Henry Ford, standing between the first and the 10-millionth of his cars, in 1924. Source: Library of Congress, Prints and Photographs Division

How Detroit’s ‘Hive Mind’ Created U.S. Auto Industry

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May 9 (Bloomberg) -- Corporate jargon has now given us the term “hive mind,” which expresses the belief that a group of individuals working in proximity can achieve a sort of critical mass that will generate more and better ideas than an individual working alone could. Many businesses in Silicon Valley seek to foster this creative environment.

This isn’t a new idea. There have been plenty of such places in U.S. history, including the Jet Propulsion Laboratory, in Pasadena, California, and the Manhattan Project, in Los Alamos, New Mexico. Perhaps the best example, however, was Detroit, where Henry Ford was at the center of a hive mind that encompassed an entire city in the last years of the 19th century and remade America in the first years of the 20th.

By 1900, about 200,000 people lived in Detroit, which was already a thriving manufacturing hub. There was standing timber nearby, and to the north of the city, iron mines fed an industry that turned out 150,000 stoves a year. It had companies that made parts for lake steamers, as well as builders of railroad carriages, seats and wheels -- all enterprises that could easily be converted to automotive purposes. One prosperous maker of plumbing fixtures, for instance, was named David Buick.

Machine Shops

By the early 1890s, Ford knew he wanted to build an automobile, even though he had never seen one. As a young man, he used the city’s machine shops as his college, moving from one to another, mastering the art of cutting and fitting metal, learning how steam worked, teaching himself the mysteries of gasoline.

As he struggled to build his first car, Ford drew on the knowledge of the hive. Years later, he said, “I drove the first car ever seen on the streets of Detroit.” This was a fib: The first car had been built by a friend of his, a generous enthusiast and inventor named Charles King. When Ford was stumped on how to make valves for his engine, King came by with some steam valves he had been working on, and told Ford that with a little machining they should do the job -- and they did.

Ford made his maiden voyage in his first car not long after, in June 1896. It was a success, and in the first decade of the century hundreds of fledgling automobile companies came into being, all pollinating one another. But now Ford stood a little apart from the hive. He kept his inventing so close to his chest that when he asked a close friend to turn a crankshaft for him in his metal shop, the man didn’t learn until years later that it was intended for an automobile.

But Ford couldn’t help but be a pollinator, too. When he launched Ford Motor Co., he got virtually his entire car from the Dodge brothers, who owned the finest machine shop in Detroit. Eventually, he was drawing on them so heavily that they feared for their company if he ever chose another supplier, and they set out to build a successful car of their own.

Ford inadvertently added to the hive when, having put his first company into bankruptcy, he managed to get another one going. But this time his wary investors had a fallback in the person of Henry Leland, the finest machinist in America. Ford had all but finished his prototype when he decided he didn’t like Leland peering over his shoulder. He quit, taking his name with him.

Leland looked over the prototype and decided to replace Ford’s engine with one of his own. He supplied a new name, too: Cadillac.

Steam Propulsion

The Cadillac was, and remains, a success. But when it was born, in 1902, the hive still had a great deal to figure out, including such fundamental issues as what should make a car go. Many inventors favored steam, the king of motive power for almost a century; others put their faith in electricity. Scores of different steam and electric cars hissed or hummed about the countryside until it became clear that such power made automobiles too heavy for road use (nowadays, of course, the hive is again swarming after the elusive electric car).

Ford’s most significant contribution to the hive (beyond his world-changing Model T of 1908) was his courage in battling an extraordinary lawsuit. In 1879, George Selden, a Rochester inventor, had dreamed up the idea of a carriage propelled by the internal combustion engine. The motor, Selden said, would be connected to the wheels (though he didn’t say how) and the machine would carry people. He filed for a patent on this fancy, but patent law at that time gave an inventor 17 years to fiddle with a submission before the patent finally took effect. Selden fiddled for the whole 17 years and then, with the American car becoming a reality, finalized his basically unchanged claim and, astonishingly, got a patent on the idea of an automobile.

No car, Selden said, could be built in, or imported to, the U.S. without a payment to him. And he began to sue. Some of the automakers held out, but patent lawsuits were then the most expensive and time-consuming form of litigation. Finally, in 1909, a court decided in Selden’s favor. Ford appealed and, after a fight that lasted seven years, he won. This set the U.S. automotive industry free.

It also empowered the Detroit hive because the bruising battle left all carmakers eager to avoid a similar experience. Instead of guarding their patents, the big carmakers -- even Ford -- established a system of sharing them. This added to the vigor of an already-thriving industry, and rapid advances in transmissions, engine design and styling followed as the companies adopted and improved one another’s technology.

Cheaper, more dependable vehicles proliferated and began to remake the American landscape and society. That openness survives, and the bees of Detroit continue their cross-pollinating on into a new century.

(Richard Snow was editor-in-chief of American Heritage magazine. He is the author of several books, including “I Invented the Modern Age: The Rise of Henry Ford,” which will be published by Scribner on May 14. The opinions expressed are his own.)

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To contact the writer of this post: Richard Snow at RSnow@forbes.com

To contact the editor responsible for this post: Max Berley at mberley@bloomberg.net