132-421: The Fordney–McCumber Tariff of 1922 was a law that raised American tariffs on many imported goods to protect factories and farms. The US Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade by providing huge loans to Europe. That, in turn, bought more US goods. However, five years after the passage of the tariff, American trading partners had raised their own tariffs by
264-527: A collective bargaining agreement with the unions because the violence, work disruptions, and bitter stalemates could not go on forever. But Ford, who still had the final veto in the company on a de facto basis even if not an official one, refused to cooperate. For several years, he kept Bennett in charge of talking to the unions trying to organize the Ford Motor Company. Sorensen's memoir makes clear that Ford's purpose in putting Bennett in charge
396-454: A franchise system, which allowed for car dealerships throughout North America and in major cities on six continents. Ford was known for his pacifism during the first years of World War I , although during the war his company became a major supplier of weapons. He promoted the League of Nations . In the 1920s Ford promoted antisemitism through his newspaper The Dearborn Independent and
528-488: A pocket watch when he was 12. At 15, Ford dismantled and reassembled the timepieces of friends and neighbors dozens of times, gaining the reputation of a watch repairman. At twenty, Ford walked four miles to their Episcopal church every Sunday. Ford said two significant events occurred in 1875 when he was 12: he received the watch, and he witnessed the operation of a Nichols and Shepard road engine, "...the first vehicle other than horse-drawn that I had ever seen". Ford
660-646: A sawmill . They had one child, Edsel Ford (1893–1943). In 1891, Ford became an engineer with the Edison Illuminating Company of Detroit . After his promotion to Chief Engineer in 1893, he had enough time and money to devote attention to his experiments on gasoline engines . These experiments culminated in 1896 with the completion of a self-propelled vehicle, which he named the Ford Quadricycle . He test-drove it on June 4. After various test drives, Ford brainstormed ways to improve
792-445: A "domestic manufacture has attained to perfection… it invariably becomes cheaper. In this report, Hamilton also proposed export bans on major raw materials, tariff reductions on industrial inputs, pricing and patenting of inventions, regulation of product standards and development of financial and transportation infrastructure. The U.S. Congress adopted the tariffs but refused to grant subsidies to manufactures. Hamilton's arguments shaped
924-593: A $ 5 daily wage ($ 152 in 2023), which more than doubled the rate of most of his workers. A Cleveland, Ohio , newspaper editorialized that the announcement "shot like a blinding rocket through the dark clouds of the present industrial depression". The move proved extremely profitable; instead of constant employee turnover, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs. Ford announced his $ 5-per-day program on January 5, 1914, raising
1056-559: A 48-hour week, but in 1926 it was announced as five 8-hour days, giving a 40-hour week. The program apparently started with Saturday being designated a workday, before becoming a day off sometime later. On May 1, 1926, the Ford Motor Company's factory workers switched to a five-day, 40-hour workweek, with the company's office workers making the transition the following August. Ford had decided to boost productivity, as workers were expected to put more effort into their work in exchange for more leisure time. Ford also believed decent leisure time
1188-539: A Detroit-area coal dealer. They formed a partnership, Ford & Malcomson, Limited, to manufacture automobiles. Ford went to work designing an inexpensive automobile, and the duo leased a factory and contracted with a machine shop owned by John and Horace E. Dodge to supply over $ 160,000 in parts. Sales were slow, and a crisis arose when the Dodge brothers demanded payment for their first shipment. In response, Malcomson brought in another group of investors and convinced
1320-495: A bombshell with the flathead Ford V8 , the first low-price eight-cylinder engine. The flathead V8, variants of which were used in Ford vehicles for 20 years, was the result of a secret project launched in 1930 and Henry had initially considered a radical X-8 engine before agreeing to a conventional design. It gave Ford a reputation as a performance make well-suited for hot-rodding. Ford did not believe in accountants; he amassed one of
1452-523: A commercial device to help their business. Sales skyrocketed—several years posted 100% gains on the previous year. In 1913, Ford introduced moving assembly belts into his plants, which enabled an enormous increase in production. Although Ford is often credited with the idea, contemporary sources indicate that the concept and development came from employees Clarence Avery , Peter E. Martin , Charles E. Sorensen , and C. Harold Wills . (See Ford Piquette Avenue Plant .) Sales passed 250,000 in 1914. By 1916, as
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#17327910612851584-532: A common myth about United States trade policy is that low tariffs harmed American manufacturers in the early 19th century and then that high tariffs made the United States into a great industrial power in the late 19th century. A review by the Economist of Irwin's 2017 book Clashing over Commerce: A History of US Trade Policy notes: Political dynamics would lead people to see a link between tariffs and
1716-539: A consultant; Ford, in response, left the company bearing his name. With Ford gone, Leland renamed the company the Cadillac Automobile Company . Teaming up with former racing cyclist Tom Cooper , Ford also produced the 80+ horsepower racer " 999 ," which Barney Oldfield was to drive to victory in a race in October 1902. Ford received the backing of an old acquaintance, Alexander Y. Malcomson ,
1848-607: A focus on business efficiency would discourage warfare because, "If every man who manufactures an article would make the very best he can in the very best way at the very lowest possible price the world would be kept out of war, for commercialists would not have to search for outside markets which the other fellow covets." Ford admitted that munitions makers enjoyed wars, but he argued that most businesses wanted to avoid wars and instead work to manufacture and sell useful goods, hire workers, and generate steady long-term profits. Ford's British factories produced Fordson tractors to increase
1980-503: A massive new assembly plant at River Rouge for the new Model A, which launched in 1927. In addition to its price ladder, GM also quickly established itself at the forefront of automotive styling under Harley Earl 's Arts & Color Department, another area of automobile design that Henry Ford did not entirely appreciate or understand. Ford would not have a true equivalent of the GM styling department for many years. By 1926, flagging sales of
2112-799: A means to foster employment, but Ford saw this as self-defeating because, in his view, productivity was necessary for economic prosperity to exist. He believed that productivity gains that obviated certain jobs would nevertheless stimulate the broader economy and grow new jobs elsewhere, whether within the same corporation or in others. Ford also believed that union leaders had a perverse incentive to foment perpetual socio-economic crises to maintain their power. Meanwhile, he believed that smart managers had an incentive to do right by their workers, because doing so would maximize their profits. However, Ford did acknowledge that many managers were basically too bad at managing to understand this fact. But Ford believed that eventually, if good managers such as he, could fend off
2244-423: A mid-range make to challenge Dodge and Buick, although Henry also displayed relatively little enthusiasm for it. Ford was a pioneer of " welfare capitalism ", designed to improve the lot of his workers and especially to reduce the heavy turnover that had many departments hiring 300 men per year to fill 100 slots. Efficiency meant hiring and keeping the best workers. Ford astonished the world in 1914 by offering
2376-426: A nation by replacing imported goods with domestic production). Tariffs may also be used to rectify artificially low prices for certain imported goods, due to 'dumping', export subsidies or currency manipulation. There is near unanimous consensus among economists that tariffs are self-defeating and have a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has
2508-503: A notion believed by some to offer lessons for developing countries today. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913, the admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. But American growth during its protectionist period was more to do with its abundant resources and openness to people and ideas. The Economist Ha-Joon Chang argues, on
2640-400: A positive effect on economic growth . Although trade liberalisation can sometimes result in large and unequally distributed losses and gains, and can, in the short run , cause significant economic dislocation of workers in import-competing sectors, free trade has advantages of lowering costs of goods and services for both producers and consumers. The economic burden of tariffs falls on
2772-506: A protective tariff, and we will have the greatest nation on earth" . Once elected, Lincoln implemented a 44-percent tariff during the Civil War —in part to pay for railroad subsidies and for the war effort, and to protect favored industries. After the war, tariffs remained at or above wartime levels. High tariffs were a policy designed to encourage rapid industrialisation and protect the high American wage rates. The policy from 1860 to 1933
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#17327910612852904-614: A role in the subsequent contraction." As of 2011, Milton Friedman held the opinion that the tariffs of 1930 caused harm but were not responsible by themselves for the Great Depression, which instead he blamed the lack of sufficient action on the part of the Federal Reserve. Peter Temin , an economist at the Massachusetts Institute of Technology, agrees that the contractionary effect of the tariff
3036-480: A significant degree. France raised its tariffs on automobiles from 45% to 100%, Spain raised its tariffs on American goods by 40%, and Germany and Italy raised their tariffs on wheat. According to the American Farm Bureau , farmers lost more than $ 300 million annually as a result of the tariff. The first sector of the economy that was hit by a fall in postwar demand was agriculture. During World War I,
3168-416: A six-inch stroke, which was connected to a countershaft by a belt and then to the rear wheel by a chain. The belt was shifted by a clutch lever to control speeds at 10 or 20 miles per hour , augmented by a throttle . Other features included 28-inch wire bicycle wheels with rubber tires , a foot brake, a 3-gallon gasoline tank, and later, a water jacket around the cylinders for cooling. Ford added that "in
3300-541: A speech in the House of Lords in which he defended fiscal retaliation against countries that applied high tariffs and whose governments subsidised products sold in Britain (known as "premium products", later called " dumping "). The retaliation was to take the form of threats to impose duties in response to goods from that country. Liberal unionists had split from the liberals , who advocated free trade, and this speech marked
3432-541: A turning point in the group's slide toward protectionism . Lansdowne argued that the threat of retaliatory tariffs was similar to gaining respect in a room of gunmen by pointing a big gun (his exact words were "a gun a little bigger than everyone else's"). The "Big Revolver" became a slogan of the time, often used in speeches and cartoons. In response to the Great Depression , Britain abandoned free trade in 1932, recognizing that it had lost production capacity to
3564-401: Is declining...faster than international trade is declining." If this decrease (in international trade) had been the cause of the depression that the countries have experienced, we would have seen the opposite". "Finally, the chronology of events does not correspond to the thesis of the free traders... The bulk of the contraction of trade occurred between January 1930 and July 1932, that is, before
3696-438: Is for citizens to buy local products instead, thereby stimulating their country's economy. Tariffs therefore provide an incentive to develop production and replace imports with domestic products. Tariffs are meant to reduce pressure from foreign competition and reduce the trade deficit. They have historically been justified as a means to protect infant industries and to allow import substitution industrialisation (industrializing
3828-693: The Ford Foundation , and control of the company to his family. Henry Ford was born July 30, 1863, on a farm in Springwells Township, Michigan . His father, William Ford (1826–1905), was born in County Cork , Ireland, to a family that had emigrated from Somerset , England in the 16th century. His mother, Mary Ford (née Litogot; 1839–1876), was born in Michigan as the youngest child of Belgian immigrants; her parents died when she
3960-784: The French : tarif , lit. 'set price' which is itself a descendant of the Italian : tariffa , lit. 'mandated price; schedule of taxes and customs' which derives from Medieval Latin : tariffe , lit. 'set price'. This term was introduced to the Latin-speaking world through contact with the Turks and derives from the Ottoman Turkish : تعرفه , romanized : taʿrife , lit. 'list of prices; table of
4092-676: The Great Depression , unemployed Detroit auto workers staged the Ford Hunger March to the Ford River Rouge Complex to present 14 demands to Henry Ford. The Dearborn police department and Ford security guards opened fire on workers leading to over sixty injuries and five deaths. On May 26, 1937, Bennett's security men beat members of the United Automobile Workers (UAW), including Walter Reuther , with clubs. While Bennett's men were beating
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4224-657: The National Bureau of Economic Research highlights the predominant influence of currency instability (which led to the international liquidity crisis ) and the sudden rise in transportation costs in the decline of trade during the 1930s. Other economists believe that the record tariffs of the 1920s and early 1930s adopted by the Republicans exacerbated the Great Depresssion in the U.S., in part because of retaliatory tariffs imposed by other countries on
4356-556: The Whig Party under the name " American System " which consisted of protecting industries and developing infrastructure in explicit opposition to the "British system" of free trade. Before 1860 they were always defeated by the low-tariff Democrats. From 1846 to 1861, American tariffs were lowered but this was followed by a series of recessions and the 1857 panic, which eventually led to higher demands for tariffs than President James Buchanan signed in 1861 (Morrill Tariff). During
4488-621: The repeal of the Corn Laws in 1846, which was equivalent to free trade in grain. The Corn Acts had been passed in 1815 to restrict wheat imports and to guarantee the incomes of British farmers; their repeal devastated Britain's old rural economy, but began to mitigate the effects of the Great Famine in Ireland. Tariffs on many manufactured goods were also abolished. But while free-trade was progressing in Britain, protectionism continued on
4620-528: The $ 5-day wage. Real profit-sharing was offered to employees who had worked at the company for six months or more, and, importantly, conducted their lives in a manner of which Ford's "Social Department" approved. They frowned on heavy drinking, gambling, and on what are now called deadbeat dads . The Social Department used 50 investigators and support staff to maintain employee standards; a large percentage of workers were able to qualify for this "profit-sharing". Ford's incursion into his employees' private lives
4752-712: The American Civil War (1861–65), agrarian interests in the South were opposed to any protection, while manufacturing interests in the North wanted to maintain it. The war marked the triumph of the protectionists of the industrial states of the North over the free traders of the South. Abraham Lincoln was a protectionist like Henry Clay of the Whig Party, who advocated the "American system" based on infrastructure development and protectionism. In 1847, he declared: "Give us
4884-524: The American agricultural industry had enjoyed prosperity through the raising of prices, which led to increased output that Americans used to supply Europe. Farmers borrowed heavily to expand their acreage and had difficulty paying back the loans when prices fell. Some of the postwar problems for American agriculture come from the great surplus of farm goods, which could not be absorbed in the national market as European countries had recovered sufficiently from
5016-604: The American producer. It upholds the American standard of wages for the American workingman". In 1913, following the electoral victory of the Democrats in 1912, there was a significant reduction in the average tariff on manufactured goods from 44% to 25%. However, the First World War rendered this bill ineffective, and new "emergency" tariff legislation was introduced in 1922 after the Republicans returned to power in 1921. According to economic historian Douglas Irwin,
5148-711: The Civil War even more explicitly protectionist than before, Germany under Bismarck rejected free trade, and the rest of Europe followed suit. After the 1870s, the British economy continued to grow, but inexorably lagged behind the protectionist United States and Germany: from 1870 to 1913, industrial production grew at an average annual rate of 4.7% in the USA, 4.1% in Germany and only 2.1% in Great Britain. Thus, Britain
5280-785: The Depression, partly as a consequence of deflation." According the historian Paul Bairoch , the years 1920 to 1929 are generally misdescribed as years in which protectionism increased in Europe. In fact, from a general point of view, the crisis was preceded in Europe by trade liberalisation. The weighted average of tariffs remained tendentially the same as in the years preceding the First World War: 24.6% in 1913, as against 24.9% in 1927. In 1928 and 1929, tariffs were lowered in almost all developed countries. Douglas A. Irwin says most economists "doubt that Smoot–Hawley played much of
5412-488: The Dodge brothers to accept a portion of the new company. Ford & Malcomson was reincorporated as the Ford Motor Company on June 16, 1903, with $ 28,000 capital. The original investors included Ford and Malcomson, the Dodge brothers, Malcomson's uncle John S. Gray , Malcolmson's secretary James Couzens , and two of Malcomson's lawyers, John W. Anderson and Horace Rackham . Because of Ford's volatility, Gray
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5544-524: The East Asian countries, he argues that the longest periods of rapid growth in these countries do not coincide with extended phases of free trade, but rather with phases of industrial protection and promotion. He believes infant industry protection policy has generated much better growth performance in the developing world than free trade policies since the 1980s. In the second half of the 20th century, Nicholas Kaldor takes up similar arguments to allow
5676-571: The European mainland and in the United States. Customs duties on many manufactured goods were also abolished. The Navigation Acts were abolished in 1849 when free traders won the public debate in the UK. But while free trade progressed in the UK, protectionism continued on the Continent. The UK practiced free trade unilaterally in the vain hope that other countries would follow, but the USA emerged from
5808-523: The Ford Model T automobile in 1908 is credited with having revolutionized both transportation and American industry. As the sole owner of the Ford Motor Company, Ford became one of the wealthiest persons in the world. He was also among the pioneers of the five-day work-week . Ford believed that consumerism could help to bring about world peace . His commitment to systematically lowering costs resulted in many technical and business innovations, including
5940-608: The Ford company adopted an annual model change system similar to that recently pioneered by its competitor General Motors (and still in use by automakers today). Not until the 1930s did Ford overcome his objection to finance companies, and the Ford-owned Universal Credit Corporation became a major car-financing operation. Henry Ford still resisted many technological innovations such as hydraulic brakes and all-metal roofs, which Ford vehicles did not adopt until 1935–1936. For 1932 however, Ford dropped
6072-467: The Model T finally convinced Ford to make a new model. He pursued the project with a great deal of interest in the design of the engine, chassis, and other mechanical necessities, while leaving the body design to his son. Although Ford fancied himself an engineering genius, he had little formal training in mechanical engineering and could not even read a blueprint. A talented team of engineers performed most of
6204-601: The Netherlands to meet with peace activists. A target of much ridicule, Ford left the ship as soon as it reached Sweden. In 1915, Ford blamed "German-Jewish bankers" for instigating the war. According to biographer Steven Watts, Ford's status as a leading industrialist gave him a worldview that warfare was wasteful folly that retarded long-term economic growth. The losing side in the war typically suffered heavy damage. Small business were especially hurt, for it takes years to recuperate. He argued in many newspaper articles that
6336-647: The Quadricycle. Also in 1896, Ford attended a meeting of Edison executives, where he was introduced to Thomas Edison . Edison approved of Ford's automobile experimentation. Encouraged by Edison, Ford designed and built a second vehicle, completing it in 1898. Backed by the capital of Detroit lumber baron William H. Murphy, Ford resigned from the Edison Company and founded the Detroit Automobile Company on August 5, 1899. However,
6468-829: The Second World War. In Report on Manufactures , considered the first text to express modern protectionist theory, Alexander Hamilton argued that if a country wished to develop a new activity on its soil, it would have to temporarily protect it. According to him, this protection against foreign producers could take the form of import duties or, in rare cases, prohibition of imports. He called for customs barriers to allow American industrial development and to help protect infant industries, including bounties (subsidies) derived in part from those tariffs. He also believed that duties on raw materials should be generally low. Hamilton argued that despite an initial "increase of price" caused by regulations that control foreign competition, once
6600-518: The South denounced it as a " Tariff of Abominations " and it almost caused a rebellion in South Carolina until it was lowered. Between 1816 and the end of the Second World War, the United States had one of the highest average tariff rates on manufactured imports in the world. According to Paul Bairoch, the United States was "the homeland and bastion of modern protectionism" during this period. Many American intellectuals and politicians during
6732-520: The UAW representatives, the supervising police chief on the scene was Carl Brooks, an alumnus of Bennett's Service Department, and Brooks "did not give orders to intervene". The following day photographs of the injured UAW members appeared in newspapers, later becoming known as The Battle of the Overpass . In the late 1930s and early 1940s, Edsel—who was president of the company—thought Ford had to come to
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#17327910612856864-414: The UK's technological advance was achieved “behind high and durable tariff barriers”. In 1846, the rate of industrialization per capita was more than double that of its closest competitors. Even after adopting free trade for most goods, Britain continued to closely regulate trade in strategic capital goods, such as machinery for the mass production of textiles. Free trade in Britain began in earnest with
6996-555: The United States and Germany, which remained protectionist. The country reintroduced large-scale tariffs, but it was too late to re-establish the nation's position as a dominant economic power. In 1932, the level of industrialization in the United States was 50% higher than in the United Kingdom. Before the new Constitution took effect in 1788, the Congress could not levy taxes – it sold land or begged money from
7128-426: The United States to achieve the fastest economic growth in the world throughout the 19th century and into the 1920s. Paul Krugman writes that protectionism does not lead to recessions. According to him, the decrease in imports (which can be obtained by introducing tariffs) has an expansive effect, that is, it is favourable to growth. Thus, in a trade war, since exports and imports will decrease equally, for everyone,
7260-677: The United States. States resorting to protectionism invoke unfair competition or dumping practices: According to the economists in favour of protecting industries, free trade would condemn developing countries to being nothing more than exporters of raw materials and importers of manufactured goods. The application of the theory of comparative advantage would lead them to specialise in the production of raw materials and extractive products and prevent them from acquiring an industrial base. Protection of infant industries (e.g., through tariffs on imported products) may be needed for some developing countries to industrialise and escape their dependence on
7392-717: The United States. As US tariffs raised, those in other countries followed. According to the American Farm Bureau, farmers lost more than $ 300 million annually as a result of the tariff. The tariff was supported by the Republican Party and conservatives and was generally opposed by the Democratic Party, liberals, and progressives. One purpose of the tariff was to help those returning from World War I have greater job opportunities. Trading partners complained immediately. European nations affected by
7524-595: The White House. Hearings were held by Congress and led to the creation of several new tools of protection. One was the scientific tariff to equalize production costs among countries; no country could undercut the prices charged by American companies. The difference of production costs was calculated by the Tariff Commission . Another was the American selling price; it allowed the President to calculate
7656-418: The abolition of export duties on most manufactured goods. Thus, the UK was the first country to pursue a strategy of large-scale infant-industry development. These policies were similar to those used by countries such as Japan, Korea and Taiwan after the Second World War. Outlining his policy, Walpole declared: Nothing contributes as much to the promotion of public welfare as the export of manufactured goods and
7788-528: The actual work of designing the Model A (and later the flathead V8) with Ford supervising them closely and giving them overall direction. Edsel also managed to prevail over his father's initial objections in the inclusion of a sliding-shift transmission. The result was the Ford Model A , introduced in December 1927 and produced through 1931, with a total output of more than four million. Subsequently,
7920-473: The age of 16 to find work in Detroit . It was a few years before this time that Ford first experienced automobiles, and throughout the later half of the 1880s, he began repairing and later constructing engines, and through the 1890s worked with a division of Edison Electric . He founded the Ford Motor Company in 1903 after prior failures in business, but success in constructing automobiles. The introduction of
8052-546: The attacks of misguided people from both left and right (i.e., both socialists and bad-manager reactionaries), the good managers would create a socio-economic system wherein neither bad management nor bad unions could find enough support to continue existing. To forestall union activity, Ford promoted Harry Bennett , a former Navy boxer, to head the Service Department. Bennett employed various intimidation tactics to quash union organizing. On March 7, 1932, during
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#17327910612858184-760: The automobiles produced were of a lower quality and higher price than Ford wanted. Ultimately, the company was not successful and was dissolved in January 1901. With the help of C. Harold Wills , Ford designed, built, and successfully raced a 26- horsepower automobile in October 1901. With this success, Murphy and other stockholders in the Detroit Automobile Company formed the Henry Ford Company on November 30, 1901, with Ford as chief engineer. In 1902, Murphy brought in Henry M. Leland as
8316-565: The average tariff level remained around 12.5%, which was too low to encourage consumers to buy domestic products and thus support emerging American industries. When the Anglo-American War of 1812 broke out, all rates doubled to an average of 25% to account for increased government spending. The war paved the way for new industries by disrupting manufacturing imports from the UK and the rest of Europe. A major policy shift occurred in 1816, when American manufacturers who had benefited from
8448-601: The aviation business during World War I , building Liberty engines . After the war, it returned to auto manufacturing until 1925, when Ford acquired the Stout Metal Airplane Company . Ford's most successful aircraft was the Ford 4AT Trimotor , often called the "Tin Goose" because of its corrugated metal construction. It used a new alloy called Alclad that combined the corrosion resistance of aluminum with
8580-537: The beginning of that century, the average tariff on British manufactured goods was about 50%, the highest of all major European countries. Despite its growing technological lead over other nations, the UK continued its policy of industrial promotion until the mid-19th century, maintaining very high tariffs on manufactured goods until the 1820s, two generations after the start of the Industrial Revolution . Thus, according to economic historian Paul Bairoch ,
8712-525: The book The International Jew . He opposed his country's entry into World War II , and served for a time on board of the America First Committee . After his son Edsel died in 1943, Ford resumed control of the company, but was too frail to make decisions and quickly came under the control of several of his subordinates. He turned over the company to his grandson Henry Ford II in 1945. Upon his death in 1947, he left most of his wealth to
8844-432: The broad workable plan of investment and participation will do more to solidify the industry and strengthen the organization than will any social work on the outside. Without changing the principle we have changed the method of payment." In addition to raising his workers' wages, Ford also introduced a new, reduced workweek in 1926. The decision was made in 1922, when Ford and Crowther described it as six 8-hour days, giving
8976-525: The city state of Athens , the port of Piraeus enforced a system of levies to raise taxes for the Athenian government. Grain was a key commodity that was imported through the port, and Piraeus was one of the main ports in the east Mediterranean . A levy of two percent was placed on goods arriving in the market through the docks of Piraeus. The Athenian government also placed restrictions on the lending of money and transport of grain to only be allowed through
9108-429: The colonists stuck to the production of raw materials and never became a competitor to British manufacturers. Policies were established to encourage the production of raw materials in the colonies. Walpole granted export subsidies (on the American side) and abolished import taxes (on the British side) on raw materials produced in the American colonies. The colonies were thus forced to leave the most profitable industries in
9240-421: The company rather than cooperate. Still, his wife Clara told him she would leave him if he destroyed the family business. In her view, it would not be worth the chaos it would create. Ford complied with his wife's ultimatum and even agreed with her in retrospect. Overnight, the Ford Motor Company went from the most stubborn holdout among automakers to the one with the most favorable UAW contract terms. The contract
9372-435: The contrary, that the United States developed and rose to the top of the global economic hierarchy by adopting protectionism. In his view, the protectionist period corresponded to the golden age of American industry, when US economic performance outstripped that of the rest of the world. The U.S. adopted an interventionist policy to promote and protect their industries through tariffs. It was this protectionist policy that enabled
9504-420: The conversion of ageing industries. In this case, the aim was to save an activity threatened with extinction by external competition and to safeguard jobs. Protectionism must enable ageing companies to regain their competitiveness in the medium term and, for activities that are due to disappear, it allows the conversion of these activities and jobs. Henry Ford Henry Ford (July 30, 1863 – April 7, 1947)
9636-450: The country did not want to see developed. Walpole forced Americans to specialize in low-value-added products. The UK also banned exports from its colonies that competed with its own products at home and abroad. The country banned imports of cotton textiles from India, which at the time were superior to British products. It banned the export of woollen fabrics from its colonies to other countries (Wool Act). Finally, Britain wanted to ensure that
9768-534: The country's catching-up period felt that the free trade theory advocated by British classical economists was not suited to their country. They argued that the country should develop manufacturing industries and use government protection and subsidies for this purpose, as Britain had done before them. Many of the great American economists of the time, until the last quarter of the 19th century, were strong advocates of industrial protection: Daniel Raymond who influenced Friedrich List , Mathew Carey and his son Henry, who
9900-509: The country, making the Ford brand known throughout the United States. Ford also was one of the early backers of the Indianapolis 500 . In 1909, Ford submitted for patent application for his invention for a new transmission mechanism. It was awarded a patent in 1911. The Model T debuted on October 1, 1908. It had the steering wheel on the left, which every other company soon copied. The entire engine and transmission were enclosed;
10032-440: The decisions of his son. Ford started another company, Henry Ford and Son, and made a show of taking himself and his best employees to the new company; the goal was to scare the remaining holdout stockholders of the Ford Motor Company to sell their stakes to him before they lost most of their value. (He was determined to have full control over strategic decisions.) The ruse worked, and Henry and Edsel purchased all remaining stock from
10164-505: The domestic market. Its main interest was now to expand foreign sales. Some farmers opposed the tariff and blamed it for the agricultural depression. The American Farm Bureau Federation claimed that because of the tariff, the raised price of raw wool cost to farmers $ 27 million. Democratic Senator David I. Walsh challenged the tariff by arguing that the farmers were net exporters and so did not need protection. They depended on foreign markets to sell their surplus. Walsh pointed out that during
10296-697: The duty, which was based on the price of the American price of a good, not the imported good. The bill also gave the President the power to raise or lower rates on products if that was recommended by the Tariff Commission. In September 1922, the Fordney–McCumber Tariff bill (named after Joseph Fordney , the chair of the House Ways and Means Committee , and Porter McCumber , the chair of the Senate Finance Committee )
10428-562: The early 1860s, Europe and the United States pursued completely different trade policies. The 1860s were a period of growing protectionism in the United States, while the European free trade phase lasted from 1860 to 1892. The tariff average rate on imports of manufactured goods in 1875 was from 40% to 50% in the United States, against 9% to 12% in continental Europe at the height of free trade. From 1871 to 1913, "the average U.S. tariff on dutiable imports never fell below 38 percent [and] gross national product (GNP) grew 4.3 percent annually, twice
10560-419: The economic cycle that was not there. A boom would generate enough revenue for tariffs to fall, and when the bust came pressure would build to raise them again. By the time that happened, the economy would be recovering, giving the impression that tariff cuts caused the crash and the reverse generated the recovery. Mr Irwin also methodically debunks the idea that protectionism made America a great industrial power,
10692-427: The expense of trolley wires , and "no storage battery was in sight of a weight that was practical." In 1885, Ford repaired an Otto engine , and in 1887 he built a four-cycle model with a one-inch bore and a three-inch stroke . In 1890, Ford started work on a two-cylinder engine. Ford said, "In 1892, I completed my first motor car, powered by a two-cylinder four horsepower motor, with a two-and-half-inch bore and
10824-476: The family farm, where he became adept at operating the Westinghouse portable steam engine . He was later hired by Westinghouse to service their steam engines. In his farm workshop, Ford built a "steam wagon or tractor" and a steam car, but thought "steam was not suitable for light vehicles," as "the boiler was dangerous." Ford also said that he "did not see the use of experimenting with electricity, due to
10956-642: The first year of the tariff, the cost of living climbed higher than any other year except during the war. He presented a survey of the Department of Labor in which all of the 32 cities that were assessed had seen an increase in the cost of living. For example, the food costs increased 16.5% in Chicago and 9.4% in New York. Clothing prices rose by 5.5% in Buffalo and 10.2% in Chicago. Republican Frank W. Murphy,
11088-446: The four cylinders were cast in a solid block; the suspension used two semi-elliptic springs. The car was simple to drive, and easy and inexpensive to repair. It was so inexpensive at $ 825 in 1908 ($ 27,980 today), with the price falling every year, that by the 1920s, a majority of American drivers had learned to drive on the Model T. Ford created a huge publicity machine in Detroit to ensure every newspaper carried stories and ads about
11220-405: The hands of the United Kingdom. In 1800, Britain, with about 10% of Europe's population, supplied 29% of all pig iron produced in Europe, a proportion that had risen to 45% by 1830. Per capita industrial production was even higher: in 1830 it was 250% higher than in the rest of Europe, up from 110% in 1800. Protectionist policies of industrial promotion continued until the mid-19th century. At
11352-617: The head of the Minnesota Farm Bureau, also claimed that the problem was not in the world price of farm products but in the things that farmers had to buy. Tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry. Protective tariffs are among
11484-460: The import of all kinds of manufactured imports, resulting in a huge drop in US trade and protests from all regions of the country. However, the embargo also had the effect of launching new, emerging US domestic industries across the board, particularly the textile industry, and marked the beginning of the manufacturing system in the United States. An attempt at imposing a high tariff occurred in 1828, but
11616-442: The import of foreign raw materials. Walpole's protectionist policies continued over the next century, helping British manufacturing catch up with and then leapfrog its continental counterparts. Britain remained a highly protectionist country until the mid-19th century. By 1820, the UK's average tariff rate on manufactured imports was 45-55%. Moreover, in its colonies, the UK imposed a total ban on advanced manufacturing activities that
11748-444: The importer, the exporter, and the consumer. Often intended to protect specific industries, tariffs can end up backfiring and harming the industries they were intended to protect through rising input costs and retaliatory tariffs. The notion that bilateral trade deficits are per se detrimental to the respective national economies is overwhelmingly rejected by trade experts and economists. The English term tariff derives from
11880-430: The introduction of protectionist measures, even self-sufficient, in some countries, with the exception of those applied in the United States in the summer of 1930, but with very limited negative effects. He noted that "the credit crunch is one of the main causes of the trade crunch." "In fact, international liquidity is the cause of the trade contraction. This liquidity collapsed in 1930 (-35.7%) and 1931 (-26.7%). A study by
12012-450: The low-end market. Although Henry Ford was against replacing the Model T, now 16 years old, Chevrolet was mounting a bold new challenge as GM's entry-level division in the company's price ladder. Ford also resisted the increasingly popular idea of payment plans for cars. With Model T sales starting to slide, Ford was forced to relent and approve work on a successor model, shutting down production for 18 months. During this time, Ford constructed
12144-506: The minimum daily pay from $ 2.34 to $ 5 for qualifying male workers. Detroit was already a high-wage city, but competitors were forced to raise wages or lose their best workers. Ford's policy proved that paying employees more would enable them to afford the cars they were producing and thus boost the local economy. He viewed the increased wages as profit-sharing linked with rewarding those who were most productive and of good character. It may have been James Couzens who convinced Ford to adopt
12276-416: The most widely used instruments of protectionism , along with import quotas and export quotas and other non-tariff barriers to trade . Tariffs can be fixed (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies according to the price). Tariffs on imports are designed to raise the price of imported goods and services to discourage consumption. The intention
12408-460: The negative effect of a decrease in exports will be offset by the expansionary effect of a decrease in imports. Therefore, a trade war does not cause a recession. Furthermore, he points out that the Smoot-Hawley tariff did not cause the Great Depression. The decline in trade between 1929 and 1933 "was almost entirely a consequence of the Depression, not a cause. Trade barriers were a response to
12540-462: The new product. Ford's network of local dealers made the car ubiquitous in almost every city in North America. As independent dealers, the franchises grew rich and publicized not just the Ford but also the concept of automobiling; local motor clubs sprang up to help new drivers and encourage them to explore the countryside. Ford was always eager to sell to farmers, who looked at the vehicle as
12672-472: The other investors, thus giving the family sole ownership of the company. In 1922, Ford also purchased Lincoln Motor Co. , founded by Cadillac founder Henry Leland and his son Wilfred during World War I. The Lelands briefly stayed to manage the company, but were soon expelled from it. Despite this acquisition of a premium car maker, Henry displayed relatively little enthusiasm for luxury automobiles in contrast to Edsel, who actively sought to expand Ford into
12804-470: The pace in free trade Britain and well above the U.S. average in the 20th century," notes Alfred Eckes Jr, chairman of the U.S. International Trade Commission under President Reagan. After the United States caught up with European industries in the 1890s, the Mckinley Tariff 's argument was no longer to protect “infant industries”, but to maintain workers' wages, support agricultural protection and
12936-440: The pacifist Rosika Schwimmer gained favor with Ford, who agreed to fund a Peace Ship to Europe, where World War I was raging. He led 170 other peace activists. Ford's Episcopalian pastor, Reverend Samuel S. Marquis, accompanied him on the mission. Marquis headed Ford's Sociology Department from 1913 to 1921. Ford talked to President Woodrow Wilson about the mission but had no government support. His group went to neutral Sweden and
13068-405: The passage of the tariff, American trading partners had raised their own tariffs by a significant degree. France raised its tariffs on automobiles from 45% to 100%, Spain raised its tariffs on American goods by 40%, and Germany and Italy raised their tariffs on wheat. In 1928, Henry Ford attacked the tariff and argued that the American automobile industry did not need protection since it dominated
13200-427: The pattern of American economic policy until the end of World War II, and his program created the conditions for rapid industrial development. Alexander Hamilton and Daniel Raymond were among the first theorists to present the infant industry argument . Hamilton was the first to use the term "infant industries" and to introduce it to the forefront of economic thinking. Hamilton believed that political independence
13332-492: The port of Piraeus. In the 14th century, Edward III took interventionist measures, such as banning the import of woollen cloth in an attempt to develop local manufacturing. Beginning in 1489, Henry VII took actions such as increasing export duties on raw wool. The Tudor monarchs, especially Henry VIII and Elizabeth I , used protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government intervention to develop
13464-456: The price dropped to $ 360 for the basic touring car, sales reached 472,000. By 1918, half of all cars in the United States were Model Ts. All new cars were black; as Ford wrote in his autobiography, "Any customer can have a car painted any color that he wants so long as it is black." Until the development of the assembly line, which mandated black because of its quicker drying time, Model Ts were available in other colors, including red. The design
13596-424: The price of some farm equipment. In September 1926, economic statistics released by farming groups revealed the rising cost of farm machinery. For example, the average cost of a harness rose from $ 46 in 1918 to $ 75 in 1926, the 14-inch plow rose from $ 14 to $ 28, mowing machines rose from $ 45 to $ 95, and farm wagons rose from $ 85 to $ 150. That triggered a tariff war against other European countries that traded with
13728-411: The principle of reciprocity. In 1896, the Republican Party platform pledged to "renew and emphasize our allegiance to the policy of protection, as the bulwark of American industrial independence, and the foundation of development and prosperity. This true American policy taxes foreign products and encourages home industry. It puts the burden of revenue on foreign goods; it secures the American market for
13860-436: The production of raw materials. Economist Ha-Joon Chang argued in 2001 that most of today's developed countries have developed through policies that are the opposite of free trade and laissez-faire such as interventionist trade and industrial policies to promote and protect infant industries. In his view, Britain and the United States have not reached the top of the global economic hierarchy by adopting free trade. As for
13992-594: The rates of customs'. This Turkish term is a loanword of the Persian : تعرفه , romanized : taʿrefe , lit. 'set price, receipt'. The Persian term derives from Arabic : تعريف , romanized : taʿrīf , lit. 'notification; description; definition; announcement; assertion; inventory of fees to be paid' which is the verbal noun of Arabic : عرف , romanized : ʿarafa , lit. 'to know; to be able; to recognise; to find out'. In
14124-424: The spring of 1893 the machine was running to my partial satisfaction and giving an opportunity further to test out the design and material on the road." Between 1895 and 1896, Ford drove that machine about 1000 miles. He then started a second car in 1896, eventually building three of them in his home workshop. Ford married Clara Jane Bryant (1866–1950) on April 11, 1888, and supported himself by farming and running
14256-511: The states. The new national government needed revenue and decided to depend upon a tax on imports with the Tariff of 1789 . The policy of the U.S. before 1860 was low tariffs "for revenue only" (since duties continued to fund the national government). The Embargo Act of 1807 was passed by the U.S. Congress in that year in response to British aggression. While not a tariff per se, the Act prohibited
14388-409: The strength of duralumin . The plane was similar to Fokker 's V.VII–3m. The Trimotor first flew on June 11, 1926, and was the first successful U.S. passenger airliner, accommodating about 12 passengers in a rather uncomfortable fashion. Several variants were also used by the U.S. Army . The Smithsonian Institution has honored Ford for changing the aviation industry. 199 Trimotors were built before it
14520-475: The tariffs lobbied to retain them. New legislation was introduced to keep tariffs at the same levels —especially protected were cotton, woolen, and iron goods. The American industrial interests that had blossomed because of the tariff lobbied to keep it, and had it raised to 35 percent in 1816. The public approved, and by 1820, America's average tariff was up to 40 percent. In the 19th century, statesmen such as Senator Henry Clay continued Hamilton's themes within
14652-582: The upscale market. The original Lincoln Model L that the Lelands had introduced in 1920 was also kept in production, untouched for a decade until it became too outdated. It was replaced by the modernized Model K in 1931. By the mid-1920s, General Motors was rapidly rising as the leading American automobile manufacturer. GM president Alfred Sloan established the company's "price ladder" whereby GM would offer an automobile for "every purse and purpose" in contrast to Ford's lack of interest in anything outside
14784-403: The war sought access for their exports to the American market to make payments to the war loans from America. Democratic Representative Cordell Hull warned, "Our foreign markets depend both on the efficiency of our production and the tariffs of countries in which we would sell. Our own [high] tariffs are an important factor in each. They injure the former and invite the latter." Five years after
14916-405: The war, with their markets no longer requiring large quantities of American agricultural products. Gross farm income in 1919 amounted to $ 17.7 billion. By 1921, exports to Europe had plummeted, and farm income fell to $ 10.5 billion. Other sectors of the economy wanted to avoid a similar fate. The 1920 election put the conservative pro-business and pro-farm Republicans in control of both Congress and
15048-433: The wool industry, leading to England became the largest wool-producing nation in the world. A protectionist turning point in British economic policy came in 1721, when policies to promote manufacturing industries were introduced by Robert Walpole . These included, for example, increased tariffs on imported foreign manufactured goods, export subsidies, reduced tariffs on imported raw materials used for manufactured goods and
15180-436: The world's largest fortunes without ever having his company audited under his administration. Without an accounting department, Ford had no way of knowing exactly how much money was being taken in and spent each month, and the company's bills and invoices were reportedly guessed at by weighing them on a scale. Not until 1956 would Ford be a publicly-traded company. Also, at Edsel's insistence, Ford launched Mercury in 1939 as
15312-409: Was a child and she was adopted by neighbors, the O'Herns. Henry Ford's siblings were John Ford (1865–1927); Margaret Ford (1867–1938); Jane Ford (c. 1868–1945); William Ford (1871–1917) and Robert Ford (1873–1877). Ford finished eighth grade at a one-room school , Springwells Middle School. He never attended high school ; he later took a bookkeeping course at a commercial school. His father gave him
15444-465: Was an American industrialist and business magnate . As the founder of the Ford Motor Company , he is credited as a pioneer in making automobiles affordable for middle-class Americans through the system that came to be known as Fordism . In 1911, he was awarded a patent for the transmission mechanism that would be used in the Ford Model T and other automobiles. Ford was born in a farmhouse in Springwells Township , Michigan , and left home at
15576-531: Was denied the use of tariffs to protect its new industries. This explains why, after independence, the Tariff Act of 1789 was the second bill of the Republic signed by President Washington allowing Congress to impose a fixed tariff of 5% on all imports, with a few exceptions. The Congress passed a tariff act (1789), imposing a 5% flat rate tariff on all imports. Between 1792 and the war with Britain in 1812,
15708-524: Was devastated when his mother died in 1876. His father expected him to take over the family farm eventually, but he despised farm work. He later wrote, "I never had any particular love for the farm—it was the mother on the farm I loved." In 1879, Ford left home to work as an apprentice machinist in Detroit, first with James F. Flower & Brothers, and later with the Detroit Dry Dock Company. In 1882, he returned to Dearborn to work on
15840-604: Was discontinued in 1933, when the Ford Airplane Division shut down because of poor sales during the Great Depression . In 1985, Ford was posthumously inducted into the National Aviation Hall of Fame for his impact on the industry. Ford opposed war, which he viewed as a terrible waste, and supported causes that opposed military intervention . Ford became highly critical of those who he felt financed war, and he tried to stop them. In 1915,
15972-413: Was elected president of the company. Ford then demonstrated a newly designed car on the ice of Lake St. Clair , driving 1 mile (1.6 km) in 39.4 seconds and setting a new land speed record at 91.3 miles per hour (146.9 kilometres per hour). Convinced by this success, race driver Barney Oldfield , who named this new Ford model " 999 " in honor of the fastest locomotive of the day, took the car around
16104-418: Was fervently promoted and defended by Ford, and production continued as late as 1927; the final total production was 15,007,034. This record stood for the next 45 years, and was achieved in 19 years from the introduction of the first Model T (1908). Henry Ford turned the presidency of Ford Motor Company over to his son Edsel Ford in December 1918. Henry retained final decision authority and sometimes reversed
16236-464: Was finally overtaken economically by the United States around 1880. British leadership in fields such as steel and textiles was eroded, and the country fell behind as new, more technologically advanced industries emerged after 1870 in other countries still practicing protectionism. On June 15, 1903, the Secretary of State for Foreign Affairs, Henry Petty-Fitzmaurice, 5th Marquess of Lansdowne , made
16368-634: Was good for business, giving workers additional time to purchase and consume more goods. However, charitable concerns also played a role. Ford explained, "It is high time to rid ourselves of the notion that leisure for workmen is either 'lost time' or a class privilege." Ford was adamantly against labor unions . He explained his views on unions in Chapter 18 of My Life and Work . He thought they were too heavily influenced by leaders who would end up doing more harm than good for workers despite their ostensible good motives. Most wanted to restrict productivity as
16500-548: Was highly controversial, and he soon backed off from the most intrusive aspects. By the time he wrote his 1922 memoir, he spoke of the Social Department and the private conditions for profit-sharing in the past tense. He admitted that "paternalism has no place in the industry. Welfare work that consists in prying into employees' private concerns is out of date. Men need counsel and men need help, often special help; and all this ought to be rendered for decency's sake. But
16632-463: Was one of Lincoln's economic advisers. The intellectual leader of this movement was Alexander Hamilton , the first Secretary of the Treasury of the United States (1789–95). The United States rejected David Ricardo 's theory of comparative advantage and protected its industry. The country pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century, after
16764-530: Was predicated upon economic independence. Increasing the domestic supply of manufactured goods, particularly war materials, was seen as an issue of national security. And he feared that Britain's policy towards the colonies would condemn the United States to be only producers of agricultural products and raw materials. Britain initially did not want to industrialise the American colonies, and implemented policies to that effect (for example, banning high value-added manufacturing activities). Under British rule, America
16896-422: Was signed by President Warren Harding . In the end, the tariff law raised the American ad valorem tariff rate to an average of about 38.5% for dutiable imports and an average of 14% overall. The tariff was defensive, rather than offensive, as it was determined by the cost of production and the market value. For agriculture, the tariff raised the purchasing power of the farmers by 2–3%, but other industries raised
17028-639: Was signed in June 1941. About a year later, Ford told Walter Reuther, "It was one of the most sensible things Harry Bennett ever did when he got the UAW into this plant." Reuther inquired, "What do you mean?" Ford replied, "Well, you've been fighting General Motors and the Wall Street crowd. Now you're in here and we've given you a union shop and more than you got out of them. That puts you on our side, doesn't it? We can fight General Motors and Wall Street together, eh?" Like other automobile companies, Ford entered
17160-525: Was small. According to William J. Bernstein , most economic historians now believe that only a fraction of the GDP loss worldwide and in the U.S. resulted from tariff wars. Bernstein argued that the decline "could not have exceeded 1 or 2% of world GDP, a far cry from the 17% recorded during the Great Depression." Jacques Sapir argues that the crisis has other causes than protectionism. He points out that "domestic production in major industrialized countries
17292-532: Was to make sure no agreements were ever reached. The Ford Motor Company was the last Detroit automaker to recognize the UAW, despite pressure from the rest of the U.S. automotive industry and even the U.S. government. A sit-down strike by the UAW union in April 1941 closed the River Rouge Plant . Sorensen recounted that a distraught Henry Ford was very close to following through with a threat to break up
17424-401: Was usually high protective tariffs (apart from 1913 to 1921). After 1890, the tariff on wool did affect an important industry, but otherwise the tariffs were designed to keep American wages high. The conservative Republican tradition, typified by William McKinley was a high tariff, while the Democrats typically called for a lower tariff to help consumers but they always failed until 1913. In
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