Not every address is listed, so some interpolation is needed.)

[cwlittle]

So, it looks like Ford Manufacturing was around the corner from the original Mack Ave. Plant.

[Rob]

I think Aerocar (then Hudson, the building still exists) was nearby too).

Jerry, thank you. I’ve saved this to Dropbox too if anyone would line that link.

https://www.dropbox.com/s/5a9f9sjcf97xv ... e.pdf?dl=0

Several years ago we were planning an Early Ford (and anyone interested) tour of Detroit, and hoped to include the locations of the Aerocar, Mack and Ford Manufacturing plants, as well as the Dodge Brothers main factory, and Ford Detroit Branch building. We didn’t accomplish it, but that could be a good “tour” someday, maybe with a final stop at Piquette.

[Rob]

As long as we're looking at addresses and locations, this is something the Detroit Library sent me when I was looking for a few of these places. Aerocar was bounded by Pulford (street on the left, unmarked), Beaufait, Mack and Beltline (rail lines). Aerocar also reported building another plant across the street or adjacent to the original plant in the summer of 1906. I believe on this map the original is the block long building listed as Columbia. It looks like the Ford Mack avenue plant would have been nearby, and Ford Manufacturing just up the street past the 700 numbers on this map:

While the earliest I believe Henry Ford and the other directors learned about Malconson's Aerocar, "The Motor World" was running at story dated November 30th, 1905, making it the earliest I've found of the new venture. It appears Malcomson was ready to get the news out to the world. The article states that Malcomson "probably will resign" as Ford's treasurer:

[Rob]

Another note. I hope to remember to put it in (too many things, too little time), but there's a good reason Albert Strelow, builder and owner of Ford's original Mack Avenue plant, should have been really, really pissed off at A. Y. Malcomson. It won't fit until later, so I hope to remember, and if not, maybe someone will remind me........

[Chris Barker]

Is it too simple to wonder if Malcomson's alleged 'love' for the K was that he wanted Ford's effort and attention on it, diverted away from the cheaper Model N which would appear to be a major threat to his Aerocar, with a similar sized 4 cylinder engine?

[Rob]

Chris,
It’s difficult to know everything that motivated A.Y. Malcomson. As we’ll see in the final installment, he may not have had much interest in FMC one way or another, except that it was generating a significant amount of capital.

I hope to show that, while Henry Ford and Alexander Malcomson were peers in many ways (age, business, Detroit business circles), they were very different. Malcomson, I’ll attempt to demonstrate, was an “investor.” I think he was the kind of person who bought and sold, with the ultimate goal of getting more for something than he paid.

Henry Ford, on the other hand, was a “maker.” He made things, produced with the idea that selling creations, at scale, was his ultimate goal.

Maybe overly simplistic, but it appears to me one tried to change the world, while the other “bought and sold” within the world.

[Luke]

Thanks guys,
I believe this is where it was. I think addresses were changed sometime after 1907. If this is correct, there is only the hint of a foundation left.

Rob,

I've been enjoying your work, thanks, do I take your comment above to mean that the present site is bare?

If so, out of interest, it should be possible to complete a LiDAR DEM/DSM analysis and produce a relief map of the site which could possibly show the original building footprint, if nothing else. The accuracy should be pretty good and might help in geo-referencing any old maps/drawings you have.

Obviously this assumes there's data available but, if so, I'd be happy to carry out the work and contribute that back here.

Luke.

[Rob]

Luke,
That would be great. Dan Walters took a few pics where he thought it was located, and there was just the outline/footings of an original building. The photo showing the building doesn't tell us a lot. I don't know if there was a front entrance, or if the building beside in the photo was part of the complex. Anything you are able to find would be interesting.
Thank you for the offer,
Rob

[DHort]

I have never used the Sanborn maps, but I wonder if they would be a good resource for this. How often did they redo their maps? Every 10 or 20 years? Can you look them up by street address, or are they filed in some other way?

[Luke]

Luke,
That would be great. Dan Walters took a few pics where he thought it was located, and there was just the outline/footings of an original building....

Rob,

This may take a little working out (and it may also not be that interesting or useful!) but here is a hillshade model of what I believe to be the ground elevations for the site in question. To be clear, this is what the ground looks like, without buildings.

To my mind the groundworks fit with the building photographed and make it possibly ~160' wide x either ~260' or 350' long. I'd be interested in your take (bearing in mind I've less than no idea about the area, and had to turn my GIS software on it's head to get the northern hemisphere orientation as it should be :

[Luke]

Actually this one may show it better without using the GIS software.

Depending upon how you figure things the building could also be as much as ~450' or ~600' long, however I'm inclined to the earlier figures... :

[Luke]

Ok, so we (or at least I!) have been looking in the wrong place, if indeed Ford Manufacturing was at 773 Bellevue.

Here is the correct location, first 1897, second shows it in 1922 (with the original number of 773 along with a cross-reference to today's numbering), and the third is closer to1950. The site is further to the south of Mack than I originally understood:

Ford_Manufacturing_site_773_Bellevue_Detroit_1922_Sanborn.png (355.89 KiB) Viewed 4033 times

I'm not sure I can reconcile the sites with the photograph, but a bit more work by someone familiar with the area might sort it out?


Images are an extraction from drawings courtesy Library of Congress.

[Luke]

Me again,

Below is a georeferenced image showing 773 Bellevue overlaid on a current USGS/Google satellite image. This shows a building (still) at that location (please ignore the minor discrepancy, that's just between the old drawings and me not going to the nth degree with the referencing).

If one considers that the front of the building shown in the 1922 was probably not there in 1905 (you can see the original 'front' wall in the drawings), and the photograph was taken from the 2nd floor office of the lighting building next door (separated by a wide driveway to the south) it could work.

Using the GIS software the original building was possibly around 122ft long by about 78ft wide, and I believe the 28' in the drawing is the building height (yet to confirm).

Also included below is a Google Streetview image of the current building as of July 2019. I think someone would need to visit the site in order to get a clearer idea of whether the current building has come out of what is shown in the early photograph, and/or if the adjacent building could be the one that's still insitu. After more than 100 years, and being a readily modifiable brick structure/facade, it's not impossible - if you walked in roughly 60-70ft from the front and there was evidence of a wall at that point then that'd probably clinch it...

773_Bellevue_Georeferenced_2022_Aerial_Image.png (413.19 KiB) Viewed 4022 times

Images courtesy USGS & Google.