UNITED  STATES  EARLY  RADIO  HISTORY
THOMAS H. WHITE
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6

Early Radio Industry Development (1897-1914)
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As with most innovations, radio began with a series of incremental scientific discoveries and technical refinements, which eventually led to the development of commercial applications. But profits were slow in coming, and for many years the largest U.S. radio firms were better known for their fraudulent stock selling practices than for their financial viability.

EARLY  U.S.  EXPERIMENTATION  AND  DEVELOPMENT

In 1895, Guglielmo Marconi became the first person to successfully demonstrate the controlled transmission and reception of longrange radio signals. But once the details of his advances became widely known, a large number of competitors sprang up on both sides of the Atlantic, many of whom developed important refinements of their own.

Scientists in the United States were particularly intrigued by reports of Marconi's advances. A short notice in the January 23, 1897 Scientific American, Telegraphy Without Wires, stated that "a young Italian, a Mr. Marconi" had recently demonstrated to the London Post Office the ability to transmit radio signals across three-quarters of a mile (one kilometer), and that "if the invention was what he believed it to be, our mariners would have been given a new sense and a new friend which would make navigation infinitely easier and safer than it now was". (The May 14, 1898 issue of the same magazine, in a short note titled Wireless Telegraphy, repeated a completely unfounded rumor that Marconi had lost his financial backers, because "the syndicate which kept it going for over a year has arrived at the conclusion that there is no money in it".) A few months later, the May 26, 1897 New York Times' Topics of the Times--Marconi Extract reported that "English electricians, particularly those connected with the army and navy, are much interested in the Marconi system of telegraphy without wires" as the inventor had now increased the signalling range to two or three miles (five kilometers), with expectations of developing even greater ranges. At a December 15, 1897 meeting in New York City, W. J. Clarke gave "an exhibition of the Marconi apparatus" consisting of a spark-gap transmitter and a coherer receiver, reported in the Wireless Telegraphy section of the 1897 edition of Transactions of the American Institute of Electrical Engineers. Two years later the Institute returned to the topic at a November 22, 1899 gathering, as reported in Possibilities of Wireless Telegraphy (New York Meeting) from the 1899 edition of organization's Transactions. However, by now Marconi's work was better understood, and this time the participants, with much stronger electrical engineering backgrounds than the self-taught Marconi, identified certain inefficiencies and errors in Marconi's approach. Although the coherer receiver had sometimes been referred to as a "marvelously sensitive electric eye", Reginald Fessenden, a professor at the Western University of Pennsylvania, reviewed his experiments using detectors that were far more sensitive and reliable, and reported measurements which disputed Marconi's assertion that the range of radio signals was proportional to the product of the heights of the sending and receiving antennas. And although the Marconi companies would long promote the supposed superiority of the "whip-crack" effect of spark transmitters, Michael Pupin, a Columbia University professor, expressed his belief that spark transmitters were inherently inefficient, and suggested that an ideal transmitter would create undamped "oscillations in a wire without a spark-gap", outlining basic ideas which would eventually be incorporated in far more efficient continuous-wave transmitters.

An expansive review in the May 7, 1899 New York Times, Future of Wireless Telegraphy, looked optimistically at the prospects for radio technology, predicting that, once a few technical obstacles were overcome, "no prudent man will try to set limits to the development of wireless telegraphy", including the possibility that "All the nations of the earth would be put upon terms of intimacy and men would be stunned by the tremendous volume of news and information that would ceaselessly pour in upon them". An article in the February 21, 1903 issue of Harper's Weekly Magazine, American Wireless Telegraphy, profiled Lee DeForest and Reginald Fessenden, who would be the two most prominent researchers in the United States during the first decade of the 1900s. (It was, however, a bit of a misnomer for this article to describe Fessenden's work as a "system of wholly American origin", because he was actually born in Canada.) A more technical overview of the industry, by William Maver, Jr., appeared in the August, 1904 The American Monthly Review of Reviews: Wireless Telegraphy To-day. Eugene P. Lyle, Jr.'s The Advance of "Wireless", from the January, 1905 issue of World's Work, gave readers a comprehensive look at the still developing industry, including various participants, government activities, outstanding technical issues, and radio's applications in such things as commercial shipboard use and military adaptations. The author also speculated about future developments, including the possibility that someday "a lone ranchman in Arizona might set up a pocket-receiver and learn the latest news", and that "millions of such little receivers" might eventually come into use.

EARLY  COMMERCIAL  DEVELOPMENT

Unlike the telephone, which was quickly adopted for business and home use, it took many years before radio's financial returns would match its great potential. In the United States, this resulted in a series of companies which sold stock at vastly inflated prices, backed mostly by vastly inflated visions of the companies' profits. Industry Comments appearing in 1901 issues of Western Electrician warned that the radio "field is still so uncertain that investors, remembering the liquid-air fiasco, should relinquish their money only after assuring themselves that display advertisements and glowing prospectuses are based on sound common sense". Wireless Telegraphy Stock, in the November 30, 1901 Electrical Review, noted the high prices already being paid for stock in companies with minimal assets and limited prospects, and opined that "The American public is to-day very much the same as it was when the late illustrious P. T. Barnum made his discovery that it liked to be fooled." In the November, 1904 issue of The Electrical Age, Wireless Telegraph Earnings warned that, even though "alluring" advertisements promoting stock sales continued to appear in the daily newspapers, there still was no reason to believe that the operations of any of the U.S. radio companies were even remotely profitable.

AMERICAN  DEFOREST  AND  UNITED  WIRELESS

After it absorbed the successor to the American Wireless Telephone and Telegraph Company, reported by Wireless Companies Merge in the January 10, 1904 New York Times, the American DeForest Wireless Telegraph Company was the largest radio company in the United States. Although the company would prove more adept at promotion than actual achievements, in early 1904, London Times war correspondent Captain Lionel James arranged to rush two American DeForest transmitters to China, in order to report on a developing conflict between Japan and Russia. A land station was established at Wei-hai-Wei on the Chinese coast, with the second transmitter placed aboard a ship, which allowed James to transmit daily updates directly from the war zone. In the August 31, 1904 New York Times, Wireless Workers Back From the Scene of War, provided a first-hand report from the two DeForest engineers, "Pop" Athearn and Harry Brown, who had operated the stations. At the 1904 World's Fair in Saint Louis, Missouri DeForest's Wireless Telegraphy was one of the latest inventions featured in the Exhibit of the Department of Interior Patent Office pamphlet. Meanwhile, the company pursued its hard-sell stock promotion, setting up a prominently located display tower, and putting on numerous demonstrations for the crowds, with the company's exaggerated exploits and potential profits "boomed" by publications such as The DeForest Wireless Telegraph Tower: Bulletin No. 1. Following successful tests at the Fair, the U.S. Navy awarded American DeForest a contract to build five stations in Panama, Pensacola, Key West, Guantanamo, Cuba, and Puerto Rico. And in the ongoing stock promotion, articles like Spanning the Seas With De Forest Wireless Telegraphy from the July 10, 1904 New York Times vastly exaggerated the company's achievements and future. In November, 1906, American DeForest president Abraham White announced the formation of a new company, United Wireless, which took over the American DeForest assets. United was also falsely said by White to be taking over American Marconi, as reported in Wireless Telegraph Consolidation, from the November 24, 1906 Electrical World, and strongly denied by Marconi officials in No Consolidation of Wireless Companies, from the April 4, 1908 Electrical Review. Moreover, a short time after the formation of United Wireless, Christopher Columbus Wilson gained control of the company, with the result that New York Times' August 18, 1907 edition reported that that White is Out of United Wirelessnew. But the company continued to be run as a huge stock promotion fraud, and over the next few years absorbed a number of smaller, legitimate, companies which found they could not compete--Wireless Telegraph Companies Unite, from the July 11, 1908 Electrical Review reported United's takeover of the International Telegraph Construction Company, which had the side-effect of its obtaining the services of a very talented engineer, Harry Shoemaker.

INDUSTRY  EXCESSES

In a less regulated era, the first decade of the 1900s saw extensive fraud in stock promotion, especially among radio stocks. Ten years of financial advice, appearing in The Medical World from 1902 through 1912, repeatedly -- and not always successfully -- warned doctors about the dangers of investing in radio stocks promoted by unscrupulous sales agents. Meanwhile, reporter Frank Fayant was in the middle of writing a multi-part series about stock fraud -- Fools and Their Money -- when he stumbled across the shenanigans going on in radio stocks. The result was a two-part exposé, The Wireless Telegraph Bubble, which details the sorry state of much of the U.S. radio industry during its first decade -- Fools and Their Money/The Wireless Telegraph Bubble, Success Magazine, January, 1907 through July, 1907. Fayant's article included one hopeful note -- "A Westerner, with western ideas of common honesty, some months ago acquired a very large interest in American De Forest, and he has been trying to bring order out of chaos." However, if this was a reference to Christopher Columbus Wilson, the assessment would prove to be wildly optimistic. To Holders of United Wireless Telegraph Company Stock , from the November, 1908 issue of United Wireless' The Aerogram, reviewed the company's new officers and directors, and stockholders would take little solace that the company treasurer -- Wilson's nephew -- was described as a "clean, clear-cut, able and conscientious young man". How About Wireless?, from the August 31, 1907 Electrical World, featured an impatient reviewer noting that "behind all the dubious experiments and more dubious financiering lies something that the world really needs" and although, as "one of the biggest things of the new century... some day wireless telegraphy will come into its own", until then "the period of exploitation seems indefinitely prolonged, and the procrastination grows tiresome". And in the December, 1907 issue of The World's Work, Transatlantic Marconigrams Now and Hereafter (Stock fraud extract), cataloged the ongoing excesses, noting that "The time may come when the wireless will become suitable for consideration by investors. It will not come until some strong, clean, honest financial interests take charge and utterly eliminate the miserable, fraudulent, unwholesome methods that have marked the whole market history of these issues." But a year later, the inflated claims in promotional articles, such as Robert Matthews' assertion that the "The wireless telegraph is here, real, virile, expanding." in American Development of the Wireless Telegraph from the November, 1908 issue of United Wireless' The Aerogram, showed that the stock promotion schemes were continuing unabated. Selected articles from the May, 1909 issue of Wireless, a promotional broadsheet issued by The New York Selling Agency, exorted the unwary that "You should buy United Wireless now--without delay, because now is your opportunity", due to the fact that "When the 'speculative' investors begin to fully understand and appreciate the wireless situation, United stock will undoubtedly be snapped up at whatever price is asked for it and will start bounding upward to quickly sell at big figures, the size of which would now seem impossible."

UNITED  WIRELESS  PROSECUTION

In the 1909 edition of Operator's Wireless Telegraph and Telephone Hand-book, Victor H. Laughter lamented the current state of the industry, but felt that radio's bright future was assured, predicting "It will only be a matter of time before all the 'get rich quick' wireless concerns will be forced out of existence", even as calls for action started to appear, with Wireless Stockholders Protest Against Management, from Telephony's July 10, 1909 issue, reporting on a brewing revolt by United Wireless investors. Finally, the federal government moved to shut down what it called "one of the most gigantic schemes to defraud investors that has ever been unearthed in this country", and arrested the principal United Wireless officers, as reported in Government Raids United Wireless, New York Times, June 16, 1910. A few weeks later, the August 4th issue of the newspaper announced the indictment of the United Wireless defendants, plus the marriage of the 64-year-old company President to his 18-year-old secretary, as an odd mixture of social and criminal news was documented in Wireless Man Weds Day He's Indicted C. M. Keys' The Get-Rich-Quick Game, which appeared in March, 1911 issue of The World's Work, reviewed assorted financial schemes, and included in its "Arrested by Government on Charges of Fraud" list were the "Officers of the United Wireless Company". (This action, while welcome, seemed overdue, as the author noted "this [United Wireless] fraud was so patent that it has been a four-years' marvel to me how it could be carried on so long without someone stopping it.") Commenting on the seemingly endless list of victims, Keys closed pessimistically with "It seems quite hopeless, this article. When a patent and above-board swindle like the United Wireless sells stocks to 28,000 people... how may one hope to stop the pillage?" But progress was being made against the United Wireless frauds, and a story on the front page of the May 30, 1911 New York Times reported that Five Wireless Men Are Found Guilty, with the prosecuting attorney celebrating that "For once a lot of crooks are going to jail after being convicted at their own expense." One of these crooks was George Parker, United's Western Sales Agent, based in Seattle, Washington -- articles in the 1907 and 1910 issues of Portland, Oregon newspapers chronicled his exploits, as he issued "masterpieces of extravagant statements, of frenzied visions of the countless millions to be earned by his company". Company president Wilson did not survive his sentence at the Atlanta federal prison -- the August 27, 1912 New York Times carried the notice that C. C. Wilson is Dead in Prison.

In addition to stock fraud, United Wireless was also guilty of extensive patent infringement. It was sued by the Marconi company, and had no defense. Receivers appointed to oversee United Wireless' financial affairs entered into negotiations with Marconi for the company to be taken over, and a short time later the settlement was reported in United Wireless Arrangements / Wireless Suit Settled in the March 26, 1912 Wall Street Journal, with the final details reported by Wireless Liquidating Co. from the paper's October 1, 1912 issue.

THE  RADIO  TELEPHONE  COMPANY  PROSECUTION

Federal prosecutors continued to investigate dubious stock promotion practices, and in its December, 1911 issue, Modern Electrics reported in Twelfth Anniversary of Wireless that although some within the industry had used radio "as a tool for extorting money from thousands of victims", a "purification" was now taking place. In the November 25, 1911 Telephony, the unfolding troubles of James Dunlop Smith, former president of the Radio Telephone Company, and a number of his business associates, were reported in Wireless Telephone Promoter Arrested. A few months later it was Lee De Forest Under Arrest, as reported in the March 28, 1912 Atlanta Constitution. DeForest was eventually acquitted on all the counts except one, which the divided jury couldn't agree upon, and was never retried on this final count. However, three others were convicted, and the Radio Telephone Company and its subsidiaries effectively shut down.

CONTINENTAL  WIRELESS  PROSECUTION

A third major company to face Federal prosecution for stock fraud was the Continental Wireless Telegraph & Telephone Company, which most prominently included A. Frederick Collins -- the company's formation had been announced in Wireless Companies Consolidate in the May 21, 1910 Electrical Review and Western Electrician. In the April 17, 1909 New York Times, Wireless 'Phones in Usenew had made the dubious claim that a commercial wireless telephone service between Portland, Maine and nearby islands had been established by Collins. A few months later, Postal Raids Show Vast Stock Frauds, on the front page of the November 22, 1910 New York Times, announced "Officers of Burr Bros. and Continental Wireless Co. Arrested in War on Swindling Concerns" as part of a major sweep against financial fraud, which was followed by further arrests, reported in Wireless Promoter Held from the January 12, 1911 issue of the newspaper. The September 17, 1912 Wall Street Journal reported the arraignment of the four Continental Wireless Case defendants, with their trial start reviewed in Say Wireless Had a Wire from the November 16, 1912 New York Times, and their sentencing reported in Continental Wireless Case from the Wall Street Journal for January 11, 1913.

With the elimination of three major fraudulent U.S. radio firms, the field was cleared for legitimate companies. And with its takeover of the United Wireless assets, the American branch of Marconi Wireless was now by far the largest radio company in the United States, a status it would hold until after World War One. For some, however, the prospects for the radio industry were still in doubt. A somber analysis appeared in the March, 1914 Technical World Magazine, as George H. Cushing reviewed the still shaky finances of the various companies, and in Wireless' Fate speculated about the next fifteen years. Cushing's predictions were profoundly pessimistic, suggesting that the private radio companies would find that "a new method of carrying messages does not, of itself, create messages to be sent", and they would prove incapable of competing with the established land telegraph lines and international cables. Finding themselves unable to "find a new use for a new tool", the radio companies were seemingly doomed to eventual failure, which would lead to a government takeover of the industry.

 
"Thomas Clark, the head of Clark Wireless, which supplied the Great Lakes area, was forced out of business by United. He later recalled, 'In New York I had seen C. C. Wilson, President of United Wireless, and I told him he was discrediting wireless for himself and everyone. He told me he didn't give a damn.'" * * * * "Marconi was elated. He wrote to his wife, 'They [United Wireless] have admitted to having copied or stolen my patents and all their stations are to be called Marconi stations--this will do our company heaps of good.' 'So you see,' Marconi confided to his wife, 'Your Dick is slowly overcoming his enemies--of course it's not right to glory over it.' In public, he never did, but in private, he couldn't help himself. It was a momentous victory." -- Susan Douglas, Inventing American Broadcasting, 1987.