Figure 5 (p. 19)-The birthplace of Victor.
Figure 6 (p. 21)-The first talking machine patent granted to Mr. Johnson on March 22, 1898.
Figure 7 (p. 23)-The Collins Carriage Shop-birthplace of the Johnson Recording Process.
Figure 8 (p. 27)-The Zonophone becomes nationally advertised, 1898.
Figure 9 (p. 30)-Eldridge R. Johnson as a young man of 33.
Figure 10 (p. 32)_Zonophone advertisement in the November 1900 issue of McClure's Magazine.
Figure 11 (p. 34)-Instrument line introduced by Eldridge Johnson in the Fall of 1900.
Figure 12 (p.36)-"His Master's Voice" painted by Francis Barraud in 1899.
Figure 13 (p.38)-Mr. and Mrs. Leon Forrest Douglass.
Figure 14 (p. 40)-Early records and brand names.
The Victor Talking Machine Company
While Mr. Johnson had not had any experience with sound reproducing equipment prior to 1896, his early training and experience assumed considerable importance in view of the part which he was to play in the development of the industry.
He was born in Wilmington, Delaware, on February 6, 1867, son of Asa Johnson and Caroline Reeves Johnson. Caroline died when Eldridge was about two years old, and he was sent to live on the farm of his mother's Aunt Elizabeth in the Bethel Church neighborhood of Kent County, Delaware.
It was here that Eldridge passed through one of the happiest phases of his life. The swimming hole in the creek was soon to be his favorite haunt, and he spent countless hours roaming the fields and woods on Aunt Lib's farm.
When Eldridge was eleven, he went to live with his father and new stepmother in Dover. His stepmother was a fine, deeply religious woman: a strict disciplinarian and a spic and span housewife in the best "Sunday parlor" tradition. The atmosphere was quite different from that at Aunt Lib's. Eldridge went to school in Dover until he was 15. After carefully weighing his interests, aptitudes, and resources, it was arranged for him to move to Philadelphia as an apprentice in the plant of J. Lodge & Sons who specialized in the manufacture of wire products. During this time, he lived with his stepmother's sister, Rebecca. It was one of Rebecca's sons, also apprenticed to Lodge, who had secured the job for Eldridge.
At the start, the job was extremely hard, dirty work, and the work-week was sixty hours. Gradually, he was given an opportunity to learn the trade, but the pressure was always heavy and he fretted under it. However, he was resolved to learn the trade and to excel at it.
At the end of four years, his apprenticeship ended and he became foreman of a department supervising 10 to 15 men at $12.00 a week. This was less than the journeyman's scale, but Lodge refused to pay more since Eldridge was under 21. This more than anything else, prompted Eldridge to accept a position with the Scull Machine Shop (then known as the Standard Machine Shop) in Camden, New Jersey. This business, housed in a small building at 108 N. Front Street back of the Collings Carriage Shop, had been established by Captain Andrew Scull as a career for his son, a graduate of Lehigh in Mechanical Engineering. It was one of many small machine shops, so common at the time, (p. 17) that specialized in repairing home appliances and farm equipment, and building models for inventors. Mr. Johnson was hired by Belford Royal, who was then foreman of the shop. The fact that Mr. Royal was considerate and helpful during the break-in period, no doubt laid the ground-work for their close friendship in the years which followed.
In 1888, two years after the shop was started, young Scull died suddenly, leaving a partially completed invention of a wire-stitching book-binder. The father was anxious to have the invention completed, so he asked Mr. Johnson, who was temporarily working in another shop, to come back as foreman and manager to take on the wire-stitching development as a major personal project.
The book-binding machine was finished in 1890, and Mr. Johnson left the Scull Shop to take a trip to the West Coast. The trip lasted about a year, and Mr. Johnson said later that he regarded it as having been a valuable experience. When he returned in 1891, business was bad and having answered a help-wanted advertisement, he found himself lined up as a strike breaker in Indianapolis, Indiana. He declined, but the Union paid his fare back to Philadelphia.
It wasn't long afterward that Mr. Scull asked him to come back as half owner of the business. Mr. Johnson agreed, and immediately set out to redesign the book-binding machine which was not selling because of its cost. Having accomplished this, a corporation known as the New Jersey Wire Stitching Machine Company was set up to market it. The venture was profitable almost from the start, and may even be active today.
As for the machine business, Mr. Johnson once said that it was a close race with failure for a long, long time. When they were lucky, the partners made ten or twelve dollars a week. In 1894, Mr. Johnson bought Scull's interest, and set up under his own name, borrowing some five or six thousand dollars for the purpose. Speaking of this experience, he said, "Being the proprietor of a machine shop was calculated to either break a man's spirit or prepare him for better opportunities. I did not win by superior speed. It was a matter of endurance." The financial stress was reduced a little by the change in ownership, but working capital was at great premium. The shop employed from 2 to 16 workmen, depending upon the volume of business in hand.
As was pointed out previously, there is no evidence to indicate that there was any considerable active demand, in the Winter of 1896, for sound reproducing equipment for use in the home, nor that any of the three principal manufacturers of the time-Edison, Bell-Tainter, Berliner-had constructive plans for developing such a demand. It follows that Mr. Johnson became identified with the industry right at the start.
This, then, is the experience and plant equipment of the man to whom Belford Royal brought Mr. Whitaker sometime during February of 1896. (p. 18)
The Development of a Motor
Mr. Johnson was in dire need of working capital in the Spring of 1896. With the machinist business barely breaking even, there had been no opportunity to build up a reserve. His decision to go ahead independently with the development of a motor for the Berliner Company, when he was unable to come to terms with Mr. Whitaker, was hampered for want of capital. He went ahead anyway, putting every dollar of his own in the venture, and everything he could borrow. This was a time when opportunity was knocking on many doors. Men who loaned even a few hundred dollars profited handsomely.
From this struggle, a spring motor was developed which was satisfactory to Berliner. It was the first spring motor for a disc talking machine which would operate at uniform speed, could be regulated, was quiet in operation, and was inexpensive to make and easy to use.
The exact construction and appearance of this motor is not known, but the probabilities are that it followed the general design of the motor illustrated and described in Mr. Johnson's first talking machine patent (Fig. 6) which was granted on March 22, 1898. It is essentially the same model which is illustrated in the Victor trademark.
The available records covering production from 1896 to 1901 are very limited. As far as the first order is concerned, there is a great deal of contradiction. Mr. Johnson said that he got an indirect order for the pilot run of 100 units on August 10, 1896. On the other hand, Mr. Gaisberg, who was with Berliner at the time, said that Berliner gave Mr. Johnson an initial order for 200 units and made an advance payment to finance the cost of production. Against this, there is evidence that the Montross Metal Shingle Company, of Camden, had delivered 100 motors to Berliner by October 15, 1896. Some time during this period, Mr. Johnson unsuccessfully tried to persuade Montross to join him in making motors for Berliner. They had a good machine shop and, among other things, had a patented rotary spring carrying cage of peculiar construction for use with a certain type fan. Mr. Johnson wanted the cage and Montross wanted the Berliner business, but this involved Mr. Johnson's motor.
Montross took an order from Berliner for 1,000 units to be made by Mr. Johnson at $4.00 each. However, the design was changed, and Mr. Johnson found that he couldn't make out at the $4.00 price. The situation was adjusted as follows: (1) Mr. Johnson would make the 1,000 motors at the $4.00 price, (2) he would take over the sale of the original 100 units, (3) he would not be called upon to pay royalty on orders he might get up to 2,500, and (4) he would subsequently pay an 8% royalty.
On October 28, 1897, Montross took an order direct from Berliner for 2,000 motors. It infringed Mr. Johnson's patent, so he declined to pay the royalties originally agreed upon. There was a lawsuit which ended with Montross agreeing not to make more than the 2,000 units, to mark the motors which they had made with a conspicuous "M," and to cancel the original agreement. (p. 20)
It is not known how many different models may have been made between 1896 and the Fall of 1900. The indications are that there may not have been more than one model and that, subject to minor improvements from time to time, it was like the trade mark model. Total production during the four-year period may have been in the order of something less than 25,000.
From 1896 to the Summer of 1898, Mr. Johnson's activities as a manufacturing machinist consisted almost entirely of supplying Gramophones to the Berliner Gramophone Company of Philadelphia. Mr. Johnson made the motors, sound boxes, and miscellaneous metal parts. He bought the horns and cabinets, assembled the components, and delivered them as complete instruments.
The Johnson Recording Process
The so-called "Johnson Process" of recording was very important in Victor's history. Mr. Johnson himself said that, "It changed the Gramophone or disc Talking Machine from a scientific toy to a commercial article of very great value. It was the first and most important step in the whole history of the evolution of the disc Talking Machine." The fact that the results were so much better than either the contemporary cylinders or Berliner discs was, undoubtedly, an important factor in getting Mr. Johnson and Victor off to a good start.
As early as April 1896, Mr. Johnson described the process to his patent lawyer. It consisted of: (1) a laterally cut recording in a flat wax-like disc, (2) a very fine electrotyped matrix of this recording, (3) multiple male "stampers" made from the master matrix.
During the Summer of 1896, Mr. Johnson made a series of experiments with Mr. A. C. Middleton to put his ideas to a practical test. They began by melting common candles in a pie plate. This wasn't successful because the bottom of the plate was too uneven. Next, they bought a cake plate. Although this was better, it was still not good enough because the texture of the wax wasn't uniform. This led to intensive experimentation with many different kinds and combinations of waxes. For a considerable time, the master discs were made of cylinder records purchased direct from Edison.
Mr. Johnson next worked on the problem of making an electrotype from a wax base. He was aided in the part of his research by Mr. C. K. Haddon with whom he had worked at Lodge and Sons. Mr. Haddon was, at the time, working for the Wirtz Manufacturing Company who made containers for artist's materials and was equipped with an electroplating department. This experiment was also successful. (p. 22)
Mr. Johnson had, at this point, convinced himself that his ideas were practical. However, his patent lawyers advised him not to apply for a patent, but to maintain his operation as a secret process until the other patents in the area had been adjudicated. In January of 1898, Mr. Johnson employed William H. Nafey to concentrate on the development of the recording process up to the point of manufacture. Mr. Nafey worked under lock and key in a room rented from the Collings Carriage Company (Fig. 7). The process was developed by September 1898 and put on an operating basis early in 1899. (p. 22) In the meantime, Mr. Johnson applied for a patent on August 16, 1898. He re-filed on November 12, 1904, but the patent was not issued until August 11, 1908.
In September of 1898, Mr. Bentley L. Rinehart, who had worked for Mr. Johnson before, was given the job of designing and installing an electroplating plant. This was completed in March of 1899, and turned out to be an excellent investment. This not only avoided the necessity of revealing secrets to outside vendors, but made it possible to develop progressively finer results.
The Patent Situation
For two or three years before 1900, and for five or ten years after, the patent situation was very troublesome. The number of patents was not large at the start, but their importance had not been legally established. Nobody knew for sure who had what.
Before 1901, there were three patents of particular interest to Mr. Johnson. Of the three, Berliner's patent #534,543 was the most important. The outstanding feature of this patent was not the disc form of record, as many have supposed, nor even the lateral cut, but the fact that the grooves, in hard material, guided the sound box across the record without supplementary mechanism. The hardness of the material was an important consideration, not only as protection against wear, but also because the support which it gave the reproducing point resulted in louder reproduction. The patent was important to Mr. Johnson because, if it were sustained, he would have to have it for his process. It would also be important as protection against infringement.
Next in importance to the Berliner patent was the Jones patent #688,739. His patent application, filed on November 19, 1897, covered substantially the same ground as Mr. Johnson's patent #896,059 which was not applied for until August 16, 1898, although the date of conception was established as April 1896. The Jones patent was drawn on narrower, more technical, lines than Mr. Johnson's. The high point was the claim for "...a stylus vibrating laterally and engraving a groove of approximately even depth." The American Graphophone Company bought this patent from Jones for $25,000, and, in due course, it became the property of the Columbia Phonograph Company. It figured in Mr. Seaman's legal tactics against Berliner in 1900, and was an issue between Victor and Columbia for many years.
Bell and Tainter's patent #341,214, of 1896, covered wax as a medium of recording. The fact that Mr. Johnson used wax on a disc as an intermediate step in the recording process, whereas its previous application had been a direct recording on a wax cylinder, didn't help. The old patent was broad enough to cover the new application. However, having not been adjudicated, it expired in 1903.
While it was clear from the beginning that, if sustained, the Berliner patent would be needed for the Johnson process, there was no assurance that it would be. Mr. Johnson had an agreement with Berliner that if, and when, it was sustained, Johnson would pay accumulated royalties. In the meantime, the improvements which he was making to the product (p.24) were not considered an offsetting factor, but a contribution to the salability of the product. Subsequently, the use of the Berliner patent was covered by formal license. When the license was taken out, Mr. Johnson stated that it was done as insurance rather than acknowledgement of the validity of the patent.
The company always had an aggressive policy toward its patents, and managed to establish a strong defensive position. In addition to the large number of patents issued to Mr. Johnson, the company did not hesitate to cross-license with its competitors when this would strengthen the company and reduce legal costs and bickering.
The Troubles Which Led to Victor
Emile Berliner developed the disc-type record, and for several years it bore his name, Mr. Johnson improved it, and was interested in combining all disc interests under the name "Consolidated" when trouble developed between the Berliner Company and its sales agent, Frank Seaman. The trouble hurt Mr. Berliner's business critically, and upset Mr. Johnson's dream.
It has been generally known that Mr. Johnson was involved in serious trouble in the late 1890's and early 1900's, but the exact nature of the trouble and its bearing on the early development of the disc-type phonograph has not been known. The situation has always been veiled in silence, and it has, as a result, been a source of speculation and gossip.
So far as can be determined from the available records, the facts are as follows. On October 10, 1896, shortly after Mr. Johnson started to deliver the motor-driven Gramophone which he had designed for the Berliner Gramophone Company of Philadelphia, the company signed a contract with an advertising agent in New York named Frank Seaman. Through this contract, Seaman received the exclusive sales agency for the Berliner product for most of the United States. In return, Seaman, operating as the National Gramophone Company, agreed to devote his entire time to the promotion of the Berliner Gramophone and Berliner records, and to identify these products, under all circumstances, with the Berliner name. So far as is known, he sold to anyone who would buy-wholesaler, retailer, consumer-and advertised the Gramophone extensively in the magazines.
On one point of Seaman's operation there was no question. He was not satisfied with his mark-up. It was probably sometime in the later part of 1897 or early 1898 that Seaman decided to do something about it. Just what the mark-up was, isn't known, but the records show that he paid the Berliner Company two "royalties"-one on manufactured cost, the other on a percentage of the retail price. It would appear that Mr. Johnson's price to Berliner may have been at cost plus 25% and that Berliner may have taken a mark-up (p. 25) of 40% on Mr. Johnson's price, Mr. Seaman was allowed a discount from this price and got a further margin by adding a mark-up to his selling price.
When Seaman pressed for a larger margin, the Berliner Company held that the two royalties together were no more than necessary, and Mr. Johnson insisted that he had nothing to spare. Mr. Johnson's position was that the product couldn't he made right for less, and that there was no excess in his margin. Far from taking this as final, Seaman continued to press from every angle he could think of without success. Seaman had apparently set up very liberal discounts to his trade, and wasn't breaking even let alone being in a position to do the aggressive advertising and merchandising he wanted to do. It is not clear why list prices weren't increased. Presumably, it was felt that they were blocked by cylinder competition, although, looking back, this isn't easy to understand. The improved performance of the disc would seem to have justified a higher price. However, it must be remembered that the cylinder had been the accepted standard, and the disc was the contender.
In any event, after exhausting every other angle, Seaman insisted that the additional profit he wanted be taken out of the product Mr. Johnson refused to be a party to it. Seaman also tried to persuade Mr. Johnson to set up prices to Berliner which would provide a confidential kick-back. This was also refused. Seaman then had a cheaper copy made of the Berliner instrument. It was called the Zonophone, and was made by the Universal Talking Machine Company which had been set up by Seaman to equip the Berliner instrument for coin operation. The Zonophone was somewhat larger and much more showy than the Gramophone, but, because of inferior construction, the performance was not as good. It also infringed both Berliner and Johnson patents. A sample was turned over to Berliner and Mr. Johnson as an example of what Seaman wanted and what could be done. The idea was again rejected. Seaman then tried to persuade Berliner to buy Zonophones from Universal instead of Gramophones from Mr. Johnson. When this was refused, Seaman decided to make and market the Zonophone himself. It is not known just when this activity started, but the new instrument was featured in a full-page advertisement (Fig. 8) in Munsey's Magazine of October 1898.
During August of 1897, while this was going on, Mr. Seaman sent the sales manager of his National Gramophone Company, William Barry Owen, to London to sell European rights to the Berliner patents. The original intent, apparently, was that Seaman would supply the instruments under his contract with Berliner, and that matrixes would be made and records pressed from equipment supplied by Berliner. Owen didn't make the quick sale which had been anticipated, and, after a few months, resigned as National's sales manager. Owen finally succeeded in interesting an Englishman named Trevor Williams in setting up a company to promote the sale of Berliner records and the improved Gramophone being made by Mr. Johnson. The new company was called The Gramophone Company. (p. 26)
During the Spring of 1898, F. W. Gaisberg went to London to set up recording facilities and to make artist contacts. At the same time, Mr. Joseph Sanders (Mr. Berliner's nephew) developed matrix and record pressing plants in his ancestral home of Hanover, Germany. Mr. Belford Royal went over to supervise the instrument end of the business. Complications soon developed, and the new company asked Mr. Johnson to come to London in July. The result of the trip was that Mr. Johnson sold rights to some of his patents, and agreed to sell parts and components direct. A capital of 15,000 pounds was accumulated, and the Gramophone Company was on its way.
In 1898, the Gramophone Company had the instrument parts which it bought from Mr. Johnson and assembled in London into complete Gramophones similar to the Victor trade mark model. It was also getting organized to have records pressed in Hanover, Germany, from Berliner matrixes which it would either make in London or import from Camden. In 1899, the name of the company was changed to the Gramophone Company, Ltd. Inspired by the early success of the company. Mr. Owen decided to expand into other lines, and a typewriter and electric clock were added. The name of the company was changed to Gramophone and Typewriter, Ltd. The new venture turned out badly and the company lost a great deal of money. As a result, the new lines were soon dropped, and the name reverted back to The Gramophone Company, Ltd. This is quite a bit ahead of the story, but outlines the important events in London prior to the birth of Victor.
Mr. Seaman was upset by the development in London. His contract with Berliner was limited to the United States, but he had hopes. He did everything he could, short of legal action, to block the transaction.
On March 22, 1898, a patent was issued to Mr. Johnson on his spring motor development. By this time, the recording process, which he had conceived in April of 1896, was nearly ready for practical application. The Johnson method cut the recording in a wax disc (from which the matrix was made) by very fine electroplating. This was opposed to the photo-engraving process of Berliner. The performance was greatly improved, and Mr. Johnson regarded the development as his most important contribution to the product end of the business.
As we have seen, there were patent complications from the start. There was no conflict with Edison's hill-and-dale cylinder, which was impressed, but Bell and Tainter's cylinder covered cutting in wax. The patent specifically covered hill-and-dale recording and reproduction on a wax cylinder, and then attempted to cover any other possible application by a blanket coverage. Since there was nothing definite about either recording or reproducing cylinder lateral cutting, some experts argued that the patent was confined to the type record, and that the broad claim wouldn't stand up. However, there was no way of telling for sure until the patent had been adjudicated. (p. 28)
The famous Berliner patent was, of course, the other to which the Johnson process might be vulnerable. However, even here there was some difference of opinion among the experts, but because of the uncertainty, the expert's advice was to proceed with the development, up to the point of manufacture, behind closed doors.
In the Fall of 1898, Mr. Johnson started to re-make the active records in the Berliner catalog by his process, expecting that they would be marketed by the Berliner Company. In a very few months, Mr. Johnson received $15,000 from the Gramophone Company for the rights to his new process which was to be administered by Belford Royal with the understanding that the secrets would not have to be revealed to anyone else.
The affairs between the Berliner Company, the Johnson shop, and Frank Seaman took a dramatic turn during the Fall of 1898 when the National Gramophone Company took full pages in the national magazines to advertise the Zonophone without any reference to Berliner. During this same period, the American Graphophone Company, operating under Bell and Tainter patents, sued the National Gramophone Company for infringement. It looked as though the Bell and Tainter patent, which was due to expire in 1903, was about to be adjudicated, although it wasn't clear at the time why the suit was brought against Mr. Seaman rather than the Berliner Company. Mr. Seaman promptly called upon the Berliner Company for support.
On December 12, 1898, The American Graphophone
Company brought a similar suit against the Berliner Company. A great
deal of work was done, and a mountain of testimony was accumulated
during the next 13 or 14 months.
(1) A progressive decline in the sale of the Berliner Gramophone, because the National Gramophone Company was putting its efforts behind the Zonophone.
(2) The postponement by both the Berliner Company and the Gramophone Company of the introduction of the Johnson recording process pending the outcome of the American Graphophone Company suits.
(3) A highly prosperous year for the Gramophone Company. Their net profits were several times higher than their invested capital.
(4) The sale to the Gramophone Company of European rights to the Zonophone.
Early in 1900, Seaman insisted that the Berliner Company should transfer its entire business in the Gramophone from Mr. Johnson to Universal. Mr. Berliner refused, and a crisis followed. On May 5, 1900. Seaman accepted a consent decree admitting the validity of the Bell and Tainter patent without consulting the Berliner Company. (p. 29)
Early in June, I900, the Berliner Company notified Seaman that, because of repeated violations of their contract, it was considered to be forfeited. Immediately, Seaman got an injunction against the Berliner Company preventing them from selling Berliner products to anyone hut himself. The mere fact that this injunction was issued suggests that something is missing from our records. It would seem that Mr. Berliner had a clear case against Seaman. However, it could have been that Berliner may have acquiesced at the start in the Zonophone activities, that he may even have given Seaman a license, or that he may have lost legal position by failing to crack down promptly.
Up to this point. Mr. Johnson had, apparently, not been directly involved in the dispute between Seaman and the Berliner Company beyond a loss of orders. However, the loss of orders in itself had become very serious. Notwithstanding the relatively good volume from London, Mr. Johnson had invested his entire savings ($50,000-$60,000) in an enlarged plant and matrixes in anticipation of increasing volume from Berliner.
By now the trouble between Seaman and Berliner was generally known in the trade, and there was speculation that Seaman and Mr. Easton (American Graphophone Company) had teamed up, with the guidance of a brilliant lawyer named Philip Mauro, to harass and annoy Mr. Johnson and Berliner and to exhaust their resources to the point where they would become disgusted and vacate the field. To outsiders, the injunction against Berliner looked like a trump card which might very well bankrupt both Berliner and Mr. Johnson. However, time demonstrated that those on the outside vastly underestimated the ingenuity and tenacity of those on the inside.
In any event, Mr. Johnson had to make a prompt decision. There was no assurance that the Berliner Company would be able to start up again at a reasonably early date, nor was there any probability of their being able to work out a consolidation of disc interests. It seemed to Mr. Johnson, that the only solution that circumstances permitted was to adopt a brand name and distribute the products himself. While he was trying to work out the details, Seaman started up a heavy legal bombardment which was to last for two or three years.
It started with one move after another to prove that Mr. Johnson was not simply a vendor to the Berliner Company, but that there was a secret agreement which, in effect, made him a part of the Berliner organization and, therefore, subject to the injunction which Seaman had obtained against Berliner. These efforts all failed, but they were time consuming and costly.
By the end of August 1900, plans had been developed to the point that Mr. Johnson was able to start out for himself. (Fig. 9) He called the new activity the Consolidated Talking Machine Company, indicating that he regarded what he was doing as a holding action, and that he hadn't given up hope of an ultimate consolidation of disc interests. (p. 31)
However, Berliner had previously set up a holding company over the Berliner Gramophone Company of Philadelphia and his United States Gramophone Company with the name, Consolidated Talking Machine Company of America. Seaman jumped on this as further evidence of something like collusion. The Consolidated Talking Machine Company of America entered suit against Mr. Johnson who immediately changed the name of his new company to Eldridge Johnson, Manufacturing Machinist.
The new company hadn't been going two months before Seaman tried a slightly different tack. Now, instead of trying to tie Mr. Johnson to the Berliner injunction, he took steps to get an initial injunction against Johnson along the lines of the one he had obtained against the Berliner Company. This would have prevented him from making or trading Gramophone products, or from using the name Gramophone. On March 1, 1901, Judge Gray refused to restrain the new company from making and trading Gramophone products, but did restrain the use of the Gramophone name. This was appealed and finally reversed by Judge Dallas of the Court of Appeals during June of 1901.
During the Summer and Fall of 1900, the Zonophone was advertised in the leading magazines as the only legitimate disc talking machine, and a replacement for the Gramophone. The ads carried the threat that purchasers of the Gramophone were vulnerable to prosecution. The new company was also being attacked by letters to the trade, and by salesmen who made every effort to throw doubt on Mr. Johnson's responsibility and integrity. Mr. Johnson got an injunction, but not until considerable harm had been done.
It was a stormy period. There were obligations ignored, facts distorted, pledges broken, products counterfeited, time and money wasted, and a multitude of suits started but never brought to trial. It was a time requiring great fortitude, and a commentary on a phase of business activity at that time.
Detailed records on the new company are not available, but the indications are that the volume may have been around a million dollars during the first fiscal year with a net of around $180,000. The nucleus of a national distribution had been set up with ten distributors, and the trade mark Victor and His Master's Voice were being used. The instrument line had been built up to five models, and the superior performance of the Johnson recording process was getting recognition. The outlook was altogether encouraging.
However, the Gramophone Company of London, Mr. Johnson's best customer at the time, had bought the Zonophone Company and was thinking of pushing its sale in the United States. They had also offered the Berliner interests a 25% share in a company to exploit Berliner products in the American market with the speculation that the activity might develop into an international cartel. The Seaman injunction was still hanging over Berliner, suits involving both Berliner and Mr. Johnson were pending, and the patent situation was unresolved. (p. 33)
But the developments in London were especially troublesome to Mr. Johnson, because if he moved against the Zonophone Company, he would run a risk of competing with, and probably losing, his best customer. Then, on July 6, 1901, the Seaman injunction against the Berliner Company was lifted. This raised the question for both Berliner and Mr. Johnson of what to do next.
Had it been lifted sooner, with reasonable assurance that it would stay lifted, the original set-up between Mr. Johnson and the Berliner Company would, undoubtedly, have been restored. However, by this time, the Berliner Company was in a weakened condition from inactivity and a greatly depreciated inventory. Although they did make an effort, they were in no position to compete in the market as it had then developed. Mr. Johnson's position was handicapped by the fact that he did not have the Berliner patent, and might be vulnerable to the Bell and Tainter patent.
Under the circumstances, Mr. Johnson wasn't sure what he wanted to do. He saw such an opportunity to improve both the record and the reproduced, and was so anxious to get going that he thought it might be to his advantage to sell his interest to Berliner's Consolidated Talking Machine Company and devote himself, unhampered, to the development of the product. Consolidated was interested, but was unable to raise the $350,000 cash that was asked. Their counter proposal of $50,000 cash and the balance on a deferred basis was not acceptable to Mr. Johnson, so, after some delay, the negotiations ended.
The same offer was also made to the Gramophone Company, but, by then, they were in trouble with the ill-advised typewriter and electric clock lines and nothing came of it. Finally, in September of 1901, an ingenious plan was worked out, under the pressure of conflicting interests, which resulted in the organization of the Victor Talking Machine Company.
The company was incorporated on October 3, 1901, with 20,000 shares of common, and 5,000 shares of 7% preferred. The Consolidated Talking Machine Company of America received 8,000 shares of common for the Berliner patents, and paid $50,000 for 500 shares of preferred with a bonus of 1,000 additional shares of common. This provided the new company with much needed working capital. Mr. Johnson received 10,000 shares of common and 3,000 shares of preferred for his plant, his patents, and his going business. The remaining 1,000 shares of common and 1,500 shares of preferred went into the company's treasury.
A detailed contract was drawn up with the Gramophone Company which gave them an option on three times their purchases for the previous year up to 50% of the company's capacity. They agreed to contribute up to $10,000 a year to the expense of the company's experimental laboratories, to provide a 25% profit over costs, to protect the company's patents, trademark, etc., and to promote the sale of the product in Europe, in British colonies and possessions, and in Russia arid Japan. (p. 35)
The new business was, in fact, a consolidation of Berliner and Johnson interests, but, in effect, was a continuation of Mr. Johnson's business in a stronger legal and financial position, and with Berliner participation. The company had not been in existence many weeks when the Columbia Company, conceding the merits of Johnson's products, introduced a laterally cut disc record which they called the Columbia Disc Graphophone Record. It not only violated the Berliner patents, but looked enough like the Victor record to confuse the public. Mr. Johnson got an injunction which led, after intermediate moves, to the cross-licensing agreement of December 8, 1903, between Victor and Columbia.
Mr. Seaman countered the organization of Victor with another suit, and succeeded in having the injunction against the Consolidated Talking Machine Company of America restored on July 22 1902. To eliminate a time consuming nuisance, this was finally settled out of court by Victor and Consolidated for $40,000. As an interesting commentary, the Frank Seaman Advertising Agency then made a strong, but unsuccessful, bid for the Victor account.
In 1903, Victor bought the American interests of the Zonophone Company from London for $135,000. This eliminated a serious potential point of friction between Victor and the Gramophone Company, but it was finally liquidated in 1912 with an accumulated loss to Victor of about $500,000.
While there were other complications along the way, the preceding developments appear to have been the major factors which resulted in the Victor Talking Machine Company.
The Victor Trade Mark
The painting, "His Master's Voice," (Fig. 12) was done originally as an illustration for general publication. Back in the 1890's, the little fox terrier in the painting was the devoted pet of an Englishman named Mark Barraud (bah-Ro). Mark subsequently died and "Nipper" went to live with Mark's uncle, an artist named Francis Barraud. One day, the artist found Nipper with his head cocked, listening to a phonograph record. Beyond the fact that it was an appealing pose, the artist wondered if the dog might not think that he was listening to his dead master's voice. So he painted the picture and called it, "His Master's Voice."
After failing to sell it as a magazine illustration, Barraud decided to see if it could be used as an advertisement. He showed it first to Edison Bell. At that time, the instrument in the painting was a cylinder-type phonograph with a black horn, Bell thought that the instrument was too drab, so the artist called on the Gramophone Company to see if he could borrow a brass horn to use as a model, Subsequently. the painting was refused by Bell but purchased by the Gramophone Company for 100 pounds. The cylinder machine in the painting was covered over and replaced with a disc-type machine like Mr. Johnson's. (p. 37)
The Gramophone Company started to use the painting as an incidental advertisement in the Spring of 1900. Copies were sold for framing, and were broadly distributed. By permission from the Gramophone Company, Mr. Johnson started using it as a trade mark in the Fall of 1900. In the meantime, Emile Berliner registered the mark in Washington on July 10, 1900 (Cft. #34,890). The transfer from Berliner to Victor wasn't officially put on the record in Washington until March 5, 1906.
The very first painting, which is reported to show paint marks of the original cylinder-type phonograph, hangs in the board room of Electric and Music Industries, Ltd. (successor to the Gramophone Company, Ltd.), in Hayes, England. There are, however, a considerable number of originals (in the sense that they were painted by Barraud) in existence. These were ordered by Victor and the Gramophone Company to provide the artist with an income beyond the 1,000 pounds a year, which they were jointly paying him. The artist died on August 24, 1924.
The Company Name
The name "Victor" was first used as a brand name in December of 1900, and was registered in Washington on March 12, 1901 (Ctf. #36676). Mr. Leon Forrest Douglas was in charge of the company's advertising, sales, and recording at that time, and, although there is some contradiction, it is reported that "Victor" was derived from Mrs. Douglass' name, Victoria (Fig. 13). The name had originally been suggested as a name for the company itself, but this was postponed until its validity had been tested.
It will be remembered that Mr. Johnson was stopped from using the word Gramophone by Judge Gray on March 1, 1901, on the grounds that it was a Berliner trademark. Mr. Johnson was under the impression that the word Gramophone was a generic term (i.e., describing the disc-type reproducer). The term "Talking Machine," on the other hand, was generic, having been coined by a headline writer on a Buffalo, New York newspaper in 1889.
For a short time, the company also used the word "Monarch" as a trademark. It is not altogether clear why. It evidently carried something of a deluxe implication, but it is possible that the object was to have a reserve name to fall back on in case the others failed to stand up. The word "Monarch" was applied to instruments for only one season, but it continued on records for several, In this case, the name apparently identified the size of the disc. (Fig. 14) Early records were branded as follows:
14 inch - Deluxe Special
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