75 Years Ago, Ford’s Better Idea

Posted December 17th, 2008 at 5.43pm in Enterprise and Free Markets, First Principles.

“A Conservative,” that anonymous scribe within Heritage, surfaces again for the second time in three days with a cautionary tale for the Big Three about Henry Ford, FDR and Big Government strings.

This latest edition of New Common Sense, titled “Ford Faced Down FDR’s Blue Eagle,” reads as follows:

Out of the rubble of the proposed bailout of the Big Three automakers, a phoenix may rise — or is it a blue eagle?

President Bush and Treasury Secretary Henry Paulson just might speed $10 billion or more to Detroit regardless of how Congress votes. After all, the government has some of that first $350 billion lying around from its $700 billion taxpayer bailout of the financial markets.

But while General Motors and Chrysler continue to beg for a handout, the other member of the Big Three — Ford — apparently clings ever so slightly to the entrepreneurial spirit of its pioneer: Henry Ford, who resisted President Franklin Delano Roosevelt’s government encroachment in the 1930s.

During the Great Depression, the National Recovery Act allowed businesses to establish industry-wide “codes” to regulate production, wages, prices and work hours. The NRA was a great boondoggle. In the auto industry, GM and Chrysler gladly signed the “Blue Eagle” code, using government coercion to force competitors to abide by rules they’d set for the market.

Compliant entrepreneurs received a nifty, government-created Blue Eagle logo to show off. Nothing drums up business like being sponsored by the government. But in 1933 that pesky Henry Ford refused to sign, writing:

I do not think that this country is ready to be treated like Russia for a while. There is a lot of the pioneer spirit here yet.”

Unlike rival automakers 75 years ago, who happily invited the government to restrict competition and skewer the consumer, Ford argued the NRA codes were un-American and unconstitutional.

President Roosevelt retaliated with an executive order barring Ford from government contracts. Because Ford could provide a better product at a better price than his government-supported competitors, though, FDR ultimately relented. Ford — and consumers — won the day.

Henry Ford, in insisting Americans weren’t ready to be treated like Russians, had reason to add “for a while.” Now the Big Three have got themselves stuck in the mud, but only Ford is unwilling to resort to New Deal thinking and give the wheel to Uncle Sam.

– A Conservative

Author: Ken McIntyre
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5 Comments

December 18, 2008 Mike Sheahen, Hickory, North Carolina writes:

Who wants a life-preserver called Chapter 11 Bankruptcy (which would would make it possible for GM and Chrysler to preserve most jobs and continue long enough to reorganize and learn to “swim” again, [relatively] free of government control]), when instead they can beg big government to fit them with a nice “cement suit” big government take-over?

If Ford is really resisting, they simply “don’t get it”, right? (Not!)

December 18, 2008 Wayne Brown, Hiram, GA writes:

Ford had a point in the 30’s. This isn’t Russia. I am very concerned that the government is seizing this opportunity to take over private industry. Let the Big Three go bankrupt. Let them break the UAW contracts so that the USA can actually compete in the global economy. In my estimation, the UAW is the villain in this auto bail-out stuff.

December 19, 2008 W Howard Baker, Bardstown, KY writes:

In American cars and trucks, I had always been a GM guy, but after reading this, I will be a Ford guy from now on.
It is funny that a true entrepreneur like Henry Ford wouldn’t have government take him over and on the other side of the world, another true entrepreneur, Soichiro Honda, did the same thing. When the government ordered him to just build motorcycles, he told them to go hang and started building automobiles. His automobiles, it can be argued, are among the top cars built by the Japanese.

December 21, 2008 PAUL DELACROIX writes:

It is my belief that Unions were a positive thing back in time.

But as an educator for 40 years; I know this. The integration of schools did no good for the white students. The African American teachers are big in teacher’s unions and they have lowered the standards because the Af. American just wouldn’t compete. ( its not that they couldn’t) it that they wouldn’t.

My belief is that its all about the family; society is so secular at this period in our history, the pre-kindergarten training is non-existent and when poor students can’t keep up in schools the Af. American want the educational standards lowered.

Time moves on and Unions should also; there is a lot of corruption in the Union hierarchy. Free Enterprise, competion all pluses; lets stop this government handouts.

January 6, 2009 Robert Clark, Clearwater, FL writes:

Ford was certainly to be admired for his integrity
and self reliant beliefs. While I am generally anti bailout, I believe there should be exceptions. Such as: When the government actions cause the ecomomy to implode (Fannie and Freddie mis, non, and malfeasances) and your customers are severely harmed by this, you (automakers) are aggrieved parties, and deserving of government help, since they screwed up your businesses. Now, union costs are high, and must be adjusted. But, American automakers build cars people WANT to own, cars and trucks with good profit margins. These profits reward American shareholders. Get the government out of the way, stop screwing up the credit markets, and sales and profits will return, as they have for the past hundred years.

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