Columbia Corporate History: Market Crash, 1929, and the Early 1930s
Columbia Master Book, Volume I, Tim Brooks, ed.
Then, for the company, for the industry, and for America, the bottom suddenly fell out. The stock market crash of October 1929, looked at first like another temporary downturn. But as the crisis worsened during 1930 and 1931, Columbia—like other record companies—saw its business shrivel away to almost nothing. Even the legerdemain of Louis Sterling could not pull it out of this one. The record industry as a whole went from 105 million units produced in 1929 to 31 million in 1931, and to an incredible 10 million or less in 1933.71 Practically all of the independent labels were swept away. Victor survived only by virtue of its ownership by the powerful radio conglomerate RCA.
Conditions were dire in England as well. In March 1931, the Gramophone Company, the Columbia Graphophone Co., Ltd. and Parlophone merged to form Electric and Musical Industries, Ltd. (EMI). This raised anti-trust problems in the U.S. British Columbia owned U.S. Columbia, while the Gramophone Co. was a wholly-owned subsidiary of Victor, which meant that Victor now indirectly controlled its chief U.S. competitor, Columbia. As a result in May 1931 Sterling was forced to turn over his interests in the U.S. company to a voting trust composed of U.S. banks.72 Eight months later, on January 16, 1932, the Trustees sold what was left of U.S. Columbia to the Grigsby-Grunow Company, a manufacturer of refrigerators and radio sets.73 Grigsby-Grunow’s chief claim to fame was its best selling radio set, the Majestic, “Mighty Monarch of the Air.”
The new owners began clearing out obsolete stock, and in June discontinued the now-moribund “budget” labels Harmony, Velvet Tone and Clarion (begun in 1930). A five minute “longer playing” disc (18,000-D series) was introduced which played at standard speed on regular machines, presumably to compete with Victor’s long play 33 1/3 rpm discs which required special equipmenl.74 Columbia standard issues switched to a “Royal Blue” label, with a newly formulated, very quiet-sounding blue wax surface, in December 1932.
Columbia’s new president H. E. Ward said that Columbia would soon begin manufacturing radios, and confidently declared that the company “had no debts, that cash on hand was sufficient for effective operation and that there were no plant maintenance costs.”75 But by November 1933 parent Grigsby-Grunow itself was in receivership, and Columbia was once again on the block. In early 1934 it was sold to the American Record Corp., a kind of dustbin for failed record labels, for a paltry $70,000. Edward Easton must have turned over in his grave.
Throughout this troubled period Columbia continued to issue new releases, splendidly recorded, although not at the rate of earlier years. Because of its high cost and low margins, classical repertoire was largely imported from Europe. Popular issues continued until 1936, after which the Columbia label was used only for occasional classical releases and specialty product. For its revival Columbia would have to once again wait for a white knight to appear. History repeated itself when a subsidiary that Columbia had discarded emerged to save the beleaguered parent. In 1925 it had been British Columbia, in 1939 it was the Columbia Broadcasting System, which in the intervening years had grown large and powerful. CBS would build Columbia into something it had always wanted to be, but never achieved: America’s number one record label. That, however, is another story.
The Columbia Master Book Discography, 4 Volumes, Complied by Brian Rust and Tim Brooks. Reprinted by permission.