[LB048118], Letter from Alfred Ord Tate to Sherburne Blake Eaton, March 5th, 1891


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[LB048118], Letter from Alfred Ord Tate to Sherburne Blake Eaton, March 5th, 1891




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


March 5, 1891.
Major S.B. Eaton,
#120 Broadway,
New York City.
Dear Sir:-
I send you herewith 15th proof of agreement between Thomas A. Edison and the Edison General Electric Co., and beg to call your attention to page 7 of the same.
The first change which should be made relates to work performed outside the Laboratory. This provision did not appear in the proof from which I made my memorandum now in your hands, but has been inserted since. It states that the cost of work conducted at the Company’s shop shall be considered as a part of the $62,000 per year payable to Mr. Edison the right to organize his force in the Laboratory for the expenditure of $62,000 a year. Now assume for the moment that we are so organized, and that Mr. Edison finds regarding a certain experiment that it can be conducted more expeditiously and at less cost in Schenectady; the actual cost of the experiment is not known until it is finished , but let us assume that when the work is done it has amounted to $5,000. Now the General Company proposes to take that amount from Mr. Edison’s allowance. Is Mr. Edison to reduce his force to the extent of five thousand dollars after he finds out what the expense has been for this foreign experiment, or how is he to protect himself? If he does not reduce his force the effect will be that he will have to pay out of his own pocket the cost of experiments conducted at the shops. It is most dangerous and most undesirable that the Laboratory should be hitched up in this agreement with any other concern. The General Company can protect itself by providing that no experiments shall be conducted at its shops without special authorization, and when Mr. Edison wishes to take or send work to Schenectady he can obtain the requisite authority. I have altered that portion of the agreement so that it requires the General Co. to pay the cost of experiments conducted at the shops, and you can rearrange the language with respect to special authorization for those experiments if you consider it more desirable in the interest of the General Company.
The next change made is in lines 14 and 15. I have crossed out the following words: “and the work to be done by the said Edison on his own account also aforesaid,” and inserted “together with experiments to be made for the North American Company as provided for in the fifth section hereof.”
The third change is in line 16. Strike out the words “The force and resources,” and substitute “three-fourths of the experimental labor capacity of the said Laboratory.” Those two last changes are very important, for the reason that they will show the intention to divide the Laboratory upon the basis of Labor. I do not think it worthwhile making any other changes in the agreement. There is nothing whatever in this which will require any fresh negotiation. That is something that we desire to avoid, and as the contract is now it can be interpreted in accordance with Mr. Edison’s understanding. I do not apprehend that it is your wish to insert in the body of the contract the schedule showing how cost shall be made up. If a paper something like the following be attached to the contracts and signed by both parties when the agreements are reexecuted it will I should think answer all practicable purposes:
Memorandum attached to contract October 1st, 1890, between T.A. Edison and the Edison General Electric Company.
It is agreed by the parties to the above contract that the cost of experimentation for the Edison General Electric Company at the Edison Laboratory shall comprise the following:
Cost of Labor.
Cost of Material.
General Expense (including ordinary recognized expense, taxes, insurance, appliances and small tools).
5% on Investment Account $115,044.86, Buildings & Fixtures
10% on Investment a/c $64,984.70, Machinery & Instruments.
Labor shall consist of the wages paid the workmen employed upon experiments for the said Company. Material shall consist of the cost of material used for these same experiments. General Expense and Depreciation shall be distributed over all the work conducted in the Laboratory upon the basis of direct or productive labor as is the practice now.
It is further agreed between the parties to the above mentioned agreement that so far as the charge for depreciation is concerned the Investment Accounts stated above shall not be increased without the consent of the said Edison General Company.
Yours very truly,
(Signed A.O Tate)
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