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The Pamphlet Collection of Sir Robert Stout: Volume 84

21, Cannon Street, London, E.C., Oct. 13th, 1884. C. L. W. Fitz-Gerald, Esq., 4, Hercules Passage, Threadneedle Street

21, Cannon Street, London, E.C.,

C. L. W. Fitz-Gerald, Esq.,

4, Hercules Passage, Threadneedle Street.

Dear Sir,

We have delayed replying to your letter to our Mr. Maton until our Mr. Godlee's return to town.

The letter to which you refer us, as you will obsrve, states that we explained to Mr. Davis, Mr. Mays' solicitor, "some" of the reasons which had led the Directors to assent to the terms. We can only state of course the reasons, so far as they were known to us, and necessarily, after an interval of two years, some of these may have escaped us. We must ask you, therefore, to take this letter with that explanation.

It would perhaps, however, save trouble if you would refer to our letter to you on the 7th July last, in which we explained to you the course which events took and some of the considerations affecting the matter. You will recollect that at the time immediately prior to the settlement the relations between your Company and the United Company were in a very strained position and in any negotiations with the United Company the question of these 4,000 Telephones was constantly raised as a preliminary difficulty which must be got rid of. Their anxiety in the matter is best shown by their providing so large a proportion of the £5,250 agreed upon in settlement.

The United Company, moreover, suggested that it had been intended that these 4,000 Telephones should be used in the Oriental district alone, and this view they stated themselves prepared to contest in Court, although the Consolidated Company did not consider it well founded. It must, however, be evident that a direct rupture between the United and Consolidated Companies would have been almost dangerous thing for your Company.

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Assuming, however, that the Telephones could have been supplied without restriction, you will observe that two difficulties presented themselves, either they would be delivered in England, the result of which would be an immense increase in the difficulty of discovering unlicensed instruments and a serious interference with the defence of the patents, which your Company acts under and with the business of the United Company, one of your largest customers. On the other hand, they might have been delivered in the River Plate or the Oriental district where your Company supplies instruments, which would simply have been a deduction from the number otherwise supplied by your Company. Their delivery in North America is scarcely a probable result, having regard to the prices ruling there.

A further question existed as to the price at which these instruments were to be supplied by your Company. You will observe that this was to be the same price as Telephones supplied by your Company to the General Post Office "at the time being." The Post Office agreement, as you will recollect, was determined on the 17th June, 1882, and no price could therefore be said to be fixed at the time these matters were under discussion. What the actual profit would have been, taken even at the Post Office price during the first 12 months, we have no means of knowing, but this will be doubtless familiar to you.

The terms of the settlement besides this provided the Company with ready money, which we believe was of importance to them at this time. How far £5,250, together with the £1,800 previously received and the retention of 200 Telephones represented the probable profit, we are not able to judge. You will of course recollect that before this time the patents were in the possession of the Oriental Company, the form of the contract itself making it, we think, plain that these patents were to be handed over forthwith and not at the expiration of the contract for the supply of Telephones.

These are some of the reasons, and we think you will agree very cogent ones, which we believe led the Board to adopt the course they did in settlement of the action against Messrs. Gouraud, Bigelow & Cargill.

Yours faithfully,

John Mackrell, Maton & Co.