Henry Jacques Gaisman - Mastermind!

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

  1. GlennConti

    GlennConti Well-Known Member

    GilletteManagingDirectors1929-30.jpg

    The top managers running Gillette Safety Razor Co. at the time of development of the New Blade and the New Razor are shown above. These are also the guys who primarily made the decisions to buy AutoStrop. Frank J Fahey even though his title was Vice President and General Manager, he was the big boss and running the show. King Camp Gillette was old, lived in California, was sick and died in July of 1932; K C Gillette was President but basically he was a figurehead. Same thing is true of William E Nickerson who had the title of Vice President; Nickerson died in June of 1930. The old guard was still tottering around but it was really Fahey, Pelham and Thompson in charge, but mostly Fahey and Pelham. Fahey ran things and was a financial wizard. Pelham was the sales and legal guru and Thompson was the inventor-manufacturing guy. Gillette was enriching these guys for years. In addition to their salaries it was discovered that they also voted themselves bonuses on the order of $40,000 per year each. These guys only oversight was the board of directors headed by a banker John E Aldred. But, Aldred was more of a financial piggy bank for Gillette and he and the board left every thing up to the team pictured above and provided only the most basic oversight for their directors fees. Aldred traded shares of Gillette stock and made profit off of his inside knowledge of the goings on at Gillette. Fahey was responsible for preparation of the books (which were audited by accountants but such scrutiny was limited). It turns out that Fahey was transferring product manufactured in the US to the overseas subsidiaries and booking those transfers as sales and profits when in fact those products were unsold and just sitting in overseas warehouses. In the 5 year period between 1925 and 1929 Fahey told people and share holders that total profits were about $70 million of that it was later charged that $19 million of that was fictitious. Falsely high earnings made the managers seem better, pumped up stock prices and allowed for high salaries and bonuses to management. When all this came to light the New York Stock Exchange said on November 17, 1931 if you don't fire Fahey and Pelham then the stock will be de-listed on the exchange. Fahey and Pelham refused to resign and Fahey, Pelham and Thompson were all promptly fired by the board of directors. Fahey, Pelham and Thompson were forced in a lawsuit (August 18, 1932) to disgorge what the judge considered their ill gotten payments and in doing so they escaped criminal prosecution. They were able to move on and find jobs elsewhere and live their lives. Gaisman was made chairman of the board on May 5, 1932 and he saw to it the King C Gillette resigned as president and Gaisman named Gerald B. Lambert as the new president of Gillette.
     
    Last edited: Aug 26, 2019
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  2. GlennConti

    GlennConti Well-Known Member

    What is mind boggling to me is how Fahey wanted to merge with Gaisman and AutoStrop which would invite scrutiny of Gillette's books. Very very early after the purchase of AutoStrop the accounting irregularities were found because AutoStrop and Gaisman had better access to the real books. Fahey was so secure in his position that he really believed he had done nothing wrong in the accounting irregularities or voting himself bonuses or stock manipulation. Not contrite, he was even unwilling to resign later when given the choice. He had to be fired and shown the door. Fahey should have fought Gaisman's patent infringement suit with all of Gillette's resources in court and kept Gaisman out of his company. Major miscalculation on Fahey's part!!
     
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  3. jmudrick

    jmudrick Well-Known Member

    After leaving Gillette Thompson filed three safety razor patents assigned to Emerson Apparatus Co. (between 1932-1935). I'm not aware of any production taking place based on the designs. No listing in Waits.

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    Last edited: Aug 26, 2019
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  4. GlennConti

    GlennConti Well-Known Member

    ThompsonObit.jpg

    Thompson's obituary in 1952. He apparently landed on his feet after Gillette.
     
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  5. GlennConti

    GlennConti Well-Known Member

    FaheyObit.jpg

    Fahey's obituary in 1945. Says he retired in 1931. So they were kind to him in the papers. He was fired and apparently was never to work again.
     
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  6. jmudrick

    jmudrick Well-Known Member

    They made knitting machines and lathes.

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  7. GlennConti

    GlennConti Well-Known Member

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    May 10, 1932 Pelham seeks bankruptcy protection. I could find no obituary notice for Pelham. He apparently slipped into obscurity and possibly poverty.
     
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  8. GlennConti

    GlennConti Well-Known Member

    GaismanMarried-2.jpg


    Of course Gaisman goes on to do very well. He retires from Gillette in 1938 at the age of 69 with a stack of cash. In 1951 at the age of 83, he marries a 33 year old nurse, who then tends to his every need until he passes at the age of 104 in 1974. He and Catherine (the nurse) build hospital wings etc in Gaisman's honor so together they are philanthropists.
     
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  9. jmudrick

    jmudrick Well-Known Member

    Good for him

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  10. GlennConti

    GlennConti Well-Known Member

    Well, to me it is an interesting story. Is Gaisman the story’s hero? Is he the villain? Is Fahey the villain - much more likely so. Gaisman is a genius but under his management Gillette only does marginally better. It is not until J P Sprang Jr starts running things after Gaisman in the late 1930’s that the company starts to really take off again. And, there’s the bit about Gaisman patenting Gillette company and Ralph E Thompson’s ideas. I would have to say Gaisman is an anti-hero. I’m glad Catherine was able to get him to spread his money around in his old age too. Gaisman never makes a misstep and as a result of his ingenuity and clear strategies he becomes as wealthy as what a billionaire would today. Gaisman definitely bested the best at Gillette Safety Razor Company.
     
    Last edited: Aug 26, 2019
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  11. jmudrick

    jmudrick Well-Known Member

    I'm not one to look for heroes and villains. You rarely find such black and white in real life. It's capitalism Jake.

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  12. GlennConti

    GlennConti Well-Known Member

    Oh but a good story usually has heros and villains.

    Guess what? Philip L. Krumholz's book "Collector's Guide to American Razor Blades" 1995 ISBN 0-9620987-3-6 just came in to me and has 3-1/2 pages devoted to this story. It adds some decent color. For example:

    Krumholz explains that after K C Gillette's patents run out in 1921, Gaisman realized Gillette's vulnerability with 66% of the world's market and no patent protection and said "I can see a barn door when it's open". I am thinking this is a problem Fahey did not address properly for years until Gaisman forced him too in 1929.

    Krumholz further states that rumors were rampant in the investment community in Spring of 1929 that Gillette was coming out with a new razor and blade. I am thinking that this information was being leaked via John E Aldred and his company in an attempt to pump up Gillette's stock price. Was Aldred the mole whose loose lips caused Gaisman to be aware of the situation in time to out maneuver Gillette's company on the patent front in November of 1929?

    Krumholz says that during merger negotiations in mid June 1930, Gaisman was demanding 25% ownership in Gillette. Gaisman ultimately settles for 13% so I guess the directors in Gillette thought they were getting a bargain.

    Krumholz says that the audit of Gillette's books occurred in August of 1930 and the accountants found a $3.6 million shortfall between actual earnings and reported earnings in 1928 and similarly a $3.3 million shortfall in 1929. This triggered more forensic accounting and an actual shortfall was determined to be $11.856 million. This is the point (October 1930) at which Gaisman upped his demand from just common stock to the preferred shares that were later issued.

    Krumholz says that former Gillette VP Thomas W Pelham started his own blade business to compete with Gillette and Gaisman (so Gaisman got a second chance to spank down Pelham). And, further Pelham was an advisor to Segal Lock who was locked in battle with Gillette for both blades and razors. Krumholz says the suits between Segal and Gillette (I'm thinking over the reissue patent 17567 and Segal's TTO designs) would weaken Segal considerably.
     
    Last edited: Aug 26, 2019
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  13. jmudrick

    jmudrick Well-Known Member

    Black and white hats belong in 30s westerns, rarely in history.

    Sure Segal was hurt, even if they figured they were right. Particularly since Gillette's method was to target distributors who may not have had pockets as deep as the real targets. Guess what, if Gillette were to say to me as a distributor, a pluarality of whose razor business was Gillette, "gee we'd really appreciate if you wouldn't carry Segal, we'd hate to have you get messed up in a lawsuit" well I'd probably have a hard time doing otherwise.
     
    Last edited: Aug 26, 2019
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  14. GlennConti

    GlennConti Well-Known Member

    Haha. People are people and there is a certain form to storytelling. 1930’s westerns? I guess you don’t get out to the movies much. Myths, stories and movies, they all have a certain “form” that appeals to humans for some reason. If this particular occurrence in history about Gaisman versus Gillette has the form of a good story then more people will be interested. It is human nature. Dry history has less appeal.

    As far a Segal is concerned threats of lawsuits to distributors and legal battles of attrition with the victory going to the deep pockets not the true righteous party are par for the course.
     
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  15. jmudrick

    jmudrick Well-Known Member

    Just trying to keep things period correct



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  16. GlennConti

    GlennConti Well-Known Member

    This story does have some exciting elements. Greedy director Aldred leaks inside information to influence stock price up and instead causes top secrets to get leaked to a competitor. Or, competitors industrial spies placed inside Gillette steal designs. Or, small David company swallows large Goliath company. Or, another greedy director Fahey cooks books and gets his comeuppance after they catch him with hand in the cookie jar. How about Pelham fighting Gaisman to his last breath and bankruptcy? How about the salacious aspect of the 83 year old Gaisman with his 33 year old nurse? These are all elements of stories people for whatever reason are drawn to.
     
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  17. jmudrick

    jmudrick Well-Known Member

    I see a very compelling screenplay. Need a love element though.

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  18. GlennConti

    GlennConti Well-Known Member

    Scarlett Johansson plays the nurse! Eye candy needed too. Lol.

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    Last edited: Aug 26, 2019
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  19. jmudrick

    jmudrick Well-Known Member

    You get Johansson you gotta have Tom Waits as Pelham.

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  20. GlennConti

    GlennConti Well-Known Member

    We’ve taken this thread from hyper speed to ludicrous speed!
     
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