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History of Communications-Electronics in the United States Navy, Captain Linwood S. Howeth, USN (Retired), 1963, pages 353-370:
The Navy and the Radio Corporation of America
1. MARCONI INTERESTS ENDEAVOR TO STRENGTHEN BRITISH DOMINATION
Immediately following the end of World War I, the British Marconi interests reopened negotiations for the exclusive use of the Alexanderson alternator. They offered to purchase 24 complete transmitters for $3,048,000, but the General Electric Co. preferred to provide them on a royalty basis. This was not satisfactory to the Marconi Co. which countered with an offer of an additional $1 million to defray development costs.1
2 . THE NAVY OPPOSES THE ALTERNATOR SALE
News of these negotiations was reported to Hooper who, in turn, warned Secretary Daniels of their implications. Daniels, still waging his unsuccessful campaign for Government ownership of radio, was considerably alarmed by this information. At Hoopers' suggestion he directed that Rear Admiral Bullard be ordered to reassume duties as the Director, Naval Communications in order that a person of sufficient stature should direct the fight against the British monopoly. Bullard, who was then on duty in the Near East, was directed to return by way of Paris to confer with Daniels, who accompanied the President to Paris on his second trip to the Peace Conference, and with Todd, recently relieved as Director and at the time on leave in that city.2
In his conference with the Secretary, Bullard advised him that he did not concur in the establishment of a Government radio monopoly and requested another assignment if it was required that he support such a policy. He received the Secretary's assurance that it was not necessary for him to do so. There is no available record of the instructions given Bullard by Daniels at this meeting. His subsequent actions as Director, Naval Communications, indicate that he had received some instructions, possibly secret ones, either directly or indirectly from the President.
Meanwhile Hooper, at the Secretary's direction, asked Mr. E. P. Edwards of the General Electric Co. to request that company's officials to withhold action on the Marconi sale until Bullard arrived and resumed his old duties. They acquiesced to this request.3 On 29 March 1919, Mr. Owen D Young wrote Franklin D. Roosevelt, acting Secretary of the Navy, disclosing the full details of the proposed sale. On 4 April Roosevelt replied to Young, inviting the officials of the General Electric Co. to Washington for a conference on 11 April. This letter stated:
Due to the various ramifications of this subject it is requested that before reaching any final agreement with the Marconi Companies, you confer with representatives of the department.
It is significant that this was written 4 days after Bullard resumed his duties as Director and the tenor of the above quoted sentence indicates that the Navy Department was in possession of a directive, probably oral, to take action to safeguard American radio interests.
3. PRESIDENT WILSON'S INTEREST IN AMERICAN DOMINATION OF RADIO
The part played by the President in the endeavor to gain American radio supremacy did not come under scrutiny until 1929. By that time both he and Bullard were dead. However, it must be assumed that the President was aware of the official activities of the members of his Cabinet and was cognizant of the Navy Department's endeavor to establish a Government radio monopoly. Following the defeat of his party in the congressional elections of 1918 he must also have realized that Daniels would fail to reach his objective.
On 12 February 1919, while attending meetings of the Peace Conference in Paris, he was presented a masterly brief on world communications by Mr. Walter S. Rogers, communication expert to the American Commission to Negotiate Peace. This brief pointed out the possibility of utilizing high-power radio for disseminating intelligence to the ends of the earth, recounted the success of the British in the domination of cable communications, and pleaded for the fair use of international communications. In reading this brief, the President must have recalled the psychological effect produced by the telegraphic broadcasts of his "Fourteen Points" and the parts played by the American and German radio stations in the arrangements for the armistice.4
On 5 February he departed France for the United States and arrived back on his second trip on 14 March. During the 18 days he was aboard the U.S.S. George Washington, his sole touch with world affairs was through the naval radio system. On the westbound journey he had conversed with Secretary Daniels by radiotelephone when 900 miles distant from New York. It must also be assumed that since he was accompanied by Secretary Daniels on the eastbound voyage, the two discussed the failure to establish the Government monopoly and the possibility of establishing an American-controlled operating company.
On the day following his return to Paris, he received a cable from Postmaster General Burleson inviting his attention to the British domination of world communications.5
With almost constant reminders of the importance of international communications, the President, shortly after his return to Paris, received still another which apparently forced him to make a decision. While breakfasting with Prime Minister Lloyd George and some of their assistants, an officer delivered the Prime Minister a telegram. After reading its contents he turned to the President and commented upon the importance of the world radio system. Following breakfast, the President went motoring with his physician, Rear Adm. Cary T. Grayson, (MC) USN. During this drive he directed Grayson to remind him to tell the Navy Department or Bullard that he had an important message for delivery to Mr. Owen D Young concerning "the protection of American rights and possibilities in radio communications."6
4. THE THWARTING OF THE MARCONI PLANS
On 31 March 1919 Bullard reported for duty as Director, Naval Communications. Three days later Hooper apprised him of the alternator situation. Bullard later stated that this was the first time that the impending sale of the alternator was brought to his official attention.7 There is no record that he informed Hooper of his possession of any directive. Obviously he must have discussed the situation with the Acting Secretary and received additional instructions, for his first action in this matter was to arrange for a conference with Young in New York on 7 April. This occurred at about the same time Roosevelt was signing the letter to Young. Bullard would not have circumvented the proposed conference in Washington without Roosevelt's approval. In fact, it is probable that it was the latter's idea for Bullard to proceed without delay.
The initial conference, held in Young's office on 7 April, was attended by Young, Bullard, and Hooper. The second one, held the following day, was attended by the president of the General Electric Co., Mr. Edwin W. Rice, Jr., and directors Young, A. G. Davis, C. W. Stone, and E. P. Edward as well as Bullard and Hooper. Later, Young conferred with the chairman of the board of the General Electric Co., Mr. C. A. Coffin, after which that official joined the meeting.
At some time during these 2 days (the exact hour obscured by several varying versions)8 Bullard informed Young of the President's interest in the matter and that he had been directed to enlist his aid in the establishment of an American-controlled commercial radio company.
During the April conference Bullard pleaded for an American radio monopoly and argued that the sale of the alternator to the Marconi interests would ensure the British a monopoly in world communications. The directors of the company, though desirous of selling the alternator to an American-controlled company, pointed out that there was no company capable of making such a purchase and their duty to their stockholders necessitated recovering the monies spent in the development of the device.9
This may have been the moment when Young conferred with the chairman of the board and imparted the information provided him by Bullard relative to the concern of President Wilson. After additional eloquent appeals to their patriotism, the directors voted to cease their negotiations with the Marconi interests. No plans concerning the sale of the alternator were made at this meeting.
5. CONCEPTION OF AN AMERICAN-CONTROLLED RADIO COMPANY
The decision to terminate negotiations with the Marconi companies left the General Electric Co. in an awkward position. They had spent over $1 million developing an apparatus for which there now was no ready market. Within a few days Young appeared in Washington requesting an appointment with Bullard and Hooper. It was arranged that they meet in the admiral's office. As was to be expected the subject of the conference was, "What do we do with the alternator?" It was suggested that the General Electric Co. establish an international communication system which would use the alternator.10 Young agreed that this was a possible solution but opined that it would not be successful without a Government charter authorizing a monopoly. The Navy representatives agreed to aid in obtaining this. Lt. Comdr. E. N. Loftin, USN, was assigned to assist Mr. A. G. Davis, patent attorney for the General Electric Co., in drafting the proposed charter.
The draft was completed by 30 May 1919. It contained, among other things, a promise on the part of the Navy Department, upon the request of the General Electric Co., to recommend and to urge Congress to grant the proposed Radio Corp. an American monopoly covering low-frequency radio communications. Other provisions of this draft contained cross-license agreements between the Government and the General Electric Co., the promise of the Navy Department to assist in the procurement of other licenses and patents, and an agreement that a high ranking naval officer would sit in on board meetings to protect Government interests. The draft contained no statement relative to the manufacture or sale of equipment by the proposed corporation which by inference, was to be solely a radio operating company.
The draft was forwarded to Acting Secretary of the Navy Roosevelt who had been kept fully informed of the proceedings. He had encouraged and approved the several actions. However, Admiral Griffin, Chief of the Bureau of Steam Engineering, who was with the Secretary in Paris, was not so well informed. Hooper cabled him information concerning the proposed charter and requested instructions. Griffin referred the message to the Secretary who directed that action be held in abeyance until his return. This information was provided General Electric officials in late May.11
Upon being informed that the General Electric Co. would not provide the Marconi companies with alternators, Nally, vice president and general manager of the American Marconi Co., made an entry in his diary, under the date of 25 April 1919, in which he commented upon the existence of this unfortunate state of affairs and the Navy's determination to eliminate foreign influence from American radio operating companies. He indicated an awareness of the fact that some American company was about to enter the field in competition with Marconi and noted that the only apparent solution to the problem was for this company, which he suspected to be General Electric, to buy out the British interests.12
In another diary entry of the same date, Nally made reference to a previous conversation with Hooper which occurred about the beginning of World War I at the time when the American Marconi Co. was obtaining few Government orders. This conversation, as recorded by Hooper, was direct and to the point--his question equally so: "Other companies get Government orders, why can't we?" Hooper's answer was equally direct and frank, "Because there are a lot of things about your company we do not like." He further advised Nally that American Marconi should divest itself of British control and have its stock owned and controlled by Americans. Moreover, it would have to discard its policy of attempting to sell the Navy equipment which did not meet its requirement nor its specifications.13 In justice to Nally he took these statements in the manner in which they were intended. The American company changed its sales methods and became a valuable asset to the Government during the war.
Late in April 1919 Nally, accompanied by Sarnoff, went to the Navy Department and requested a conference with Hooper. Again, as direct as before, he asked what was transpiring. Again, equally frank, Hooper told him of the effort being made to establish the new company, adding that the American members of the Marconi directorate were blameless but that it was necessary to eliminate foreign control from the United States international communications. Additionally, he told him that he would suggest that Young, if he headed up the new company, take in the personnel of the American Marconi Co. intact as the operating force of the new company.14
Hooper made this suggestion to Young who, in turn, on 12 May suggested to Nally that the American Marconi Co. join the General Electric Co. in forming the new corporation. In his diary entry of that date, Nally wrote that Young stated that the General Electric Co. preferred to stay out of the radio operating business, and did not desire to compete with American Marconi, but had to find a market for the alternator and, at the same time, maintain harmonious relations with the Government.15 Thus did that premier of entrepreneurs pave the way for American Marconi officials to enter the new company and convert Nally to the "cause."
Secretary Daniels returned from Europe about the end of May 1919. Shortly thereafter he reviewed the General Electric Co. Navy plan and discussed it at length with Bullard. A meeting was called by the Secretary which was attended by General Electric Co. and Navy officials. At this meeting he agreed that there was great value in the proposed agreement, and that he possessed full authority to sign it but, since it appeared to create a monopoly, he desired to discuss it with various colleagues in the Cabinet and Congress. While reiterating his objections to the American Marconi Co., because of its alleged domination by the English company, Daniels voiced his old views of the military necessity of Government ownership of radio, but he admitted doubt of his ability to convince Congress of the necessity for it.16
Young must have been completely surprised by this turn of events. He had every reason to consider that Bullard and Hooper had spoken authoritatively and that the Secretary would follow the advice of Roosevelt. Leaving Washington he asked Hooper's opinion as to whether a transoceanic company would pay dividends on the investment and was answered affirmatively.17 What transpired at the next meeting of the board of directors of the General Electric Co. has never been completely divulged but they did decide to proceed with the organization of the Radio Corporation without further governmental blessing.
After making this decision, the General Electric officials notified Secretary Daniels that they were entering into negotiations with the American interests in the Marconi Wireless Telegraph Co. of America. Following this notification there is no record of further official correspondence requesting Navy support. In fact, within 30 months following this, Young stated that he had no knowledge of any executive department of the Government which could speak authoritatively in the radio field.18
The failure of Daniels to support his subordinates marked the beginning of a rapid diminution of the Navy's control of the Nation's radio policies. Young's relationship with Bullard and Hooper continued cordial and he did, from time to time, unofficially ask their opinions.
The negotiations with officials of American Marconi were successful, and an agreement was reached which was contingent upon the ability to purchase the British-owned stock of the American company. The proposed new corporation would purchase American Marconi tangible property with its preferred stock at par value and its patents, good will, and business assets with its common stock at no par value.
Nally and Davis sailed for England for the purpose of purchasing American Marconi stock for the new corporation. After 2 months of diplomatic and tactful discussions, aided by the belief of British Marconi officials that our Congress might enact legislation against the foreign control of wireless facilities located on the mainland, territories, or possessions of the United States, the reluctant directors of the parent company made the best of the situation. On 5 September they sold the General Electric Co. 364,826 shares of stock.
6. BIRTH OF THE RADIO CORPORATION OF AMERICA
With the controlling shares of American Marconi safely in hand, the Radio Corp. of America (RCA) was incorporated under the laws of the State of Delaware on 17 October 1919. Insofar as the personnel of the American Marconi Co. were concerned, the only difference noted after 20 November, when RCA took over the assets and business of that company, "was a different company name on the pay check."19 The Marconi Co. retained its corporate identity for many years because of intangible assets which could not be evaluated until decisions were rendered in numerous pending patent infringement suits.
The Radio Corp. came into possession of the American Marconi patents, high-powered stations, its contract with the U.S. Shipping Board for the maintenance of the radio equipment on 400 of its ships, the Wireless Press, a corporation established for the purpose of publishing the American edition of the Marconi house organ, and three-eighths of the stock of the Pan-American Wireless Telegraph & Telephone Co.20 This company had been chartered in Delaware under the joint ownership of the Federal Telegraph and American Marconi Cos. for the purpose of establishing radio circuits with Central and South American countries.
On the date of its incorporation, the Radio Corp. signed a cross-license agreement with the General Electric Co. by which both corporations were granted the free use of each other's radio patents, and the Radio Corp. became the exclusive U.S. sales agent for radio apparatus manufactured by the General Electric Co. In return for this concession the Radio Corp. agreed not to become a manufacturer.21 Inasmuch as the Alexanderson alternator provided the best means of generating continuous waves and possessed the necessary power to ensure transoceanic radio communications, this gave the Radio Corp. a virtual U.S. monopoly in long-distance point-to-point communications.
For its expenditures, rights, and privileges the General Electric Co. received 135,174 shares of Radio Corp. preferred stock, par value $5 per share, and 2 million shares of common stock, no par value. The American Marconi interests received 2 million shares of common stock to be exchanged for that company's stock and a like number of shares of preferred stock for its assets, if on appraisal they were found to be worth $9,500,000, or a reduced number if the value proved less than that figure. Since the Radio Corp., under its cross-license agreement with General Electric, was prohibited from manufacturing, the Aldene, N.J., plant of the ex-Marconi Co. was purchased by the General Electric Co. for $500,000.22
Three of the articles of incorporation were of particular interest to the Government. One prohibited the election of a director or officer who was not a citizen of the United States. Another contained a prohibition that not more than 20 percent of the stock could be held and voted by foreigners and that those shares would carry "Foreign Share Certificate" printed on their faces. The third permitted participation in the administration of its affairs by the Government of the United States as the directors might vote advisable.23
Young was elected Chairman of the Board of Directors, Nally the president, and David Sarnoff the managing director.
One of the first actions of the Board of Directors was to invite President Wilson to nominate a naval officer of the rank of captain or above, regular Navy, to present the Government's views and interests concerning matters pertaining to radio communication at meetings of stockholders and directors.24 In response to this request the Navy Department nominated Bullard. This was approved by President Wilson on 14 January 1920.25 Bullard attended 29 of the 32 meetings held between 14 January 1920 and 28 July 1931. He later stated, "Who would not therefore feel proud to have assisted in the successful development of such strong control of radio activities."26
In a letter addressed to Young, dated 14 February 1920, Hooper expressed his personal appreciation for the manner in which the General Electric Co. had patriotically responded to the Navy's appeal for the protection of American radio interests. The closing paragraph commended the work of Young and Davis and the attitudes of the directors.
Hooper later wrote an article entitled "Keeping the Stars and Stripes in the Ether" which was published in the June 1922 issue of Radio Broadcast. In this he gave credit for the formation of the Radio Corp. to Bullard, Young, and others and assumed no credit for himself. Young, commenting on the article to the editors of the magazine, stated that Hooper did not do himself justice since the initiative which brought into being our American radio policy and resulted in preventing other nations outdistancing us, started with him. He further commented that the original thought and the persistent pushing were Hooper's, and he should be fully credited with them.
Both Bullard and Hooper were offered, but refused to accept, posts in the new corporation. Neither of them accepted any gratuity for the services rendered, feeling that they were amply recompensed in the knowledge of duty well done.
7. GROWTH OF THE RADIO CORPORATION OF AMERICA
While the above was transpiring, congressional legislation had been enacted directing the Government to return to private ownership all telephone, telegraph, and cable facilities seized by it during the war. This was approved by President Wilson on 11 July 1919. The hour of return of radio station was fixed as 0000, 1 Mar. 1920.
Faced with the early return of the long-distance stations that had belonged to the Marconi Co., the Radio Corp., before the end of 1919, completed a traffic agreement with the British Marconi interests and began handling transatlantic communications on 1 March. Shortly thereafter the company established circuits with Japan and Norway in accordance with the former American Marconi traffic agreements with the governments of those countries.
Foreign domination of American radio communications had been effectively eliminated but, since no single company possessed sufficient patents to provide a complete system, there still remained the necessity for considerable cross-licensing and agreement between various corporations to insure the success of the Radio Corp.27
"Young was anxious to create an industry in which competition would be 'orderly and stabilized.' "28 In order to do this he endeavored to bring all interested companies into the Radio Corp. In his first attempt he was aided and abetted by the Navy Department which had written similar letters to the American Telephone & Telegraph and General Electric Cos. requesting that they get together in order that the vacuum tube could be made available to the public and, also, that it might be further improved.29
Both companies, seeing the futility of noncooperation, readily agreed to cross-license their radio patents and to subdivide the field into telegraphic and telephonic uses. The agreement was signed 1 July 1920. The Telephone Co. purchased one-half million shares each of Radio Corp. preferred and common stock for $2,500,000.30 Unfortunately, the agreement between the two Radio Corp. corporate partners failed to envision the radio broadcasting boom which would engulf the country within a few months. The ambiguity of the agreement later caused considerable controversy which resulted in the Telephone Co. disposing of its Radio Corp. stock to the public.
The Radio Corp. sought a license to utilize the Government-owned patents which totalled over 140, including the Poulsen and the confiscated German patents, purchased from the Alien Property Custodian. The Navy Department's policy was to grant license to any American company which would cross license. The Radio Corp. refused to do this, and no further action was taken.
8. THE WESTINGHOUSE COMPANY ENTERS THE INTERNATIONAL RADIO COMMUNICATIONS FIELD
The Westinghouse Electric & Manufacturing Co., which had enlarged its production facilities to provide radio equipment for the Allies, found little market for its equipment upon the termination of hostilities. Viewing the formation and growth of the Radio Corp. with anxiety, the officials of this archrival of the General Electric Co. decided that it would be necessary for them to enter the transoceanic radio communication field lest they fall far behind in the industry.
To provide a company for this purpose, they decided to purchase and reorganize the International Radio Telegraph Co. The stock of this company, successor to the National Electric Signaling Co., was owned by the estate of T. H. Given. Given, prior to his death, had bought the interests of Walker, his partner in the earlier company. The International Co. owned, among other patent rights, the heterodyne method of reception and the rotary spark gap. It had remained solvent during the war but was, at this time, in a precarious condition.
On 22 May 1920 the Westinghouse Co. entered into contract with the International Radio Telegraph Co. and its stockholders, Martha A. Given, her daughter, and three others, which provided for the formation of The International Radio Telegraph Co.31 This new company was organized in June 1920.32 Under the agreement, the stockholders of the old company were to receive 12,500 shares of preferred stock, par value of $1,250,000 and 125,000 shares of no par value of the new company. The Westinghouse Co. was to purchase a like number of shares of no par value for $2,50,000. In addition to this, the Given beneficiaries retained numerous assets of the original company, including cash and bonds on hand and receivable, and all claims against governments and individuals for patent infringements. By the sale of stock to the Westinghouse Co., they realized a clear profit of $1,250,000.33 The Westinghouse Co. was indeed desperate.
On 29 June these two companies executed a license agreement wherein the Westinghouse Co. was given the right to manufacture, use, and sell apparatus covered by the patents of the latter except that apparatus for public commercial radio communication purposes could only be sold to The International Co.34
Following the incorporation of the new company its president, Mr. Samuel M. Kintner, sailed for Europe for the purpose of executing traffic exchange agreements with foreign radio organizations. To his chagrin he discovered that Young had already assured the Radio Corp. a virtual monopoly in transatlantic communication.
This was a serious setback for officials of the Westinghouse Co. Their only possible chance of success in the long-distance radio communication field would be to amalgamate with the Federal Telegraph Co. which possessed a concession with the Government of China for the construction and operation of four stations for interior and one for external communications. In such a combine they would be limited to oriental and transpacific communications but would be in competition with the Radio Corp. which operated a circuit with Japan. In Central and South America the Federal Co. and the Radio Corp. were already joined in the Pan-American Co. The Federal Co. was very desirous of the amalgamation but the Westinghouse Co. officials deemed the field too restricted.
9. WESTINGHOUSE STRENGTHENS ITS PATENT POSITION
The position of the Radio Corp. was much stronger than that of its rival. The alternator was a far better transmitting device than the rotary spark gap upon which Westinghouse was dependent. This was realized even before the Pittsburgh officials learned of the failure of Kinter's mission. They decided to increase their patent holdings.
The International Co. first sought a cross-license agreement with the Government and this was signed on 5 August 1920. It did not grant The International Co. exclusive use of the Government-owned patents nor was the license transferable. The Government gained, in exchange, the incontestable right to utilize the heterodyne method of reception.
On 5 October 1920 the Westinghouse Co. obtained from Armstrong and Pupin a 30-day option on 4 patents and 16 applications for patents relating to radio. One of these, the Armstrong feedback circuit, was in litigation with De Forest. On 4 November this option was exercised at a cost of $335,000. An additional $100,000 was to be paid if the interference claim was decided in favor of Armstrong.35 The International Company was cross-licensed to use these patents. As a consequence of this, the Navy also obtained rights under these patents.
10. WESTINGHOUSE CO. AND GENERAL ELECTRIC CO. BECOME CORPORATE PARTNERS IN THE RADIO CORP.
The rights to the Armstrong and Pupin patents strengthened the position of The International Co. greatly. Westinghouse Co. officials, feeling themselves in a most advantageous position to enter the Radio Corp. as a strong corporate partner of the General Electric Co., directed The International Co. to make overtures to the Radio Corp. Young discussed the proposed agreement between the Radio Corp. and the Westinghouse Co. with Hooper. The latter, still of the opinion that a monopoly was necessary, suggested Young obtain the official concurrence of the Government. He agreed to do this, but the promise was still unredeemed when, on 30 June 1921, Westinghouse joined the Radio Corp.36 The sales agreement, whereby The International Co. was purchased by the Radio Corp. and a cross-license agreement between Westinghouse and the Radio Corp. in which The International Radio Corp. merger was ratified, was drawn up on that date but was not formally ratified until 8 August 1921. This agreement resulted in a further cross-license agreement being executed between the Westinghouse Co., the Telephone Co., and the Western Electric Co. on 30 June 1921.37 The strong patent position of the Westinghouse interests, and the anxiety of the General Electric Co. and the Radio Corp. concerning this, is indicated by the favorable partnership position achieved by the former. The International Co. stockholders received 1 million shares of both preferred and common stock of the Radio Corp. and retained the $2,200,000 owed the company by the Westinghouse Co. under the 21 June 1920 agreement. The manufacturing of radio equipment, for which the Radio Corp. became exclusive U.S. sales agent, was divided with 60 percent going to the General Electric Co., and 40 percent to the Westinghouse Co.
11. EXPANSION OF THE RADIO CORP. DURING 1921
On 19 February 1921 the General Electric Co. acquired from the United Fruit Co. one-half the stock of the Wireless Specialty Apparatus Co. On 7 March limited cross-license agreements were executed between the General Electric Co., the Radio Corp., the United Fruit Co., and the Wireless Specialty Apparatus Co. By these agreements the Radio Corp. gained control of the patents of the Wireless Specialty Apparatus Co., including important patents assigned it by Pickard.
On 1 August a traffic agreement was concluded with the Government of Poland. This was followed by the successful negotiation of traffic and cross-license agreements with the Government of Germany and the German Trans-radio and Telefunken Cos. The last of these agreements was executed on 22 October 1921. On 26 October a traffic agreement was completed between the Radio Corp. and the two French operating companies. At this time, Hooper was inspecting the Lafayette radio station prior to its being turned over to the Government of France. At the instigation of the State Department he was directed to assist the Radio Corp. in their negotiations and was instrumental in convincing the French authorities of the necessity of dealing with the corporation to obtain an American station for the establishment of a transatlantic circuit.38
In October 1915 the Marconi Wireless Telegraph Co. of America had requested diplomatic assistance in an effort to extend its facilities to certain South American countries. This aid was denied because of the company's foreign affiliation. On 4 November 1915 the American Marconi officials stated that their attempts to obtain concessions in these countries were entirely independent of any other country and again requested assistance of the State Department. This was again denied. Hooper made the acceptable suggestion of the formation of an entirely new company to exploit radio communications with the South American republics. With the consent of the State and Navy Departments, the Pan-American Co. was formed in 1917. During the organization of the company both the State and Navy Departments were consulted and their solicitors had assisted in drafting, correcting, and amending its charter. Three-eighths of the stock of the company was owned by American Marconi, three-eighths by British Marconi and one-quarter by the Federal Telegraph Co. of California, which was to supply the arc transmitters. Prior to the company's obtaining the necessary concessions from South American governments, the U.S. Government purchased the patents and assets of the Federal Co. with the exception of its holdings in the Pan-American Co.
In early 1918 Nally, President of the Pan-American Co., consulted with LeClair, of the Radio Division of the Bureau of Steam Engineering, relative to proceeding with the Pan-American plans. On 6 February, he wrote the Navy Department a lengthy letter stating the policies and plans of his company and received assurances that Secretary Daniels understood and would not interfere with his plans as presented. Following this, Nally sailed to South America and completed necessary arrangements with the Argentine Government.
Upon his return he learned that the Government looked upon the Pan-American plan with disfavor and that Secretary Daniels was determined upon Government ownership of all commercial radio stations in the United States. Appealed to in person, the Secretary stated emphatically that he would not favor the erection of stations by Pan-American, and renounced having discussed or approved such a plan. Nally was informed by Todd, Director of Naval Communications, also an advocate of Government ownership, that the proposed station then about to be constructed at Monroe, N.C., for war communications with Europe, would be used for peacetime communications with South America. Nally was advised that he might well proceed to erect a station in the Argentine to communicate with this station rather than with one owned by Pan-American. He refused to consider this and took no further action in the matter.
When Secretary Daniels deferred obtaining a government charter for the Radio Corp., he promised the officials of the General Electric Co. that the Federal Telegraph Co. would not be permitted to construct arc transmitters for commercial purposes until a final decision had been reached.39 In compliance with this promise, the Federal Co. was advised that they could not construct transmitters for the Pan-American Co.
At the time the Radio Corp. absorbed the American Marconi Co. and obtained its holdings in the Pan-American Co., no further action had been initiated to establish South American circuits. Shortly thereafter Young came to Washington to confer with Hooper concerning this situation. Following the war, France and Germany obtained radio concessions from the Argentine. These concessions brought about a probability of unhealthy competition or the possible elimination of American interests, as there would be insufficient traffic from any country to warrant more than one station in each.
Hooper and Bullard agreed that the best solution was to form one company which would include companies in all countries holding concessions in South America at that time. The Navy Department gave its sanction to the plan to establish this consortium consisting of the Radio Corp. of America, British Marconi, the Campagnie Général de Télégraphie and Téléphonies (France), and the Telefunken Co. (German).
In conferences between the officials of these companies, an international company was formed, known as the A.E.F.G. with the four companies as equal partners. Each provided two members of the directorate but a neutral chairman, an American, had the power to exercise his veto whenever, in his opinion, any decisions were contemplated which would have been unfair to a minority. In this agreement the Radio Corp. not only achieved a position as an equal partner of the older established companies but, through the power of veto, it actually gained control of the consortium. By a cross-license agreement made at the same time, it obtained the use, in the United States, of the patents of the French company.40
12. THE NAVY OBJECTS TO THE RADIO CORP.'S EFFORTS TO ESTABLISH A MONOPOLY OF SHIP-SHORE COMMUNICATIONS
The proposed Government charter for the Radio Corp. had envisioned that it would be granted a monopoly of long-distance radio communications and, additionally, that it would be a patent holding agency which would freely grant licenses to reputable manufacturers, thereby stimulating healthy competition.
Despite the concern of many interested Navy officials, excluding Hooper, many of the former officials of the American Marconi Co. were appointed to policy and managerial positions in the new company.41 These officials brought with them the imbued belief that only the Marconi Cos. and those which succeeded them had legal rights in the radio field. Further, they were not in agreement with the restriction against manufacture imposed upon the Radio Corp.
In reviewing the vacuum tube manufacturing situation existent in the United States at the time of the formation of the Radio Corp., it will be remembered that it was legally impossible, except by agreement between patent holders, for anyone to manufacture the three-element tube. This tube had been manufactured during the war under Government immunity. Following the termination of the war, the Government could no longer assume the responsibility for infringement. The Radio Corp. then entered into an agreement with De Forest to manufacture them under the limited rights he had retained in his sale to the Telephone Co.
In an effort to alleviate the situation, Hepburn, as Acting Chief of the Bureau of Steam Engineering, on 5 January 1920, addressed similar letters to the General Electric and the American Telephone & Telegraph Cos. pointing out that, although numerous conferences had been held in connection with the patent situation, nothing of practical value had evolved. The letters ended with a plea for an immediate remedy of the situation.
The General Electric and the Telephone Cos. entered into the previously mentioned agreement on 1 July 1920 which was extended on the same date to include the Western Electric Co. and the Radio Corp.
By this the General Electric Co. became for over 2 years the sole legal American manufacturer of the three-element tube for public sale.42 The existing manufacturing agreement with De Forest was discontinued, thus giving the Radio Corp. a sales monopoly of this item.
To the surprise of naval officials who had fostered the agreement, the Radio Corp. refused to sell tubes to competing communications operating companies or to shipowners who did not lease or buy their equipment or utilize their radio maintenance service. This situation continued through the remaining months of 1920 and caused Hooper to address a personal letter to Young, under the date 11 December 1920, in which he stated that all the efforts of the General Electric, Western Electric, and Telephone Cos. to serve the Government and the American people in the radio field were being thwarted by several persons in the Radio Corp. who were determined to exercise a monopoly of radio apparatus.
Young replied to this on 13 January 1921 stating that, in his opinion, Hooper was expecting too much in too short a time and asked his patience and cooperation in his effort to develop an esprit de corps within the Radio Corp. organization and an understanding of the necessity of cooperation with all Government agencies.
The exchange of correspondence continued with Hooper replying on 17 January. This letter contained pertinent remarks concerning three matters of the corporation's policy. The first concerned the sale of three-element electronic tubes. He considered the policy should allow their unrestricted sale, believing that what the Radio Corp. might lose in competition in the ship-shore business could be offset by sale of tubes and by increased good will. He further stated that the corporation should be able to keep ahead of its competitors for the merchant marine business by constantly providing better equipments and services. The second matter dealt with the erection of coastal stations. He stated that Sarnoff and others, without knowledge or in disregard of agreements, had shifted back to the same old Marconi idea of a complete chain of commercial coastal stations. These were to be supported by the receipts obtained by a monopoly on ships' installations which they hoped to attain by restrictions on the sale of tubes. He followed this by the statement, "Such a policy must inevitably lead to the Department's withdrawal from any agreements now observed by the Government." Continuing, he advocated the encouraging of two strong competing companies in the ship-shore business, operating under agreed upon and sane policies, one of which should permit shipowners free choice in contracting for installations. He ended this with the statement that the personnel of the Radio Corp. seemed to be against permitting such competition. The final comment referred to a growing tendency of the corporation's personnel to dictate to the Navy what it must or must not have in the details of equipment, and stated that cooperation was not as good as it had been before the Radio Corp. came into existence. Hooper's papers do not contain a reply from Young concerning these remarks.
On 25 April 1921 the Chief of the Bureau of Engineering again addressed similar letters to both the General Electric and the Telephone Cos. criticizing them for failure to provide ships of the merchant marine with tubes unless the owners contracted for service or purchased or leased equipment from the Radio Corp. Indirectly replying to this, the Radio Corp. attempted to tighten its monopoly by implied threats of legal action against commercial users of tubes in equipments not provided by them.
At a meeting of the directors of the Radio Corp. on 21 April 1922, it was agreed that licenses should be granted to companies manufacturing equipment for the U.S. Government provided such equipment was not used for toll purposes. At the same meeting it was decided to sell complete installations or parts thereof to shipowners or agents and to competing radio companies operating ship radio service with the following restrictions:
Licensed only for use on board merchant ships and merchant aircraft for radio telegraphic and radio telephonic communications destined to or originating on board such ship or aircraft; or for relaying radio telegraphic or radio telephonic communications between ships at sea and aircraft, between ship and aircraft and shore and vice versa.43
Authorization was granted to lease competing companies transmitting apparatus of 2 kw. or less antenna input and receivers for installation in shore stations for ship-shore and shore-ship communications purposes only. The royalty to be charged for this equipment was to be based on the percentage of gross business for which the apparatus was utilized. In the event that shipowners and competing companies refused to accept these imposed conditions and continued the corporation's alleged infringement of its patents they were to be placed on formal notice and, in due course, prosecuted.44 This new policy was partially publicized in the August 1922 issue of World Wide Wireless which contains the statement that the Radio Corp., "responding to the call of humanitarianism for the first time permitted the use of its vacuum tubes on competing ship stations."
The Independent Wireless Telegraph Co. refused to accept the imposed conditions. On 7 November 1922 the Fleming patent on the two-element expired. De Forest legally began the manufacture and sale of tubes under rights of manufacture and sale to amateurs retained by him when he sold his triode patents to the Telephone Co. He sold tubes to the Independent Co. On 6 April 1923 the Radio Corp. filed suit against the Independent Co. and named De Forest as a coplaintiff. De Forest refused to appear. The court held that the patent owner must voluntarily join as plaintiff and would not consider the suit.45
The "radio boom" of 1922 caught the Radio Corp. and its associated companies unprepared. Complete sets were soon demanded by the public. The corporation could not meet the demand. Numerous companies entered the field, some without knowledge of the existent patent situation. One hundred thousand receivers were sold in 1922. In 1923 550,000 were purchased and the demand was steadily increasing.46 The Radio Corp. unsuccessfully endeavored to control the situation by filing infringement suits against manufacturers providing sets which contained base receptacles which would accommodate tubes manufactured for amateurs. The Radio Corp.'s court actions and its failure to grant licenses to reputable manufacturers created public resentment which Congress recognized by the adoption of House Resolution 548 which directed the Federal Trade Commission to submit a study of the radio industry.
The necessity for properly exercised control of the numerous radio patents is well recognized. Had the Radio Corp. followed the concept of Young and provided equitable licensing to reputable manufacturers, as they later did in 1927, they would have performed a meritorious service to their Government and to the people of the United States. Instead, they pursued the same tactics as the old Marconi Co. and, in so doing, they cost their stockholders and the public millions of dollars, which swelled only the coffers of various patent law firms and a few selfish individuals.
13. THE NAVY SUPPORTS THE FEDERAL TELEGRAPH CO. IN ITS ENDEAVORS TO ESTABLISH TRANSPACIFIC RADIO CIRCUITS
On 8 January 1921 the Federal Telegraph Co. entered into an agreement with the Republic of China wherein that company was to erect and operate one station for transpacific communications and four stations within China for interior communications. Previous to the granting of this concession, the several preceding Chinese Governments had granted concessions to Danish, Russian, and British-Japanese communication companies. During 1921 these concessions became the subject of diplomatic negotiations among the Government of China and the governments of all countries holding concessions.47
One of the requirements of the contract between the Chinese Government and the Federal Co. required the latter to own the patents for all equipment to be installed. At this time these were owned by the United States with the Navy Department as custodian. The State Department, in furtherance of U.S. interests, requested that these patents be returned to the Federal Co. This was done, with the Government retaining a nonexclusive, nonrevocable, and nontransferable license to use existing and future Federal patents.
Young, fresh from his conquest of South American communications, objected to this, feeling that the Radio Corp. should be free from competition in the United States in the international radio communication field. In view of the several concessions granted by China, he suggested a consortium similar to the one established to handle South American communications.48
On 12 December 1921 he addressed letter to Senator Elihu Root, one of the four U.S. delegates to the Washington Disarmament Conference, that stated that if the consortium was not desirable, the Federal Co. should be supported in the construction of the Chinese stations, and that the United States end of Chinese-American transpacific circuit should be owned by the Radio Corp. This letter was referred to the Navy Department together with a copy of a letter to Mr. Sheffield, attorney for the Radio Corp.,49 suggesting the establishment of a consortium.
The Secretary of the Navy, the Hon. Edwin Denby, replied to the Secretary of State on 16 December 1921, giving general approval to Young's plan, provided the approvals of the several governments were obtained, and provided that a monopoly of transpacific communications would not be established in the United States.50
Senator Root, on 21 December, requested the Navy to provide an oral briefing on the subject. This was given on that date by Capt. S. W. Bryant, USN, Assistant Director of Naval Communications and Hooper, who had been appointed Technical Advisor in Radio Matters to the senior U.S. delegate to the Disarmament Conference. During this briefing the history of the radio situation in the United States from 1904 to that time was first presented by Bryant. Then Hooper commented upon the existent issue. The following pertinent portions of his comments are synopsized from a memorandum51 written by him immediately following the meeting:
Monopoly is a very bad thing, as it restricts the development of the art, the sale of apparatus at reasonable prices in competition to the public, and service to ships. The Radio Corporation has a strong monopoly everywhere except in the Far East, and anything this conference does to increase its strength may result in serious harm to this country.
In this memorandum Hooper wrote that Senator Root, in substance, stated that his sole interest was to protect China from various parties who were endeavoring to get concessions through bribery and misrepresentation of their personal interests, and that he could see that a monopoly was endeavoring to get him to take an interest in something which should more properly be considered by the executive departments and that, therefore, he would forward the correspondence to the Secretary of State as a matter of more direct concern to him.
The Federal Telegraph Company of San Francisco, about a year ago, negotiated a very excellent contract with the Chinese Government. The Navy Department, at the request of the State Department, transferred the patents of the Federal Telegraph Company back to them in order that they could carry out their part of the contract with the Chinese Government. This is a very good arrangement for American business and the State Department supports it. Since the Westinghouse Company has joined the Radio Corporation the only competition possible seems to be between the Federal Company and the Radio Corporation as regards long-distance communication. Since competition is necessary, the Federal Company should establish itself in China and no arrangement should be encouraged between the Radio Corporation and the Japanese company or any such combination which will lessen the chances of success of the Federal Company.
The Federal Company will watch the American interests in China better than the Radio Corporation because the Radio Corporation covers a world-wide field and naturally cannot give particular attention to one locality. The Federal Company should have stations on the west coasts of the United States and South America and in the Far East and the Radio Corporation should cover the rest of the field. This would permit ideal competition in the manufacture and sale of apparatus, and stimulate the activities of both companies.
On 22 December Young addressed a six-page letter52 to the Secretary of the Navy commenting upon the reservations made in the letter to the Secretary of State of 16 December. The tenor of his letter indicates that he was thoroughly disturbed by the Secretary's position. He stated that in regard to the first reservation:
. . . I am entirely in accord with its spirit and purpose. My only hesitation is a practical one. Confusion, misunderstanding and delay usually result from an attempt of the representatives of several governments to act in unison on any program.
Continuing, he disavowed any knowledge as to which department of our Government was authorized to act exclusively in the radio field, stating that several departments were attempting to deal with it and that their policies were not uniform and were often conflicting.
In commenting upon the second reservation he stated:
. . . I am prepared as a result of my own experience and after careful consideration to maintain the proposition that competitive radio stations in the United States for international communication is in the interest of the foreigner and to the detriment of America.
He deplored the fact that Congress had failed to enact legislation preventing foreign interests from establishing radio stations in the United States and that, if such stations were established, foreign governments could dictate the terms under which our radio communications would be carried on. He then reiterated his belief that competition should be between radio and cables and that the Radio Corp. should have an exclusive U.S. monopoly for international radio communications.
In late December the Secretary of the Navy responded to Mr. Young. This letter53 stated that President Roosevelt had, in 1904, designated the Navy as the department responsible for Government policy in national radio matters. He sharply stated that if the Radio Corp. chose to go elsewhere for advice without consulting the Navy and to take actions contrary to the opinions of officers of that service it would reap the results of such action. After stating the Navy's beliefs and policies54 he closed thanking Young for his views and suggesting that he might be able to work up some plan which would not possess the objectionable features of an international pool.
On 9 January 1922 Young wrote the Secretary of State, again requesting that the question of an international consortium be considered for handling Chinese radio communications be added to the agenda of the Disarmament Conference. This letter55 was referred to Senator Root who, on 11 January, replied stating that it was beyond the scope of the Conference to handle the subject and that it should be taken care of through diplomatic channels.
Hooper, on 3 June 1922, wrote Young commenting upon the actions taken by the Radio Corp. In this he stated: that events of the last year had shown that his advice was correct about the tube, and the Chinese and Westinghouse situations and, had this advice been followed by the Radio Corp., it would have had a happier path and would not have the public against it. Continuing, he wrote that insofar as China is concerned, he would never recommend approving any compromise on the proposition that communication between the United States and China was solely a matter between the two countries. If the United States disapproved of any other policy, the Radio Corp. was perfectly safe because no foreign interest would be granted a permanent operating license to communicate with the United States unless approved by the U.S. Government.56
On 6 June 1922 Young made a conciliatory reply praising Hooper for his inspiring influence in the organization of the Radio Corp. and commented:
I do think we are making progress on the international situation helpful to America. What you say is quite true, that progress might have been made in other ways, and very likely more advantageously. Certainly, I should not wish to say that the steps taken in the order taken have been one hundred percent wise. The most one can hope for is to get along with the best judgement he has and with the use of such material, human and otherwise, as is available. If one's judgement were always right and men could be found who were one hundred percent perfect to execute it, that would, of course, be not only comfortable but an ideal situation.57
While this tempest was brewing, the position of the Chinese Government deteriorated to such an extent that it was feared that a Chinese bond issue, which was to be floated in the United States to finance the construction of the stations, would lack sufficient subscribers. The Federal Co. was also in a precarious financial position. These circumstances, combined with Young's realization that the Government would not consider a consortium, made it necessary for the two companies to take concerted action. On 8 September 1922 they formed the Federal Telegraph Co. of Delaware for the purpose of constructing and operating the Chinese stations. Seventy percent of the stock of this company was owned by the Radio Corp., and the remainder by the Federal Telegraph Co. of California. The U.S. terminal of the trans-pacific circuit was to be a station of the Radio Corp. This partnership was approved by the Chinese Minister of Communications on 13 July 1923, thereby eliminating all other parties concerned insofar as Chinese-American radio communications were concerned. However, the dilatory actions of the Chinese Government delayed and discouraged action for years.
With the advent of the broadcasting boom, radio became a household necessity and the commercial use of this medium far outstripped the military uses. Government policy, making for its control, rapidly became more and more within the province of the Department of Commerce. Later the Federal Communications Commission was established by Congress to control the civilian use of the medium.
1 W. Rupert Maclaurin, "Invention and Innovation in the Radio Industry" (the Macmillan Co., New York, 1949), p. 100.
2 S. C. Hooper, "History of Radio, Radar and Sound in the U.S. Navy" (Office of Naval History, Washington, D.C.), 10R.
4 Supra, chap. XXV.
5 Ray Stannard Baker, "Woodrow Wilson and World Settlement," vol. III, p. 425.
6 Testimony of Rear Adm. Cary T. Grayson (MC) USN, before a Senate committee in 1929. The date of this directive was something between 16-21 March 1919 at which time the President and Bullard were concurrently in Paris. Bullard sojourned at the same hotel as the President.
7 U.S. Naval Institute Proceedings, vol. 49, October 1923, p. 1630. The underscoring is the author's.
8 Dr. Gleason L. Archer states that Young gave him this account on 5 February 1937:
"Admiral Bullard and Commander S. C. Hooper came to my office, and Admiral Bullard said that he had just come from Paris, at the direction of the President, to see me and talk about radio.
"He said that the President had reached the conclusion, as a result of his experience in Paris, that there were three dominating factors in international relations--international transportation, international communication, and petroleum--and that the influence which a country exercised in international affairs would be largely dependent upon their position of dominance in these three activities; that Britain obviously had the lead and experience in international transportation--it would be difficult if not impossible to equal her position in that field; in international communications she had acquired the practical domination of the cable system of the world; but there was an apparent opportunity for the United States to challenge her in international communications through the use of radio; of course as to petroleum we already held a position of dominance. The result of American dominance in radio would have been fairly equal stand-off between the U.S. and Great Britain--the United States having the edge in petroleum, Britain in Shipping, with communications divided--cables to Britain and wireless to the United States.
"Admiral Bullard said the President requested me to undertake the job of mobilizing the resources of the nation in radio. It was obvious that we had to mobilize everything we had, otherwise any of our international neighbors could weaken us tremendously by picking out one little thing. The whole picture puzzle had to be put together as a whole in order to get an effective national instrument.
"At this time Mr. A. G. Davis was working with Mr. Steadman of the Marconi Company, who had come over here again, and the General Electric Company was about to conclude an agreement to sell about five million dollars worth of apparatus, with everything settled except the amount of royalty payments to be paid to use on the basis of so much per word transmitted via the alternators. By this time we were not content merely to sell the apparatus--we wanted a royalty on the traffic in addition. At this stage we were asked not to sell the Alexanderson alternator to either the British or American Marconi Companies--and there were no other prospective customers for that kind of apparatus.
"I asked Admiral Bullard what impressed President Wilson about radio. He said the President had been deeply impressed by the ability to receive all over Europe messages sent from this side--particularly the fact of the broadcast (i.e., by radio telegraph) across all international boundaries from this country by the Alexanderson alternator of his own "Fourteen Points," Bullard said he had been into some of the Balkan states and there found school children learning the Fourteen Points as they would learn their catechism--made possible by the Alexanderson alternator at New Brunswick, New Jersey, which, defying all censorship, was stimulating in everybody everywhere a deep anxiety that the war should end" (Gleason L. Archer, History of Radio to 1926,) (American Book-Statford Press, Inc., New York 1958), pp. 164-165).
". . . Admiral Bullard explained President Wilson's part in the affair not in open conference but privately during a lull in the conference of April 8, 1919. At that moment there was uncertainty as to what action the directors might take. The naval officer called Mr. Young aside and imparted the information as a state secret, saying that President Wilson was deeply concerned over the matter of checkmating British domination of wireless and had given him as Director Naval Communications special instructions with reference to American control of the Alexanderson alternator. For diplomatic reasons the head of the nation could not openly show his hand in the matter." (Archer, op. cit., footnote p. 163).
Dr. Rupert Maclaurin quotes the following from an interview with Young in August 1944:
"When Admiral Bullard arrived in my office, he said the President, whom he had just seen in Paris, was concerned about the post-war international position of the United States and had concluded that three of the key areas on which international influence would be based were shipping, petroleum and radio. In shipping England was supreme and the United States could not rival her position. On the other hand, in petroleum, England could not challenge America's position. But in radio, the British were now dominant and the United States, with her technical proficiency, had an opportunity to achieve at least a position of equality" (Maclaurin, op. cit., p. 101).
9 Testimony of Owen D Young before the Senate Committee on Interstate Commerce, 11 January 1921.
10 The February 1921 issue of The Wireless Age, p. 13 attributes the suggestion to Bullard. George H. Clark in an unpublished manuscript, "The Formation Of the Radio Corporation of America," p. 45 claims it was made by Hooper. ("Radioana," Massachusetts Institute of Technology, Cambridge, Mass.) Owen D Young, in several letters to Hooper, credits the latter with the suggestion.
11 "Radioana," op. cit., letter, dated 30 May 1919, from A. G. Davis to O. D Young, files, R.C.A.
12 "Radioana," op. cit., George H. Clark, "The Formation of the Radio Corporation of America," undated and unpublished manuscript, pp. 53-54.
13 Undated pencilled memorandum of S. C. Hooper, files, R.C.A., Ibid.
14 Ibid., Clark, "History of the Formation of RCA," p. 56
15 Ibid., pp. 62-63.
16 Ibid., pp. 59-60.
17 Ibid., pp. 61-62.
18 "Radioana," op. cit., letter, dated 22 Dec. 1921, from the Radio Corp. of America to the Secretary of the Navy, signed by Owen D Young, files, R.C.A.
19 "Radioana," op. cit., Clark, "The Formation of RCA," p.71.
20 Report of the Federal Trade Commission on the Radio Industry (Washington, Government Printing Office, 1924), p. 21.
21 Ibid., pp. 21-22.
22 Ibid., pp. 21, 126-130.
23 Ibid., p. 19.
24 "Radioana," op. cit., letter, dated 3 Jan. 1920, from E. J. Nally to President Woodrow Wilson, files, R.C.A.
25 Ibid., Presidential approval of a letter of the Acting Secretary of the Navy, Rear Adm. Thomas Washington, dated 12 Jan. 1920, files, R.C.A.
26 U.S. Naval Institute Proceedings, Annapolis, vol. 49, p. 1633.
27 Owen D Young in testifying before the Committee on Interstate Commerce, U.S. Senate, 9 Dec. 1929, stated: "It was utterly impossible for anybody to do anything in radio, any one person or group or company at that time. The Westinghouse Company, the American Telephone and Telegraph Company, the United Fruit Company, and the General Electric Company all had patents but nobody had patents enough to make a system. And so there was a complete stalemate."
28 Maclaurin, op. cit., p. 105.
29 Infra, ch. XXIX.
30 Report of the Federal Trade Commission of the Radio Industry, op. cit., p. 21.
31 The only change in the name of the new company was the prefixation of the word "The."
32 Report of the Federal Trade Commission on the Radio Industry, op. cit., pp. 151-154.
34 Ibid., pp. 157-162.
35 Ibid., pp. 170-174.
36 Hooper briefing of Senator Elihu Root, 21 December, files, Bureau of Engineering, National Archives, Washington, D.C.
37 Report of the Federal Trade Commission on the Radio Industry, op. cit., pp. 162-199.
38 Bureau of Engineering, Monthly Report on Radio and Sound, November, 1921.
39 "Radioana," op. cit., letter, dated 30 June 1919, from A. G. Davis to O. D Young, files, R.C.A.
40 License and traffic agreements--Radio Corporation of America, Compagnie Générale de Télégraphie Sans Fil, Gesellschaft Fuer Drahtlose Telegraphie, m.b.h, Marconi's Wireless Telegraph Co. (Ltd.), dated 14 Oct. 1921.
41 "Radioana," op. cit., SRM 5-672, files, R.C.A. Young advised Hooper in December 1919 that many Navy officials had criticized him for this action.
41 License agreement between the General Electric Co. and the American Telephone & Telegraph Co. dated 1 July 1920.
43 Report of the Federal Trade Commission on the Radio Industry, op. cit., p. 70.
44 Ibid., p. 71.
45 Ibid., p. 91.
46 Broadcasting Yearbook, 1946, p. 20.
47 "Radioana," op. cit., letter, dated 7 Dec. 1921. from Owen D Young to James R. Sheffield, files, R.C.A.
49 "Radioana," op. cit., files, R.C.A.
50 Files, Secretary of the Navy, National Archives, Washington, D.C.
51 Files, Bureau of Engineering, National Archives, Washington, D.C.
52 Files, Bureau of Engineering, National Archives, Washington, D.C.
54 Navy policies concerning radio as stated by the Secretary of the Navy: "It is advisable to keep radio in competition with cables at the present time but in order to do this, it is not desirable to hold up an international pact, of such character that, should cables eventually be replaced entirely by radio, there would be no competing radio companies.
"International arrangements for American stations to communicate with foreign stations are necessary and desirable, but exclusive contracts can only result in an international pool, which, directly or indirectly, will result in submerging the interests of each country with the others in the group, and in building up a situation which in the years to come, may not be in the best interest of the United States.
"The interests of any of the governments must be compromised in any international monopolistic combination, with those of the other governments, and which ever government is most efficient and agressive for the moment gains important advantages over the others. This is not in the best interests of the strategical situation, in event of war, and after all, the security in event of war is most important.
"An international pool, or even a pool in any one country, is directly or indirectly restrictive of competition in sales of material, ship service, and in the advance of art.
"Where competition is undesirable because of the lack of traffic, and radio competition with the cables, it might be preferable to temporarily divide the radio field among different radio companies, say one company to operate in the Pacific, and another in the Atlantic, and still a third independently in South America. This at least would give competition in the material features of radio, and, later on, if the cables should become less important and competition becomes desirable across each ocean, it could grow naturally, by the intrusion of these various companies in the others' temporary field.
"It is essential that provision be made by which foreigners cannot be licensed to build radio stations in the United States."
55 "Radioana," op. cit., files, R.C.A.
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