[78-L] Advent of Electrical Recording

[Geoffrey Wheeler]

On February 25, 1925, Western Electric Company sent Columbia Phonograph 
Inc. a contract regarding the conversion of Columbia Phonograph from 
acoustic to electrical recording. The original copy shows written in 
ink to the left of the last paragraph “Accepted May 14, 1925 H. C. Cox 
Pres.” Most of the correspondence from Western Electric between 1925 
and 1933 in the author’s possession comes from G. E. Cullinan, General 
Sales Manager, Western Electric Company Inc. General Supply Department, 
100 East 42nd Street, New York City. Between 1925 and 1933, the 
principal issues raised by Columbia Phonograph regard how to calculate 
royalties on either records pressed or records sold, discounting 
returns, and the submission of payments. Columbia was forever behind in 
its payments, which may explain why it was slow to covert Harmony from 
acoustic to electrical recording. In December 1933, Columbia Phonograph 
was forced into bankruptcy, owing monies to various creditors, 
including its parent company, Grigsby-Grunow. Columbia Phonograph was 
sold Monday, April 16, 1934 as a single lot in Chicago federal 
bankruptcy court to Sacro Enterprises Inc., a New York corporation 
formed Saturday, April 14, 1934. Purchase price was $70,500. Sacro 
acquired legal rights to all physical, intellectual, and financial 
property, including the trade name Columbia Phonograph but not the 
legal right to the corporate name and charter. Columbia Phonograph was, 
as they say, dead, dead, dead, and really dead as a corporation. Best 
evidence shows that most likely Sacro was created and funded by 
Consolidated Film Industries and managed by American Record 
Corporation. Sacro itself never paid taxes and never filed required 
forms with the IRS or the State of New York and was declared 
involuntarily bankrupt December 15, 1938. At no time did CFI, by then 
listed on the New York Stock Exchange, file that Sacro was a wholly 
owned corporation. This is, in part, why nobody at the time had ever 
heard of Sacro and there is nothing to document its existence other 
than its corporate filing. CBS itself does not seem to know these facts 
until 1977 when it was involved in a copyrights lawsuit before a 
European court. Once it had this information, CBS did not pursue or 
disclose it to shareholders, business partners, the FCC, banks, or any 
other governmental or institutional entity worldwide!
Geoffrey Wheeler