The Victor Talking Machine Company

In 1911, the name of Edison's National Phonograph Company was changed to, "Thomas A. Edison, Inc." The company was still making cylinder records and they were finer and longer playing than they had been at the start. Nevertheless, they were still cylinders. Over the years, Edison had occupied a conservative, relatively inactive, position. With a degree of veneration for Mr. Edison, the product was highly regarded by a comparatively limited following. In 1912, their blue celluloid cylinders began to replace wax and, for the first time, a disc record was offered under the trade name "Diamond Disc." It was a heavy record and the list of artists was limited, but the company took effective advertising advantage of the Edison name. Records were featured as re-creations. An elaborate "Laboratory Model" phonograph listing at $285 was advertised to play records ". . . just as Mr. Edison heard them." Since Mr. Edison was known to be nearly deaf, the claim about what he heard was accepted by many with a good natured chuckle.

1. Beneficial Association-During April of 1913, Victor assumed sponsorship of the Victor Employee's Cooperative Beneficial Association. This Activity had been in operation by the employees for seven or eight years with company approval. At the time the company assumed the sponsorship, the terms were: entrance fee-$.50, dues-$.25 per month, sick benefits-$l.00 per day (maximum-100 days), and death benefit-$150. The company matched the employees' contributions dollar for dollar and absorbed the full cost of operation including nurses, administrative costs, etc. The conditions and benefits were broadened from time to time, subject to such reasonable conditions as experience proved desirable. Membership was ultimately divided into two classes based on weekly income. Class #1 included employees who made $25 a week or less, and Class #2 included those who made more than $25 a week. The breakdown in benefits is reflected below.

Class 2	Class 1
Membership Fee
$.50	$.50
Sick Benefits
2.10	1.50
Death Benefits
250.00	250.00

(p. 71)

There was a waiting period of seven days which was covered if the disability lasted longer than five weeks. The association was administered by a board of trustees under the chairmanship of Mr. E. F. Haines. Each trustee represented one of the company's major departments. The plan was discontinued in 1949 after the State of New Jersey enacted a law which established a system of benefits along the same general lines.

2. Group Insurance-On April 15, 1913, Victor took out a group policy with the Travelers Insurance Company. This was the third policy issued by Travelers outside its own organization. The first was issued to Mergenthaler Linotype Co., and the second to the Ohio Electric Company. The Victor policy was taken out a month and five days following the original coverage of Traveler's own employees.

The policy, at the start, called for a death benefit of $500 to members of the Beneficial Association who had worked for the company five years or more and whose salary did not exceed $200 a month. This was increased to $750 on January 1, 1916. On October 30, 1917, the plan was extended still further to cover practically the entire working force on a sliding scale based on length of service. Members of the Beneficial Association whose salary did not exceed $200 a month received death benefits as follows:


More than two months	$250
More than one year	500
More than two years	750
More than five years	1,250
More than ten years	1,500
More than fifteen years	1,750
More than twenty years	2,000

From the beginning, these benefits were without cost to the employee.

3. Pensions-The pension plan, which was established on May 15, 1913, applied, at first, to employees who earned less than $200 a month. After 20 years of service, the plan provided for a monthly payment of $30. The plan went into effect at age 65 for men and age 55 for women. Sometime before 1920, the payments were increased to $40. During 1920, the payments were again increased to $50 and the salary limit was increased from $200 to $300. The company absorbed all costs. A few retired employees are still participating in this plan because RCA assumed responsibility when Victor was acquired.

All three plans were administered with careful consideration, and exceptions were made in worthy cases. In cases of prolonged illness, the company extended help long after the provisions of the Beneficial Association had been complied with. Employees who lived a great distance away were sent home at company expense. In many cases, tubercular employees were sent to the Southwestern Presbyterian Sanitarium in Albuquerque where the company had established a connection. To take care of industrial accidents and other (p. 72) emergencies, the company maintained a dispensary with trained nurses and a doctor in constant attendance. While no expense or effort was spared to avoid industrial accidents, the company's policy was to provide medical attention as long as it was needed when they did happen.

4. Turkeys-For several years, the company gave each employee a turkey with cranberries at Christmas time. In 1912, the total weight of the gift turkeys was 50,000 lbs. and it took 57 barrels to hold the cranberries. The activity was discontinued in 1915 when it was discovered that workmen from the cabinet factory had gone into the poultry business with the gift turkeys.

On August 1, 1913, the License Royalty plan, with which Victor was particularly identified, was announced. Unlike the plans which had preceded it (including the short-lived plan of May 1, 1910, which included exclusive wholesale representation), title remained in the Victor Talking Machine Company as long as the covering patents continued. It was a license to use only, whereas the plans which had preceded it were licenses to sell. Available records do not show, for certain, that this plan was worked on and/or approved by Elihu Root and Charles Evans Hughes, but it is known that these men and others of top national prominence were retained by Victor to support the company's large and competent legal staff.

2. Victor Machines were licensed for use only with Victor Records, Victor Sound Boxes, and Victor needles (and vice-versa).

4. Dealers were required to keep records in envelopes which contained the license notice.

6. Instruments were not licensed for public entertainment at a profit. However, a special license was recognized.

10. Advertisements offering other talking machines at cut prices must exempt Victor products.

On March 31, 1916, about two years and a half after the License Plan had been in operation, the company had 6,043 dealers and 103 distributors. 4,884 contracts had been cancelled from January 1, 1912, to January 1, 1915. Approximately 5% were cancelled for price cutting. However, a large number of the cancellations were, no doubt, for insufficient volume. There is no known case of a repossession from the public. (p. 73)

The plan was sustained by the U.S. Circuit Court on August 1, 1915, and was actively administered until April 9, 1917, when the U. S. Supreme Court ruled against it.

A letter was issued to the trade on May 29, 1917 announcing that the plan had been discontinued and that future sales would , observe the terms of the ruling. Suggested list prices were offered, "Not binding on the Trade."

During the life of the plan, there had been a considerable amount of "grousing." It was therefore interesting that, when it was discontinued, there was no stampede to get away from it. On the contrary, it carried on of its own momentum in many markets for some time, and there were continuing expressions of regret over its loss several years after it had been discontinued. From the company's point of view, it had worked well. The company had profited, as had the cooperating distributors and dealers.

It goes without saying that the adverse decision was regarded by Victor's management as a serious blow. However, its advocates felt that it had been an important factor in establishing the company, and that it helped lay the foundation for the even larger volume which lay ahead. In 1917, the company's total volume was $31,645,000. From 1920 to 1923 inclusive it averaged around $46,500,000.

After Victor's shipping department was completed in 1915, cabinets were fed across the 4th floor bridge from the cabinet factory to meet motor board assemblies fed across by a similar 4th floor bridge from the metal manufacturing plant. By a system of overhead and roller conveyors, an assembly operation was developed which approximated the facilities of an automobile assembly line. After the motor boards had been assembled in the cabinet and checked for performance, the conveyor continued to the packing section where the instrument was put in a veneered packing case, closed with an automatic nailing machine, and sent down the "Lowerator" to the shipping platform on the first floor where, in the busy season, ten box cars would be in the process of being loaded to be pulled twice a day.

From the earliest days, Victor strongly cautioned against using a steel needle more than once. Many people, no doubt, thought that the company was simply trying to sell more needles. The facts are, of course, that while the company was interested in the sale of needles (which were obtained under specifications from a vendor), repeated use of a steel needle was bad for the record. At the end of a single record the needle would have developed a "face," and since the inside grooves of a record had a different contour than the outside, the needle at the end of a record would not fit the grooves as it had when it was new. (p. 74) This situation would grow progressively worse with repeated use. Results would be particularly bad if the needle was removed and replaced at a different angle. In such cases, the crystalline steel needle would be faced like a cutting tool.

In 1916, the company introduced the Tungstone Stylus with a fanfare and continued to "plug" it until automatic record players came along with the jeweled point. Up to this time, Victor's position had been that jewels couldn't be ground accurately enough at a justified price, and that improperly ground, or split jewels would hurt the record. The company felt that the fibrous (non-crystalline) character of tungsten made it an ideal reproducing point. Large quantities were made by a colorful process developed by Victor. On one floor of the metal manufacturing plant, there was a forest of screw machines in orderly arrangement. A thin metal rod was fed in one side-a spool of Tungstone wire on the other. The automatic head drilled the rod, inserted the wire, crimped it, grooved the shank to one of three different depths to produce either loud, medium or soft tone volume, cut the rod, and dropped a perfect stylus in the bin. Victor was never very enthusiastic about Fibre, or Thorn needles, although they were used, to some extent, by people who were afraid of hurting their prized records. The company's volume in steel needles and Tungstone Styli ran around $1,000,000 or more for several years.

Of the $52,654,000 which Victor spent for advertising from 1901 to 1929, $17,814,000, or more than one-third, was spent for "sales promotion" or for record catalogs and supplements, instrument catalogs, and other printed matter. Much of this material was printed, two colors or more at a time, on very large, high-speed presses installed for this particular use by A. H. Sickler & Company (later known as The Franklin Printing Company), which was owned principally by Mr. Charles Brown of Moorestown. However, there was a great deal of printing (less elaborate advertising material, notices, office forms, etc.) which the company could print more cheaply than it could buy. From the earliest days, the company had had its own printing facilities for the preparation of record labels. These were located first at 117 Federal Street, then in the old Locke Building at Delaware & Cooper, and finally in Building #5 from about 1916 until the early 1930's when it was sold to the Advertising Printing Company, who moved it to the River Road near Building #53. Victor men will remember Charles Durgess, Oscar Hunt, and Van Hess as having been active in this phase of the company's business.

Victor normally maintained a staff of twenty to thirty men in the field. They were not salesmen in the ordinary sense, although from time to time they would take orders for accessories and, subject to the distributor's approval, orders for major products for the distributor's accounts. (p. 75)

The function of these men, glamorized at banquets and the like as "Ambassadors of Trade," was to get the best possible representation from dealers who, in those days, were officially recognized by Victor. Specifically, their function was to help the dealer in any way they could to increase his volume.

In cases where dealers were not giving satisfactory representation and gave no evidence of being interested in making the required effort, the situation would be called to the distributor's attention with suitable recommendations. A considerable number of the men in this group became distributors or the active manager of a distributing organization.

In 1917, the company's Order Department serviced orders from the distributor for instruments, records, and spare parts. It placed orders on the plants for instruments and parts. Another group was responsible for the more flexible orders on the Record Pressing Plant. The Order Department also handled complaints. Starting in the early "20's" records were also cleared by long hand.

One principal order was placed on the plant for instruments to cover the Fall season. This order was usually placed around the fourth of July-the low point in the seasonal cycle. This was thought to account for the fact that there was only one year in the company's history when there wasn't a shortage extending, in some cases, from a few models to the entire line. However, in view of the way the volume increased year after year, this point has, perhaps, been over-stressed.

Until 1921, the instrument lines which were introduced each year consisted almost entirely of slight changes in design. However, the trade was as sensitive to obsolescence as if the models had been completely changed.

Shipment of the new line usually started in July or August, but sometimes individual items would be delayed. Distributors would place bulk orders for much more than they could hope to receive, and shipments would be pro-rated. There was no trouble getting orders for a new line.

Until 1918 or 1919, shipments to each distributor would be made on the department manager's estimate of market requirements. From mid September to the middle of December. there would scarcely be a day when there wasn't at least three or four, and sometimes as many as ten or fifteen, distributors in Camden pleading for larger shipments. These men would see everybody who would see them, from the 7th floor down. There was a receptionist on nearly every floor of Building #2. This not only took an enormous toll of time during the day, but it was standard practice for active members of the department to take the customers to dinner and the theater. (p. 76)

Starting about 1919, a plan was adopted to base a distributor's shipments, during the active last three or four months of the year, on his performance during the first eight or nine. This was on the theory, of course, that if a distributor demonstrated that his own and his dealer's organization could sell say 1% of the factory's output in an open market, there was no equity in reducing this during the Fall in order to increase shipments to other distributors who were able to do some fast talking. The plan was accepted as fair and equitable by all distributors except a few "fast talkers" and was continued almost without change for many years. The number of callers was greatly reduced and one receptionist served the building.

In a very few cases, a distributor's rating was increased arbitrarily for justified reasons. But in no case, so far as is known, did this stand up after the end of the active season when the distributor was back on his own. The plan of allocations described applied only to shipments during shortages. Every effort was made by quotas. etc., based on population. spendable income, etc., to encourage distributors to improve their rating during the Spring and other times when merchandise was available.

It was a long-time company policy to estimate each distributor's share of production right up to Christmas. This meant that the shipping schedules, which were regularly and carefully timed for approximately simultaneous delivery across the country, had to be stepped up some weeks before Christmas to distant points with nearby points getting cut proportionately. As the date of the last pre-Christmas shipments were made, quantities would be stepped up, accordingly, to the nearby points.

In the days when all shipments were made from Camden, this would mean that quantities going to the big Eastern markets would be heavy in the days just before Christmas. On more than one occasion, a train of 10 or more cars was shipped to New York as late as 10 or 11 o'clock on Christmas Eve with company representatives riding the train to expedite its clearance across the Hudson for delivery to waiting consumers on Christmas day.

The Camden plant was a gradual development spread over many years. However, about half of the entire investment was concentrated in the five year period from 1912 to 1917. During this period, Buildings #1 and #2 were completed as was a section of #18, and three sections of #17. Buildings #5, #6, and #7 were enlarged and the grinding plant, bulk head, and other wharf equipment for the economical storage and handling of coal, was completed as was the dry kiln which, at the time, was one of the largest and most efficient in the country.

Building #10 was not completed until 1923, but it was a notable addition to the plant. Built on filled ground, supported by innumerable concrete piles, its erection was carefully (p. 77) watched by the Bureau of Standards in Washington which was very complimentary in its conclusions. The original intent was that the building would ultimately be used entirely for record production. The cross-flow of air was designed to eliminate the excessive heat of the old pressing plant in Building #4. A prominent feature of Building #10 was the escalator arrangement and the speed with which the building could be emptied.

Building #2 was built in the early days of air conditioning. The original plan called for sealed-in windows. Since the air conditioning system proved inadequate, it is fortunate that it was subsequently decided to play it safe.

On several occasions, the company tried to buy the Esterbrook property in the interest of integrating the plant, but negotiations always fell through because of the increasing value at which the Esterbrook property was held.

Building #53 was erected as a warehouse, although during World War I it was used for the production of war material. Storage space was always at a premium. There were times when shellac, record scrap, etc., was stored in open fields under tarpaulins, and finished instruments, which distributors did not take as anticipated, were stored among machinery in inactive parts of the factory and in box cars held on the company's sidings under demurrage.

The various buildings in the plant were laid out in the interest of economical production. The company did not hesitate to make an important capital expenditure (as when Building #3 was torn down and Building #8 erected) if it could be demonstrated that a justifiable economy would follow.

Over the company's history, many records have been issued which had great dramatic impact. Perhaps the first record of this kind was the duet from "Forza del Destino," sung by Caruso and Scotti. It was issued in May of 1906 and sold, single-faced, for $4.00. The next such recording was probably the quartet from "Rigoletto," recorded by Caruso, Abbott, Homer, and Scotti. This was issued in the Spring of 1907 and sold for $6.00. Next in line, would perhaps have been the Sextet from "Lucia," recorded by Caruso, Sembrich, Scotti, Journet, Severina and Doddi. It was released about a year later and sold for $7.00. The great Miserere scene from "Il Trovatore," by Caruso and Alda with the Metropolitan Opera Chorus was announced in 1910 and listed at $4.00.

In 1918, the company introduced recordings by both the Boston and Philadelphia Symphony Orchestras, and there were many other outstanding records by organizations and individual artists. (p. 78)

Then there was a very much larger group of recordings which, while perhaps less spectacular at the start, were an important part of Victor's record volume and enjoyed excellent sales year after year. They, with other similar records by these and other artists, were "standard" selections and were the nucleus of many record collections of that period.

In addition to records having entertainment or inspirational value, the company issued a number of specialties of a broad educational character. For instance, the "Oscar Saenger Course of Vocal Training" consisted of ten double-faced, 12-inch records with a book of instructions arranged in sets for each type of voice-bass, baritone, tenor, mezzo-soprano and soprano-in an attractive carrying case with lock and key. Each course sold at a list price of $25.00.

Then, during World War I, records were issued with accompanying text under the title, "First Aid French" to enable men going abroad to get some of the inflection of the French language.

Over a long period of time, the Educational Department issued a set of records which reproduced the various instruments of the orchestra. While they were primarily for the use of students, they would help anyone to a fuller enjoyment of instrumental music. In addition, there were other records for studying wireless, etc., and, in a somewhat different field, for setting up exercises, weight control, etc.

In 1919, the company set up a sales school in Camden under F. S. Delano. It was generally known as the "Red Seal School" and the main purpose was to promote the sale of Red Seal records, but all other phases of the company's business were also covered.

Dealers and distributors were invited to sign up as many of their people as they wanted for two weeks' intensive instruction. There was no charge for the tuition. Transportation and living costs were paid by the dealers and distributors. (p. 79)

From first to last, there were 40 or 50 such classes averaging about 25 students each. At the end of the course, each student was given a diploma, which, incidentally, was usually highly prized. Each class was given a name and all classes vied with each other after "graduation" to establish sales records.

The work followed, to some extent, the activities of a traveling unit which the company had sent to a number of cities a year or two earlier, but it was more comprehensive. The work of the traveling school was covered in three or four days.

During the two weeks the students were in Camden, they got a thorough workout on the product-particularly Red Seal records. However, the basic elements of salesmanship, store management, ordering, etc., were also covered. Stress was laid on sizing up the customer with suggestions as to how best to determine probable musical tastes, etc. At the time these classes were held, the company had an "ideal store" set up on the first floor of Building #2. It was known as the "Idea Shop" and was equipped with the best equipment which the company had developed or sponsored to improve retail sales. The operation of the school was altogether successful. If there was any negative, it was that, in a few cases, dealers were annoyed by requests from "trainees" for more pay on the grounds that the school had qualified them for better jobs!

Victor's established policy was one of active and cordial cooperation with the government. It responded promptly to requests for all sorts of cooperation. It helped the 1,200 Victor men who joined the armed forces, did what it could to build their morale, and assured them that their jobs would be waiting for them when they got back.

The company also made aircraft parts and assemblies, rifle stocks and parts, shell parts and assemblies, detonator cases, and other war materials.

In 1918, the fuel administration curtailed all talking machine production to 70% of 1917. This was reduced later to 40%. In actual practice, instrument production was reduced for a while to 10% of normal. Following the end of the war, it took about four months to clear the plants of war work. Full capacity was not reached until October of 1919. In addition to the general excise tax of 3%, the talking machine industry was called upon to pay an extra excise tax of 5% because music was rated as a semi-luxury. In 1920, Victor's taxes amounted to nearly $4,000,000. The company issued the following notice to its key people: "The new burden of taxation must be offset by efficiency in manufacture and our fundamental business policy must be to market a large volume of goods of the highest quality at a small margin of profit."

During the war, records were in extraordinary demand. Distributors not only brought great pressure on the company for current popular numbers, but several of them sent (p. 80) scouts around the country to buy up anything which would play. This included, quite literally, anything which would play. At the end of the war, when production was picking up, distributors had back orders on the company for about 50,000,000 records. Feeling certain that this was heavily inflated, the company gave them an opportunity to revise. The total was cut to 12,000,000. Later, on a second opportunity, it was reduced to 5,000,000.

For many years, the company met with the distributors in Atlantic City, or other convention spots, during the Summer, to discuss plans for Fall and to socialize. A feature of these conventions was entertainment by the company's artists-both Red Seal and Black Label. In 1920, for instance, the group was entertained one evening by Caruso, Rachmaninoff, Kindler, and the Victor Orchestra (the Philadelphia Orchestra under Pasternack), and on another evening by Henry Burr, Billy Murray, Peerless Quartet, Frank Banta, Monroe Silver, Fred Van Eps, and Margaret Young. While this was a lavish display of talent for a routine business meeting, the customers were, in fact, listening to samples of the product they had to sell. There was always a cheerful carnival air at these conventions with enough of the serious to send the customers away with a feeling that they were part of a top flight activity.

In 1906, Victor's Eastern wholesalers organized the Eastern Talking Machine Jobbers Association. A year or two later, this became The National Association of Talking Machine Jobbers. Officers and directors were elected. The officers met with Victor's officers from time to time to acquaint the company with developments in the field, to make organized requests, express appreciation, and so forth. It also served as a nucleus of social activity at the conventions. For the most part, its activities were innocuous. However. there were times when, from the company's point of view, it seemed to be developing into a problem.

At least twice during Victor's history, efforts were made to develop a custom-made department to serve the carriage trade. At one time, the old Potter Express Building, across from the Esterbrook plant where Building #3 stands now, was entirely devoted to this activity under W. B. Stevenson. Some very handsome cabinets in traditional design were developed, but nothing came of it. The cost of the fine cabinets, made in small quantities, resulted in a total price for the instrument which was higher than prospective customers were willing to pay. (p. 81)

Sometime after Mr. Easton died in 1915, a New York financier bought control of the Columbia Company. He increased the capitalization from 150,000 shares to 1,500,000 shares, no par. These shares were listed on the New York stock exchange and were quickly run up to 65. At this point, the issue was at a value of nearly $100,000,000, whereas the tangible assets did not have a value of one-third this amount.

In 1921, the stock dropped to $5 a share. The banks who had loaned the company $15,000,000, kept it going for 3 years, but, in 1923, receivers were appointed. The stock was taken from the exchange and the end had arrived. The company was later resumed under new ownership.

The company regarded its distributors and their salesmen as the company's own representatives on the "firing line." While it was made clear to company personnel that distributors must be treated cordially and fairly, it was also made clear that distributor and factory interests were not always identical and that there were points of conflicting interest which were not always discussed. There was a particular ban on discussing one distributor's affairs with another. There was also an effort to brief those who came in contact with distributors on the company's position on controversial questions so that everyone would tell the same story. This resulted from cases where distributors, talking with several factory men, were able to piece together more of a story than any of them had intended.

For many years, problems requiring special decisions were cleared through a system of committees. They were set up in the form of a pyramid. The base of the pyramid was made up of operating or production groups (primary functions). Each would be headed by a department manager and each would have established authority. Decisions beyond the scope of the primary committee would be sent up, with recommendations, to a reviewing committee consisting of the chairmen of the primary committees headed by a director. These secondary committees also had delegated authority. Issues beyond their scope would be sent up, with recommendations, to an executive management committee made up of directors which, in turn, passed along issues of top importance to the Board. Minutes were taken by a staff of trained male secretaries. Under the plan, it usually took about a week for clearance. The plan had the advantage of getting everything which required attention "on the record" and of securing a general airing. In practice, discussions, under some chairmen, were continued too long and there was a feeling, at times, that competition which could get a quick answer from a top executive had an advantage. (p. 83)

For many years, shipments were made "f.o.b. factory with the lowest published carload rate allowed to destination." During most of its life, the plan was quite satisfactory from the standpoint of the large distributors who got all or most of his shipments in full cars. Suggested list prices could be advertised nationally, distant distributors were at no disadvantage (profit-wise) against those near the plant, the problem of local manufacturing in distant markets was covered, and so on. The plan was less favorable to small and medium sized distributors, many or most of whose shipments went LCL. In some cases, the differential was the measure of profit or loss on the distributor's activity for the year.

In operation, the cost of freight was included in the cost of merchandise. The loading was in the order of 2% which was adjusted from time to time to bring the cumulative cost of freight in line with the actual cost on a non-profit basis. If the loading was larger than needed, it was reduced (or vice versa).

The plan was discontinued by RCA-Victor in 1933 because large distributors near the company's only domestic instrument plant in Camden (where competition was especially hot) were in the position of carrying the load for distributors in parts of the country where the heat wasn't so great. The loading was taken out of the cost, the country was divided into three zones, and suggested list prices were set up on the basis of the relative cost of freight. Numerous difficulties developed-not the least of which being inconsistencies in list in fringe areas close to the edge of the zones.

From the very early days, the company maintained a lunch club which was, at one time. a residence on Cooper Street where part of Building #2 stands. Later, a building was erected just north of Building #2 on Front Street. It was built along the lines of a metropolitan club with rooms at the left of the entry for the directors and guests, and at the right for company executives (major and minor). Upstairs was a larger room for all other employees who wanted to use it. Many, in those days, carried their lunch and were not interested.

Victor cabinets were always finished with great care. During the years when the surface was varnished, the operation was very thorough and very involved. Under Jim Thompson's skillful supervision, the product had an international reputation for top quality. The process varied from time to time with the price class of the instrument, but, in general, took from 18 to 24 days. (p. 84)

Home \| Back to Top	This website is supported by and
©2001-2007 David Sarnoff Collection. All rights reserved.