Henry Ford's Depression Carby
The first phase of the Great Depression hit Ford Motor Co. hard. Sales of its flagship Model A declined by 50 percent from 1930 to the end of 1931, while Chevrolet rose to auto-market leadership.
Ford clearly needed to hurry development of its Model B, which had been in the works since 1929. But would rushing it to market during the Depression pay off?
To be competitive, Ford needed a model with more cylinders. In 1929, Henry Ford, the company's founder, had told an engineer, "We're going from a four to an eight because Chevrolet is going to a six," according to "'32 Ford Deuce," a history by Tony Thacker. The challenge was that existing V-8 engines powered luxury cars like Cadillacs, LaSalles and Lincolns, priced six to eight times the $500 sticker planned for the Model B. Auto experts said that creating an inexpensive, reliable "eight" was impossible.
Ford cast the effort as part of a larger social mission. In March 1932, he told Time magazine he was prepared to "risk everything we've got to create useful work for just as many people as possible." Producing the Model B would cost $198 million in wages alone, plus parts and materials ordered from 5,000 firms. But for many desperate for jobs, this wasn't enough.
On March 7, the same day Ford's statement appeared in Time, laid-off Ford workers marched to the River Rouge plant in Dearborn, Michigan, to ask for jobs. The marchers clashed with police, and the protest soon became deadly. The head of Ford's security, Harry Bennett, drove his car into the crowd and police opened fire, killing four. More than 50 marchers were injured.
Three weeks later, Edsel Ford, Henry Ford's son and the company's president, announced the March 31 roll-out of two Model B's: a "four" with 50 horsepower and an "eight," labeled the "Model 18," with 65, the New York Times reported. The models were similar except for their engines, and both were available in 14 body types. The new models were longer and roomier than the old and capable of driving 75 miles per hour.
The new V-8 standard coupe would cost $490 (the same as the Model A "four"), and the Model B "four" would cost $50 less. At the top end, a V-8 convertible cost $650, just $10 more than the Model A convertible.
Nationwide, more than 5 million Americans turned out to view the new Fords, and the company said 200,000 orders were booked. However, the car's instant success soon revealed the dangers of rushing to market.
Ford wasn't yet geared up for mass production of the new models, and the engine hadn't been exhaustively tested. Buyers thus experienced long delays in getting the new models, and then faced repeated breakdowns. Ford lost about $75 million in 1932 -- an average of about $250 on every car sold.
Henry Ford was unfazed, according to "'32 Ford Deuce." He argued that the money went toward good causes: paying workers and paying taxes.
"We didn't lose it -- we used it," he said. "If we had dropped it on the stock market, that would have been losing it."
(Philip Scranton is a Board of Governors professor of the History of Industry and Technology at the University of Rutgers at Camden and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)
To read more from Echoes, Bloomberg View's economic history blog, click here.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Philip Scranton at firstname.lastname@example.org
To contact the editor responsible for this story: