Ford Motor Company is an American automaker and the world's fifth largest automaker based on worldwide vehicle sales. Based in Dearborn, Michigan, a suburb of Detroit, the automaker was founded by Henry Ford, and incorporated on June 16, 1903. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. The largest family-controlled company in the world, the Ford Motor Company has been in continuous family control for over 100 years. Ford now encompasses several brands, including Lincoln and Mercury.
The founding of Ford Motor Company
Henry Ford's initial foray into automobile manufacturing was the Detroit Automobile Company, founded in 1899. The company floundered, and in 1901 was reorganized as the Henry Ford Company. Ford had a falling out with his financial backers, and in March 1902 left the company with the rights to his name and 900 dollars. The Henry Ford Company changed their name to Cadillac, brought in Henry M. Leland to manage the operation, and went on to be a successful manufacturer of automobiles.
Henry Ford himself turned to an acquaintance, coal dealer Alexander Y. Malcomson, to help finance another automobile company. Malcomson put up the money to start the partnership "Ford and Malcomson" and the pair designed a car and began ordering parts. However, by February 1903, Ford and Malcomson had gone through more money than expected, and the manufacturing firm of John and Horace Dodge, who had made parts for Ford and Malcomson, was demanding payment.
Malcomson, constrained by his coal business demands, turned to his uncle John S. Gray, the president of the German-American Savings Bank and a good friend. Malcomson proposed incorporating Ford and Malcomson to bring in new investors, and wanted Gray to join the company, thinking that Gray's name would attract others to invest. Gray was at first uninterested, but Malcomson promised he could withdraw his share at any time, so Gray reluctantly agreed. On the strength of Gray's name, Malcomson recruited other business acquaintances to invest, including local merchants Albert Strelow and Vernon Fry, lawyers John Anderson and Horace Rackham, Charles T. Bennett of the Daisy Air Rifle Company, and his own clerk James Couzens. Malcomson also convinced the Dodges to accept stock in lieu of payment.
On June 16, 1903, the Ford Motor Company was incorporated, with 12 investors owning a total of 1000 shares. Ford and Malcomson together retained 51% of the new company in exchange for their earlier investments. When the total stock ownership was tabulated, shares in the company were: Henry Ford (255 shares), Alexander Y. Malcomson (255 shares), John S. Gray (105 shares), John W. Anderson (50 shares), Horace Rackham (50 shares), Horace E. Dodge (50 shares), John F. Dodge (50 shares), Charles T. Bennett (50 shares), Vernon C. Fry (50 shares), Albert Strelow (50 shares), James Couzens (25 shares), and Charles J. Woodall (10 shares).
At the first stockholder meeting on June 18, Gray was elected president, Ford vice-president, and James Couzens secretary. Despite Gray's misgivings, Ford Motor Company was immediately profitable, with profits by October 1, 1903 of almost $37,000. A dividend of 10% was paid that October, an additional dividend of 20% at the beginning of 1904, and another 68% in June 1904. Two dividends of 100% each in June and July 1905 brought the total investor profits to nearly 300% in just over 2 years; 1905 total profits were almost $300,000.
However, there were internal frictions in the company that Gray was nominally in charge of. Most of the investors, both Malcomson and Gray included, had their own businesses to attend to; only Ford and Couzens worked full-time at the company. The issue came to a head when the principal stockholders, Ford and Malcomson, quarreled over the future direction of the company. Gray sided with Ford. By early 1906 Malcomson was effectively frozen out of the Ford Motor Company, and in May sold his shares to Henry Ford. John S. Gray died unexpectedly in 1906, and his position as Ford's president was taken over by Ford himself soon afterward.
