Part 8: "We want CASH!"by Paul Schatzkin
In the dark and starry nights he spent on the deck of the S.S. Bremen, Philo T. Farnsworth, now 28 years old, had ample time to reflect upon the unlikely chain of events that found him sailing on a luxury liner enroute from New York to London.
By the fall of 1934 Philo's daring invention of electronic television should have placed him at the vanguard of the new emerging communications industry. However, RCA, world's largest radio manufacturing and broadcasting concern, was committing time and vast sums of money to fight tiny Farnsworth TV over the patents which were the foundation for the commercialization of television. But for Philo, his "lab gang," and the scattering of patient investors he had attracted over the years, the litigation with RCA had a twin edged effect. As long as Farnsworth's patents remained under contention, his company could neither sell licenses nor collect royalties on the inventions he had discovered. Without these funds, Farnsworth was hard-pressed to maintain his legal defenses.
Pressure was building from some backers who would have had Farnsworth accept RCA chief David Sarnoff's one-sided terms, which amounted to a total sell-out of the inventions to RCA. Consequently, investment money that could have been used to begin new areas of scientific inquiry was diverted into the ongoing legal battles.
Nevertheless, Farnsworth knew that his portfolio contained many patents that were unavoidably fundamental to the art of turning light into electricity by means of a pencil-thin, rapidly deflected electron beam. Subsequent developments by other companies, like RCA, proved that this was indeed the direction that the rest of the industry would follow. But owning the patents alone was not sufficient to guarantee Farnsworth's ultimate prosperity.
Since domestic markets were forestalled indefinitely by the cloud of litigation, Farnsworth had no choice but to seek foreign alternatives for money. When Baird Television of England invited him to bring his invention to England, to be considered for a patent license there, Farnsworth was certain that he had found a timely solution to his costly delays at home.
Baird Television was named for John Logie Baird, an inventor of Scottish descent whose mechanically-scanned television device made him the first independent inventor to earn any money from sending pictures through the air. This was possible in part because broadcasting in Britain was almost entirely controlled by the government sponsored British Broadcasting Corporation. During the early 1930's the BBC permitted Baird to use their radio channels at night to broadcast pictures on a temporary, experimental basis. Using one radio channel for his low-frequency, low-resolution pictures, and another channel for sound, Baird managed to sell several thousand "televisor" receivers in kit form throughout Europe. The radio amateurs who assembled these kits were rewarded for their diligence with a fuzzy preview of the age old dream of seeing from a distance.
Unfortunately for Baird, the costs of tooling up for production forced him to seek financial assistance and in the process he lost control of his company to a large conglomerate called British Gaumont. This arrangement worked fine for Baird until 1934, when the BBC expressed dissatisfaction with Baird's system and invited him to conclude his experiments. This development came as quite a surprise to Baird's backers, and they urged him to develop an electronic television system in order to stay competitive.
Baird was steadfast in support of his own invention, but the Directors of British Gaumont were not about to let a potentially lucrative business slip through their fingers. So British Gaumont ignored the objections of the inventor in whose name they acted, and compelled John Logie Baird to seek a license from a young American inventor named Philo T. Farnsworth.
The shift in Baird's fortunes began some time in 1933 when scientists at the EMI Corporation in London demonstrated the rudimentary capabilities of an electronic television system to the BBC brass. The receiving end of this system was a familiar cathode ray tube; the camera tube, which EMI modestly dubbed the "Emitron" is a much more intriguing development.
What was curious about the Emitron tube was its unmistakable resemblance to another device, the RCA Iconoscope, which Vladimir Zworykin had first demonstrated for RCA during the same period. Both tubes employed the same one-sided photocathode composed of discrete photoelectric islands, and an unusual triangular scanning configuration. There is no question that the Emitron and the Iconoscope were virtually identical devices. The only question that stands unanswered is "which laboratory produced it first?"
J. D. McGee, one of the EMI scientists who developed the Emitron, when interviewed in London in the spring of 21976 London, insisted that it is possible for the same scientific development to occur simultaneously in different places because there is frequently only one viable solution to a problem. However, there is evidence to suggest that RCA enjoyed a long-standing, mutual cross-license arrangement with EMI in which these two giants shared their information and patents.
In other words, in the fall of 1934, as Farnsworth sailed for Europe hoping to form an alliance that would enable him to overcome his difficulties at home, his principal domestic adversaries were already operating a trans-Atlantic alliance of their own.
Of course, Farnsworth had no knowledge of all these backstage dealings. As his boat arrived in Southampton, he was unaware that the struggle to bring television to Europe would be drawn along exactly the same lines as his struggle in America.
Success at Last
While Farnsworth and Turner went off to meet their hosts from Baird, Tobe and Arch stayed on the ship to keep an eye on the equipment as it was unloaded from the cargo hold. This turned into an unexpectedly tricky maneuver, because a British maritime labor dispute prevented the Bremen from unloading directly onto the British dock because it was a German ship. Consequently, all the cargo had to be transferred to a smaller, British vessel, before it could be unloaded onto the dock. Gusty winds and choppy water caused the crate holding Farnsworth's irreplaceable equipment to sway precariously as it was hoisted out of the hull of the Bremen.
Tobe and Arch held their breath as the crane swung out over the edge of the big ship and the crate began a controlled descent toward the bobbing deck of the smaller ship. The crate was only inches from a safe landing when a sudden wave caught the smaller ship; instead of the crate being lowered gently to the deck, the deck rushed up to meet the crate, smacking it with a force equivalent to a fall from several feet.
Farnsworth and his men were unable to assess the damage until several hours later, when the crate was unsealed at Baird headquarters in London. John Logie Baird stayed alone in his office, but his representative hovered about restlessly while Phil and Tobe lifted the lid. The sudden change in their expressions when they peered into the crate was a dead giveaway that things inside looked grim.
Indeed, three racks of electronics had sheered away from their mountings and fallen into a heap at the bottom of the crate. Baird's men smiled to each other when they saw the mess for themselves -now they could report to their boss that the American machine was wrecked.
Less than an hour later, Baird's cause for celebration was interrupted. Skee Turner appeared at the door, inviting Baird and his men to come back downstairs for their first look at electronic television. The Baird contingent followed Turner, accompanied now by representatives of British Gaumont.
Farnsworth had placed both the camera and the receiver near the door, and the instant the British Gaumont people entered the room they were confronted by their own disembodied image, rendered in stunning clarity and detail.
The Britons were startled by the experience. After years of financing Baird's mechanical television system, the most resolution that the British Gaumont people ever saw was 60 lines per frame. Now they were confronted with an image composed of more than 300 lines per frame, rendering detail they had always been assured was quite impossible. Confronted by Farnsworth's obvious accomplishment to the contrary, the British Gaumont people realized that they'd bet on the wrong horse.
The stunning effect of this demonstration did little to ease the shock of Farnsworth's terms when they were finally presented. The Board of Directors of British Gaumont sat in bemused tolerance while Farnsworth explained that in addition to the customary continuing royalties, he wanted a $50,000 down payment to act company the license, as a sort of opening fee, a royalties-in-advance payment.
What British Gaumont had envisioned was more like a mutual exchange, a sort of our-patents-for-yours proposition, with no cash involved. But actually, Farnsworth couldn't think of anything in the British Gaumont patent portfolio that he really needed, certainly none of John Logie Baird's patents. It seemed to Farnsworth that he was the only one holding any cards in this game, and he stood firm: $50,000 cash or no license. The negotiations quickly bogged down.
Farnsworth asked for a short recess to confer privately with his associate Skee Turner. Once alone, they hardly needed to speak; the determined looks in their eyes was mutual. They would not go home empty-handed.
Skee Turner was first to notice a bottle of Scotch and one small glass standing on a mantle, and with a compulsive, defiant flourish, he poured himself a shot and choked it down. Turner then handed the bottle and glass to Farnsworth, who hesitantly did the same. Taking a brief moment to recompose themselves, Farnsworth and Turner returned to make their final stand before the British Gaumont Board of Directors.
It's not hard to envision the subsequent encounter: The spokesman for British Gaumont leans forward, confident that these young, inexperienced bargainers were about to propose a clever Yankee "compromise". Instead, Farnsworth firmly reiterated his earlier terms: "We want cash," he declared, speaking now with a tone of finality in his voice, assuring the Board of Directors that the negotiations were about to conclude, one way or another.
The Board of Directors stiffened in surprise, mumbled among themselves for a few moments, and then conceded to Farnsworth's demand.
Exciting as their cruise across the Atlantic to Britain must have been, the return voyage with $50,000 in their pocket must have been truly exhilarating for Farnsworth and Company. That sum represented the first genuine reward for nearly 10 years of concentrated effort.
The first public demonstration of Farnsworth TV had been a few months earlier at Philadelphia's Franklin Institute, where thousands lined up to see the new electronic marvel. The next step, Philo and Skee decided, was to demonstrate the day-to -day operation of television broadcasting, something which could be done immediately by investing the British license fee into a fully equipped television studio that could sustain a regular schedule of experimental broadcasts.
However, the $50,000 license fee was not entirely Farnsworth's property. The money, as well as all of Farnsworth's patents were actually the property of Television Limited, the holding company that Jess McCargar formed to raise money when Farnsworth had walked out of the Philco Radio Company back in 1933. Farnsworth still owned a significant portion of the equity in the enterprise, but he was by no means the majority stock holder.
Instead, the numerous investors who had acquired chunks of stock were represented by their own Board of Directors, and that august body, not Farnsworth would determine the disposition of the Baird license fee.
Farnsworth realized how the power in his life had shifted almost the moment he stepped off the gangplank: Jess McCargar demanded that the $50,000 be forwarded immediately to the business offices in San Francisco, and that the matter of building a studio be tabled until the Board of Directors could consider it. In the meantime, Jess figured that $50,000 would serve nicely to pay off some old bills, for example, the $30,000 tab for legal services contracted during the patent litigation with RCA.
Farnsworth and Turner saw their dream of a studio facility that would give them an entry into the lucrative broadcasting business dissolve in the face of McCargar's singlemindedness.
What Farnsworth feared was that his sponsors would choose to take the conventional approach, and attempt to secure the future of Farnsworth Television by doing what Farnsworth called "tacking on the shipping room door," i.e. following in the pattern established by giants like RCA and opening their own factory to build and sell merchandise.
Farnsworth felt that a more lucrative future could be found in the field of television broadcasting, as radio broadcasting had already proven to be massively profitable. Building a studio facility seemed like a logical step in this direction; in his dreams, Farnsworth would let others worry about the manufacturing. His company would collect royalties for the use of his patents, and that revenue would free Farnsworth to devote his own energy to new lines of research, to explore the curiosities that appeared in his observations every day.
However, this issue never really surfaced when confrontations
began to erupt with Jess McCargar. For his own part, Jess was
only questioning the wisdom of taking on another sizable expense
when they could hardly meet current expenses. But when the Board
of Directors sided with McCargar, Farnsworth realized that the
odds were no longer in his favor. As much as he hated to admit
it, this denial of a studio left Farnsworth numb with the realization
that not unlike John Logie Baird, he had lost control of his destiny
to men who would not always share his vision.
End of Part 8
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