Cowboys and Indies: The Epic History of the Record Industry (8 page)

The game changer was the sinking of the
Titanic
in April 1912. The ship’s radio operators were Marconi employees whose distress signals were picked up by a ship just sixty miles away, also equipped with a Marconi radio station. Once the
Carpathia
arrived at the
Titanic
’s last known coordinates at 4:00
A.M.
, it found 706 dazed survivors freezing in lifeboats on an ice-covered sea. In the coming days, as news of the
Titanic
’s fate spread through the radio networks, and the
Carpathia
sailed back to New York with the survivors, the U.S. Navy repeatedly tried to contact the
Carpathia
’s radio master on behalf of President William Howard Taft. Marconi is believed to have initiated messages to his radio operators ordering them not to send out any information to third parties. His motives became clearer upon the
Carpathia
’s arrival in New York. Marconi was waiting at the dock with
New York Times
journalists with whom he had negotiated a deal for the radio operator’s exclusive story.

Already alarmed by his socialist fantasies, the U.S. Navy’s top brass was not impressed with Marconi’s opportunism, and in the ensuing inquiry, his radio operators were duly grilled. However, in a
Titanic
inquiry in London, Britain’s postmaster general emphasized, “Those who have been saved have been saved through one man, Mr. Marconi … and his marvellous invention.” Marconi’s technology was acquiring a geopolitical dimension; his business experienced a growth spurt of 2,000 percent.

Then came the tipping point: As war broke out in Europe, Britain cut Germany’s telegraph lines to America. Stunned by Britain’s belligerence and noting the strategic importance of radio technology in trench warfare, the U.S. Navy, AT&T, and Westinghouse joined together in a covert project to urgently develop long-distance radio. Their discovery of vacuum-tubed radio transmitters marked the giant leap that in October 1915 enabled AT&T scientists to transmit signals from a navy station outside Washington, D.C., to Honolulu and the Eiffel Tower in Paris.

With thousands of young teenage boys reading war stories about radio operators luring Zeppelins to their death, amateur radio traffic exploded. Then, in April 1917, America entered the war, and for reasons of national security the government banned all radio broadcasts—even listening. In a deliberate move to take over radio, the U.S. Navy used wartime security powers to annul Marconi’s patents and seize Tesla’s German-funded radio towers. All manufacturers of radios were ordered to manufacture exclusively for the U.S. Navy.

At the end of the war in 1918, the U.S. Navy tried to have its monopoly continued, but Congress rejected the motion. In April 1919, however, U.S. Navy Captain Stanford Hooper and Admiral William Bullard met with General Electric executives to persuade them not to sell their long-distance transmission tools, termed
Alexanderson alternators
, to Marconi. They suggested instead that General Electric could set up its own American-run radio business and secure a commercial monopoly of long-distance commercial communication. Recognizing the rare opportunity, General Electric bought out Marconi’s American operations and created RCA in October 1919. For his work masterminding the operation, Admiral Bullard was given a seat on RCA’s board of directors. AT&T was awarded a monopoly in long-distance telephone.

RCA promptly took over General Electric’s and Westinghouse’s manufacture of radio devices, began buying up most of the radio-related patents on the market, and set up radio stations. With the public ban on amateur radio finally lifted, a new radio craze exploded with better equipment and far bigger numbers than before.

Blindsided by this giant tsunami of teenaged excitement, record companies experienced a sudden drop in sales as retailers converted larger portions of their stores to radio equipment. Shop owners noticed how these excitable boys, accompanied by their skeptical fathers, would happily show up the salesmen’s ignorance of radio equipment given half a chance. Father, of course would only pull out his wallet if satisfied his son’s questions were adequately answered. To earn a living, retailers now had to catch up with the kids.

The initially high cost of radio equipment explains why the boom witnessed a strange upsurge in pay-phone vandalism across America. Receivers in public phone booths were being ripped out on a massive scale; teenagers were using the parts to make headphones.

By the end of 1922, about 2 million radio sets had been sold in America. Of the 20,300 radio stations that were licensed, 15,780 belonged to amateurs, many of whom were youngsters clogging up the airwaves with music.

When the first National Radio Conference was convened in 1922, of the thirty-one speeches allocated to industrialists and politicians, three were given to members of the American Radio Relay League—the organization that issued amateur licenses. “We are trying to get away from the idea that our radio is a play-thing,” explained this watchdog, which named and shamed radio rogues in its magazine. “When we speak of ‘citizen wireless’ we convey a picture—no longer of little boys in short trousers playing with toys … but a vast field in which the private citizen of this country may enter and carry on useful communication.” U.S. Secretary of Commerce Herbert Hoover emphasized in his opening speech the need “to accommodate the most proper demands [of the commercial industry] and at the same time to protect that precious thing—the American small boy, to whom so much of this rapid expansion of interest is due.”

Compounding problems for record companies, the radio boom coincided with an economic downturn as the wartime economy experienced deflation due to returning soldiers disrupting the labor market. Bizarre as it seems, the biggest boom in record sales, in and around 1921, was immediately followed by the biggest slump in the industry’s thirty-year history.

The first of many casualties was Columbia. Because it had built up debts overproducing stock in the boom, the sudden downturn spelled immediate danger. At the close of 1921, Columbia reported losses of $4.6 million; its deficit had ballooned to $15.7 million, and it was unable to pay notes on its debts of $22 million. Several stockholders filed an application for receivership.

Victor’s downward spiral was delayed as a result of Caruso’s death in August 1921, which provoked an abnormal spike in record sales. By late 1922, Victor’s sales tumbled by a third, and the following year, Red Seal record sales slumped to 6 million, beginning a gradual decline that would last throughout the twenties.

Edison Records had once employed ten thousand people; by February 1922, its factories had been downsized to just three thousand workers. In one internal exchange illustrating that some of Edison’s senior staff were not blaming radio as the sole source of their misfortunes, Walter Miller dared to tell the half-deaf autocrat, “A one-man opinion on tunes is all wrong. Last year when you were the only picker of tunes, you refused to let us record the four biggest successes of the year.”

Throughout 1921 and 1922, many of the new independents that had sprouted up since the war simply went bust. Harry Pace, founder of Black Swan, recalled that “radio broadcasting broke and this spelled doom for us. Immediately dealers began to cancel orders … Records were returned unaccepted, [and] many record stores became radio stores.” In December 1923, Black Swan Records filed for bankruptcy. In stark contrast to the record industry’s misfortunes, the net earnings of RCA rocketed. By 1924, RCA had outgrown Victor, with gross sales of $55 million compared to Victor’s $37 million.

Dealers saw the tide change in their stores; the radio set made the talking machine look old. After almost forty years of growth, the once awe-inspiring Victrola had finally been overtaken by a more powerful and interactive piece of technology. The richest mogul in the business, Eldridge Johnson, suffering from depression, took to his bed and simply ordered Victor’s stars to boycott radio. With its founder absent, a vacuum enveloped Victor; its senior management stood immobilized.

Hundreds of new radio stations sprouted up across the land, all broadcasting new entertainment formats—boxing matches, political events, comedy shows, children’s stories. America, fascinated by its own imagination, was becoming more American than ever before.

6. SURVIVORS

For younger players willing to adapt, cut corners, and take risks, the radio age offered the chance of becoming a bigger fish in an admittedly smaller pond. The 1920s, despite being a harsh climate for record sellers, would prove to be a unique era for music. As demands became more niche-oriented, a new breed of talent hunter was emerging from the fringes—the wheeling, dealing record man.

Through the ambient noise of radio interference and teenaged pirates, two legal precedents pointed the way forward. In January 1922, the American government banned radio amateurs from broadcasting “entertainment,” an ambiguous term amended in September to “mechanically operated instruments”: in other words, teenagers broadcasting records.

Then, in the summer of 1923, the nine-year-old composers and publishers union, ASCAP, filed a lawsuit against L. Bamberger & Company, the owners of a large department store in New Jersey and radio station WOR. Because the radio station had refused to pay ASCAP royalties for the songs it broadcast, the Newark court ruled in ASCAP’s favor. Seemingly, music publishers were supportive of radio, even if it meant suing for their slice of cake.

Columbia was the one major company that, unlike Victor and Edison, didn’t have the cash reserves to sit around debating boycotts, lawsuits, or the raspy timbre of radio. Thinking pragmatically, Columbia’s cash-strapped staffers recognized radio as free promotion. Ultimately, however, Columbia’s precarious situation needed a visionary leader. Enter the short, witty Louis Sterling, Columbia’s London boss, who stepped up to the challenge while gray-haired tycoons like Eldridge Johnson and Thomas Edison grumbled around their mansions.

Lithuanian-born of Jewish origin, Sterling had sailed to America with his family when he was a baby. In 1903, Sterling left New York for a new life in the Old World. When his ship docked in Southampton, he frittered away his last $5 and slept his first night on the floor of an English jail. The next day, he dusted himself off and found William Barry Owen, boss of the Gramophone Company, whom he had previously met in New York. As promised, Owen took on the twenty-four-year-old as a traveling salesman—a formative experience in which Sterling learned about cultural diversity and purchasing patterns all over Britain. Moving through a number of small phonograph companies, by 1910 Sterling was Columbia’s U.K. sales chief, and by the end of the war he was running the whole company. Thanks to commissions, Sterling had amassed a personal fortune, much of which he reinvested in his greatest passion of all, collecting rare books.

When radio took off in America, Sterling convinced his investors in London that records were far from obsolete. Continuing his habit of going against the traffic, in November 1922, for a cool £500,000, Sterling bought out his employers, Columbia’s British company, including all of Columbia’s European and Asian trademarks.

He then set his sights on America, where despite being in receivership, Columbia was still managing to score hits. Following Okeh’s lead, Columbia talent scout Frank Walker signed blues diva Bessie Smith, whose “Gulf Coast Blues” sold 750,000 copies. In a curious twist of fortunes, Bessie Smith, previously rejected as “too black” by Okeh’s Fred Hager and too “nitty-gritty” by the bankrupt Harry Pace, was now singing Columbia out of trouble.

Shortly after, a Wisconsin label, Paramount, signed up Ma Rainey—another gutsy blues diva from the vaudeville circuits. Sixty miles away, in an Indiana factory town called Richmond, the Gennett label began documenting Chicago’s vibrant jazz scene courtesy of two music publishers, Lester and Walter Melrose. The brothers had strolled into Gennett’s Chicago showroom carrying the sheet music of two outstanding jazz pioneers, Jelly Roll Morton and King Oliver—both New Orleans migrants now playing in Chicago’s clubs.

As a result of this lucky introduction, King Oliver’s Creole Jazz Band, featuring Louis Armstrong on cornet, recorded sixteen sides for Gennett, officially launching the
hot jazz
genre on record. Jelly Roll Morton, sporting diamond-studded teeth, had begun his career in the Storyville brothels, then rambled around the South as a gambler, pool shark, pimp, vaudeville comedian, and pianist. Not only was he composing his own tunes, he was exploring the French Creole and Caribbean rhythmic influences of New Orleans—what he called
the Spanish tinge
.

Despite these seminal records from the Midwest, Okeh remained the most progressive in the business. Singled out by the magazine
The Wireless Age
as the most radio-friendly record company in America, Okeh began field trips to Atlanta, St. Louis, Detroit, and Chicago. One pioneer record man to emerge from these expeditions was Ralph Peer, the sound engineer who had supervised Mamie Smith’s “Crazy Blues.” While driving across America in Okeh’s truck, Peer saw nothing but opportunity.

Now in his thirties, the wily Ralph Peer was a white Southerner, originally from Independence, Missouri, who began his music career in Columbia’s Kansas office. While recording blues, gospel, and folk songs in hotel rooms, warehouses, and ballrooms, Peer began to realize that out in the virgin plains, a cornucopia of unsigned talent lay waiting.

His main contact in Atlanta was the nineteen-year-old Polk Brockman, who from one end of his father’s furniture store was selling so many race records, he convinced Okeh to grant him a wholesale distributorship for his region. On a business trip to New York in June 1923, Brockman was killing time in the Palace Theater on Times Square watching a newsreel of a fiddlers competition in Virginia. Struck by a brain wave, he pulled out his notebook and jotted down the words “Fiddlin John Carson—local talent—let’s record.” The fiddler in question was a fifty-three-year-old white farmer from the Blue Ridge Mountains. Brockman convinced Ralph Peer to include Atlanta on his road trip.