The Saga of Grigsby-Grunow/Majestic Part 2
BY PAUL TURNEY
The story of Grisby-Grunow's demise goes on here in Part 2 of Paul Turney's well researched article. Still, the Majestic "Smart Set" lived on. Part 1 appears earlier in this issue. We include references for both articles here. (Editor)
Behind the Scenes
Despite the glowing newspaper reports and healthy outward appearance in the showrooms, all was not well behind the scenes at Grigsby-Grunow. During the nine months ending September 9, 1933, sales totaled $6,408,898, but losses were $2,315,530. Although unit sales appeared healthy, the investment made in bringing the new line to market must have been enormous, and gross receipts were but a shadow of what they had been when the company was "one of the skyrockets of the boom days of 1929."
This decline was all reflected in a stock price that failed to rise, as might have been expected from a company showing improving fortunes. Through 1933, it never rose above about $3 a share. On November 24, 1933, a judge placed the company in the control of equity receivers after petitions had been filed requesting both receivership and involuntary bankruptcy. They were spared the latter on the basis that total book assets of $14,584,030 exceeded liabilities of about $6,000,000.
In filing the petitions, creditors cited "preferential security exchanges" in the amount of $100,000, a practice which, they argued, if allowed to continue would pose a serious impediment to their receiving timely settlement. The company's moves to block the petitions altogether on the basis of their being "perfectly solvent" were dismissed.
For a while during late 1933 and early 1934, the Grigsby-Grunow manufacturing juggernaut rolled on under the receiver as workers continued producing the hot selling "Smart Sets." Press announcements of the company's tribulations in late November 1933 did not go unnoticed. Zenith, upon hearing the news, mounted a "raid" on the Majestic distributors, attempting to win them over. They circulated a letter referring to the company's "bankruptcy" and adding that "no one wants an orphaned set."
The receiver promptly filed suit, threatening Zenith with contempt of court and asking that they cease and desist from interference with the work of the court appointee. Zenith duly issued a letter rescinding their statements and expressing regret.
In a twist of irony that had perhaps not been lost on Zenith, back in 1930 Grigsby-Grunow had themselves issued a circular urging the public to avoid "dumping" by distressed companies, referring to dumped sets as "orphan[s] in the storm." In the aftermath, Grigsby-Grunow released two letters, the first stating they would not mount any "counter-attack against Zenith business," and the second commenting on their own state of affairs since receivership:
The receivers are proceeding aggressively with Majestic business. There has been no dumping whatever. The receivers have made a record in sales of radios, more radios having been sold in the first half of December than in the entire month of December 1932; in fact, more than in the entire month of December 1932 and 1931 combined. It is confidently expected that the full month of December 1933 will show more sales than any month in the history of the company.
Unfortunately, despite this upbeat report, the buoyant sales of "Smart Sets" did not prove to be the magic bullet to save the company that many had hoped for. Reorganization under the receivership proved unsuccessful, and following further petitions, less than three months after commencing equity receivership, they were placed into bankruptcy on February 20. This set into motion proceedings for the final liquidation of all assets. The original petitions had been made by a handful of creditors owed a mere $42,000, one just $20, but they proved sufficient to topple the once mighty giant.
Figure 6. Majestic Radio bankrupt stock sale advertisement.
In June of 1934, after several stalled attempts, the company's assets, including their remaining inventory of 8,000 finished radios, were put up for sale to the highest bidder. The radios soon appeared on the retail market, adding to those of dealers who were already liquidating their own stocks. Majestic "Smart Sets" were advertised nationally in newspapers at steeply discounted prices. See Figure 6.
In due course, all remaining company assets were liquidated, with the giant manufacturing plant on W. Dickens Avenue going under the hammer in June 1936. It was sold to the Zenith Radio Corporation, then in dire need of additional floor space, for $410,000.
A previous Zenith bid of $350,000 had been rejected. Zenith's McDonald had also submitted two earlier bids for the real estate, equipment, and good will of the company, one of $750,000, followed by another for $855,000. Both had been rejected. Earlier, the property had been expected to raise $1,500,000.
Why did this once majestic company fail? Their demise ultimately came down to over-extension and their inability to control costs during the roller-coaster days of the Great Depression. Grigsby-Grunow had an optimistic and expansionist business model that did not allow for the precipitous downturn. Buoyed by the ebullience of early success, they were too slow to adapt to the rapidly deteriorating and changing business climate.
The sales resurgence in the second half of 1933 that resulted from the company's attractive and affordable "smart sets" and was attributed to the Roosevelt administration's NRA, proved to be too little too late. The costs in bringing the new line to market and ramping up and sustaining production acted as a final blow. At the hearings in November, where they had initially insisted they were perfectly solvent, R.J Grigsby attributed the difficulties, in his own words "...to the impossibility of carrying the burden of its fixed investment in plant and equipment on the volume of business and profit now obtainable. The popularity of the low-priced midget sets reduced the value to the company of its large cabinet plant and also made possible the entry into the already expanded radio industry of dozens of new small radio manufacturing companies with the consequent price and profit demoralization. The competition resulted in heavy cash depletion and book losses."
Over time, the Grigsby-Grunow name almost but not quite faded into oblivion. Today the name survives in the radio collecting community, where it is especially revered amongst collectors of Art Deco radios, due in a large part to the Majestic "style leader Smart Sets" of 1933.
Rising from the Ashes
All rights to the Grigsby-Grunow patents and trademarks ("Majestic" and "Mighty Monarch of the Air") were bought by a group consisting of W.E. Schott and the Harris, Karp, Goldsmith Co. of Cincinnati in April of 1936 for $350,000. The purchase included much of the physical equipment from the Grigsby-Grunow plants, which the group had been selling off at auctions held at 5801 West Dickens Avenue prior to its being sold.
In June of 1936, all Majestic intellectual property and trademark rights exchanged hands again, purchased this time by the Triangle Electric Company of 600 Adams Street, Chicago. Triangle Electric, owned by Davega Stores Corp, a division of Atlas Stores Corp., had been a wholesaler of radio sets and electrical apparatus in the mid-West since 1920. Their past clients, numbering some 2,000, had included Kolster and Zenith, and they now planned to manufacture and nationally distribute "a complete line of Majestic radio sets, refrigerators, and household utilities," for which they planned an expansion and conversion of their warehouse facilities on Adams Street.
However, in October, Davega sold the rights to the Majestic Radio and Television Corporation, which it had been instrumental in forming and newly incorporating in September. The management team for this new company was, as it had been at Triangle, under Davega Stores. Davega was principal stockholder and had a cash investment exceeding $300,000 in the new venture.
The reformed Majestic would stay in the manufacturing business through 1955. However their journey through the years was a turbulent one, with several Chapter 11 reorganizations and changes of ownership. Their products are today well known among radio collectors and include such gems as the Charlie McCarthy and Melody Cruiser models, to name but two. That is, however, another story.
Unauthorized Users of the Name
Following Grigsby-Grunow's demise, for several years there was at least one unauthorized user of the once respected Majestic name. The Sun Radio Service and Supply Company of Washington D.C., by all accounts a shady entity often the target of legal actions, sold radio sets for a while under the "Majestic International" and possibly "Majestic" labels. These sets, of course, bore no relation to Grigsby-Grunow.
This and a multitude of similar abuses by other radio corporations, some little known, prompted the FTC to file suit in September of 1936. The suit gave the named offenders and certain of their suppliers until October to show cause as to why they should not discontinue their practices. As a result, Sun Radio agreed at once to cease all use of the Majestic mark.
I managed to locate some advertising for radios marketed in the Washington D.C. area under the Majestic International label dating from December 1934. I know of one collector who has a small compact with the markings, and sets do occasionally show up on the likes of e-Bay. Until now, the origins of this mark had been a mystery, at least to me!
Majestic International sets are relatively uncommon, having been marketed, it appears, primarily in the Washington D.C. area for just the years 1934, 1935, and 1936. Sun Radio was, of course, unrelated to the much later Grundig-Majestic venture (also referred to as Majestic International) formed post-1954 between Majestic Radio and Television (then under Wilcox-Gay) and the West German (as it then was) Grundig.
References (Parts 1 & 2):
"$750,000 Bid Is Declined, "NY Times, 3/11/36.
"1929 Business to Exceed 1928 Record, Claim," Mason City Globe-Gazette, 10/29/29. Pg. 17 "Majestic Radio Section."
"40 Majestic Radio Sets Given Graf Zeppelin's Crew," Mason City Globe-Gazette, 10/29/29, Pg. 17, "Majestic Radio Section."
"40,000 Shares of Atlas Stores Corporation Common Stock," Chicago Daily Tribune, 6/15/28, pg. 28.
"Above and Beyond, William Lears Contributions to," Chicago Daily Tribune, 01/25/04, Transportation Section pg. 1.
"Approves Offer On Equipment of Grigsby-Grunow," Chicago Daily Tribune, 4/3/36, pg. 31.
"Aviation Brash Young Man," Time Magazine,
"Build English Radio Factory," Milwaukee Journal, 6/23/29, pg V1, Google Archives.
"Business: Zenith," Time Magazine, 6/29/36.
"Corporate Reports," NY Times, 7/31/29 and
"Depression in Radio Line Hits Grigsby-Grunow," Chicago Daily Tribune, 7/31/30, pg. 22.
"Fallen Comet," Time Magazine, 12/4/33.
"Federal Suit Hits More Radio Plants," NY Times, 9/19/36.
"FTC Acts To Guard Old Radio Names," NY Times, 5/23/37.
"Gets $9,000,000 for stock..," NY Times, 11/26/29.
"Gets Millionth Radio," Mason City Iowa Globe, 10/30/29.
"Grigsby Charges Zenith," NY Times, 12/17/33.
"Grigsby Firm Settles Suit Over patents,"
3/31/31, Chicago Daily Tribune.
"Grigsby Large Radio Makers in Receivership," Chicago Daily Tribune, 11/25/33, pg. 25.
"Grigsby Plans New Firm to Handle Refrigerators," Chicago Daily Tribune, 4/5/30, pg. 28.
"Grigsby radio Put Into Receivership," NY Times, 11/25/33.
"Grigsby Stock Slump Rouses Much Interest," Chicago Daily Tribune, 9/18/30, pg. 21.
"Grigsby To Appeal Adverse Dynamic Speaker Decision," Chicago Daily Tribune, 4/10/30.
"Grigsby's Sale delayed. 90-Day Operation Asked," Chicago Daily Tribune, 5/1/34, pg. 29.
"Grigsby-Grunow Co. September Schedule -- Largest in 31/2 Years," Hartford Courant,
8/27/33, pg. B5.
"Grigsby-Grunow Earnings Drop," LA Times,
7/1/30, pg. 12.
"Grigsby-Grunow in Bankruptcy," NY Times,
"Grigsby-Grunow Line Bought by Electric Firm," Chicago Daily Tribune, 6/20/36, pg. 28.
"Grigsby-Grunow Makes Large Addition to Plants," The Music Trade Review, 3/16/29, pg. 4.
"Grigsby-Grunow Patent Action Dismissed in Kansas City after Concessions," NY Times,
"Grigsby-Grunow radio Sales Best in 32 Months," Chicago Daily Tribune, 11/5/33, pg. A9.
"Grigsby-Grunow Sale Ordered," NY Times,
"Grigsby-Grunow Set Production Higher," Oakland Tribune, 2/1/31 pg. 1 & 102.
"Grigsby-Grunow To Omit Dividend," NY Times, 3/8/30.
"Grigsby-Grunow to Issue Rights for Expansion,"
Chicago Daily Tribune, 10/16/29, pg. 30.
"Grigsby-Grunow to Vote on Merger," NY Times, 2/26/31.
"Grigsby-Grunow Was Asked to Quit Radio Association, Says Its Head," Chicago Daily Tribune, 6/17/30, pg. 23.
"Licensee Assails Radio Royalties," NY Times,
"Magnavox in Merger with Grigsby-Grunow is Report," Oakland Tribune, 02/20/30, pg. 1.
"Magnavox Remains Center of Trading on Local Market," Oakland Tribune, 03/30/31.
"Magnavox to Reorganize," NY Times, 2/21/30.
"Majestic Back as Brand by Grigsby-Grunow Sale," NY Times, 6/20/36.
"Majestic Radio Has Largest Cabinet Factory in the World," Burlington Hawk-Eye, 11/3/29, pg. 24, Iowa
"Majestic Sales Through Newspaper Advertising," Burlington Hawk-Eye, 11/3/29, pg. 24.
"Majestic Will Build Electric Refrigerators," Evening Huronite, 8/26/29, pg. 11.
"New Grigsby-Grunow Action," NY Times,
"New Low Prices on Majestic Radios," Ames Daily Tribune & Evening Times, 11/4/29, pg. 5.
"New Majestic Issue is Off to a Lively Start," Chicago Daily Tribune, 4/16/30, pg. 23.
"Peace Reigns In Rival Radio Makers' Camps," Chicago Daily Tribune, 12/19/33, pg. 24.
"Prof. Fessenden is one of Majestic's Engineers," Mason City Globe Gazette, 10/30/29, pg. X-6.
"Quits Radio Group, Charging Monopoly," NY Times, 6/16/30.
"Radio Firm Creates Branch of Education to Aid Schools," Oakland Tribune, 10/23/29, "Special Majestic Radio Section."
"Radio Trust is Dissolved by Consent Ruling," Chicago Daily Tribune, 11/22/32.
"Ruling for Grigsby-Grunow," NY Times,
"Seeks 30,000,000 in Radio Action," NY Times,
"Stock Offer Today for Majestic Radio," NY Times, 10/30/36.
"The New Grigsby-Grunow Shares Seek Listing Today," Chicago Daily Tribune, 3/20/28, pg. 25.
"The Tribune Investor's Guide," Chicago Daily Tribune, 8/26/29, pg. 32.
"Three Models Keep Majestic Plant Busy," Burlington Hawk-Eye, 11/3/29, pg. 24.
"Trade Notes & Comments," NY Times, 9/22/29.
"Trade Notes & Comments," NY Times, 7/28/29.
"Yellow Truck Factory Taken By Radio Firm," Chicago Daily Tribune, 1/5/28, pg. 21.
"Zenith Radio Buys Plant," NY Times, 6/18/36.
Appleton Post Crescent, 8/31/31, pg. 17.
Burlington Hawk Eye, 11/3/29, pg. 24, 25 "Special Majestic Radio Section."
Burlington Hawk-Eye, 11/3/29, pg. 24, Iowa.
Chester Times, 7/14/30, pg. 11.
Chicago Daily Tribune, 2/17/31.
Chicago Daily Tribune, 12/2/28, pg. B1.
Cones & Bryant, Zenith Radio The Early Years, Schiffer Publishing, 1997, pg. 201.
Decatur Herald (Illinois), 2/23/30, pg. 7.
Douglas, Alan, Radio Manufacturers of the 1920s,
Key West Citizen, 6/26/30, pg. 1, na.com.
Kokomo Tribune, Majestic full page ad, 11/07/29, pg. 15.
Lebanon Daily News, 8/25/49, pg. 31.
NY Times, 1/24/31.
NY Times, Trade Notes & Comments, 1/14/29
Oakland Tribune, 8/8/33, pg. 32.
Presto-Times, 7/1/29, pg. 13.
Radio Retailing, April, 1929.
Radio Retailing, July, 1929, pg. 123.
Radio Retailing, Oct 1933, pg. 22 & pg. 58, 59.
Salt Lake Tribune, 11/13/28, pg. 15 (one of many newspapers showing the same ad).
San Antonio Light, 8/18/29, Majestic ad, pg. 10.
San Antonio Light, 11/12/33, pg 23.
The Sheboygan Press, 12/17/29, half-page ad, pg. 24.
U.S. Design Patent 90,680, granted 9/30/33, M.C. Rosenow et al.
Paul Turney has been collecting vintage radios on and off since 2001, focusing on sets from the 1930s and 1940s. You can see more of his collection at his website www.tuberadioland.com.