VIEWPOINT: Ford, FDR and Banks' Desperate Hour
Whalen, Christopher, American Banker
Byline: Christopher Whalen
One of the less-known threads in the story of how American navigated from the market crash of October 1929 to the start of FDR's administration in 1933 involves the long-standing quarrel between two former business partners, Henry Ford and James Couzens. Their long-running dispute made the dark days of 1930-33 even more terrible and more dramatic, and directly set the stage for many of the Roosevelt-era sound bites that decorate contemporary history of the Depression.
At the inception of Ford Motor Co., Couzens had been Ford's general manager and represented the provider of capital for the infant company, a local Detroit coal dealer named Malcomson. He was also the driving force who commercialized the Ford car, over the objection of Henry Ford, a perfectionist and inveterate tinkerer who would continuously improve his creation. Eventually Henry Ford bought out his partners and forced Couzens out of the company as well, leaving the Ford family in control and a less than cordial relationship between the two men.
The conflict between Ford and Couzens highlights the 19th-century, hard-money view of Henry Ford, who literally ran Ford Motor Co. on a cash basis until he ended his day-to-day control of the operations. It also shows the desperate attempts by Hoover to keep some of the nation's most important banks afloat in the dark days of February and March of 1933, when banks in many states in the country were forced to close.
In his final months in office after the election of FDR, Hoover attempted to enlist the help of Henry Ford to support several insolvent banks in Detroit. These were banks where the Ford family kept much of its wealth, all in cash deposits, and in which Edsel Ford had already invested despite his father's opposition. Edsel Ford was an intelligent, enlightened individual who understood the real and symbolic significance of his family's wealth - and what the failure of the Detroit banks would mean to the larger community.
On the Sunday before Lincoln's Birthday in 1933, Treasury Undersecretary Arthur Ballantine attempted to convince Ford to put more financial support behind the Detroit banks. Hoover even telephoned Ford on Feb. 12 and spoke with the auto king for almost an hour. Hoover went to bed believing that he had turned Ford around, but awoke the next day to learn that a banking holiday had been declared by the governor of Michigan.
The day before Ford's meeting with Ballantine, the DetroitFree Press had carried an interview with Couzens, Ford's estranged former business partner who became senator from Michigan after leaving Ford Motor Co. …