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The Electric Vehicle Company: A Monopoly that Missed1

Published online by Cambridge University Press:  24 July 2012

John B. Rae
John B. Rae
Affiliation:
Associate Professor of History at Massachusetts Institute of Technology
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Abstract

Attempts to monopolize the automobile industry began early in its history but were never successful because the industry possessed characteristics which made monopolization exceptionally difficult. The first of these efforts provides an illuminating example of business failure resulting from avoidable errors of judgment. The Electric Vehicle Company began its operations on the assumption that the electric automobile was going to be the dominant type; when this became demonstrably a bad guess, the company tried to compensate by using the Selden patent to collect royalties from the manufacturers of gasoline automobiles. This scheme likewise misfired, and the company collapsed into bankruptcy. The scheme also brought disaster to the Pope Manufacturing Company of Hartford, Connecticut, which abandoned a very promising position of leadership in the automobile field in order to participate in a highly speculative enterprise.

Type
Research Article
Information
Business History Review , Volume 29 , Issue 4 , December 1955 , pp. 298 - 311
Copyright
Copyright © The President and Fellows of Harvard College 1955

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References

2 There is a thorough study of this feature of the automobile industry in Vatter, Harold G., “Closure of Entry in the Automobile Industry,” Oxford Economic Papers, New Series, Vol. IV, no. 3 (Oct., 1952), 213–34CrossRefGoogle Scholar.

3 Greenleaf, William, “The Selden Patent Suit” (Ms. Ph.D. Thesis, Columbia University, 1955), p. 117Google Scholar. The copy of this thesis which I used is in the Ford Motor Company Archives, Dearborn, Michigan. It contains a very thorough description of the founding of the Electric Vehicle Company, and is the basis for the somewhat briefer account in Nevins, Allan, Ford: The Times, the Man, the Company (New York, 1954), pp. 284 ff.Google Scholar

4 Greenleaf, “The Selden Patent Suit,” p. 118.

5 Automobile Trade Journal, XXIX, No. 6 (Silver Anniversary Issue, 1924), 286Google Scholar.

6 Greenleaf, “The Selden Patent Suit,” p. 122.

7 Nevins, Ford, p. 288.

8 Maxim, Hiram P., Horseless Carriage Days (New York, 1937), pp. 129–30Google Scholar.

9 Duncan, H. O., The World on Wheels (Paris, France, 1926), p. 915Google Scholar; Automobile Trade Journal, XXIX, No. 6, 286.

10 Maxim, Horseless Carriage Days, p. 165.

11 Greenleaf, “The Selden Patent Suit,” p. 143.

12 This reorganization is described in Columbia Motor Car Co. and G. B. Selden vs. C. A. Duerr and Co. and Ford Motor Co. (U.S. Circuit Court of Appeals for the Second District, Transcript of Record, Vol. 3, p. 1086), and in Herman F. Cuntz, “Pope Mfg. Co., Columbia Automobile Co., and the Electric Vehicle Co.” (Ms. account dated June, 1947, in the Henry Cave Collection, Detroit Public Library).

13 This interview appeared in the New York World (17 Nov. 1895) and is quoted in Winton, Alexander, “Get a Horse,” Saturday Evening Post, Vol. 202, No. 32 (8 Feb. 1930), 39Google Scholar.

14 Maxim, Horseless Carriage Days, p. 165.

15 Seltzer, Lawrence H., Financial History of the American Automobile Industry (Boston, 1928), p. 25Google Scholar.

16 Cuntz, “Pope Mfg. Co.” (Cave Collection); Maxim, Horseless Carriage Days, pp. 165–66. The batteries in the electric taxis weighed about a ton and had to be changed after every trip.

17 Greenleaf, “The Selden Patent Suit,” p. 152. Hirsch, Mark D., William C. Whitney. Modern Warwick (New York, 1941), p. 554Google Scholar, defends Whitney's action in this matter.

18 This description of the acquisition of the patent by the Electric Vehicle Company is taken from H. F. Cuntz, “Hartford the Birthplace of the Automobile Industry,” Hartford Times (17 Sept. 1947), and from Maxim, Horseless Carriage Days, pp. 162–64.

19 The decisive opinion was given by Mr. Dugald Clerk, a Scots engineer, who was then considered the world's leading authority on internal combustion engines. It should be borne in mind that the courts did uphold the validity of the Selden patent. Ford's victory consisted of a decision that the patent applied only to two-cycle engines and that he therefore had not infringed it.

20 Nevins, Ford, p. 293. Apparently Selden had a deal with Day whereby the latter received half of his royalties.

21 There is possible confirmation for this theory in Cuntz's story. He was sent to Rochester to interview Selden and was told that a group of unidentified New York financiers had been negotiating for purchase of the patent. Since Selden had been trying for years to interest potential backers, his claims could easily have reached Whitney. See Cuntz, “Hartford the Birthplace of the Automobile Industry,” Hartford Times (17 Sept. 1947).

22 In 1900 the Electric Vehicle Company did begin the manufacture of a gasoline car, the Columbia. We have therefore the curious situation that in 1903 the reorganized Pope Manufacturing Company was competing with its own former motor carriage department.

23 Greenleaf, “The Selden Patent Suit,” p. 195. Joy confided to his associate, James W. Packard, that his hope was that something might be done, either under the Selden patent or by agreement, to curtail competition. (Letter, Joy to Packard, 9 March 1903; Henry B. Joy Papers, Michigan Historical Collections, University of Michigan.)

24 The text of this agreement can be found in Epstein, Ralph C., The Automobile Industry. Its Economic and Commercial Development (Chicago, 1928)Google Scholar, Appendix C.

25 Letter of G. C. Arvedson of Patent Dept., Automobile Manufacturers Association (3 March 1936), in Federal Trade Commission, Report on the Motor Vehicle Industry, 76th Congress, 1st Sess., House Document 468 (Washington, D.C., 1939), p. 43.

26 Winton, “Get a Horse,” loc. cit., p. 144.

27 This company was purchased in 1916 by Charles W. Nash.

28 Automobile Trade Journal, XXIX, No. 6, 292Google Scholar.

29 Selden's share of the royalties had to come from the Electric Vehicle Company's three-fifths.

30 Letter, Henry B. Joy to George H. Day, 3 Jan. 1903 (Henry B. Joy Papers).

31 Greenleaf, “The Selden Patent Suit,” p. 192.

32 Cuntz, who was employed by the Association as its patent expert, insists that it never tried to limit competition. See letter, Cuntz to Charles B. King, 11 Aug. 1936 (Charles B. King Collection, Detroit Public Library). For conflicting evidence see Nevins, Ford, p. 432.

33 Thompson, George V., “Intercompany Technical Standardization in the Early American Automobile Industry,” Journal of Economic History, XIV, No. 1 (Winter, 1954), 3Google Scholar.

34 Nevins, Ford, p. 443.

35 Nevins, Ford, chap. XIII.

38 Automobile Trade Journal, XXIX, No. 6, 206Google Scholar.

37 The Automobile, Vol. 18, No. 19 (7 May 1908), 653Google Scholar.

38 These figures are taken from Greenleaf, “The Selden Patent Suit,” pp. 432–33.

38 Seltzer, History of Automobile Industry, p. 25. The Pope Manufacturing Company was also scaled down. Its Toledo plant was bought by John N. Willys, who then moved the Willys-Overland Company there from Indianapolis. This reorganization lasted until 1911, when another failure resulted in liquidation.

40 Seltzer, History of Automobile Industry, p. 38. Brady was also a substantial stockholder in General Motors.

41 Automobile Trade Journal, XXIX, No. 6, 51Google Scholar; Seltzer, History of Automobile Industry, p. 38.

42 Maxim claims that in 1899 the Pope company was the largest producer of motor carriages in the country (Horseless Carriage Days, p. 169). Since he uses the term to include both gasoline and electric vehicles, he was probably correct.