9

Europe in the Thirties

THE INTERNATIONAL DIFFUSION
OF SOUND

Having successfully created large new markets for their sound recording technologies at home, Western Electric and RCA were anxious to do the same abroad, and this motive went hand in glove with the desire of American studios to extend their control of the international film industry into the sound era. Accordingly, the Big Five began to export sound films in late 1928, and ERPI (Electrical Research Products, Inc. —Western Electric's aggressive marketing agent) and RCA began installing their equipment in first-run European theaters at the same time. British exhibitors converted most rapidly, with 22 percent wired in 1929 and 63 percent by the end of 1932.

German and French exhibitors converted more slowly, largely because in 1928 a German cartel had been formed to stem the invasion of American sound equipment. Backed by German, Dutch, and Swiss capital, Tobis (the Tonbild Syndicate, A. G. ) had acquired the European rights to the Tri-Ergon sound-on-film system and began to wire German theaters for its use. At the same time, Germany's two largest electrical manufacturers, Siemens and Halske, A. G., and Allgemeine Elektrizitätsgesellschaft (AEG), formed the Klangfilm Syndicate to exploit a competing system mutually developed by the corporations on the basis of Kuchenmeister, Pederson-Poulsen, and Messter patents. After several months of feuding with each other over European markets, Tobis and Klangfilm merged in March 1929 to combat the threat of American domination of the sound film. With capital assets of over one hundred million dollars and venture capital provided by the Dutch bank Oyens and Sons, Tobis-Klangfilm quickly concluded cross-licensing agreements with the British and French Photophone Company and British Talking Pictures, Ltd., giving it production, distribution, and manufacturing branches in every country in Europe.

Almost immediately, Tobis-Klangfilm began to enter suits against Western Electric and ERPI, and their licensees, for patent infringement in all of its territories, and won final injunctions in Germany, Holland, Czechoslovakia, Hungary, Switzerland, and Austria. As American foreign grosses plummeted by 75 percent, the Hollywood monopolists agreed to boycott the markets in dispute. Simultaneously, in July 1929, the General Electric Corporation (which held a controlling interest in RCA) acquired part interest in AEG and nudged Tobis-Klangfilm into a

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