March 3, 1890
My dear Mr. Edison,-
I have received all your letters of 28th ult.
PHONOGRAPH WORKS. I note what you say in regard to subscription to Lippincott's Company which is being handled by Spencer Trask. Our pay roll at the Phono. Works run is being handled by Spencer Trask. Our pay roll at the Phono. Works runs between six and seven thousand dollars per week. I have had a talk with Mr. Batchelor and he says that he will cut this down at once to the lowest possible note. We always have more or less difficulty in getting money from Lippincott, and never depend upon receiving it. On Saturday last a report was sent you from the Phonograph Works of shipments for that week up to Friday night. The average for these days is only 25 instruments per day, and all these are not complete phonographs; many of them are bodies--about half. The Phono. Works have on hand practically no orders whatever for shipments our amount of the North American Phono. Co.
Doll. Mr. Batchelor is quite positive that by the [illegible] instant the Works will be turning out 500 dolls per hour. He has given me the following prices at which to bill these against the Doll Company:-
Movement mounted in body, complete--------$1.20 each.
Assembling head, legs, arms, chemise and washing---------3 cents each
Packing.
Doll furnishes heads, legs arm chemises, delivered free at factory; it also furnishes boxes, string, paper, excelsior, labels & c in connection with packing. We furnish labor, charging them 10% on cost for use of packing room.
I believe that as soon as our negotiations with the Automatic Amusement Co. are completed we can obtain an order for two or three thousand or perhaps more of these attachments. Such an order, together with the Doll business, would help us out very materially at the Phonograph Works.
AUTOMATIC AMUSEMENT CO. I have carried out your wishes fully in regard to standing in with Lippincott in the deal. As I told you in my previous letter, the Automatic people at the start to leave Lippincott out, and in the first interview which I had with them, they wanted to negotiate with you without reference to Lippincott. I told them that the North Am. Company claimed the right to dictate to their sub-companies as to what appliances should be used in connection with the phonograph, and I asked them to show their authority for entering into contract with these sub-companies. Of course they had none, and they recognized the necessity of bringing Lippincott into the deal. There has been a great deal of negotiating since then, and Lippincott and myself have finally got the matter down in the shape as per letter attached addressed to Charles A. Cheever. At a meeting which Lippincott had with these people he agreed to an increase of the capital stock, and, of course, I had to stay with him. The division which is now proposed, that is, eleven to Phonograph people, eleven to Automatic people, and three to the Treasury, is the very best that could be arrived at.
Since we started these negotiations, Lombard of the North Am. Phono. Co., has brought out a "nickel-slot" machine, which is much more simple and better in every respect than the machine of Glass or Gilliland. Lombard will turn this over to Lippincott, and it, in all probability, will be the standard device.
With relation to Section 3rd of Lippincott's proposition to Cheevor, wherein we agree that if after the delivery of the [illegible] machines which are being manufactured now by the Gilliand people, the Edison Phono. Works are not prepared to [illegible] delivery of sufficient machines to fill orders we will grant a further limit in excess of the 500 now conceded, I considered it was perfectly safe to ascent to this, for the reason that we are to have a model immediately, and the whole of the attachment is punchwork; all we would have to prepare are the dies.
SECTION 4. Gilliland wanted us to agree to buy the cabinet work from his people; this I refused to do.
SECTION 8. When I started negotiating with the nickel-slot people the first point that I made was, that in negotiating with you they were able to estimate the value of whatever they might expect to receive from you, on your goodwill & c., and that it was only just that you should be placed in a similar position in regard to the property which they had capitalized; that that property is represented by such applications as have been made by their people for patents covering the devices which they control, and I requested that these applications should be submitted to us. They finally agreed that if we could go ahead and settle all other points excepting this one they would then submit their applications and claims for patents, and if these were not satisfactory to us we could call the deal off. This is what is referred to in the 8th section of the letter which I am discussing. If [illegible] to all the other points, they will submit their applications to anyone which we many name as an expert, and if we are not satisfied we can cancel the deal. I expect that by tomorrow everything will be settled, excepting of course this question of applications.
It may strike you as peculiar why Lippincott should desire to go ahead with these people when Lombard has a good machine that Lippincott can get. I can give you the following reasons why Lippincott desires to combine: First, all his sub-companies are in pretty bad condition; very few of them pay expenses; the "nickel slot" business will give them an immediate and quite a large revenue-certainly more than enough to keep them floating and sustain life until the commercial side of the business is more fully developed. The Cheever people have 500 attachments under way, which will be finished very shortly, and which can be placed in service immediately. Lippincott is anxious to get these out. Second, Lippincott does not know what patents may be allowed these people or how for they may conflict with the Lombard device. Third, two or three of the sub-companies here already made contracts with the Automatic people, and while Lippincott claims that none of the sub-companies can use appliances in connection with the phonograph unless the same are approved of by the North Am Phono. Co., in enforcing this he would have to fight some of this licensee companies. Fourth, If he puts an attachment out direct from the factory he could not capitalize it, and the block of stock which he will get in the present instance may be an attraction.
I argue with myself that the deal is a good one on your behalf chiefly because you will be manufacturing for a concern other than the North Am. Phono. Co. The manufacture of the phonograph itself seems to be a little more than the North Am. people can support. This "nickel-slot" concern will at least have enough money to pay for the attachments, which we will make, and that seems to be to be the biggest end which we have to consider. You, of course, get one-half of the stock which goes to Lippincott. I think that this will be worth something, but how much I am not prepared to say.
In regard to Gouraud in connection with this "nickel-slot" attachments for about a thousand machines. This shows what the Colonel intended to do if we had allowed him to handle his alleged order. I have blocked him on any deal with the nickel slot people.
EDISON GENERAL CO. The ordinary stock of the Edison General Co. is selling at 105. I learn that it is being bought by people in Germany--Villard's friends. Villard is not buying any himself, but is keeping the price up and his friends are purchasing. The trust stock is selling at 75, and is very firm at that price, with the prospect of an almost immediate advance. I have asked Perry to write you fully on this subject.
WANGEMANN. Wangemann returned on the 27th ultimo. I have not yet received his expense accounts, as they are in his boxes which he is passing through the Customs House. I will have them in a day or two and will go through them carefully.
NEW JERSEY IRON PROPERTIES. I sent Reed to Paterson this afternoon to see Elliott in regard to properties which the latter is bonding. Reed tells me that he saw Elliott a few days ago and looked over the list of properties for which Elliott said he was negotiating, and that in his judgment there were only two or three on the list which were any good at all. He says that Elliott informed him your instructions ere to negotiate for all the properties. I have told Reed to write you fully after he has made a further inspection of Elliott's list.
BATTERY. I will write you fully tomorrow in regard to the Battery and Phonoplex. I shall have to close now in order to catch a mail and foreign dolll business.
Yours very truly,
A.O. Tate

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