DOCUMENTS FROM THE EDISON PHONOGRAPH DIVISION'S FINAL DAYS (OCTOBER

The following documents from Blue Folder No. 40 (Edison National Historic Site) offer a revealing, behind-the-scenes look at operations during the final days of Edison's Phonograph Division.

Subject: Discontinuing the Record Business
Arthur Walsh to Charles Edison
(October 12, 1929)

On or about 1912 the Edison Industries began to manufacture and sell the disc type of record and from that date to this, as far as I can estimate, it has always been a losing business. Without going too far back into history, I have looked over the financial statements of the pst five years. The five years show a loss on account of records, as follows:

Statement of net book loss on disc records according to the financial statements during the past five years:
1924	150,477
1925	102,345
1926	367,443
1927	322,228
1928	390,535
Total	$1,332,928

In 1929 the estimated net book loss will exceed $500,000....

In July 1929 we announced the Edison Lateral Cut Record, which was ultimately to supersede the Hill & Dale Record, previously sold. At the present time we are making both types. The sales in September ran 29,766 for Lateral Cut and 8,479 for Hill and Dale.

Below an attempt has been made to recapitulate the advantages and disadvantages of continuing in the record business...

ADVANTAGES:

1. Help to sell more [radio-phonograph] Combinations.

2. Possible idle equipment and plant.

3. Keeping faith with old owners.

4. Avoid possible embarrassment to trade in discontinuing project just started [lateral-cut discs], which might cause trade to feel we might cut out radio just as abruptly.

5. Possibility of Record Business being reborn, if Combinations become increasingly popular.

6. As Mr. Thomas A. Edison is the inventor of the Phonograph & Record, there is possibility of loss of prestige, if abandoned.

7. Absorbs portion of Thomas A. Edison Industries overhead, which would increase other costs unless something else is found for factory and space.

8. Eliminate loss thru voiding contracts with recording artists, which would be small in comparison with potential losses if business does not succeed.

DISADVANTAGES:

1. Heavy losses, as indicated above.

2. Export situation — Cannot sell Records in Continental Europe, Dependencies or Colonies of a European Country.

3. Unfavorable situation regarding portables, which we do not manufacture but buy and sell at a book loss merely to help sales of records.

4. Increasingly high recording costs due largely to excessive fees demanded by popular artists whose reputations aid in selling records.

5. Necessity for investing large sums for promotion and advertising to increase sales.

6. It is a dying business and without sales of Phonographs it may be merely a question of time until the Phonographs now in hands of public will be discarded.

7. Cheap competition makes sales increasingly difficult. The public is interested chiefly in jazz music and buy cheaper grades of records which can be discarded in few weeks at little loss when popularity wanes.

8. To become world power in record business it will be necessary to establish recording units with plating a pressing factories in Chicago, and the West Coast, in Europe, South America, Australia and the Orient; the question being, can money so invested have the potential profit as money invested in other things.

9. Mr. Walsh and co-workers pending time on record sales and production out of proportion to return.

10. Possibility that present type of record may become obsolete. Mr. Sarnoff of R.C.A. announced at meeting few weeks ago that home talking pictures would play large part in future home entertainment which may be subtle warning that Victor is going into film recording.

Discontinuing Recording
W. H. Miller
(Undated; probably week of October 14, 1929)

Stop all recording at once. ... [Note: The last Edison recording session was a private one for Margaret Rogge Becker, held on the morning of October 19.]

Prepare list of Recording Equipment to be retained for recording Broadcast Records.

Retain Electrical Recording Agreements — if they won't cost us anything. ...

Negotiating Release of Contracts with Artists
W. H. Miller
(Undated; probably week of October 14, 1929)

Discontinue — at once — all recording.

Contact artists at once — advise them of decision and ask them to cancel contracts; also, to treat confidentially until announcement is made public. This is particularly important in the case of Martinelli who should be given opportunity of making new arrangement with another company before an announcement is made.

In cases of refusal to cancel — negotiate cash release always bearing in mind, artists' expenses, etc. to obtain consent and endeavor to sell their contracts. No arrangement is to be consummated without approval.

All contracts are to be disposed of in one way or another by December 31, 1929.

Sale of Finished Stock
R. R. March and A. J. Clark
(Undated; probably week of October 14, 1929)

Liquidate inventories of finished stocks, wherever located, by December 31st.

Prepare estimated liquidation value of stocks as compared with inventory value.

Consideration to be given to plan to sell entire stocks thru regular jobbers and dealers, piecemeal, and/or entire stocks as job lots to one source of distribution, the question being, can we dump such records to one jobber because of other jobbers' stocks that they may not want to sell at reduced prices.

Be prepared to sell Needle [lateral-cut] Reproducers at cost to disgruntled Hill and Dale [vertical-cut] users.

All records to be sold by December 31st.

All Schuberts and Beethovens [phonographs]... are to be sold with needle [lateral-cut] attachments by December 31st, even if these must be sold for as low a price as $10.00 each.

Inventories on hand December 15th to be turned over to Mr. Clark for salvage.

Contact F. R. Schell and set aside records of both types to be retained for [Henry Ford] Museum purposes.

Disposition of Master Moulds
W. H. Miller and A. J. Clark
(Undated; probably week of October 14, 1929)

Contact Messrs Buchanan and Schell to ascertain moulds to be retained for [Henry Ford] Museum purposes and after setting these aside, Mr. Miller will endeavor to sell needle type [lateral-cut] moulds to other companies, provided this can be done without obligation on our part to artists who recorded such records.

[Note: Such a sale was never completed, as far as can be ascertained. However, the existence at ENHS of a Needle Type pressing with a Brunwick sample label (see Edison Disc Record Oddities) suggests that the Brunswick-Balke-Collender Co. might have been contemplating the purchase of some masters.]

All moulds not thus sold and those not required for Museum are to be sold thru Mr. A. J. Clark.

Discontinuing Amberol Record Sales
W. S. Williams
(October 22, 1929)

... While phonographs are still carried in Cylinder inventory, they were turned over to Mr. Clark some time ago for sale as scrap or junk. ...

A total of 32,408 B.A. [Blue Amberol] Records were sold for $6008.75 between July 1 and October 15. Of this number of records 15,185 were sold under the special $.20 offer which expired September 30. The balance of sales were to jobbers and dealers and to individuals at $.35 each.

Sales have greatly decreased since September 30 as shown by the following comparison of orders, shipments and cancellations.

	Orders Received	Shipments	Cancellations
August	11,347	7,463	2,900
September	21,076	13,664	6,095
October 1–19	2,954	5,588	1,324

Cancellations, which have been exceedingly high due to inability to ship records of customers' selections, have been very costly because of paper work involved in refunding advance payments.

As of October 19, there were unfilled orders on hand for only 43 [cylinder] records.

It is apparent from the above that it is now opportune to either discontinue entirely or take action to endeavor to increase sales. ...

Therefore, the following recommendations are made.

(1) Entirely discontinue sales [of Blue Amberol cylinders] on October 26.

(2) Burn all [cylinder] records in stock, including 212,566 not carried in inventory, thus releasing 600 packing cases which may be salvaged thru Disc Record Sales at $.90 each.

(3) Release the remaining [cylinder division] employees — thus saving $86.50 weekly.

(4) Close books of Division by December 31. ...

To the Trade: Re: Discontinuance of Commercial Record Production
Arthur Walsh
(October 29, 1929)

As you know, the Edison Radio is a pronounced success. Present demand is about three time production. We feel that this demand will increase steadily...

Our present manufacturing facilities are inadequate to satisfy the demand for Edison Radios. These facilities must be increased immediately.

After a careful weighing of the record business and its prospects, we have decided to discontinue the production of records, except for special purposes, and to devote our great record plant to the production of radio, and kindred new developments in the radio and home entertainment field.

This step is being taken regretfully because the phonograph for home entertainment was one of Mr. Edison's favorite inventions. But, this is a case where sound business judgement must prevail over sentiment.

We must add that we are happy in the knowledge that there are many competent manufacturers, now producing excellent records, with adequate facilities to take care of all present and future phonograph owners...

We will, therefore, on November 1st discontinue the production of commercial phonograph records such as have been heretofore sold through you.

On and after the same date, the name of Radio-Phonograph Division will be changed to Radio Division.

Faithfully yours,
THOMAS A. EDISON, INCORPORATED.
Radio-Phonograph Division

Arthur Walsh
Vice President.

To All Dealers
The Edison Distributing Corporation
(November 13, 1929)

Under date of October 29th a letter was mailed to you from Thomas A. Edison, Inc., Orange, N. J., announcing the "Discontinuance of Commercial Record Production."

At this time we have in stock a limited supply of Edison Hill and Dale, and Lateral Cut Needle Records, which we will offer you, subject to prior sale, F. O. B. Chicago.

The Edison Hill and Dale Records at five cents each in lots of fifty or more to be selected by us, or ten cents each in lots of fifty or more of your selection.

Lateral Cut or Needle Records of the seventy-five cent series at fifteen cents each in lots of fifty or more of our selection, and twenty cents each, you selection. The two dollar series are priced at forty cents each.

Under no circumstances are the records returnable. ...