Spencer Heath Archive

Item 2891

Exchange of letters between son-in-law Irvan Thomas O’Connell (Sr.), Automatic Heating, Air Conditioning, Plumbing, 22 S. Braddock Street, Winchester, Virginia, and Heath at 434 W. 120^th Street, New York City.

March 24, 1937

 

 

 

 

Dear “Pops”:

 

Please note the “Pops;” now you know this is going to be a touch!

 

I have been thinking about writing you, so often, and have tried to get Bee to act, but she’s been busy with the children. I’ve been just dying to tell you about my experience with Mr. Brown at the bank; I really wanted to call you up or something, quick!

 

 Well, prices of materials seemed to be going up so fast, that when I estimated on a job, the price would be up before I got back to the office! So I decided the thing to do was to stock up on enough material of the common run, sort of like “sugar in a grocery store” variety, that I’d need on ten to fifteen jobs. I worked up a list that came to a little over two thousand dollars and took it up and talked it over with my friend, Mr. Brown. He seemed to think it was a good idea, so I asked him for the money. He said, “I’ll take it up with the directors on Friday night.” The favorable way he re-acted to it made me realize how right you’d been about your advice about the bankers. Well, on Saturday he telephoned and said, “It is O.K.; I can let you have the money.” So I felt pretty swell! He, however, cautioned me about trying to expand too rapidly, as you did. You both think so nearly along the same lines that it astonished me at times, or rather, you seem to know how he’ll think.

 

 I sent my five-page list of material to three companies for quotes and, I’ll be able to buy it from their stocks at prices that prevailed last year. The saving will be twofold, as there is another advance April 1st. The only trouble with this system, as I see it, is it will freeze up my bank credit until I get the stock turned over.

 

 I now have the plumbing and heating on three new houses. The jobs are not big ones, however; they only total around one thousand dollars. But did I tell you? I got my first job down in Clarke County for two thousand dollars, and the man paid down four hundred eighty-five dollars ($485.00) to protect himself against a price raise. The way material is going up, he was pretty smart, but then, he’s a Wall Street broker and knows the market. We have his material all ordered and covered now.

 

 I bought five hundred dollars worth of plumbing stock last week and paid cash for the truck. But by the time I buy the million and one things, insurance, license, typewriter, stationary, books, tools, rent, etc., however, I may run short of cash before time to draw on my first jobs. Well, there’s where you come in! Thank God for a rich Father-in-law! (That was to kid the stenographer). I forgot to tell you that I have one of them too.

 

 Well, to get back to this touch, if I run out of money before April is out, you’ll just have to kick in with a thousand or so; until we start clipping coupons. I’ll be interested in your reaction to this last.

 

The man started work on the first contract to-day. So the mills are in operation now. I’m out lining up busi­ness, even on Sunday, but I’ll have to get two crews working on installations before there’s a chance of pro­duction coming up to the profit point.

 

 I went over Sunday to see my old friend, Mr. Samuels. He’s with me 100%; so everything looks like it’s going O.K. I’m working from 7:00 A.M. to 10:00 P.M. It is more fun when you’re doing it on your own.

 

 I want to thank you for your encouragement and help; with­out it, I wouldn’t have dared undertake the step.

 

 The building is starting both here and at Front Royal with a bang. So there is plenty of work available.

 

 Lucile got home to-day. She looks well and seemed to have enjoyed her stay with you, very much. We are looking for­ward to a visit from you so we can talk it all over.

 

 With my sincere best wishes,

 

 

 

 

 

Dear Irvan:                                March 26, 1937

 

I am much interested to receive your touching letter of the 24th with latest bulletins on the new business. I would certainly like to have an occasional talk with you about it. It looks to me that you are using very good judgment and getting things well in hand. However, I don’t think you have at all frozen your credit with Mr. Brown. He is anxious to lend same as you are to borrow, long as he thinks everything is sound. He doubtless knew when he financed you for the materials for a dozen or more jobs against the rise in prices that you would need more funds to carry on current work in hand. It is good that he knew what you were using this first two thousand for, since it was a sort of speculation and wouldn’t supply your current needs. I remember when I made a first loan (and it was a pretty large one) my banker said right away, “Do you think this will be all the credit you will need?” I said “Just for the present, but I expect I will need a good deal more before long.” He said, I know darn well you will.” And he proceeded to outline a plan then and there, and the plan was carried out very successfully.”

 

 The least that you can do is to give your banker first chance to finance you properly. He would not freeze up your credit purposely, knowing that you had still to finance your current expenses, and, anyhow, it is not good policy to borrow anywhere else without his knowledge. And if you find it convenient to chum up with him a little he will take just as much interest in how you are getting along.

 

 About expanding too rapidly, it^’s best not to take every job you can get if there are plenty of them. Pick the ones that you are sure you can handle best and finish quickest and get the pay. These are the customers to whom you can give the best satisfaction and the ones that will build your reputation. If you spread out on too many jobs it will not only strain your finances, but your customers, on the whole, will be less satisfied. With fewer and better satisfied customers and quicker re­turns you will get a reputation for high class work and rapid performance. Of course, it’s possible to be too cautious, but I think you will know about where to draw the line. In case of doubt, I think your banker can help you to decide wisely. I don’t mean every banker but a good banker, and I imagine that’s the kind Mr. Brown is.

 

 The three new houses must be pretty small ones if the plumb­ing and heating only comes to three or four hundred dollars apiece. I wonder what kind of a job it is down in Clarke County for two thousand dollars. I suppose you have been making prices long enough so you will not make the mistake of bidding too low and that your bids will all be for quick acceptance or revision, in view of the rising market. Another way to keep from over expanding is to bid pretty high, especially on the jobs that you are least anxious to get.

 

 Well, about this “touch” business. I think you better keep that
in pickle for a while, but I want to hear a plenty about how everything is going. I can be a whole lot interested without making any promises. The bank most probably will be glad to furnish you all the capital you need for solid progress (unless you get too big for them). Before that time comes you can incorporate perhaps and issue yourself a lot of stock and let other people in on some some of it, but I wouldn’t think too much about that for a while yet.

 

 I surely am glad your wrote me. I was wondering, and I want to hear a lot more from you. I think you are in the way of making a very fine start and I am very glad you have had the nerve and the enterprise to do it. Give my love to Bee and tell her I miss her very much, and I was sorry to have Lucile go back so soon as she did.

Best luck!

      

S. H.