New York Evening Post, August 25, 1927, page 3:
HUGE RADIO SYSTEM STARTED BY POSTAL
Mackay Buys Federal Telegraph as First Step Toward World Communications Chain
PATENTS ALSO ACQUIRED
The Postal Telegraph - Commercial Cables Company has acquired the Federal Telegraph Company and in the near future will expand the latter's radio communications service into a world-wide system which will supplement and relieve the present rush of traffic over the land telegraph lines and ocean cables operated by the various companies controlled by Clarence Mackay.
Announcements by George V. McLaughlin, vice-president of the Mackay interests, and Ellery W. Stone, president of Federal-Brandes, Inc., of which the Federal Telegraph Company is a subsidiary, made public the details of the merger which will bring into being the largest and most comprehensive system of communications in the world.
The radio service of the Federal Telegraph Company is now confined to a point-to-point and a ship-to-shore service on the Pacific Coast, but the expansion of this system is made possible by the terms of a contract signed with the Federal-Brandes Corporation, under which the Mackay interests acquire the right to purchase and use the many valuable patents held by the latter corporation.
Through control of these patents, among them the long-wave arc-system of radio transmission, the Mackay concern will become interested in the commercial use of television, facsimile and photoelectric telegraphy and telephony.
Plan World-Wide System
Mr. Stone's announcement referred to the purchase of the Federal Telegraph Company by the Mackay interests as "the first stop" in the building up of a world-wide system, which will embrace almost every known of communication.
"The Federal Telegraph Company, on August 10, 1927, after negotiations conducted during the past seven months, consummated a twenty-year contract with Radio Communication Company, Inc., one of the companies comprising the Mackay system, under the terms of which the Federal Telegraph Company henceforth will participate with the Mackay system in the building up of a world-wide radio communication system, in conjunction with Mackay system's present wire and cable system," the announcement said.
"The first step in this radio expansion of the Mackay system is the purchase by the Mackay system of the Federal Telegraph Company's present land and marine radio telegraph system on the Pacific Coast, at a price representing a profit of $1,000,000 to the Federal company. All the necessary preliminary steps in connection with this sale have been taken, and it is expected the properties will he transferred within the next thirty to sixty days.
"The Mackay system will bear half of the expense of the laboratories of the Federal Telegraph Company, now located at Palo Alto, Cal., which is headed by Dr. F. A. Kolster, chief research engineer of Federal Telegraph Company. The manufacturing and operating relationship established by this contract between the Federal Telegraph Company and the Mackay system will be similar to that of the Western Electric Company to the American Telephone and Telegraph Company, in that the Federal Telegraph Company will perform engineering and manufacturing functions in the fields in which the Mackay system will be the operating organisation.
Plan Submitted to U. S.
Mr. McLaughlin's statement said the entire plan for the purchase of the Federal company and the operation of the contract between Brandes and the Mackay interests had been submitted to the United States Department of Justice and the chairman of the Federal Radio Commission.
Although no statement as to the actual cost of the entrance of the Mackay Interests into the radio field could be obtained, it is believed from the terms of the contract with the Federal-Brandes interests that it will not total more than $5,000,000.