I am not sure how many of you watch the history channel but recently a series just ended; The Men who Built America. If you didn’t see it, look it up. Beyond just the car market, it was a very interesting mini series. I also learned something very interesting about the beginning ages of the automobile. The show talked about the Association of Licensed Automobile Manufacturers.
What is the Association of Licensed Automobile Manufacturers, you may ask?
Well it was actually a very corrupt association, much like the other monopolies of the time; Standard Oil, JP Morgan, and others. The Association of Licensed Automobile Manufacturers (A.L.A.M) was started by George B. Selden and the Electric Vehicle Company, with one goal in mind; control the auto market. Once they owned the patent to build automobiles they could control the whole market. They could pick and choose the Auto makers that they would license to make cars. Then they would recieve royalties. This made the cars cost more as they manufacturers had to raise prices to be able to cover the overhead and the royalties as well as make a profit. This in turn made it harder for the middle class [which barely existed yet] to own a car.
This was all about to change.
Henry Ford, a man with an idea applied to A.L.A.M. for the ability to make his revolutionary ”workin man’s car”. He was denied. This did not stop Ford from continuing to innovate. A key factor to his denial was Old’s as he had a lot to lose if Ford was permitted to build his car. This as much as anything shows how dangerous Association of Licensed Automobile Manufacturers . was to capitalism. Ford got the money together to build his factory and went on building cars. With his innovative production line he was able to turn out 15 cars a day compared to one or two as with most of his competitors, you can learn more about that here. This did not make A.L.A.M happy at all, due to all of the royalty money that they where losing. They brought the suit to the courts, at the same time The Courts had a Hearing for Standard Oil, working to topple the Monopoly. In both cases the Monopolies lost out. This was all made possible by William McKinley being assassinated. While the President being assassinated is not the highlight here, nor something I promote, McKinley was being bought by the monopolies letting them slide by. The Vice President Theodore Roosevelt, could not be bought, actually why he was the Vice President. JP Morgan, Rockefeller and other Titans of the time, paid McKinley to have Roosevelt as his VP, to keep him out of the way of their agenda. This turned out to not work in the end.
The courts ruled in favor of Ford allowing him to produce his car, and at only $850 dollars the men building them could even afford to buy them. This, before now never happened. Men worked long days for little pay. Ford introduced the 8 hour work day and 5 day work week. Paying his employees 5 dollars a day, then a livable wage. This all meant the average man could not only afford to live a decent life but by the car he built as well.
Where did this leave the Association of Licensed Automobile Manufacturers?
Well it left the Association of Licensed Automobile Manufacturers in the dust. While it still survived, it was no longer the controlling monopoly it once was.
In 1934, this group renamed itself to the Automobile Manufacturers Association. This was the name the group had the longest and became the best known by. It focused upon establishing a code for fair competition. In 1939, it moved its headquarters from New York City, where it had been close to bankers, to Detroit, where the manufacturers were all based. The organization had a budget of $1 million at the time. During the early stages of World War II, the association played a role in adapting American automotive manufacturing capabilities towards arms production efforts, especially regarding large aircraft engines. Within hours of the December 7, 1941 attack on Pearl Harbor, the association invited all companies in the larger automotive industry, regardless of whether they were association members, to join a new cooperative undertaking, the Automotive Council for War Production. Some 654 manufacturing companies joined, and produced nearly $29 billion in output, including tremendous numbers of motorized vehicles, tanks, engines, and other products for the Allied military forces. Between a fifth and a quarter of all U.S. wartime production was accounted for by the automotive industry. In 1950, the association published the book, Freedom’s Arsenal: The Story of the Automotive Council for War Production, to document this achievement.
In August 1972, the group changed its name to the Motor Vehicle Manufacturers Association, to reflect the growing importance of truck makers. A major issue then developed over whether foreign-owned automakers with operations and in some cases manufacturing within the U.S. could join the group. In 1986 the association ruled that foreign transplants had to manufacture half their American sales within the country in order to join; a grandfather clause allowed Honda and Volvo to stay in. In May 1988, Toyota’s attempt to join was rejected on this line. By 1992, Toyota and Nissan were able to meet the membership mark and qualify to join.
In late 1992, the group expelled Honda, Volvo, and heavy truck makers and changed its name to the American Automobile Manufacturers Association. The association now was back to its traditional stance of representing the “Big Three” manufacturers. They also moved their headquarters from Detroit to Washington, D.C., in order to have a stronger governmental presence.
However, their situation became problematic with the DaimlerChrysler merger of 1998, which meant there were only two American-only manufacturers, too few for an organization. The American Automobile Manufacturers Association was thus phased out in January 1999, and a new and different successor group, the Alliance of Automobile Manufacturers, was formed that included a large number of foreign-owned manufacturers.
As usual, if you have any questions or anything to add let us know.