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Professor Joel Newman asks ‘Did the Tax Laws Torpedo the Paxton Phoenix Steam Car?’

Editor’s Note: this article was reproduced with the permission of Matthew Bender & Company, Inc., a member of the LexisNexis Group of companies.

Professor Joel Newman asks “Did the Tax Laws Torpedo the Paxton Phoenix Steam Car?” in the March 2012 edition of the Lexis Federal Tax Journal Quarterly.

Professor Newman writes in the Journal on Research and Development: ”Robert Paxton McCulloch inherited a fortune, and added to it with his chainsaw company. Then he spent it. He almost built a steam-powered automobile in the late 1940s and early 1950s. One might think that anyone crazy enough to do that would have been crazy enough to buy the Brooklyn Bridge. He didn’t. He bought the London Bridge instead and moved it to Arizona.

“The steam-car project was abandoned in 1954. His foreman claims that the abandonment was caused by unfavorable tax laws. Was it?

“This article will describe the development of McCulloch’s steam-powered automobile — the Paxton Phoenix — and what happened to it. It will then consider the question, “Who shot the Phoenix?” Was it the tax laws, or was it something else? Finally, it will consider whether or not things have improved, at all.

“Mention steam-powered automobiles, and most people think of the Stanley Steamer.  The Stanley twins, Freelan and Francis, began building steam cars in 1897.  By the time the Stanley Motor Carriage Company ceased production in 1924, they had built some 11,000 of them.  The Stanley/Locomobile was the most popular automobile in the United States from 1900 to 1904.  It was simple, with 37 moving parts, in contrast to the thousands of parts of its gas-driven competitors.  It was also reliable, and powerful.

“Perhaps its biggest competitive advantage was the ease of starting.  The early gas automobiles had to be started with a crank.  Sometimes, balky cranks led to broken arms.  As to the Stanley Steamers, it may have taken as much as twenty minutes for the water to heat, but otherwise, starting was efforts, and crankless.

“Two developments, however, led to the decline in popularity of the steamer.  The first was price.  By 1914, with the development of mass production, Henry Ford was producing twice as many automobiles in a day as Stanley was producing in a year.  As a result, a Model T cost only one fourth the price of a Stanley.

“Second was the invention of the electric starter, which first appeared in the Cadillac in 1912.  With the disappearance of the cranks, the gas-powered cars became as easy to start as the steamer.  Now, the instantaneous starting of the gas cars became far preferable to the twenty-minute wait required for the steam cars.  The Stanley never recovered.”

Read the rest of Professor Newman’s research here.