Just finished Henry Ford’s autobiography – My life and work…an excellent book! It surpassed all my expectations by miles.

This is not a typical autobiography of a successful person/ businessman – where you get to know about his childhood, upbringing, what made him great etc. In fact there is almost nothing about ‘My life’ in Ford’s biography and mostly it is about ‘…and work’.

It is a very concise piece of work (just 116 pages) and is written in very crisp manner. Ford has chosen words and construction of narration with utmost precision – you cannot make it any shorter.

Rather than an autobiography, it is Ford’s free-flowing discussion on various topics of business – just look at the titles of various chapters: Beginning of Business, What I Learned About Business, Wages, Money and Goods, Money – Master or Servant, Democracy and Industry: so atypical of an ‘autobiography’ – it more like articles in business journals or academic writings.

Almost all his thoughts give clear indication of how deep was his understanding of various aspects of business. But in particular I liked his views of ‘Finance’. So here is an extract from the book…

(From ‘Chapter 2: What I Learned About Business’, My life and work)

“I have never been able to understand on what theory the original investment of money can be charged against a business. Those men in business who call themselves financiers say that money is ‘worth’ 6 percent, or 5 percent, or some other percent, and that if a business has one hundred thousand dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into business he had put it into a savings bank or into certain securities, he could have a certain fixed return. Therefore they say that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the products of tools. Therefore money is worth what it will help you produce or buy and no more. If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business – or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces – and not a fixed sum according to some scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before.

Business men believed that you could do anything by ‘financing’ it. If it did not go through on first financing then the idea was to ‘refinance’. The process of ‘refinancing’ was simply the game of sending good money after bad. In the majority of cases the need of refinancing arises from bad management, and the effect of refinancing is simply to pay the poor managers to keep up their bad management a little longer. It is merely a postponement of the day of judgment. This makeshift of refinancing is a device of speculative financiers. Their money is no good to them unless they can connect it up with a place where real work is being done, and that they cannot do unless, somehow, that place is poorly managed. Thus, the speculative financiers delude themselves that they are putting their money out to use. They are not; they are putting it out to waste.”


I wonder what Henry Ford would have thought of the current financial mess and the multi-billion dollar ‘bailout’ packages as a means to rescue businesses

~ Kaustubh