M. Hohner, Trossingen to M. Hohner, New York, April 17, 1925.
[To:] M. Hohner Inc., New York
The wage negotiations have now led to an agreement. From Monday, the 13th of the month, we will be obliged to pay higher wages, which will increase our expenses according to cautious calculations by about 200,000 marks. On the employer side, all means were applied to come away cheaper from the agreement. Unfortunately, without success. Actually, we can still be satisfied with the agreement as it now stands in comparison to neighboring industries, although for the harmonica industry this sort of increased expense for wages cannot be borne while maintaining the old retail prices. After the wage negotiation the leading individuals from the sales divisions of the 3 firms in Trossingen sat together at one table in order to negotiate the future structure of pricing policy with one another. Strangely, the Koch firm demonstrated the greatest willingness to follow our ideas in this area. On the occasion of a meeting that took place yesterday evening an agreement on principles was reached to the effect that the 3 local firms will at first align their base catalogue prices or their so-called recommended prices to be on the same basis. After that, it shall be determined on a case by case basis which price differences can be allowed between the individual firms. Richard Koch would be prepared, in general, to set his prices 5% lower than Hohner’s. Richard Koch’s position is quite striking. Just a few days ago, the Koch firm reacted entirely negatively to our suggestions. Obviously, the new wage increase strongly influenced the Koch firm to assist in a recovery by means of the pricing policy. Koch’s balance sheet for 1924, as Schrei heard from Wilhelm Koch, has been finalized. The result contained therein may have been correspondingly striking, which would explain the Koch firm’s changed attitude. Richard Koch’s experiences in the U.S.A. will also have been primary determinants of the firm’s complete willingness to forge a mutual price agreement.
Tomorrow negotiations are taking place in Nuremberg between the Trossingen group and the Klingenthal group. Topic of negotiation: “Mutual convergence, common pricing policy and that sort of thing.” Our “Councilor of Commerce” and Dr. Will Hohner will be present at this negotiation, as well as Richard Koch and Otto Weiss. The first joint meeting with the Saxons will in all likelihood be informational in nature, particularly since there is no inclination at all from our side to cooperate with the Saxons again, that is, to found a so-called general association. It is not at all possible to predict the results of the discussion about the price question. At the beginning of next week we will be able to give you more precise information on this point.
Among other things, it still needs to be mentioned that the Koch firm agreed 14 days ago not to include the U.S.A. area in the agreement. From our side, we immediately answered “yes.” Whether the Koch firm will maintain its old position after Richard Koch’s return, we do not know. In any case, you may be assured that we will make no agreements that could be damaging to you. For the harmonica industry, it is a commandment of necessity that relationships be created concerning sales policies, which can help the industry to recover. The newly approved wages can only be borne if the retail prices can be correspondingly increased.
You will from now on be regularly advised by us concerning the progress of the negotiations taken up with the competition.
[M. Hohner, Trossingen]