Frederick Henry Royce was the son of a flour miller. He apprenticed with the Great Northern Railroad and designed his first car in 1904. It was an improvement of his two-cylinder Decauville. Charles Stewart Rolls was the third son of Lord Llangttock and a successful businessman, selling horses and carriages to the well to do. Rolls requested a meeting after hearing of Royce's new machine and a partnership ensued, giving Rolls the exclusive right to sell Royce's cars.

A product of that partnership, after a few less than successful attempts is the famous Silver Ghost. Rolls Royce Company committed itself to making a single 40/50 hp model. The firm provided only the chassis, with the customers ordering the bodies from a variety of coachbuilders. The 40/50 hp received a massive new crankshaft that made its six-cylinder engine smoother than any other in this period. Because of the exploits of a well-promoted Rolls-Royce tourer, all 6,173 40/50s came to be known as 'Silver Ghosts.' Later trials, races and hill climbs bolstered the model's reputation as 'The Best Car in the World.'

The 40/50 soon became the favored car of princes and potentates. Even Lenin owned one, although the British royal family bought only Daimlers.