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Did You Know
May 2010

Did You Know?
by Ken Carr
May 2010

I came across the following letter, found it interesting and thought you might enjoy reading it. It is not from the NCR Archive but rather from a private collection.  I think it provides a look into Patterson’s thinking on the marketing of the cash register. It is word for word as Patterson wrote it with no editing. Mr. Patterson wrote the letter from London to Mr. E. H. Bunstine in Dayton on December 30, 1908.  Mr. Bunstine, it would appear, was a Director with NCR. 

Dear Sir,

            Yours of December 3rd received suggesting that we meet competition in our old way, that is, parallel it with identical machines that they make at prices $25 to $50 less than theirs and advance the price on all machines on which we have no competition. Allowing our agents extra commission upon the sale of those machines which are most popular and which we desire to sell most.
            Our old way of putting on “knockers” and keeping prices up high seemed alright at first, and we fought alone that line.  Sometimes it was a good thing and sometimes it proved a bad thing. I have looked over the whole situation and made it a great study over 20 years, and I have come to the conclusion that it would have been better for the Company in every way not to have put prices up so high.  We would have made more money and discouraged competition more by keeping prices lower. Keeping up prices to the height which we did was apparently the right thing at the time, but I can see now that it was a mistake.
            I think I explained before the One Hundred Point Club, when you and the rest of the Directors were present the importance of putting down the price of our machines to meet competition of details made in the States and of other machines made in Europe.  I have talked with Messrs. Pfume and Deeds and written many letters from this side trying to convince them and through them to the Board of Directors, that any other policy than putting down the price was suicidal.
            It would take more time than I possibly have now to spare to write the many reasons  that have caused me to come to this conclusion.  I thought I told Messrs. Pfume and Deeds sufficient for them to explain to the Board of Directors.  I knew all along the necessity of putting down our prices, and there is no doubt now in my mind but what I have been right.  I know I am right and only sorry I did not put down prices a year sooner.  As it is we will have to put them still lower in order to protect our business.  This will apply not only to the Continent and Great Britain but to America as well.
            Putting up prices encourages competition, and instead of giving more attention to the increase of business and such things as guiding the Inventions Department, the Tool Making, the economy in the Making and Selling and advertising, I have had to give it to competition.
            Now!  It is the people who keep up prices that get whipped in the end.  I am conversant with many cases here in London that did not believe that “A bright day brings forth the Adder”.  That is, they did not meet competition until competition had the market.
            I wish you would ask Mr. Deeds to show you some of the letters which I wrote him and Mr. Pfume, as they cover the ground so well.  But my letters will not explain, in order to know that I am right it would have been necessary for you to have been at my elbow for the last 10 years watching the effects on different experiments and finding out what people are doing in other lines of business. I have made it life’s study, and it is impossible to make anybody see things as I see them unless they have been through the same experiences as I have, but there is no doubt but what I am right.  I know it, and there is no possibility of my being wrong in the reduction of prices, and time alone will prove it. 

Sincerely yours,
John H. Patterson

I find it interesting he said that he wishes “he” had lower prices a year earlier and yet he seems frustrated that he is having so much difficulty getting the Board to react to his suggestion. I wonder what happened that prevented him from just lowering the prices rather having to plead with the Board to do so.