RPA v. RCA

COMMUNICATION

Last week great Radio Corporation of America, with its swarm of subsidiaries, was fighting for its life before the Federal Radio Commission. After years of industrial supremacy this Goliath of the air had been driven back against the wall by a little David called the Radio Protective Association ("Against Radio Monopoly"). At stake were 1,403 Federal licenses whereunder RCA's National Broadcasting Co. Inc., RCA Communications Inc., Radiomarine Corp. of America and RCA-Victor Co. Inc., did business.

When Congress passed the Federal Radio Act in 1927 it suspected the existence of an "air trust." Therefore in Section 13 of that law it directed the Federal Radio Commission to void all licenses of broadcasting and communications companies "finally adjudged guilty by a Federal court of unlawfully monopolizing or attempting to monopolize radio communications through the control of radio apparatus." RCA with some 4,000 patents dominated the radio manufacturing field, compelled rival firms making sets under a patent-license-and-royalty system to install only RCA vacuum tubes in their products. So complete was its grip on the industry that five independent radio manufacturers, backed by RPA, went into the Federal court at Wilmington, Del. and asked Judge Hugh Martin Morris to pass on the legality of RCA's tube contract with competitors. Judge Morris ruled that the contract was a violation of the Clayton Anti-Trust Law as it tended to create a monopoly. RCA appealed to the U. S. Supreme Court which in April refused to set aside what amounted to a monopoly conviction as specified by the Federal Radio Act.

In line with this judgment the Federal Radio Commission summoned RCA and its subsidiaries to show cause why the extreme penalty of the law should not be invoked and its licenses canceled July 15. At last RPA had RCA on the defense before a-- government body empowered to sweep RCA's vast business into the junk pile at one stroke.

Before the Commission appeared President Merlin Hall Aylesworth to plead for the life of his National Broadcasting Co.'s seven stations (WRC, Washington; WEAF and WJZ, New York; KGO, San Francisco; KOA, Denver; WTAM, Cleveland; WENR, Chicago). His company had, he said, $17,000,000 in unfulfilled broadcasting contracts on hand. It had earned its first "small profit" last year on $20,000,000 gross business. It had leased 27 new studios in Manhattan's Radio City. A revocation of its licenses would ruin its business. Questioned by caustic Representative Frank R. Reid of Illinois, an intervener in the case, about the Delaware case, Mr. Aylesworth said: "I know very little about it. I wouldn't know a vacuum tube from an inner tube. I'm a broadcaster." Observed Representative Reid: "You're a slicker, too." Retorted Broadcaster Aylesworth: "Well, it's something to be called a slicker by a Congressman."

Officials of RCA Communications contended that if the Commission withdrew its 113 point-to-point licenses, they would be gobbled up by foreign countries "like Russia and Mexico" and the U. S. would be virtually forced out of the international wireless field. Jeopardy to life at sea was depicted by Radiomarine officials if that company should lose its 1,122 ship-shore licenses because of its parent company's law violation. RCA-Victor declared it would have to cease television experimentation if the Commission ruled against it. Summing up for RCA, Louis Titus, chief attorney, declared an "unspeakable disaster" would follow the Commission's refusal to renew RCA licenses. His prime legal argument was that Congress meant to put off the air as unfit only those who criminally violated the Sherman Act, not those who merely broke the civil provisions of the Clayton Act.

To put RCA out of business has for the last four years been the sole mission in the life of Oswald Francis Schuette (pronounced Shooty), active head of RPA. Born in Chicago 59 years ago, Mr. Schuette for years was a reporter on the Chicago Daily News. He was its Berlin correspondent during the War, followed the German armies at the front. Afterwards about Washington he liked to wear the field green jacket of a German officer. When he helped organize independent radio manufacturers into RPA, his friends told him that he, neither lawyer nor radio expert, was crazy to try to buck the well-heeled legal and technical staffs of RCA. But he kept pounding away before Congressional Committees and in the Press about RCA's "patent racketeering." His foes called him and his independents "barnacles" and "pirates." Lacking funds at first for a court fight (a radio patent suit costs $100,000 or more), Mr. Schuette concentrated in what he called the "court of public opinion." Tall, thin-haired, deep voiced, he complains in his small disorderly Washington office: "The biggest thing I hold against RCA is that they keep me away from my wife and four children in Illinois."

Last week Anti-Monopolist Schuette was in his glory before the Radio Com mission. He sobbed of "the army of broken, bankrupt business men, dealers, manufacturers and engineers who have been crushed by this trust." He quoted Herbert Hoover as Secretary of Com merce: "It is inconceivable that the American people will ever permit a particular group to obtain a monopoly in the new means of communication." He argued for a maximum penalty for RCA.

Others urging the Commission to anni hilate RCA included the American Federation of Labor and the Milwaukee Journal. Declared Representative Reid: "RCA's arguments are the same as those advanced by Mr. Al Capone. . . . He also contends that his operations bring happiness to the farm and fireside and comfort to ships at sea but the Federal Government has not conceded that this gives him permission to violate the law."

The hearings over, the Commission took the case under consideration. Generally expected was that it would deny RCA at least one important license renewal to furnish a test case for the entire issue to be reviewed by the Supreme Court.

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