#128 Henry Leland (Cadillac)

What I learned from reading Master of Precision: Henry Leland by Ottilie Leland and Minnie Dubbs Millbrook. ---- [0:17] Henry Leland laid the foundation for the future of American industry. He had established manufacturing procedures never previously so effectively employed and took a position of leadership. In the next decades would be comparable in statute with, although quite different from, William Durant, Henry Ford and Alfred Sloan. [0:40] It should be pointed out that Leland's contribution to the development of the motor car was the establishment of high standards of manufacturing. [2:33] Henry Leland always got deep satisfaction out of anything which was made right. He had—in high degree—the pride of craftsmanship that had marked the master workman down the centuries. [3:07] He developed the Cadillac, the self-starter, The Lincoln car, held up high standards of performance for the industry, and established the first notable school of automotive mechanics. [4:05] A lesson Henry Leland learned from his Father: He bequeathed a singularly trustful disposition to his son, who could never believe that other men were not inherently as good and honorable as he himself. He was several times to pay a stiff penalty for this faith in human nature. [4:56] A lesson Henry Leland learned from his Mother: “There is a right way and a wrong way to do everything. Hunt for the right way and then go ahead.” This simple admonition was to become a creed that would govern all of his actions as he rose in industry. [6:10] He lives through the beginning of two industries in his life: Manufacturing in general and the automobile industry in specific. [7:24] Henry Leland was not sure he wanted to become an apprentice machinist. The hours were long—10 hour days, 6 days a week—and most factories did not pay high wages. Moreover, farming was still the traditional American operation, which offered a possibility of independence and did not shut a man indoors with noisy machinery. [9:06] Henry was already discovering the education that could be mined from books. At first, the fond of reading, he had been attracted by cheap adventure novels, which he borrowed from the local library. One night a stranger there, seeing what he was taking out exclaimed, “Surely don't read that trash!” Henry replied, “What better use can I make of my time than to read?” The stranger answered, “It makes a lot of difference what you read,” and then suggested some better books. The episode was a revelation to young Leland and he was soon reading volumes that acquainted him with American genius in literature, government and invention. [9:55] Abraham Lincoln was his idol. Lincoln Motor Company—which Henry founds when he is in his 70s— is named after Abraham Lincoln. If we want to continue the conversation that Steve Jobs and Larry Ellison were having [about who is history’s greatest person] in The Billionaire and The Mechanic—Jobs said Gandhi. Ellison said Napoleon. Leland’s answer would be Abraham Lincoln. [12:05] Even if he experienced a financial penalty, Henry Leland wanted to do the honorable thing. [12:44] Henry wanted to work where he could render the greatest service to his country [during The Civil War]. He had learned that the U. S. Armory needed expert mechanics, and he had determined to help with war production. The particular lesson he learned in the Armory was the value of order and neatness in a work shop. Everything was clean and systematic, a state of affairs not common in early factories. [14:37] Precision was his god. His personal work was outstanding. [14:56] The discipline and subordination of factory life ran counter to American individualism. [16:31] A nervous breakdown drove him from the shop to the far for rest. [16:48] His mind, independent and teaming with ideas, made it difficult for him to work with others. He longed for a business in which he might put his theories to work but he had no money, a family to support, and his father and mother were in need of aid. [20:00] The manufacture of the hair clippers [which he invented and brought to market against the opposition of his bosses] was spirited and rose to an output as much as 300 daily. For this I received a ‘Thank you’ and 50 cents a day more in my pay envelope. That was on of the times I thought I ought to quit making other men rich and go to work for myself. [20:41] Henry Leland was good at sales by not trying to be good at sales. He wanted to educate people. He was gifted at selling because he gave the customer useful advice. [22:26] As usual there was little money left over for saving. And yet Henry Leland was more hopeful of going into business for himself than ever before. He had brought his skill and experience to the service of the ambitious industrialists of the west and they had shown him in return the financial method that had put them in business. Each had organized a company by selling stock. “Eureka,” said Henry Leland to himself, “I have found it,” for he had great experience and he was sure he could raise a little money. His dream of an independent business might come true after all. [23:40] Henry Leland had a lifetime of experience before he starts his first company. He was 47 years old. He had been working in factories since he was a teenager. [25:03] Leland was a missionary for precision. He held people to high standards. [26:07] Horace Dodge trained directly under Leland for two years before starting a machine shop of his own. [27:45] The building up of a business, which expands rapidly and must be financed primarily from its own earnings, is often a discouraging process. [27:56] How Henry Leland advertised the services of his foundry: We appeal for business only to those who want the best. We do not attempt to compete with the average foundry on price. We believe no other foundry can successfully compete with us on quality. [29:57] “There always was and there always will be conflict between Good and Good Enough. In opening up a new business one can count on meeting resistance to a high standard of workmanship. It is easy to get cooperation for mediocre work, but one must sweat blood for a chance to produce a superior product.” —Henry Leland [35:10] Henry Leland founds Cadillac when he is almost 60 years old: Henry Leland now embarked on the great adventure of his life; he would play an important role in the organization of Detroit’s first successful automobile company. [35:27] Cadillac was making $2 million per year in profit when Billy Durant buys Cadillac for $4.5 million. [37:21] Other men had built cars for many reasons—for the fascination of creation, for the profits in it—but Henry Leland agreed to build a car because he did not want to see a pet engine unappreciated and unused. [38:53] Henry Leland was an expert in a field where experts were still uncommon. [41:13] We buy the best parts we can find. I have always contended price should be considered last by a manufacturer in selecting materials for his product. [45:10] His theory was that the one essential ingredient of success was mastery of one’s self as well as one’s job. [47:57] A story: If you do the right thing people will remember. [52:10] Henry Leland is 77 years old when he starts Lincoln Motor Company [54:21] Henry Leland did not believe in quitting: It was manifestly impossible for the Lelands, men of tender heart and unswerving integrity, to take a cold, dispassionate view of the financial straits of the Lincoln Company. Many automobile companies had had money troubles; some had undergone a variety of reorganizations, combinations and other stratagems to keep alive and their directors and management had not been considered dishonest or insensible of their trust even though investors may have lost a portion or all of their equity. But such a course was unthinkable for the Lelands; as long as there was breath in their bodies they would oppose it. They had invested everything they owned in the company. [1:01:05] Henry Ford and Henry Leland were like oil and water: We see a difference in management culture. Leland led from the front. Ford beat you down from above. [1:02:27] How Ford management described the Lincoln organization: The whole organization is unusually harmonious and uniformly competent. [1:05:40] A letter from Henry Leland to Henry Ford: I cannot but feel certain that you intended to keep those pledges when you made them to me personally and, while I cannot understand the long delay on your part, I still hope and trust that you will not shake my life long faith in humanity. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  Just a quick note before today's podcast. I changed the cover art that appears in your podcast player back to the original one that says founders. I just think it looks better than the previous one that said misfits. I just wanted to let you know that you're on the right feed. The misfit feed is the only place where you can find full-length episodes. So that's it. I hope you enjoy this podcast. Henry Leland laid the foundation for the future American industry. He had established manufacturing procedures never previously so effectively employed and took a position of leadership. He was to maintain it and in the next decades would be comparable in stature with, although quite different from, William Durant, Henry Ford, and Alfred Sloan. In comparing Leland with Durant and Ford, it should be pointed out that Leland's contribution

• 0:41David Senra?

  to the development of the motor car was the establishment of high standards of manufacturing. Ford, of course, through the moving assembly line, also developed standards, but for the manufacture of a cheap car. He himself recognized Leland's great contribution. Durant, as the founder of General Motors, was a promoter, but made contributions as the head of an organization, offering a variety of cars and the establishment of companies supplying parts. Sloan reorganized General Motors on a sounder basis and established its highly successful system of financial controls. The Dodge brothers would be included by some experts as a major force in the early automobile industry, and in the 1920s, Walter P. Chrysler took a prominent place in the industry.

• 1:26David Senra?

  Leland's period of eminence might be set as 1908 through 1922. How had he reached this eminence? Let's go back and follow the Leland story from its beginnings. It takes us first into an earlier industrial era, goes hand in hand with the steady rise of American manufacturing through the bicycle and the pioneer automotive stages, enables us to understand more fully the maturing of the motor car in the United States, and still has relevance to the developments that are taking place today. That's an excerpt from the book that I'm going to talk to you about today, which is Master of Precision. All right, so I want to start there because after I took a slight detour doing a three-part series on Larry Ellison, I'm back on this multiple-part series on the

• 2:09David Senra?

  early days of the automobile industry in the United States. And every single person listed there I've already done podcasts on, or I will do podcasts on in the future. I just had to wait for some books to arrive. Okay, so let's start in the introduction. There's an overview of his personality here, and I would say a brief overview of his general life story. Henry Leland is the founder of both Cadillac and Lincoln. So it says, "Henry Leland always got deep satisfaction out of anything which was made right. He had in high degree the pride of craftsmanship that had marked the master workmen down the centuries. Originality of conception had to be matched with close attention to practical effectiveness, and both had to be crowned with artistry of form."

• 2:51David Senra?

  And so that paragraph really gives us insight into how Leland approached his work. He had by far the highest standards, in terms of quality standards, than any other early automobile pioneer. It continues, "Leland's role was an inspiring and often a successful one. He developed the Cadillac, the self-starter, the Lincoln car. He held up high standards of performance for the industry and established the first notable school of automotive mechanics. Unfortunately, near the end of his life, he saw his company, the Lincoln Motor Company, go into receivership. Eventually, it passed under the control of Henry Ford, who had first proposed to keep Leland and his son in the industry as a public service, but in the end failed to live up to his professions." I would say he failed to live up to his promises.

• 3:36David Senra?

  The authors go fully into this painful episode as they do in all phases of Leland's career. So that's a good overview of where we're going to be going. Okay, so I want to get right into his early life. His family, like most Americans at the time, they were farmers. Henry Leland transitions. The transition that happens on an individual basis in his life from farmer to somebody working in factories is not only taking place in his life, but in American culture at large. So here the author is talking about what Henry learned from his father, who was also a farmer. "He bequeathed a singularly trustful disposition to his youngest son, who could never believe that other men were not inherently as good and honorable as he himself."

• 4:20David Senra?

  And with several times to pay a stiff penalty for this faith in human nature. Remember that sentence when we get towards the end of Leland's life story where he's dealing with Henry Ford and Henry Ford betrays him. Here's a lesson that he learned from his mother. Although at six years of age at the time, he already had a few duties. One was to drive the cows in from the woods to the barn lot to be milked. He had a small boy's fear that one of the bears might come out of the woods. Full of dread one evening, he threw down the poles at the gate in haste, scattering them. His mother appeared and called him back. This is her talking to her son. There is a right way and a wrong way to do everything. Hunt for the right way and then go ahead.

• 5:05David Senra?

  Although he did not know it then, this simple admonition was to become a creed that would govern all his actions later as he rose in industry. So his family has really poor luck on the farm. They decide that they're going to escape the farm and they were essentially, they were in perpetual, I would say, poverty. And so they decided to try to escape that by moving to New England where there's a lot more manufacturing that's starting to take place. But every member of the family, even Leland as a really young boy, must get a job and continue to work. So it says, but even he found a small job. He was given the task of feeding and watering 400 chickens and of keeping separately the eggs of several fancy breeds of poultry. It was a happy time.

• 5:47David Senra?

  The family was reunited under one roof. And so eventually, he starts working in factories as he gets a little older. And what's interesting about this time is we see the transition in Henry's life also mirrors the overall transition that's happening in American life where people are leaving the farms to work in an entirely new industry. He lives through the beginning of two industries in his life. One is the manufacturing in general and factories, and then the automobile industry in specific. The author's going to tell us a little bit more about this time. Americans of the 18th century understood how to till fields, sail ships, fell forests, and run sawmills, but they knew little of complex machinery or factory operations.

• 6:30David Senra?

  This is where Leland becomes an expert, right? Native manufacturing skills, therefore, were scarce, and the first concern of all new undertakings was to produce experienced operatives. Later on, Henry realizes the same thing is playing out in the automobile industry. So he starts one of the first schools for mechanics. He's like, "We don't have enough high skilled workers, as many that we need." As the Industrial Revolution accelerated, the Lelands, like thousands of other who had no land and no hope of continuing in their traditional farm life, began entering these rudimentary factories and shops, some forced by the necessity of making a living and others attracted by a broadening opportunity to exercise their latent ingenuity. So Henry takes a few jobs in factories.

• 7:14David Senra?

  He proves himself, even as a young person, he's a teenager at this time, that he's very competent. So he gets the opportunity to become an apprentice. And I thought his response was interesting. It says, "It was an opportunity, but Henry Leland was not sure that he wanted to become an apprentice machinist. The hours were long. He had to work 10 hours a day, six days a week, and most factories did not pay high wages. Moreover, farming was still the traditional American occupation, which offered a possibility of independence and did not shut a man indoors with noisy machinery." So eventually, he takes the position. And it says, "Once in his new position, the young man perceived that it offered many possibilities. He was learning something all the time. His new job held promise for the future.

• 7:57David Senra?

  Even the Gibbs of his older shopmates merely fired him with a determination to master his craft." So what they're talking about there is he's working with a lot of Englishmen. And at the time, there was no respect for American craftsmanship. They're saying Americans made crappy products, they didn't have the skills, that all the greatest products in the world came from wherever, Europe. So they're telling a young, largely ignorant Henry Leland this. And I thought this section was really interesting. "It was simply impossible," they smugly pointed out, "for any Americans to achieve real competence in mechanics. Americans had no really skilled workmen, inventors, writers, statesmen. In fact, there were no great men but Englishmen."

• 8:42David Senra?

  So that's what his older coworkers were telling him. Of course, that's not true, but Henry doesn't have a large education at this time, so he doesn't know any better. So this is where he learns the value of reading. While he resented the chafing, he lacked the background of reading and experience that would have afforded him an effective rebuttal. So he starts, he gets access to a bunch of books. And this is a result. Henry was already discovering the education that could be mined from books. At first, though fond of reading, he had been attracted by cheap adventure novels, which he borrowed from the local library. One night, a stranger there, seeing what he was taking out, exclaimed, "Surely you don't read that trash." Henry replied, "What better use can I make of my time than to read?"

• 9:28David Senra?

  The stranger answered, "It makes a lot of difference what you read." And then suggested some better books. So he's saying, you know, you're on the right track for reading, but you're just reading the wrong stuff. The episode was a revelation to young Leland, and he was soon reading volumes that acquainted him with American genius in literature, government, and invention. So right about this time, the Civil War is going on. So it says, "His reading and his feeling of the necessity to defend his country had made him deeply patriotic. Abraham Lincoln was his idol." So Lincoln is named, Lincoln Motor Company, which Henry founds, when he's in his 70s, by the way, is named after Abraham Lincoln, who he thought was the greatest person to ever live.

• 10:09David Senra?

  If we want to continue that conversation that Steve Jobs and Larry Ellison were having, I think it was on the podcast about the billionaire and the mechanic, where, you know, Jobs is saying Gandhi's the best person, Ellison is saying Napoleon. Well, we have Leland's answer. His was Abraham Lincoln. "His brother Edson had enlisted into the army." He's a little older than Leland. Leland's actually underage at this time. "And although Henry was underage and his parents had refused their permission for him to become a soldier, he determined that he would join up." So he goes down and enlists, but his mother follows him there to stop this. So it says, "But his mother guessed his intention, followed him to the recruiting office, and had his name removed from the roll of eligibles, and then sent him back to work."

• 10:54David Senra?

  And his mother probably saved his life. His older brother serves in the war, gets captured, then winds up getting sick and dying. I think he died of some kind of pneumonia-like disease. And so Henry Leland survives the Civil War because he was too young to enter in. So, but he's extremely patriotic. And we're going to see this later on where... I'm not gonna say it's the greatest mistake in his life because of what he wanted to do, but he quit Cadillac and resigned because Billy Durant would not let, Billy Durant was a pacifist and would not let Henry Leland create weapons for, use the Cadillac factory to create weapons during World War I.

• 11:37David Senra?

  And Cadillac, I would say is, you know, it was an extremely high-quality company, extremely profitable most of his life, and he was in control of it, which that's where he runs into a lot of trouble later on, is that Lincoln was not on solid financial ground, was eventually overtaken by Henry Ford, and he lacked the control, and so Henry Ford had all the power. But the reason I bring that up is because he was guided by this, I don't know if you wanna call it like an internal honor, he would, regardless of if he experienced a financial penalty, that's not what drove Henry Leland. He wanted to do the honorable thing. Remember, it said, his dad taught him that, you know, that to have faith in his fellow human beings, and Leland definitely did. And you also see that in how he created his products, but also how he managed his company, which I'll get to.

• 12:22David Senra?

  Okay, so anyways, back to this patriotic time during the Civil War, he's like, okay, if I can't serve as a soldier, I wanna serve other ways. And he references the job he gets. Later on, he says, "I made guns for Lincoln." Okay? So he starts making weapons for the Union Army during the Civil War, and he's also learning about manufacturing complex machines here. So it says, "Henry wanted to work where he could render the greatest service to his country." So the same thing he's doing now as a young teenager, he does during the Civil War, he does during World War I. Okay? Yeah, he had learned that the US Armory needed expert mechanics, and he had several years of experience, and he had determined to help there with the war production.

• 13:01David Senra?

  He did so, and he remained at the Armory until hostilities ceased in April 1865. As he said afterward, "The particular lesson he learned in the Armory was the value of order and neatness in a workshop." So remember the title of the book, "Master of Precision." He means master of precision in all things, including the cleanliness of your workspace, right? Everything was clean and systematic, a state of affairs not common in the early cluttered factories and machine shops. So the war is over, he needs a job. It says he found employment the very next day at the Colt revolver factory. So he's going back to making weapons. Now, what was interesting is this, he's had several years working in factories in New England, then he works for the armory during the Civil War, now he's working at the Colt

• 13:46David Senra?

  revolver factory. But again, Leland was reluctant. He had, he was already developing a unique set of skills, but he wasn't sure if he was meant for factory work. He liked being outdoors, he liked autonomy, he liked control, and as a worker in the factory, you don't have those things. Now, once he has his own business, then he can run things as he sees fits, but at this point in his life, he doesn't like the lack of autonomy. So here we see like his inner, this inner dialogue that's happening, this struggle of what, what, what am I doing with my life? One would expect Henry Leland to have joined enthusiastically in the exhilarating movement for the development of the American industry. Actually, it seems not to have fired his imagination.

• 14:27David Senra?

  He was only 22 in 1865, and it is a question whether he recognized then the dynamic possibility of the interchangeability of machine parts. To be sure, precision was already his god, and his personal work was outstanding, but apparently he lacked any soaring industrial vision. That would come with further experience. The truth was that he had not yet accepted factory life as his permanent and passionate concern. The discipline and subordination of factory life ran counter to American individualism. And so like many people in life, especially in your early twenties, he doesn't know what he's gonna do. He has a lot more years ahead of him than he does have behind him, so he's, he's testing out a different, a lot of different things.

• 15:12David Senra?

  He's still working in the factory, still, he winds up buying a farm and working there on weekends, he's like, maybe I'll do that. He tries to study law like his idol, Lincoln. He becomes a police officer for a time, and he also works on volunteer fire department. So I thought this was hilarious. So the note of myself is, there's still no grand purpose in life, he's still not sure what to do, and then Gangs of New York. So I'm referencing that classic movie, and I'll tell you why in a minute. There now followed a period in which Leland was active in church and town affairs, but seemed to lack a sure sense of his purpose in life. So this is when he starts volunteering for these, it's like volunteer fire departments. They call them companies.

• 15:54David Senra?

  And there's a scene in Gangs of New York, which plays out exactly like what's happening in Leland's. This is a crazy time. So it says, "Every company," meaning fire company, "strove to get to the fire first, and each sought to wash out its closest rival." So not only are the fire companies trying to put out the fire, they also engage, it's almost like a gang. And they do these, at the scene of every fire, there's fistfights and brawls. "After every fire, there was likely to be a rough-and-tumble fistfight between companies." So there's a scene in Gangs of New York that shows this. "Leland was active in the fire department for about five years. Then a nervous breakdown drove him from the shop to the farm for a rest."

• 16:36David Senra?

  And so it's after this breakdown, again, he's got a ton of anxiety about what his life is going to be. He finally figures out what he's going to do. He finally makes his commitment. So it says, "Leland now took a long, hard look at his future. His mind, independent and teeming with ideas, made it difficult for him to work with others. He longed for a business in which he might put his theories to work. But he had no money, he had a family to support, and his father and mother were in need of aid. It would be years before he could save the necessary capital to launch a business. But he reflected that he could prepare himself for the time when he might..." When he might start a business, it is. "Accordingly, he decided to go into the best factory he could find and learn all there was to be learned."

• 17:20David Senra?

  Or this is extremely smart move by himself. He's like, "All right, I gotta commit to something. I'm going to commit to factory work. And if I'm going to commit to it, I want to learn from the masters. I want to learn from the best people." And in New England at the time, the most precise, the company that had the reputation for the highest quality work was this company called Brown and Sharp. And that is where he's going to work. And it's during this time that not only we see that he's dedicated his craft, but he also has a strong belief in his abilities. So he's making a series of screws for Brown and Sharp right now. And they're getting rejected as not being high enough quality. And he thinks that's incorrect. And he winds up being correct. And the reason I bring this up is because this is the first time that he ever felt thrilled with his work.

• 18:03David Senra?

  So it says, "The inspector who checked the output rejected thousands of screws, which Leland thought fully met specifications. He studied his machines and even scraped some of them, but he could find nothing to account for inaccuracy. He then examined the gauges used in inspection and was able to demonstrate that a number of these were worn and inaccurate." So that the rejected screws actually met qualifications. So he takes that confidence of being correct and starts to reevaluate the way the factory is doing certain things and realizes, hey, there's a lot of room for improvement here. He says, "He noted that a number of parts were being made on lathes, which he felt could be turned out better and cheaper on the screw machines. Indeed, he thought that on some items, he could produce as much a day on the screw machine as the lathe could put out in a week or more.

• 18:48David Senra?

  Accordingly, he proposed certain shifts to the superintendent, who authorized him to go ahead." So he's known his entire career for doing this, for redoing factories, not only as a salesperson for Brown and Sharp later on, but also as an engineer in his own companies. So it says, "The shift was made, and so successfully, by the time he left the department, he was supervising 60 machines, when at first, he had just been supervising six of them. And for the first time, he felt the thrill of real accomplishment in his chosen life work." So not only is he improving the overall productivity of the factory, he's also inventing new products. So he invents what some consider the first pair of electric hair clippers. And he does so after overcoming a lot of adversity.

• 19:33David Senra?

  The leaders of the company pushed back over and over again, no, we don't want to diversify into this product line, whether it's we don't dedicate the time, or they doubted that they would actually sell. The product becomes extremely successful. And the reason I bring this up is because it's important. This is where he realizes, I have to have my own company. I'm not going to be able to get my ideas out the way I want them unless I'm in control." She says, "The manufacture of the clippers was spirited and rose quickly to an output as much as 300 daily. For this, I received a thank you and 50 cents a day more in my pay envelope. That was one of the times I thought I ought to quit making other men rich and go work for myself."

• 20:14David Senra?

  Okay, so now he's only becoming an extremely skilled machinist. He's understanding how to make a factory more productive, but he also goes out on sales calls. So he goes to other factories because Brown and Sharp are producing machines that are used in other factories, right? And so Leland was a gifted salesperson, but he's not gifted the same way Billy Durant was, or the reason Billy Durant was, who was extremely personal, positive. Leland was gifted at sales by not trying to be good at sales. He wanted to educate people. He was gifted at selling because he gave the customer useful advice. And here's an example of that. He claimed he was never, he never was a salesman and never expected to bring home orders. He just talked about jobs and machines.

• 20:57David Senra?

  When he found a tool or machine not being used in the most advantageous manner, he would stop and give proper instructions. In some shops, his advice led to a change in the whole system of manufacturing. One day, he was roundly criticized by another salesman who heard him recommend a Pratt and Whitney machine to do a certain job. Surely, this was disloyalty, this helping to sell a competitor's machine instead of his own. But a year later, the manager of whom he had recommended the rival machine sent for him. A new building had been erected and was to be equipped with new tools, and he wanted Leland's advice and recommendations for the installation. So what does that mean? He trusted Leland. And so now, a year later, he's got a much bigger job.

• 21:41David Senra?

  Many Brown and Sharp machines were ordered. And so this delay would happen all the time. They'd go to Henry, they'd be like, "Henry, we're getting all these new orders in, and we don't have a record of anybody ever going and trying to sell them. Did you visit this factory?" And Henry would be like, "Oh, yeah. I talked to them six months ago," or, you know, "three months ago," or whatever it was. And again, he didn't view it as a sales call. He went in there trying to improve their business and sharing the knowledge that he'd already accumulated. It's just a very smart move. Now, around this time, he's meeting a lot of, you know, successful founders and industrialists, and he learns something. Just as he's teaching them, he's learning from them as well. And specifically, how do I get money to start a business? So it says, "This is the time in his life where he's like, okay, I'm gonna make the jump from employee to founder."

• 22:25David Senra?

  "As usual, there was very little money left over for saving. And yet, at this very time, Henry Leland was more hopeful going into business for himself than ever before." He had bought his skill and experience to the service of the ambitious industrialists of the West. He's traveling all over the country, trying to sell for Brown and Sharp. "And they had shown him in return the financial method that had put them in business. With a background of experience and only a little money as a nucleus, each had organized a company, and by selling stock, secured the further capital needed." "Eureka," said Henry Leland. "I have found it." For he had great experience, and he was sure he could raise a little money. His dream of an independent business might come true after all.

• 23:09David Senra?

  Now, this business, he's not gonna start out as an automobile manufacturer. He's a machinist, just like the Dodge Brothers. He's going to make machines and products for a wide variety of companies, but eventually, a lot of automobile companies. And that, he's actually asked to take over an automobile company because his products were so high-quality and the way he ran his business. And I'll get there in a minute. But for this, he's gotta move. He's gonna move to Detroit. So he moves to Detroit and raises money for his own machine shop. Okay? I skipped way ahead. This is something very important about the life story of Henry Leland. He had a lifetime experience before he starts his company. He's 47 years old, and he's been working in factories since he was, let's say, 17.

• 23:53David Senra?

  So it says, "Leland located in Detroit because in that city, he found the financial backing he needed." So he partners up with this guy named Faulkner. They're going to start this company called Leland and Faulkner. There's another guy, but I'm going to ignore him because he leaves the partnership later. Faulkner was looking for an opportunity to invest the money he had made in lumbering. We saw this in the Billy Durant story, too. A lot of people in Flint, Michigan made money in lumber and then they dumped it into early automobile companies. Leland's compelling arguments persuaded him to put most of the money for their, for a machine shop. Like the rest of the United States, Detroit was much taken with the bicycle craze. So they started making parts for bicycle manufacturers as well. The new, the new firm was formally organized in September of 1890.

• 24:34David Senra?

  So we're about 13 years from the, from like the birth of the automobile industry. There's of course, people still making cars before this, but this is when they're starting to produce thousands and thousands of cars every year. Now, something you need to know about Leland is he's very much, you remember when Jeff Bezos told us that if you had to choose between a missionary and a mercenary, you always choose missionaries because they, they make better products. Leland's very much a missionary. In fact, he evangelizes, he's a missionary for precision. So a lot of the way he talks, and some people didn't like this because he held people to high standards. I don't think he was ever trying to be disrespectful, but he would evangelize that we need to do

• 25:16David Senra?

  better, that we can constantly improve and the products that we're making can be better. So it says, "With his own shop, Henry Leland was able to organize his work in what to him was the very best way. He would inoculate into his coworkers, his standards of precise and planned production. Many a man learned practical engineering as Henry Leland had learned it, starting out with nothing more than his own natural aptitude and some mechanical training. To be progressively developed, taught and encouraged by the old pro from Brown and Sharp." That's Leland. We're going to see somebody we covered. So he's, might be, I would say he's probably the most, the single most influential person in the early automobile industry. Well, let me read this part to you and then I'll expound on that. Okay.

• 26:00David Senra?

  So it says, "After two years in that pioneer, after two years in that pioneer machine shop, one of the workmen went on to a rather fabulous career of his own. His name was Horace Dodge, so he trained directly under Leland. He and his brother John established a machine shop of their own, furnished the first motors for Henry Ford and went on to manufacture a motor car, which still carries the Dodge name." So the, I would say the reason I say he's probably the single most influential person is like, Henry Ford would, when he ran into problems, he'd go and ask Henry Leland how to solve them. Alfred Sloan dedicated more, more words to what he learned from Henry Leland than anybody else in, in his autobiography. Same thing with Billy Durant. Again, he was almost like an older brother,

• 26:41David Senra?

  maybe even like a father figure to, he was a much older than a lot of the early automobile pioneers. And as such, he had a lot longer time to accumulate a set of skills that, you know, they, they just could not match. And you also see this, we talk about the difference between stated preference and revealed preference a lot. And so you see this because when they had the opportunity to go buy their own car, Alfred Sloan, other people, they would buy Cadillacs. They're clearly saying, hey, this person has higher standards. He makes the single best product out of anybody else in his field. As with any new business, there's a lot of series, a series of struggles that Leland has to overcome. And one of them is, you know, the, they, they had a lot of success

• 27:24David Senra?

  because they had a great reputation, right? And again, they're not, they don't have products yet. They're still looking for products, but they're being, they're, they're being hired, almost like contractors, right? And they have a lot of customers, but here's the problem. Because of the small capitalization and the need for more and more shop equipment and material, there were times when after the men were paid, not much money was left for Mr. Leland. The building up of a business which expands rapidly and must be financed primarily from its own earnings is often a discouraging process. So Leland winds up becoming extremely financially successful, but he, that was not his primary motivation. In fact, he got a lot of criticism because he's constantly investing in the best materials. And he does this to an extreme. For

• 28:07David Senra?

  an example, they couldn't find a foundry of high enough quality. So Henry's response to this is, okay, I guess we're gonna have to make our own. And we see, uh, once he starts a foundry and advertises its services, we're gonna see right here how he views.

• 28:23David Senra?

  Remember, they said, "Precision is his god. Quality is his god." The new foundry stated, this is in the advertisement for them, ready? "We appeal for business only to those who want the best. We do not attempt to compete with the average foundry on concerns of price. We believe no other foundry can successfully compete with us concerning quality. For months, Mr. Leland personally inspected every wagonload of casings delivered." And this shows his extreme nature here. "And in the effort to get workmen and foremen educated, to his own critical viewpoint, he would throw out piece after piece for any slight deviation from pattern or form.

• 29:06David Senra?

  Or he would go through the foundry, pick up a casing, and throw it with force onto the floor. If it broke, it was defective. If it remained whole, it was satisfactory. For a time, perhaps half the product, although fully up to the commercial standard of most foundries, meaning that they would be acceptable for customers, went back for re-melting." So saying that what the customer would accept, half of what the customer would accept, were below the standards that Leland put for himself. This went on until it began to be whispered around the works. "The old man is going crazy." And so his theory was that, listen, there's always going to be people willing to pay for quality. Do not compete on price, just make the very best product. And he winds up being correct.

• 29:49David Senra?

  So it says, "He predicted that after the quality of his casings had become recognized, people would come begging for them, even at the higher price." Here's a quote, direct quote from Leland. "There always was, and there always will be, conflict between good and good enough. And in opening up a new business or in a new department, one can count upon meeting this resistance to a high standard of workmanship. It is easy to get cooperation for mediocre work, but one must sweat blood for the chance to produce a superior product." Time upheld his judgment. "For when he himself needed all his foundry output," this is when he does catalog, right? "For when he himself needs all his foundry output and had to drop his outside customers,

• 30:32David Senra?

  they begged," this one company begged for another year's supply, "and offered to pay 20 cents a pound." Why is that 20 cents a pound important? Because they, previously, when the foundry was open outside customers, he was selling his casings for 8 cents a pound. So they found the quality so high that they would almost pay three times more than they were before, just to not lose out on the quality of the product. So Henry Leland is kind of pulled into the automobile industry and he's pulled in by Ransom Olds. Ransom Olds is the founder of Oldsmobile and this is what Henry Leland learned from Ransom Olds. "Ransom Olds will always occupy an important niche in the automobile Hall of Fame, for he demonstrated that the motor car was a practical vehicle which could be manufactured in quantity and would attract buyers by the thousands."

• 31:17David Senra?

  Now, he was the first mass-produced, successful mass-produced automobile manufacturer, not on the scale, of course, like the Model T, but still selling thousands of vehicles a year. "It now seemed likely that the automobile industry might grow to considerable proportions." Henry Leland believed that it had a great future, yet he had no idea of entering the business himself. So this idea, this belief that it has a great future, came directly because he was supplying parts for Ransom Olds and he saw how fast the growth was occurring. "The engine intrigued him," meaning the automobile engine, "intrigued him as any complicated machine which he thought could be improved." Now, it finally got to the birth of Cadillac. Now, this is really interesting where it's birthed from.

• 31:59David Senra?

  Before, Henry Ford had two failed automobile companies before his third and final and successful automobile company, right? That second company, which starts out as a Henry Ford company, eventually turns into Cadillac, and this is that story. The Henry Ford company, so it was financed by this guy named Murphy, okay? "The Henry Ford Company was incorporated in 1901 and Henry Ford, again, took his place as an engineer. Difficulties and disagreements ensued, and though some cars were built, Ford left the company by 1902." So he lasted less than a year, he lasted five months, actually. "The directors had decided on liquidation. When approached, Henry Leland promised he would go to the plant and look over the machinery." So Murphy hires Leland, he's like, "Hey, again, this speaks to the reputation that Leland worked his entire life to achieve.

• 32:44David Senra?

  Hey, go tell me what my machines are worth, okay? Because we're going to liquidate this failed Henry Ford company." The fact that this young automobile concern had failed to survive did not surprise Leland. The auto craze had fallen upon Detroit and half the mechanics of the city were concocting cars in their home workshops. So the numbers vary depending on when you're looking, but from what I understand, there was about 2,000 individual car companies. And almost 100 years later, only three survived. So it says, now, this is Henry Leland's son talking about what's taking place at this time. "When father accepted the job of appraising the automobile company's equipment, he must

• 33:28David Senra?

  have had a further flash of inspiration. Some days later, he appeared with a high-powered motor. He was doing his own tinkering and realized, hey, I actually have improved this motor. I think it's the best motor and maybe we should manufacture it." So he goes to this meeting and they want to know how much the equipment's worth. And he starts doing this pitch. He's like, "Well, why don't we try to manufacture this motor? I can build the motor for you." So he says, "He wasted no time in telling the men before him what values he had found in their equipment. I have done what you asked me to do, but gentlemen, I believe you're making a great mistake in going out of business." And from there, he launched into an exposition of faith in the future development of the motor car industry. His enthusiasm grew, but he's an evangelist, remember that. "I have bought you a motor.

• 34:11David Senra?

  It has three times the power of the oldsmobile, meaning the ones that's in the oldsmobile. Its parts are interchangeable and it is not temperamental." So it says, when he said it's not temperamental, the audience laughed. Why did they laugh? Because at this time in history, most cars would fail. So it says, "I can make these motors for you at less cost than I make the others for the oldsmobile." They were sold on both the motor and the salesman. The wealthy men decided to stay in business if Mr. Leland would join them in the reorganization of their firm. He thought he was just going to sell motors. They're eventually going to pull him into this company and then they're going to say, "Hey, now they're going to pull you into this company. You've got to run this." So why they're laughing? When Cadillac starts going, it's such a reliable motor. This is where it reminds me of Henry Royce from Rolls Royce, who did the same thing.

• 34:55David Senra?

  The advertisements would say that when you buy Cadillac, it comes with a round trip. And the reason being is because a lot of people would get in their cars and then eventually on their outing, they'd find themselves broken down. And so they couldn't get back to their point of origin. With a Cadillac, you could. Now, it's also really important to understand that Henry Leland, when he found Cadillac, he's almost 60 years old.

• 35:19David Senra?

  Henry Leland now embarked on the great adventure of his life. He would play an important role in the organization of Detroit's first successful automobile company. What that means is not only is the product successful, but the company is financially successful. I'll get to when Billy Durant buys the company from him. But they're making about, I think, two, they're making $2 million a year in profit. And Billy Durant is able to buy the company for $4.5 million. And even when GM gets in trouble later on, he had, you know, Billy Durant adds all these other, you know, crappy automobile companies. Buick and Cadillac are funding all the nonprofitable companies that Billy Durant rolls into General Motors.

• 35:59David Senra?

  So Cadillac was by far, if not the most successful early automobile company, one of. It's one of two. He's either the first or the second. Buick's the other one. Again, this is way before Ford hits the Model T. Oh, and I forgot to mention something. So I'm about to tell you when, this is when Henry agrees to become an automobile offender. He's working on the engine, but he's still running his, his machine shop, Leland and Faulkner. So he starts working on Cadillac and he thinks it's going to be like a part-time job. And then he, he falls in love with the work and he realizes the opportunity. So he, that he winds up dedicating all his time to Cadillac. So it says, "Remembering those days, Mr. Leland would say, 'I never intended to get into the automobile business. There was too much trouble in it.

• 36:42David Senra?

  But to the directors, it seemed reasonable that if the Lelands could do such a good job on their part of the process, they could probably handle the whole operation much better than it was being done." So these are, you know, wealthy people that made money in other domains. They don't really want to run the car company, nor do they actually have the skillset to do so. So that's when they kind of forced Leland's hand. They're like, "We're going to shut down if you don't run this whole thing." That's what it meant, but he was pulled into it. "Finally, as the difficulties multiplied, Murphy and Bowen came again to call, to call, to call Henry. They were very definitive. Either you fellows come and run the factory for us, or we will go out of business." So the Lelands became automobile manufacturers. Other men had built cars for many reasons, for the fascination of creation, for the profits in it.

• 37:26David Senra?

  But Henry Leland agreed to build a car because he did not want to see a pet engine unappreciated and unused.

• 37:34David Senra?

  The Lelands had agreed that they would assume general direction of the Cadillac operation and would spend at least two or three hours there every day, though still giving their major part of their day to L&F, that's his other company. Yet, from the first day, they found themselves devoting more and more attention to Cadillac and less and less to their own establishments. The Lelands were happy at Cadillac. Henry went to work at once, systematizing the operation and winning the friendship of the personnel, as he introduced his way of efficiency and ideal of precision. So, I want to call your attention to that, that he's winning the friendship and the loyalty of the personnel. That's, he leads from the front. He's, later on, I would, I compare Henry Ford and, and Henry Leland as oil

• 38:18David Senra?

  and water. Henry Ford was an autocrat. There was no, he just, he wanted essentially pegs in a machine. Leland was not like that. He valued the, the individual contributions, and he thought that if he had the highest scale, most educated workers, they'd make the best product. Ford had a completely different approach to manufacturing. So, it says, "On a dollar-for-dollar basis, the Cadillac was in all probability the best car on the market. It appeared at a time when there was still a premium upon reliable performance, and Leland was an ex-" this is such an important sentence "- and Leland was an expert in a field where experts were still uncommon. Competitors would learn, they would find out by trial and error, the ways Henry Leland had learned through

• 39:03David Senra?

  a lifetime spent in factories among machines, but it would take time for them to catch up." So, Henry's level of quality was so, was so high that he changed the perception. So, other countries at this time thought American mass manufacturing, they called it nasty. And so, Leland's dedication to quality actually changed that impression. So, he insisted on precision, and his work, the main takeaway from this section is, he insists on precision, and his work was appreciated because of this. So, it says, "Fred Bennett remained with Cadillac throughout his life and came to know Henry Leland well." So, now, he's, later in his life, Bennett is writing- Henry's son about his father.

• 39:46David Senra?

  There is one thing which I always tell present day manufacturers and that is the real basis of the modern standardized car can be put down to the strong religious sense of your father. He insisted on complete accuracy in manufacturing for the reason that it would be wrong to put fine limits onto blueprints and not carry them out into the manufactured article. There's a ton of examples just like this one in the book that Henry insisted on excellence from everyone around him. Leland was a holy terror to automobile suppliers. So in this book, it reprints the story that Alfred Sloan tells in his autobiography when

• 40:25David Senra?

  he's selling bearings to Cadillac and just Leland tears into them about they're not precise enough, that you can do better. And again, some people might not like to be talked that way. Sloan realized it invigorated him. He's like, wow, this guy, I thought I had high standards. This guy has way higher standards. And so we see that and we see the result. Incidentally, talking about all these stories get passed down about how strict he is. So it says he had spread a little farther the Cadillac's reputation for excellence. So as they tell friends and other people in the industry about how relentless Henry Leland's drive for quality is, all that does is now you have people out there saying, hey, this guy, he has the highest quality products. And this is the result. When Mr.

• 41:08David Senra?

  Sloan bought a car for his own personal use, he bought a Cadillac. This is Henry Leland talking. We buy the best parts we can find. I have always contended price should be considered last by a manufacturer in selecting materials for his product. Now I'm skipping forward, there's a lot of, it's not, you know, you don't start Cadillac and then everything goes well. They have a lot of sales, but they don't have a lot of like large financial backing. So then there's, they're constantly short of money, even though they're making profit. And so this is why they sell to GM, because although they fight back from when there's like a financial panic, they're close to, you know, running out of money. And then the overall economy picks up, they do more sales, they become more profitable. And even though they're making $2 million a year, they're just like, you know, this is too anxiety inducing.

• 41:52David Senra?

  And they thought, you know, the pitch from Billy Durant is that he has access to a lot more money. I think the early GM was capitalized at something like $60 million, which was huge in the early stages of the automobile industry. So it says, despite their present success with principal, despite their present success, the principal stockholders thought it would be a relief to be quit of the worry in connection with the business they had built up after so many years of anxiety and uncertainty. And they were willing to sell it if they could liquidate their investment with some profit. And so Henry Leland is also difficult in his dealings with Durant. Durant's buying all these companies with stock. And Leland's like, no, you're paying cash for this buddy. And in this section, there's also a description of like, why are so many people starting car companies?

• 42:34David Senra?

  Before they were actual manufacturing concerns, they were just assemblers. And so they had a lot, they realized there was a limit to how successful this business model would be, but they could still make a lot of money on a small investment. This is an example of that. One of the fascinating features of the early automobile business was that it was possible to make so much money on a small initial investment. Osmobile went into production with not more than $200,000. And in less than three years, it had paid 105% in cash dividends. And the capital, the value of the stock had risen to $2 million. Henry Ford's third venture started with much less, not more than $29,500 in cash. And in four years, its net profit was over a million.

• 43:15David Senra?

  It cost Cadillac backers $178,000 for three attempts and two failures at the game, before they finally got into successful production and the company sold seven years later for $4.5 million. And so like a lot of the people that we cover on the podcast, Henry Leland thought of himself as a teacher so much that he made a school, he made one of the first schools, if not the first school, to teach people mechanics, right? And this is the section, I'll tell you the note I left myself after. Henry Leland always wanted to share with others some of the good things he had found in life. So one was his religious experience. He would preach out of the Bible every, every day at lunch. The other was his technical skill and the rewards it had brought. When he went into business for himself, he never stopped instructing his men in a better

• 43:57David Senra?

  way to do things. He labored to teach his workmen, his suppliers, his stockholders, and even his customers. He's teaching everybody around him. Anybody could apply to him for advice, and many did. Henry Ford, in the early days, came over to ask him how to grind his pistons so they would not stick when they got hot. So he would constantly share. Even though he was competing with these people, he'd share his information. This reminds me of one of my favorite quotes by the founder of Intel, Bob Noes, who was also the mentor of Steve Jobs. And he says, "Knowledge is power. Knowledge shared is power multiplied." And I think if Henry Leland had heard that quote, he would definitely agree. Not only did he do the school of mechanics, at first they thought, "Okay, we need more skilled laborers." But eventually, people went to his school, and they wouldn't even go, they'd

• 44:41David Senra?

  work for his competitors. He still kept the school open. It was very important for him. He thought that this opportunity was so great, because if you were skilled, a skilled worker in the early automobile industry, you could make a lot of money compared to other labor opportunities that you had. So Henry Leland thought it was some kind of, I wouldn't say like, mission, but he thought he was doing a greater good by teaching people how to take care of themselves, and as a result, being able to provide for their families. I would also say, a trait about his personality I particularly admire, he was dedicated to self-improvement. His theory was that the one essential ingredient of success was mastery

• 45:21David Senra?

  of oneself as well of one's job. So now we get to the point where he's going to leave Cadillac. So he's going to resign, him and his son are going to resign, after Durant refuses to let them make airplane engines. So before, Durant was true to his word. It's like, "No, no, we're going to buy the company, but you run it." He was hands-off. He wouldn't even go to the factory. Leland, later on in life, I thought, I think, thought he would have a similar arrangement with Henry Ford. Henry Ford was not like that at all, and I'll get to that in a little bit. But this is where the Leland's resign, because, again, to him, it's an honor thing, patriotism, and helping. He thought, "Okay, if I could produce airplane engines for the war, the war will end sooner and less people will

• 46:05David Senra?

  die." And so he thought it was... I don't know if his motivation was religious, but he talked about it in a religious sense, that he was saving lives. That's what he believed. And again, he's going to walk away... From his greatest professional achievement that he'll ever see, and probably the best position he'd ever been in. He could have probably stayed at Cadillac till, you know, he's in his 60s. He's like 77, something like that, when he founds Lincoln, Lincoln Car Company. It starts out, the Lincoln Company first is organized to produce Liberty Engines for the war, and then after the war's over, it's repurposed into automobile manufacturing. But this is where Lehman walks away from the greatest opportunity in his life. When his son returned with his uncompromising answer, meaning Durant's not budging,

• 46:50David Senra?

  Henry Lehman blew off many months of anxiety and a mighty explosion of wrath. They decided to send in their resignations to Durant and General Motors and find a way to help the war effort independently. It was a heartrending decision to choose between the solid, well-built Cadillac organization, again, probably the most successful single brand, early automobile brand at this time, culmination of their life's work, and nebulous... So they're saying, "We're gonna throw away a well-built Cadillac organization and the culmination of their life work for a nebulous half-form plan." Meaning, they don't know... They know they're going to help with the war effort, they don't know how they're going to do it, okay? It's not like they had a backup here. More hope... It was more hope than plan.

• 47:34David Senra?

  They want to build motors for the government and help win the war. More cautious, more calculating men would have waited until the future was more plain and the plans of the government more clearly defined before taking such a decisive step. But the Lelands had a way of following their ideals, and in this case, they delayed not one moment to count the cost. So there's one story from this time that I want to share with you, and it gives you an insight into the way Henry conducted his life and his relationships with other people, and the fact that he was constantly trying to help people around him. So at this time, everybody's trying to go after the same supplies, right? They need different tools, they need steel, they need all these same materials, because

• 48:19David Senra?

  the war effort in America is being galvanized, right? And so Lincoln set up, it's set to set up to manufacture engines for the war, but they can't get, they're saying, hey, they're placing orders and they're saying, okay, we need this in two weeks. They're trying to give us a nine months. And so he winds up getting placed at the head of the line because he wound up helping this person out in the previous time in their life. So it says, "Mr. Leland called Sweet," this is somebody, this guy is helping him, "to his home and gave him a letter with instructions to deliver it personally to the president of a New England company, which made a certain type of machine that he needed. It was an order for a large number of machines to be delivered in 30 days. Sweet protested that the plant probably had advanced orders of

• 49:04David Senra?

  a year or more. Henry replied, 'I know, I know, but just do as I tell you and then come home.' When the messenger delivered the letter to the toolmaker," this is now the president of the company, this is his response, "doesn't Mr. Leland know our plant is booked to capacity with orders for at least a year? Sweet answered, 'He does, because I told him that would be the case.' Pondering a moment, the manufacturer said, 'Go back and tell Mr. Leland he will have the machines in 30 days.' Sweet was astonished and asked for an explanation. The toolmaker told him the story," now this is direct quote from the toolmaker, "20 odd years ago, I had invented this machine and then used all my available money in making up a number of models. These were shipped to manufacturers

• 49:49David Senra?

  in different parts of the country with the request that they be given a trial. If satisfactory, I would manufacture as many as the company could use. If not satisfactory, I asked that they be shipped back at my expense with a report. I soon began to get my machines back with such comments as 'no good,' 'not practical,' 'too many defects.' Then a letter came from the Cadillac Motor Car Company over a signature of Henry Leland. He wrote, he wrote that he believed I had a machine that would prove of great value to the industry if certain defects were corrected. He enclosed a check to cover the expense of my sending one of my expert mechanics to work with him in perfecting my machine. If successful, he concluded, we will place a substantial order."

• 50:35David Senra?

  The defects were corrected and our mechanic returned with a good order and a check in full payment. That was our beginning. What you see here now is that result. You may tell Mr. Leland his order will be filled and delivery made as requested. And so I would summarize that section as if you do the right thing, people will remember. So now the war's over, I'm fast forwarding, and they're starting manufacturing a car. Now, keep in mind, Henry Leland is the opposite of Henry Ford. Henry Ford is making a $250, $300 car. Henry Leland is making a luxury product. He wants to make the best car in the world, right? Unfortunately, this is the worst possible time to manufacture an expensive luxury car. Here's some details about that. At any rate, the advent of the new Lincoln car had been delayed almost to the very day

• 51:20David Senra?

  when the economic depression of the early 20s made itself felt. Five days after the long heralded beauties, they're talking about the Lincoln car, made their debut, other manufacturers, disturbed by the slackening of demand, announced price cuts. It was a most unprosperous time to launch an expensive car, no matter how great its virtues. It is a high-quality car, but no one has any money. Instead of going immediately into profitable production, cancellations of orders came pouring in, and the company with a large and expensively obtained inventory of material in hand was forced not only to curtail its production quickly, below a profitable level, but also to pay out large sums in refunding deposits to dealers.

• 52:03David Senra?

  So not only are they experiencing bad economic times, but they're also playing roles they're not used to. Henry is 77 when he starts Lincoln Car Company, okay? And he's doing something completely new, and this is a description of that. They're much more involved in the financial aspect of that, and they were not really skilled in that domain. The Lelands were now playing a new role, one in which they had no experience and for which they had neither training nor heart. Remember, he's 77 years old. Between them, father and son, they designed, created, organized, produced, and managed, but they'd never before been the major financial sponsors of a great business venture, meaning they have a lot of their own money at stake here, including raising money from people that believed in them. So it says, "Previously, the financial responsibility of their business operations

• 52:44David Senra?

  had been borne by others. Mr. Faulkner had put up money for LNF, that's his first company. Messrs. Murphy and Bowen had provided the capital for Cadillac until General Motors took over. While the Leland's had started out independently in the Liberty Motor Project, in the end, the United States government had underwritten the operation." So they're doing government contracts while they're making engines for the war. That's what they're talking about there. But in this case, they have a lot of their own money on the line. They're also working with people. There's going to be a split in the board, right? And so they're losing money, they're losing money. They have a lot of debt. And they're all in. And they have partners that are around, Henry has partners that are around his age, right? But they're getting advanced in age that their sons are now coming and other

• 53:25David Senra?

  family members are now coming and involved in the business. And they slowly convince the older people in their family that, hey, we're throwing a lot of good money after bad. Because to get out of this, they're going to need a couple million dollars. They think Lincoln will be profitable enough. Henry and his son believe that Lincoln will be profitable enough, that they can pay off the debt when the economy improves. But the younger people, the people that were not involved, that had no previous experience in the automobile industry, convinced longtime associates of Henry to not continue to fund the company. So when the company is put into receivership, Ford's going to buy it out of receivership, the final board meeting, they're coming out and, you know, they're

• 54:09David Senra?

  crying. There's tears in their eyes because they feel they betrayed, you know, their lifelong friend, Henry. And they're just like, "We had to vote with my family." And so Henry and his son, they did not believe in quitting. And so I would say this is an example of, Henry Leland had an honorable personality, and he wanted to keep going so he could pay back the people that believed in him. So it says it was manifestly impossible for the Lelands, men of tender heart and unswerving integrity, to take a cold, dispassionate view of the financial straits of Lincoln Company. Many automobile companies had had money troubles. Some had undergone a variety of reorganizations, combinations and other strategies to keep alive, and their directors and management

• 54:54David Senra?

  had not been considered dishonest or insensible of their trust, even though investors may have lost a portion or all of their equity. But such a course was unthinkable for the Lelands. As long as there was breath in their bodies, they would oppose it. They had themselves invested everything they owned in the company. So even though their partners in previous financiers say, "Okay, we're going to put the company in reinsurance. We give up." The Lelands no longer run such receivership. They don't own the company anymore, right? And so they're still going around. They're taking meetings in New York with all kinds of bankers. They're trying to find somebody to give them money so they can get the company back and run it and then pay back their shareholders. So they wind up doing a deal with Henry Ford. But Henry Ford, remember at this time, when we covered the book,

• 55:39David Senra?

  My Forty Years Before, it talks about the end of his life. He was extremely, like, he was jealous. He started getting jealous of Charles. The author of that book was Charles Rensen. And if anybody received credit for anything that was not Henry Ford, he found that distasteful. He also refused to compromise. He was seemingly rigid. He's like, this is, you know, he's arguably the most successful entrepreneur in the world at the time. So he was not bending. So, and he's also known to be two-faced, where he tells publicly, he decides to buy Lincoln, right? Because he does a deal because he talks to Henry's son, Wilfred. And the way Ford spins this is like,

• 56:23David Senra?

  you know, Henry Leland is one of the most important people in the automobile industry. Lincoln's a good car. It's going to be a profitable endeavor, and I'm also doing a good deed. So he's like, we're going to make money, but I'm really doing a good deed because, you know, this guy's almost 80 years old. He's played an important role, and we're going to help him. That's not, that's not true. That's not why he does it. He has a fanatical distaste for anybody else getting any kind of credit. So it says, Wilfred left the... This is how the Lelands... The reason I need to bring this up to you right here is because Henry Ford, according to the Lelands...

• 57:02David Senra?

  Purposely misled them and lied to them and then wind up firing them later. Okay. So this is how the Lelands thought about the deal with Ford or what he agreed to. Wilfred left the Fords convinced that the understanding between the parties were were complete on all the important points. They would reimburse the creditors and stockholders. They would keep the distributors and retention of the Leland management, right? Him and his son were going to be both be running the company. The Lelands were believers in this case, of course, that the Ford offer was extremely fortuitous. There were years of struggling to try to to get a deal. Sore and defeated as they were, the Ford proposal was bombed to their long tired souls. It seemed logical to them that an experienced automobile manufacturer not only could appreciate the virtues of the Lincoln car and the excellence of the factory organization, but also could

• 57:47David Senra?

  better foresee its certain brilliant future than the mechanically ignorant, money-conscious capitalists of the former Lincoln Directorate. These are the younger people that convinced their old, the older family not to keep investing money. There was another bond of understanding between the Lelands and Henry Ford beside an interest in things mechanical. And that and that was a certain distrust of coldly calculating financiers. This transaction was directly between father and son and father and son. So you have Henry and Etzel Ford and you have Henry and Wilfred Leland. All honorable men, and there was no need to consider the careful dispositions of the financial world. Nope, wrong, wrong. Henry Ford's not putting this in writing on purpose.

• 58:31David Senra?

  And they get an indication of this because there's a journalist that's kind of in Ford's pocket. He writes for Detroit News and he's he's the one that always gets like exclusives from Ford. And his name's, his name's Sweetheart, Swineheart. And we start to see this, this idea where Ford is now spinning like the publicity and the public relations of this deal. The trend of Swineheart's story must have been somewhat of a surprise to the Lelands, who would believe that Ford saw good business as well as charitable reasons for investing in the Lincoln company and retaining the Leland management. However, the headline was Ford Saves Lelands. That's exactly what Ford wanted people to believe. And the gist of the announcement that followed was that Ford neither wanted nor needed the Lincoln, but through the intercession of Mrs.

• 59:14David Senra?

  Ford and her kind heart and because of the constant pleading of the Lelands, Henry Ford's own kind heart was touched and he decided to help. Okay, so at this point, the deal is done.

• 59:30David Senra?

  Again, Henry Ford initially agreed Leland's gonna run this. And then this is where we see the Cadillac, or excuse me, the Lincoln organization and the Ford organizations are like oil and water, just like their founders are. And again, as I read this section here, I want you to keep in mind, Henry Leland is almost 80 years old when he does this. Certainly, Henry Leland began his employment with Henry Ford in a cooperative mood, understandingly eager for success in this last chance to save Lincoln and end his career on a successful note. But he was also a man of independent spirit, and he resented the contemptuous indifference of his authority, the continued calculated insult to his position. So he fought back. So Ford sends over a bunch of guys, they start redesigning his factory, they start firing people, there's no chain of command at all. So he fought back.

• 1:00:14David Senra?

  He countermanded orders which had been given without his knowledge. He fired men installed in the place of his employees. They'd fire Leland's employees and put in their own people, and then Leland would fire them. One day when Sorenson paused, now this is Charlie Sorenson playing like the bad guy role too. "One day when Sorenson paused to question a heap of cylinders thrown aside by the inspector, and after a cursory review said to the workman at hand, 'Use them,' Henry came along with a sledgehammer and smashed every one of them beyond use or repair." So he's using sledgehammers, breaking things, almost 80 years old. And he's doing that because he does his own qualities, like his own quality testing, he's like, "These parts are not good enough." And then his employees are saying, "Well, the Ford people told us to use it."

• 1:00:59David Senra?

  And Henry's like, "I don't care what they say, we're not gonna use lower quality products in the Lincoln automobile." So we also see a difference in management culture. Like I said earlier, Henry Leland led from the front. Henry Ford beat you down from above. So it says, "Though neither the Lelands nor many others knew it at the time, this kind of behavior by Ford supervisors were not uncommon at Ford plants and with Ford's knowledge and approval." So they'd hit, they'd smack their employees, they'd fire them if they, it was just extremely, "I would not want to work in a Ford factory," is what I'm saying, especially at this time. "Men were not allowed to sit down at all. If they so much as leaned against the machine, they were liable to be fired. Strange and devious ways were used to discipline men." And this is a quote from this other author that wrote a book on Ford.

• 1:01:42David Senra?

  It says, "If the work of certain clerks in the shop is not wanted, why tell them so?" Meaning, why are we gonna tell them? They wouldn't tell them. This is childish behavior. I cannot believe this. Smash their desks. Expensive tools of skilled workmen are scattered over the floor? This is foolish, insulting, humiliating? Not at all. This is now Ford management technique. It takes to conceit out of a man who prides himself on his work. No, what kind of quality person is gonna let their desk be smashed? Your tools thrown about? Smacked in the face? Like, this is ridiculous. It was such a surprise to the Leland's. But it was funny to me is there's a report that is commissioned by the Ford management to like, not spy, I guess to give them a report of how Leland manages. And listen to the report.

• 1:02:27David Senra?

  This is now a Ford guy describing Lincoln management. "The whole organization appears to us is unusually harmonious and uniformly competent." Yeah, isn't that what you want? So now, we get like the contrast. It says, "In contrast, here were the Leland's who led and did not drive. With them were men, many of the employees from the LNF days." So people were working with them for multiple decades. "They expected to talk things over with their executives before coming to a decision, and then by the same process, explain to the men under them the reasons underlying decision." Which is so important, we've seen over and over again. We have to know, people have to know why. "The reasons underlying decision, and thus secure cooperation."

• 1:03:08David Senra?

  "To the swiftly moving Ford bosses, such a method seemed ridiculously slow and cumbersome. In fact, the whole Leland organization seemed clumsy to the Ford people." This is now the difference, how they view things. "Manufacturing was to them a matter of logistics, layouts and systems, not human engineering." This is a summary of how the Leland's saw this time. "The whole period was to them a confusion of spit-in-your-eye, hit-and-run tactics. Plenty of action, but little consideration, conference or explanation." So this goes on for several months. They try to talk to Henry Ford. First, he's receptive. He has him over to their house. And then eventually, he disappears.

• 1:03:53David Senra?

  He won't speak to them. And to me, he does something that's completely dishonorable.

• 1:03:59David Senra?

  He doesn't have the courage to fire Henry Leland. So he does, this is the order, the order, there's all this infighting. So Ford tells one of his lieutenants, hey, go tomorrow to Lincoln and tell Wilfred that we don't need him any longer. And what do you think? What do you think Henry's response, Leland's response to that's gonna be? You're gonna fire his son and you think he's gonna, this is an honorable person. What would any honorable father do? He did do exactly what Henry Leland did. He's like, you're firing my son, I'm gone too. And so Ford's not dumb. He's an autocrat. He's extremely ruthless and relentless, but he's not dumb. He knew what he was doing. That's just, that's just hard to swallow.

• 1:04:43David Senra?

  So it says, "For a time after their dismissal, the Lelands hoped to have some discussion and settlement with Henry Ford. They received two weeks' advance salary as terminal pay, and that ended their association with the great Ford Motor Company. They were not to talk with either of the Fords again, so they never spoke to Henry or Etzel again." So that just seems to be like a real cowardly way to do things. And not only that, there's tons of, there's a lawsuit that's gonna happen, there's testimony from both sides, there's depositions. A bunch of other people, they're not just the Leland family, said Henry Ford made all these promises and he did not keep them.

• 1:05:23David Senra?

  And so I want to bring up, so Leland gets some money, because again, Henry Ford said he was gonna make all the shareholders whole, right? The people that invested and believed in the Lelands. And so he doesn't do that. Henry Leland winds up having to sue the Ford company to try to get this resolved. And I want to go back to, remember that lesson he learned from his father when he was a young boy? He's now writing a letter to Henry Ford. This is Henry Leland writing to Henry Ford. Henry Ford just ignored him. Again, he never talked to him again, and this is what Henry Leland says. "I cannot but feel certain that you intended to keep those pledges when you made them to me personally. And while I cannot understand the long delay on your part, I still hope and trust that you will not shake my lifelong faith in humanity."

• 1:06:09David Senra?

  And so this is the final hurrah of Henry Leland's life. And he fights, there's multiple years, it goes on, I think, four to six years of him trying to get Henry Ford to honor his, uh, his word where he said he'd pay back the shareholders. And they wind up, again, he doesn't have any writing. He have promises with accountants and attorneys, but there's not, he does not have this in writing. And so Henry Ford never did. Um, and so after four, almost four years of litigation, the Lelands had to notify the stockholders that all the efforts had been exhausted on their behalf. Again, he's, this is Henry Leland just trying to be an honorable person and he's doing this right before he dies. He's in his late 80s at this point.

• 1:06:51David Senra?

  So it says, "On September 1st, 1931, Henry Leland wrote this last letter to the stockholders of Lincoln Motor Company. I am 88 years of age, on the threshold of the exit from life, ready to meet my maker, and I am unwilling that this case be ended without my putting myself on the record. I have followed every step of this fight to obtain our day in court. To me, this case has meant the fulfillment or the failure of the agreement I obtained from Henry Ford for those individuals who suffered loss directly because of their faith in me. This suit was not brought in my own behalf, for Mr. Ford paid me personally the amount agreed upon.

• 1:07:32David Senra?

  I have brought, and I brought this and together with my son Wilfred, and entirely financed this suit on behalf of those others whose benefit this agreement was made. We have no further recourse to law. There is no step we can take at this time to gain for you the day in court, which every American citizen is entitled. But the equities and the Ford obligations have not changed. Henry Ford, by the terms of his agreement, owes you the amount of your stock investment in the Lincoln Motor Company." And so, response to this, a lot of stockholders sent him letters. Most of them were, you know, they were sympathetic and they appreciated him fighting on this. Uh, here's one, he says, "I'm just in receipt of your copy of the form letter which you

• 1:08:16David Senra?

  addressed to the stockholders of Lincoln Motor Company. I want to thank you for it. It was, I was a very small stockholder in your company, having invested between $1,000 or $1,100 into it. I learned to drive on your splendid car, the Cadillac, and I knew the Lincoln was going to be a great achievement as well. So I went into this with the little money I had." My father was an admirer of yours. I once met you at my father's house when I was making him a visit. I know the account of what you say took place between you and Henry Ford is true, and I felt grateful to you for the long and bitter fight you have made to obtain justice for your shareholders. I wish I could say, "Don't worry about it anymore." I can say so for myself, and I do.

• 1:08:56David Senra?

  So again, he's a great man. He deserved a better ending than this. One consolation alone remained. They had tried. Perhaps it had been a fragile chance from the beginning, but they had not turned it away. In a measure, while they had lost their case, they retained their reputation for personal integrity and responsibility. The business and industrial world was better for this attempt to keep an obligation, no matter what the cost in failure, ridicule, and slander. But the time was not long for Henry Leland. He had fought his last fight, finished the course, and kept the faith as best he could. When he wrote he was on the threshold from the exit from life, he had but six months more, including

• 1:09:37David Senra?

  another birthday. With his son at his side, he died on March 26, 1932.

• 1:09:45David Senra?

  And that is 128 books down, 1,000 to go. If you buy the book using the link in the show notes, you'll be supporting the podcast at the same time, and I'll talk to you again soon.