If you look at People magazine, the featured people are generally from entertainment either TV or Film or actors. At the turn of the last century the stars of the media were business tycoons, particularly Henry Ford and Thomas Edison. It turns out Henry Ford was a huge fan of Thomas Edison and when he was beginning the Ford process he wrote his idol and was encouraged to carry on or be persistent. A few years later, Henry Ford was wealthier than Thomas Edison and they met, found they had similar outlooks on life and spent their families spent summers together touring. The public loved to read about and see these two elderly gentleman going on car trips during the summer. The book The Vagabonds by Jeff Guinn published by Simon & Schuster, NY, 2019 is the story of their adventures.
Unlike most families taking car trips, Henry and Thomas travelled with a crew to ensure when they stopped, they had all the conveniences of city life, in the country. Both gentleman were interested in birding and nature and brought along an expert naturalist John Burroughs as a guide.
The reason why the gentleman was part myth and part reality. The myth was Tomas Edison was the greatest inventor in the US was partly true for he was the inventor who made money from his inventions Edison Electric. The myth was he improved many products and then tried to monetize them. Henry Ford’s Model T came out in 1908 and was half the price of most of the other cars. It was a basic vehicle and using the production line to drive costs down, it was soon affordable for many Americans. The production time to produce the vehicle went from thousands of hours to Ford’s 2 and half minutes. One feature was the placement of the steering wheel, Ford insisted it be on the left side, so the ladies in long dresses could easily get off on the raised sidewalks most towns had. Remember the roads were not paved in 1908.
One of the myths about the Model T is you can get it any color you liked, so long as the color was black. Black paint was chosen because it dried quickest. Imagine if the another color dried quickest. It terms of the $5 a day for working on the assembly line, this was actually the idea of the general manager James Couzens. In 1915, Mr. Couzens was concerned about turnover at the plant, it was as much as 300% because the wage was $2.34 a day, slightly higher than $2.09. Ford was inclined to go to $3.00 a day, but Couzens insisted on $5.00, the savings would come from training because of turnovers and chronic absenteeism. The $5.00 generated positive publicity and Ford adopted the idea of his own. Couzens left Ford to be Mayor of Detroit and later became a US Senator representing Michigan.
Part of the reasons for the trips, similar to most families and friends the idea of seeing the country is a very good one, but equally important as the Vagabonds went about their tours, they encouraged more highways to be upgraded which sold more Fords as the roads were better to drive on. One has to remember until WW II, most of the country was rural based. After the WWII, the GI bills to buy housing helped the suburbs grow and change American to more urban. Later the bill to build the interstates opened vehicle traffic to all.
Linking to dividend paying stocks, there is both myth and reality in every stock. The myth is the story in the press, the reality is does it make profits and are they consistent over the years? If yes, then the stock is a long term hold, if no look for alternatives and try to buy reality rather than myth.
There are more questions than answers, till the next time – to raising questions.