The same year, Henry Ford shocked the world with what probably stands as his greatest contribution ever: the $5-a-day minimum-wage scheme. The average wage in the auto industry then was $2.34 for a 9-hr. shift. Ford not only doubled that, he also shaved an hour off the workday. In those years it was unthinkable that a guy could be paid that much for doing something that didn't involve an awful lot of training or education. The Wall Street Journal called the plan "an economic crime," and critics everywhere heaped "Fordism" with equal scorn. But as the wage increased later to a daily $10, it proved a critical component of Ford's quest to make the automobile accessible to all. The critics were too stupid to comprehend that because Ford had lowered his costs per car, the higher wages didn't matter--except for making it feasible for more people to buy cars.

When Ford stumbled, it was because he wanted to do everything his way. By the late 1920s the company had become so vertically integrated that it was completely self-sufficient. Ford controlled rubber plantations in Brazil, a fleet of ships, a railroad, 16 coal mines, and thousands of acres of timberland and iron-ore mines in Michigan and Minnesota. All this was combined at the gigantic River Rouge plant, a sprawling city of a place where more than 100,000 men worked.

The problem was that for too long they worked on only one model. Although people told him to diversify, Henry Ford had developed tunnel vision. He basically started saying "to hell with the customer," who can have any color as long as it's black. He didn't bring out a new design until the Model A in '27, and by then GM was gaining.

In a sense Henry Ford became a prisoner of his own success. He turned on some of his best and brightest when they launched design changes or plans he had not approved. On one level you have to admire his paternalism. He was so worried that his workers would go crazy with their five bucks a day that he set up a "Sociological Department" to make sure that they didn't blow the money on booze and vice. He banned smoking because he thought, correctly as it turned out, that tobacco was unhealthy . "I want the whole organization dominated by a just, generous and humane policy," he said.

Naturally, Ford, and only Ford, determined that policy. He was violently opposed to labor organizers, whom he saw as "the worst thing that ever struck the earth," and entirely unnecessary--who, after all, knew more about taking care of his people than he? Only when he was faced with a general strike in 1941 did he finally agree to let the United Auto Workers organize a plant. By then Alfred P. Sloan had combined various car companies into a powerful General Motors, with a variety of models and prices to suit all tastes. He had also made labor peace. That left Ford in the dust, its management in turmoil. And if World War II hadn't turned the company's manufacturing prowess to the business of making B-24 bombers and jeeps, it is entirely possible that the 1932 V-8 engine might have been Ford's last innovation.

In the prewar years there was no intelligent management at Ford. When I arrived at the end of the war, the company was a monolithic dictatorship. Its balance sheet was still being kept on the back of an envelope, and the guys in purchasing had to weigh the invoices to count them. College kids, managers, anyone with book learning was viewed with some kind of suspicion. Ford had done so many screwy things--from terrorizing his own lieutenants to canonizing Adolf Hitler--that the company's image was as low as it could go.

It was Henry Ford II who rescued the legacy. He played down his grandfather's antics, and he made amends with the Jewish business community that Henry Ford had alienated so much with the racist attacks that are now a matter of historical record. Henry II encouraged the "whiz kids" like Robert McNamara and Arjay Miller to modernize management, which put the company back on track. Ford was the first company to get a car out after the war, and it was the only company that had a real base overseas. In fact, one of the reasons that Ford is so competitive today is that from the very beginning, Henry Ford went anywhere there was a road--and usually a river. He took the company to 33 countries at his peak. These days the automobile business is going more global every day, and in that, as he was about so many things, Ford was prescient.

Henry Ford died in his bed at his Fair Lane mansion seven months after I met him, during a blackout caused by a storm in the spring of 1947. He was 83. The fact is, there probably couldn't be a Henry Ford in today's world. Business is too collegial. One hundred years ago, business was done by virtual dictators--men laden with riches and so much power they could take over a country if they wanted to. That's not acceptable anymore. But if it hadn't been for Henry Ford's drive to create a mass market for cars, America wouldn't have a middle class today.

-- Lee Iacocca was president of Ford, later chairman of Chrysler, and last year founded EV Global Motors.

Henry Ford

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