The Dodge Brothers

The Dodge Brothers

By David Glenn Cox

Just before the turn of the 20th Century brothers John and Horace Dodge were building bicycles, just like the Wright brothers. They built what we call today the safety bicycle; with two identical wheels which were all the rage. The brothers also liked tinkering with steam engines, but in 1899 the brothers sold their bicycle company and opened the Dodge Brothers Machine Shop. The boys where young and hungry and willing to work on most any project, that came through the front door.

But in 1902, the Dodge brothers began supplying parts exclusively to Ransom Olds of Oldsmobile fame. At the time, Oldsmobile was the top-selling automotive company in America and to the Dodge brothers, they thought they had arrived. Their business was booming and everything was going great for the boys. But just five years later, Oldsmobile was struggling and soon sold out to Billy Durant, in what was to become General Motors.

Suddenly, the boy's future looked cloudy, when in walks this guy through the front door. Everyone in Detroit knew about this guy. He was a local celebrity, who'd won a big time auto race, but he was also known as brash, arrogant and hard to get along with. He had previously founded two auto companies and both had ended in fiasco. One can only imagine the looks on the brother's faces when Henry Ford came strolling in to see them.

Ford had brought along designs for a new model he called the Fordmobile; the brothers liked Ford's design but sensed what coming next, Ford wanted credit from the brothers. In 1903, Henry Ford was just a guy; there was no Ford Motor Company with agents and offices around the world. Henry Ford was just a local guy, known around town for his bad attitude, his bad history and his bad credit. The brothers on the other hand had seen the declining sales of their best customer in Ransom Olds.

So the brothers struck a deal with Ford. While the Dodge’s had given Olds 60 days to pay, Ford's first order would be paid cash on the barrel head and afterwards, Ford was given just 15 days to pay. The brothers also stipulated that if Ford defaulted on the debt, the ownership of all parts reverted to the Dodge's brothers, installed or not. The terms were tough; this is what the Dodge brothers thought of Henry Ford's chances. Ford had no choice, without the Dodge brothers to supply him; he would be out of business for a third and probably the last time.

Henry Ford's company at that time was known as the Ford and Malcomson Company. Malcomson was a Scottish immigrant who'd made a fortune in the coal business. He was what we'd call today an entrepreneur, investing in potentially lucrative businesses. By 1903, Malcomson had decided his project with Henry Ford wasn't what he was looking for. Few questioned Ford's ability as a mechanic, but many questioned Ford's ability as a business person. Malcomson had had enough and saw in the Dodge brothers a potential reprieve from the foibles of Henry Ford.

Malcomson offered the brothers a 10% stake in the company for $7,000 in parts and $3,000 in cash. In came to be known as one of the greatest bargains in American history, as the Dodge brothers eventually sold their shares for over $34 million dollars, but that is story for down the road. The road ahead for Ford was still rocky; he sold his first Fordmobile for $895 cash with a payroll due and only $223 in the bank. That was the low ebb for Ford from that point forward sales exploded. In 1906, Ford sold 1599 cars, a year later it was 8,000 cars. Six years more and the Ford Motor Company were producing a 1,000 cars per day, every day.

The Dodge brothers were rolling in cash thanks to Ford and Ford was using his share of the profits to build his own factories eliminating the parts supplied by the Dodge Brothers. By 1913, John Dodge was alleged to have said, "I'm tired of being carried around in Henry Ford's vest pocket." The brothers designed and built the Dodge Model 30, a four-cylinder 35 horsepower economy car to compete with the 20 horsepower Ford. The new Dodge vehicle offered innovation, a gas gauge, electric lights and a sliding gear transmission with all steel construction.

In just two years, the Dodge Company was second in sales to Ford and extremely profitable, because when the Dodge brothers sold a new car, the Dodge brothers made money and when Henry Ford sold a new Ford, the Dodge brothers made money. In 1916, Ford hatched a plan to try to starve the brother's out. He announced that Ford Motor Company would no longer pay stock dividends, but instead, would plow all the profits back into the company. It was a sham and the courts agreed with the Dodge's after they'd sued Ford. Ford was forced to pony up a million dollars to the brothers. Then Ford let it be known through the grapevine that he was planning to start a new car company, selling new cars for $300.

If Ford had followed through with his threat it would devastated the market. The Dodge's decided enough was enough, finally selling their shares for $25 million and with their stock sale all the rumors of Ford's new car company just evaporated. By this time Dodge brothers had built their own reputation for durability and innovation. The company had become a leading builder of light trucks but in 1920, John Dodge succumbed suddenly to pneumonia in January and Brother Horace passed from cirrhosis the following December.

Without the founders, ownership of the company fell to the widows of John and Horace. Lacking the brother’s vision, the company began to falter, falling from second place in sales, down to fifth and then seventh. The company was sold in 1925 to an investment firm for $146 million dollars. Making it the largest the largest cash transaction in history at the time. But without a visionary at the helm to lead the company it stagnated and was sold out again in 1928 to Walter Chrysler of the Chrysler Corporation, adding Dodge to the other Chrysler product lines, Desoto, Plymouth. But that is another story for another time, about another industrial giant.