Henry Ford’s Horseless Horse

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But the major farm-equipment companies such as John Deere and International Harvester, along with a host of smaller companies, were soon experimenting and turning out internal-combustion tractors. The early gasoline tractors were largely modeled on the steam-powered ones they were beginning to replace. Thus they were large, heavy, clumsy, and expensive. Few farmers wanted or could afford them. Then World War I changed everything.

American farm prices soared as European grain production plunged and Russia’s huge grain exports were cut off. The demand for horses and mules, meanwhile, also increased vastly. The belligerents needed the animals to haul wagons and guns on the front lines, where they were slaughtered, like the soldiers, by the hundreds of thousands. With the price of horseflesh rising out of sight and money in their pockets from grain sales, more and more American farmers decided to try tractors. Henry Ford decided the time had come to produce one.

In 1915 he announced his plans for the Fordson tractor, saying he would sell it for $250. His new tractor was smaller than most then on the market, structurally much simpler, and specifically designed to be mass-produced—a tractor version of the Model T, in other words. It took Ford two years to get into production, and the initial price ended up at $750. Still, from the beginning sales were brisk. By March 1918 he was making eighty a day, and production hit three hundred a day by year’s end. In 1920 Ford boasted that he had sold one hundred thousand tractors, twice the total number that had been in use on American farms when the Fordson was introduced.

Although already the largest manufacturer of tractors, Ford then decided to go after market share. In January 1922 he slashed prices, selling the Fordson for only $395, less than the price of a good team of horses. The other tractor manufacturers were stunned and had no choice but to meet his price. Many, Ford included, were losing $300 on every tractor they sold, and a good number vanished from the marketplace. International Harvester, however, did not.

His tractor failed because Ford focused too much on replacing the horse and not enough on what the horse actually did.

“Ford was backed,” Cyrus H. McCormick, grandson of the founder, explained, “by the most popular commercial name of the time and by the uncounted millions earned for him by his epoch-making car [but] he was trying to capture a business with which he had no previous contact. International Harvester had on its side many years of training gained from contact with farmers, less capital by far, and utter inexperience with defeat.” That contact with farmers and farm equipment was to prove crucial in the contest between Ford and McCormick for dominance in the tractor market.

You see, the old horse-drawn farm equipment had been powered by a bull wheel. That was a large wheel sticking out from the side of the equipment, armed with cleats that dug into the ground. As the horses pulled the equipment, the bull wheel, at least in theory, turned the machinery. When the soil was wet, however, the bull wheel often just slithered along without turning and had to be helped manually, an exhausting and sometimes dangerous job. Farmers hated bull wheels.

But the bull wheel, for all its inadequacy, was the best way there was for powering horsedrawn equipment. As one engineer of the time explained, “horses are obliged to transmit their power through the ground to the machinery they operate because of their inherent and unchangeable construction.”

The construction of tractors is not unchangeable, however, and in the cutthroat tractor market of the early 1920s International Harvester soon offered a vast improvement on the bull wheel, the power takeoff. The PTO is a rotating shaft powered by the tractor’s engine that can be connected to the equipment being pulled by the tractor. It has since been a feature of every successful tractor model.

Being a farm-equipment manufacturer, International Harvester soon had a line of equipment designed to work with the new, much more efficient, and far more reliable power source offered by its tractors. Farmers loved the PTO, and International Harvester quickly pulled ahead of Ford in tractor sales.

When Ford produced his Model T, he produced a practical, affordable horseless carriage, all that the traveler needed to travel and just what the marketplace was looking for. It was one of the great capitalist bull’s eyes of history. His Fordson tractor, however, was no more than a practical, affordable horseless horse. That, in the end, was not quite enough.

Even geniuses don’t hit the bull’s eye every time.