By 1920, the whole appearance of American city streets along with their noise and even their smell had changed from what they had been 20 years earlier. The horse, which had been the chief means of land transportation for 3,500 years, had given way to the automobile, and the country’s largest industry had been born.
The dream of a self-propelled vehicle had been around at least since the middle of the eighteenth century, but it was only toward the end of the nineteenth, when the internal combustion engine approached practicability, that the dream started to be a reality. Europe, especially France and Germany, made many of the first technical breakthroughs (such as the carburetor), and France was the largest automobile producer until 1904, when it was overtaken by the United States, which has led the world ever since.
The brothers Charles and Frank Duryea set up a small factory in Springfield, Massachusetts, in 1896. They manufactured and sold 13 automobiles that year, beginning the American automobile industry. By the turn of the century both the variety of cars and the companies that manufactured them were proliferating. In 1903—a year by no means atypical of the early days of the automobile business—57 automobile companies came into existence (Cadillac among them) and 27 went bankrupt.
At first, automobiles were manufactured for the rich. The Duryea brothers sold their cars for $1,300 each. In 1896 that was a very good annual wage for a skilled workman. Cheaper cars came on the market, but it was Henry Ford who took up the automobile and changed the world with it.
Ford’s Model T was a revolutionary concept in automobiles in that it was designed not as a rich man’s showboat or a little fair-weather putt-putt but as basic transportation for the common man. As such it changed both the American economy and, indeed, the entire landscape of the country. It made the automobile the engine of change in the twentieth century, just as the railroad had been in the nineteenth.
The raw numbers show vividly just how quick and how sweeping was the impact of the Model T. In 1900 America produced 4,100 automobiles; in 1908, the year of the Model T’s advent, the number had risen to 63,500; in 1909 it had nearly doubled, to 123,900. In 1916 it stood at 1,525,500. Having designed the Model T, Ford put all his energies into finding cheaper and better ways to produce it. Introduced at a price of $850, by the 1920s a new one could be bought for $275, despite the inflation caused by World War I. The most important innovation was the moving assembly line, instituted in 1914.
Previously, automobiles had mostly been built one by one. But Ford had visited a meatpacking plant in Chicago and had been deeply impressed by the speed and efficiency with which steers were transformed into steaks. He reasoned that if cattle could be disassembled this way, he could reverse the process with automobiles in order to assemble them more quickly and cheaply. He was right, and the assembly-line method quickly spread not only to other car companies but to nearly every industry engaged in manufacturing complex things. And so the American passion for “productivity,” the output of factories as measured against man-hours of labor, really got under way.
The apostle of productivity had been a man named Frederick Winslow Taylor. Born in 1856 into a wealthy Philadelphia family, he went to work in a factory at 18 instead of going to college and soon began developing his principles of time and motion. He used a stopwatch to study exactly how workers did their jobs, in order to devise ways for them to do those jobs more quickly and better. In 1911, toward the end of his life, he published The Principles of Scientific Management , one of the most influential business books ever written. Although little-known to the general public, his impact on the American economy in the twentieth century was immense.
There was a price to be paid for the efficiency of the assembly line, however. The workers on the line spent their days attaching the same type of bolt to the same type of nut for hour after hour. The work was stultifyingly boring. The turnover in workers at Ford plants began to rise alarmingly, and Ford sought to reverse that trend by paying his workers five dollars a day, an astonishing wage for an industrial worker. Many of Ford’s fellow industrialists foresaw disaster, but in fact the wage hike more than paid for itself in increased productivity and lower turnover. It also, not entirely coincidentally, created many more customers for Ford, as many of his workmen could now afford to buy a car.
By the 1920s, Ford was producing well over half the cars in America, which, in turn, had on its roads more than 80 percent of all the cars in the world. Between 1922 and 1930, the United States turned out an astounding 30 million passenger cars. This vast production stimulated many other businesses: The steel, rubber, and glass industries flourished. Construction companies boomed as highways and garages were built. Oil companies, rapidly losing their kerosene business to the spread of electricity, more than made up for it with increased gasoline sales.
Henry Ford, however, stayed too long with his momentous car. Owning 100 percent of the stock in the Ford Motor Company, Ford could do as he pleased. He was sure that the Model T—cheap, basic transportation—was what the country wanted. For years he was right, and his company manufactured more than 15 million Model T’s between 1908 and 1926. But his major competitor, General Motors, tried a different approach.
General Motors had been created by William C. Durant in the first decade of the century by acquiring numerous small automakers. But while Durant was a great visionary, he was a poor manager. In the 1920s he lost control of General Motors to the DuPont Company and the Morgan Bank. Alfred P. Sloan became GM’s president and proceeded to create the largest and most powerful industrial enterprise on the face of the earth. He recognized that he couldn’t compete head-to-head with the Model T, so he went it one better. His low-end car, the Chevrolet, cost a little more but offered amenities the Model T did not have—different colors, for instance.
Sloan realized that automobiles had become more than basic transportation. They were symbols that expressed both personality and status. GM produced a carefully calibrated series of cars to appeal to every economic level, from the Chevrolet to the Cadillac. By 1927 GM had surpassed Ford in auto production, and Ford was forced to abandon the Model T and retool. The company would never regain its primacy.