MarketInsight | The Five Dollar Day
In January 1914, six months before the assassination of Austrian Archduke Franz-Ferdinand sparked the start of World War I in Europe, Henry Ford and the Ford Motor Company shocked the nation with the announcement of the Five-Dollar Day. Ford Motor’s announcement that they were more than doubling wages for workers on the company assembly line in Dearborn Michigan was stunning. The move was hailed as an act of altruism and Ford is often credited with the creation of the middle class. His workers could now afford to buy homes and the very Model-T automobiles they labored to produce.
Ford’s motives were not entirely altruistic. Productivity at his plant suffered from worker turnover. Ford, who had started out working for Thomas Edison, revolutionized manufacturing when he invented the moving assembly line. That assembly line was not fully automated unless he had a trained labor force to perform the repetitive tasks required of its human component. The increased pay worked. Turnover dropped from 370 percent to nearly zero. So many applicants flooded the plant that riots broke out. With his new workforce in place, the time it took to make each Model T dropped from more than 12 hours to a mere 93 minutes.
The pay increase came with a catch. Only half of the money was paid in wages; the second half was profit sharing — and to qualify, workers had to meet certain requirements. Ford Motor Company inspectors visited workers in their homes making sure that the dwellings were clean, that everyone was speaking English, and that no one was drinking alcohol. They also kept their eyes open for any acts of sedition or abuse. Finally, employees were required to contribute regularly to a savings account.
Henry Ford is a complex figure in American history. He was an early fan of Adolf Hitler. The Fuhrer was a fan of Ford’s. The German dictator greatly admired Ford Motor Company as a model of efficiency. And, although the auto magnate would later change his mind about the Fuhrer when World War II broke out, it is said he kept a picture of Hitler on his desk and that Adolf kept a picture of Henry on his.
Henry Ford was a fierce anti-Semite. In 1920, he began publishing a series called “The Protocols of the Elders of Zion,” in a newspaper he owned called the Dearborn Independent, which purported to tell the “neglected truth.” The fiercely anti-Semitic polemic had first been published in Russia in 1903 and purported to expose the plans of an international cabal of Jews to control the world by controlling information and entertainment. The “Protocols,” replete with tales of child abduction and shadowy rituals, had been widely debunked and dismissed as fake long before Henry Ford published them, but Ford, who once remarked that “history is bunk,” believed them, because he wanted to.
Some of this may sound familiar. Vile conspiracy theories about baby eating satanic cults and deep state cabals haunt the internet today as well. More and more, otherwise normal neighbors have increasingly grasped the noxious spewings of an anonymous internet prophet known as QAnon. It occurs that there are similarities between Henry Ford’s time and our own. A pandemic, a recession, and the closing of bars represent both eras. Now, in 1920 the bars closed for a different reason; Prohibition became the law. But one must wonder if conspiracies thrive in a world where people feel cooped up and powerless.
Scott A. Grant is a local author, historian, columnist, and speaker. He is president of Standfast Asset Management in Ponte Vedra Beach. He welcomes your comments or questions at email@example.com.