do the work of a thick one. The importance of the problem is shown by
the fact that one-fourth of all the capital invested in the telephone
has been spent in copper. Professor Pupin, who had been a member of the
faculty of Columbia University since 1888, solved this problem in his
quiet laboratory and, by doing so, won the greatest prize in modern
telephone art. His researches resulted in the famous "Pupin coil" by the
expedient now known as "loading." When the scientists attempt to explain
this invention, they have to use all kinds of mathematical formulas and
curves and, in fact, they usually get to quarreling among themselves
over the points involved. What Professor Pupin has apparently done is
to free the wire from those miscellaneous disturbances known as
"induction." This Pupin invention involved another improvement
unsuspected by the inventor, which shows us the telephone in all its
mystery and beauty and even its sublimity. Soon after the Pupin coil
was introduced, it was discovered that, by crossing the wires of
two circuits at regular intervals, another unexplainable circuit was
induced. Because this third circuit travels apparently without wires,
in some manner which the scientists have not yet discovered, it is
appropriately known as the phantom circuit. The practical result is that
it is now possible to send three telephone messages and eight telegraph
messages over two pairs of wires--all at the same time. Professor
Pupin's invention has resulted in economies that amount to millions of
dollars, and has made possible long distance lines to practically every
part of the United States.

Thus many great inventive minds have produced the physical telephone.
We can point to several men--Bell, Blake, Carty, Scribner, Barrett,
Pupin--and say of each one, "Without his work the present telephone
system could not exist." But business genius, as well as mechanical
genius, explains this achievement. For the first four or five years
of its existence, the new invention had hard sailing. Bell and Thomas
Watson, in order to fortify their finances, were forced to travel around
the country, giving a kind of vaudeville entertainment. Bell made a
speech explaining the new invention, while a cornet player, located in
another part of the town, played solos, the music reaching the audience
through several telephone instruments placed against the walls. Watson,
also located at a distance, varied the program by singing songs via
telephone. These lecture tours not only gave Bell the money which
he sorely needed but advertised the innovation. There followed a few
scattering attempts to introduce the telephone into every-day use and
telephone exchanges were established in New York, Boston, Bridgeport,
and New Haven. But these pioneers had the hostility of the most powerful
corporation of the day--the Western Union Telegraph Company--and they
lacked aggressive leaders.

In 1878, Mr. Gardiner Hubbard, Bell's earliest backer, and now his
father-in-law, became acquainted with a young man who was then serving
in Washington as General Superintendent of the Railway Mail Service.
This young man was Theodore N. Vail. His energy and enterprise so
impressed Hubbard that he immediately asked Vail to become General
Manager of the company which he was then forming to exploit the
telephone. Viewed from the retrospection of forty years this offer
certainly looks like one of the greatest prizes in American business.
What it signified at that time, however, is apparent from the fact that
the office paid a salary of $3500 a year and that for the first ten
years Vail did not succeed in collecting a dollar of this princely
remuneration. Yet it was a happy fortune, not only for the Bell Company
but for the nation, that placed Vail at the head of this struggling
enterprise. There was a certain appropriateness in his selection, even
then. His granduncle, Stephen Vail, had built the engines for the first
steamship to cross the Atlantic. A cousin had worked with Morse while he
was inventing the telegraph. Vail, who was born in Carroll County, Ohio,
in 1845, after spending two years as a medical student, suddenly shifted
his plans and became a telegraph operator. Then he entered the Railway
Mail service; in this service he completely revolutionized the system
and introduced reforms that exist at the present time. A natural bent
had apparently directed Vail's mind towards methods of communication, a
fact that may perhaps explain the youthful enthusiasm with which he took
up the new venture and the vision with which he foresaw and planned its
future. For the chief fact about Vail is that he was a business man
with an imagination. The crazy little machine which he now undertook to
exploit did not interest him as a means of collecting tolls, floating
stock, and paying dividends. He saw in it a new method of spreading
American civilization and of contributing to the happiness and comfort
of millions of people. Indeed Vail had hardly seen the telephone when
a picture portraying the development which we are familiar with
today unfolded before his eyes. That the telephone has had a greater
development in America than elsewhere and that the United States has
avoided all those mistakes of organization that have so greatly hampered
its growth in other lands, is owing to the fact that Vail, when he first
took charge, mapped out the comprehensive policies which have guided his
corporation since.

Vail early adopted the "slogan" which has directed the Bell activities
for forty years--"One System! One Policy! Universal Service." In his
mind a telephone company was not a city affair, or even a state affair;
it was a national affair. His aim has been from the first a universal,
national service, all under one head, and reaching every hamlet, every
business house, factory, and home in the nation. The idea that any man,
anywhere, should be able to take down a receiver and talk to anyone,
anywhere else in the United States, was the conception which guided
Vail's labors from the first. He did not believe that a mass of
unrelated companies could give a satisfactory service; if circumstances
had ever made a national monopoly, that monopoly was certainly the
telephone. Having in view this national, universal, articulating
monopoly, Vail insisted on his second great principle, the
standardization of equipment. Every man's telephone must be precisely
like every other man's, and that must be the best which mechanical skill
and inventive genius could produce. To make this a reality and to secure
perfect supervision and upkeep, it was necessary that telephones should
not be sold but leased. By enforcing these ideas Vail saved the United
States from the chaos which exists in certain other countries, such as
France, where each subscriber purchases his own instrument, making his
selection from about forty different varieties. That certain dangers
were inherent in this universal system Vail understood. Monopoly all
too likely brings in excessive charges, poor service, and inside
speculation; but it was Vail's plan to justify his system by its works.
To this end he established a great engineering department which should
study all imaginable mechanical improvements, with the results which
have been described. He gave the greatest attention to every detail of
the service and particularly insisted on the fairest and most courteous
treatment of the public. The "please" which invariably accompanies the
telephone girl's request for a number--the familiar "number, please"--is
a trifle, but it epitomizes the whole spirit which Vail inspired
throughout his entire organization. Though there are plenty of people
who think that the existing telephone charges are too high, the fact
remains that the rate has steadily declined with the extension of
the business. Vail has also kept his company clear from the financial
scandals that have disgraced so many other great corporations. He has
never received any reward himself except his salary, such fortune as
he possesses being the result of personal business ventures in South
America during the twenty years from 1887 to 1907 that he was not
associated with the Bell interests.

Vail's first achievement was to rescue this invention from the greatest
calamity which would have befallen it. The Western Union Telegraph
Company, which in the early days had looked upon the telephone
as negligible, suddenly awoke one morning to a realization of its
importance. This Corporation had recently introduced its "printing
telegraph," a device that made it possible to communicate without the
intermediary operator. When news reached headquarters that subscribers
were dropping this new contrivance and subscribing to telephones, the
Western Union first understood that a competitor had entered their
field. Promptly organizing the American Speaking Telephone Company, the
Western Union, with all its wealth and prestige, proceeded to destroy
this insolent pigmy. Its methods of attack were unscrupulous and
underhanded, the least discreditable one being the use of its political
influence to prevent communities from giving franchises to the Bell
Company. But this corporation mainly relied for success upon the
wholesale manner in which it infringed the Bell patents. It raked
together all possible claimants to priority, from Philip Reis to Elisha
Gray, in its attempts to discredit Bell as the inventor. The Western
Union had only one legitimate advantage--the Edison transmitter--which
was unquestionably much superior to anything which the Bell Company
then possessed. Many Bell stockholders were discouraged in face of this
fierce opposition and wished to abandon the fight. Not so Vail. The mere
circumstance that the great capitalists of the Western Union had
taken up the telephone gave the public a confidence in its value which
otherwise it would not have had, a fact which Vail skillfully used in
attracting influential financial support. He boldly sued the Western
Union in 1878 for infringement of the Bell patents. The case was a
famous one; the whole history of the telephone was reviewed from the
earliest days, and the evidence as to rival claimants was placed on
record for all time. After about a year, Mr. George Clifford, perhaps
the best patent attorney of the day, who was conducting the case for the
Western Union, quietly informed his clients that they could never
win, for the records showed that Bell was the inventor. He advised the
Western Union to settle the case out of court and his advice was taken.
This great corporation war was concluded by a treaty (November 10, 1879)
in which the Western Union acknowledged that Bell was the inventor,
that his patents were valid, and agreed to retire from the telephone
business. The Bell Company, on its part, agreed to buy the Western Union
Telephone System, to pay the Western Union a royalty of twenty per cent
on all telephone rentals, and not to engage in the telegraph business.
Had this case been decided against the Bell Company it is almost certain
that the telephone would have been smothered in the interest of the
telegraph and its development delayed for many years.

Soon after the settlement of the Western Union suit, the original group
which had created the telephone withdrew from the scene. Bell went back
to teaching deaf-mutes. He has since busied himself with the study of
airplanes and wireless, and has invented an instrument for transmitting
sound by light. The new telephone company offered him $10,000 a year as
chief inventor, but he replied that he could not invent to order. Thomas
Sanders received somewhat less than $1,000,000 and lost most of it
exploiting a Colorado gold mine. Gardiner Hubbard withdrew from business
and devoted the last years of his life to the National Geographic
Society. Thomas Watson, after retiring from the telephone business,
bought a ship-building yard near Boston, which has been successful.

In making this settlement with the Western Union, the Bell interests not
only eliminated a competitor but gained great material advantages.
They took over about 56,000 telephone stations located in 55 cities
and towns. They also soon acquired the Western Electric Manufacturing
Company, which under the control of the Western Union had developed into
an important concern for the manufacture of telephone supplies. Under
the management of the Bell Company this corporation, which now has
extensive factories in Hawthorne, Ill., produces two-thirds of the
world's telephone apparatus. With the Western Electric Vail has realized
the fundamental conception underlying his ideal telephone system--the
standardization of equipment. For the accomplishment of his idea of
a national telephone system, instead of a parochial one, Mr. Vail
organized, in 1881, the American Bell Telephone Company, a corporation
that really represented the federalization of all the telephone
activities of the subsidiary companies. The United States was divided
into several sections, in each of which a separate company was organized
to develop the telephone possibilities of that particular area. In 1899
the American Telephone and Telegraph Company took over the business and
properties of the American Bell Company. The larger corporation built
toll lines, connected these smaller systems with one another, and
thus made it possible for Washington to talk to New York, New York to
Chicago, and ultimately--Boston to San Francisco. An enlightened policy
led the Bell Company frequently to establish exchanges in places where
there was little chance of immediate profit. Under this stimulation the
use of this instrument extended rapidly, yet it is in the last twenty
years that the telephone has grown with accelerated momentum. In 1887
there were 170,000 subscribers in the United States, and in 1900 there
were 610,000; but in 1906 the American Telephone and Telegraph Company
was furnishing its service to 2,550,000 stations, and in 1916 to
10,000,000. Clearly it is only since 1900 that the telephone has become
a commonplace of American existence. Up to 1900 it had grown at the rate
of about 13,000 a year; whereas since 1900 it has grown at the rate of
700,000 a year. The explanation is that charges have been so reduced
that the telephone has been brought within the reach of practically
every business house and every family. Until the year 1900 every
telephone subscriber had to pay $240 a year, and manifestly only
families in affluent circumstances could afford such a luxury. About
that time a new system of charges known as the "message rate" plan was
introduced, according to which the subscriber paid a moderate price for
a stipulated number of calls, and a pro rata charge for all calls in
excess of that number. Probably no single change in any business has had
such an instantaneous effect. The telephone, which had hitherto been an
external symbol of prosperity, suddenly became the possession of almost
every citizen.

Other companies than the Bell interests have participated in this
development. The only time the Bell Company has had no competitor, Mr.
Vail has said, was at the Philadelphia Centennial in 1876. Some of this
competition has benefited the public but much of it has accomplished
little except to enrich many not over-scrupulous promoters. Groups of
farmers who frequently started companies to furnish service at cost did
much to extend the use of the telephone. Many of the companies which,
when the Bell patents expired in 1895, sprang up in the Middle West,
also manifested great enterprise and gave excellent service. These
companies have made valuable contributions, of which perhaps the
automatic telephone, an instrument which enables a subscriber to call
up his "party" directly, without the mediation of "central," is the most
ingenious. Although due acknowledgment must be made of the honesty and
enterprise with which hundreds of the independents are managed, the fact
remains that they are a great economic waste. Most of them give only a
local service, no company having yet arisen which aims to duplicate the
comprehensive national plans of the greater corporation. As soon as an
independent obtains a foothold, the natural consequence is that every
business house and private household must either be contented with
half service, or double the cost of the telephone by subscribing to two
companies. It is not unlikely that the "independents" have exercised a
wholesome influence upon the Bell Corporation, but, as the principle of
government regulation rather than individual competition has now become
the established method of controlling monopoly, this influence will
possess less virtue in the future. In addition to these independent
enterprises, the telephone has unfortunately furnished an opportunity
for stockjobbing schemes on a considerable scale. The years from 1895 to
1905 witnessed the growth of many bubbles of this kind; one group of men
organized not far from two hundred telephone companies. They would
go into selected communities, promise a superior service at half the
current rates, enlist the cooperation of "leading" business men, sell
the stock largely in the city or town to be benefited, make large
profits in the construction of the lines and the sale of equipment--and
then decamp for pastures new. The multitudinous bankruptcies that
followed in the wake of such exploiters at length brought their
activities to an end.

CHAPTER V. THE DEVELOPMENT OF PUBLIC UTILITIES

The streets of practically all American cities, as they appeared in 1870
and as they appear today, present one of the greatest contrasts in our
industrial development. Fifty years ago only a few flickering gas
lamps lighted the most traveled thoroughfares. Only the most prosperous
business houses and homes had even this expensive illumination; most
obtained their artificial light from the new illuminant known as
kerosene. But it was the mechanism of city transportation that would
have looked the strangest in our eyes. New York City had built
the world's first horse-car line in 1832, and since that year this
peculiarly American contrivance has had the most extended development.
In 1870, indeed, practically every city of any importance had one
or more railways of this type. New York possessed thirty different
companies, each operating an independent system. In Philadelphia,
Chicago, St. Louis, and San Francisco the growth of urban transportation
had been equally haphazard. The idea of combining the several street
railways into one comprehensive corporation had apparently occurred to
no one. The passengers, in their peregrinations through the city,
had frequently to pay three or four fares; competition was thus the
universal rule. The mechanical equipment similarly represented a
primitive state of organization. Horses and mules, in many cases hideous
physical specimens of their breeds, furnished the motive power. The
cars were little "bobtailed" receptacles, usually badly painted and more
often than not in a desperate state of disrepair. In many cities the
driver presided as a solitary autocrat; the passengers on entrance
deposited their coins in a little fare box. At night tiny oil lamps
made the darkness visible; in winter time shivering passengers warmed
themselves by pulling their coat collars and furs closely about their
necks and thrusting their lower members into a heap of straw, piled
almost a foot deep on the floor.

Who would have thought, forty years ago, that the lighting of these dark
and dirty streets and the modernization of these local railway systems
would have given rise to one of the most astounding chapters in
our financial history and created hundreds, perhaps thousands, of
millionaires? When Thomas A. Edison invented the incandescent light, and
when Frank J. Sprague in 1887 constructed the first practicable
urban trolley line, in Richmond, Virginia, they liberated forces that
powerfully affected not only our social and economic life but
our political institutions. These two inventions introduced anew
phrase--"Public Utilities." Combined with the great growth and
prosperity of the cities they furnished a fruitful opportunity to
several particularly famous groups of financial adventurers. They led to
the organization of "syndicates" which devoted all their energies, for
a quarter of a century, to exploiting city lighting and transportation
systems. These syndicates made a business of entering city after city,
purchasing the scattered street railway lines and lighting companies,
equipping them with electricity, combining them into unified systems,
organizing large corporations, and floating huge issues of securities.
A single group of six men--Yerkes, Widener, Elkins, Dolan, Whitney,
and Ryan--combined the street railways, and in many cases the lighting
companies, of New York, Philadelphia, Chicago, Pittsburgh, and at least
a hundred towns and cities in Pennsylvania, Connecticut, Rhode Island,
Massachusetts, Ohio, Indiana, New Hampshire, and Maine. Either jointly
or separately they controlled the gas and electric lighting companies
of Philadelphia, Reading, Harrisburg, Atlanta, Vicksburg, St. Augustine,
Minneapolis, Omaha, Des Moines, Kansas City, Sioux City, Syracuse, and
about seventy other communities. A single corporation developed nearly
all the trolley lines and lighting companies of New Jersey; another
controlled similar utilities in San Francisco and other cities on the
Pacific Coast. In practically all instances these syndicates adopted
precisely the same plan of operation. In so far as their activities
resulted in cheap, comfortable, rapid, and comprehensive transit systems
and low-priced illumination, their activities greatly benefited the
public. The future historian of American society will probably attribute
enormous influence to the trolley car in linking urban community with
urban community, in extending the radius of the modern city, in freeing
urban workers from the demoralizing influences of the tenement, in
offering the poorer classes comfortable homes in the surrounding
country, and in extending general enlightenment by bringing about a
closer human intercourse. Indeed, there is probably no single influence
that has contributed so much to the pleasure and comfort of the masses
as the trolley car.

Yet the story that I shall have to tell is not a pleasant one. It is
impossible to write even a brief outline of this development without
plunging deeply into the two phases of American life of which we have
most cause to be ashamed; these are American municipal politics and
the speculative aspects of Wall Street. The predominating influences
in American city life have been the great franchise corporations.
Practically all the men that have had most to do with developing our
public utilities have also had the greatest influence in city politics.
In New York, Thomas F. Ryan and William C. Whitney were the powerful,
though invisible, powers in Tammany Hall. In Chicago, Charles T. Yerkes
controlled mayors and city councils; he even extended his influence
into the state government, controlling governors and legislatures. In
Philadelphia, Widener and Elkins dominated the City Hall and also became
part of the Quay machine of Pennsylvania. Mark Hanna, the most active
force in Cleveland railways, was also the political boss of the State.
Roswell P. Flower, chief agent in developing Brooklyn Rapid Transit,
had been Governor of New York; Patrick Calhoun, who monopolized the
utilities of San Francisco and other cities, presided likewise over the
city's inner politics. The Public Service Corporation of New Jersey
also comprised a large political power in city and state politics. It is
hardly an exaggeration to say that in the most active period, that
from 1880 to 1905, the powers that developed city railway and lighting
companies in American cities were identically the same owners that had
the most to do with city government. In the minds of these men politics
was necessarily as much a part of their business as trolley poles
and steel rails. This type of capitalist existed only on public
franchises--the right to occupy the public streets with their trolley
cars, gas mains, and electric light conduits; they could obtain these
privileges only from complaisant city governments, and the simplest way
to obtain them was to control these governments themselves. Herein we
have the simple formula which made possible one of the most profitable
and one of the most adventurous undertakings of our time.

An attempt to relate the history of all these syndicates would involve
endless repetition. If we have the history of one we have the history of
practically all. I have therefore selected, as typical, the operations
of the group that developed the street railways and, to a certain
extent, the public lighting companies, in our three greatest American
cities--New York, Chicago, and Philadelphia.

One of the men who started these enterprises actually had a criminal
record. William H. Kemble, an early member of the Philadelphia group,
had been indicted for attempting to bribe the Pennsylvania Legislature;
he had been convicted and sentenced to one year in the county jail and
had escaped imprisonment only by virtue of a pardon obtained through
political influence. Charles T. Yerkes, one of his partners in politics
and street railway enterprises, had been less fortunate, for he had
served seven months for assisting in the embezzlement of Philadelphia
funds in 1873. It was this circumstance in Yerkes's career which
impelled him to leave Philadelphia and settle in Chicago where, starting
as a small broker, he ultimately acquired sufficient resources and
influence to embark in that street railway business at which he had
already served an extensive apprenticeship. Under his domination, the
Chicago aldermen attained a gravity that made them notorious all over
the world. They openly sold Yerkes the use of the streets for cash and
constantly blocked the efforts which an infuriated populace made for
reform. Yerkes purchased the old street railway lines, lined his pockets
by making contracts for their reconstruction, issued large flotations of
watered stock, heaped securities upon securities and reorganization
upon reorganization and diverted their assets to business in a hundred
ingenious ways.

In spite of the crimes which Yerkes perpetrated in American cities,
there was something refreshing and ingratiating about the man.
Possibly this is because he did not associate any hypocrisy with his
depredations. "The secret of success in my business," he once frankly
said, "is to buy old junk, fix it up a little, and unload it upon other
fellows." Certain of his epigrams--such as, "It is the strap-hanger who
pays the dividends"--have likewise given him a genial immortality.
The fact that, after having reduced the railway system of Chicago to
financial pulp and physical dissolution, he finally unloaded the whole
useless mass, at a handsome personal profit, upon his old New York
friends, Whitney and Ryan, and decamped to London, where he carried
through huge transit enterprises, clearly demonstrated that Yerkes was a
buccaneer of no ordinary caliber.

Yerkes's difficulties in Philadelphia indirectly made possible the
career of Peter A. B. Widener. For Yerkes had become involved in the
defalcation of the City Treasurer, Joseph P. Mercer, whose translation
to the Eastern Penitentiary left vacant a municipal office into which
Mr. Widener now promptly stepped. Thus Mr. Widener, as is practically
the case with all these street railway magnates, was a municipal
politician before he became a financier. The fact that he attained the
city treasurership shows that he had already gone far, for it was the
most powerful office in Philadelphia. He had all those qualities of
suavity, joviality, firmness, and personal domination that made possible
success in American local politics a generation ago. His occupation
contributed to his advancement. In recent years Mr. Widener, as the
owner of great art galleries and the patron of philanthropic and
industrial institutions, has been a national figure of the utmost
dignity. Had you dropped into the Spring Garden Market in Philadelphia
forty years ago, you would have found a portly gentleman, clad in a
white apron, and armed with a cleaver, presiding over a shop decorated
with the design--"Peter A. B. Widener, Butcher." He was constantly
joking with his customers and visitors, and in the evening he was
accustomed to foregather with a group of well-chosen spirits who had
been long famous in Philadelphia as the "all-night poker players." A
successful butcher shop in Philadelphia in those days played about the
same part in local politics as did the saloon in New York City. Such
a station became the headquarters of political gossip and the meeting
ground of a political clique; and so Widener, the son of a poor German
bricklayer, rapidly became a political leader in the Twentieth Ward,
and soon found his power extending even to Harrisburg. A few years ago
Widener presided over a turbulent meeting of Metropolitan shareholders
in Newark, New Jersey. The proposal under consideration was the
transference of all the Metropolitan's visible assets to a company of
which the stockholders knew nothing. When several of these stockholders
arose and demanded that they be given an opportunity to discuss the
projected lease, Widener turned to them and said, in his politest and
blandest manner: "You can vote first and discuss afterward." Widener
displayed precisely these same qualities of ingratiating arrogance and
good-natured contempt as a Philadelphia politician. He was a man of
big frame, alert and decisive in his movements, and a ready talker;
in business he was given much to living in the clouds--a born
speculator--emphatically a "boomer." His sympathies were generous, at
times emotional; it is said that he has even been known to weep when
discussing his fine collection of Madonnas. He showed this personal
side in his lifelong friendship and business association with William
L. Elkins, a man much inferior to him in ability. Indeed, Elkins's great
fortune was little more than a free gift from Widener, who carried him
as a partner in all his deals. Elkins became Widener's bondsman when the
latter entered the City Treasurer's office; the two men lived near
each other on the same street, and this association was cemented when
Widener's oldest son married Elkins's daughter. Elkins had started life
as an entry clerk in a grocery store, had made money in the butter and
egg business, had "struck oil" at Titusville in 1862, and had succeeded
in exchanging his holdings for a block of Standard Oil stock. He too
became a Philadelphia politician, but he had certain hard qualities--he
was close-fisted, slow, plodding--that prevented him from achieving much
success.

For the other members of this group we must now change the scene to New
York City. In the early eighties certain powerful interests had formed
plans for controlling the New York transit fields. Prominent among
them was William Collins Whitney, a very different type of man from the
Philadelphians. Born in Conway, Massachusetts, in 1841, he came from a
long line of distinguished and intellectual New Englanders. At Yale his
wonderful mental gifts raised him far above his fellows; he divided
all scholastic honors there with his classmate, William Graham Sumner,
afterwards Yale's great political economist. Soon after graduation
Whitney came to New York and rapidly forged ahead as a lawyer.
Brilliant, polished, suave, he early displayed those qualities which
afterward made him the master mind of presidential Cabinets and the
maker of American Presidents. Physically handsome, loved by most men and
all women, he soon acquired a social standing that amounted almost to a
dictatorship. His early political activities had greatly benefited New
York. He became a member of that group which, under the leadership of
Joseph H. Choate and Samuel J. Tilden, accomplished the downfall of
William M. Tweed. Whitney remained Tilden's political protege for
several years. Though highbred and luxury-loving, as a young man he was
not averse to hard political work, and many old-timers still remember
the days when "Bill" Whitney delivered cart-tail harangues on the lower
east side. By 1884 he had become the most prominent Democrat in New
York--always a foe to Tammany--and as such he contributed largely to
Cleveland's first election, became Secretary of the Navy in Cleveland's
cabinet and that great President's close friend and adviser. As
Secretary of the Navy, Whitney, who found the fleet composed of a few
useless hulks left over from the days of Farragut, created the fighting
force that did such efficient service in the Spanish War. The fact that
the United States is now the third naval power is largely owing to these
early activities of Whitney.

Certainly all this national service forms a strange prelude to Whitney's
activities in the public utilities of New York and other cities. Had he
died, indeed, in his fiftieth year, his name would be renowned today as
a worker for the highest ideals of American citizenship. What suddenly
made him turn his back upon his past, join his former enemies in Tammany
Hall, and engage in these great speculative enterprises? The simplest
explanation is that, with his ability and ambition, Whitney had the
luxurious tastes of a Medici. At the height of his career his financial
success found expression in a magnificent house which he established
on Fifth Avenue. Its furnishings were one of the wonders of New York.
Whitney ransacked the art treasures of Europe, stripped medieval castles
of their carvings and tapestries, ripped whole staircases and ceilings
from the repose of centuries, and relaid them in this abode of splendor,
and here he entertained with a lavishness that astounded New York. This
single exploit pictures the man. Everything that Whitney did and was
his house, his financial transactions, his Wall Street speculations, the
rewards which he gave his friends assumed heroic proportions. But these
things all demanded money. The dilapidated horse railways of New York
offered him his most convenient opportunity for amassing it.

But Whitney had not proceeded far when he came face to face with a quiet
and energetic young man who had already made considerable progress in
the New York transit field. This was a Virginian of South Irish descent
who had started life as a humble broker's clerk twelve or fourteen years
before. His name was Thomas Fortune Ryan. Few men have wielded greater
power in American finance, but in 1884 Ryan was merely a ruddy-faced,
cleancut, and clean-living Irishman of thirty-three, who could be
depended on to execute quickly and faithfully orders on the New
York Stock Exchange--even though they were small ones--and who, in
unostentatious fashion, had already acquired much influence in Tammany
Hall. With his six feet of stature, his extremely slender figure, his
long legs, his long arms, his raiment--which always represented the
height of fashion and tended slightly toward the flashy--Ryan made a
conspicuous figure wherever he went. He was born in 1851, on a small
farm in Nelson County, Virginia. The Civil War, which broke out when
Ryan was a boy of ten, destroyed the family fortune and in 1868, when
seventeen, he began life as a dry-goods clerk in Baltimore, fulfilling
the tradition of the successful country boy in the large city by
marrying his employer's daughter. When his father-in-law failed, in
1870, Ryan came to New York, went to work in a broker's office, and
succeeded so well that, in a few years, he was able to purchase a seat
on the Stock Exchange. He was sufficiently skillful as a broker to
number Jay Gould among his customers and to inspire a prophecy by
William C. Whitney that, if he retained his health, he would become one
of the richest men in the country. Afterwards, when he knew him more
intimately, Whitney elaborated this estimate by saying that Ryan was
"the most adroit, suave, and noiseless man he had ever known." Ryan had
two compelling traits that soon won for him these influential admirers.
First of all was his marvelous industry. His genius was not spasmodic.
He worked steadily, regularly, never losing a moment, never getting
excited, going, day after day, the same monotonous dog-trot, easily
outdistancing scores of apparently stronger men. He also had the
indispensable faculty of silence. He has always been the least talkative
man in Wall Street, but, with all his reserve, he has remained the soul
of courtesy and outward good nature.

Here, then, we have the characters of this great impending drama--Yerkes
in Chicago, Widener and Elkins in Philadelphia, Whitney and Ryan in New
York. These five men did not invariably work as a unit. Yerkes, though
he had considerable interest in Philadelphia, which had been the scene
of his earliest exploits, limited his activities largely to Chicago.
Widener and Elkins, however, not only dominated Philadelphia traction
but participated in all of Yerkes's enterprises in Chicago and held
an equal interest with Whitney and Ryan in New York. The latter
Metropolitan pair, though they confined their interest chiefly to their
own city, at times transferred their attention to Chicago. Thus, for
nearly thirty years, these five men found their oyster in the transit
systems of America's three greatest cities--and, for that matter, in
many others also.

An attempt to trace the convolutions of America's street railway and
public lighting finance would involve a puzzling array of statistics and
an inextricable complexity of stocks, bonds, leases, holding companies,
operating companies, construction companies, reorganizations, and the
like. Difficult and apparently impenetrable as is this financial
morass, the essential facts still stand out plainly enough. As already
indicated, the fundamental basis upon which the whole system rested
was the control of municipal politics. The story of the Metropolitan's
manipulation of the New York street railways starts with one of the
most sordid episodes in the municipal annals of America's largest city.
Somewhat more than thirty years ago, a group of New York city fathers
acquired an international fame as the "boodle aldermen." These men had
finally given way to the importunities of a certain Jacob Sharp, an
eccentric New York character, who had for many years operated New
York City railways, and granted a franchise for the construction of
a horse-car line on lower Broadway. Soon after voting this franchise,
regarded as perhaps the most valuable in the world, these same aldermen
had begun to wear diamonds, to purchase real estate, and give other
outward evidences of unexpected prosperity. Presently, however, these
city fathers started a migration to Canada, Mexico, Spain, and other
countries where the processes of extradition did not work smoothly.
Sharp's enemies had succeeded in precipitating a legislative
investigation under the very capable leadership of Roscoe Conkling, who
had little difficulty in showing that Sharp had purchased his aldermen
for $500,000 cash. In a short time, such of the aldermen as were
accessible to the police were languishing in prison, and Sharp had been
arrested on twenty-one indictments for bribery and sentenced to four
years' hard labor--a sentence which he was saved from serving by his
lonely and miserable death in Ludlow Street Jail. In the delirium
preceding his dissolution Sharp raved constantly about his Broadway
railroad and his enemies; it was apparently his belief that the
investigation which had uncovered his rascality and the subsequent
"persecutions" had been engineered by certain of his rivals, either
to compel Sharp to disgorge his franchise or to produce the facts that
would justify the legislature in annulling it on the ground of fraud.

Though the complete history of this transaction can never be written, we
do possess certain facts that lend some color to this diagnosis. Up to
the time that Sharp had captured this franchise, Ryan, Whitney, and the
Philadelphians--not as partners, but as rivals--had competed with him
for this prize. At the trial of Arthur J. McQuade in 1886, a fellow
conspirator, who bore the somewhat suggestive name of Fullgraff, related
certain details which, if true, would indicate that Sharp's methods
differed from those of his rivals only in that they had proved more
successful. Thirteen members of the Board of Aldermen, said Fullgraff,
had formed a close corporation, elected a chairman, and adopted a policy
of "business unity in all important matters," which meant that they
proposed to keep together in order to secure the highest price for the
Broadway franchise. The cable railroad, which was the one with which Mr.
Ryan was identified, offered $750,000, half in bonds and half in cash.
Mr. Sharp, however, offered $500,000 all in cash. The aldermen voted in
favor of Sharp because cash was not only a more valuable commodity
than the bonds but, to use Alderman Fullgraff's own words--"less easily
traced." That Whitney financed lawsuits against the validity of Sharp's
franchise appears upon the record, and that Ryan was actively promoting
the Conkling investigation, is likewise a matter of evidence.
Sharp's victory had the great result of bringing together the three
forces--Ryan, Whitney, and the Philadelphians--who had hitherto combated
one another as rivals; that is, it caused the organization of the famous
Whitney-Ryan-Widener-Elkins syndicate. If these men had inspired all
those attacks on Sharp, their maneuver proved successful; for when the
investigation had attained its climax and public indignation against
Sharp had reached its most furious stage, that venerable corruptionist,
worn down by ill health, and almost crazed by the popular outcry, sold
his Broadway railroad to Peter A. B. Widener, William L. Elkins,
and William H. Kemble. Thomas F. Ryan became secretary of the new
corporation, and William C. Whitney an active participant in its
affairs.

This Broadway franchise formed the vertebral column of the New
York transit system; with it as a basis, the operators formed the
Metropolitan Street Railway Company in 1893, commonly known as the
"Metropolitan." They organized also the Metropolitan Traction Company,
an organization which enjoys an historic position as the first "holding
company" ever created in this country. Its peculiar attribute was that
it did not construct and operate street railways itself, but merely
owned other corporations that did so. Its only assets, that is, were
paper securities representing the ownership and control of other
companies. This "holding company," which has since become almost a
standardized form of corporation control in this country, was the
invention of Mr. Francis Lynde Stetson, one of America's greatest
corporation lawyers. "Mr. Stetson," Ryan is said to have remarked, "do
you know what you did when you drew up the papers of the Metropolitan
Traction Company? You made us a great big tin box."

The plan which Whitney and his associates now followed was to obtain
control, in various ways, of all the surface railways in New York and
place them under the leadership of the Metropolitan. Through their
political influences they obtained franchises of priceless value,
organized subsidiary street railway companies, and exchanged the stock
of these subsidiary companies for that of the Metropolitan. A few
illustrations will show the character of these transactions. They thus
acquired, practically as a free gift, a franchise to build a cable
railroad on Lexington Avenue. At an extremely liberal estimate, this
line cost perhaps $2,500,000 to construct, yet the syndicate turned this
over to the Metropolitan for $10,000,000 of Metropolitan securities.
They similarly acquired a franchise for a line on Columbus Avenue,
spending perhaps $500,000 in construction, and handing the completed
property over to the Metropolitan for $6,000,000. In exchange for these
two properties, representing a real investment, it has been maintained,
of $3,000,000, the inside syndicates received securities which had a
face value of $16,000,000 and which, as will appear subsequently, had
a market cash value of not far from $25,000,000. They purchased an
old horse-car line on Fulton Street, a line whose assets consisted of
one-third of a mile of tracks, ten little box cars, thirty horses, and
an operating deficit of $40,000 a year. At auction, its visible assets
might have brought $15,000; yet the syndicate turned this over to the
Metropolitan for $1,000,000. They spent $50,000 in constructing and
equipping a horse railroad on Twenty-eighth and Twenty-ninth Streets and
turned this over to the Metropolitan for $3,000,000. For two and a half
miles of railroad on Thirty-fourth Street, which represented a
cash expenditure of perhaps $100,000, they received $2,000,000 of
Metropolitan stock. But it is hardly necessary to catalogue more
instances; the plan of operations must now be fairly evident. It was
for the members of the syndicate, as individuals, to collect all the
properties and new franchises that were available and to transfer them
to the Metropolitan at enormously inflated values. So far, all these
deals were purely stock transactions--no cash had yet changed hands.
When the amalgamation was complete, the insiders found themselves in
possession of large amounts of Metropolitan stock. Their scheme for
transforming this paper into more tangible property forms the concluding
chapter of this Metropolitan story. *

     * In 1897 the Traction Company dissolved, after distributing
     $6,000,000 as "a voluntary dividend" among its stockholders.

Nearly all the properties actually purchased and transferred in the
manner described above, had little earning capacity, and therefore
little value; they were decrepit horse-car lines in unprofitable
territory. The really valuable roads were those that traversed the great
north and south thoroughfares--Lenox, Third, Fourth, Sixth, Eighth, and
Ninth Avenues. Many old New York families and estates had held these
properties for years and had collected large annual dividends from
them. Naturally they had no desire to sell, yet their acquisition was
essential to the monopoly which the Whitney-Ryan syndicate aspired to
construct. They finally leased all these roads, under agreements which
guaranteed large annual rentals. In practically all these cases the
Metropolitan, in order to secure physical possession, agreed to pay
rentals that far exceeded the earning capacity of the road. What is the
explanation of such insane finance? We do not have the precise facts in
the matter of the New York railways; but similar operations in Chicago,
which have been officially made public, shed the utmost light upon
the situation. In order to get possession of a single road in Chicago,
Widener and Elkins guaranteed a thirty-five per cent dividend; to get
one Philadelphia line, they guaranteed 65 1/2 per cent on capital
paid in. This, of course, was not business; the motives actuating
the syndicate were purely speculative. In Chicago, Widener and Elkins
quietly made large purchases of the stock in these roads before they
leased them to the parent company. The exceedingly profitable lease
naturally gave such stocks a high value, in case they preferred to sell;
if they held them, they reaped huge rewards from the leases which they
had themselves decreed. Perhaps their most remarkable exploit was
the lease of the West Division Railway Company of Chicago to the West
Chicago Street Railroad. Widener and Elkins controlled the West Division
Railway; their partner, Charles T. Yerkes, controlled the latter
corporation. The negotiation of a lease, therefore, was a purely
informal matter; the partners were merely dealing with one another; yet
Widener and Elkins received a fee of $5,000,000 as personal compensation
for negotiating this lease!

But this whole leasing system, both in New York and Chicago, entailed
scandals perhaps even more reprehensible. All these leased properties,
when taken over, were horse-car lines, and their transformation into
electrically propelled systems involved reconstruction operations on an
extensive scale. It seems perfectly clear that the chief motive
which inspired these extravagant leases was the determination of the
individuals who made up the syndicate to obtain physical possession and
to make huge profits on construction. The "construction accounts" of the
Metropolitan in New York form the most mysterious and incredible chapter
in its history. The Metropolitan reports show that they spent anywhere
from $500,000 to $600,000 a mile building underground trolley lines
which, at their own extravagant estimate, should have cost only
$150,000. In a few years untold millions, wasted in this way,
disappeared from the Metropolitan treasury. In 1907 the Public
Service Commission of New York began investigating these "construction
accounts," but it had not proceeded far when the discovery was made that
all the Metropolitan books containing the information desired had been
destroyed. All the ledgers, journals, checks, and vouchers containing
the financial history of the Metropolitan since its organization in 1893
had been sold for $117 to a junkman, who had agreed in writing to grind
them into pulp, so that they would be safe from "prying eyes." We shall
therefore never know precisely how this money was spent. But here again
the Chicago transactions help us to an understanding. In 1898 Charles T.
Yerkes, with that cynical frankness which some people have regarded as
a redeeming trait in his character, opened his books for the preceding
twenty-five years to the Civic Federation of Chicago. These books
disclosed that Mr. Yerkes and his associates, Widener and Elkins, had
made many millions in reconstructing the Chicago lines at prices which
represented gross overcharges to the stockholders. For this purpose
Yerkes, Widener, and Elkins organized the United States Construction
Company and made contracts for installing the new electric systems on
the lines which they controlled by lease or stock ownership. It seems a
not unnatural suspicion that the vanished Metropolitan books would have
disclosed similar performances in New York.

The concluding chapter of this tragedy has its setting in the Stock
Exchange. These inside gentlemen, as already said, received no cash as
their profits from these manipulations--only stock. But in the eyes
of the public this stock represented an enormous value. Metropolitan
securities, for example, represented the control and ownership of all
the surface transit business in the city of New York. Naturally, it had
a great investment value. When it began to pay regularly seven per cent
dividends, the public appetite for Metropolitan became insatiable. The
eager purchasers did not know, what we know now, that the Metropolitan
did not earn these dividends and never could have earned them. The mere
fact that it was paying, as rentals on its leased lines, annual sums far
in excess of their earning capacity, necessarily prevented anything in
the nature of profitable operation. The unpleasant fact is that these
dividends were paid with borrowed money merely to make the stock
marketable. It is not unlikely that the padded construction accounts,
already described, may have concealed large disbursements of money
for unearned dividends. When the Metropolitan was listed in 1897, it
immediately went beyond par. The excitement that followed forms one of
the most memorable chapters in the history of Wall Street. The investing
public, egged on by daring and skillful stock manipulators, simply went
mad and purchased not only Metropolitan but street railway shares
that were then even more speculative. It was in these bubble days that
Brooklyn Rapid Transit soared to heights from which it subsequently
descended precipitately. Under this stimulus, Metropolitan stock
ultimately sold at $269 a share. While the whole investing public was
scrambling for Metropolitan, the members of the exploiting syndicate
found ample opportunity to sell. The real situation became apparent when
William C. Whitney died in 1904 leaving an estate valued at $40,000,000.
Not a single share of Metropolitan was found among his assets! The
final crash came in 1907, when the Metropolitan, a wrecked and plundered
shell, confessed insolvency and went into a receivership. Those who had
purchased its stock found their holdings as worthless as the traditional
western gold mine. The story of the Chicago and Philadelphia systems,
as well as that of numerous other cities, had been essentially the same.
The transit facilities of millions of Americans had merely become
the instruments of a group of speculators who had made huge personal
fortunes and had left, as a monument of their labors, street railway
lines whose gross overcapitalization was apparent to all and whose
physical dilapidation in many cases revealed the character of their
management.

It seems perhaps an exaggeration to say that the enterprises which have
resulted in equipping our American cities and suburbs with trolley lines
and electric lighting facilities have followed the plan of campaign
sketched above. Perhaps not all have repeated the worst excesses of
the syndicate that so remorselessly exploited New York, Chicago, and
Philadelphia. Yet in most cases these elaborate undertakings have been
largely speculative in character. Huge issues of fictitious stock,
created purely for the benefit of inner rings, have been almost the
prevailing rule. Stock speculation and municipal corruption have
constantly gone hand in hand everywhere with the development of
the public utilities. The relation of franchise corporations to
municipalities is probably the thing which has chiefly opened the
eyes of Americans to certain glaring defects in their democratic
organization. The popular agitation which has resulted has led to great
political reforms. The one satisfaction which we can derive from such a
relation as that given above is that, after all, it is representative
of a past era in our political and economic life. No new "Metropolitan
syndicate" can ever repeat the operations of its predecessors.
Practically every State now has utility commissions which regulate
the granting of franchises, the issue of securities, the details of
construction and equipment and service. An awakened public conscience
has effectively ended the alliance between politics and franchise
corporations and the type of syndicate described in the foregoing pages
belongs as much to our American past as that rude frontier civilization
with which, after all, it had many characteristics in common.

CHAPTER VI. MAKING THE WORLD'S AGRICULTURAL MACHINERY

The Civil War in America did more than free the negro slave: it freed
the white man as well. In the Civil War agriculture, for the first time
in history, ceased to be exclusively a manual art. Up to that time the
typical agricultural laborer had been a bent figure, tending his fields
and garnering his crops with his own hands. Before the war had ended the
American farmer had assumed an erect position; the sickle and the scythe
had given way to a strange red chariot, which, with practically no
expenditure of human labor, easily did the work of a dozen men. Many
as have been America's contributions to civilization, hardly any have
exerted greater influence in promoting human welfare than her gift
of agricultural machinery. It seems astounding that, until McCormick
invented his reaper, in 1831, agricultural methods, in both the New and
the Old World, differed little from those that had prevailed in the days
of the Babylonians. The New England farmer sowed his fields and reaped
his crops with almost identically the same instruments as those which
had been used by the Roman farmer in the time of the Gracchi. Only a
comparatively few used the scythe; the great majority, with crooked
backs and bended knees, cut the grain with little hand sickles precisely
like those which are now dug up in Etruscan and Egyptian tombs.

Though McCormick had invented his reaper in 1831, and though many rival
machines had appeared in the twenty years preceding the Civil War, only
the farmers on the great western plains had used the new machinery to
any considerable extent. The agricultural papers and agricultural fairs
had not succeeded in popularizing these great laborsaving devices. Labor
was so abundant and so cheap that the farmer had no need of them. But
the Civil War took one man in three for the armies, and it was under
this pressure that the farmers really discovered the value of machinery.
A small boy or girl could mount a McCormick reaper and cut a dozen acres
of grain in a day. This circumstance made it possible to place millions
of soldiers in the field and to feed the armies from farms on which
mature men did very little work. But the reaper promoted the Northern
cause in other ways. Its use extended so in the early years of the war
that the products of the farms increased on an enormous scale, and the
surplus, exported to Europe, furnished the liquid capital that made
possible the financing of the war. Europe gazed in astonishment at a new
spectacle in history; that of a nation fighting the greatest war which
had been known up to that time, employing the greater part of her young
and vigorous men in the armies, and yet growing infinitely richer in the
process. The Civil War produced many new implements of warfare, such as
the machine gun and the revolving turret for battleships, but, so far as
determining the result was concerned, perhaps the most important was the
reaper.

Extensive as the use of agricultural machinery became in the Civil War,
that period only faintly foreshadowed the development that has taken
place since. The American farm is today like a huge factory; the use
of the hands has almost entirely disappeared; there are only a few
operations of husbandry that are not performed automatically. In Civil
War days the reaper merely cut the grain; now machinery rakes it up and
binds it into sheaves and threshes it. Similar mechanisms bind corn and
rice. Machinery is now used to plant potatoes; grain, cotton, and other
farm products are sown automatically. The husking bees that formed
one of our social diversions in Civil War days have disappeared, for
particular machines now rip the husks off the ears. Horse hay-forks and
horse hayrakes have supplanted manual labor. The mere names of scores
of modern instruments of farming, all unknown in Civil War days--hay
carriers, hay loaders, hay stackers, manure spreaders, horse corn
planters, corn drills, disk harrows, disk ploughs, steam ploughs,
tractors, and the like--give some suggestion of the extent to which
America has made mechanical the most ancient of occupations. In thus
transforming agriculture, we have developed not only our own Western
plains, but we have created new countries. Argentina could hardly exist
today except for American agricultural machinery. Ex-President Loubet
declared, a few years ago, that France would starve to death except
for the farming machines that were turned out in Chicago. There is
practically no part of the world where our self-binders are not used. In
many places America is not known as the land of freedom and opportunity,
but merely as "the place from which the reapers come." The traveler
suddenly comes upon these familiar agents in every European country,
in South America, in Egypt, China, Algiers, Siberia, India, Burma, and
Australia. For agricultural machinery remains today, what it has always
been, almost exclusively an American manufacture. It is practically the
only native American product that our European competitors have not
been able to imitate. Tariff walls, bounty systems, and all the other
artificial aids to manufacturing have not developed this industry in
foreign lands, and today the United States produces four-fifths of
all the agricultural machinery used in the world. The International
Harvester Company has its salesmen in more than fifty countries, and has
established large American factories in many nations of Europe.

One day, a few years before his death, Prince Bismarck was driving on
his estate, closely following a self-binder that had recently been put
to work. The venerable statesman, bent and feeble, seemed to find a deep
melancholy interest in the operation.

"Show me the thing that ties the knot," he said. It was taken to pieces
and explained to him in detail. "Can these machines be made in Germany?"
he asked.

"No, your Excellency," came the reply. "They can be made only in
America."

The old man gave a sigh. "Those Yankees are ingenious fellows," he said.
"This is a wonderful machine."

In this story of American success, four names stand out preeminently.
The men who made the greatest contributions were Cyrus H. McCormick,
C. W. Marsh, Charles B. Withington, and John F. Appleby. The name that
stands foremost, of course, is that of McCormick, but each of the others
made additions to his invention that have produced the present finished
machine. It seems like the stroke of an ironical fate which decreed
that since it was the invention of a Northerner, Eli Whitney, that made
inevitable the Civil War, so it was the invention of a Southerner, Cyrus
McCormick, that made inevitable the ending of that war in favor of the
North. McCormick was born in Rockbridge County, Virginia, on a farm
about eighteen miles from Staunton. He was a child of that pioneering
Scotch-Irish race which contributed so greatly to the settlement of this
region and which afterward made such inestimable additions to American
citizenship. The country in which he grew up was rough and, so far as
the conventionalities go, uncivilized; the family homestead was little
more than a log cabin; and existence meant a continual struggle with
a not particularly fruitful soil. The most remarkable figure in the
McCormick home circle, and the one whose every-day life exerted the
greatest influence on the boy, was his father. The older McCormick
had one obsessing idea that made him the favorite butt of the local
humorists. He believed that the labor spent in reaping grain was a
useless expenditure of human effort and that machinery might be made
to do the work. Other men, in this country and in Europe, had nourished
similar notions. Several Englishmen had invented reaping machines, all
of which had had only a single defect--they would not reap. An ingenious
English actor had developed a contrivance which would cut imitation
wheat on the stage, but no one had developed a machine that would work
satisfactorily in real life. Robert McCormick spent the larger part
of his days and nights tinkering at a practical machine. He finally
produced a horrific contrivance, made up of whirling sickles, knives,
and revolving rods, pushed from behind by two horses; when he tried this
upon a grain-field, however, it made a humiliating failure.

Evidently Robert McCormick had ambitions far beyond his powers; yet
without his absurd experiments the development of American agriculture
might have waited many years. They became the favorite topics of
conversation in the evening gatherings that took place about the family
log fire. Robert McCormick had several sons, and one manifested a
particular interest in his repeated failures. From the time he was seven
years old Cyrus Hall McCormick became his father's closest companion.
Others might ridicule and revile, but this chubby, bright-eyed,
intelligent little boy was always the keenest listener, the one comfort
which the father had against his jeering neighbors. He also became his
father's constant associate in his rough workshop. Soon, however, the
older man noticed a change in their relations. The boy was becoming
the teacher, and the father was taught. By the time Cyrus was eighteen,
indeed, he had advanced so far beyond his father that the latter had
become merely a proud observer. Young McCormick threw into the discard
all his father's ideas and struck out on entirely new lines. By the time
he had reached his twenty-second birthday he had constructed a machine
which, in all its essential details, is the one which we have today. He
had introduced seven principles, all of which are an indispensable part
of every reaper constructed now. One afternoon he drove his unlovely
contraption upon his father's farm, with no witnesses except his own
family. This group now witnessed the first successful attempt ever made
to reap with machinery. A few days later young McCormick gave a
public exhibition at Steele's Tavern, cutting six acres of oats in
an afternoon. The popular ridicule soon changed into acclaim; the new
invention was exhibited in a public square and Cyrus McCormick became a
local celebrity. Perhaps the words that pleased him most, however, were
those spoken by his father. "I am proud," said the old man, "to have a
son who can do what I failed to do."

This McCormick reaper dates from 1831; but it represented merely the
beginnings of the modern machine. It performed only a single function;
it simply cut the crop. When its sliding blade had performed this task,
the grain fell back upon a platform, and a farm hand, walking alongside,
raked this off upon the ground. A number of human harvesters followed,
picked up the bundles, and tied a few strips of grain around them,
making the sheaf. The work was exceedingly wearying and particularly
hard upon the women who were frequently impressed into service as
farm-hands. About 1858 two farmers named Marsh, who lived near De Kalb,
Illinois, solved this problem. They attached to their McCormick reaper a
moving platform upon which the cut grain was deposited. A footboard was
fixed to the machine upon which two men stood. As the grain came upon
this moving platform these men seized it, bound it into sheaves, and
threw it upon the field. Simple as this procedure seemed it really
worked a revolution in agriculture; for the first time since the
pronouncement of the primal curse, the farmer abandoned his hunchback
attitude and did his work standing erect. Yet this device also had
its disqualifications, the chief one being that it converted the human
sheaf-binder into a sweat-shop worker. It was necessary to bind the
grain as rapidly as the platform brought it up; the worker was
therefore kept in constant motion; and the consequences were frequently
distressing and nerve racking. Yet this "Marsh Harvester" remained the
great favorite with farmers from about 1860 to 1874.

All this time, however, there was a growing feeling that even the Marsh
harvester did not represent the final solution of the problem; the air
was full of talk and prophecies about self-binders, something that would
take the loose wheat from the platform and transform it into sheaves.
Hundreds of attempts failed until, in 1874, Charles B. Withington of
Janesville, Wisconsin, brought to McCormick a mechanism composed of two
steel arms which seized the grain, twisted a wire around it, cut the
wire, and tossed the completed sheaf to the earth. In actual practice
this contrivance worked with the utmost precision. Finally American
farmers had a machine that cut the grain, raked it up, and bound it
into sheaves ready for the mill. Human labor had apparently lost its
usefulness; a solitary man or woman, perched upon a seat and driving a
pair of horses, now performed all these operations of husbandry.

By this time, scores of manufacturers had entered the field in
opposition to McCormick, but his acquisition of Withington's invention
had apparently made his position secure. Indeed, for the next ten years
he had everything his own way. Then suddenly an ex-keeper of a drygoods
store in Maine crossed his path. This was William Deering, a character
quite as energetic, forceful, and pugnacious as was McCormick himself.
Though McCormick had made and sold thousands of his selfbinders, farmers
were already showing signs of discontent. The wire proved a continual
annoyance. It mingled with the straw and killed the cattle--at least so
the farmers complained; it cut their hands and even found its way, with
disastrous results, into the flour mills. Deering now appeared as the
owner of a startling invention by John F. Appleby. This did all that
the Withington machine did and did it better and quicker; and it had
the great advantage that it bound with twine instead of wire. The new
machine immediately swept aside all competitors; McCormick, to save his
reaper from disaster, presently perfected a twine binder of his own. The
appearance of Appleby's improvement in 1884 completes the cycle of the
McCormick reaper on its mechanical side The harvesting machine of fifty
nations today is the one to which Appleby put the final touches in 1884.
Since then nothing of any great importance has been added.

This outline of invention, however, comprises only part of the story.
The development of the reaper business presents a narrative quite as
adventurous as that of the reaper itself. Cyrus McCormick was not only
a great inventor; he was also a great businessman. So great was his
ability in this direction, indeed, that there has been a tendency to
discredit his achievements as a creative genius and to attribute his
success to his talents as an organizer and driver of industry. "I may
make a million dollars from this reaper," said McCormick, in the full
tide of enthusiasm over his invention; and these words indicate an
indispensable part of his program. He had no miserly instinct but he
had one overpowering ambition. It was McCormick's conviction, almost
religious in its fervor, that the harvester business of the world
belonged to him. As already indicated, plenty of other hardy spirits,
many of them almost as commanding personalities as himself, disputed the
empire. Not far from 12,000 patents on harvesting machines were granted
in this country in the fifty years following McCormick's invention, and
more than two hundred companies were formed to compete for the market.
McCormick always regarded these competitors as highwaymen who had
invaded a field which had been almost divinely set apart for himself. A
man of covenanting antecedents, heroic in his physical proportions, with
a massive, Jove-like head and beard, tirelessly devoted to his work,
watching every detail with a microscopic eye, marshaling a huge force
of workers who were as possessed by this one overruling idea as was
McCormick himself, he certainly presented an almost unassailable
battlefront to his antagonists. The competition that raged between
McCormick and the makers of rival machines was probably the fiercest
that has prevailed in any American industry. For marketing his machine
McCormick developed a system almost as ingenious as the machine itself.
The popularization of so ungainly and expensive a contrivance as the
harvester proved a slow and difficult task. McCormick at first attempted
to build his product on his Virginia farm and for many years it was
known as the Virginia Reaper. Nearly ten years passed, however,
before he sold his first machine. The farmer first refused to take it
seriously. "It's a great invention," he would say, "but I'm running
a farm, not a circus." About 1847 McCormick decided that the Western
prairies offered the finest field for its activities, and established
his factory at Chicago, then an ugly little town on the borders of a
swamp. This selection proved to be a stroke of genius, for it placed the
harvesting factory right at the door of its largest market.

The price of the harvester, however, seemed an insurmountable obstacle
to its extensive use. The early settlers of the Western plains had
little more than their brawny hands as capital, and the homestead
law furnished them their land practically free. In the eyes of a
large-seeing pioneer like McCormick this was capital enough. He
determined that his reaper should develop this extensive domain,
and that the crops themselves should pay the cost. Selling expensive
articles on the installment plan now seems a commonplace of business,
but in those days it was practically unknown. McCormick was the first
to see its possibilities. He established an agent, usually the general
storekeeper, in every agricultural center. Any farmer who had a modicum
of cash and who bore a reputation for thrift and honesty could purchase
a reaper. In payment he gave a series of notes, so timed that they fell
due at the end of harvesting seasons. Thus, as the money came in from
successive harvests, the pioneer paid off the notes, taking two, three,
or four years in the process. In the sixties and seventies immigrants
from the Eastern States and from Europe poured into the Mississippi
Valley by the hundreds of thousands. Almost the first person who greeted
the astonished Dane, German, or Swede was an agent of the harvester
company, offering to let him have one of these strange machines on
these terms. Thus the harvester, under McCormick's comprehensive selling
plans, did as much as the homestead act in opening up this great farming
region.

McCormick covered the whole agricultural United States with these
agents. In this his numerous competitors followed suit, and the
liveliest times ensued. From that day to this the agents of harvesting
implements have lent much animation and color to rural life in this
country. Half a dozen men were usually tugging away at one farmer at the
same time. The mere fact that the farmer had closed a contract did not
end his troubles, for "busting up competitors' sales" was part of the
agent's business. The situation frequently reached a point where there
was only one way to settle rival claims and that was by a field contest.
At a stated time two or three or four rival harvesters would suddenly
appear on the farmer's soil, each prepared to show, by actual test, its
superiority over the enemy. Farmers and idlers for miles around would
gather to witness the Homeric struggle. At a given signal the small
army of machines would spring savagely at a field of wheat. The one that
could cut the allotted area in the shortest time was regarded as the
winner. The harvester would rush on all kinds of fields, flat and hilly,
dry and wet, and would cut all kinds of crops, and even stubble. All
manner of tests were devised to prove one machine stronger than its
rival; a favorite idea was to chain two back to back, and have them
pulled apart by frantic careering horses; the one that suffered the
fewest breakdowns would be generally acclaimed from town to town.
Sometimes these field tests were the most exciting and spectacular
events at country fairs.

Thus the harvesting machine "pushed the frontier westward at the rate of
thirty miles a year," according to William H. Seward. It made American
and Canadian agriculture the most efficient in the world. The German
brags that his agriculture is superior to American, quoting as proof
the more bushels of wheat or potatoes he grows to an acre. But the
comparison is fallacious. The real test of efficiency is, not the crops
that are grown per acre, but the crops that are grown per man
employed. German efficiency gets its results by impressing women as
cultivators--depressing bent figures that are in themselves a sufficient
criticism upon any civilization. America gets its results by using a
minimum of human labor and letting machinery do the work. Thus America's
methods are superior not only from the standpoint of economics but of
social progress. All nations, including Germany, use our machinery, but
none to the extent that prevails on the North American Continent.

Perhaps McCormick's greatest achievement is that his machine has
banished famine wherever it is extensively used, at least in peace
times. Before the reaper appeared existence, even in the United States,
was primarily a primitive struggle for bread. The greatest service of
the harvester has been that it has freed the world--unless it is a world
distracted by disintegrating war--from a constant anxiety concerning its
food supply. The hundreds of thousands of binders, active in the fields
of every country, have made it certain that humankind shall not want for
its daily bread. When McCormick exhibited his harvester at the London
Exposition of 1851, the London Times ridiculed it as "a cross between
an Astley chariot, a wheel barrow, and a flying machine." Yet this same
grotesque object, widely used in Canada, Argentina, Australia, South
Africa, and India, becomes an engine that really holds the British
Empire together.

For the forty years succeeding the Civil War the manufacture of
harvesting machinery was a business in which many engaged, but in which
few survived. The wildest competition ruthlessly destroyed all but
half a dozen powerful firms. Cyrus McCormick died in 1884, but his sons
proved worthy successors; the McCormick factory still headed the list,
manufacturing, in 1900, one-third of all the self-binders used in the
world. The William Deering Company came next and then D. M. Osborne, J.
J. Glessner, and W. H. Jones, established factories that made existence
exceedingly uncomfortable for the pioneers. Whatever one may think of
the motives which caused so many combinations in the early years of
the twentieth century, there is no question that irresistible economic
forces compelled these great harvester companies to get together.
Quick profits in the shape of watered stock had nothing to do with
the formation of the International Harvester Company. All the men
who controlled these enterprises were individualists, with a natural
loathing for trusts, combinations, and pools. They wished for nothing
better than to continue fighting the Spartan battle that had made
existence such an exciting pastime for more than half a century. But the
simple fact was that these several concerns were destroying one another;
it was a question of joining hands, ending the competition that was
eating so deeply into their financial resources, or reducing the whole
business to chaos. When Mr. George W. Perkins, of J. P. Morgan
and Company, first attempted to combine these great companies, the
antagonisms which had been accumulated in many years of warfare
constantly threatened to defeat his end. He early discovered that the
only way to bring these men together was to keep them apart. The usual
way of creating such combinations is to collect the representative
leaders, place them around a table, and persuade them to talk the thing
over. Such an amicable situation, however, was impossible in the present
instance. Even when the four big men--McCormick, Deering, Glessner,
and Jones--were finally brought for the final treaty of peace to J. P.
Morgan's office, Mr. Perkins had to station them in four separate rooms
and flit from one to another arranging terms. Had these four men been
brought face to face, the Harvester Company would probably never have
been formed.

Having once signed their names, however, these once antagonistic
interests had little difficulty in forming a strong combination. The
company thus brought together manufactured 85 per cent of all the farm
machinery used in this country. It owned its own coal-fields and iron
mines and its own forests, and it produces most of the implements used
by 10,000,000 farmers. In 1847 Cyrus McCormick made 100 reapers and
sold them for $10,000; by 1902 the annual production of the corporation
amounted to hundreds of thousands of harvesters--besides an almost
endless assortment of other agricultural tools, ploughs, drills,
rakes, gasoline engines, tractors, threshers, cream separators, and the
like--and the sales had grown to about $75,000,000. This is merely the
financial measure of progress; the genuine achievements of McCormick's
invention are millions of acres of productive land and a farming
population which is without parallel elsewhere for its prosperity,
intelligence, manfulness, and general contentment.

CHAPTER VII. THE DEMOCRATIZATION OF THE AUTOMOBILE

In many manufacturing lines, American genius for organization and large
scale production has developed mammoth industries. In nearly all the
tendency to combination and concentration has exercised a predominating
influence. In the early years of the twentieth century the public
realized, for the first time, that one corporation, the American Sugar
Refining Company, controlled ninety-eight per cent of the business of
refining sugar. Six large interests--Armour, Swift, Morris, the National
Packing Company, Cudahy, and Schwarzschild and Sulzberger--had so
concentrated the packing business that, by 1905, they slaughtered
practically all the cattle shipped to Western centers and furnished
most of the beef consumed in the large cities east of Pittsburgh. The
"Tobacco Trust" had largely monopolized both the wholesale and retail
trade in this article of luxury and had also made extensive inroads into
the English market. The textile industry had not only transformed great
centers of New England into an American Lancashire, but the Southern
States, recovering from the demoralization of the Civil War, had begun
to spin their own cotton and to send the finished product to all parts
of the world. American shoe manufacturers had developed their art to
a point where "American shoes" had acquired a distinctive standing in
practically every European country.

It is hardly necessary to describe in detail each of these industries.
In their broad outlines they merely repeat the story of steel, of oil,
of agricultural machinery; they are the product of the same methods, the
same initiative. There is one branch of American manufacture, however,
that merits more detailed attention. If we scan the manufacturing
statistics of 1917, one amazing fact stares us in the face. There are
only three American industries whose product has attained the billion
mark; one of these is steel, the other food products, while the third
is an industry that was practically unknown in the United States fifteen
years ago. Superlatives come naturally to mind in discussing American
progress, but hardly any extravagant phrases could do justice to the
development of American automobiles. In 1899 the United States produced
3700 motor vehicles; in 1916 we made 1,500,000. The man who now makes a
personal profit of not far from $50,000,000 a year in this industry
was a puttering mechanic when the twentieth century came in. If we
capitalized Henry Ford's income, he is probably a richer man than
Rockefeller; yet, as recently as 1905 his possessions consisted of a
little shed of a factory which employed a dozen workmen. Dazzling as is
this personal success, its really important aspects are the things for
which it stands. The American automobile has had its wildcat days; for
the larger part, however, its leaders have paid little attention to Wall
Street, but have limited their activities exclusively to manufacturing.
Moreover, the automobile illustrates more completely than any other
industry the technical qualities that so largely explain our industrial
progress. Above all, American manufacturing has developed three
characteristics. These are quantity production, standardization, and
the use of labor-saving machinery. It is because Ford and other
manufacturers adapted these principles to making the automobile that the
American motor industry has reached such gigantic proportions.

A few years ago an English manufacturer, seeking the explanation of
America's ability to produce an excellent car so cheaply, made an
interesting experiment. He obtained three American automobiles, all of
the same "standardized" make, and gave them a long and racking tour over
English highways. Workmen then took apart the three cars and threw the
disjointed remains into a promiscuous heap. Every bolt, bar, gas tank,
motor, wheel, and tire was taken from its accustomed place and piled up,
a hideous mass of rubbish. Workmen then painstakingly put together three
cars from these disordered elements. Three chauffeurs jumped on these
cars, and they immediately started down the road and made a long journey
just as acceptably as before. The Englishman had learned the secret
of American success with automobiles. The one word "standardization"
explained the mystery.

Yet when, a few years before, the English referred to the American
automobile as a "glorified perambulator," the characterization was not
unjust. This new method of transportation was slow in finding favor
on our side of the Atlantic. America was sentimentally and practically
devoted to the horse as the motive power for vehicles; and the fact that
we had so few good roads also worked against the introduction of the
automobile. Yet here, as in Europe, the mechanically propelled wagon
made its appearance in early times. This vehicle, like the bicycle, is
not essentially a modern invention; the reason any one can manufacture
it is that practically all the basic ideas antedate 1840. Indeed,
the automobile is really older than the railroad. In the twenties and
thirties, steam stage coaches made regular trips between certain cities
in England and occasionally a much resounding power-driven carriage
would come careering through New York and Philadelphia, scaring all the
horses and precipitating the intervention of the authorities. The hardy
spirits who devised these engines, all of whose names are recorded in
the encyclopedias, deservedly rank as the "fathers" of the automobile.
The responsibility as the actual "inventor" can probably be no more
definitely placed. However, had it not been for two developments,
neither of them immediately related to the motor car, we should never
have had this efficient method of transportation. The real "fathers"
of the automobile are Gottlieb Daimler, the German who made the first
successful gasoline engine, and Charles Goodyear, the American who
discovered the secret of vulcanized rubber. Without this engine to form
the motive power and the pneumatic tire to give it four air cushions
to run on, the automobile would never have progressed beyond the steam
carriage stage. It is true that Charles Baldwin Selden, of Rochester,
has been pictured as the "inventor of the modern automobile" because,
as long ago as 1879, he applied for a patent on the idea of using a
gasoline engine as motive power, securing this basic patent in 1895, but
this, it must be admitted, forms a flimsy basis for such a pretentious
claim.

The French apparently led all nations in the manufacture of motor
vehicles, and in the early nineties their products began to make
occasional appearances on American roads. The type of American who owned
this imported machine was the same that owned steam yachts and a box at
the opera. Hardly any new development has aroused greater hostility. It
not only frightened horses, and so disturbed the popular traffic of
the time, but its speed, its glamour, its arrogance, and the haughty
behavior of its proprietor, had apparently transformed it into a new
badge of social cleavage. It thus immediately took its place as a new
gewgaw of the rich; that it had any other purpose to serve had occurred
to few people. Yet the French and English machines created an entirely
different reaction in the mind of an imaginative mechanic in Detroit.
Probably American annals contain no finer story than that of this simple
American workman. Yet from the beginning it seemed inevitable that Henry
Ford should play this appointed part in the world. Born in Michigan in
1863, the son of an English farmer who had emigrated to Michigan and
a Dutch mother, Ford had always demonstrated an interest in things far
removed from his farm. Only mechanical devices interested him. He liked
getting in the crops, because McCormick harvesters did most of the work;
it was only the machinery of the dairy that held him enthralled. He
developed destructive tendencies as a boy; he had to take everything to
pieces. He horrified a rich playmate by resolving his new watch into its
component parts--and promptly quieted him by putting it together again.
"Every clock in the house shuddered when it saw me coming," he recently
said. He constructed a small working forge in his school-yard, and built
a small steam engine that could make ten miles an hour. He spent his
winter evenings reading mechanical and scientific journals; he cared
little for general literature, but machinery in any form was almost a
pathological obsession. Some boys run away from the farm to join the
circus or to go to sea; Henry Ford at the age of sixteen ran away to get
a job in a machine shop. Here one anomaly immediately impressed him. No
two machines were made exactly alike; each was regarded as a separate
job. With his savings from his weekly wage of $2.50, young Ford
purchased a three dollar watch, and immediately dissected it. If several
thousand of these watches could be made, each one exactly alike, they
would cost only thirty-seven cents apiece. "Then," said Ford to himself,
"everybody could have one." He had fairly elaborated his plans to start
a factory on this basis when his father's illness called him back to the
farm.

This was about 1880; Ford's next conspicuous appearance in Detroit was
about 1892. This appearance was not only conspicuous; it was exceedingly
noisy. Detroit now knew him as the pilot of a queer affair that whirled
and lurched through her thoroughfares, making as much disturbance as
a freight train. In reading his technical journals Ford had met many
descriptions of horseless carriages; the consequence was that he had
again broken away from the farm, taken a job at $45 a month in a Detroit
machine shop, and devoted his evenings to the production of a gasoline
engine. His young wife was exceedingly concerned about his health;
the neighbors' snap judgment was that he was insane. Only two other
Americans, Charles B. Duryea and Ellwood Haynes, were attempting to
construct an automobile at that time. Long before Ford was ready with
his machine, others had begun to appear. Duryea turned out his first one
in 1892; and foreign makes began to appear in considerable numbers. But
the Detroit mechanic had a more comprehensive inspiration. He was not
working to make one of the finely upholstered and beautifully painted
vehicles that came from overseas. "Anything that isn't good for
everybody is no good at all," he said. Precisely as it was Vail's
ambition to make every American a user of the telephone and McCormick's
to make every farmer a user of his harvester, so it was Ford's
determination that every family should have an automobile. He was
apparently the only man in those times who saw that this new machine was
not primarily a luxury but a convenience. Yet all manufacturers, here
and in Europe, laughed at his idea. Why not give every poor man a Fifth
Avenue house? Frenchmen and Englishmen scouted the idea that any one
could make a cheap automobile. Its machinery was particularly refined
and called for the highest grade of steel; the clever Americans might
use their labor-saving devices on many products, but only skillful hand
work could turn out a motor car. European manufacturers regarded each
car as a separate problem; they individualized its manufacture almost as
scrupulously as a painter paints his portrait or a poet writes his
poem. The result was that only a man with several thousand dollars could
purchase one. But Henry Ford--and afterward other American makers--had
quite a different conception.

Henry Ford's earliest banker was the proprietor of a quick-lunch wagon
at which the inventor used to eat his midnight meal after his hard
evening's work in the shed. "Coffee Jim," to whom Ford confided
his hopes and aspirations on these occasions, was the only man
with available cash who had any faith in his ideas. Capital in more
substantial form, however, came in about 1902. With money advanced by
"Coffee Jim," Ford had built a machine which he entered in the Grosse
Point races that year. It was a hideous-looking affair, but it ran like
the wind and outdistanced all competitors. From that day Ford's career
has been an uninterrupted triumph. But he rejected the earliest offers
of capital because the millionaires would not agree to his terms. They
were looking for high prices and quick profits, while Ford's plans were
for low prices, large sales, and use of profits to extend the business
and reduce the cost of his machine. Henry Ford's greatness as a
manufacturer consists in the tenacity with which he has clung to this
conception. Contrary to general belief in the automobile industry he
maintained that a high sale price was not necessary for large profits;
indeed he declared that the lower the price, the larger the net earnings
would be. Nor did he believe that low wages meant prosperity. The most
efficient labor, no matter what the nominal cost might be, was the
most economical. The secret of success was the rapid production of
a serviceable article in large quantities. When Ford first talked of
turning out 10,000 automobiles a year, his associates asked him where
he was going to sell them. Ford's answer was that that was no problem at
all; the machines would sell themselves. He called attention to the
fact that there were millions of people in this country whose incomes
exceeded $1800 a year; all in that class would become prospective
purchasers of a low-priced automobile. There were 6,000,000 farmers;
what more receptive market could one ask? His only problem was the
technical one--how to produce his machine in sufficient quantities.

The bicycle business in this country had passed through a similar
experience. When first placed on the market bicycles were expensive;
it took $100 or $150 to buy one. In a few years, however, an excellent
machine was selling for $25 or $30. What explained this drop in price?
The answer is that the manufacturers learned to standardize their
product. Bicycle factories became not so much places where the articles
were manufactured as assembling rooms for putting them together.
The several parts were made in different places, each establishment
specializing in a particular part; they were then shipped to centers
where they were transformed into completed machines. The result was that
the United States, despite the high wages paid here, led the world in
bicycle making and flooded all countries with this utilitarian article.
Our great locomotive factories had developed on similar lines. Europeans
had always marveled that Americans could build these costly articles so
cheaply that they could undersell European makers. When they obtained a
glimpse of an American locomotive factory, the reason became plain. In
Europe each locomotive was a separate problem; no two, even in the same
shop, were exactly alike. But here locomotives are built in parts,
all duplicates of one another; the parts are then sent by machinery to
assembling rooms and rapidly put together. American harvesting machines
are built in the same way; whenever a farmer loses a part, he can go
to the country store and buy its duplicate, for the parts of the same
machine do not vary to the thousandth of an inch. The same principle
applies to hundreds of other articles.

Thus Henry Ford did not invent standardization; he merely applied this
great American idea to a product to which, because of the delicate
labor required, it seemed at first unadapted. He soon found that it was
cheaper to ship the parts of ten cars to a central point than to ship
ten completed cars. There would therefore be large savings in making
his parts in particular factories and shipping them to assembling
establishments. In this way the completed cars would always be near
their markets. Large production would mean that he could purchase his
raw materials at very low prices; high wages meant that he could get the
efficient labor which was demanded by his rapid fire method of campaign.
It was necessary to plan the making of every part to the minutest
detail, to have each part machined to its exact size, and to have every
screw, bolt, and bar precisely interchangeable. About the year 1907
the Ford factory was systematized on this basis. In that twelvemonth it
produced 10,000 machines, each one the absolute counterpart of the other
9999. American manufacturers until then had been content with a
few hundred a year! From that date the Ford production has rapidly
increased; until, in 1916, there were nearly 4,000,000 automobiles
in the United States--more than in all the rest of the world put
together--of which one-sixth were the output of the Ford factories. Many
other American manufacturers followed the Ford plan, with the result
that American automobiles are duplicating the story of American
bicycles; because of their cheapness and serviceability, they are
rapidly dominating the markets of the world. In the Great War American
machines have surpassed all in the work done under particularly exacting
circumstances.

A glimpse of a Ford assembling room--and we can see the same process in
other American factories--makes clear the reasons for this success. In
these rooms no fitting is done; the fragments of automobiles come in
automatically and are simply bolted together. First of all the units are
assembled in their several departments. The rear axles, the front axles,
the frames, the radiators, and the motors are all put together with the
same precision and exactness that marks the operation of the completed
car. Thus the wheels come from one part of the factory and are rolled on
an inclined plane to a particular spot. The tires are propelled by some
mysterious force to the same spot; as the two elements coincide, workmen
quickly put them together. In a long room the bodies are slowly advanced
on moving platforms at the rate of about a foot per minute. At the side
stand groups of men, each prepared to do his bit, their materials being
delivered at convenient points by chutes. As the tops pass by these men
quickly bolt them into place, and the completed body is sent to a place
where it awaits the chassis. This important section, comprising all the
machinery, starts at one end of a moving platform as a front and rear
axle bolted together with the frame. As this slowly advances, it passes
under a bridge containing a gasoline tank, which is quickly adjusted.
Farther on the motor is swung over by a small hoist and lowered into
position on the frame. Presently the dash slides down and is placed in
position behind the motor. As the rapidly accumulating mechanism passes
on, different workmen adjust the mufflers, exhaust pipes, the radiator,
and the wheels which, as already indicated, arrive on the scene
completely tired. Then a workman seats himself on the gasoline tank,
which contains a small quantity of its indispensable fuel, starts the
engine, and the thing moves out the door under its own power. It stops
for a moment outside; the completed body drops down from the second
floor, and a few bolts quickly put it securely in place. The workman
drives the now finished Ford to a loading platform, it is stored away
in a box car, and is started on its way to market. At the present time
about 2000 cars are daily turned out in this fashion. The nation demands
them at a more rapid rate than they can be made.

Herein we have what is probably America's greatest manufacturing
exploit. And this democratization of the automobile comprises more than
the acme of efficiency in the manufacturing art. The career of Henry
Ford has a symbolic significance as well. It may be taken as signalizing
the new ideals that have gained the upper hand in American industry. We
began this review of American business with Cornelius Vanderbilt as the
typical figure. It is a happy augury that it closes with Henry Ford in
the foreground. Vanderbilt, valuable as were many of his achievements,
represented that spirit of egotism that was rampant for the larger part
of the fifty years following the war. He was always seeking his own
advantage, and he never regarded the public interest as anything worth
a moment's consideration. With Ford, however, the spirit of service
has been the predominating motive. His earnings have been immeasurably
greater than Vanderbilt's; his income for two years amounts to nearly
Vanderbilt's total fortune at his death; but the piling up of riches
has been by no means his exclusive purpose. He has recognized that
his workmen are his partners and has liberally shared with them his
increasing profits. His money is not the product of speculation; Ford
is a stranger to Wall Street and has built his business independently
of the great banking interest. He has enjoyed no monopoly, as have the
Rockefellers; there are more than three hundred makers of automobiles
in the United States alone. He has spurned all solicitations to join
combinations. Far from asking tariff favors he has entered European
markets and undersold English, French, and German makers on their own
ground. Instead of taking advantage of a great public demand to increase
his prices, Ford has continuously lowered them. Though his idealism may
have led him into an occasional personal absurdity, as a business man
he may be taken as the full flower of American manufacturing genius.
Possibly America, as a consequence of universal war, is advancing to a
higher state of industrial organization; but an economic system is not
entirely evil that produces such an industry as that which has made the
automobile the servant of millions of Americans.

BIBLIOGRAPHICAL NOTE

The materials are abundant for the history of American industry in the
last fifty years. They exist largely in the form of official documents.
Any one ambitious of studying this subject in great detail should
consult, first of all, the catalogs issued by that very valuable
institution, the Government Printing Office. The Bureau of Corporations
has published elaborate reports on such industries as petroleum
(Standard Oil Company), beef, tobacco, steel, and harvesting machinery,
which are indispensable in studying these great basic enterprises. The
American habit of legislative investigation and trust-fighting in the
courts, whatever its public value may have been, has at least had the
result of piling up mountains of material for the historian of American
industry. For one single corporation, the Standard Oil Company, a
great library of such literature exists. The nearly twenty volumes of
testimony, exhibits, and briefs assembled in the course of the Federal
suit which led to its dissolution is the ultimate source of material on
America's greatest trust. As most of our other great corporations--the
Steel Trust, the Harvester Company, the Tobacco Company, and the
like--have passed through similar ordeals, all the information the
student could ask concerning them exists in the same form. The archives
of such bodies as the Interstate Commerce Commission and Public Utility
Commissions of the States are also bulging with documentary
evidence. Thus all the material contained in this volume--and much
more--concerning the New York traction situation will be found in the
investigation conducted in 1907 by the Public Service Commission of New
York, Second District.

American business has also developed a great talent for publicity.
Nearly all our big corporations have assembled much material about
their own history, all of which is public property. Thus the American
Telephone and Telegraph Company can furnish detailed information on
every phase of its business and history. Indeed, one's respect for
the achievements of American industry is increased by the praiseworthy
curiosity which it displays about its own past and the readiness with
which it makes such material accessible to the public. Despite the
abundance of data, there is not a great amount of popular writing on
these subjects that has much fascination as literature or much value as
history. The only book that is really important is Miss Ida M. Tarbell's
"History of the Standard Oil Company," 2 vols. (new edition 1911). Of
other popular volumes the present writer has found most useful Herbert
N. Casson's "Romance of Steel" (1907), "History of the Telephone"
(1910), and "Cyrus Hall McCormick: His Life and Work" (1909); J.H.
Bridge's "Inside History of the Carnegie Steel Company" (1903); "Henry
Ford's Own Story" as told to Rose Wildes Lane (1917).

For Chapter V, the author has drawn from articles contributed by him
in 1907-8 to "McClure's Magazine" on "Great American Fortunes and their
Making;" and for Chapter IV, from an article contributed to the same
magazine in 1914, on "Telephones for the Millions."

End of Project Gutenberg's The Age of Big Business, by Burton J. Hendrick