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History of Communications-Electronics in the United States Navy, Captain Linwood S. Howeth, USN (Retired), 1963, pages 133-152:


The  Early  Radio  Industry  and  the  United  States  Navy


At the time the Senate Committee on Foreign Relations was considering ratification of the 1906 Berlin Convention, the radio industry in this country was badly in need of investigation.
    In the earlier years hundreds of patents had been granted, yet, excepting a few, there was but a modicum of originality in any. This was caused by the fallacious view of the patentees that any improvement in vital or accessory components was fundamental and resultant in distinctly different methods of radio communication. This was intensified by the equally fallacious acceptance of this view by the many national patent offices which failed to realize that in so doing they were essentially allocating the use of something over which they had no control, something that belongs to every living thing, the air. Such a situation could have but one result--the various patent holders of so-called systems considered every other patentee a thief and a scoundrel, and instead of cooperating to provide stamina to the young industry they were stifling its growth by malnutrition. Although infringement suits had been slow to develop and slower yet in adjudication, the judgments rendered were beginning to become effective. The largest company in this country was completely controlled by notorious individuals who were continuing to use it as a medium for the sale of stock the proceeds of which were misdirected to individual usage or for advertising purposes without greatly enhancing the real assets of the company.
    In the field of commercial radio operations 188 commercial vessels of U.S. registry were fitted with radio equipment of which only 83 were under American Marconi Co. contract. The largest number of shore stations of any one company was the 39 erected by the American De Forest Wireless Telegraph Co., but the actual reason for these was for stock promotion rather than for communications.
    U.S. engineers and scientists were improving appurtenances and auxiliary apparatus and obtaining slightly better ranges in transmission. In 1906 De Forest discovered and applied for a patent on the three-element vacuum tube as a detector. In the same year Gen. H. H. Dunwoody, USA (retired), discovered the rectifying property of carborundum, while Mr. J. G. Pickard disclosed that silicon possessed the same property. Fessenden by this time had been successful in transmitting speech between Brant Rock and Plymouth, Mass., utilizing a small, high-frequency alternator. In 1903 Poulsen developed the arc transmitter to the extent that he was able to transmit for a distance of 150 miles. In 1909 the U.S. rights to the Poulsen transmitter were purchased by Mr. Charles Elwell.
    Development in the United States was accomplished without very exact quantitative knowledge of the involved factors. Frequently, capacity, and inductance were the only ones normally measured. High-frequency currents, above the range of 6-ampere thermal ammeters, were usually measured by the use of shunts of inexactly known resistances, thus providing measurements which were only approximations. The energy losses in equipment were seldom determined. Fessenden had measured the strength of receiver antenna currents by means of the shunted telephone method, but the results were not accepted by other radio engineers and scientists. Most of the commercial radio interests in this country, with the exception of Fessenden, Stone, and a few others, were more interested in establishing communication networks or in financing stock promotion than in providing the necessary funds for research and development of more efficient apparatus.


In the radio stockbrokerage field, Abraham White, who earlier had so thoroughly eliminated the Gehring interests, now began eying the American Marconi Co. The idea of gaining control of that company looked so big to White that, without consulting its directors, he announced in the newspapers, one Sunday morning in November 1906, the formation of the United Wireless Telegraph Co., organized and capitalized at $20 million for the purpose of uniting the different radio systems, including those of the Marconi and American De Forest companies, as well as for acquiring the latest and most approved inventions employed in the art and for continuing its development and expansion throughout the world on a broad and comprehensive scale.1
    Included among the directors were White and his former satellites, plus a member of a well-known New York Stock Exchange firm and a prominent banker from Pittsburgh. The last two named remained on the board just 24 hours. From the moment White displayed their names upon his half-page advertising, a "stream of incredulous inquiries poured in on them from their friends," and with as good grace as possible they quickly severed their connections.2
    Leading Marconi promoters on both sides of the Atlantic made immediate and irate protestations. Marconi cabled from Italy that it "was all Greek to him." Emphatically denying any merger plans of the De Forest and Marconi firms, the President of the Marconi Wireless Telegraph Co., Mr. John W. Griggs, characterized White's "merger" as "antagonistic and repugnant to the Marconi companies." White continued "merging," the denials of the enemy notwithstanding, and succeeded in winning over one Marconi director, who was immediately ousted from that company's board. A notorious firm of Broadway brokers which had been "hawking Marconi shares around the country at fictitious prices" also succumbed to White's wiles.3
    A sample of the alluring prospects offered is gleaned from the statement below taken from a circular outlining details of the plan for exchanging United Wireless and American De Forest securities:
For every dollar paid by you for De Forest preferred or common stock there will be issued $1.10 worth of United Wireless Telegraph Company preferred stock, plus 5% thereon for every year the stock has been held by you for over one year. To holders of bonds who desire to exchange them for preferred stock, we will exchange by allowing 20 percent on the par value of the bonds and the holder will be allowed to retain his bonus stock. To the holders of bonus, cut rate, or broker's stock we will exchange at the rate of one share of United for six of American De Forest. This applies either to preferred or common stock purchased prior to January 1, 1907. All stock exchanged must be held in escrow in bank or trust company for two years.4
    For the first time De Forest realized White's true intentions and strenuously objected to his actions. This aroused White's ire. He completely ignored De Forest and left him completely out of the new organization. In a letter to Frank Butler, dated 10 October 1906, De Forest explained the existing situation:
That philanthropist has cut me off entirely. I can't get a dollar from the company nor will he allow me to sell my stock.
    . . . It's pretty tough after all I've done to make the enterprise out of which so many were reaping huge commissions a success . . . to get this treatment . . . As soon as your immediate usefulness was ended, it was a case of "to hell with you." I might have foreseen my own treatment from the treatment you received . . . Reformation is an impossibility. There will be no great things in wireless until the present management is out.
For his entire holdings in the American De Forest Wireless Telegraph Co., including all patents excepting those pending on the three-element vacuum tube, De Forest received a paltry $500. His attorney pocketed one-half of that.
    White was not successful in his efforts to obtain control of the American Marconi Co., but he did succeed in obtaining control of and absorbing Shoemaker's International Telegraph Construction Co. Shoemaker, for the second time, went to work for White, and his brilliantly started career became hitched to a lodestone.
    In the late summer of 1907, "ex-Confederate Army Colonel Christopher Columbus Wilson, stock promoter par excellence, 'Colonel Sellers' incarnate,"5 the erstwhile general western manager of the American De Forest Wireless Telegraph Co., dissatisfied with his share of the spoils, succeeded in ousting White from the presidency and from the board. Wilson continued and expanded the stock-peddling policies of the company and made White look like a rank amateur as he further depreciated the physical assets of the firm. The below-quoted statement of Mr. John Firth provides an idea of the standing of the United Wireless Telegraph Co. in financial circles.
. . . Just as I was arranging to leave New York for Pittsburgh I received a telephone call from Colonel Wilson, President of the United Wireless, asking for an interview. I informed him I was leaving New York that evening, and would not be able to see him until my return to New York. He asked me what time I was leaving and I said 9:30 p.m. and he asked me to see him at his hotel, Waldorf Astoria, on my way down at 7 o'clock. He then asked me at the interview to become president of the United Wireless Telegraph Company, saying he would retire if I accepted. He also promised me a block of the company's stock. I said I would not under any circumstances accept his proposal as the company had degenerated and was being used to swindle the people by selling them stock that had no value and my final remark was that the company was ''conceived in sin and brought forth in iniquity." He was furious.6
    Unfortunately, no date is connected with the above. Obviously, Wilson, at that time, was looking at the "handwriting on the wall" and was searching for a scapegoat. He did not succeed in accomplishing this, for in 1910 he was adjudged guilty of perpetrating a fraud and, like his erstwhile associate, White, was sentenced to be a Government guest in the Federal Penitentiary, Atlanta, Ga. Following this, the company continued to suffer reverses. The notoriety incident to Wilson's conviction ruined the further sales of stock. In 1912, it was adjudged guilty of infringing Marconi patents and was forced into bankruptcy. Its few remaining assets were purchased by the parent Marconi Co. and given gratuitously to the American Marconi Co.
    The officials of the United Co. had so completely degraded it that it ceased to be a factor in the development of the industry. The Navy refused to have any dealings with the White or Wilson interests after the organization of the United Wireless Co.


Discouraged, De Forest, in 1907, joined with James Dunlop Smith, once a star stock salesman of White, and Samuel Darby, an honest patent attorney, to form the De Forest Radio Telephone Co. This firm was capitalized at $2 million, and 50 percent of its stock was issued to De Forest in exchange for the US and foreign patents pending on the triode and for the tuned circuit patents of John Stone Stone which were acquired by him at this time, the Stone Co. then being about to dissolve because of lack of revenue.
    This new company's basic endeavor was the development of the radiotelephone. In this effort they utilized a version of the Poulsen arc8 as the transmitter and a combination of crystal and triode detectors in the receiver. The U.S. Navy, searching for a satisfactory radio system for tactical usage, was the company's first customer. In late 1906 they purchased 26 of these equipments for installation in vessels of the "Great White Fleet" prior to their departure on a round-the-world cruise. They were improperly used by naval personnel and for this reason proved a failure.9 This did not appreciably bolster the company's revenue and they were soon in financial difficulties. Some of De Forest's associates again resorted to sales promotion of the company's stock, but by this time the public had become somewhat wary of the rosy future pictured by the brochures of the day. Unsuccessful in raising sufficient funds the company was forced into bankruptcy in 1911 after the failure of an attempt to merge it into a $10 million North American Wireless Corp. All that was salvaged from this venture was a subsidiary, the Radio Telephone Co. which had been established at the same time as the parent company. De Forest was not to escape the responsibility for the misdeeds of his associates. The same Government crusade against radio stock promoters which resulted in the convictions of White and Wilson ensnared De Forest and two of his sales-promotion force. Aided by his classmates at Yale he was ably defended and was exonerated on the grounds that he had not been aware of the unlawful practices used by his company. The two associates were given penitentiary terms. The Government's primary accusation was that the defendants were selling stock "in a company incorporated for $2 million whose only assets were De Forest's patents chiefly directed to a strange device like an incandescent lamp which he called an audion and which device had proven worthless."10
    Following the failure of his company, De Forest entered the employ of the Federal Telegraph Co. of California. There, assisted by Messrs. Herbert Van Etten and Charles Logwood, he worked "on problems of high-speed telegraphy, static reduction, and long-range transmission."11 In 1912 he conducted new experiments with his triode and succeeded in obtaining increased amplification by connecting them in cascade. This proved effective as a telephone repeater and in the spring of 1913 the American Telephone & Telegraph Co. purchased the triode rights for this purpose for $50,000. Following this, De Forest is credited with the discovery of the oscillating property of the triode.12
    The Federal Telegraph Co., American sponsor of the Poulsen continuous-wave arc transmitter, was utilizing a "tikker" receiver for the reception of this type of emission. De Forest developed his "ultra-audion" for use in heterodyne reception to replace the Federal "tikkers." Later the Navy purchased a large quantity of "ultra audions," but their construction was of such poor quality that it was necessary for its radio test shop to redesign and reconstruct them.13
    About this time De Forest claimed the development of the feedback circuit which could be used either to increase the sensitivity of the audion as a detector or to generate oscillations. This came into conflict with a claim of Mr. Edwin Armstrong, who had delivered a paper describing a "regenerative circuit" in early 1913.14
    In 1913 De Forest used the $50,000 he obtained from the sale of the telephone repeater rights to the triode and reorganized the Radio Telephone Co., changing its name to the Radio Telephone & Telegraph Co., of whose stock he owned 80 percent. The following year he sold further triode rights to the telephone company for $90,000 and began the manufacture of tubes under the limited rights he had retained.15 This company managed to stave off bankruptcy for the next decade and did some business with the U.S. Navy but was never looked upon by it with exceeding favor.16 Figure 11-1


Reginald Fessenden, the hot-tempered, stubborn, self-opinionated, and intolerant scientific director of the National Electric Signaling Co., was long obsessed by the conviction that long-distance radiotelegraphy and telephony could be best accomplished by the transmission and reception of continuous waves.17
    In 1903 he had interested two Pittsburgh bankers, Walker and Givens, in supporting his research with the idea of developing a radio communication system which could be sold in its entirety.18 The National Electric Signaling Co. was organized for this purpose. It was not engaged in stock promotion and in fact both Walker and Givens were unalterably opposed to the sale of the company's stock to the public.19
    During the last decade of the 19th century Nikola Tesla had pioneered the use of the alternator but had not been successful in its use as a transmitter of radio waves. Fessenden adopted this means and had several built to his specifications. None of these proved sufficiently powerful because of his adamant refusal to accept the advice of Dr. E. F. W. Alexanderson, of the General Electric Co., to use an iron core.20
    Parallel with his endeavor to develop the alternator, Fessenden worked on a synchronous rotary quenched spark transmitter which reduced the damping coefficient to a point where the emission had some what the characteristics of undamped waves. He was successful in developing such a transmitter which had some capability of transatlantic radiotelegraphic transmission. It was not sufficiently superior to Marconi equipment to permit further expenditures of funds following the loss of the company's towers at Machrihanish, Scotland, in 1907.21
    In his search for a receiver for speech transmissions Fessenden developed and patented an electrolytic detector in 1903. This device had the same failing as the coherer in that a cyclic operation was necessary to permit a flow of current from a local battery to emulate the actions of the transmission being received. Continuing the search for a more satisfactory system of continuous-wave reception, he developed the heterodyne method of reception. In his early receivers of this type he utilized a small arc generator to provide the local oscillations. The difficulty in controlling the local generator delayed the acceptance of the heterodyne receiver until De Forest developed his "ultraudion" which could be used as a satisfactory generator of local oscillations.22
    As previously related, Fessenden during the years 1903-7 had almost constantly berated the Navy because of their failure to purchase his apparatus or to pay his company royalties on the equipments then in use.23 Being aware of their standing with the Navy Department, the National Electric Signaling Co. engaged John Firth, vice president and sales manager of the Wireless Specialty Apparatus Co., to sell the Bureau of Equipment the 100-kw., synchronous rotary spark gap transmitter which Fessenden had developed for transatlantic communications experiments. This was done in the full knowledge that Firth was on excellent terms with the leading personnel in the Radio Division of the Bureau of Equipment and that the Bureau was specifically seeking a means of direct radio communications between Washington and the Canal Zone as well as equipment to provide long-distance radio telegraphy.24
    Firth, as a salesman of radio apparatus and appurtenances, had no peer in his day. He did not immediately rush to Washington and endeavor to sell the transmitter, but on every one of his periodic visits to the Bureau he would mention that he would like to see a large installation there so that the Navy Department could be in touch with its ships and stations all over the world. After having voiced this idea for almost a year, one day in the late summer of 1908 he was asked by Sweet, the Assistant Head of the Radio Division, "How is your dream getting on?" This was what he had patiently awaited, and he instantly replied:
It will come true quicker than you think. I am prepared to take your order today for a 100-kw. set embodying the very latest features in wireless and which will connect you at will with every ship in our service.
Sweet was impressed with the old gentleman's sincerity, and took him to see his superior, who directed him to investigate and contract with Firth, provided the equipment would be guaranteed to meet the specified requirements.25 Although his connection with the National Electric Signaling Co. may have been suspected, since his own firm did not manufacture transmitters, he did not reveal it until after the decision was made. Regardless of Firth's offer, specifications had to be drawn up and bids requested on the equipment from all possible suppliers. This was done and, additionally, two ship installations were included.
    The January 1909 issue of the Electrical World contains a rather caustic news item concerning these, which is quoted in its entirety:
On Jan. 5 proposals for furnishing long-distance wireless plants for the Navy will be opened, consisting of a sending station at Washington, having a range of 3000 miles, and two equipments for vessels having a receiving range of 3000 miles and a transmitting range of 1000 miles. The circular for prospective bidders is a formidable document which, if taken too seriously, might well deter any manufacturer from submitting a proposal. Aside from forms, there are 33 paragraphs, of which 31 consist mainly of conditions to secure the government from any possible loss, or exercise of any generosity toward a manufacturer who might, in his zeal to meet the need by the government for such a plant, too lightly pass over the difficulties incident to its design and construction--these precautions recalling the interesting game of "Heads I win, tails you lose." Apparently exhausted in the work of preparing these safeguards, the writer of the document confines to two paragraphs of the specifications to guide the successful bidder, as follows;
    "The station to be capable of transmitting messages at all times and at all seasons to a radius of 3,000 miles in any navigable direction from Washington, D.C. Such messages must not be interrupted by atmospheric disturbances or intentional or unintentional interference by neighboring stations. The station to be capable of transmitting and receiving messages with entire secrecy. The contractor must supply the necessary concrete buildings, with living accommodations for four operators, towers, ground connections, wiring and apparatus complete. Such to be erected at or near Washington, D.C., the exact location to be decided at a later date.
    "Two sets of apparatus installed on board vessels of the United States Navy, to be capable of transmitting and receiving messages at all times, in all seasons and in all latitudes, to and from a distance of 1000 miles, and to receive messages from the high-powered station above-mentioned at a distance of 3,000 miles at all times, the apparatus to be capable of transmitting and receiving messages at the maximum radius with entire secrecy and without the possibility of interruption due to atmospheric conditions or intentional or unintentional interference. These sets to include as an adjunct wireless telephone apparatus capable of establishing and maintaining satisfactory communication to a distance between ships of 100 miles. Such communication to be sustained without adjustment of instruments or interruption therefrom for periods of at least 5 minutes. This ship apparatus must be so constructed as to be installed in a room with 100 sq. ft. deck space. The antenna must be so disposed as not to require a change in the height or distance between masts or to materially change the outward appearance of the vessel.26
One of the above mentioned "31 paragraphs" reserved the right "to award the contract for either of the items, to accept any bid, to waive any defects or informalities in the proposals, and to reject any or all bids."
    When the proposals were finally opened on 28 January 1909, the following bids were submitted:

Marconi Wireless Telegraph Co. of America       

$249,245 to $361,094  

Stone Telephone & Telegraph Co.

$100,000 to $275,000*

Collins Wireless Telephone Co.

Radio Telephone Co.


National Electric Signaling Co.

Telefunken Wireless Telegraph Co.


Massie Wireless Telegraph Co.


*Bid did not guarantee to meet specifications.
+Equipment only.

%Both items and buildings and towers.
#Both items but not buildings and towers.

    On 19 February 1909, the Bureau of Equipment recommended the award of contracts to the National Electric Signaling Co., the "lowest responsible bidder, for the sum of $182,600," which included providing the building and towers. However, when the contract was executed, the second proposal of that company was accepted with the tower and buildings to be erected by the Navy. The contract was signed on 7 May 1909, and included the lease of the company's Brant Rock station, where the apparatus intended for the Washington station was installed for a period of 6 months for an additional $5,000. This was done for the purpose of experimenting with the equipment as installed at Brant Rock.
    Following the announcement of the 19 February recommendation of the Bureau of Equipment, a protest from the Radio Telephone Co. was received wherein they claimed that their bid was the lowest for the apparatus; that the bids for the erection of the station were too indefinite to permit any company to make a satisfactory bid; that the requirements of the specifications were such that they could not be fulfilled by any company; and that no practical wireless telephone could be delivered by any company other than their own because of their ownership of the basic patents on such apparatus; and that their bid on the equipment for two vessels was $18,700, while the bid of the National Electric Signaling Co. was $108,900.27 The reply of the Bureau of Equipment to this protest, portions of which were quoted in a letter of the Department, was that it was not known that the Radio Telephone Co. had manufactured any radiotelegraph apparatus, although some of their radiotelephones had been purchased by the Navy and that those had proven of doubtful practicability; that the business operations of the company were at least questionable, and the methods they pursued were such as to create grave doubt as to their honest intent; that the comparison of their bid with the bid of the National Electric Signaling Co. was not made with the knowledge of the fact that the latter's bid included equipment for a high-powered station as well as for two sets of ship equipment; that no award was made for radiotelephones; and that it was believed that their protest was made for stock jobbing and advertising purposes. The second letter of the Radio Telephone Co. addressed to the Secretary of the Navy was written in defense of their radiotelephones which had been installed on vessels of the Atlantic Fleet and which according to the Bureau were not favorably reported on. In this letter they stated that they were interested in seeing that the specifications of the contract of 7 May 1909 should be fully met by the successful bidder.
    The Marconi Wireless Telegraph Co. of America made no direct protest at this time, but they did, on 24 April 1909, offer the use of their South Wellfleet station for use of the Government at all times or at stated periods.28
    Repercussions caused by the award of this contract to the National Electric Signaling Co. continued. Several manufacturers charged that Government specifications were being prepared and worded to benefit certain private patentees and a single corporation. In refuting these charges, the Radio Division stated that its specifications for radio equipment were worded so as to incorporate the best features of all manufacturers and to provide for improved construction and were not prepared to favor or exclude any person or firm, but, since the Navy was the largest American user and since the art was developing rapidly, the aim had been to keep the specifications abreast or in advance of the best practices in order to incite further development. The Navy, with its experience with apparatus purchased from various manufacturers, was in the best position to determine the best practices and where improvements were desirable. No radio equipment had been delivered up to this time that completely complied with the latest specifications since it had been necessary to waive some of the specifications on all the bids that had been accepted. Two complete sets then under construction were designed to meet all the specifications, but since the manufacturer had not had previous Government contracts he could not be included in the "certain private patentees and a single corporation." The Telefunken Wireless Telegraph Co. and the National Electric Signaling Co. were delivering material on large contracts and the Wireless Specialty Apparatus Co. was delivering, on contract, receivers and accessories. The most recently awarded contract for complete sets, transmitters, and receivers had been with the National Electric Signaling Co. since they were the lowest responsible bidder on equipment almost complying with and in some respects better than the specifications. No previous intimation that these specifications favored any particular person or corporation had been received, and such charge was without foundation in fact, and also without foundation as regards any award made for equipment delivered on modified specifications.29 Lower bids of the United Wireless Co. and the Radio Telephone Co. on several schedules were rejected because these companies were not considered commercially responsible. Moreover, difficulties with both these companies had been experienced on previous contracts. Concerning the charge that vessels, stations, and personnel had been used in furtherance of discrimination, the Radio Division felt that this related to the contract for the high-powered station at the seat of government and pointed out that this contract called for no payment until the contractor's guarantees were fulfilled; therefore it was to the interest of the Government to service test this equipment at every possible opportunity. Additionally, the Division advised they were doing all that could possibly be done to encourage research and development by contracting with as many reliable manufacturers as funds would permit. For the past 2 years equipment had been purchased from the Telefunken Wireless Telegraph Co., the Diehl Manufacturing Co., the Wireless Specialty Apparatus Co., the National Electric Signaling Co., and the Marconi Wireless Telegraph Co. of America. Normally the contract had been given the lowest responsible bidder. The Marconi bids were normally higher than those of other companies, but on one occasion they had been given a portion of a contract in order to distribute the work as much as possible and to encourage them to improve their apparatus. It stressed its policy by stating: "Other things being equal, the Navy Department prefers apparatus manufactured in the United States."30
    Fessenden, having achieved his purpose to some degree, ceased his choleric beratings of the Navy. A study of Navy contracts for radio apparatus indicates that approximately 50 more complete sets of National Electric Signaling Co. equipment were purchased during the next 2 years. This represented about 75 percent of the radio equipment purchased during that period. Excepting for the sales of some apparatus to the United Fruit Co., this represented the total income of the company for this period. The 100-kw. and two 10-kw. equipments were never able to meet the specifications, and settlement was finally effected at a figure below the original contract price.31
    Fessenden's inability to meet the contractual requirements of the Navy, coupled with his failure to develop a satisfactory radiotelephone system, widened a breech, originally caused by differing personalities, between him and sponsors. In January 1911 this culminated in a complete break, and Fessenden was dismissed. He then sued the company for breach of contract and was awarded a judgment of about $400,000. This forced this company into receivership to conserve its assets, but it continued its research under Mr. Samuel Kinter. In early 1912 Todd, then Head of the Radio Division, in testimony before a Senate subcommittee stated that the company had raised the prices of their apparatus to a point which prohibited the Bureau from making further purchases from them.32 Shortly after leaving the firm Fessenden became associated with the Submarine Signal Co., of Boston, Mass. From that time he is not credited with further developments in the radio field.
    W. Rupert Maclaurin, in his excellent work, "Invention and Innovation in the Radio Industry," states:
. . . this much is clear about Fessenden as an inventor: in the period from 1905 to 1913 he succeeded in competition with the better organized and aggressive Marconi enterprises, in developing a wireless system which, from a patent point of view, was completely self sustaining.33
Figure 11-2
Figure 11-3
Figure 11-4


In 1909 Mr. Charles Elwell, an Australian by birth and recently a graduate of Stanford University, obtained an option on the American rights to the Poulsen system which had been patented in this country in 1905. The Navy had procured several sets of this apparatus in 1907, and one of the first tasks assigned the U.S. Naval Radio Laboratory was the testing and analysis of this equipment. The Laboratory rendered the opinion that it was too complicated for shipboard personnel to maintain.34
    In 1910, Elwell and his associates, mostly faculty members of Stanford, formed a small company and constructed stations along the west coast of the United States. Their financial backing was inadequate and the company was soon in precarious circumstances. One of Elwell's partners had been associated with Mr. Beech Thompson, and he managed to gain the interest of that entrepreneur, who subsequently became president of the Federal Telegraph Co., organized to absorb the original company. Elwell became the chief engineer of the new company.
    Under Thompson's management the company commenced to prosper and in 1912 established a circuit between San Francisco and Honolulu using 30-kw. arc transmitters and "tikker" detector receivers. The circuit was satisfactory during darkness, and contracts were obtained with the Honolulu papers for the daily transmission of news. The Honolulu station was constructed under the personal supervision of Elwell who, upon his return from Hawaii, convinced Thompson and the other directors that they should endeavor to interest the Navy in their equipment. Elwell proceeded to Washington with a 5-kw. and a 12-kw. set and gave demonstrations. The 5-kw. transmitter was excited by an independent source, whereas the 12-kw. had the field coils directly in series with the arc. The smaller set gave unsatisfactory performance, but the 12-kw. did exceedingly well. The Navy was then testing the Fessenden 100-kw. synchronous rotary spark gap equipment, and Elwell managed to convince the Chief of the Bureau of Steam Engineering and the Head of the Radio Division that the Federal equipment should be given a comparative trial. This was accomplished over the strenuous objection of Dr. Austin, of the U.S. Naval Research Laboratory, who was unable to agree that the 30-kw. transmitter could possibly compete with Fessenden's 100-kw. giant.35
    Navy officials were so certain that the Federal equipment would be unable to compete with their Fessenden transmitter that they required the company to install its equipment in their new Radio (Arlington), Va. station in such a manner that, after its removal, there would be no evidence of its having been installed. A further proviso required the installation to be completed prior to 1 December 1912.
    This equipment did not have to be removed because of failure to compete with the Fessenden equipment. On the contrary, it practically overwhelmed the Fessenden unit, becoming the Navy's darling of the World War I period.36 The Federal Telegraph Co. soon became a Navy-subsidized firm and was purchased by the Government during World War I.37
    The first Federal equipment purchased was for the Panama Canal Zone station. The specifications for this equipment were so prepared that only the Federal Co. could meet them. This procedure provoked protests from the Atlantic Communication Co. and the Marconi Wireless Telegraph Co. of America. The substance of the protests was that the specifications restricted competition by describing apparatus that only one manufacturer could supply. This the Bureau admitted to be a fact, and it had been to assure this fact that the proposals had been so advertised. In explaining this, the Bureau noted that it had made extensive investigation of the questions involved and, as a result of its investigation, had specified the apparatus which, in its judgment, would best suit the purposes of the Navy. Such was the ordinary procedure in all commercial transactions. To accept protests to the extent of changing specifications to include apparatus that it did not desire would be to admit that the ordinary commercial procedure was not open to a Government department, whose experience, research, and decisions would thus become secondary to the clamor of rival manufacturers. While the Bureau considered the above protests as an effrontery, it went on to explain its action. There being two fundamentally different systems of radio involved, namely, the spark system or system of damped oscillations and the system of continuous undamped oscillations, sometimes called the Poulsen system, there was a matter of choice. All the other so-called systems bearing proper names such as Marconi, Shoemaker, Fessenden, De Forest, Telefunken, etc., were but variations of the spark system and did not represent real differences so far as fundamental classification was concerned. When comparative tests clearly demonstrated the superiority of the Poulsen system the Navy's course of action was clear. One of the most gratifying features of the situation to the Bureau was that, through the Navy Department's help and encouragement to the Federal Co., which held the American rights to Poulsen equipment, an American company was assisted in developing a system that was to inaugurate a new era in the history of radio. Therefore, in concluding his commentary on the Navy's decision to act as it did, Lt. Comdr. A. J. Hepburn, USN, wrote:
As the matter stands we alone possess the sure knowledge to foretell a revolution in the art of Radio. That revolution will come whether with or without our help. But whereas on the one hand we stand to gain the credit that comes of clear-cut, scientific investigation, confident judgment and decisive action, taking the leading place in a progressive movement, on the other we are placed in the position of indecision, timidity, self-mistrust--in short, inefficiency.38


The early history of this company, its policies, and the Navy's opposition to these have been related in previous chapters. In 1906 it changed its policy to permit outright sale of equipment to the U.S. Navy and submitted proposals for the provision of radio apparatus. The bids submitted by the Marconi Co. were normally higher than those of other companies, but on one single occasion they were given a portion of a contract to distribute the work and to encourage them to improve their apparatus.39 This company was not involved in the sale of watered paper, although its stock at times was "hawked" at fictitious prices. It operated at a deficit until 1910.40 Following the Government prosecution of officials of the United Wireless Company and The Radio Telephone Company and the loss of an infringement suit by United to Marconi, the American Marconi Company became firmly entrenched in the operating field by absorbing both the United and the Massie interests. However, they lagged in research and their equipment rapidly became obsolescent. By 1912 their patent position in the United States had become questionable.


The Atlantic Communication Co. was a totally German-owned subsidiary of the Telefunken Co. established for the dual purposes of acting as the US sales agency of Telefunken apparatus and to operate the US terminal of a proposed transatlantic circuit.
    The contract records of the Navy Department indicate that three 5-kw. and two 10-kw. Telefunken equipments were purchased in 1911. The Navy's principal purchase from this company was a number of quenched spark gaps developed by Mr. Max Wein, of Telefunken. These dischargers enabled the sparks to follow each other so regularly that a musical tone was emitted instead of the sharp staccato sound of the open spark. In addition to increasing transmission ranges by a reduction in the damping effect, the tones of several transmitters in an area could be adjusted so as to be distinguishable. These dischargers came into use rapidly as a modification to existing Navy transmitters. Except for the development of the Poulsen arc this company would probably have become the Navy's sole source for the procurement of transmitters following 1912.


Upon severing his connections with the International Telephone & Telegraph Co. in 1907, Col. John Firth organized the Wireless Specialty Apparatus Co., New York.
    Farnsworth, a radio patent attorney retained by American Marconi, was president of the firm; Firth, with a sales connection with the Fessenden firm, was vice president and sales manager; and J. G. Pickard filled the position of chief engineer, retaining his consultant business and laboratory in Amesbury, Mass.
    This company's business was centered around the construction and sales of receivers, Leyden jar condensers, crystals, and other radio components and appurtenances. Their receivers were based upon the developments of Pickard and utilized crystal detectors patented by him. No effort was made to construct transmitters, and this, coupled with their close associations with other companies, permitted them to remain free of involvement in patent litigation for several years.
    Their equipment was rugged and reliable, and their business reputation was excellent. With Firth heading their sales branch, they quickly established themselves and sold large quantities of apparatus to the United States and foreign governments. The U.S. Navy purchased their Leyden jars, crystals, and telephone headsets as well as large quantities of their excellent IP 76 crystal detector receivers.41 These Wireless Specialty Apparatus Co. devices could have been considered Navy standard equipments between 1909 and 1914.
    Admiral Hepburn related a story concerning Firth which illustrates his ability as a salesman and also reveals the profits being made in radio equipment at the time.
The colonel was an engaging character and a great salesman. He used to drop in at least once a month to see us, to see what was going on and to see what he could sell us. I became very fond of the old man. There was no question about it, he wasn't in business for his health and the prices he charged were pretty exorbitant in my opinion, but he had valid patents. It was a matter of detectors which finally made me take a step which has since caused me to wonder about the ethics of the business. We didn't have much money and I finally told him, 'Colonel you will have to bring down the price of those crystal detectors we're buying from you. We were paying $75.00 a set for them and I judged they could be made for about two dollars and five dollars would have allowed him a fair profit. I said, 'of course, we have to have them and we haven't the money to pay you $75.00 a set. Now what I am going to do is pirate those sets and make them ourselves. We have to have them. You would have a good claim against the government for infringement of your patent and you can go to law about it. In two or three years you can undoubtedly get some compensation, but you will have to pay a good deal of legal fees, but we must have them and unless you do better that is going to happen.' He came back in a few days and said I had him over a barrel, that it was a dirty trick and a few other good-natured remarks of that sort, but thinking it over he thought he could let us have those detectors for fifteen dollars a set. I told him I thought we could do that and we went ahead."
    In early 1912 Firth sold his stock in the company to the United Fruit Co., which then gained control of the firm. Firth then established the Wireless Improvement Co.


The only small business concern providing radio equipment to the Navy during this period was one conducted for a short time by an individual named Baldwin. Long after he retired, Admiral Hepburn, in relating his experiences as Head of the Radio Division, Bureau of Steam Engineering, told of his association with Baldwin and of the Navy's role in assisting him to develop the modern set of headphones.
    Like every other Government bureau or institution devoted to scientific work, the Radio Division received freak letters from backwoods inventors claiming miraculous discoveries. These were always politely answered, and when someone appeared to have an idea or a device possessing some merit it was promptly investigated. One day, while opening his mail, Hepburn came across a letter from Salt Lake City written with violet ink on blue and pink pad paper. The writer, a Mr. Baldwin, stated that he was sending a pair of telephones, which he had patented, and requested that they be tested. He wrote that they had a resistance of about 2,000 ohms, which he understood was standard for Navy headsets, but he could not be sure because he had no way of measuring it. The phones arrived promptly, packed in an old baking powder tin. They weighed about a pound, and were of radically different construction. The headset consisted of a piece of clock spring affixed to each phone and loosely bound together by hemp twine. Dr. L. W. Austin, of the Navy's Radio Research Laboratory, looked at them and laughingly took them for the requested testing. A few days later he informed Hepburn they were about twice as sensitive as any he had tested and advised him to obtain more for quality tests.42
    Baldwin was told that his phone had passed numerous tests and that they were within 100 of the 2,000-ohm resistance normally used by the Navy in its phones. He was requested to provide another set for test at the normal price paid for such equipment. He replied immediately on the same blue and pink paper with the same violet ink that he was forwarding another set for which he desired no reimbursement. This turned out to be equally as good as the first. Further correspondence informed him that the electrical properties of his headsets were excellent but that in their existing form they were impractical for use because of their weight and the condition of the head harness. He was advised to redesign and was provided with numerous suggestions which, it was considered, might be helpful. He was told that the Bureau of Steam Engineering was ready to order a quantity of his redesigned phones, provided they cost no more than the Navy was currently paying for similar equipment. He agreed to the redesign and the price, and in a short time developed a satisfactory set of headphones, although the harness was still quite clumsy and uncomfortable to wear.43
    It then developed that he was manufacturing these devices in his kitchen and, because of his limited facilities and the bonding clause of the Navy contract he would only accept one for 10 sets, after which another contract for 10 more sets would be accepted ad infinitum. These phones were far better than any on the market and the Navy was in a position to take his full limited output, so this procedure was accepted for the time with the hope that a more satisfactory solution would evolve.44
    After Baldwin had completed several contracts, Hepburn suggested that he endeavor to improve the head harness. Baldwin must have been aware of the desirability of this, for in a very short time he sent in a simple, effective headset consisting of nothing more than two leather-covered spring-wire rods dangling from each end, each of which carried a phone on a spring clip, thus permitting its being slid up and down. In his little kitchen workshop, Baldwin had developed the modern headset, and in the many years which have followed little has been necessary to improve it. Hepburn advised him to obtain a patent upon it immediately but, strangely enough, he replied that he would not demean himself by requesting a patent on such trivia.45
    The naval radio operators immediately set up a clamor for this comfortable, efficient headset, and this necessitated an increase in manufacturing capabilities. Hepburn suggested he be employed at a navy yard where good facilities could be made available; that he be given a royalty on each set manufactured, and also be allowed to exploit his device commercially. While Baldwin toyed with this idea, there was considerable two-way correspondence with one side of it always in blue, pink, and violet. He finally replied that, for domestic reasons, which Hepburn surmised were more or less peculiar to the Utah of those days, he could not move. At the time the final decision arrived, Firth, of the Wireless Specialty Apparatus Co., happened to be in Hepburn's office.
    He was apprised of the situation, and it was suggested that he might, with the Navy's blessing, make some satisfactory manufacturing arrangement with Baldwin. He immediately went to Salt Lake City and succeeded in arriving at an agreement with Baldwin, who closed his kitchen workshop. The contract contained one stipulation, the mention of which in later years was sure to arouse Firth's ire: The company could never increase the price of its headsets sold the U.S. Navy, even at a time when they were selling on the market at a price six times higher.46


By the beginning of 1912 an all-out struggle for control of the radio industry in the United States was underway with the Marconi and National Electric Signaling Cos. arrayed against each other and each of these against all others. The National Electric Signaling Co. had won injunctions against both the Telefunken and United Cos., both of which had filed appeals. This company had also filed a damage suit against the Government in the amount of $700,000, claiming infringement by equipment purchased by it from the Marconi and Telefunken Cos. During Fessenden's association with it there had been a close working agreement with the Wireless Specialty Apparatus Co. and Firth had, in some degree, acted as sales agent for both companies. When Fessenden was discharged this relationship ceased and the National Electric Signaling Co. filed an injunction suit against the Wireless Specialty Apparatus Co. The American Marconi Co. had injunction suits pending against the National Electric Signaling, the United Wireless, and the Federal Telegraph Cos. The suit against the latter had been instituted after an unsuccessful attempt by American Marconi to purchase that company in 1911.47 The British Marconi Co. had a similar suit pending against the U.S. agents of the Telefunken Co.48
    Only two sizable radio communication companies were then in the field, United Wireless and American Marconi. The former was operating the larger part of the shore stations and had the bulk of the coastwise shipping, while the latter was primarily engaged in providing service for transatlantic shipping. The Massie Wireless Telegraph Co. was providing local service in the Narragansett and Long Island Sound area and a small service on the west coast of the United States. The Tropical Radio Co. was providing service for the United Fruit Co., of which it and the Wireless Specialty Apparatus Co. were subsidiaries.
    Following the Government prosecution of the notorious radio stock peddlers, the United Wireless Co. had cleaned house. Yet it was in most precarious circumstances despite having contracts for services with about 450 vessels. Its assets had been misappropriated by its top officers and its patent situation was decidedly questionable.
    The two U.S. firms with the most valid and useful patents were the National Electric Signaling49 and the Wireless Specialty Apparatus50 Cos. The former company, although not in danger of bankruptcy, was operating under receivership to conserve its assets which had been subjected to severe drain by a court award to Fessenden. The Marconi interests had been advised by their patent attorney, Mr. Phillip Farnsworth, president of the Wireless Specialty Apparatus Co., that their patent situation in the United States was very weak. To strengthen their patent situation they initiated injunction suits.51
    In a hearing before a subcommittee of the Commerce Committee of the U.S. Senate, both Mr. Cloyd Marshall, of the United Wireless Co., and Todd, of the Bureau of Steam Engineering, testified that should either the Marconi Co. or the National Electric Signaling Co. win all their pending suits they would be in a position to eliminate all competition. At this hearing Todd also testified that, although in the past several years the Navy had purchased considerable radio equipment from the National Electric Signaling Co., that firm had recently increased their prices to an extent that prohibited the Navy from making further purchases from them.52
    Few of these infringement suits were settled by the courts. The Marconi Co. was unwilling to put its position to a final test. The National Electric Signaling Co. feeling secure of the validity of its newly patented heterodyne method of reception and desirous of conserving assets, did not force for settlements. The Marconi Co. did, however, obtain an injunction over the weak United Wireless Co., forcing it into bankruptcy. Fearing that its stations might fall into the hands of the Navy or that United's stockholders might purchase its remaining assets and revitalize the competition, the British Marconi Co. purchased them for three quarters of a million dollars,53 an amount far in excess of their value. The shore stations and ships contracts were gratuitously turned over to the American Marconi Co. for operation. The annual lease price of their ship installations was immediately increased to $1,000.
    The parent Marconi Co. had just been granted a contract to build a British Empire radio network and was, for the first time, in excellent financial condition. By April 1912 its stock had more than quadrupled in value in an 8-month period. As previously stated, Marconi research and development had not kept pace with the times. In an effort to obtain satisfactory equipment for fulfilling their contract with the British Government, they attempted to purchase the Poulsen patents, but with no success. They were therefore forced to utilize a Marconi-developed "timed-spark" transmitter.54 In an endeavor to strengthen the American company and their patent position in the United States they made overtures to purchase the Wireless Specialty Apparatus Co., but these were not successful, possibly because Farnsworth considered American Marconi a "feeble company" and did not desire to exchange his company's stock for theirs.55 Failing in this, they entered into a patent cross-licensing agreement with the National Electric Signaling Co. wherein they paid the latter $270,000 in royalties and the injunctions which had been granted both companies against each other were dropped.56 Meanwhile, the Marconi and Telefunken interests had, in 1912, reached a secret world-wide agreement to refrain from instituting litigation against each other.57
    When the clouds lifted from this struggle, the American Marconi Co. was firmly entrenched in the radio communication field. However, it faced a dissatisfied steamship companies' association no longer forced to lease their equipment in order to be able to communicate with shore stations, since public law required reception of messages from any and all stations.58 The National Electric Signaling Co. possessed some very basic patents but had but little market. On the other hand, the Federal Telegraph Co. did possess basic patents, and they and the Telefunken Co. were almost the sole sources from which the Navy could procure transmitters. The satisfactory use of the Poulsen arc, which was later procured in large quantities, necessitated the use of the heterodyne receiver patents. This situation posed a dilemma, the solution of which and the resulting repercussions will be related later.

    1 Electrical World (McGraw-Hill Publishing Co., New York), 24 Nov. 1906, p. 984.
    2 Fayant, "The Wireless Telegraph Bubble," Success magazine, July 1907, p. 482.
    3 Ibid., p. 482.
    4 Electrical World, op. cit.
    5 Lee De Forest, "Father of Radio" (Willcox & Follet Co., Chicago, 1950), p. 185.
    6 "Radioana," John Firth, "The Story of My Life" (unpublished manuscript n.d.), SRM-5-503, p. 13.
    8 In 1900, William Duddell discovered that an electric arc would, under certain conditions, generate high-frequency energy. Three years later, Valdemar Poulsen applied this principle to a radio transmitter and produced continuous oscillation at 100 kc.
    9 Infra, ch. XIII.
    10 Gleason Archer, "History of Radio to 1926" (American Historical Co., New York, 1938), p. 110.
    11 W. Rupert Maclaurin, "Invention and Innovation in the Radio Industry" (the Macmillan Co., New York, 1949), p. 77.
    12 Langmuir, Meissner, and Armstrong also claimed priority in this discovery. De Forest was the winner in a later four-party interference suit,
    13 Maclaurin, op. cit., p. 77-78. "Radioana" (Massachusetts Institute of Technology, Cambridge, Mass.), G. H. Clark, "Radio in War and Peace," unpublished manuscript, n.d., p. 372.
    14 Armstrong won the original interference suit. In 1928 the U.S. Supreme Court reversed the decisions of lower courts and awarded priority to De Forest. This was reaffirmed by the same court in 1934. Despite this, the Franklin Institute of the State of Pennsylvania for the Promotion of the Mechanic Arts awarded the Franklin Medal to Armstrong in 1941, stating these decisions were made "much to the astonishment of radio engineers." This statement is supported by the action of the Institute of Radio Engineers which, in 1918, presented Armstrong with it first Medal of Honor award for his work in developing the feedback circuit. When the Supreme Court reaffirmed its decisions in 1934 Armstrong returned this medal, which was promptly given back to him indicating their conviction of his prior claim. (Committee on Science and the Arts, Rep. No. 3087, 8 June 1941, pp. 3-4).
    15 This was not a remunerative business because De Forest tubes lacked uniformity and quality.
    16 Infra, pp. 2M.
    17 Maclaurin, op. cit., pp. 59-63; infra, ch. IV.
    18 Supra, ch. IV.
    19 Helen M. Fessenden, "Fessenden--Builder of Tomorrows" (Coward-McCann, New York, 1940), pp. 124-125.
    20 Maclaurin, op. cit., pp. 59-63.
    21 Ibid., p. 64.
    22 Ibid., p. 61.
    23 Supra, chs. VII and VIII.
    24 "Radioana," op. cit. (John Firth, "The Story of My Life").
    25 "Radioana," op. cit. (G. H. Clark, "Radio in War and Peace," p. 61).
    26 Electrical World (McGraw-Hill Publishing Co., New York), vol. LIII, No. 1, Jan 2, 1909, p. 11.
    27 Letter, dated 13 Mar. 1909, Radio Telephone Co. to Bureau of Equipment, files, Bureau of Equipment, National Archives, Washington, D.C.
    28 Letter, dated 24 Apr. 1909, Marconi Wireless Telegraph Co. of America to Bureau of Equipment, files, Bureau of Equipment, National Archives, Washington, D.C.
    29 Memorandum, dated 1 Feb. 1911, for the Chief of the Bureau of Steam Engineering, "Concerning Alleged Favoritism Shown in Preparation of Specifications and in the Award of Contracts for Wireless Material, etc.," files, Bureau of Steam Engineering, National Archives, Washington, D.C.
    30 Ibid.
    31 Infra, ch. XIII.
    32 Testimony of D. W. Todd before a Subcommittee of the Commerce Committee, U.S. Senate, on Radio Communications (Washington, Government Printing Office, 1912), p. 29.
    33 Maclaurin, op. cit., p. 63.
    34 Infra, ch. XIII. L. W. Austin, "The Work of the U.S. Naval Radiotelegraphic Laboratory," Journal of the American Society of Naval Engineers, vol. XXIV, No. 1, February 1912, p. 124.
    35 "Radioana," op. cit., C. F. Elwell, "Pioneer Works in Radiotelegraphy."
    36 Infra, ch. XIII.
    37 Infra, ch. XX.
    38 Letter, dated Apr. 1915, Lt. Comdr. A. J. Hepburn, USN, to the Chief of the Bureau of Steam Engineering, files, Bureau of Steam Engineering, National Archives, Washington, D.C.
    39 Memorandum, dated 1 Feb. 1911, Radio Division to the Chief of the Bureau of Steam Engineering, files, Bureau of Steam Engineering, National Archives, Washington, D.C.
    40 Annual report, Marconi Wireless Telegraph Co. of America.
    42 Memorandum, dated Feb. 1911, Radio Division to the Chief of the Bureau of Steam Engineering, files, Bureau of Steam Engineering, National Archives, Washington, D.C.
    42 Transcription of recording by Adm. A. J. Hepburn, S. C. Hooper Reels, Office of Naval History, Washington, D.C., pp. 326-332.
    43 Ibid.
    44 Ibid.
    45 Ibid.
    46 Ibid. Hepburn stated that he suggested this to Firth to repay him for reducing the price of crystals.
    47 "Radioana," op. cit., letter, dated 12 Dec. 1912, Phillip Farnsworth to F. P. Fish, former president A. T.&T. Co., files, Wireless Specialty Apparatus Co.
    48 Testimony, D. W. Todd before a Subcommittee of the Commerce Committee, U.S. Senate, on Radio Communications (Washington, Government Printing Office, 1912), pp. 28-29.
    49 Maclaurin, op. cit., p. 63.
    50 "Radioana," op. cit.
    51 Ibid.
    52 Testimony of Cloyd Marshall and D. W. Todd before a Subcommittee of the Commerce Committee, U.S. Senate, on Radio Communications (Washington, Government Printing Office, 1912), pp. 28-29.
    53 "Radioana," op. cit.
    54 This transmitter proved unsatisfactory and they later tried to procure exclusive rights to a newly developed Alexanderson alternator. The story of the U.S. Navy's struggle to prevent this will be related in later chapters.
    55 "Radioana," op. cit.
    56 Maclaurin, op. cit., p. 68.
    57 "Radioana," op. cit.
    58 Infra, ch. XII.
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