The Big Fourth

You've got to ac-cent-tchu-ate the positive,

E-lim-my-nate the negative,

Latch on to the affirmative,

Don't mess with Mister In-be-tween.*

Back in 1942, Johnny Mercer, the author of these mortal lines, had learned to accentuate his positive talents as a songwriter and singer. He had fame and some fortune. So Glenn Wallichs, whose music store in Hollywood was one of California's largest, thought that Mercer should also accentuate his business side. As Wallichs was having trouble getting records to sell, why not have Mercer make some for him? Mercer liked the idea but doubted that Wallichs could get any shellac, then one of the shortest of shortages, Wallichs went from house to house collecting old records, melted these down for a starter. Then Wallichs and Mercer persuaded Cinema-producer George Card ("Buddy") De Sylva to invest $50,000, and they launched Capitol Records, Inc.

As Capitol had no recording studio, it had to rent commercial ones. It contracted with outside companies to make records with their trademark. At first, the wartime demand was so great that anything would sell "as long as it was round, flat and had a hole in the middle." But with most big stars signed up with the top three--R.C.A.-Victor, Decca or Columbia, Capitol had to hustle to find talent to record. Mercer decided that the only thing to do was to build up unknowns. With a song called Cow Cow Boogie, he turned an obscure performer named Ella Mae Morse into a jukebox favorite and put Capitol on the road to success.

By recording only popular music and building up new talent (King Cole Trio, Stan Kenton, Peggy Lee) as it had Ella Mae Morse, Capitol grew fast. And the company was not hurt by the fact that Mercer could plug a song over the air or turn out hits (That Old Black Magic, Blues in the Night, On the Atchison, Topeka and the Santa Fe) to record. Capitol went in for children's albums, made tie-ups with movie studios to record their stars, branched out into selling needles, record players and other accessories, set up their own dealer system. Then Capitol set up a nationwide transcription service through which over 200 radio stations pay from $50 to $250 a month to play Capitol records. As Wallichs says: "They are paying us for the privilege of plugging pur records."

By always playing the right note, Capitol grew so fast that it finally decided it needed its own record plant. So last year it sold over $3,000,000 in stock and bought the Scranton Record Co. for $2,000,000. Thereby Capitol was able to boost record production again, peg down its position as the No. 4 U.S. record company.

Last week, Board Chairman De Sylva, 51, President Mercer, 37, and Vice President Wallichs, 36, announced that Capitol had grossed $13,082,797 in 1946 (double the 1945 gross) and had netted $842,961, almost four times as much as the previous year. They said it sold 42 million records, one-sixth of all those sold in the U.S.

But Mercer & Co. are still not satisfied. They expect to sell some 50 million to 60 million discs this year, get within sight of Victor and Decca (100,000,000 each) and hailing distance of Columbia (75 million).

* Song by Johnny Mercer and Harold Arlen. Used by permission of Edwin H. Morris & Co., Inc.

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