The Thomas A. Edison Papers Digital Edition

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Title

[LB014102], Letter from Thomas Alva Edison to Edison Electric Light Co Ltd, Arnold Henry White, September 12th, 1882

Editor's Notes

I july received your favor of 24th August.##I would point out to you that my estimate for a 80 Light Plant was made to be compared with your estimate of net cost of same and I in no wise fell into the error of estimating the net cost of a plant "[to] the Company not even in London, but in New York, in the case of the Edison Co with the gross price including profit charged by the Swan Co"##My estimate was made on the basis of packing and shipping expenses [but] this site being paid by me - you being charged with the freight and insurance for which there is a margin in the case of the Dynamo of L2.16.8. My estimate is simply one of cost to you in London as compared with your estimate of cost to you there. From a paragraph in one of your letters to Johnson as to the preparation of this estimate I gain the impression that it is your idea that the estimate was not carefully prepared, which is certainly not justified as it was based on my figures worked out with the object of seeing whether I could not deliver Dynamos F.O.B in Port of London in case of large orders. It is my impression after reading your letter and again looking over my Estimate that your examination of the latter could not have been very great or else you would have discovered that I did compare "like with like" viz the net cost of an 80 Light Edison Plant delivered in London##I did not mean to give you the impression that we can dispense with Electroliers - which I allowed for in my estimate. What I meant you to understand was that however necessary we might the the Electroliers manufactured here it would be better policy to use those made in England in order to cheapen our plant. To sum up my figures I would state that where so poor a machine as the Burgon is used it is possible for you to put in one of our plants at cost at a loss of about L2.0.0 where no engine and boiler is required, and where your customer requires the latter articles you can certainly make a small profit in consequence of the economy of my lamps and Dynamos as compared with those of my opponents so far as power is concerned. If a better machine than the Burgon is used (the Siemens) you can make a gross profit of at least 25%. I therefore consider your loud complaints in your letters to Mr Johnson as to the ruinous cost of your machinery not only far fetched but scarcity in accordance with the facts of the case. we have had to meet here with the same competition and in the course of about eight months we have not only killed it but have earned profits amounting to a sum equal to our cash capital plus 7%. Mr Olricks remarks to the effect that we have had no such competition as yourself are exactly the opposite to the facts of the case as we have had competition of the most severe character, which we have managed to kill and have made money in doing so and I am extremely disappointed at your complaints that you cannot follow in our footsteps.##Referring to your letter of 18th August to Mr Upton I would remark that the ten candle lamps sent you were but samples and were made by hand and were necessarily very expensive. In such cases it is our practice to charge our customer with one half and bear the balance of the cost ourselves. Of course when we make these lamps as regular articles of manufacture the cost will be very considerably reduced and we are now preparing tools with the view to achieving this object. If however you prefer it I will in the future refrain from sending you any new variety of lamp until they can be turned out at the bottom price which in every instance will be long after the first samples have been produced by hand. It is for you to decide whether yiou want this course pursued it being quite immaterial to me as I am glad to say my other companies both at home and abroad are only too anxious to get samples of anything new I may turn out, (with a view to improving our system) irrespective of immediate cost trusting in my ability and desire to cheapen the manufacture later on.##From your letter to Mr Upton I gather that it is your opinion that I am compelled to supply your company with lamps of whatever character and candle power at 40 cents for "General Distribution" and 50 cents for "Isolated." If I am right in my conjecture I must say that I entirely dispute your assumption as I fail to see that the contract gives you any such right. At the time the contract was made the only lamps of regular manufacture were of sixteen and eight candle power for "General Distribution" and "Isolated" purposes. I am now working on 32, 50, & 100 candle power lamps and it would be absurd to expect that these can be made at the same price just as it would be absurd for me to undertake to supply them at the same price as to the 8 & 16 candle lamps. I am also working on a higher resistance lamps with the object of reducing the investment in conductors. This lamp may prove expensive to manufacture and yet is economical for your company to purchase at say twice the present cost of our regular lamps. It would be as impolitic for you as for to me to have such a one sided arrangement as to price of lamps as you assume exists as it could not but deter me from further investigation on the fear that I might devise a lamp expensive to manufacture but yet economical to use.##I must protest against the spirit which seems to underlie your letter to Mr Upton and more especially your letters to Mr Johnson. My object has always been to endeavor to cheapen the manufacture, increase the variety, and add to the com[pletion] of everything in connectin with my system and I must confess to a feeling of disappointment at finding, for the first time, that those associated with my interprise of Electric Lighting in England do not seem (judging from your letters) to encourage my efforts in this direction##As to the extra [L] armature sent you I would point out to you that you accepted the "L" ([our] light) machines sent you instead of 100 light machines and it was but natural that I should presume that you would require extra armatures for the same as I have not yet found that an armature will last for ever and that it is impossible to have an accident with them. It is however a matter of little moment to me whether you keep the Armatures or not the question involved being not whether you or I were in [----] as to them but whether my credit with my Bankers should be impaired. Considering the nature of my authority from you to draw it would have been but mere business courtesy for you to have met the Draft and cabled me to reimburse you the disputed amount in the first case instead of leaving it unpaid for several days. I do not know what may be the business usage under such circumstances in England but in this country this course is invariably pursued where relations such as those between us exist. I have already paid out an amount about equal to the sum in dispute (for which accounts go forward by this mail) and in consequence of your orders not to draw on your company again till I hear from you by letter I shall be compelled to pay, for goods shipped from my personal funds as our various establishments have my personal order for the goods shipped and to be shipped to you.##I shall be glad to know if it is the intention of your Company to again refust to honor my Drafdt on them in the manner pursued in this case as if so I shall be obliged to request that my bills against you be paid in New York in cash as I cannot afford to allow any doubt as to whether my dradft on you will be honored as I sell them to my Bankers through whom I am constantly drawing on all my Foreign correspondents, nor can I expect my Bankers to negotiate them for me if such a sdoubt does exist.##From your letters mainly to Mr Johnson I gain the impression that you imagine that it is my desire to force on you the product of our factories here. I wish to disabuse your mind of any such idea and would add that I shall be equally as pleased as yourself when your Company can get their Lighting apparatus manufactured in England equally as good and cheaper than we can ship it from here.

Author

Edison, Thomas Alva

Recipient

Edison Electric Light Co Ltd

White, Arnold Henry

Mentioned

Swan United Electric Light Co Ltd

Olrick, Harry

Johnson, Edward Hibberd

Upton, Francis Robbins

Date

1882-09-12

Type

Letter

Subject

Competition and market structure

Financial operations (companies and organizations)

Stocks, bonds, and investments

Incandescent lamp

Dynamos and generators

Folder ID

LB014-F

Microfilm ID

81:866

Document ID

LB014102

URL

https://edisondigital.rutgers.edu/document/LB014102

Rights

Thomas Edison National Historical Park

Publisher

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

License

CC0 1.0 Universal

Has Version

Archive.org Viewer, Microfilm Series Reel 81

Item sets

[LB014-F] LB-014 (1882)