Automakers in the Driver's Seat

For centuries--perhaps as far back as Homer--human beings have envisioned the possibility of self-propelled land vehicles which did not run on rails. In the fifteenth century, Italian painter Francesco di Giorgio Martini designed a four wheeled human-powered vehicle (never to be built) and named it "automobile." Experimental steam carriages emerged (and subsequently disappeared) in England in the mid-nineteenth century. Then, toward the end of the nineteenth century and in the early twentieth, both steam and electricity--already being used to power other types of transportation, namely steam locomotives and urban light rail--were considered plausible ways to power automobiles. Unlike electric cars, steam cars never really enjoyed a heyday. Despite the great interest in steam among manufacturers, including such entrepreneurs as Ransom Eli Olds, the difficulty of making a steam engine small enough for the automobile curbed public interest. The power source that came to the fore was the internal combustion engine. Although electric cars initially dominated the market within cities (they were quieter, easier to handle, and less obviously polluting), gasoline-powered automobiles could go farther (electric cars needed to stay close to recharging stations) and faster.

The earliest gasoline-powered automobiles had definite drawbacks: they were rather dangerous to less technically-inclined motorists, and they were not usable at all times of the day or the year. Even as manufacturers added accessories to make the vehicles more practical and more user-friendly, automobiles, on their own, couldn't mature into a full-fledged transportation system. The gasoline-powered automobile couldn't enter into widespread use without a constellation of complementary products and services.

1. Complements to the Automobile

For any form of self-powered wheeled-transportation other than railways, the most obvious--and critical--need was roads to drive on. Automobiles required an extensive system of roads, preferably with hard surfaces; in the U.S., much needed to be done on both counts. At the end of the nineteenth century, the American road system was practically non-existent, particularly for purposes of long-distance travel, which for decades had been the province of trains. Furthermore, when it came to road design, the needs of horse-users conflicted directly with those of automobile users; the hard surface essential for automobiles was dangerous for horses, particularly when wet. For the automobile to 'win,' America's highways and byways had to be entirely rethought.

The demand for individualized wheeled transportation also was affected by demographics. Both sparse population and the need to travel a significant distance daily, for work or for other purposes, increased the demand for automobiles. Changes in the provision of rural services, as well as the rise of the suburbs, gave the automobile and its culture a significant boost.

Other automobile complements were useful only for those driving gas powered cars. They needed fuel (gasoline) to be available, particularly on the road. Additionally, care and maintenance had to be available if anyone other than hobbyists were to drive gas vehicles. Thus, both expertise and products for auto repair had to be readily available.

Finally, automobiles, even once they were being produced on assembly lines, were fairly expensive; few individuals could buy them with cash. Widespread automobile ownership depended on financing options that could relieve the cash burden on the average customer.

2. Developers of the Complements

Serendipity

In some ways, good fortune set the stage for gas-powered automobiles before they appeared as a mass-market item. By 1880, the Good Roads Movement, the political will to create a national system of improved roads, was first kindled by the League of American Wheelmen, an organization of bicyclists. Bicyclists and motorists shared a similar conception of what constituted a good road (a hard surface), as well as some similar care and maintenance needs (roadside facilities, etc.). Cyclists played a major role in revitalizing the dormant business of taking care of those who traveled the road--rather than the rail--breathing new life into inns that had seen little business since stagecoach days.

Gasoline-powered vehicles probably also received a boost from the fortuitous discovery of enormous amounts of oil in Beaumont, Texas, in 1901. The discovery came at a time when the demand for petroleum products was in severe decline (as gas and electricity displaced kerosene as an illuminant) and gasoline-powered vehicles were still a novelty (considered a potentially dangerous one) among automobiles.

The Government

The late nineteenth century saw the birth of a new attitude toward national connectivity. This new attitude was manifested in the 1893 establishment of the Office of Roads Inquiry (which produced maps of improved roads) and in the advent of Rural Free Delivery (RFD) in 1896, which created, for the first time, a demand for roads which were passable year-round. On a local (urban) level, too, a demand for road improvement was born as city governments began using motor vehicles for "police work, fire fighting and street maintenance." By 1916, urban and rural interests worked together to produce the Federal Aid Road Act, also called the "Good Roads Act," which mandated spending a total of $75 million over five years, as well as matching state highway money. This Act marked the beginning of a financial and policy commitment to national roads. During the 1920s, mileage of paved roads doubled, and four-lane parkways were born--and 60 percent of the improvement was paid for by gasoline taxes.

Government (federal, state, and local) did more to create a national road system than simply build roads, however. The government not only provided the hard surfaces drivers needed, but it also made the roads safe for traffic by instituting appropriate traffic laws and installing instruments for traffic-control, ranging from simple stop signs to electric traffic signals, as early as 1914.

Once the new automobile infrastructure began to take shape, government at all levels began to depend on it and, by depending on it, encouraged its flowering. For example, since automobiles could bridge previously prohibitive distances, they facilitated a consolidation of rural services, from schools to mail delivery; as long as individuals were willing and able to commute for them, these services no longer had to be very conveniently situated. Much later, after the Second World War, when the maturing interstate highway system had shortened the time of commutes by up to half, the Federal Housing Administration encouraged workers to double the distance accordingly by moving to new homes in the suburbs. To this end, the FHA provided mortgages with 25-30 year terms, and encouraged banks to lend money to buyers of new suburban homes (like the $6,900 homes of Levittown), snubbing older properties on the grounds that "crowded neighborhoods lessen desirability" and "older properties in a neighborhood have a tendency to accelerate the transition to lower-class occupancy."

The Automakers and Their Allies

When neither government nor fortune alone provided the complements they needed to get their product off the ground, manufacturers themselves provided them, either on their own or by collaborating with one another or the government.

Early in the twentieth century, for example, the auto industry became aware that mass auto ownership would require innovative financing options. Banks, which were concerned about people depleting their savings by purchasing cars, did not rush forward to provide credit to the masses. The auto industry itself took charge, in a series of moves which revolutionized not only the way Americans travel, but also the way they manage their money. Early on, dealers eager to make sales facilitated the installment-selling of automobiles. By 1911, Studebaker had stepped in to help its dealers through the installment process. Four years later, the first auto purchasing credit company, Guaranty Securities Company, was established by John North Willys for purchasers of Willys-Overland cars. Months after its establishment, the Guaranty Securities Company was reorganized and began financing installment plans for purchasers of other manufacturers' cars. By the early 1920s, several hundred similar companies had emerged, including the General Motors Acceptance Corporation, GM's own credit agency.

In addition to the automakers themselves, other major corporations had much to gain from the rise of the automobile. They, too, took it upon themselves to provide related services which would make their core product more valuable. Perhaps the best example would be the proliferation of filling stations along America's highways, providing the operators of gas-powered vehicles with a more convenient way to gas up. Prior to the advent of highway filling stations (and the invention of the gas pump as we know it) car owners bought gasoline in hand-held containers at stores that did not specialize in the sale of gasoline. Often, these stores were not conveniently located, optimally structured, or adequately stocked. Between 1907 and 1913, the 'gas station' as we know it came into being, as oil companies developed such innovations as 'drive-in' stations (which were useful as driving ceased to be a fair-weather activity) and gas pumps (which were safer and cleaner than containers for dispensing gasoline). After the break-up of the Standard Oil monopoly--which took place in 1911, just as the demand for petroleum began to skyrocket--gas stations emerged as a major locus for competition between the Standard Oil companies and their new competitors. Standard Oil introduced the first pre-fabricated stations as early as 1916, and in less than a decade they had become the mode of choice for oil companies to make their mark on a territory:

Shell "invaded" the area between San Jose and Santa Barbara in California by building 8 bulk depots and 100 service stations in six weeks. District managers drove the area's highways picking suitable locations. Real estate men followed to buy or lease site, and were followed in turn by construction crews in relays to excavate and bury tanks, pour concrete foundations, bolt buildings into place, install pumps, and paint.

Like automobile manufacturers, the sellers of petroleum products were interested in making auto travel more user-friendly; thus, they developed their own complements. In addition to pumping gasoline, many sold food items and automobile supplies, performed minor auto repairs, and even distributed free road maps. The guide books made famous by Michelin are another example of a company in the auto industry venturing into a different sector (travel information) to encourage customers to drive more.

Companies with an interest in keeping the public on the roads didn't only act alone to generate complements--they also joined forces. These cooperative efforts intended to benefit the companies themselves also benefitted consumers as well. For example, in the 1910s, when automakers were still essentially 'assembly operations,' they worked together to standardize the parts they all needed; when 800 sizes of lock washers were replaced by 16, everyone benefitted from newly gained efficiencies. And in resolving their own supply problem, automakers inadvertently created a much-needed complement for consumers: standardized parts were useful not only to automakers but also to auto-owners in need of replacement parts. H. L. Barber, writing in 1917, noted that:
[E]arly owners of cars [had] learned by bitter experience what it meant to have a screw loose or a tire put out of business in a town where the supply stores did not sell that particular screw or that particular tire. . . . High maintenance and repair costs ate up many an automobile buyer in the early days of the craze. It wasn't the original cost, although that was high enough; it was the upkeep.

By 1917, twenty years into the industry, the burden of non-standard parts was already a thing of the past. "[T]oday," noted Barber, "automobiles are the most interchangeable of all assembled mechanisms. . . . But for this the farmer, the moderate salaried city man, the mechanic and the small tradesman would not today be consumers of motor cars."

Auto manufacturers also played a role in the Good Roads Movement, particularly through the Lincoln Highway Association, which sought to create a coast-to-coast hard-top road. From 1913 to 1916, the Association, whose members included the leading individuals from companies such as Hudson and the Packard Motor Car Company, not only generated publicity and enthusiasm, but also built and marked portions of the proposed Lincoln Highway. The Association disbanded, however, in the wake of the 1916 Good Roads Act, when the federal government, with the help of the states, took the front seat in road-building.

3. Cooperative Competition

The advantages reaped by the cooperating automakers and their customers were unquestionably impressive. From Barber's 1917 perspective, in fact, the cooperative process in a competitive context was so unheard of and so effective as to appear no less than miraculous. "To the thinker," he wrote:
[O]ne of the most interesting features of the automobile industry is this example it has given to the world of efficiency and co-operation. We are not surprised at efficiency in the steel business or the oil business, because they are industries conducted practically by one man power; and if autocratic rule is not efficient, its last excuse for being right might appear to have ceased to exist; but to find several hundred different manufacturers with divergent ambitions, ideals and interests benevolently engaged in co-operative competition, justifies, it would seem, the optimism which sees the world as growing better.

By Adam Brandenburger and Elizabeth Stein

Endnotes

1. "Automotive 101: Automotive History" (http://www.autoshop-online.com/auto101/histtext.html).

2. Jean Pierre Bardou et. al., The Automobile Revolution (Chapel Hill, NC: University of North Carolina Press, 1982), p. 23.

3. Stephen B. Goddard, Getting There: The Epic Struggle Between Road and Rail in the American Century (New York: Basic Books, 1994), p. 200.

4. Peter J. Ling, America and the Automobile: Technology, Reform and Social Change (New York: Manchester University Press), p. 6.

5. George S. May, "Marketing," in George S. May (ed.), Encyclopedia of American Business History and Biography: The Automobile Industry, 1896-1920 (New York: Bruccoli Clark Layman, Inc.), pp. 317-319.

6. John A. Jakle and Keith A. Sculle, The Gas Station in America (Baltimore: John Hopkins University Press), pp. 131-133.

7. Jakle and Sculle, p. 141.

8. Jakle and Sculle, p. 55.

9. H.L. Barber, Story of the Automobile: Its History and Development From 1760-1917 (Chicago: A.J. Munson & Co., 1917), p. 99.

10. Barber, p. 100.

11. Barber, p. 136.