Ford vs. Dodge: A Feud That Long Predates American Muscle Glory
Before the horsepower wars, it was an all-out legal war.
In the early 1900s, there were hundreds of American automakers. And yet, when you look at the history of the U.S. auto industry, there’s a ton of overlap. For example, Henry Leyland, founder of Lincoln, was also in on the ground floor at Cadillac. Walter P. Chrysler put in time at Buick (under Charles Nash) and Willys-Overland before starting his eponymous company. And John and Horace Dodge were principal stakeholders at Ford before starting their own car company and setting off one of the most contentious legal battles Detroit has ever seen, as outlined in this recent article on How Stuff Works.
Yes, you read that right. John and Horace Dodge, the brawling, hard-drinking businessmen recently resurrected by Dodge in a series of commercials, were instrumental in getting Ford started on his path to automotive domination. To build his Model A (the 1903-’04 car, not the later one), Ford needed $28,000 in cash. Not only did the Dodges pony up 10 percent, they also became Ford’s principal supplier of outside work.
The feud begins
Just a few months into Model A production, The Ford Motor Company was seeing impressive profits for the era, and Ford was paying his investors back handsomely. Then in 1908, the Model T debuted, and the company was off. And while the Dodges were legally partial owners of Ford, they were busy investing their approximately $6.6 million in earned dividends into forming their own company. The Dodge Brothers Motor Company launched in 1914 with the Model 30-35, a direct competitor to the Model T. Henry Ford was not happy.
Ford, understandably, did not want to be actively funding a competitor, so in 1916, he simply stopped paying his principal investors. Then, he slashed the Model T’s price to just $345, a move that few, if any, competitors could match and still turn a profit.
Ford put on his everyman persona and argued that he simply wanted to invest that money into more jobs, declaring:
“My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business.”
In reality, this was aimed squarely at stopping the Dodges in their tracks.
The brothers retaliated. The day after Edsel Ford’s 1916 wedding, where they were guests, they filed a lawsuit against Ford. In it, they argued that he couldn’t simply freeze out his minority shareholders and run the business without their input.
The case was a long, brutal one that was heard in Michigan’s Supreme Court. Attorneys for the Dodges even called Ford to the witness stand, where he was forced to testify, treated with extreme hostility, and left feeling humiliated. By 1919, it was all over. The Court ruled in favor of the Dodges, establishing the precedent of “shareholder primacy,” an idea that has been re-litigated over and over again in the past century.
The aftermath
Ford would have his revenge on the Dodges. As the case was winding down, he unexpectedly announced that he was selling FoMoCo to Edsel. At the same time, he founded Henry Ford and Son. Worse, the new automaker was reportedly poaching most of the company’s engineers and management. FoMoCo stock prices plummeted, and most shareholders – including the Dodge Brothers – sold their stock back to the Ford family. Of course, it was all a ruse. There was no new car company, and Ford would continue to have final say over every major decision at the company until his retirement in 1945.
Was Ford’s maneuver illegal? Absolutely. But 100 years on, it’s the perfect ending to this old-Detroit-meets-There-Will-Be-Blood saga. The Ford family continues to play a major role in the company to this day. And the Blue Oval and Dodge have been competitors – on the race track, the drag strip, the streets, and in showrooms ever since.
So, oddly enough, there would be no Ford without Dodge, and vice versa. Kind of makes all those Mustang-versus-Hellcat drag races seem a little more personal, doesn’t it?
Photos: How Stuff Works
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