Durant claimed that the financiers listened for two hours, but other than Diamond Match Company president Edward Stettinius and Morgan himself, no one at the table felt that Durant was anything more than a salesman. (That refusal would ultimately cost the Morgan partners billions of dollars. Stettinius, unbeknownst to his skeptical colleagues, eventually bought a large block of General Motors stock on his own and made a small fortune.)
He next tried National City Bank, this time to attempt to secure a $2 million loan to cover the first payment to Ford. Frank Vanderlip, the bank’s president, was enthusiastic about the deal, so approval seemed a formality. It wasn’t. The bank’s credit committee turned Durant and Vanderlip down on the grounds that Durant had placed far too high a value on Ford Motor Company. With that, Billy Durant lost his last chance to buy Ford’s company.*2
And so, against both his will and his better judgment, Henry Ford was back in the car business.
In this instance as well, most biographers have insisted that Ford, with Model T sales promising to soar, could not have been serious about selling his company. But Henry Ford was not a man to frivolously solicit an offer from a competitor. Ford was not a man to do anything frivolously. The option Durant obtained was real and, once more, there are too many disparate sources to conclude anything but that Ford was all too willing to be bought out.
And in some ways, Ford’s exit would have made sense. For someone who was instrumental in ushering in modernity, Ford’s essence remained in the world he was rendering obsolete. He was a man of great sentiment and craved an innocent, almost frontier life, where recreation consisted of such simple pursuits as fishing and folk dancing, mostly jigs and polkas. And, of course, there were his beloved birds. After he’d made his fortune, he initiated annual camping trips with his closest friends, Thomas Edison, John Burroughs, and Harvey Firestone—they called themselves the vagabonds—although the quartet came to be accompanied by cooks, servants, photographers, and often other celebrated Americans, including a president or two. Yet for all of this, Ford had just spent the better part of a decade focused obsessively on work, most days seeing nothing but the inside of a factory or workshop. Under these circumstances, it is not difficult to imagine him grateful for the chance to leave that brutish existence—and as a rich man to boot.
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In any event, after the deal with Durant fell through, Ford’s spine stiffened. At this point, he had little to lose. The bulk of his indemnity was for cars already sold. It was true that future sales until the Selden patent expired three years hence promised to be robust, but pursuing the case on appeal would not cost him one additional cent in licensing fees. Had he accepted the judgment, he would have had to pay those anyway. His only risk was in legal fees, which, exorbitant as they may have been, would be only a small percentage of the reward he stood to gain if he won.
Ford supplemented his legal team with top patent lawyers from both New York and Chicago, as Ralzemond Parker gradually removed himself from the case. Ford always claimed he had affection for Parker, but Parker was old and tired, he had lost a case that everyone Ford spoke with—including Parker himself—had thought eminently winnable, and Ford had not demonstrated any tolerance for failure. The new legal team, with holdover W. Benton Crisp, was comprised exclusively of men with buttoned-up polish, which seemed appropriate for the appellate phase of the case.
If Ford had any doubts that he would fight on alone, they were dispelled early in 1910. In February, the American Motor Car Manufacturers Association, the trade organization that Couzens had put together to face off against ALAM, was dissolved. Officially, the reason was that the group’s five-year charter had expired, but the real reason was that all but thirteen of its forty-three members had already signed on with ALAM, and of those remaining, a majority wanted to jump ship as well. By the end of March, ALAM boasted more than eighty members, each of which advertised under the banner of the Selden organization.
On April 2, Thomas Jeffery died of a heart attack while on vacation with his wife in Pompeii, Italy. Automobile Topics wrote, “Mr. Jeffery’s death removes a man who has been one of the great manufacturers in the automobile field, and few men in the business were wider known in this country or abroad. He was the second man in the United States to take up the manufacture of automobiles, and he was among the first to see the great possibilities of the automobile as a commercial product.”10 Indeed, with the passing of the brilliant and idiosyncratic Jeffery, the one man with sufficient gravitas in the industry to join Ford as an effective ally in his appeal—assuming Jeffery would ever have joined with anyone—was gone.
Ford was hailed as a hero in his hometown—“Ford, the Fighter,” the Detroit Free Press dubbed him in an editorial—but in the industry at large, many shied away. To them, at least for the time being, he was only “Ford the loser.” ALAM pressed its advantage by returning to the same sort of threatening publicity campaign it had launched when the suit was first joined.
As he had in 1903, Ford offered to post a bond to protect his customers—and this time he had the money. ALAM responded with ads warning anyone thinking of purchasing an unlicensed automobile of legal liability. (Although at that point, with the case yet to be appealed, there was none.) ALAM also targeted “individuals listed as prospective customers” and sent them an “explanatory booklet, bearing on its cover the title, ‘What is the Selden Patent on Gasolene Automobiles?’ ” On the cover, in a display box, and as a chapter heading on the last page of the booklet in capital letters was the statement, “No bond is required when you buy a car licensed under Selden patent.” The text also asserted that “licensed dealers decline to take unlicensed cars in trade,” and that “it should be borne in mind that such a bond does not permit the owner of a car to use his machine if an injunction is issued and that an unlicensed car may be difficult to dispose of.”11
Eventually Ford responded by taking out full-page ads in the trade magazines and newspapers under the heading “This Advertisement is Published for the Protection of the Automobile Public.” In it, Ford laid out his guarantee:
If there are any prospective automobile buyers who are at all intimidated by the claims made by our adversaries, we will give them, in addition to the protection of the Ford Motor Company with its some $6,000,000.00 of assets, an individual bond backed by a Company of more than $6,000,000.00 more of assets, so that each and every individual owner of a Ford car will be protected until at least $12,000,000.00 of assets have been wiped out by those who desire to control and monopolize this wonderful industry. The bond is yours for the asking, so do not allow yourself to be sold inferior cars at extravagant prices because of any statement made by this “Divine” body.12
During this give-and-take, in addition to selling automobiles and preparing a complex legal appeal, Ford Motor was engaged in gradually shifting the company’s operations to the Highland Park plant, which had opened at the beginning of 1910. Manufacturing was moved first, operation by operation, but the plant was also to serve as a proving ground for many of the techniques that would eventually result in the Ford assembly line. With Flanders gone, most of the work was done by Wills and Sorenson, but always in accordance with the principles in which Flanders had schooled them. Sorenson wrote later, “The entire plant had to be functioning before the Ford mass production and assembly system could be completely worked out into one great synchronized operation from one end of the place to the other….We set up lay-out boards on which we worked out the production lines and placement of machines to scale. Numbered brass plates were attached to all machines in the Piquette plant with corresponding tags on the layout boards so that every machine would be set up in its assigned place when the move to Highland Park was made.”13
When the mock-up seemed finalized, the construction manager drew up detailed floor layouts, which were then given to Albert Kahn, the architect, to be rendered into building plans. The process was exacting and laborious, requiring constant revision, and then, as operations move
d from Piquette Avenue to Highland Park, testing and retesting without impeding the flow of production of Model Ts for which orders had already been accepted.
Ford himself had little input in the process. “Henry Ford had no ideas on mass production. He wanted to build a lot of autos. He was determined but, like everyone else at that time, he didn’t know how. In later years he was glorified as the originator of the mass production idea. Far from it; he just grew into it, like the rest of us.” Referring to the conveyer system that was later installed to move parts from one station to another, Sorenson added, “Years later, in My Life and Work, a book which was written for him, Mr. Ford said that the conveyer-assembly idea occurred to him after watching the reverse process in packing houses, where hogs and steers were triced up by hind legs on an overhead conveyer and disassembled. This is a rationalization long after the event. Mr. Ford had nothing to do with originating, planning, and carrying out the assembly line. He encouraged the work, his vision to try unorthodox methods was an example to us; and in that there is glory enough for all.”14 The fiction persists, however. On the website of the Henry Ford Museum, under “Did You Know?” is the entry, “The idea for using a moving assembly line for car production came from the meat-packing industry.”
It is testament to the Ford team’s ability and commitment, and to the quality of their product, that in a year of utter turmoil, they continued to sell cars, and a lot of them—more than thirty-two thousand. Billy Durant’s Buick kept pace, with sales of more than thirty thousand cars, most of them Model 10s, but this was to be Durant’s last year as Ford’s chief competitor.*3
At that point, of course, every one of those thirty-two thousand cars increased Ford’s indebtedness to his adversaries. Ford therefore, for clarity if nothing else, wanted his appeal heard as soon as possible. Because of a series of procedural delays, however, it could not be scheduled until November 1910. ALAM had expanded the range of lawsuits to include almost every remaining serious independent as well as a number of prestigious foreign firms, such as Mercedes, and importers of foreign automobiles, such as Fiat. But each of these new actions would depend on the ruling of the appellate court in the Ford and Panhard suits.
The case would be heard by a three-judge panel of the Second Circuit Court of Appeals. Appellate cases are, in theory, not retrials but instead restricted to questions of procedure or judicial error in the original action. In this case, however, because of the nature of the ruling, the court, in the process of evaluating Judge Hough’s decision, would also be passing on the merits of the Selden patent.
The judges’ backgrounds would not have been a source of optimism for Ford’s lawyers. The senior member, Emile H. Lacombe, had been a protégé of William Whitney when Whitney served as New York’s corporation counsel, and he had helped in dismantling Boss Tweed’s political machine. Another of the three, Henry G. Ward, had been a law firm associate of Judge Hough, and, like Hough, had specialized in admiralty law. Only the youngest and most recently appointed member of the court, Walter C. Noyes, was of independent background, and although he was the best-versed in patent law, he had only been on the federal bench for three years.
The hearing was on the court’s calendar for only three days, a restriction that worked, perhaps unwittingly, to Ford’s advantage. Crisp and his associates filed a more pointed, succinct, and comprehensible brief than had Parker in the original trial. Ford’s lawyers focused on Selden’s sixteen-year delay in receiving his patent, not debating whether the process was allowed under the law—it was—but rather emphasizing it as proof that Selden himself had been aware that he would be unable to construct a working machine from his specifications. But it was Frederic Coudert, the lawyer for Panhard, “who made the most effective appearance for the defense,” whose “oral argument, reinforced by a superb brief, challenged the basic assumption of the trial court that the Selden patent, as viewed against the state of the art in 1879, marked the borderline between success and failure.”15
In his most devastating attack, Coudert showed the court that the newest edition of the definitive work on gasoline engines—written by the plaintiff’s key expert witness, an English engineer named Dugald Clerk, whom the ALAM lawyers had billed as the world’s foremost authority on the technology—had mentioned Selden not at all and that, further, Clerk had written that no one had developed the Brayton motor to any greater degree than had the inventor. This was a direct refutation of Clerk’s own testimony at the trial, when he had credited Selden with successfully adapting the Brayton motor for use in a road carriage. “Will this Court prefer the theories of Clerk, the retained witness, to those of Clerk, the disinterested scientist, composing the ‘classic’ on gas engines?” Coudert asked the judges.16
The appellate judges, unlike Hough, asked pointed and informed questions throughout the hearing, and after listening to closing arguments, including another bravura performance by Frederick Fish, they retired to consider the evidence. Given the mass of exhibits, a decision was not expected until spring. Instead, it was rendered in less than six weeks.
With this a case of great import, likely to go to the Supreme Court, it was significant that the two senior members of the tribunal deferred to Judge Noyes, the most expert in patent law, to write the opinion. Their confidence in him seemed not misplaced. The opinion Noyes wrote was praised as being “deft in its reasoning…[demonstrating] an understanding of automotive history, and a firm grasp of technical considerations, such as Hough had lacked.”17 It was also a complete reversal of Hough’s decision, leaving no room for ALAM lawyers to find subjective language on which to take the case further. Nor did Noyes’s opinion—tight, comprehensive, and meticulously thorough—seem to create any potential opening to claim judicial error.
After an exhaustive review of both the history of hydrocarbon engines and the technical specifications of the various types, in the most salient paragraph of the opinion Noyes wrote:
It is our opinion…that in [Selden’s] road locomotive combination embracing as its engine element an engine of the constant pressure type, the substitution in place of such engine of an engine of the constant volume type destroys the unity of the combination, because the two engines do not perform the same functions in substantially the same way. Granting the patent as broad a range of equivalents as its interpretation will permit, and giving due consideration to the degree of invention involved, still we are not able to hold that the Otto improved engine is the equivalent of the Selden engine or that the defendants infringe by employing it as an element of their motor vehicle combination.18
Noyes concluded with a statement directed at the more than ample royalties Selden had already received, although money was not likely to mitigate the sting to the old man’s pride:
While the conclusion of non-infringement which we have reached leaves the patentee empty handed…it cannot be regarded as depriving him through any technicality of the just reward for his labors. He undoubtedly appreciated the possibilities of the motor vehicle at a time when his ideas were regarded as chimerical. Had he been able to see far enough he might have taken out a patent as far reaching as [Judge Hough] held this one was. But like many another inventor, while he had a conception of the object to be accomplished, he went in the wrong direction. The Brayton engine was the leading engine at the time and his attention was naturally drawn to its supposed advantages. He chose that type. In the light of events, we can see that had he appreciated the superiority of the Otto engine and adapted that type for his combination, his patent would cover the modern automobile. He did not do so. He made the wrong choice and we cannot, by placing any forced construction upon the patent or by straining the doctrine of equivalents, make another choice for him at the expense of these defendants who neither legally nor morally owe him anything.
Significantly, the court did not question the practicality of Selden’s machine or whether it would have qualified for pioneer status had anyone chosen to build Brayton powered automobiles, nor did the judges addres
s his delays in the patent process. If the Selden 1877 Buggy had been powered by an Otto, therefore, his patent might have been upheld. On this narrow basis only, Hough’s decree was reversed, with court costs accruing to the original plaintiffs.
The appellate court’s ruling has been almost universally extolled by historians and Ford biographers as a redress of a perversion of justice. Judge Hough has been dismissed as a man hopelessly befuddled by the intricacies of both the technology and the law, while Judge Noyes and his colleagues have been praised for sage and sound legal judgment.
The only problem with this interpretation is that Judge Hough’s ruling, not the appellate decision, conformed to the law then on the books. Ford should have lost.
Drive!: Henry Ford, George Selden, and the Race to Invent the Auto Age Page 33