Source: Scientific American, 20 July 1895 and 22 June 1895.
The Mercedes brand was one that emerged in the Daimler organisation in a somewhat unorthodox fashion. A wealthy commercial magnate in Vienna by the name of Emil Jellinek, working on the principle that if he ordered a large enough quantity he could influence the product, ordered four Daimler automobiles on the condition that they were capable of sustaining speeds in excess of 25 mph. Despite some misgivings, Daimler could not afford to turn down such a large order, and the four vehicles were duly delivered to Jellinek at his winter residence on the French Riviera. Jellinek subsequently sold two of the vehicles to Baron Henri de Rothschild whose ego – and wallet – had been stirred by Jellinek’s ability to easily overtake him on the roads of Nice. It was common at the time for drivers to enter races under pseudonyms, and Jellinek followed this practice using the name of his daughter: Mercedes. Despite the death of a Daimler foreman in one of the ‘fast’ cars demanded by Jellinek, the thirst for speed was sufficient to allow Jellinek to persuade Daimler to construct a new vehicle for him and give it the name ‘Mercedes’.
The real persuasion came in financial form. In early 1900 Jellinek offered Daimler an order for 36 vehicles with an estimated value of $130,000 (nearly $10m). All he required was the naming of the vehicles and the exclusive sales rights for America and a large part of Western Europe. The automobile that resulted has since been hailed as a masterpiece, with a top speed of 55 mph, more than 50% greater than its predecessors. The Mercedes totally surpassed its competitors and in particular left the small original Benz vehicles struggling in its wake. Despite the success of automobiles in France specifically, where restrictive legislation on automobile use had been largely absent, and Europe generally, the industry was about to be engulfed by a tidal wave from America.
America takes a turn of the wheel
The automobile had taken time to stimulate any meaningful response in America, but by the mid-1890s this had begun to change. Reports of the races in Europe and the developments of Daimler and Benz began to influence opinion in America such that home-produced vehicles began to emerge. The coverage of the Paris-Bordeaux-Paris race excited widespread interest in America, and by September 1895 the US Patent Office had received over 500 applications related to the automobile. As its potential became more recognised, a New York patent attorney by the name of George Selden decided to seek a patent on his ‘improved road engine’. This was granted in November 1895, some 15 years after his original application. Selden may not have been at the technological forefront so far as the automobile was concerned but he was certainly one of the first to recognise the significance of the development that had been fostered in Europe.
Others also shared his vision and had progressed well beyond the paper construct of Selden. A range of automobiles had been constructed and tested in America over the years leading up the excitement of 1895. Steam-powered vehicles had been built by Ransom Olds, a Michigan machinist, in the late 1880s and early 1890s. An electric car had been designed by William Morrison in Iowa and given a public view in Chicago in 1892, while in 1894 Henry Morris of Philadelphia had built the ‘Electrobat’. So far as a car powered by a gasoline engine was concerned, the Duryea brothers had wheeled out their first successful model in 1893 and in 1895 had defeated the heavier Benz automobile in the Chicago Times-Herald race. Interestingly, one of the major factors was that the Benz had been designed to run on the relatively well-paved roads of Europe while the Duryea had to combat the sandy, poor quality tracks prevalent in America. The race was run in poor weather conditions, with muddy roads, which the Benz was simply too heavy to negotiate.
6.3 – The press scents an opportunity: the Times-Herald race
Source: Scientific American, 3 August 1895.
The early ‘races’ in general were more endurance trials than speed events, although speed did become an issue as time progressed. The Vanderbilt Challenge Cup, donated by Willie K. Vanderbilt and run at Long Island in 1904 under the auspices of the American Automobile Association, was won by a car which averaged over 50 mph. This was a long way from the early days of racing when the less-than-impressed spectators were prone to chant ‘get a horse’. The introduction of races in America was of vital importance in the development of the automobile since it was one of the main methods of drawing public attention, absolutely necessary if funds were to be forthcoming in financing future development. The need for an automobile industry in America was explicitly recognised in the press, which helped the efforts of entrepreneurs soldiering to build viable automobiles. The relationship between the press and the automobile was symbiotic. Just as the railway, electricity and the telephone had stimulated the birth of magazines to provide information and news on these new inventions, so too did the automobile. Publications such as The Horseless Age in America and Autocar in Britain appeared in 1895 to cater for the growing levels of interest in the new form of transport.
6.4 – Unexpected windfalls: the race to be hit by Vanderbilt’s automobile
Source: Horseless Age, 2 January 1901.
William K. Vanderbilt had shipped a Daimler automobile from Cannstatt with the sobriquet the ‘White Ghost’. Willie K., as he was known, then proceeded to drive the vehicle at great speed on Long Island and in the process come into repeated contact with both the local constabulary and grazing animals. So far as the latter were concerned, Willie K. would pay damages for the stricken beast. Eventually this was to become almost a cottage industry in the area. As soon as his automobile was sighted at the Manhattan ferry the Long Island locals would round up elderly livestock and attempt to ensure that the unfortunate beasts made contact with the ‘White Ghost’. Some farmers even purchased disabled streetcar horses for that very purpose. “The farmers have discovered that a horse which isn’t worth over $6 for glue and fertilizer will bring $65 to $100 when killed by a Vanderbilt auto… Animals were routinely shoved in the way of his car. Fights would break out over who should have the privilege of having his horse hit first… Newspapers estimated that it cost Willie K. $47.23 a mile to take pleasure trips to the island. The carnage ended when a couple of nearsighted speculators had their beasts struck by non-Vanderbilt vehicles; Willie K. grew suspicious and announced plans to ‘employ a claims agent to adjust losses’.”
6.5 – Automobiles arrive, swiftly followed by loss adjusters
Source: B. R. Kimes, The Star and the Laurel: The Centennial History of Daimler, Mercedes, and Benz, 1886–1986, Mercedes Benz of North America, 1986, p.95.
In the mid-1890s, Europe still held the lead in the design and construction of the automobile. Within ten years, though, it was effectively supplanted by new producers in North America. The European automobiles were individually constructed and hence expensive to run and maintain; they were heavy since European roads were typically surfaced; and they attracted a tariff on importation to America. As a consequence, their penetration of the American market had been relatively limited.
Demonstrating that the technology worked was one thing, but what the market required was a vehicle that would be able to displace the horse-drawn carriage on the basis of cost. Perhaps the lack of roads in America had left it behind Europe, there being only 200 miles of surfaced roads outside of urban areas. Whatever the reason, America’s rapidly growing economy and the wealth it was creating was swiftly making it the single largest homogeneous market in the world. In Britain the existing carriers, most notably the stagecoaches and the railways, had successfully created barriers such as the red flag laws to inhibit the progress of their new competitor. In continental Europe, the focus had increasingly been on the creation of larger and more expensive vehicles. The market gap that existed, therefore, was for the affordable horse-and-carriage replacement. This was the gap that inventors in America sought to fill.
Enter the Duryea brothers
In 1895, the automobile largely created by Frank Duryea had won the Chicago Times-Herald race. The vehicle was the product of many years of w
ork, which on a number of occasions had been sufficiently dispiriting in its lack of success that the project was nearly abandoned. Interest in the automobile had been stimulated by reports in Scientific American of the Benz automobile in Europe. Charles and Frank Duryea decided that, with their background in the bicycle industry and their knowledge of engineering and machining, they should be able to create an improved version of the vehicle. Together in 1892 they managed to persuade Erwin Markham of Springfield, Massachusetts, to invest part of his small savings to finance the project. Their early experience was not encouraging and Charles Duryea repaired to Illinois to work on a bicycle project with another group. This left Frank Duryea in the position of not only having to repair and sustain the confidence of his worried investor, but also seek to overcome the technical obstacles which had thus far proved insurmountable.
The first of these problems was to achieve controlled combustion, fundamental for an internal combustion engine. Eventually in 1893, after significant revisions to the existing engine, the combustion process was successfully achieved. The background to this was a grim economic and financial environment and a scepticism verging on ridicule from observers of the project. Sustaining Markham’s commitment in the face of this represented at least as important a task as the engineering problems. Although the first engine was neither powerful nor effective it was psychologically very important, for it convinced Markham to continue his backing for the venture. A new engine was constructed which was operationally superior and this allowed the road test of a vehicle in September 1893. The notes supplied to the press indicated the intent to form a joint stock company on the basis of a vehicle that, it was ‘estimated’, could be profitably sold for $400 (nearly $30,000). The test was successful in that the vehicle moved under its own power. However, the power generated by the engine was not great. Combined with an unsatisfactory transmission mechanism, this meant it could not move at any great speed, nor could it negotiate even a slight incline.
In order to address the transmission problem, Frank Duryea visited the Chicago Exposition in 1893, where he was able to view the Daimler automobiles imported by William Steinway. There in person he was able to ride on the ‘Otto’ four-stroke-engine-powered cars and inspect the clutch and gear transmission mechanisms. Returning to Springfield he set about persuading Markham to part with further funds. He was successful, although Markham’s resources were limited and Duryea had to lead a hand-to-mouth existence. In January 1894, after months of unpaid and arduous work, Duryea successfully demonstrated a reliable vehicle that could negotiate inclines. Certain alterations, such as brakes, were obviously required before commercial deployment could begin, but now there was a working prototype.
Unfortunately the move to the next stage of development was beyond Markham’s means and patience and another backer had to be found. Markham had invested nearly $3,000 (over $200,000) and new funds were required. On the back of the vehicle being developed, a new joint stock company was formed in September 1895. The Duryea Motor Wagon Company carries the distinction of being the first such company in America to solely concentrate on the automobile. The funds this raised allowed the completion of the new vehicle, which was wheeled out in time to win the Thanksgiving race in Chicago and receive the $2,000 prize.
The Duryea vehicle might have been the first in America, but Frank Duryea was only one among many inventors frantically seeking to achieve the same goal. The principal barrier to entry was one that is common to most new industries in their formative stages. The initial public scepticism towards the automobile formed the backdrop to the banks’ assessment of their highly speculative nature. This convinced them of the wisdom of avoiding it as a destination for investment funds. The scepticism was also fuelled by the economic hardship and poor stock market conditions which prevailed during the early 1890s. The absence of funds from the banks did not unduly inhibit the initial development phase of the automobile, but it did help to focus early efforts on relatively high-priced automobiles where expenditure could be quickly recovered (the presumption being that the wealthy were relatively price-insensitive). For a new automobile manufacturer in this ‘cottage industry’ type of environment, all that was required was the mechanical knowledge, or at least a presumption that one had it, and the ability to persuade suppliers to provide materials on credit. Many existing and new companies were to try their hand at producing this new vehicle. There are estimates that in the 20 years that followed the first faltering steps of the Duryea automobile, there were over 1,000 and possibly as many as 1,500 automobile manufacturers in America.
Despite the early success of the Duryea vehicles, the company founded by the brothers did not survive long, becoming the victim of increasing sibling rivalry. In 1898 the Duryea Motor Wagon Company was sold to the National Motor Company and effectively closed after the production of 13 vehicles. Charles Duryea continued with the Duryea Manufacturing Company, which was established in 1898 with a capitalisation of $50,000 ($3.75m), although the actual funds raised amounted to just $3,400 ($250,000). Duryea retained the remainder of the unsold shares. Charles Duryea continued unsuccessfully to build motor vehicles and eventually ended up the editor of the Automobile Trade Journal.
The efforts of Frank Duryea met with more success and his partnership with the Stevens Arms and Tool Company produced a business, the Stevens-Duryea Company, that manufactured high-end vehicles with varying degrees of success before being purchased by Westinghouse in 1916. For Frank Duryea, at least, there was some monetary reward – a payment of $500,000 ($22m) in return for his stake. Auto production continued for some time after this transaction, with the ownership structure taking various guises and the receivers never far from the door. Eventually, in 1924, the company sold its plant and property to the Springfield Body Company. Although the Duryeas had the first automobile company and substantial early success, it was not enough to make them a major market player. Their operations were swiftly overtaken by events. One other first that the Duryea automobile can lay claim to was the first recorded traffic accident, which took place in 1896 in New York City and resulted in the temporary arrest and imprisonment of the driver.
The excitement which increasingly surrounded the development of the horseless carriage almost inevitably attracted individuals who sought to translate this excitement into monetary gain. Some took the arduous and frustrating route of striving to produce better and cheaper vehicles. Others sought easier returns, raising capital based on expectations of future demand without any real intent to fulfil this demand. One of these was a gentleman by the name of Edward J. Pennington, who formed numerous companies on the back of his alleged expertise in engine technology, the valuable patents he held, and his ability to produce motor vehicles which would quickly capture market share. Like all stock promoters, he was sufficiently technically knowledgeable on the subject to persuade the financial press of his intentions and in the receptive mood of the time was able to raise funds. Photographs and plans of his ‘vehicles’ appeared in the trade and financial press, allowing substantial funds to be raised. Even though the validity of his claims was shown to be lacking in substance, Pennington demonstrated that a slightly altered message or geographic location was often all that was required to allow capital-raising exercises to be repeated if the environment was sufficiently optimistic.
A case of hot air
In November 1895 the first edition of the new magazine The Horseless Age was published. The magazine was dedicated to the emerging motor vehicle industry. In its first edition it featured a number of vehicles with different forms of propulsion. The first was the ‘Spring Motor Quadricycle’, a vehicle powered by a wound spring which it was hoped could cover three miles at a speed of 20 mph on one winding, assuming no gradients. More attention was paid to the Duryea Motor Vehicle, which was to be entered in the Times-Herald race, and the race itself commanded many column inches. Space was also given to a number of electrics such as the Electrobat, but the largest single entry on a motor vehicle referre
d to the Kane-Pennington Hot Air Engine and the Racine Motor Vehicle Company. This entry provided a relatively detailed and seemingly technical explanation of the operation of the Pennington engine and the vehicles which carried it. These ranged from four-wheeled vehicles to motor bicycles and included illustrations and photographs such as that for the most recent version detailed below. This vehicle was the Fan-Motor Bicycle and was presented as the latest advance: “[a]t an exhibition given in Milwaukee, Wis, recently, Mr Pennington covered a mile on his motor cycle in 58 seconds” (i.e. over 60 mph). Further, the article noted that a “number of the large bicycle manufacturers are preparing to apply Kane Pennington engines to their machines, and motor cycles will be a familiar sight before the close of 1896”.
The enthusiasm for motor vehicles was not surprising given the express purpose of the journal was the promotion of the new industry. Equally, in an embryonic industry, the claims of manufacturers and new companies were no doubt difficult to validate. Certainly, within a relatively short period of time, the enthusiasm which had greeted Pennington’s commercial endeavours was replaced by a different set of emotions. In the June 1896 edition the following article appeared, under the heading ‘Beelzebub’:
“Persons interested on this side of the Atlantic have read with mingled feelings the deluge of humbug and bluff with which E. J. Pennington, aforetime of America, has been flooding the motor press of England and the Continent. These feelings have passed through the various phases of amazement and indignation, and we have at length settled into such a deep disgust that we are compelled to doubt whether our English cousins really possess the good sense with which they are commonly supposed to be endowed.
Engines That Move Markets (2nd Ed) Page 25