Death & Taxes

On Detroit's tree-shaded Grand Boulevard stands Henry Ford's own hospital, famed for its skillful surgeons, its spacious research laboratories. But when ailing Edsel Bryant Ford stepped through its doors seven weeks ago with his quick, springy stride, nothing could be done for him. So, at 49, Edsel Ford returned to his sprawling grey stone house beside grey Lake St. Clair to await death. Last week it came.

Seven weeks is not long to condition the greatest private industrial empire in the world for the loss of its titular head. But there had been more time than that. When Edsel Ford underwent a major operation 16 months ago, he must have known his days were numbered. But were even 16 months time enough to adjust the empire to the shock?*

Only one man could finally answer that question--and he was tight-lipped with grief. But there are few problems Henry Ford has not foreseen. Wall Street, which Henry Ford hates obsessively, rubbed its hands at the prospect of enormous fees if the family-held stock should be sold to the public in order to pay astronomical inheritance taxes. But Wall Street rubbed its hands too soon.

The Problem. Of the 3,452,800 shares of $5 par value stock of Ford Motor Co., Edsel held 41.65%, his mother held slightly more than 3%. Henry Ford held the remainder, in iron control of the company, which is valued at $718,000,000.* If this valuation were accepted by the Federal Government for tax purposes (though it might be higher or lower) the tax on Edsel's holdings could be roughly computed at 75%, or $225,000,000. The plain fact is that there may be enough liquid assets in the Ford empire to pay even this enormous tax. In December 1941, the Ford Motor Co. set liquid assets, cash, bonds, etc. at $230,580,916. This money could be used for taxes if it were loaned to Edsel's estate, used to purchase Edsel's holdings or distributed in dividends. But any such method would leave the Ford empire short of cash.

One possibility loomed larger and larger. Suppose a way had been found to avoid paying the staggering inheritance taxes?

Set up with fanfare in 1936 was the Ford Educational and Charity Foundation. Into it both Henry and Edsel dumped blocks of nonvoting Ford stock. /- The Foundation was ostensibly organized to finance Greenfield Village. Henry Ford Hospital and various other philanthropic projects.

The Solution? If Edsel's holdings of nonvoting Ford stock have been--or are to be--transferred to the charitable Ford Foundation to "help people to help themselves," both the inheritance handed down to Edsel Ford's heirs and the estate taxes would be much reduced. Only the shares retained would be taxable. True, millions upon millions would pass forever from the Ford family. But the family has always regarded money as only a handy tool. Control of the empire is what matters. To keep control, the loss of hundreds of millions would be considered a fair trade.

But in the shock of Edsel's death, the plight of the empire will still be critical. It may not stand the shock of another death. Average U.S. life expectancy is 61 years; Henry Ford is 79.

Whalebone tough as he is, Henry Ford had never expected (until recently) to outlive his only son. All his life Edsel was the pupil, his father the teacher, empire management the subject. As a baby, Edsel watched his father tinker with his first horseless carriage, rode proudly on a special little seat when it first sputtered along Detroit's dusty Bagley Avenue in May 1896.

So rapidly did this mechanical wonder beget thousands of other mechanical wonders sputtering over the land that young Edsel had no time for college. He pulled on greasy overalls, went into the shop at 19. The lessons were hard, the hours long, the examinations unexpected. His keen blue eyes sparkling, Henry loped through the shop tangling routine, creating problems, leaving them for young Edsel to solve.

But it was not until the years of World War I that Edsel first learned what it was going to mean to live within the Ford legend. Deeply opposed to war, Henry insisted that Edsel be deferred from the draft as one of the company's key men. Edsel was condemned as a "slacker" and "coward." Silently, Edsel shouldered his share of managing the company, knowing that the bitter storm was puffed up by Republican politicians. The deferment was justified. But this was Edsel's first experience in the storms which swirled about his father. The next williwaw came in 1919, when Henry Ford rowed bitterly with Ford stockholders, finally bought them out for $75,000,000 ($70,000,000 of which was borrowed from hated Wall Street) and installed Edsel as president. Henry Ford had learned that Edsel's great value was in soothing the rows his father raised.

Good-by to Model T. In later years Edsel's job was to keep the company up to date. It was Edsel who finally persuaded Henry to junk the obsolete Model T and bring out the gearshift Model A. It was Edsel who argued for snappier designs, brighter colors, a complete line of low-priced cars. And when it became plain that the U.S. might be drawn into World War II, it was Edsel who counteracted his father's bone-deep hatred of war.

But Edsel was always in the background. When Henry Ford confidently stated that he could build 1,000 planes a day, it was up to Edsel to prove that the company could at least build 500 planes a month at Willow Run (he lived to see the goal in sight). The teacher still created problems for the pupil to solve.

Edsel seldom made headlines, either in his stewardship or in private life. His houses in Detroit, Seal Harbor and Hobe Sound were lavish. He had three yachts. But his likes were extremely simple. In the evenings, he often sat around playing hearts, rummy or backgammon with his family. At his $3,000,000 Seal Harbor house, he loved to prowl along the rocky Maine coast with his wife, Eleanor Clay Ford (whom he had married in 1916), to find a cozy corner in the lee of a boulder and read to her in his soft, shy voice. He played tennis, avoided stuffy gatherings, kept himself in fine physical fettle. His main interest was art: he spent a summer trotting through Europe's galleries, later gave some $600,000 in objets d'art and contributions to Detroit's Institute of Arts.

Heirs Apparent. Edsel sent his own sons to college. Henry Ford II, now 26, of Yale, has much of the courtly air of his grandfather, also his little trick of cocking his head towards anyone talking to him. He showed he had a mind of his own by turning Catholic to marry, is now a lieutenant in the Navy. Benson Ford, 23, alone of the grandchildren, has his grandfather's keen blue eyes and much of his tremendous energy. Rejected in the draft (he is almost blind in one eye) he got special War Department permission to enlist, is now in officers' training school. Both he and Henry II are directors in the company. The youngest son, William Clay Ford, just 18, is a Naval air cadet.

Until war's end, the Ford burden must inevitably fall upon the two most trusted men in the empire -- tall, hawk-nosed Charles E. Sorensen, vice president, and squat, nail-hard Harry Bennett. Sorensen, Danish-born, came to the company in 1904, has heard all the dreams of Henry and Edsel, and translated them into cars off the production line, planes winging from Willow Run. Bennett is no production man. Upon his pugilist's shoulders has rested the Atlantean task of protecting the empire from anything which Henry Ford wants it protected from. Hired to guard the Rouge plant against saboteurs in 1917, he stayed to guard the Ford family from kidnappers and later futilely tried to bar the door against collective bargaining.

Of the intense loyalty of Bennett and Sorensen there can be no question. But as to how they will pull together -- with Edsel gone -- there is doubt. The empire has long been split into two warring kingdoms, with Bennett ruling one, Sorensen the other. Edsel Ford gave his tacit support to Sorensen, counteracting the tremendous influence Bennett has with Henry Ford. The scales are now tipped far the other way. This Tuesday Bennett was made a director (Sorensen was one already) at the same time that Edsel's widow and three other executives were added to the board. But Henry Ford took the presidency for himself.

On July 30 he will be 80. But his blue eyes are still sharp, his mind disconcertingly keen. Hours of his days are still spent dogtrotting through the Rouge and Willow Run shops, poking his long nose into obscure corners, knowing everything that is going on. At no time during the long years when Edsel sat in the presidency did his father permit him to rule alone. As Henry explained: "He knows some things better than I do and I know some things better than he does." One thing which Henry Ford knows better than anyone -- while he lives, no one but Henry Ford will run the Ford empire.

* The staff of Henry Ford Hospital formally announced that "death was due to a condition which developed from a former stomach malady for which an operation was performed 16 months ago. Undulant fever was also present." The New York Daily News picked up the rumor that death was due to cancer, pettishly demanded why this was not formally announced, if true. /- Stock of the Ford Motor Co, is of two types, voting and nonvoting. The exact ration is on a closely guarded Ford secret, but comparison can be made to the stock structure of Ford Motor Co. of Canada. Of the 1,588,960 Ford Canada shares outstanding, only 70,000 are voting shares, which are closely held by members of the Ford family and top Ford bosses.

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