[D8736AEI], Letter from Samuel Insull to Thomas Alva Edison, October 20th, 1887


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[D8736AEI], Letter from Samuel Insull to Thomas Alva Edison, October 20th, 1887

Editor's Notes

"Although I am unable to give you so thorough a report of the running of our business for the last three months, that is, from the date when I wrote you last on this subject, I can give you some figures which will afford you an opportunity of judging whether we have improved our position any, during that period. ## Our sales for July, August and September, amounted to $519,550.00, that is, an average of $173,183.00 a month, as against a total for the nine previous months of $834,194.00, making an average per month of $92,688.00. You will see from this that our average sales for July, August and September are almost double the amount per month, as compared with the nine previous months. ## What the profits of these sales have been, I cannot say at the moment. All that I can tell you is that I am confident we are making money. ## My promise to you to keep a proper account of my stock has entirely broken down, owing to circumstances which I explained to you some weeks back. I cannot, therefore, judge of the profits we are making, unless I take an actual count of stock, and this I cannot do until another three months have expired. ## Our total gross liabilities on July 1st. amounted to $597,222.83 ## These liabilities included our open accounts, our notes, the money we owe you, and the advances we received from the London Co. on the 'Jumbo' dynamos. ## Our immediately available assets to meet this indebtedness, amount to $189,983.51 ## leaving our net liabilities $407,239.32 ## By 'available assets', I simply mean the cash and notes we had in hand and the money that was owed to us on the 1st. of July. ## On the 1st. of October, our gross liabilities amounted to $576,554.52 ## and immediately available assets amounted to 262,104.19 leaving out net liabilities $314,450.33 ## If you subtract the net liabilities at the 1st. Of October, from those at the 1st. of July, you will see what I have reduced our net liabilities $92,788.99 during the three months. This has been achieved by decreasing our gross liabilities $20,668.31 during that period and by increasing our available assets $72,121.68 in the same period. ## Of course the measure of a man's or a corporation's position financially, is not guaged by what he owes in the gross, but by considering what he owes in connection with what he has got to meet it with. In this letter I am taking no account of the value of our stock, but am simply taking into account they money we have in hand and the money that is owed to us. To put it in another light, on the 1st. Of October we had enough money in hand and owing to us, to meet our liabilities for a period of from 60 to 70 days. Of course we cannot collect close enough to get the full advantage of this, but our cash sales take care of the deficit. ## On the 1st. Of July we had invested in machinery and tools, furniture and fixtures, patterns, real estate and new buildings, the sum of $502,892.67. On the 1st. Of October we had invested $541,888.01, showing an increase in investments of $38,995.34. Of course this is without allowing any depreciation for these three months, as we do not write off our depreciation, except every six months. ## On the 1st. of July we had invested in Edison United Mfg. Co. stock, $17,500.00. On the 1st. of October we had invested, $29,500.00, showing an increase of $12,000.00. Take this in connection with the increase in our investments in our plant and property, and it shows a total of $50,995.34 increase investments, and a decrease of $92,788.99 in our net liabilities. You will probably add these two amounts together and say that the cocern is $143,784.33 better off, or in other words, that we have made that amount of profit in the last three months. If you asked me whether such a conclusion would be correct, I could not answer you with any absolute certainty, because, as I have stated above, I have not got a close enough record of my stock to allow me to form a definite conclusion. The chances are that we have reduced our stock somewhat since the 1st. of July. My estimate, taking into consideration the business done and the profit that should have been made on it, is that we have reduced our stock between $40,000.00 and $50,000.00, or in other words, that this net improvement has taken place owing to having reduced our stock between forty and fifty thousand dollars and having made profits amounting to, from $90,000.00 to $100,000.00 in the period under discussion, namely three months. My estimate of profits may be a little high, but I find that we made $167,000.00 on $834,000.00 worth of business during the previous nine months. Presuming that we are making the same profit now, we ought to have made $104,000.00 in the last three months. I put it at from ninety to a hundred thousand dollars because the main part of our work in the last three months had been underground conductors, on which there is a smaller margin of profit than there is a smaller margin of profit than there is on our dynamo work, which formed the main part of our work for the previous nine months. ## You will see in this letter, I have simply dealt with out total liabilities and what we have got immediately available to meet them and to provide us with the means of running our business. I have not taken the slightest account of stock which is passing through the shop. My estimate is that the value of our stock, raw, partly finished, and finished, is about $420,000.00. ## I hope you will be able to understand the above as well as you did my letter to you of the 3rd. of August, although I do not intend that this letter should be considered, by any means, as complete as the previous letter I wrote you. In fact I can only undertake to give you an exhaustive criticism on the state of our business, once in six months. ## As I read the figures which I have given above, it shows me every day we are gaining a better position. If it does not show the same thing to you, I wish you would write back and tell me, so that I can try and make the matter more clear to you. Anyway, please let me know what you think of the figures. ## P.S. I estimate, that taking into account what we have sold during the last three months, our total sales for the six months from the 1st. of July to the 1st. Of January will amount to $970,000.00"








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Thomas A. Edison Papers, School of Arts and Sciences, Rutgers University