Unlike its Mercury division, Ford Motor Company’s Lincoln brand was originally a separate company, founded in 1917 by Henry Martyn Leland, the founder of Cadillac. Henry Leland was one of the best and most respected engineers of the early auto industry, an expert in mass production and precision manufacturing. His life, however, is a tragic tale of broken promises and dashed hopes, the story of a great man brought down by the pettiness and venality of a new era that no longer had any place for great men. This week, we look at the career of Henry Leland, founder of Cadillac and Lincoln.
THE 19TH-CENTURY MAN: HENRY LELAND
At the dawn of the 20th century, Henry Martyn Leland was already 56 years old, well into an exceptionally vigorous middle age. A farmer’s son from Vermont, Henry Leland became an apprentice machinist the summer before the Civil War. At the age of 21, he cast his first vote for Abraham Lincoln in the 1864 presidential election; Leland remained an admirer of Lincoln’s for the rest of his life.
By the time he founded Leland, Faulconer & Norton (later Leland & Faulconer) in 1890, Henry Leland was already a highly accomplished engineer, known and respected for his fanatical devotion to precision manufacturing. Leland and his son, Wilfred Leland, who joined the company shortly after its inception, were considered leading experts in the new science of mass production. With his stern, patrician manner and long white beard, Leland cut a curious, somewhat fusty figure by fin de siècle standards — a sort of Biblical patriarch for the Gilded Age.
FIRST FORAY INTO THE AUTO INDUSTRY
In 1900, Ransom Eli Olds, founder of the Olds Vehicle Company (the forerunner of Oldsmobile), hired Leland & Faulconer to manufacture transmissions for Olds’ new one-cylinder car. Leland & Faulconer had never built parts for automobiles before, but the firm’s bicycle gears and boat and industrial engines were of extremely high quality. The transmissions L&F built for Olds were so precisely manufactured that their components were actually interchangeable from car to car, a novel idea at that time. Even the instruments needed to measure fine tolerances had only been invented a few decades earlier and the assembly of complex machine parts usually required laborious filing, polishing, and scraping.
After a fire destroyed Olds’ engine production line in March 1901, Ransom Olds contracted with L&F to manufacture engines as well as transmissions. Even though the L&F engines shared the same design as those built by Olds’ other outsider engine supplier, the Dodge Brothers, the Leland-built engines’ close tolerances made them significantly more powerful.
Leland’s engineers subsequently determined that with a few modest changes, they could triple the power output of the Olds engine, without increasing its production cost. Henry and Wilfred Leyland offered the redesigned engine, dubbed “Little Hercules,” to Olds, but Olds’ business manager rejected it, on the grounds that retooling for a new engine would be too expensive. The Lelands gave up, although they did install one of the Little Hercules engines in their own Olds car.
THE DAWN OF CADILLAC
In August 1902, a group of local investors led by William H. Murphy and Lemuel W. Bowen hired Henry Leland to appraise the factory and tooling of the Henry Ford Company, Henry Ford’s second failed automotive venture. After several years of setbacks and disappointments, the Murphy group had lost confidence in Ford and they had forced him out the previous March. They intended to liquidate the company’s assets and enlisted Leland to help them determine a fair selling price.
After inspecting the Henry Ford Co. works, Leland told the financiers that they were wrong to dissolve the company. He acknowledged that it had many problems, but he suggested that instead of liquidating, the Murphy group should reorganize. He launched into an impassioned speech about the future of the automobile and then suggested the firm build a new model powered by the Little Hercules engine, which he promised he could manufacture for less than he had charged Oldsmobile.
On August 27, 1902, the Henry Ford Company officially became the Cadillac Automobile Company, taking its name from French explorer and adventurer Antoine de la Mothe Cadillac, the founder of the city of Detroit. Henry Leland became a minority shareholder and the director of the new firm, although he also retained his role at Leland & Faulconer, which supplied Cadillac with engines, transmissions, and steering gear.
THE PRECISION CAR
The first Cadillac automobile entered pilot production in late October and debuted at the New York auto show in January 1903. It was an immediate success, selling 12,212 cars between 1903 and 1906 — enough to make Cadillac the best-selling automaker in America. These early Cadillacs were not fast, with a top speed of perhaps 30 mph (50 km/h), but they were extremely durable and admirably free of temperament. “When you buy a Cadillac,” the company’s advertising assured buyers, “you buy a round trip.”
In the fall of 1905, Cadillac bought out Robert Faulconer’s share of L&F and the two companies merged to form the Cadillac Motor Car Company, with Henry Leland as president and general manager. Wilfred Leland was officially the assistant treasurer, but his unofficial (although still vital) role was smoothing his father’s business relationships. Henry Leland, by then in his sixties, could be infinitely patient with engineers, but his stubborn bluntness put him at a disadvantage in situations calling for diplomacy. He could be particularly hard on suppliers, many of whom had vivid memories of the old man dressing them down for failing to meet his lofty standards of quality.
Leland’s perfectionism paid off for Cadillac, which developed an admirable reputation for workmanship and reliability. In 1908, the company won Britain’s prestigious Dewar Trophy, following a well-publicized test, supervised by the Royal Auto Club, in which technicians completely disassembled three Cadillacs, intermingled their parts, and then reassembled them using only wrenches and screwdrivers. It was a dramatic demonstration of Leland’s philosophy of interchangeable parts in an era when most automotive engineering still resembled blacksmithing.
THE GENERAL MOTORS BUYOUT
By 1909, Cadillac had attracted the attention of entrepreneur William Crapo Durant and his fledgling General Motors Company. Billy Durant, who became head of Buick in 1904, had been on a merger-and-acquisition spree since 1906; in September 1908, he had organized General Motors as a holding company. Durant’s style was freewheeling, verging on reckless. He bought companies with a combination of bank loans and stock transfers rather than cash, and many observers were at a loss to see any coherent strategy behind his acquisitions.
When Durant called in 1909 to discuss acquiring Cadillac, the company’s backers were more than willing to sell. The future of the auto industry was still uncertain in those days and dozens of companies popped up and disappeared every year. Even Cadillac, one of the more successful Detroit automakers, had flirted with bankruptcy during the economic downturn of 1907. The members of Murphy’s group were very wealthy, but they were ready to move on to less risky ventures.
The Cadillac board assigned Wilfred Leland to negotiate with Durant. Wilfred proved to be a canny and tenacious negotiator, rejecting any deal that involved a transfer of stock in lieu of cash. When Durant offered him a kickback to lower the selling price, Wilfred flatly refused. In July 1909, he and Durant closed a deal for General Motors to buy Cadillac for $4.5 million.
Durant was always far more interested in the buying and selling of companies than he was in day-to-day management, so he asked the Lelands to stay on at Cadillac. They told him that they would remain only if he gave them a free hand. Durant happily agreed, promising them that they could continue to run Cadillac as they saw fit.
THE MAN WHO SAVED GENERAL MOTORS
By the summer of 1910, Cadillac was practically the only financially sound part of the entire General Motors corporation. Buick alone was over $8 million in debt and many of the other divisions were barely solvent. GM was on the verge of bankruptcy.
Hoping to leverage Cadillac’s sterling reputation, Durant asked Wilfred Leland to accompany him on his meetings with GM’s creditors. By then, the corporation needed an infusion of $15 million (over $300 million in today’s dollars) to survive and potential financiers were slamming their doors in Durant’s face.
In September 1910, Durant and Wilfred Leland went to New York to meet with executives from five major banks, including Ralph Van Vechten of Continental National Bank and James Jackson Storrow of Lee, Higginson & Co., to discuss GM’s future. By the end of the first day, the prognosis was grim. Not only were many GM subsidiaries operating at a loss, there was evidence of shoddy accounting practices and at least one of Durant’s companies was operating on fraudulent patents. The day’s only bright spot was Wilfred’s late-afternoon presentation on Cadillac. Cadillac was the antithesis of everything the bankers had criticized about other GM holdings: It was soundly managed, free of debt, and had strong revenues.
After the meeting adjourned for the day, the bankers asked to speak to Wilfred alone. They invited him to join them for an evening meeting, without Durant. That night, Wilfred Leland did what Durant had failed to do: He convinced five leading banks that the auto industry had a future and that General Motors was a good investment.
When the regular meeting resumed the following morning, Billy Durant was stunned to discover that the bankers had had a radical change of heart. They were now prepared to back the $15 million loan package. The bankers said in no uncertain terms that Wilfred had single-handedly saved GM.
Wilfred had not, however, saved Billy Durant. The bankers were weary of Durant’s spendthrift style and lack of managerial ability. A major condition of the loan package was the establishment of a new board of directors, which wasted no time in forcing Durant out. James Storrow replaced Durant as interim president.
Although Wilfred had saved GM, the Lelands’ reward was a bitter one. The board set GM’s annual loan payments nearly equal to Cadillac’s total annual income, essentially making Cadillac responsible for repaying the entire loan. The board also assigned Wilfred and Henry Leland to reorganize and optimize the production methods of GM’s other divisions while simultaneously cutting the Lelands’ salaries in half, supposedly in the spirit of fiduciary thrift. In short, the Lelands now had radically increased responsibilities, no increased authority, and dramatically reduced pay. (When Billy Durant regained control of the company in 1915, he repeatedly promised to compensate the Lelands with stock for their lost wages of the previous five years, although he never actually followed through.)
THE STANDARD OF THE WORLD
No one would have blamed Henry Leland if he had resigned or retired at that point. He was nearly 70 years old, still working hours that would have pushed many younger men to the point of collapse. That he did not step aside reflected the near-religious character of his perfectionism. He was passionate about sharing his knowledge and philosophy, whether with line workers or other executives. At GM, he held an ongoing series of conferences to disseminate the manufacturing techniques and best practices he had developed over his long career. He had a profound influence not only on GM, but also on many later automakers. His nickname became “the Grand Old Man of Detroit.”
One of Henry Leland’s major contributions to the auto industry was one we now take for granted: the electric starter. Before the First World War, most cars required hand cranking to start, which was difficult and sometimes dangerous. Automatic starters were technically feasible, but most manufacturers had never bothered, assuming they would be too expensive to be practical. The reports of cranking-related injuries and deaths horrified Henry Leland, however, and he declared that Cadillac would develop a reliable automatic mechanism to replace the hand crank.
One of Leland’s employees recalled that engineer Charles Kettering, who would later become GM’s head of research (and a major figure in the development of leaded gasoline), had developed a small, powerful electric motor that would be suitable for this purpose. Leland hired Kettering and commissioned him to develop his existing motor design into the first automotive starter motor. Cadillac introduced the electric starter, along with an electrical ignition system, in 1912. This move was driven not by marketing or legal considerations, but by Leland’s formidable sense of ethics.
Although innovations like the electric starter gave Cadillac an obvious competitive advantage, they were controversial, not least within GM itself. General Motors was now in the hands of bankers, who took a dim view of anything they perceived as needless extravagance. If hand cranks were good enough for every other manufacturer, why should Cadillac incur the cost of developing an automatic starter? Henry Leland railed against such shortsightedness throughout his career. “There always was and there always will be conflict between Good and Good Enough,” he once wrote. “It is easy to get cooperation for mediocre work, but one must sweat blood for a chance to produce a superior product.”
The Lelands’ exasperation with the intransigence of their financiers and rivals came to a head following the introduction of Cadillac’s first V8 engine in 1914. The V8 configuration was not new, but it was the source of a great deal of sniping, both inside and outside the corporation. The Lelands finally replied by asking Theodore McManus, chief copywriter of Cadillac’s advertising agency, to craft a rebuttal ad entitled “The Penalty of Leadership.” It was essentially an impassioned (if long-winded) manifesto of Henry Leland’s philosophy, a declaration of principle. “When a man’s work becomes a standard for the whole world, it also becomes a target for the shafts of the envious few,” it said. “If his work be merely mediocre, he will be left severely alone–if he achieves a masterpiece, it will set a million tongues a-wagging.” It concluded by declaring, “That which is good or great makes itself known, no matter how loud the clamor of denial That which deserves to live–lives.” The ad ran only once, in the January 2, 1915 issue of The Saturday Evening Post, but it remains one of the most famous pieces of copy ever written.
THE LELANDS GO TO WAR
The Lelands’ departure from Cadillac was over an entirely different matter of principle. Henry Leland had seen as early as 1910 that war in Europe was likely. After a trip abroad in 1913, he predicted the imminent outbreak of “the bloodiest war of history” and declared that the U.S. should intervene lest European civilization collapse. When America finally did enter the war in April 1917, Wilfred Leland went to Billy Durant and suggested that Cadillac divert part of its manufacturing capacity to the production of military aircraft engines. Durant, who was normally very solicitous of the Lelands, told Wilfred that he would not permit GM to do any military work. Both Wilfred and Henry Leland resigned in protest.
The Lelands gathered a group of investors and launched their own firm, the Lincoln Motor Company, to build engines for the war effort. Henry Leland quickly recruited many former Cadillac engineers to join them, while Wilfred went to Washington to secure the necessary government contracts. By the end of August 1917, Lincoln had $10.7 million in federal loans to build their factory and a contract to produce 6,000 Liberty V-12 aircraft engines. On July 31, 1918, Lincoln sign a new, uncancellable contract that extended the Army’s order to 9,000 engines, with an option for 8,000 more.
After the armistice that fall, however, the War Department notified the Lelands that it was abrogating the supposedly irrevocable contract, even though Lincoln had delivered only 6,500 engines. The decision left Lincoln with a very expensive factory and nothing to build. Moreover, the company paid $4.1 million in taxes for 1918, leaving it deep in the red.
THE LINCOLN CAR
Henry Leland decided to return to the auto business, intending to develop a new luxury car. In January 1920, the board of directors reorganized Lincoln as a Delaware corporation and issued $5.5 million in new stock (more than half of it held by the Lelands themselves) to finance the production of the new car, which would powered by a V8 engine.
The 1921 Lincoln Model L, which went on sale late in 1920, was a well-engineered product, with a level of workmanship befitting the Lelands’ reputation. Unfortunately, it had also had dated, prewar styling. Some wits, including designer Ray Dietrich, dubbed the Lincolns “Noah’s Arks,” a negative image that a subsequent restyling by Buffalo coachbuilder Brunn & Company did not completely alleviate.
Even if the car had been stunning, the postwar economy was moribund and the market for luxury cars was soft. Lincoln had hoped to sell 6,000 cars in 1920, but the final tally was only about 700 and buyers canceled many early orders as the economy worsened.
The Lelands spent much of 1920 and 1921 struggling to secure additional financing. To make matters worse, in May 1921, the government presented Lincoln with a $5.4 million claim for back taxes. The new Harding administration had decided that the depreciation Lincoln claimed for its factory and tooling should be taxed as income. Wilfred Leland successfully fought this claim, but in November, the IRS issued a new tax lien, this one for $4.5 million. The following day, November 8, 1921, the Lincoln board voted 6—3 to put the company into receivership.
LOOKING FOR A SAVIOR
Now desperate to save their company, the Lelands set out to find a financier who would buy Lincoln outright, rather than wait for the receiver to part it out. It was not just a matter of pride — the Lelands were Lincoln’s largest shareholders and they had the most to lose from liquidation.
Earlier that summer, the Lelands had approached Henry Ford in search of a loan. When the Lelands had first met Ford back in 1901, he had been a struggling engineer and race car builder. Twenty years later, he was one of the world’s richest men, with a well-documented loathing for the bankers and accountants who had become the bane of the Lelands’ existence. While Ford refused to loan Lincoln any money, he expressed a willingness to help if the company did end up in receivership.
In November, Wilfred Leland began negotiating with Henry Ford and his son Edsel, the nominal president of the Ford Motor Company, about the prospect of Ford acquiring Lincoln. They kept their talks, conducted at the Ford home, Fair Lane, completely secret even from Henry Leland. Wilfred had little actual power to negotiate such a deal. Lincoln was no longer really the Lelands’, although even the receiver acknowledged that the company would have little real value without them. Still, 11 years earlier, Wilfred’s passion and eloquence had saved General Motors and he still held out hope that he could do the same for his father’s company.
On February 4, 1922, the Ford Motor Company purchased Lincoln from the receiver for $8 million, which was nearly equal to the company’s cumulative liabilities. Ford subsequently paid out about $4 million more to Lincoln’s suppliers, allowing the company to resume operations almost immediately. Ford also paid the company’s tax lien, which the IRS had belatedly reduced to $610,274.
As Henry Ford had promised Wilfred, he allowed Lelands to remain in control of the company. Ford also promised the Lelands that he would compensate Lincoln’s existing shareholders, who had received only four cents on the dollar for their original investment. Ford told Wilfred not to worry, assuring him that Ford would do right by the Lelands and their stockholders.
The press hailed Henry Ford as the savior of Lincoln. For the Lelands, who a few months earlier had faced the likely dissolution of their company, it seemed like the best possible outcome.
For all of Henry Ford’s lofty rhetoric, it soon became clear that he had a very different idea about what was right than the Lelands did. Two weeks after the sale — the day after Henry Leland’s 79th birthday — Ford men began to “remodel” the Lincoln factory, demolishing Henry Leland’s executive offices. Ford installed new managers, ostensibly to observe the Lelands’ production methods, but actually to replace Leland loyalists and shut the Lelands themselves out of the decision-making process. The worst insult came when Ford production chief Charlie Sorensen demanded that Lincoln employees begin using parts that they had previously discarded as substandard. While Henry Ford remained warm and cordial to the Lelands socially, the actions of his men told a different story.
The situation quickly became intolerable for the Lelands. Wilfred Leland appealed to Henry Ford for help on several occasions, without success. He finally wrote to Ford, asking him if he would sell the company back to them. Ford replied caustically that he wouldn’t relinquish it for $500 million.
On June 10, 1922, Ford executive Ernest Liebold appeared at the Lincoln offices and demanded the Lelands’ resignations. According to one account, Ford employees literally carried the elder Leland out of the building in his office chair, depositing him unceremoniously on the street. In Leland’s place, Ford installed Edsel Ford as the new president of the company.
Although they had lost control of Lincoln, the Lelands continued to press Ford to make good on his promise to compensate the stockholders. Ford simply ignored them. In 1927, the Lelands organized 1,800 Lincoln shareholders in a $6 million lawsuit against the Ford Motor Company. The suit dragged on for almost four years. Henry Ford steadfastly refused to appear in court, but his lawyers fought the case all the way to the Michigan Supreme Court. By the fall of 1931, Henry Leland wrote to his fellow stockholders that they had exhausted all legal remedies.
Wilfred organized still another lawsuit, this time on behalf of one of Lincoln’s former suppliers. That winter, he crashed Henry Ford’s New Year’s Eve party to deliver a subpoena. Nothing came of that suit either, and both Lelands finally admitted defeat.
By then, Henry Leland was exhausted and broken. The decade-long battle with Ford had tarnished his once-unimpeachable reputation, as had the on-again, off-again tax claim, which reemerged in 1923; Ford Motor Company finally settled it for $1.5 million.
Henry Leland died on March 26, 1932, at the age of 89. Wilfred Leland survived until 1958, although he remained deeply bitter about Lincoln and Henry Ford until the end of his life.
THE FATE OF LINCOLN
Henry Ford’s cruelty toward the Lelands was characteristic — Ford could be sadistically abusive, even to his own son — but it begs the question of why he agreed to buy Lincoln in the first place. The answer appears to be that it was a bargain. The $12 million or so that Ford ultimately paid for the company was, by Henry Leland’s own estimation, about a quarter of what it was actually worth. It was at least $2 million less than the Lelands had spent to build the company and its factory in the first place. In short, it was a deal that Ford, an inveterate cheapskate, could hardly resist.
Once the Lelands were dispatched, Ford paid little attention to Lincoln, leaving its management to Edsel. Edsel Ford was a refined, well-educated, soft-spoken man, in many ways the opposite of his famous father. He did his best to continue the Lelands’ tradition of fine engineering, matching it with an array of attractive custom and semi-custom bodywork from some of the country’s top coachbuilders.
The original, Leland-engineered Model L chassis survived until 1930, the Lelands’ V8 through 1932. Wilfred Leland was apparently not impressed with the first Ford-engineered Lincoln, the 1931 Model K, but it was an automobile worthy of the Lelands’ legacy. Thanks to Edsel’s influence, it was also a beautiful car, recognized today as a true Classic.
As tragic as the Lelands’ story is, it’s difficult to see how it could have turned out any differently. Even if Henry Ford had taken a gentler hand, it’s unlikely that Henry Leland’s standards of quality could have survived Ford’s characteristic penury.
Even if the Lelands had remained at Cadillac, their fate would probably have been similarly demoralizing. By the mid-twenties, GM president Alfred P. Sloan had elevated the kind of “Good Enough” engineering that Henry Leland so deplored to the status of gospel. The auto industry was no longer dominated by engineers, but by bankers, finance men, and eventually that great scourge of the modern age, the MBA. Innovators like Henry Leland and even Henry Ford were troublesome anachronisms, products of an era whose time had passed.
In the end, what undid Henry and Wilfred Leland was not their financiers, the government, or even Henry Ford, but a clash of values. Henry Leland was raised with an abiding belief that rectitude would ultimately be rewarded — that if you did things the right way, whether morally, ethically, or technologically, things would turn out all right. Whether that was true in the 19th century is debatable, but it was certainly not true in the 20th, an epoch that more often than not rewarded opportunism and mediocrity over virtue and talent.
The Lelands had no true successors, least of all in the auto industry, and we are all the poorer for it.
NOTES ON SOURCES
Information for this article came from Wilfred Leland’s book Master of Precision (Great Lakes Books Publication) (Chicago, IL: Wayne State University Press, 1996), written by Leland prior to his death in 1958 and completed by his widow, Ottilie Leland; Griffith Borgeson, “How Leland Lost Lincoln to Ford: The little-known battle of two Henry’s: dedication to an ideal vs. big business,” Motor Trend, February 1967 (Vol. 19, No. 2), pp. 58-62, 82-83; and Nico P. Leelenders, “Rolling Back the Odometer: The Legacy of Henry Martyn Leland,” RM Magazine January 2007, pp. 29-32.