Great American Documents: Patent for the Model T

During political discussions, from the past few years, many have talked about the middle class in the USA.  Some comments are about the decline of the middle class.  Some about entrepreneurs and small businesses owners building the middle class.  Some about higher education providing career options that bring people into the middle class.  Three hundred years ago, the colonial economy roughly divided between the landed gentry, shop owners, and laborers (e.g. indentured servants and slaves).  Our Civil War, Industrial Revolution, and immigrations from various part of Europe shifted labor from mostly agricultural regions to urban and factory towns.  From the turn of the century to the post WWII years, many whose grandparents had worked the land or factories had become the middle class, populating the suburbs.  I propose that Henry Ford’s Model T has something to do with it.

Ford took out his patent for the Model T on October 1, 1908.  Over the next couple of decades, his factory went from being one of 30 in the USA to setting the standard for production methods.  His Model T went from being a stripped down version of the motor cars shipped over from Europe to being the family car in the USA.  How did the Model T help promote the middle class?

In the dynamic of private and public synergy, Ford’s vehicles and state roads encouraged the development of each other.  These vehicles and roads allowed farmers and factories to move their products more quickly and directly to towns and customers.  Cars and roads also allowed workers to live away from factories and to seek alternate jobs.  Geographic mobility allowed work mobility, which allowed workers with skills to compete for higher wages, which provided more income for their families.  Commuting allowed development of housing separate from company houses and apartments, as well as ownership of houses in suburbs.

Of course, none of these synergies could happen if people could not afford the cars.  At the turn of the century, vehicles cost $2,000 – $3,000, well out of the reach of the average workers.  Ford built and sold his cars for $850, counting on volume profits.  He also doubled the wages of his factory works to $5 per day, and trained them to work on many parts of the assembly line, to increase worker retention.  His higher paid workers could afford his cars.  Ford’s investment in his product, factories, and employees changed the USA from farm-shop-railroad-barons to a middle-class-suburban culture.  His patent gave him the credit for his idea and the financial reward of his investment.

Ford’s patent differed from most patents today.  First, his patent was for the whole product.  Most patents today are for specific parts that go into the assembly of something.  Automobiles, appliances, electronic gizmos probably use dozens to hundreds of parts, each with a separate patent.  This might represent how much more complicated our widgets are these days, but I suspect that it represents something different about how we invent stuff now.

Inventors and tinkerers are always experimenting, researching, developing and improving stuff.  Ford built custom racing cars before developing his Model T.  However, these days there will probably be few guys in garages who will dream up something that will change society.  More likely, those creative researchers work for corporations, universities, and government agencies (e.g. Department of Defense, Energy, Science and Aviation, Institute of Health).  Their inventions are most likely to be from the process of making something larger.  Depending on their employment contracts, they may not take out personal patents, but file for patents through the agency.

A second difference with patents now, is that these have become commodities for sale.  Global corporations buy up portfolios of patents.  Sometimes this is to gain control of patents related to their products to secure their production process and to prevent competitors from using those widgets.  Sometime this is to suppress a product that might cut into their market share with a better mouse-trap.  This creates an economy of invention-to-generate-patents, not so much to bring something useful to the market place, but to own the patent so that some bigger company will want to buy and control it.

This begs the question of whether all the talk about the creativity and entrepreneurial spirit of the US economy is really about building companies or to get bought out.  A hundred years ago, we made stuff and sold it to generate wealth.  Now we buy and sell shares in companies and buy patents.  If Ford were around today, would he be able to invent a product that would change our society over the next 100 years?

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About hermitsdoor

Up here in the mountains, we have a saying, "You can't get there from here", which really means "We wouldn't go the trouble to do that". Another concept is that "If you don't know, we ain't telling." For the rest, you'll have to read between the lines.
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6 Responses to Great American Documents: Patent for the Model T

  1. Vicar says:

    I think you are talking about patents.

    • hermitsdoor says:

      I even looked up the word in the dictionary to verify that I had the right meaning, but missed that last “t”. I’ve correct my error. Would like you like to be copy editor 🙂

  2. Barneysday says:

    Believe it or not, I have a patent on a heavy equipment product where I used to work for the manufacturer. The company owns the patent since I came up with the idea on company time, against a company product. Most patents work that way today. In one company I worked for, any patent I came up with, on any product, related or not to theirs, became the property of the company because it was done while I worked for them. Pretty typical process.

    The biggest reason for Ford’s success was the wage level. At the time Chrysler and GM fought him tooth and nail for his outrageous salary levels. But Ford saw the wisdom in making his workers also his customers.

    Wish that business leaders today had that level of vision.

    Great post

  3. The Vicar says:

    This is the real Vicar (the one that doesn’t notice spelling errors). Looking at how companies and the government work together today it makes me wonder if the colaborative days of 100 years ago are even possible. Companies seek government subsidies to lessen risk and spur growth, but often it’s the executives that make out and political PAC’s that swell with campaign contributions . When business models fail, it’s tax payers that absorb the cost (increased budget deficit on loan defaults), and the workers that struggle (unemployment).

    100 years after Ford was awarded his patent, GM was being bailed out, AIG was being stabilized, Solyndra was the hope for the future (this isn’t unique to the current administration, each one has their favorite projects)….. while Romney & Obama need $$ to get their message out for the upcoming election. The super companies of today are like Apple or Facebook. They reinvent themselves on a regular basis. The factory jobs of today are at Starbucks or Peet’s Coffee, where people work for a low wages + tips and health care benefits, and dream of what they will be some day.

    • hermitsdoor says:

      Maybe the “dream” is what is really the American Dream (not the excessive bank account or house). Your analysis about the relationship between business and government is estute. I must admit that I had not address how this has changed also. I shall weave this insight into some future post 🙂

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