Henry Jacques Gaisman - Mastermind!

Discussion in 'Safety Razors' started by GlennConti, Aug 16, 2019.

  1. jmudrick

    jmudrick Well-Known Member

    Gem and Ever-Ready are the same maker, ASR, and the same blades in reality, so should be combined when thinking companies rather than brands.

    What source(s) were you looking at?

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  2. GlennConti

    GlennConti Well-Known Member

    Mostly East coast newspapers in Philadelphia, Pittsburgh, New York, Birmingham, New Brunswick. My public library only gives me access to papers in my general area. I live in NJ. Oh, Washington DC and Trenton and Boston too
     
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  3. jmudrick

    jmudrick Well-Known Member

    Ok. My quick and dirty search of national newspapers for 1929 shows ASR with a lot more (blade) mentions :13,000 for Gillette, 12,000 for Ever-Ready , 7,000 for Gem. This includes markets, drug stores , manufacturers ads (a small minority), everything appearing in print in markets large and small. We know Gillette was selling more blades but ASR presence was a considerable looming threat even in '29 before the Micromatic years.

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    Last edited: Sep 1, 2019
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  4. GlennConti

    GlennConti Well-Known Member

    I haven't given up on this story at all! I'm hard at it. There are my latest thoughts:


    On April 17, 1930 Gillette asks the United States District Court in Delaware to compel AutoStrop for more particulars and data in their charge of patent infringement.(43) By May 18, 1930 Gillette has seen the charges and they file answers to AutoStrop then. Gillette asserts that the AutoStrop reissue patent USRE17567E is invalid and void as Gaisman was 1) not the original and first inventor of most if not all of the blade and razor improvements that were patented. And 2) that the same was “improvements” were known and used by other in the US before his alleged invention. Further, Gillette’s answer stated that 3) the reissue patent is invalid and void as said “improvements” do not even constitute a patentable invention as per patent laws. This was because said “improvements” were common knowledge on the part of anyone skilled in the art of blade and razors prior to his alleged invention. 4) That cancellation of the original patent US1658435A and its reissue was illegal because it was an unlawful expansion in an attempt to co-opt similar blades in use extensively by others in the public.(44) This rebuttal by Gillette’s attorneys would never be considered and decided upon by a judge in this case. Gillette and AutoStrop would later settle before a decision was made leaving these points moot for the time being because of a merger between the two companies. After acquiring this patent USRE17567E in the merger, Gillette would later use it to bludgeon blade competitors. However, this patent’s validity does get decided on in the United States Supreme Court on November 9, 1936. Justice Owen J Roberts stated in his majority opinion concerning the case of Essex Razor Blade Corp. v. Gillette Safety Razor Company that the patent was indeed invalid for lack of invention reversing the decision of the Circuit Court of Appeals.(45) In other words, Gillette would have ultimately won their defense of the patent infringement case with AutoStrop based on their answer point 3 above, patent invalidity. Albeit they might have had to take their case all the way to the United States Supreme court if AutoStrop did not give up in the lower courts. Initially Gillette had the stomach for a fight as evidenced by Fahey’s March 18, 1930 letter to shareholders stating they invited any and all law suits. Why why why did Gillette give up the fight so easily?

    The answer to the above question lies in John Aldred’s pool of Gillette stock. Being sued for patent infringement is generally bearish for a companies stock price. Gillette was no exception. Given that there was a general bearish trend for the stock market after the “Black Friday” massacre back in October 1929. And, given Gillette’s share price was generally frothy due to good news in February 1930 about the impending new product release and years of profits such patented product would provide, shorts were thinking Gillette was over bought and ripe for profits on the down side. Further, former vice president of sales Thomas Pelham had placed Gillette in a terrible position by contracting out all of Gillette’s factory production for the year virtually locking in that earnings for 1930 would be weak and set a record for the down side. If additionally Gillette had to pay AutoStrop patent royalties on each blade being sent out, the losses for the year would be catastrophic. Patent litigation would also be expensive. On April 11, 1930, it was reported that Gillette’s earnings showed a large drop of over 50 percent when compared to the year ago period(46) (there were costs hitting profits associated with factory changes and new product roll outs too). The news was getting out and the bearish short traders on Wall Street were licking their chops ready for a sweet kill. John Aldred had to take action to protect his interests in Gillette shares.(47)

    In February of 1930, Aldred started to convince large Gillette shareholders that a pool of buyers was needed to offset downward pressure from the short interest and indeed profits might be had by squeezing the shorts. Aldred was able to convince about 60 individuals and firms to participate in his buying pool to be managed by Aldred & Co for a fee. The pool started buying Gillette shares at about $100 per share. During the fight against the shorts, the pool had been able to acquire about 74,000 shares of Gillette stock at an average share price of $81.50 per share. However, the pool was not able to stem Gillette's share price decline. As the chairman of the board of directors, John Aldred could sense his pool could be a massive failure. Were the trends too ominous for stock prices? Was he over exposed to Gillette shares? How would he sell his holding in Gillette if the share prices continued to tank? Who would buy it? By July 28, 1930 the pool was sitting on a paper loss of about $1.7 million. His pooled investment of about $6 million was now worth about 28 percent less! What could he do? It might continue to take a bath. Well there was this issue of pending patent litigation at Gillette. This and many of John Aldred’s problems would go away if Gillette and AutoStrop were to merge. Gaisman wanted this and negotiation were on and off. This was doable. Fahey who wanted to fight Gaisman was weakened in that his ally Pelham was now out of the picture. If there was a merger, Gillette would need shares and they could buy all the shares in the pool! This is exactly what happened.(47)

    The merger had to go through. Aldred had decided it was time to substantially pare his personal holdings in Gillette Safety Razor Company(GSRCo). Aldred had convinced GSRCo. to prop up the companies share price by buying shares on the open market in preparation to the merger. Sound like a conflict of interest? It was! So, the pool directed by Aldred and GSRCo directed by Aldred were both working to keep the share price high. This was all to Aldred’s great personal benefit. The pool had 74,000 shares. GSRCo needed 310,000 shares to buy out Gaisman. GSRCo started buying shares of its own stock with loans arranged by Aldred (for a fee). By August 1930 GSRCo had manged to acquire on its own 115,200 shares on the open market. So, the directors of the pool (Aldred) negotiated with the directors of GSRCo (Aldred) to buy 60,000 shares of the pool! All this at a profit to the pool of about $60,000! Personally, Aldred had snatched victory from the jaws of defeat and a $1.7 million dollar loss was now a small gain. Chunk by chunk Aldred’s personal holding in GSRCo stock were decreasing and he was selling at top dollar too. GSRCo now had about 175,000 shares of the 310,000 that Aldred needed to complete the merger. Where would GSRCo get the additional 135,000 shares? Well GSRCo could buy them directly from the companies directors! The ship was sinking and it’s time for all the big insiders to cash out. The King is dead - long live the new King – King Gaisman. The individual directors including Aldred sold an additional 70,471 shares directly to GSRCo. On August 11, 1930 the GSRCo directors (Aldred) approved this new purchase from the individual directors/shareholders (Aldred). Old King Gillette even sold 20,000 shares to GSRCo at an average price $82.50. The average price GSRCo had paid for all these 225,000 shares was $79.26. Now, without buyers propping up GSRCo’s share price, the bears had a field day. Aldred could now care less. He was largely divested by this point. By January 1, 1931, GSRCo’s share price had plummeted to $21.50 a share! The little guys still holding GSRCo would be enraged.(47) The merger between GSRCo and AutoStrop was just a mechanism for John Aldred to sell his personal holdings to GSRCo not on the market at a favorable price.
     
    Last edited: Sep 4, 2019
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  5. GlennConti

    GlennConti Well-Known Member

    John Aldred must have been totally disgusted at the terrible management of GSRCo at the hands of Fahey and Pelham. Fahey had mismanaged the development of the “New” blade and razor products. Instead of a new earnings stream for years to come off of protected intellectual property, royalties would have to be paid to AutoStrop. That or years of expensive litigation would ensue. Pelham had practically given away the store with large discounts tying up the factories to sell at no profit. Further, AutoStrop’s audit of the company books would show that profits had been inflated by booking foreign transfers as sales. Fahey and Pelham inflated the profits using slight of hand tricks and they were then erroneously awarded big bonuses for doing so. Aldred had by now divested his shares and a new regime headed by Gaisman would take the helm at GSRCo. All that was left was to negotiate with Gaisman the terms of the surrender/merger. Checkmate for Gaisman. Oh, and all the loans GSRCo had gotten from Aldred & Co. needed to buy the 310,000 shares for AutoStrop would have to be paid back! Aldred would see to that by selling $20 million in bonds to the public at large.
     
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  6. GlennConti

    GlennConti Well-Known Member

    So, I created a PDF document of this story. It is a work in progress but much smoother than the jumble here. Check it out at:

    http://gilletteadjustable.com/autostrop-merger/

    Warning... not for the faint of heart. The PDF complete with bibliography is 15 single spaced pages long. Lol, pictures included!
     
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  7. brit

    brit Well-Known Member

    very cool sir..nicely done..
     
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  8. GlennConti

    GlennConti Well-Known Member

    NewBladeGillettePatPendTenPack-cropped3.jpg



    No date code? What do you guys think? Were these blades produced before Jan - March 1930? I was expecting A-1 or A-2 maybe A-3 but not nothing. Any ideas?
     
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  9. GlennConti

    GlennConti Well-Known Member

    NewBladesNDC.jpg

    I just thought Krumholz got it wrong.
     
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  10. GlennConti

    GlennConti Well-Known Member

    If Gillette was producing “New” Blades in 1929, then Gaisman just gets one sees the new design and amends his patent in November. Easy peasy. Just doesn’t make sense to me though. I understood the big design reveal was March 6 and the first blades weren’t produced until January. Help me out?
     
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  11. jmudrick

    jmudrick Well-Known Member

    I'll observe again production doesn't mean distribution. That's all I got.

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  12. GlennConti

    GlennConti Well-Known Member

    Ok I am following you now. I guess. You are saying they were made in 1929 but not sent out until 1930 sometime. They were held back in a warehouse in inventory then distributed to dealers in January or after. So they were still a secret in 1929.
     
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  13. jmudrick

    jmudrick Well-Known Member

    I have no insight into how closely held the design would have been but sure production could have preceded distribution thusly.

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  14. GlennConti

    GlennConti Well-Known Member

    Yes. I don’t usually think that way. But see what you are saying. I own a small business and time is money. Get a check, cash it immediately. Invoice as soon as possible. Build something, ship it as soon as possible. Now they call it “just in time”. But you could have a valid point.
     
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  15. jmudrick

    jmudrick Well-Known Member

    A theory made to fit the known facts. They may have hoped for an earlier roll out.

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    Last edited: Sep 11, 2019
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  16. GlennConti

    GlennConti Well-Known Member

    There was a whole roll out timeline. All this took a lot of planning and execution. Big 5 page ad hits March 8 issue. Dealer shipments start February 15. Production starts January 6. This all according news articles. Everything hush hush too as far as the design before the big reveal in the Saturday Evening Post. I sent Krumholz a note about this but don’t know if he has anything to add. Blade production in 1929 just puzzles me. Unless they are some sort of marketing focus group sample prototypes????
     
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  17. Rev579

    Rev579 Well-Known Member

    They could simply be "early". I always thought that in order for something to be patented, production needed to be in place. Patent pending and patent applied for are both stamps on Gillette razors.
     
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  18. GlennConti

    GlennConti Well-Known Member

    I don’t believe there are any production requirements in the patent process. Not sure about prototypes. A prototype may be required for an application. But full production for approval I don’t think so.
     
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  19. Rev579

    Rev579 Well-Known Member

    I don't know what kind of issue overhead was 90 years ago, but being ready to roll when it was time to roll, without hangups would have been important. Punctuality was not only valued, it was an expected commodity. I have really enjoyed reading some of the old Life and Saturday Evening Post publications(along with others). It offers great insight to the life and times of the 10's-30's.
     
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  20. mr-razor

    mr-razor Well-Known Member

    here is a "A1" blade. I think the blades without date code are from the early time of the first quarter in 1930 or from 1929:
    [​IMG]
     
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