"Coffee Jim," to whom Ford confided his hopes and aspirations on these occasions, was the only man with available cash who had any faith in his ideas. Capital in more substantial form, however, came in about 1902. With money advanced by "Coffee Jim," Ford had built a machine which he entered in the Grosse Point races that year. It was a hideous-looking affair, but it ran like the wind and outdistanced all competitors. From that day Ford's career has been an uninterrupted triumph. But he rejected the earliest offers of capital because the millionaires would not agree to his terms. They were looking for high prices and quick profits, while Ford's plans were for low prices, large sales, and use of profits to extend the business and reduce the cost of his machine. Henry Ford's greatness as a manufacturer consists in the tenacity with which he has clung to this conception. Contrary to general belief in the automobile industry he maintained that a high sale price was not necessary for large profits; indeed he declared that the lower the price, the larger the net earnings would be. Nor did he believe that low wages meant prosperity. The most efficient labor, no matter what the nominal cost might be, was the most economical. The secret of success was the rapid production of a serviceable article in large quantities. When Ford first talked of turning out 10,000 automobiles a year, his associates asked him where he was going to sell them. Ford's answer was that that was no problem at all; the machines would sell themselves. He called attention to the fact that there were millions of people in this country whose incomes exceeded $1800 a year; all in that class would become prospective purchasers of a low-priced automobile. There were 6,000,000 farmers; what more receptive market could one ask? His only problem was the technical one--how to produce his machine in sufficient quantities.
The bicycle business in this country had passed through a similar experience. When first placed on the market bicycles were expensive; it took $100 or $150 to buy one. In a few years, however, an excellent machine was selling for $25 or $30. What explained this drop in price? The answer is that the manufacturers learned to standardize their product. Bicycle factories became not so much places where the articles were manufactured as assembling rooms for putting them together. The several parts were made in different places, each establishment specializing in a particular part; they were then shipped to centers where they were transformed into completed machines. The result was that the United States, despite the high wages paid here, led the world in bicycle making and flooded all countries with this utilitarian article. Our great locomotive factories had developed on similar lines. Europeans had always marveled that Americans could build these costly articles so cheaply that they could undersell European makers. When they obtained a glimpse of an American locomotive factory, the reason became plain. In Europe each locomotive was a separate problem; no two, even in the same shop, were exactly alike. But here locomotives are built in parts, all duplicates of one another; the parts are then sent by machinery to assembling rooms and rapidly put together. American harvesting machines are built in the same way; whenever a farmer loses a part, he can go to the country store and buy its duplicate, for the parts of the same machine do not vary to the thousandth of an inch. The same principle applies to hundreds of other articles.
Thus Henry Ford did not invent standardization; be merely applied this great American idea to a product to which, because of the delicate labor required, it seemed at first unadapted. He soon found that it was cheaper to ship the parts of ten cars to a central point than to ship ten completed cars. There would therefore be large savings in making his parts in particular factories and shipping them to assembling establishments. In this way the completed cars would always be near their markets.