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Figure 25 (p. 90)-Model 8-30. The public invested approximately $20,000,000 on this one model in slightly less than a year.

Figure 26 (p. 94)-The above is a good example of the Company's use of curiosity and suspense in announcing the Orthophonic Victrola.

The Victor Talking Machine Company

chapter eight

In September of 1917, after the cancellation of the License System, R. H. Macy & Company sued Victor and several Victor distributors for damages. counsel fees, and costs to the amount of $570,000, claiming violation of the Sherman Anti-Trust Law.

This suit was based on the fact that in April of 1914. Macy had applied for permission to sell shop-worn records at less than the specified retail prices. This request was denied, presumably for fear that blanket authority would get out of hand and would give Macy with their 6% "cash discount" policy, an advantage over all other dealers.

Macy ignored Victor's wishes and proceeded to buy where they could. During 1915 and 1916 particularly, they did a large volume, and, because of their large volume, had little difficulty in finding dealers who would split the discount. Victor tried several times, without success, to get Macy to take out a dealer's license. The effort to keep the merchandise in authorized channels was not successful.

The activity gave Macy such a competitive advantage over licensed dealers that the entire Victor system, designed to produce equitable competitive conditions between all dealers and distributors, was in danger of breaking down at a time when the system was believed to be on a sound legal basis. In March of 1921, nearly four years after the license system had been discontinued, the court held that the Anti-Trust Law had been violated and awarded Macy damages totaling $184,836.68.

Wood Carving

Victor depended, to a considerable extent, on wood carving for decorative effect. The extent of the carvings, in general, corresponded to the price of the instrument. Much of this carving was done by machine, but there was a time (around 1920) when the company had the reputation of having the finest staff of wood carvers in the world. There were about 125 men in this group. On the lower priced instruments, their activity might consist of simply an occasional "under-cut" to supplement the machines, whereas on the higher priced instruments, the carving would be carried out in elaborate and attractive detail.

Double-Faced Red Seal Records

Although Black Label records had been doubled since 1908, Red Seal numbers were not doubled until 1923. The delay was due, of course, to the difficulty of working out (p. 85) details with the artists. The complications were finally ironed out, and after a record exchange which enabled the trade to get its inventories in order, the doubled records were announced on a price basis which enabled the public to buy two selections for a small increase over the previous price of one.

Advances Against Royalties

Being in the position of having all, or nearly all, of the world's big artists could become a serious problem, as the company found out in the early "20's." This problem developed not from the size of royalty itself, but from the advance which it became routine to make against the royalty and which, in many cases, was established when the artist's royalties were running high. Times came when the royalties earned by some of the biggest artists did not nearly cover the advance. In the meantime, competition was quite willing to pay a bonus for the prestige value of a name and, consequently, Victor was in a hazardous position. This problem was still an active issue when the recession hit the industry in the Fall of 1924.

The Debacle of 1924

In 1921 and 1922, radio receivers were evolving from the wound-coil, cat's-whiskers stage to manufactured parts, to complete sets. It was becoming increasingly evident that here was something for the talking machine business to be concerned about, although Victor's volumes in 1920, 1921, 1922, and 1923 were larger than in any previous years.

Victor decided that it had better be prepared to get in the business and, consequently, made a determined effort to develop a radio chassis which would be good enough to carry the trade mark. This continued for two or three years.

In 1924, RCA introduced an impressive line of radio receivers which included Radiola III, the Super VIII, the Regenoflex, the Semi-Portable Superheterodyne. and other models. Their introduction was supported by a particularly effective year-long advertising campaign.

The Victor organization was not as alert as it should have been to the significance of this development, nor did it appreciate the fact that it had been trading on momentum and was, in fact, suffering from a lack of aggressive research and development work in its own field. There were straws (like the public's clamor for better bass response) which should have revealed this, but which the company by-passed for want of a satisfactory solution. The company was complacent-lulled by excellent current volume.

In 1924, business followed the normal seasonal cycle until September when, for the first time in Victor's history, sales to the public failed to materialize as anticipated. By this time, materials had been fabricated to the point where the cost of completion would be (p. 86) relatively small and the management decided that it would be better to liquidate complete instruments than materials in process. Sales were subnormal all Fall, and even at Christmas there were heavy inventories everywhere-dealer, distributor, factory. For the factory, it was the first time in the company's history.

During the first six months of 1925, the company made a concentrated constructive effort to sell its own inventory as well as that of the dealers and distributors. Instrument manufacture was stopped cold and overhead was rolling up at a rate of several hundred thousand dollars a month.

A high-powered sales campaign was set up under the slogan and symbol "Do YOU have a Victrola" superimposed on a question mark. Campaigns were set up in 10 or 12 cities-St. Louis, Syracuse, Baltimore, Washington, Detroit and Cleveland, to mention a few. There was a carefully developed program with dealer meetings, cooperative advertising, house to house selling, banners, point-of-sale material, etc. The campaign was organized in each city with a manager. Specific duties were assigned and everyone in Camden, in any way qualified, was sent into the field. Lloyd Egner, Manager of the Traveling Department, was in charge with Otto May and Ralph Cron his principal assistants.

The effort wasn't without success. Sales added up to about $1,000,000. However, this was not nearly enough. The personnel hadn't been adequate to do the job and there was still several million dollars in inventory to be sold. So, around the first of June, the management decided that drastic action must be taken.

The first step was to appoint Roy A. Forbes as Sales Manager. Mr. Forbes had been in the retail end of the business for many years. He had started with Landay, made a further name for himself with McCreery in New York, and was Manager of Wanamaker's Talking Machine Department in Philadelphia just before he came to Camden.

At this time, the company was being actively managed by a committee consisting of Mr. Shoemaker, Mr. Staats, and Mr. Fenimore Johnson. Eldridge Johnson was not well and had, as a matter of fact, been relatively inactive in the company's management since 1917. A good part of the intervening time, his participation in the company's affairs had been by "remote control."

By the late Spring or early Summer of 1925, the men at the top knew that greatly improved sound reproduction was in sight. Its own scientists, working with Westinghouse, had well developed experiments in the field of matched impedances (exponential amplification). The Bell Lab., working on telephone improvements, had developed the same principle with the specific application of the re-entrant horn. They had also developed electric recording. It was clear that between radio on the one side. and greatly improved sound reproduction on the other, drastic action of some sort was unavoidable. (p. 87)

One of the first steps taken by Mr. Forbes was, accordingly, the unpleasant necessity of liquidating the company's inventory. This was done by offering it to the company's distributors at fifty cents on the dollar. This action was unpleasant not only because of the loss to the company, but because it was the first time in the company's history that dealers and distributors had been asked to take inventory loss. The company was not in a position to absorb the mark-down.

The offering, made at the worst time in the seasonal cycle, was a spectacular success. Dealers and distributors sold what they had and bought more to average down. The way was now clear for Victor to do whatever might next be decided upon. After much deliberation several important decisions were made.

1. Victor signed up with RCA for radio chassis and apparatus for the electric reproduction of records.

2. Victor signed up with Western Electric for the re-entrant horn and for electric recording. There is a story to the effect that Victor was about to sign with Western Electric for the exclusive right to electric recording, as well as the re-entrant horn. Frank Capps found out about it through a laboratory leak and told Louis Sterling (Columbia's long-time strong man in England) who burned up the wires, got the negotiations held up until he could come over, and finally persuaded Western Electric to also license Columbia.

3. Victor perfected the first automatic record changer.

It will be understood that these steps were taken at a time when there was plenty of doubt among businessmen as to whether any kind of record business could survive in the face of radio, and at a time when Victor's fortunes were at a low ebb.

In the late Summer of 1925, Victor switched their advertising account from F. Wallis Armstrong to N. W. Ayer & Co. to provide a complete change of pace in the critical situation which existed at that time. During October, Victor took two black & white double-pages, two more in color, a fourth cover and a color page in the Saturday Evening Post. Most of this was devoted to announcing that the company would introduce spectacular new merchandise around the first of November.

In the meantime, the management had ordered a vast quantity of merchandise, not only from its own plants, but from RCA and others. Among the items ordered were 10,000 of the Credenza Orthophonic-Victrola, a manual, hand wound, acoustic talking machine with the re-entrant horn, which was to sell for a list price of $300 ($335 with electric motor). This, in itself, took considerable courage.

Shortly before the first of November, engraved invitations were sent to important people in music, politics, publishing, and other circles, inviting them to a pre-showing of electric recording on the Orthophonic instrument. The resulting word-of-mouth and other publicity was tremendous. (p. 88)

Finally, the national "Opening Day" came, with newspaper advertising, street banners, store displays, and great "hoopla." The stores were jammed and complimentary comments were to be heard everywhere. This lead was followed up with demonstrations at Rotary, Lions, Kiwanis and similar clubs, church activities, sewing circles, dealers' stores everywhere, and it was even billed as a vaudeville act. Sales of the product were heavy from the start. 67,000 units of this one model (Fig. 25) were sold in about a year. During 1925, the total of 19 models was introduced. This was followed by 24 more in 1926. List prices ranged from $17.50 to $1,000.

The nine records listed below, having popular appeal and calculated to bring out the features of electric recording and the Orthophonic Victrola talking machine, were selected for use whenever or wherever the product was demonstrated:

Pal of My Cradle Days-Whitman
I Miss My Swiss-Happiness Boys
Valse in C Sharp Minor-Cortot
Aloha Oe-Kreisler
Rose Marie-Mixed Vocal
Soldiers Chorus-Victor Male Chorus
Don't Bring Lulu-Jan Garber
March Slav-Philadelphia Orchestra

Annotations were supplied with suggestions as to how the records could be used to best advantage. In addition to putting over the product, this resulted, as might be expected, in a substantial sale for each of the records.

Some of the instruments, particularly the higher priced radio-combinations which had been expected in the Fall of 1925, did not materialize until late in the first quarter of 1926. At the time, there was considerable anxiety that they might not sell so late in the season, but they did. However, production was stopped during the Summer months to avoid overproduction which might dampen enthusiasm in the Fall.

At radical variance with the company's earlier policy, the cabinet styling used at this time had the definite feel of traditional furniture. The designing was done by Miss Virginia Hamill of New York. In the main, the instruments were well liked, although some structural problems were encountered and they were costly.

By the end of 1926, the working loss of about $6,500,000 suffered during 1925 had been fully covered. It had been demonstrated that radio was not going to replace recorded music, and that Victor had recovered the position which was being lost in the Fall of 1924. (p. 89)

(Figure 25)

The "0rthophonic Victrola"-The "Electrola"-The "Panatrope"

Victor was in trouble in the Spring of 1925, as was the rest of the phonograph industry. For the first time in peace-time history, there had been no upsurge of sales during the previous Fall. The public was buying radio receivers instead of phonographs. RCA had its first full-line of seven models and had been doing an outstanding job of advertising.

Victor's current sales in the Winter of 1924-25 were not good enough to absorb outstanding inventories, let alone provide adequate production. How Camden worked out of this problem is another story. Suffice it here to say that an infusion of new products was urgently needed. It was, accordingly, a real break that the Bell Laboratories should have come up with electric recording, logarithmetic [sic] acoustical reproduction, and electrically amplified reproduction just at this time.

At this point, it might be explained that the Brunswick Balke Collender Company had been giving Victor formidable competition for several years. This company had gotten into the business shortly after the end of the First World War to liquidate a lot of cabinets which had been cancelled by Edison. As a result of the war-time shortage, their effort was very successful, and they decided to follow it up. They soon found that there was a strong latent demand for cabinets with better furniture values-with the phonograph equipment concealed. To meet this demand, they developed a series of "Flat-Top" consoles.

Victor resisted this trend on the ground that the "Victrola," like a piano, was a definite musical instrument entitled to its own identity, and that the inevitable decorations on the lid of a "Flat-Top" would hurt the record business. It seemed like a sound position at the time, but the demand became so insistent that, in the end, Victor had to yield.

Victor's old rival, the Columbia Company, got into severe financial difficulties in 1921. A receiver was appointed in 1923 and the company was reorganized in 1924. Columbia's genealogy after this was as follows:

1. In 1925, the company was sold to Louis Sterling's Columbia Gramophone Company of Great Britain.

2. Sterling then sold it to the Grigsby Grunow Company.

3. In 1934, Grigsby Grunow sold it at a receiver's sale to the American Broadcasting Company.

4. ABC sold it to the Columbia Broadcasting System in 1938.

The Brunswick Company had also found that the public wanted better bass response and tried to provide it. Here again, they were commercially successful, although the results were scientifically inadequate. From Victor's point of view, the reproduction was "barrelly" or "tubby" and they would have no part of it. Victor recognized the need for better bass but didn't know how to provide it and refused to compromise. (p. 91)

The date which concerns us here is 1925, for it was in that year that Mr. Sterling learned that Victor was about to sign an exclusive contract with the Western Electric Company for electric recording. He protested so effectively that he was included in the transaction. Presumably, he did this before the English Company bought the American Company, but this is not definitely known. The Columbia electric records were known as "Vivatonal." They also introduced an improved instrument which was not commercially important. It is of interest, parenthetically, that the American Record Company bought rights to Brunswick and other records.

In 1925, Brunswick was left out in the cold as far as the Bell Patents were concerned. They met this situation with a development which they called "Light Ray" electric recording. It was, in fact, simply a type of microphone. It didn't live up to its billing and did not become a troublesome competitive factor. So much for electric recording. The instrument situation was another story.

In the Spring of 1925, electric amplification was not quite ready for the market. The magnetic speaker was further advanced than the dynamic, but the logarithmic acoustical horn, using the principle of matched impedances, was further advanced than the magnetic.

At this time, Victor was facing a loss of about a half million dollars a month and didn't feel that it could hold, even briefly, for product development. So it signed up for all three-electrical amplification with both magnetic and dynamic speakers, and the exponential acoustical system. It also signed up for radio chassis to be used in radio-phonograph combinations. As far as the phonograph was concerned, major effort was put back of the acoustical system. The Brunswick Company, on the other hand, elected to put emphasis back of electric amplification.

On August 13, 1925, The New York Times carried a full column-plus story to the effect that the Brunswick Company would privately demonstrate a new instrument later that week, that it would be known as the "Panatrope," and that there would be a demonstration in Carnegie Hall in October. The same article announced a 40-minute record with 500 grooves to the inch, and with frequencies of 100 to 7 or 8,000. The first recording was to be issued in October, but so far as is known, it never was. The record was to have been called the "Pallatrome."

On August 15th, there was a news story in the "Talking Machine World" which said that the Panatrope would be demonstrated to the Trade around September 15th. An advertisement on September 15th spoke of the instrument as having "magnetic" reproduction, although Dr. Kellogg, who made important contributions to the dynamic speaker, does not think that they ever made extensive commercial use of the magnetic type. (p. 92)

An advertisement in the October 15th issue of The Talking Machine World said that they were getting ready to feature the Panatrope and that the rest of the Brunswick line would be dropped.

On November 15th, two weeks after the Orthophonic Victrola had been introduced, they advertised that the Panatrope was the first, and only, purely electric reproducer.

On February 15, 1926, their monthly advertisement in the "Talking Machine World" said that more than 1,000,000 people had heard the Panatrope in the past sixty days.

On March 15th, they increased the total to 2,000,000. They also featured "amazing music" by Brunswick light-ray recording.

On April 15th, they announced three new phonographs (evidently reinstated to meet competition with Victor's low priced Orthophonic models).

The first Brunswick advertisement in the Saturday Evening Post did not appear until September 11, 1926. It was a double-page spread and featured Brunswick Records.

On October 9, 1926, their advertisement in the Post said that the Panatrope had been demonstrated in New York just before Christmas, 1925, and had been heard by 4,000.000.

In the meantime, during the Spring of 1925, Victor had put an intensive sales drive back of the old line Victrolas in key cities using the slogan, "Have you a Victrola?" About $1,000,000 worth of sets were sold through dealers on this drive, but this wasn't nearly enough in view of the developments in sight for Fall. So, in the early Summer the public was given the opportunity to buy the long time staple Victrola at fifty cents on the dollar. Discounts on the factory stocks enabled distributors and dealers an opportunity to equalize losses they might be called on to take on their own stocks. This sale was a spectacular success.

Victor spent the early Fall of 1925 getting ready for a grand opening of the Orthophonic Victrola, scheduled for early November. There was an elaborate build-up developed by Victor's Sales Manager, Ray Forbes, the N. W. Ayer advertising agency, and Victor's Directors.

Four new Orthophonic (acoustical) models were announced to distributors on September 10th. A sample of the top model in the line was shipped to each distributor with 14 records selected to dramatize the new reproduction. (p. 93)

(Figure 26)

There was a teaser advertisement in seven October magazines featuring "Opening Day." Toward the end of October, this was carried nationally into the newspapers ( Fig. 26) There were advance shows to influential people a few days before opening day. There were store and street banners, and window displays designed to create curiosity. Dealer's stores all over the country were crowded on opening day. There were excellent news articles and enthusiastic reactions. This was followed with demonstrations to groups of people everywhere: fraternal organizations, churches, even Vaudeville acts, and, of course, advertising was continued in the magazines and newspapers. The product was a sell-out from the start.

It was an exciting time in Camden, greatly emphasized by the bad time the company had just come through. Incidentally, the ground work had been laid for 1926 which was so good that the loss of 1925 was fully covered and more.

Camden knew that Brunswick had something, but things were breaking so favorably for the acoustic product that they weren't worrying too much that deliveries of equipment for electric amplification were not coming through as expected.

On December 16th, Victor announced eight more models-two "Electrolas," four acoustical combinations, one electrical combination, and one electric-acoustical combination. Shipments were expected to start in a few days. However, the models with the magnetic speaker didn't start until February, and those with the dynamic speaker until the following September. During the next few years, Victor introduced 29 electrically amplified record reproducers. Nine sold at retail for $900 to $1,750, ten for $400 to $900, and ten for $195.50 to $400. The total production was 270,262 units (including about 8,000 which used the Orthophonic horns).


It has been known that the Panatrope was demonstrated to both the trade and the public before the Electrola. However, the emphasis on "demonstrations" and the number of people who had "heard" the instrument, and the fact that it apparently was not advertised to the public until October 1926, leads to the conclusion that Victor had been the first to make stock shipments.

This is supported by the fact that Victor's first shipments of Model 12-2 with the dynamic speaker were made during September 1926. This indicated that Victor got off to an even start with Brunswick.

However, there is evidence that a dealer in Denver, Colorado, had a Panatrope with a magnetic speaker during November 1926. This may, of course, have been an isolated pre-production model, but this doesn't seem probable.

Under the circumstances, until better evidence is available, any claim for priority in electrical amplification should be made with discretion, if at all. (p. 95)

The New Instrument Line

Starting in the Fall of 1925, Victor introduced a large number of new models with a wide variety of new services.

There were instruments which played records acoustically through full and modified Orthophonic horns. They were called Victrolas. There were instruments which played records electrically through an Orthophonic horn with speaker unit or with a cone. These were called Electrolas. There were radio-phonograph combinations which used the same radio chassis as Radiolas #20, #25, and #28, and later Radiolas #18 and #64 with a broad selection of record playing equipment. There were, for the first time, electrically amplified models which played records automatically through the Orthophonic horn or through a cone. These were available with or without radio. There were straight radio (only) receivers, and there were some models, like luggage-style "hand-wounds," which differed with the past only in detail.

In general, the service offered and the price range of the new products was as follows:


Full Orthophonic Acoustic reproduction. Manual Hand wound.

Medium Orthophonic Acoustic reproduction. Manual. Hand wound.


Small Orthophonic Acoustic reproduction. Manual. Hand wound.


Electric Amplification through full Ortho. Horn. Manual. Electric motor.


Electric Amplification through cone. Manual. Electric motor.

Straight Radio (only) Receiver, using Radiola #20.

Radio-Phono Combination. Full Orthophonic. Acoustic Amp. Manual. Electric motor.


Radio-Phono Combination. Medium Orthophonic. Acoustic Amp. Manual. Hand wound.


Radio-Phono Combination. Small Orthophonic. Acoustic Amp. Manual. Hand wound.



Radio-Phono Combination. Electric Amp. through Cone. Manual. Electric motor.


Automatic Record Player. Full Orthophonic. Acoustic Amp. Electric motor.


Automatic Record Player. Electric Amp. Full Orthophonic. Amp. Electric motor.


Radio-Phono Combination with automatic Record Player. Electric Amp. Electric motor.

*Most manually operated units were also offered with induction disc electric motors at an additional cost of $35, or with universal motors at an additional cost of $55. (p. 96)

In addition to the types of instruments listed, the company offered an instrument for coin operation (Model CE-47), and a model with out-sized Orthophonic horn for use in large halls, theatres, out of doors, etc. Production was not large in either case.

While it was the Orthophonic instrument with acoustical reproduction which created the dramatic reaction in the Fall of 1925 and Spring of 1926, it developed later that two other introductions of the period turned out to have much greater historical value. The Orthophonic Victrola is now simply an interesting development in sound reproduction, whereas electric amplification and automatic record changers are important current products.

First Automatic Record Changer

The automatic record changer, used in Model #10-50 and other models, was introduced in March 1927, and was the very first automatic record player. Its operation as a changer was entirely satisfactory but it was a bit awkward to feed the records to the "over-head" suspension. The fact that it would only play 10 or 12-inch records separately also left something to be desired. Accordingly, the company proceeded to develop a new model. It was included in Model #10-35 introduced in November of 1928. It had a flexible arm hopper, was easy to feed, and would play 10 and 12-inch records intermixed. However, the product had a hidden mechanical imperfection of some sort and gave a lot of trouble. Victor's sales during 1927 and 1928 were among the best in the company's history.


Victor's export activities may be said to have started in 1898 when Mr. Johnson made his first shipments to London. However, this consisted of supplying material for another brand. The first export shipments under Victor's trade marks were made, no doubt, through the Victor Distributing & Export Co. of New York in 1903. This company had been taken over as a wholly owned subsidiary in 1904. Victor apparently started to export from Camden in 1906. No records have been found of specific earlier shipments.

From 1906 to 1926, export activities accounted for the following totals:

Approximate % of Company Total


(p. 97)

It was company policy to foster the export business. During periods of shortage, for instance, every effort would be made to cover instrument requirements as closely as possible. Even on the tightest items, they would participate to the extent of the traditional 10% even though their previous purchases were no more than half of this. Their demand was particularly strong for machines which bulked small for shipment. This accounts for the lower dollar ratio for machines as against units. This activity was supported not only in the interest of added volume, but also as a hedge against possible periods of domestic economic depression.

By the early 1920's, Dan Mitchell, the manager of the department, had developed a highly efficient and effective organization. Special records were pressed; instruments were especially protected against tropical conditions: a staff of highly trained salesmen covered the various territories; and the Camden office was expertly staffed right down to a corps of translators. They also had close affiliations with aggressive distributors in the countries where Victor had trade mark and patent coverage.

In 1921, activities in Argentina were supported by setting up the Pan American Recording Co., a wholly owned subsidiary. This was broadened from year to year by setting up other subsidiaries with varying functions, in Japan, Brazil, and Chile, and by acquiring the Canadian Company. An important interest was also acquired in the Gramophone Co. Ltd. of London.

Display Rooms

For several years, Victor maintained two elaborate showrooms with trained personnel to demonstrate the product to the public. One of these rooms was on the east side of Fifth Avenue, just below 42nd Street, and the other was on the Board Walk in Atlantic City just below the Traymore Hotel.

McCormack-Bori Radio Broadcast

On January 1, 1925, Victor broadcast a program by John McCormack and Lucrezia Bori over WEAF and thirteen other stations. Because of the artists, the event got a lot of publicity both before and after the program. It was a red-letter event in the development of radio!

At that time, Victor had no radio receiver to sell, nor did they have one in prospect. On the contrary, it had a heavy overstock of talking machines which had not been sold during the preceding Fall as anticipated. But the broadcast dramatically called attention to the vast poo1 of program material which was available in Victor's list of big-name artists. The broadcast also gave Victor an opportunity to sell the idea that the talking machine would not be replaced by radio but would live beside it. (p. 98)

Following the broadcast, Victor widely advertised the program under the headline, "YOU HEARD THIS PROGRAM ON THE RADIO-NOW YOU CAN HEAR IT WHENEVER YOU PLEASE ON THE VICTROLA."

Johnson Sells Control

In the Fall of 1926, Mr. Hector McNeil, representing Speyer & Co. and J & W Seligman of New York, opened negotiations for the purchase of Mr. Johnson's interest in the Victor Talking Machine Company. When the decision came to sell, it was with the stipulation that all others who wished to sell might do so on the same basis ($115 a share). Mr. Johnson is reported to have received $23,000,000. Those close to him received S7,000,000, for a total of $30,000,000. There were many who regretted the sale and had some difficulty in reconciling the decision.

It was, undoubtedly, a difficult decision to make, and there is some evidence that it was subsequently, but perhaps only temporarily, regretted. At the time it was made, there were apparently three principal considerations. First, Mr. Johnson did not feel that his health would enable him to give the hectic situation of the time the personal attention which it needed. Second, there was concern that the equity which he and his close associates had built up might crumble under the operation of inheritance taxes. Third, there was a long time urge to be relieved of the strain under which he had operated so much of the time since 1894.

The transaction between Mr. Johnson and the bankers was completed on January 6, 1927, On January 17, 1927, the stockholders approved a plan of recapitalization.

Before giving effect to the recapitalization, but after the plant had been reappraised by the James F. Baker Co., the company's capital structure stood as follows:

Capital Surplus (arising from reappraisal)

After the recapitalization it stood as follows:


Victor Acquired by RCA

On March 15, 1929, the Victor Company was acquired by RCA, but continued to operate with few, if any, changes in personnel or distributors for nearly two years (Victrolas were manufactured by the Victor Division of the Radio-Victor Co.). Similarly, the Radiola (p. 99) lines were distributed by the Radiola Division through Radiola distributors. The Victor plant had, in the meantime, been taken over by (General Electric and Westinghouse, Radiola's previous sources of supp1y. The new manufacturing operation. known as the Audio Vision Appliance Co., was set up to supply both the Radiola and Victor Divisions. Victor, having in mind its reputation for quality reproduction of sound, decided to rest its case on an excellent, newly developed TRF chassis. It was given the name, "Microsynchronous" and a sales campaign featuring the word was built tip around it. It was markedly successful. Victor's total instrument sales for 1929, made up principally of two radio-phonograph combinations (RE-45 and RE-75), an electrically amplified talking machine, and a straight radio set, totaled $50,540,000 which was the largest in the company's history. This total, however, was not entirely spontaneous. Production was somewhat beyond demand and sales effort was required, even in the active Fall months, to run up the total. The chassis, however, was warmly received. Owners were generally satisfied that the reproduction was better than anything previously offered. Five or ten years later, many owners still felt that nothing had yet appeared which was as good.

Most of the 1929 line was continued well into 1930 with a new line added during the Fall of 1930. This contained a lower priced combination, RE-17 (a modification of the RE-45 with home recording added), RE-57, R-15, and R?35.

Starting late in 1930, or early in 1931, steps were taken to consolidate the Victor Division activities with the Radiola Division (which had been operating parallel) in a superheterodyne line. The company's internal and field staffs were combined under the RCA Victor Company which had taken over the Radio-Victor Co., the Audio Vision Co., and the remaining assets of the Victor Talking Machine Co. A new group of distributors. selected from those who had been serving either RCA or Victor, was set up. The organization in each territory best rated by the RCA and Victor internal staffs was given the first opportunity to buy the other. The negotiations were difficult and protracted. They were carried out under the supervision of Mr. I. E. Lambert of RCA's legal staff, and were completed April 2, 1931. The first product by the new company was the "Superette," an excellent table model at substantially lower list. It was announced February 13, 1931. First shipments were made during March, 1931, as the company's somewhat belated answer to the Gilfillian "Cathedral" model of West Coast "loft" fame and to Philco's well known "Midget." Building #3 was erected for the economical, straight-line, manufacture of Model R-7. The "Midget" took Philco, who at one time had been an important vendor of Victor's, out of the battery and battery eliminator business, and established them as radio receiver manufacturers. (p. 100)


Starting almost from scratch in the Fall of 1901, when a dollar was a dollar, the Victor Company had run up a total volume of approximately $700,000,000 by the end of 1930. Of the total, approximately $413,000,000 was in instruments, $272,000.000 in records, $15,000,000 in parts (motors, sound boxes, etc.) and sundries (needles, horns, albums, etc.). Approximately 8,130,000 complete instruments were made, all but 308,000 (3.79%) of which had turn-tables. Approximately 591,000,000 records were made.

Roughly $52,000,000 was spent for advertising; $34,400,000 for space; $17,800,000 for catalogs, record supplements, sales promotion helps, etc., and $450,000 for radio broadcasting and miscellaneous advertising expenses.

More than 30 individuals were said to have participated in Victor activities to the extent of at least a million dollars. A large number of individuals in "key" positions profited handsomely, but to a lesser extent. Around 10,000 people had good jobs.

But these figures, as impressive as they are, are not as important for RCA Victor as the fact that the company, dominating the industry for almost thirty years, played an important part in the inception and subsequent development of entertainment in the home, thus giving RCA Victor a clear title to having been the dominating factor for more than fifty years in one of the two or three most important aspects in the current American standard of living.

Nor are they as important as the good will which is still attached to the "dog" trade mark. Based on correspondence from the public, and other evidence, there are apparently a very large number of people who still remember the thrill of their first hand wound "Victrola" machine under the Christmas tree, and who still have a nostalgic interest and affection for a particular assortment of records and for the dog. (p. 101)

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