Let's put a temporary hold on discussing the history of Zenith, fascinating as it is, but "cut to the chase," and tell why Zenith failed, and the cause of its failure. To survive , Zenith had to engage in two "wars" the first of which it won, and the second, which it lost, as did the entire American consumer electronics industry.
(Note: The two installments of "First War" that Zenith fought and won were printed in Posts 5 and 6. It is repeated in this Post 15, and an ensuing Post 16, for the benefit of the many new readers who have found this blog. A little "refresher" is often helpful, anyway.)
The First War. Zenith launched a legal attack on the RCA (Radio Corporation of America) patent cartel that was extorting exorbitant royalties from the American radio industry. The cartel was operating in criminal violation of the Sherman Anti-trust Act. Here is a description of the act:
Sherman Anti-Trust Act. Federal legislation passed in 1890 prohibiting "monopolies or attempts to monopolize," and "contracts, combinations, or conspiracies in restraint of trade" in interstate and foreign commerce. The major purpose of the Sherman Antitrust Act is to prohibit monopolies and sustain competition so as to protect companies from each other, and to protect consumers from unfair business practices. The act was supplemented by the Clayton antitrust act in 1914. Both acts are enforced by the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Attorney General's office. (Source: answers.com)
In short, the Sherman Act prohibits any contract, conspiracy, or combination of business interest in restraint of interstate or foreign trade.
Zenith fought the first war single-handed, and won it for benefit not only for the benefit of Zenith, but also for the entire American consumer electronic industry.
But it was a short-lived victory, for another and more formidable competitor was in the offing, this one inexplicably supported by the government of the United States. This was the war against another cartel which RCA also instigated--an RCA-Japanese cartel. Zenith lost this war. Zenith was not the only loser, for hundreds of thousands of American manufacturing and related jobs were lost when production was transferred out of this continent. In the end, the entire American radio and televisions industry was wiped out. Zenith was the last of the American companies to go under and was declared bankrupt in 1998.
The story of Zenith's initial victory and eventual defeat is told brilliantly in a book by Philip J. Curtis, a Zenith attorney who was the Zenith "point man" is the two battles. His book is titled The Fall of the U.S. Consumer Electronics Industry . . . An American Trade Tragedy. (The publisher is unreachable and has apparently gone out of business.) The book is being "remaindered" by Amazon. com at a price of $114.
Philip J. Curtis |
The loss of the second war is the reason why you cannot buy an American-made radio or television set, nor any of the hundreds of other revolutionary electronic devices such as iPhones and iPods. Now they are all manufactured overseas, not here. America has lost it all. The total of the casualties: 800,000 American jobs sent off-shore, and most American companies that produced radio, television, and related products, were forced out of business, or taken over by the Japanese.
(. . . and the loss the second war may be the reason why you may have lost your job with Zenith, for Zenith was forced to lay off all its production employees, and sell its factories and production equipment. During its banner years, Zenith employed 32,000 Americans; following the Japanese take-over, Zenith employed only a fraction of that number. )
Curtis casts as the villain in both wars as (to quote) “ . . . the brilliant and ruthless David Sarnoff who ‘seized control of the RCA patent pool’ . . . and who controlled the lucrative industry for over forty years by means of a scurrilous patent-package licensing scheme.”
Defeated in the First War, Sarnoff went on to establish a second scheme in conjunction with the Japanese to literally take over the American television industry. You can read about Sarnoff in the ever-useful Wikipedia, but you won't find there the facts of what he did to destroy an entire American industry.
--and the take-over scheme was made possible by three administrations of the United States Government, beginning with the Nixon Administration, and followed by the Carter and Reagan administrations! Unbelievable? Well, wait until you read the proof!
Let's cover the first Zenith War, the war that Zenith won, as related by Philip Curtis in his book, and adapted for this blog by the author of the blog.
Zenith Declares War On the RCA Patent Cartel
World War II had ended, and Zenith
was converting from wartime products to consumer products. In order to manufacture and sell its radio and television products, Zenith was forced by the patent laws to accept an RCA package license
which required a payment of a 7.5 percent of the sale price of not just the
electronic circuits, but the entire product including the cabinet, which in the
top line sets were expensive. So the
tribute payable to RCA for a $450 Zenith radio was $33.75. The extortionate nature of this assessment is
pointed up by the fact that a profit on such a radio was normally 10 percent, or
$45.00. Further, the RCA license
required that the licensee grant back to
RCA any patents it developed!
This outrageous levy had the effect of making the licensee a subsidiary of RCA.
Such a monopoly was a clear violation of the Sherman Antitrust Act, which came into being to break up the monopolies in the last century: the Steel Trust, the Sugar Trust, the railroad trust, and the notorious Rockefeller Oil Trust, all of which had mutually agreed among their co-conspirators to fix prices, to divide up world domestic and foreign markets amongst themselves, and to use their combined power to crush competitors.
Judge Leahy |
Zenith Loses the First Round
Then came what was looked upon as Zenith’s “death sentence”. It was imposed at the defendant’s behest by Judge Leahy of the Delaware federal trial court. Before Zenith’s antitrust claim could even be considered, said the judge, the afore-described forty patents that Zenith had supposedly infringed must each be tried in court. Also, any newly issued patents could be asserted against Zenith, and each in turn must be tried. The cost of the full-scale trials would be enormous, and most pertinent, RCA could continue for years to impose its criminal conspiracy on the industry and reap the benefits thereof. [Judge Leahy’s opinion in favor of RCA is set forth in Appendix II in the Curtis book.]
I Attack!
Eugene F. McDonald |
To lead his attack team, McDonald enlisted Joe Wright, who later became president of Zenith.
Joseph S. Wright came to Zenith from
the Federal Trade Commission (FTC) in Washington, D.C., where he was in charge
of ensuring compliance with the Commission’s order to cease and desist from
unfair competition. Wright in turn
brought in Philip J. Curtis, who had worked with Wright in his antitrust
section of the FTC. Curtis characterized
Wright as “the government’s bulldog, and Zenith needed a man with bite.”
And bite he did. He got together with Curtis and Zenith’s long-time counsel Irving Herriot to decide strategy. They had two chances. The first chance was to petition the Delaware Third Circuit Court of Appeals to force Judge Leahy to put Zenith’s antitrust claim ahead of the trial of 40-plus patents. This was considered a hundred-to-one chance, and so it eventually proved.
Another bulldog was brought on board, this one in the form of Thomas C. O’Connell, described by Curtis as “a fearless, brilliant trial lawyer.” And so he proved. Cross-claims were filed on the antitrust issue against the RCA cartel, including GE and Western Electric.
The case was under the jurisdiction of Chicago’s Judge Michael Igoe, who allowed Zenith’s case to proceed independently of the Delaware trial and Judge Leahy’s ruinous decision.
Judge Igoe |
Not that this much bothered RCA and
its raft of attorneys. It took Zenith’s
attorneys no less than three years to discover that evidence, but find it they
did. RCA’s counsel drew upon every
possible expedient, including what Curtis called “sandbagging” and “the
wallpaper treatment.” The wallpaper
strategy was to “swamp them” (the Zenith attorneys) with plenty of nothing until they gave up
in exhaustion and despair.” Documents
detailing communications relative to the conspiracy, and between RCA’s
executive officers were withheld, and attempts made to actually hide them!
An example of the RCA’s tactic in
making it as difficult as possible to examine its files is shown what might be
called the “fleabag’ incident. Rather
than offering space at RCA’s luxurious New York City headquarters for Zenith’s
examination of the files, the files were piled into the worst possible room of
a New York hotel that RCA could find.
Phil Curtis’s description is vivid:
“The hotel itself was a third avenue fleabag . . . that had not been
cleaned or decorated for human habitation for many, many years. There was a small window covered with years
of New York grime and jammed shut so that we could not open it. Hanging from the center of the ceiling on a
black, twisted cord was the original light fixture. The ‘document” room’ had the sepulchral stench
of many decades of living and, possibly, dying.
The ‘air conditioning’ was a contradiction of terms. Counsel for RCA must have thoroughly searched
New York City and could find none worse for our accommodation.”
* * * * * * * *
End of First Installment of the two installments that describe Zenith’s first war and victory against the RCA cartel.
In the second installment, one that will appear in Post 16, we'll see how McDonald's crew of fighters defeated RCAs' criminal conspiracy to the benefit of not only Zenith, but also of the entire American consumer electronics industry.
* * * * * * * *
A more recent case in which an American company created a patent monopoly--a "conspiracy in restraint of trade"-- was by the Xerox Corporation, the first manufacturer of a practical copy machine. The copying process was rather simple in description--set type on a substrate (paper) with an electromagnetic charge, dust some carbon powder on it which sticks to the charged area (the type), shake the dust off , then heat the paper to fuse the typed area. Although simple in description, but exceedingly difficult to put into practice.
But Xerox did it, to their credit. Do you recall the first Xerox copier?--a large, table-like device which accepted the item to copy under a platen, press a button, and copy came out of the end.
But Xerox erred in accumulating all the patents and becoming the exclusive vendor by forbidden others from using the patents; in short, acting in "restraint of trade" in violation of the Sherman Anti-Trust Act. Xerox was sued by the government and forced to relinquish exclusive use of the patents. Immediately, other manufacturers produced a variety of copy machines of great versatility, and even a desktop laser printer. (This statement points up the value of the Sherman Act in encouraging innovation.)
* * * * * * * *
Back to Zenith History again! Can't help it!--it is so fascinating. Let's look at this Zenith radio that dates from 1925-1927 era--The Zenith Stratosphere 1000!
This was the first radio ever capable of tuning to stations world-wide, and a predecessor to the portable Zenith Transoceanic. And it cost $750, and this when you could buy an automobile for $300--the Ford Model T, for example.
(An aside: Some of you may be old enough to know how much fun the Model T was to drive! Three pedals on the floor and a throttle lever beside the steering wheel was all that was needed. And you could whiz along at the breath-taking speed of 45 miles per hour! Lowering the windshield would increase the thrill. Then you had to wear goggles.)
That 1925 $750 cost of the Stratosphere 1000 in today's money would be close to $10,000-- enough to buy a pretty good used car. And if you could find a Stratosphere today, one in good condition, it would be worth $50,000!
SO!--if you are probing around in an old barn and find a moldy old Zenith Statosphere 1000, buy it!
Here is another ahead of its time development by Zenith--the Robot Dial.
The trouble with an old radio that you may find is that it probably won't play very well. If it is a Zenith, it is not that the quality didn't go in, but due to the fact that the springs that hold the vacuum tubes suffer from old age and lose their grip on the socket pins, so the electrical connections are bad. But that can be fixed, and there are lots of places that repair old radios, and make them sound as good as new. Here are three that do repair old radios, as found on the internet--
1.
www.everythingradio.com, www.tomsradiorepair.bizland.com,
and,also, the “old radio fixer upper guy”: www.theoldradiofixerupperguy.com/repairservices.html
(Note: The information in the foregoing article is derived from information in an article by Steve Johnson titled "What It's Worth: Zenith Radio" published in the Hearst Electronics Products Magazine. The article also covers the Zenith Wincharger and the Trans-Oceanic radio set. Johnson also deals in antique radios and other antique items. See
And for lagniappe, here is a fascinating old radio-telephone--
Antique style novel dial radio from the collection of Jim's Antique Radios, www.antiqueradiosmusem.org |
* * * * * * * *
(Note: The following was lifted from Post 4, as it is worth repeating.)
NOW--BOOKS ABOUT ZENITH! Those who love the old Zenith will delight in adding such books to their libraries. Four such books are described below. They are primarily the work of two college professors, Harold N. Cones and John H. Bryant, who earned the name “The Radio Professors” because of their dedication to writing the history of Zenith and its products. (Please note that this account was lifted from Post 9, but it is worth a repeat.)
Zenith Trans-Oceanic: The Royalty of Radios. (2008) $22.95.
Zenith Radio: The Glory Years, 1936-1945. (2003) Illustrated Catalog and Database. (With Martin Blankenship.) $23.46
Zenith Radio: The Glory Years, 1936-1945: History and Products. (With Martin Blankenship.) $27.05.
dangerous crossings (sic) 1925. $2.85 (Actual price asquoted!)
The book “dangerous crossings” describes the exploration of an area of the far north by Donald MacMillan, Richard Byrd, and Eugene McDonald. McDonald played an extraordinary and heroic part in the expedition. It is there that he introduced the Zenith short-wave radio system that revolutionized world-wide communication. The radio system was perhaps the first of the many “firsts” that Zenith was notable for.
All books are available from Amazon.com. Prices are effective as of March 12, 2014. Bookseller Barnes and Noble and your local bookseller may also have them, or can get them for you.
* * * * * * * *
Thomas Argy was a Zenith electronic engineer. He invented as system for adapting a telephone circuit into a television set, so if you were sitting in front of the set, you could receive telephone calls and make calls by way of the set. The feature was called "the Space Phone." Some Zenith models from the 1970's to the 1990's offered this special feature.
Tom Argy got a patent for it, and then, sadly, passed away. Later, the patent issued in his name. Zenith made a special ceremony in presenting a copy of the patent to Argy's son--a kindly act typical of Zenith.
Welcome to the Raulanders! The Raulanders are a group of former employees who worked for Rauland, and who get together and reminisce, socialize, and exchange information.
Let's look back! Sixteen (16) posts have been published so far in this blog. If you want to catch up, or review what has been published, here is how to do it. Go to the front of this blog where you can review this little diagram, which leads you to the Posts of the blog from the first to the most recent:
First, here is a reproduction of the diagram at the front of every Post . Here is what it looks like--
(This diagram doesn't work here, but it will when you access it at its location, which is on the front of all posts, right side.)
- February
2014 (2) –Posts 2 and 1
- March
2014 (1) --Post 3
- April
2014 (1) --Post 4
- May
2014 (2) --Posts 6 and 5
- June
2014 (2) --Posts 9 and 8
- July
2014 (2) --Posts 11 and 10
- August
2014 (2) --Posts 13 and 12
- September 2014 (1) –Post 14
To view a Post, just click on the date of its publication. For
example, if you want to view Post 1, just
click on the date February 2014, and an address in blue will appear. Click on it. Post 2 will appear first. Then scroll
down to the post you want to view--Post 1. (The latest post is on top of the earlier post.)
And here is a summary of all the Posts to date--
Post 1: The story of Zenith . . . its early success and eventual failure . . . help in writing blog needed from the Zenith Pioneers . . . the two principals: McDonald and Nevin . . . named “the Zenith Book” . . . tentative title: A Requiem for Zenith: The Story of the Rise and Fall of a Great American Company, and the Lessons to be Learned from its Fall . . . please tell your friends and former fellow employees.
Post 1: The story of Zenith . . . its early success and eventual failure . . . help in writing blog needed from the Zenith Pioneers . . . the two principals: McDonald and Nevin . . . named “the Zenith Book” . . . tentative title: A Requiem for Zenith: The Story of the Rise and Fall of a Great American Company, and the Lessons to be Learned from its Fall . . . please tell your friends and former fellow employees.
Post 2. The birth of Zenith . . . on “a rainy
night” . . . McDonald and Karl Hassel . . . McDonald gets it going . . . the first "Znith" radio sets.
Post 3. Reference to the Zenith Book Facebook page . . .
McDonald and the Porthole Television set . . . ServiceWorld Magazine . . . the
story of the Zenith Distributors . . . the question: What destroyed the Zenith we all knew? . .
. the Philip Curtis book described . . .
four other books about Zenith . . . meet Professor Marianne McDonald . . .
a request for comments.
Post 4. Zenith Declares War! . . . the two cartels explained . . .
Party Time! . . . Gene Polley: how he got started with Zenith . . . Polley's memories of McDonald . . . Pulley’s major
contribution and his reward . . . Robert Adler’s contribution . . . Zenith gets
into television . . . McDonald’s profit
sharing system . . . the Mizpah . . .
preparations for next Post . . . Help! Help! Comments needed!
Post 5. Brief summary of the Curtis Book . . . author’s role in relation to the
Curtis book . . . Zenith declares war! (the first installment) . . . I Attack! (McDonald) . . . the
“fleabag” incident . . . now for something completely different: the Big Bang! (a nearby factory explodes) . .
. the author apologizes (for calling Adler’s remote control a “gizmo.”)
. . . references again to the Zenith Book Facebook page.
Post 6. Zenith’s First
War, Second Installment . . . Curtis describes the high court proceedings (in
London--hilarious! ). . . Zenith wins!--so did
the entire American consumer electronics industry . . . a tribute to Chicago’s Judge Michael Igoe . .
. two questions: How many of the readers
know the story of Zenith’s First War? . . .
how many have actually read the Curtis book?
Post 7. Zenith’s first television set plays again! . . (Photo:
Brian Mahronic and Zenith Model 1939) . . .old Zenith TV set is shown . . .
Antique Radio club of Illinois is described . . . Sam Kaplan, inventor of the
ChromaColor television tube, is introduced . . . Robert Podowski writes and
account of the early development of the Adlers ultrasonic-based remote
control.
Post 8. Post 8 features engineers, executives and others . . . the Hall of Fame in electronics . . .
Robert Adler and Carl Eilers are among those listed . . . Eiler’s achievements
. . . odd Zenith products: the Jack-in-the-box television set; the
batwing lock radio;the roach motel cable box . . . Zenith’s early radio
station in Mt. Prospect, Illinois . . . Museum of Broadcast Communications . . .
McDonald’s philanthropies . . . photo of Marianne, McDonald’s daughter . . .
Help! Request for comments from readers
of the blog.
Post 9. Unhappy
announcement: the Zenith breakfast meetings are no more . . . photos of the
Medinah banquet meeting hall and five of the attendees . . . a tribute to Richard and Barbara Alfano
who produced the breakfast meetings for nine years . . . remembering Joseph
Wright . . . a review of the book “dangerous crossings”--the adventures of
Commander McDonald in the Arctic . . .a plea to encourage readership of the
blog, and a request for comments.
Post 10. Call this Post “Nostalgia” . . . awful pun . . . the Zenith
Distributors . . . What does a distributor do? . . . J.S. Williams Company . .
. George. H. Lehleitner & Co. . . . name of McDonald’s wife . . . the
radios and televisions of Zenith have not been forgotten . . . Radio Attic . . . Antique Radios Club . . ..
. Grunow Mansion . . . Lost Chicago . . . Florsheim . . . American Flyer . . .
Zenith logo . . . Zenith Stratosphere radio model . . . Commander McDonald and the
book “dangerous crossings” . . . please encourage readership . . . an apology .
. . Mizpah!
Post 11. The “epitome” issue . . . first epitome: a servicing
dealer-- Porter Barnes of Evansville,
Indiana . . . a dealer who
sells to Zenith customers . . . a “mon
and pop” operation . . . the largest servicing dealer in Evansville . . . running
a small business . . . the importance of advertising . . . the need for support
. . . the role of management . . . the importance of the proper location . . .
in retrospect . . . a tribute to long-time Zenith engineer Joseph Graziano . .
. announcement of RadioFest . . . the
managers of Zenith: McDonald, Kaplan,
Wright, Nevin . . . technical lightweights . . . Phil Curtis . . .
Nevin’s career at Zenith . . . Radio Station WEFM . . . profit-sharing changed . .
. intro to Lansdale debacle.
Post 12. Readers
express doubt -- is a "Zenith Book" possible? . . . dual betrayal . . . the Requiem for Zenith and the Curtis book .
. . two authors to the book-- Curtis and Clarke . . . Lansdale! . . . the
brochure . . . the “pitch” for Lansdale. . . Gene
Kinney pitches it world-wide . . . “Let’s turn off the heat” . . . Lansdale now junk . . . What would the Commander have done?
Post 13. The special products of Zenith . . . the special
products division . . . description of facilities . . the prime purpose of the division . . . special
products catalog . . . radio set PRR-15(z) . . . used in the Cuban missile
crisis . . . Bell Boy Paging Receiver . . .
more special products . . . the Uniscope . . . Zenithcon 1 . . .all gone
now . . . ChromaColor! . . . the patent
suit . . . description of the ChromaColor patent . . . a page from the magazine ServiceWorld
. . . the banner of a Zenith publication--"ZTAC News."
Post 14. Reviewing the cable box . . . typical cable box . . . latest remote control . . . coaxial cable
. . . the caricatures again . . . Vito Brugliera . . . ZTAC News . . . example
of circuit . . . Andy Bellavia teaching
. . . Dick Kemp . . . Bill Cohn . . .
the Quality had gone in, but-- . . .
sold to Motorola . . . Let’s lighten the mood . . . Zenith in Mt. Prospect in
1925 . . . TV antennas . . . the quarter horse case . . . suspicious television
sets . . . cut to the chase . . . hold your hats for Post 15!
Post 15. Let’s “cut
to the chase”--Zenith’s First War once more. . .
more history—the Stratosphere 1000 radio . . . cost of the $tratosphere,
then, and now . . . four books about Zenith (again) . . . Tom Argy and the Space Phone . . . welcome to the Raulanders . . . how to view
previous posts of this blog . . . a review of the contents of the blog (what
you are reading now!) . . . explanation of "Mizpah."
Post 16. To be published
. . . the second installment of Zenith’s first War .
. . (what will be in the remainder of Post 16? -- even the author of
this blog doesn’t know, but is open to suggestions and contributions.)
SO!--Mizpah! until next time.
An explanation of the word "Mizpah" for those who have recently joined: It is a Hebrew term which means (very roughly) ". . . may all be well with you and I until we meet again." Mizpah was also the name of McDonald's yacht.
Ralph, You are off by a decade on the Zenith Stratosphere. It was a 1936 model. This is a very desirable set by collectors and has a value of over $30,000 now. There are several still around. I have had the honor of seeing several of them over the years at the Antique Radio Club of Illinois presentations.
ReplyDeleteAnother excellent post! We appreciate these helpful links on repairing old (but otherwise working) radios. I remember as a young girl in California being so impressed by the Trans-Oceanic picking up radio stations in France - it is truly amazing technology when one thinks about it. I also have trouble grasping how an immense airplane is able to take off and stay in flight (although I understand how a bird can) or how a huge ship is able to float on water (all about the physics of water displacement), and yet these are all remarkable achievements by humanity.
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