No Love Lost
The lawsuit brought by the brothers against Ford became the legal basis for the idea that companies exist primarily to generate profits for shareholders, setting the stage for the aggressive rise of the American corporation.
Capital Thinking • Issue #208 • View online
Henry Ford is practically revered as the patron saint of American cars, and the Model T is his holy text.
But it wouldn’t have happened if not for the life, and possibly the death, of two of his biggest rivals: the Dodge brothers.
And if it weren’t for a small complication, such as the most deadly pandemic in recorded history, our cars might look very different today.
Bar Fights, Lawsuits and the Flu Pandemic: The War Between Henry Ford and the Dodge Brothers
From Jalopnik by Erin Marquis:
On Nov. 1, 1916, Henry Ford’s son Edsel married Eleanor Clay in the home owned by the department store tycoon J.L. Hudson.
It was a small, cozy informal affair filled with close friends who happened to be members of Detroit’s elite.
This guest list included a pair of fiery, hard-drinking redheaded brothers named John and Horace Dodge.
The Dodge Brothers weren’t always so welcome in polite society. Both Horace and John were incredibly prolific drunks and public rabble-rousers.
Horace once started a brawl in a bar and then threatened to kill the owner of the newspaper that reported it. John knocked a man out cold on the street when the passerby mocked him for being unable to crank-start his Ford.
And when a Grosse Pointe country club denied John membership, he built a huge mansion directly across the street with a 12-car garage. They were loud and uncouth, even for a loud, uncouth town like turn-of-the-century Detroit.
The brothers came up from working class roots, the sons of a machinist and seamstress, but by the time the brothers attended Edsel Ford’s wedding they were incredibly wealthy men with the second most successful car company in America in their own name—and a 10 percent stake in the Ford Motor Company.
On that chilly joyous day in Detroit, John and Horace celebrated the wedding of the heir-apparent with Henry Ford and his family.
The very next day, they sued him.
Building a Ford, the Dodge Way
The brothers started a machinist shop in Detroit in 1900. Their first major job was building transmissions for Ransom Olds, founder of Oldsmobile.
Then in 1903 John and Horace took a chance on a well-known engineer, entrepreneur and failure at both named Henry Ford. Duds like the Ford’s Quadricycle and the Detroit Automobile Company had marked Ford as a washout and a loser.
The Dodges weren’t just auto parts suppliers and stakeholders in Ford’s businesses; in 1903 they were the only ones willing to do business with Ford at all.
It was a risky deal, but a canny one befitting of these two sets of hardheads. Nobody else would make it, but nobody else succeeded like they did, either.
Every single component of the original, early 1900s Model A was made by the Dodges, while Ford assembled the cars at his plant on Mack Ave. (This was before Ford set up his famous moving assembly line, which wouldn’t enter production until 1913, and before the Dodges made their own cars.)
The Dodges gave up all of their other contracts to focus solely on the Ford business. Now their fates were tied together.
The brothers made sure Ford paid dearly for their time and energy. They were granted a 10 percent stake in Ford Motor Company, and would be the proud owners of the entirety of its assets should the company fail.
Luckily, the gamble paid off almost immediately. Ford had made $3 million by the time the second year of the partnership rounded out in 1905, with the Dodge Brothers already making back their investment. And this was still years before the Model T even made its debut.
The Dodges had become incredibly wealthy men with a significant stake in one of the most successful companies in the world. And Ford’s success would be shared with them—at least, the brothers thought so.
John and Horace were already well on their way to challenging Ford’s supremacy in the auto market when Ford stopped paying dividends to his investors. It was a move, some speculate, made mostly to send the Dodge Brothers’ rising star crashing to the ground.
The A.V. Club