Grand Tradition : The Cutthroat Business Behind All That Pretty Music : THE STEINWAY SAGA: An American Dynasty, <i> By D.W. Fostle (Scribner: $35; 710 pp.)</i>

From 1853 to the present, the firm established by German immigrant Heinreich Steinweg has produced several hundred thousand fine pianos. It took less than a generation for Steinway to emerge at the head of the 826 instrument makers in New York and of the hundreds more nationally. By the early 1890s the Steinway family, still firmly in charge, was reaping 30 cents clear profit on every dollar of gross revenue. No instrument on either side of the Atlantic garnered more florid endorsements from top artists.

In his detailed (to say the least) chronicle of this American success story, D.W. Fostle offers rich insights on why this success occurred. Surely it was due in part to the Steinway firm’s tough business practices. No other house did more than Steinway to develop the technology and to hire the best craftsmen to apply it. At the same time, no other firm was willing or able to do more to control costs. All but invisible to the genteel audiences at the old Steinway Hall on 14th Street were the endless strikes, lockouts, brawls with wreckers, attempts at union busting and confrontations over scabs. In 1880 Heinreich’s son, William, even considered moving all operations to the German branch in Hamburg in order to take advantage of “cheap German labor.”

In some of the best passages of the book, Fostle also demonstrates Steinway & Sons’ utter mastery of the blood sport of marketing. The need was great. The Steinways’ competitors were turning out cheap knockoffs and planting rumors of the house’s demise. Steinway counter-punched with inflated production figures, the manipulation of competition juries, apparently forged testimonials, and what one competitor, himself a consummate huckster, called “fraudulent puffing humbug.” Somehow it all worked, however, and the house of Steinway emerged in solid control of the top end of one of the most high-tech industries of the day.

Steinway’s ability to prevail in this Darwinian struggle over the decades was vastly enhanced by the single-minded and ruthless control exercised by several generations of the founding family. As immigrants from the town of Seesen, members of the family were like many immigrants today, fanatically devoted to their business, loyal to each other and committed to maintaining close ties with their homeland long after they had gained wealth in the New World. Beyond this, the Steinway men were brutal toward any sign of apostasy within the family and showed a stunning callousness toward any Steinway wife who failed to find complete fulfillment in the successes of the firm.

The central figure in this family saga was William, who absolutely dominated the industry while his wife ran off with the coachman and various nephews suffered under his tyrannical sway. A visionary’s visionary, William Steinway dreamed up the idea for a subway for New York a generation before anyone else did and teamed up with Germany’s Gottlieb Daimler to produce automobiles in 1891, long before Henry Ford entered the business. With Titanic self-confidence, William committed his own vast resources to such schemes and then borrowed heavily against future earnings. Hence, when he died in 1896, this giant of probity was insolvent, just at the moment when cheap uprights, which William abhorred, were pouring out of the competitors’ factories.

“The Steinway Saga” is a long, leisurely read, full of bizarre tales and droll insights that will delight musicians, students of management, moralists and viewers of family soap operas such as “Dynasty.” Like Thomas Mann’s fictional family, the Buddenbrooks, the clan of Steinway was the key to both the company’s successes and its failures. Fostle’s account of the family’s affairs reads like a novel, or like some especially engaging Harvard Business School case study of the do’s and don’ts of family-run businesses.

It is no criticism of Fostle to note that at least two other elements figured in the Steinway success. First, for reasons closely linked with technology, Steinway’s 19th-Century instruments produced a strong, commanding tone at precisely the time that the German-Russian school of full-armed playing came into fashion. Steinways were not better than the instruments built by the great Boston firm of Chickering, but the latter appealed to the lighter, cleaner French style of performance that began to wane in the 1860s while the Steinway instruments were perfect for the emerging style. The great American composer and pianist Louis Moreau Gottschalk epitomized this French school and preferred Chickerings. After his death the field was dominated by German and Russian virtuosos who gravitated naturally to Steinway. Another factor contributing to Steinway’s rise was the quality of its competitors. Dismissed rather airily by Fostle, Chickering and others gave the Steinway firm a run for its money, forcing it to seek continual improvement and what today might be called “total quality management.”

“The Steinway Saga” also recounts the travails of Steinway & Sons in the 20th Century. Player pianos, then radios, television and the decline of high culture all played a part in the firm’s difficulties. So did the collapse of music education in American schools, not noted by Fostle. Then, both before and after the sale of Steinway & Sons to CBS in 1972, a number of bad strategic moves threatened the firm’s very existence.

Above all, the Steinway firm paralleled the American automobile industry in failing to reckon on the competition from Japan, in this case from Yamaha. The onslaught from Yamaha shattered the old smugness and forced Steinway & Sons to concentrate on its core product. To be sure, a group of red-eyed MBAs from Boston nearly killed the firm in the 1980s when they tried to apply techniques they had learned in the heating and fuel oil business. Yet somehow Steinway continues even now and is once again making instruments that artists revere. In the ultimate paradox, Steinway today competes in part against itself, for tens of thousands of the instruments it has manufactured over the years are still on the market and sounding as splendid as ever.