At just 17, Merz demonstrated impressive skill as a race driver when he was hired by Arthur C. Newby (one of the future founders of the Indianapolis Motor Speedway) to drive one of his National Motor Vehicle Company stock cars against some of the top competitors in the United States at a 100-mile (160 km) race at the Indiana State Fairgrounds one-mile (1.6 km) dirt oval on November 4, 1905.

Merz led the race over his teammate W. F. "Jap" Clemens until lap 80 when his right rear tire blew and sent him crashing through a wooden fence.

After observing the event, Carl G. Fisher, who later founded the Indianapolis Motor Speedway, saw the opportunity to promote American automobiles by staging a 24-hour distance record run.

Working with Newby and James A. Allison, his partner at Prest-O-Lite, the trio organized the record run again at the Indiana State Fairgrounds for November 17–18.

The race also produced the first fatalities at the Indianapolis Motor Speedway when 30-year-old driver William Bourque and his 23-year-old riding mechanic Harry Holcomb struck a fence post.

Merz was directly involved with another fatal accident when, at 175 miles (282 km), the right front tire on his National blew out and sent him through the track's outer fence and into a cluster of spectators.

Following these deaths, the Indianapolis Motor Speedway, initially using a crushed stone surface, was paved with brick to produce a safer track.

At the Speedway's July 1910 meet, Merz drove for Empire, a short-lived Indianapolis automobile company founded by Carl G. Fisher.

In the Remy Grand Brassard race, Merz battled teammate and future Indy 500 winner, Howdy Wilcox, to the finish only to lose by nine seconds.

In 1912 he changed to the Stutz team, impressing observers with his ability to keep a car with the second smallest engine (390 cubic inches) in contention.

Merz, driving a Stutz again, was chasing Spencer Wishart in a New Jersey-built Mercer for second place when his engine burst into flames just before starting the last of the race's 200 laps.

Coming down the front stretch to the checkered flag, spectators saw Merz's mechanic, Harry Martin, leaning out of the cockpit trying to bat the flames down with a jacket.

Merz took up the position of engineer for Rayfield Carburetter Company in 1914, and served in France during the First World War in the American Expeditionary Forces, the forerunner of the US Army Air Corps, from 1917 to 1919 reaching the rank of lieutenant-colonel.