RADIO CORPORATION OF AM ERICA (RCA) ORIGIN AND THE NAVY

Mr. Merrill is a frequent contributor to THE SUBMARINE REVIEW and is a published author of several books on the history of undersea technology. He is a retired engineer with lengthy experience at tire New London lab of the Naval Undersea Walfare Center. He currently lives in Waterford, CT.

Introduction

Rear Admiral William H. G. Bullard “In early April 1919 … determined that if possible this few form of international communication should remain in the hands of American citizens … ”

With new radio technology and radio proven to be a strategic asset, a long World War I (WWI), and its aftermath jointly contributed to the incorporation on October 17, 1919 of RCA with General Electric (GE) as the major stockholder. For the following sixty-seven years, this new radio communications entity progressively became one of lhc largest and most influential electronics companies of the 20th century.

This essay focuses on political and technical issues, as well as the Navy’s technology goals for radio in 1919 that led to the founding by private industry of RCA. Also addressed arc the consequences, at that time, of the introduction of the Alexanderson alternator radio signal source for long distance transmission, as it was the pivotal item that brought about the start of the new company. The events leading up to the formation of RCA are the primary focus.

At the start of WWI, there was further emphasis on radio’s viability from England’s alleged first offensive action of the war, the cutting of Germany’s five transatlantic cables that ran through the English Channel. Cable severing included the cable between United States and Germany. German submarines then cut Britain’s undersea cables, thus creating further emphasis on radio. The widespread use of radio introduced problems from signal interception

With the importance of radio and the expanding war, a Navy goal aimed at perfecting existing Navy radio facilities was established. A new board to work toward this goal (the Naval Communications Service) was authorized in May 1915. Then Captain William H. G. Bullard, who had earned distinction in the electrical and radio field, was appointed as the first director. It was Bullard’s actions in 1919 that ultimately brought about the creation of RCA.~ By 1919, a number of improvements of radio and its associated technology with their uses during the more than four years of WWI supported Admiral Bullard’s comments above. Wartime experience included recognition of the British international cable monopoly and the growing British Marconi international radio systems. The
British Marconi Wireless Telegraph Company of America subsidiary’s broad and growing interests further favored consideration of American owned and operated international radio systems.

Setting

As radio began to emerge at the brink of the 20th century, merchant shipping radio ship-to-shore, shore-to-ship, and ship-toship expanded. The US Navy saw radio as improvement over searchlight, flag signaling and the use of pigeons. Early US Navy attention to Marconi’ s wireless communications began in 1899 after the successful Marconi demonstration with ships of the Royal Navy communicating up to distances of 74 nautical miles. To accommodate American commercial needs, Marconi established the abovccited Marconi America November 22, 1899. In the ensuing years, Marconi continued to grow in United Stales and abroad. Even
though the majority of the stockholders of the Marconi subsidiary
were American the largest holdings and company control were
British.

At the beginning of the 20111 century, England was recognized as dominant in cable communications coupled with an established sea transportation monopoly. Further, there was a perception due to Marconi’s expanding wireless holdings that England had ambitions to be in control of international radio communications. In 1903, Germany held the First International Wireless Conference at Berlin to formalize international protocols for the widening
use of radio. The meetings met with success in some areas but were deadlocked on the issue of message exchange by competing wireless companies. Marconi took a strong position against accommodating exchange. This position provided Marconi with a virtual monopoly. In the years ahead, Marconi’s monopoly became a significant issue in the establishment of RCA.

In 1904, President Theodore Roosevelt addressed the growing interest in radio. He established the Roosevelt Board to prepare recommendations for coordinating government development of radio services. The Board’s report proposed assigning most of the oversight of government radio to the Navy Department, plus significant restrictions on commercial stations. Although never becoming law its recommendations were in effect adopted, especially by the Navy Department. “The dominance of the Navy in this field was established and it was enabled to launch its own radio system, one for which Congress saw fit to appropriate many millions in the following ycars.”4 A remark by Rear Admiral Bullard in 1923 attests to the Navy’s interpretation of the Roosevelt Board’s findings “The Navy Department has always maintained the rights conferred by it and has always assumed the obligations demanded by it.”

Efforts at that time by the Navy to negotiate with Marconi regarding communication systems demonstrations and possible radio communication system purchases did not go smoothly. Marconi with dominance in radio did not sell the systems but useda royalty leasing arrangement with stipulations. This was not acceptable to the Navy. Over the next decade, independent of Marconi, the Navy guided and assisted the development of radio in this country. Where possible the Navy tended to award contracts to American companies. During this period, Marconi and Telefunken
in Germany made the best radio systems.’

A quote from naval historian Captain L. S. Howeth points out the Navy’s view of dealing with Marconi: “The nonacceptance of unwarranted dictatorial authority led to a wider search, the exercise of ingenuity, and the more rapid development of a competitive market wh ich benefited the Navy and the rest of the world.” 7 Not long after the sinking of the TIT AN IC, Congress in August passed what is known as the Radio Act of 1912 . The Act broadly
regulated how radio was to be used until 1927. A provision related to war stated ” … that the President of the United States in time of war or public peril or disaster may cause the closings of any station
for radio communication and the removal therefrom of all radio apparatus, or may authorize the use or control of any such station or apparatus by any department of the Government, upon just compensation to the owners.” It was from this Act during War years 1914-18, that important steps were undertaken to assure government control of radio, which brought the Navy into substantial contact with commercial and military uses of radio.

In 1914, President Wilson ordered the Navy to take over “one or more high-powered radio stations within the jurisdiction of the United States and capable of transatlantic communications.” Under this action, the Navy took control of two German commercial radio stations, one German-owned at Tuckerton, New Jersey, and one at Sayville, Long Island, owned by an American subsidiary of a German company. They were operated as a commercial enterprise.ff
Immediately after signing the United States declaration of war against Germany, April 6, 1917, President Wilson directed the Navy by executive order to take over any radio stations it might need, and to close all stations that were not necessary and operating them for the duration, (except Army field activities). The Navy took
over 53 commercial stations and closed 28. Most of the remaining stations were the United States radio facilities of the American Marconi Wireless Company. 9 At the end of the war, the Navy was involved with 111 of 127 commercial stations.

After nearly five years of war, the Navy was well aware of the effectiveness of radio for military needs of Army and Navy that came to attention during WWI. In the months after the armistice, there was a growing realization in some quarters that United States leadership in the rapidly evolving field of radio could be seen as a national goal. Senior Washington government personnel took initiatives to search for ways to bring this technical leadership to the country. The end of the war found wireless communication entirely under the government. A bill was introduced in Congress, November 1918 to perpetuate government monopoly of all wireless communications.

Path to RCA

Certainly, it was the collective radio-related events of the war years that contributed to the perceived need for national technical leadership in the emerging and broadening use of wireless. By the end of the War, senior government levels in Washington were well informed about radio by observation, and in some situations actual transatlantic use of radio. The Navy, controlling a large number of commercial radio stations and their own radio operations for five years, had an intense intimacy with all the current technical and operational aspects of radio, military and commercial.

In May 1915, Gugliemo Marconi had initial discussions wit GE’s vice president and general council Owen D. Young in New York City and visited General Electric in Schenectady, New York, to view the newly-developed Alexandcrson alternator as a signal source for long distance radio communication. Marconi agreed to purchase exclusive rights to the alternator for close to $4 million. When the United Stales entered the war, negotiations were put aside. With the Navy in control of New Brunswick Marconi station, GE did deliver a SOkW alternator and later in the war a 200 kW alternator.

From the beginning of the war, Secretary of the Navy Josephus Daniels, who was appointed in 1913, strongly held the view that the Navy should control the ether. Secretary Daniels was also disposed toward government ownership of armor plate factories and of telephones and telegraphs. At the end of the WWI he made a serious attempt to have the Navy control all radio transmitters in the United States.

The end of the War found wireless communication stations still under the government. In this regard, a bill was introduced in Congress (November 1918) to perpetuate government monopoly of all wireless communications under the Navy. This was in consonance with Daniels’ position. It should be noted that many foreign countries had early adopted the policy of government ownership and operation of all radio activities. With heavy opposition in Congress, the press, and the public, on January 16, 1919, the bill was tabled. 13 Later in July 1919, Daniels addressed letters to the President of the Senate and Speaker of the House of Representatives, each directed toward government monopolization of radio under the Navy.

14 Later by presidential executive order the radio stations were returned to their owners on March I, 1920. 15 A comment in the November, 1919, issue of Wireless World is of interest, ” … it is not likely that Congress would yield to any proposal leaning toward Government ownership of this method of communication … stating that a compromise had been suggested looking to the establishment of an American controlled company, operating under a Government authorized monopoly.” 16 Alexanderson Alternator Of special note and relevance to RCA origins is the invention of the Alexanderson alternator. Alternator research began at GE in Schenectady in 1903 when inventor Reginald Fessenden, an inventor, asked GE to build an alternator. Starting in 1904, Ernst Alexandcrson, an engineer at GE and in due course a prolific inventor, worked on developing the alternator. The device was delivered in 1906 when Fessenden successfully transmitted voice at 50 kHz with a radiated power of I watt to distances of the order
of 200 miles. By 1915, Alexanderson had perfected a high frequency high power continuous wave signal generator.
GE developed a continuous wave alternator and receiver communication system. An article in The Electrical Experimenter (August, 1916) pointed out that the electrically driven alternator produces I 00 KW at a precise frequency of 50,000 cycles per second and no harmonics. Two 50 kW GE alternators were installed at the American Marconi station at New Brunswick, New Jersey. The 50 kW alternator’s performance was superior to that of
an arc transmitter with 100 kW rating. In January 1918, a GE 200 kW alternator operating at 22.05 kHz was installed for Navy use at the New Brunswick station owned by American Marconi Wireless This equipment carried the bulk of the
traffic to Europe for the remainder of the war and for a period thereafter.

The GE alternators quickly became the clear first choice for long-distance radio service. The alternator performance easily surpassed the current preferred signal choices of spark and arc
systems. By 1919, the General Electric Company, after an investment of the order of S 1 million, was ready to go into production of the successful high frequency alternator. It was possibly the most
promising single piece of apparatus available for transoceanic communication.

In addition to the alternator as a significant transmitting device available at the end of the war, additional important radio-related technology developments included mica condensers, vacuum tube oscillators, signal detectors, amplifiers, transmitters and receivers. The level of development and complexity of the vacuum tube was
in the early stages of what the future brought. These advances came from the technical laboratories of W cstinghouse, General Electric, AT & T, and others. Starting in the early years of research and development of radio
technology, litigation between and among inventors and technical companies of radio lechnology was a time wise and fiscal problem barrier to progress. Soon after the declaration of war a federal government moratorium on radio patent rights and litigation for the duration of hostilities was invoked, and the patents of the major companies involved with radio in the United States were merged to facilitate the war effort.

Alternator Anticlimax

The alternator, enthusiastically pursued during and immediately after WWI, was soon replaced by the vacuum tube. By the late 1920s, successful high power transmitting tubes with water-cooled anodes led the Navy and others to abandon high frequency alternators and their more complicated mechanical requirements. The advent of the vacuum tube as a signal source soon stopped alternator production. A number of alternator transmitters continued in use through the 1940s. Regardless of the growing potential and capabilities of vacuum tubes, the GE alternator was recognized from 1916 and for the next few years as the most significant device in long distance radio.

A comment made in 1922 is appropriate, “So, ironically, it turned out that the magnificent Alexandcrson alternators, so glowingly reviewed in this article, were actually just a couple of years away from becoming inefficient, outdated dinosaurs that would be rapidly overshadowed by far more efficient vacuum-tube shortwave transmitters”

1919

At the end of 1918, Congressional action as mentioned previously lo invoke national radio monopoly was firmly rejected after much lobbying against it by American radio business leaders, American Marconi, and others including some from academia. It was still unresolved as what to do about the extensive government held private radio transmitting station assets and radio related patents held by the navy during the war. The theme of however this
would be resolved was ” … take action to safeguard American radio interests. ”

Major Players

Personages contributing to the events of 1919 that brought the new company to fruition in October included President Wilson, Owen D. Young (General Electric), Gugliemo Marconi, Commander (later Admiral), Stanford C. Hooper, Admiral William H. G. Bullard, Assistant Secretary of the Navy Franklin D. Roosevelt, and Edward J. Nally of American Marconi.

With the war over and the Paris Peace Conference at Versailles scheduled to begin January 18, 1919, President Wilson sailed on the S.S. GEORGE WASHINGTON and arrived in Paris on December 13 . Throughout his four crossings of the Atlantic during the peace negotiations between December 1918 and July 1919, effective use of radio communications took place for the President, demonstrating his ability with radio to be in constant touch with the United States and world affairs. The battleship PENNSYLVANIA accompanying the GEORGE WASHINGTON also was in constant communication via radio. During one of his westbound trips, the president had occasion to use radiotelephone to converse with Secretary of the Navy Daniels. During his first trip to France, the President received an extensive briefing on world communications and the importance of assisting in the development of wire and radio communications.

While at the Conference, President Wilson visited several of the Allied countries and noted the impact of his worldwide radiotelegraphy broadcast to the German people January 8, 1918. The President’s Fourteen Points speech brought about a broad awareness of the content of the speech throughout Europe. The 200 kW Alexandcrson alternator at the Brunswick, New Jersey radio facility was the signal source.

In mid-February, the President made a brief return to Washington. At that time a much-quoted comment about his experience in Paris stated ” … that there were three dominating factors in international relations- international transportation, international communication, and petroleum- that the influence which a country exercised in international affairs would be largely dependent upon their position of dominance in these three activities. ” 22 Events beginning in March 1919 primarily involving the Navy, General Electric and the Marconi Companies reflect President Wilson’s understanding of radio and its importance then and in the future. Navy and General Electric

In March 1919, British Marconi again entered into negotiations with GE for worldwide exclusive use of the alternator. In the United States the rights would solely be vested in American Marconi. The offer was for 24 units, British Marconi wanted 10 and American Marconi 14, for $3,048,000. GE preferred a royalty basis and refused. Marconi countered with an additional $1,000,000 to defray development costs. The sale was impending. This gained the attention of the Navy.

At the request of Secretary Daniels, Commander Stanford C. Hooper of the Naval Radio Service asked GE to withhold action regarding the sale of the alternators to British Marconi, until after Admiral Bullard (newly recently appointed Director of Naval Communications) arrived for duty in Washington. Bullard, recently in Paris with President Wilson, reported for duty March 31. Several days later, Hooper apprised Bullard about the negotiations of the pending GE alternator sale to Marconi. The discussions included ways to block the sale of the alternators to British Marconi.

On March 29, 1919, Owen D. Young of GE wrote to the acting Secretary of the Navy Franklin D. Roosevelt, and provided details of the pending alternator purchase. Roosevelt replied to Young and invited GE officials to confer in Washington on April 11 regarding the sale of the alternators. In advance of the Roosevelt proffered conference date, a significant two-day meeting was held April 7, 8 with Admiral Bullard, Commander Hooper, and GE managers at Young’s office at 120 Broadway in New York.24 Bullard pointed out the President’s interest in establishing an American-controlled commercial radio company. The negative aspects of selling the GE alternator to Marconi were highlighted. GE brought up the financial side of recovering the money spent in the Jong development of the alternator. The meeting concluded with the GE directors voting to stop negotiations with Marconi interests for the alternators and to place the order with a new American company that would the operate United States end of international wireless circuits for both government and commercial traffic.25• ‘

With the alternator procurement by Marconi no longer an issue, there still remained the question of how to provide an American company to lead in international communications. One option was a government-backed company possibly chartered and with the Navy in a strong role. Current sentiment was not favorable to that solution.

The subsidiary American Marconi Company during its tenure became the dominant international radio communication and shipto-shore activity in the United States. As mentioned previously, the company was not acceptable because of its foreign connection with British Marconi and British policies. Marconi policies were noted to be litigious and tended toward monopoly. Young and his GE associates rationalized that a new company would immediately have to compete with American Marconi. The purchase of American Marconi was very important. In June 1919, a GE representative and Edward J. Nally, manager of American Marconi, sailed to England to negotiate with the Marconi Company for the purchase by GE of American Marconi to provide a basis for the new private company. On September 5,
1919, British Marconi Company agreed to sell its American interests. GE paid $3.5 million for the controlling stock. The New York Times reported on September 4, 1919 the news story that GE would become a stockholder in American Marconi.

The article pointed out that GE became interested through having developed the Alexanderson alternator, which was installed at the New Brunswick, New Jersey American Marconi station. This action by GE gained high approval from the Navy Department. The article also stated “It is understood that, however, that if reorganization is undertaken American capital will back the enterprise, so that control will rest absolutely in this country.”27 RCA Launched RCA, as a publicly-held company owned by GE with controlling interest, was granted a charter under the corporation laws of the state of Delaware on October 17, 1919. Significant highly detailed stock, asset considerations, and personnel questions would take additional months to clarify and resolve. RCA ‘s primary responsibility was to maintain radio communications circuits to and from the United States, including ship-to-shore. With the GE purchase of American Marconi came exclusive rights to communicate with British Marconi stations and with most other stations in Europe. RCA manufacturing facilities would come at the end of the next decade. On November 20, 1919, the American Marconi Company was officially merged with RCA.

Agreeing not to become a manufacturer, RCA had exclusiverights to GE-manufactured radio hardware. With access to the GE Alexanderson alternator’s power for transoceanic communications, the new corporation had a virtual U.S. monopoly in long-distance point-to-point communications.~8 One of the requirements for American control was met by the certificate of incorporation that provided “no person shall be eligible for election as a director or officer of the corporation who is not at the time of such election a citizen of the United States.”

The new corporation was underway and by January 1920 was advertising with a World Wide Wireless logo for RCA ‘s Marine Radio Shore Station in New York City with call letters WNY. The advertisement announced that the company had exclusive rights to the radio inventions and extensive research laboratories of the
General Electric Company.
RCA greatly benefited from a number of cross-licensing
arrangements that provided free use of patents. The licensing began
in 1920 and included arrangements involving GE, AT&T, and
Westinghouse Manufacturing Company. United Fruit also crosslicenscd with RCA. This company held extensive shipboard and
shore radio stations in Central America in conjunction with their agricultural activities and ship transportation of their products. The joint use and availability of patents removed barriers that prevented bringing commercial products to market.
In the future, work at RCA successfully moved towards consumer products, radio broadcast receivers, radio broadcast transmission, and research related to military needs, plus the slowly evolving creation of television systems for broadcasting and receiving video signals. Research, hardware production, distribution, and sales provided company focus.
Along with other industries, the national depression beginning in 1929 provided severe challenges to RCA along with other consumer product-based industries. This was further exacerbated with the 1930 anti-trust injunctions against RCA based on the cross licensing of patents with AT&T, General Electric, and Westinghouse. GE was forced to sell its interest in RCA, making the Corporation independent.

1986

During the post-World War II period through the 1970s, RCA laboratories continued to develop and introduce new technologies related to computers, integrated circuits, lasers and other devices, and solid-state television cameras. With RCA ‘s base in the sales of consumer products, the growing Asian intrusion in the 1970s into the United States electronic marketplace of low price products along with management difficulties, caused the RCA decline to begin.
In 1919, GE paid $3.5 million to purchase American Marconi and create RCA. In 1986, GE’s offering price to purchase RCA was $6.5 billion. At the time this offering was the largest non-oil merger in financial annals. In a few years, this was followed by a breakup of RCA where the consumer products went to a French company (Thomson Group) and the RCA Laboratories to SRI (Stanford Research Institute).

Closing Comment

Nationalization of the entire radio industry during WWI provided relief from patent litigation that impeded radio technology development during the first part of the new century. Litigation costs time and money. Radio technology advances during the war and the manufacturing of thousands of radio devices were made possible in an environment where patent infringements were not a concern.

In 1919, as discussed previously, alarm over the possibility of losing the United States rights to GE’s Alexanderson alternator for international communications to a potentially monopolistic Britishcontrolled American Marconi and other Marconi holdings required action. It was with the wartime litigation free experience and the drive to fend off Marconi that RCA was created. The purchase of American Marconi removed the foreign factor; the alliance of the leading radio manufacturers and cross licensing of patents initially relieved the litigation aspects of radio hardware manufacturing during the early t 920s.29

Reprise

April 4, 1919, a letter to GE’s Young from Assistant Secretary of the Navy Franklin D. Roosevelt, acting for Secretary of the Navy Josephus Daniels, asked Young to confer with naval officials before consummating the Marconi order. Four days later, Admiral Bullard, Commander Hooper, and Young appeared before the GE Board of Directors with the outline of a proposal that would alter the structure of American Communications.