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The History of Philco

Chapter 3: Leadership in Radio

© 2005-2013 Ron Ramirez

For spring 1930, Philco began a promotional tie-in with Paramount Pictures. Many Philco advertisements featured stars of motion pictures, then under contract to Paramount. In addition, Philco made such things as autographed pictures of Paramount stars available as giveaways to Philco dealers. Philco radios were set up as displays in theatre lobbies. Billboards advertised the current Paramount movie and also mentioned Philco. Parades and contests were held. This, together with Philco's consistent print advertising and its Philco Hour broadcasts, kept the Philco name before the public.

Charles Buddy Rogers picture - Click to enlarge
Back view of Rogers picture - Click to enlarge

For the new 1930-31 season which began in June, Philco added another new feature – Tone Control. A four-position switch allowed the listener to select between four degrees of tone – Brilliant, Bright, Mellow or Deep. Finally, a Philco set owner could have a radio that sounded like a Majestic if they wished; or, with a counterclockwise turn of the tone control, it could produce a bright sound with little bass.

Many developments were going on behind the scenes in 1930 at Philco. To begin with, up until midyear, Philco receivers used RCA tubes. Philco's Chief Engineer, Walter Holland, even appeared in a 1929 RCA advertisement promoting RCA Radiotron tubes. However, in 1930, some sort of a disagreement over tubes between RCA and Philco occurred. Philco stated the disagreement was over technical specifications; but according to RCA, it had to do with price. At any rate, the tiff prompted Philco to contract with two independent tube manufacturers, Sylvania Lamp Company and Hygrade Lamp Company, to produce a line of tubes bearing the Philco brand name. Now, not only would new Philco radios use Philco brand tubes, but Philco would also enter the replacement tube business with its own tubes.

Following the disagreement with RCA, Philco no longer broadcast the Philco Hour on NBC. Instead, the program began to air on close to fifty radio stations via transcription disks the first week of August. Initially, eleven half-hour programs were recorded; stations were advised that they could get twenty-six weeks worth of programs out of the eleven by mixing different disks. (It took six twelve-inch disks to make one complete program, so this was easy to do.)

Jessica Dragonette was no longer on the syndicated program, having been replaced by a male singer, William Schultz. But Henry M. Neely continued to appear as master of ceremonies, along with Billy Artzt and the Philco Concert Orchestra, and the Philco Quartette. In addition, Philco began to broadcast their own symphony orchestra program, on Tuesday nights, over NBC's rival, the Columbia Broadcasting System (CBS).

By now, of course, the Great Depression was on, and many people could not afford a radio set. In response, some West Coast radio manufacturers began to market small, relatively inexpensive table model sets with a speaker above the dial and controls, in a compact cabinet with an arched top. Today, they are known as cathedral radios.

Philco recognized this trend toward smaller, more affordable radios, and in August 1930 became the first major radio manufacturer to introduce a "midget" (as they were then called) of its own. The Model 20 or Baby Grand was a seven tube set and incorporated all of the features of the much larger Model 77, except for a tone control and Type 45 tubes (the lower power Type 71A audio output tubes were used instead). Philco advertising claimed the Baby Grand would perform as well as larger sets, as indeed it did. Priced at $49.50 less tubes, it was an instant hit. At one point in the fall, Philco had over 140,000 unfilled orders for Baby Grand sets. Philco would eventually sell over 343,000 of the Model 20 receivers – becoming the nation's number one radio manufacturer in the process by the end of 1930, as well as causing a lot more grumbling from competing set manufacturers for bringing out its own "midget" set, reducing radio prices even more as a result.

Pepito the Clown with a Philco 20, 1930 - Click to enlarge
Philco 20 in a barbershop - Click to enlarge
Salesman with Webb Slingabout - Click to enlarge

At the same time, Philco also inexplicably introduced a new high-end radio. The Concert Grand was, underneath the surface, the same as the Model 296 lowboy radio-phonograph, but the cabinet was something else again. A very fancy corner cabinet with double doors which concealed a control panel and speaker area, entirely covered in cloth, housed the Model 96 chassis and single-play phonograph, and also included record storage on the sides. Priced at $350 less tubes, Philco was obviously aiming at a wealthier clientele with this set. However, that price, at that time, ensured that few would sell. Indeed, only 500 Concert Grands were made. It would be a few years before Philco would fare well with expensive models.

In late 1930, Edward Davis was promoted to the new position of Chairman of the Board at Philco. James M. Skinner, who had started out as a chemist with Philco in 1911, was now the company's President. Skinner had been the driving force behind Philco's success for many years; having been responsible for getting Philco into the business of starting batteries, radio batteries, Socket-Power units, and, ultimately, radios. Skinner's goal for Philco at the time was to produce 6,000 radios a day.

Automobile radio was becoming popular. The Automobile Radio Corporation had been formed in 1927 by C. Russell Feldman to produce Transitone radios for installation in automobiles. The early Transitones had two-dial tuning and took up a lot of dashboard space. Priced at over $150, they sold poorly.

Philco became involved with Automobile Radio Corporation in mid-1930. By August, they were not only selling Transitones through Philco dealers, but they were also building a single-dial unit for Automobile Radio. In December, Philco purchased the Automobile Radio Corporation, creating a new subsidiary exclusively for automobile radio – the Transitone Automobile Radio Corporation. Shortly afterward, Philco introduced a new Transitone auto radio, the Model 3, which was priced below $100.

When Philco purchased the Automobile Radio Corporation, it also acquired that firm's elegant office furniture. Skinner refused to allow it into the Philco offices. He was quoted in Fortune magazine as saying, "This is a factory. We don't believe in fancy furnishings."

As part of the Automobile Radio Corporation acquisition, William Balderston, a former Automobile Radio salesman, was allowed into the Philco offices, as he was made the head of Philco's new Transitone subsidiary.

Also in the latter part of 1930, Philco built a plant in Toronto, Ontario to better serve the Canadian market. The company also further expanded its existing Philadelphia facilities.

In all, Philco sold 616,000 radios in 1930, grossing close to $34 million.

Philco Jumbo Sets from 1930 - Click to enlarge
Philco window display, 1930 - Click to enlarge
A Philco dealer meeting, 1930 - Click to enlarge

For many years, RCA had kept a major radio advancement to itself. The superheterodyne circuit had been invented during World War I by Major Edwin Howard Armstrong, a brilliant young man who had also invented the regenerative circuit in 1912. RCA held the superheterodyne patent – and refused to license other manufacturers to use it. Following a lawsuit, however, RCA finally began to license other manufacturers to use the superior superheterodyne circuit in late 1930. Philco quickly acquired one of the licenses and offered its first superheterodyne, Model 111, in January 1931.

Since 1929, designer Edward L. Combs had been responsible for nearly all of Philco's cabinet designs. It was he who had designed such classics as the June 1929 Highboy De Luxe, the August 1930 Concert Grand, even the original Baby Grand (Model 20). But there is one cabinet Combs designed, which was introduced in March 1931, that has come to represent the quintessential vintage radio.

Model 21 was a slight improvement of Model 20, adding push-pull Type 45 tubes in place of the Type 71A tubes used in Model 20. The cabinet remains to this day the most recognizable vintage radio cabinet ever, to collectors and non-collectors alike. And even though Philco hired a much more famous industrial designer, Norman Bel Geddes, to produce a number of cabinet designs for their 1931-32 line, Edward Combs' classic cathedral continued in the new lineup as Models 70, 90 and 35 (a battery operated version of Model 70).

Jumbo Philco store display, 1931 - Click to enlarge
Model 370 Lazyboy, 1931 - Click to enlarge

There was a new product that was generating considerable interest at this time. Radio with pictures, which was also known as television. Philco had begun research into television as early as 1928. Its rival, the much larger RCA, had its own team of engineers, led by Russian immigrant Vladimir Zworykin, working on the subject.

A young man was also working on television on the West Coast, independent of any large corporation. Philo T. Farnsworth had already invented the Image Dissector camera tube and had made great advances with his electronic television apparatus, demonstrating a working system in 1927. In the spring of 1931, perhaps in a game of one-upmanship with RCA, Philco became interested in the work of Farnsworth. Philco agreed to become a Farnsworth licensee, and to provide financial backing to Farnsworth. In exchange, Farnsworth was asked to move his entire laboratory from San Francisco, California, to Philco headquarters in Philadelphia, for a period of what was originally intended to be six months.

Due to the deepening depression, several radio firms had gone out of business. At the end of 1930, the two principals in Grigsby-Grunow (makers of the Majestic radio), B.J. Grigsby and William Grunow, had gone their separate ways, and by late 1931, Majestic was falling almost as fast as it had risen. At the same time, Philco had solidified its hold on first place among radio manufacturers, selling 977,000 sets in 1931 and again making close to $34 million in sales; becoming one of the few radio manufacturers to make a profit for the year.

Philco began doing research into high fidelity sound in late 1931. Its first efforts at high fidelity were made available in January 1932, incorporated into two new consoles, Models 112X and 90X. These consoles featured a radical new design, with the speaker board tilted upward. This was designed to allow the higher audio frequencies to be more easily heard. A screen was placed in the lower back of the cabinet, covered in cloth, which was supposed to prevent sound waves from being emitted from the rear.

Philco 15X Inclined Sounding Board - Click to enlargeIn 1932, Philco began featuring a more expensive model in its magazine advertisements, trying to establish an image as "A Musical Instrument of Quality." The lower priced sets were still featured in local newspaper advertising, however, to get customers to visit their local dealers.

Shadow tuning was an important new feature offered by Philco in its Models 15 and 91, which were introduced in June. A small "window" was mounted just above the radio dial. This "window" contained a translucent screen upon which light shone. Inside, there was a miniature meter movement that moved a flat vane instead of a needle. The vane appeared in the center of the screen as a shadow, blocking out most of the light when the radio was not tuned to any station. As a station was tuned in, the vane moved, causing the shadow to become narrower. When the shadow was at its narrowest, the station was correctly tuned in.

Philco annoyed the radio industry even further by standardizing its home radio tubes with its auto radio tubes. Both were designed to operate with 6.3 volt filaments, which was perfect for an automobile radio with its 6 volt battery. The new tubes had the added advantage of lower heater current, making them equally attractive for use in home sets. Other radio manufacturers continued to use 2.5 volt filament tubes at first, but eventually the rest of the industry would follow Philco's lead in this regard.

Short wave reception had begun to attract a little interest in 1931, although it took a couple years before the public really became interested in tuning in foreign lands. Philco released a shortwave converter, Model 4, that year. By January 1932, it was available as part of two consoles, Models 470 and 490. Each of these housed two chassis – a specially modified Model 4 shortwave converter chassis, together with either a Model 70 or 90 chassis.

In June 1932, Philco introduced its first single-chassis, all-wave receiver. Model 43 was available in either console or Baby Grand versions and could receive, in four bands, frequencies from 550 kc up to 20 mc.

Taking the high-fidelity idea a step further, Philco used two speakers on many of its 1932 consoles. By 1933, however, Philco had discontinued the practice.

Another radio development was causing pains among radio manufacturers. That was the introduction of a much smaller midget radio, also called a "pee-wee" at the time. These were very small table radios, which sold at equally small prices – some for less than $10. This time, Skinner and Philco were on the same side as other major radio manufacturers in regards to the pee-wee. Nevertheless, Philco introduced a cheap set of its own in the Fall of 1932, although it was a small cathedral, not a pee-wee. The four-tube Philco Jr., Model 80B, was priced at $18.75 and was meant to be a price leader, to get the customers into the stores. It made Skinner sick when, during the last week of 1932, Philco sold 17,000 80B sets – fifty percent of Philco's entire sales for the week.

1932 was the worst year of the Depression. Things were getting worse for everyone, and Philco did not escape unscathed. Despite spending $900,000 on magazine advertisements, and another $350,000 on newspaper ads and broadcast time, Philco only sold 600,000 radios in 1932, while its dollar sales went down to $17 million. The company did hold on to the number one position in radio, however.

Philco assembly line, 1932 - Click to enlargeIn 1932, RCA was charging a 5 percent royalty on the net selling price of each radio. In order to reduce patent royalties paid to RCA, Philco split into two companies that year – Philadelphia Storage Battery Company, which manufactured the chassis, and the Philco Radio & Television Corporation, which bought the chassis, added cabinets and trim, and then marketed them. Philco then began to base its royalty fees paid to RCA on the price which P.S.B. charged Philco Radio & Television for the chassis. As a result, RCA threatened to cancel Philco's license in 1934; Philco responded by filing suit against RCA.

Larry E. Gubb was made President of the Philco Radio & Television subsidiary; James M. Skinner remained President of the parent company.

Philco had been exporting certain radio models to the United Kingdom since 1930, when Model 20 sets were shipped across the Atlantic to the British Isles. In 1932, a subsidiary company was formed in London – Philco Radio & Television Corporation of Great Britain, Limited, headed by Carleton L. Dyer. This company soon opened a manufacturing facility at Perivale, Greenford, Middlesex.

Meanwhile, back in the USA, by the end of the year Philco's competitors were claiming that Philco's pricing of its sets were ruining the radio industry. James Skinner retorted that Philco was not leading the price cutting. In reality, Philco did not sell a radio below $18.75 in 1932, even though there were some "pee-wee" sets made by other manufacturers that were selling for less.

Philco's television research team, headed by Philo Farnsworth, was still hard at work on television in 1932. On June 28, Philco received a license for experimental station W3XE, one of America's first all-electronic television stations. While Farnsworth and his team of engineers at Philco broadcast the Mickey Mouse cartoon "Steamboat Willie" over W3XE over and over, making adjustments, Farnsworth's son, Philo Farnsworth III, watched the program on a prototype receiver in the Farnsworth home.

But trouble was brewing in the Farnsworth-Philco partnership. Philco began to manage Farnsworth's budget more tightly, as Farnsworth had retained the patents to his work; Philco was merely a licensee. What had originally been scheduled to take six months had stretched out to more than a year. Then in the winter of 1932, Farnsworth's second son, Ken, died of strep throat. Farnsworth asked for time off in order to arrange for his son's burial in Utah. Philco refused, stating that he "could not be spared" because "he was too essential to their investment."

Because of these incidents, Philco lost Farnsworth's services by summer 1933, as he left to resume television research independently. One is left to wonder what might have happened had Philco been able to keep Farnsworth on its team. Perhaps Philco might have beaten RCA in television. Perhaps this may have enabled Philco to remain an independent entity beyond 1961. Nevertheless, the loss of Farnsworth did not stop Philco from continuing its own television research.

January 1933 brought about a very different chairside radio from Philco. The company had already pioneered the chairside radio concept a year and a half earlier with the introduction of the Model 370 Lazyboy, in a cabinet designed by Norman Bel Geddes. Now, the 14-LZX introduced a large separate speaker cabinet, which could be placed up to 25 feet away from the chairside unit, which contained the radio chassis. Of course, the two units were connected together by a wide, flat, eight-conductor cable which carried high voltage DC as well as the household AC current!

Philco 14LZX, 1933 - Click to enlarge
Philco 16CPX Century of Progress model - Click to enlarge

Economic conditions began to slowly improve in 1933. This helped enable Philco to finally sell a significant number of higher-priced sets, especially the Model 16 which came out in June. This powerful all-wave set used eleven tubes; the console and chairside versions used a large, very heavy speaker. Philco touted the 16 for its fidelity; people bought it for its all-wave coverage.

A special Model 16 was built for the 1933 Century of Progress exposition in Chicago. This chairside with separate speaker was later shown in various parts of the country during the year. The design of the 16CPX was quite different from the standard 16RX chairside, the Century of Progress model having chrome and Catalin trim, but no sliding top to conceal the set's dial or controls. Priced at $600, only 75 were made. Only one is rumored to have survived, but we currently have no photographs of it.

Philco remained the top radio manufacturer in the country, and their 1933 sales of 963,000 radios nearly matched their 1931 sales figure. Their dollar sales were up, also, to twenty-three million.

Philco began hosting annual cruises to Bermuda for its distributors in the early 1930s. The cruise would take place in May; while on the cruise, distributors were introduced to Philco's new product line that would make its public debut the following month. A few years later, a second annual cruise to Havana, Cuba was added for select Philco dealers. Philco's UK subsidiary also hosted annual cruises to Belgium and Holland for its dealers and distributors.

July 1933 saw Philco beginning a new nationwide program for select independent radio service shops. Through this new program, Radio Manufacturers Service (RMS), Philco not only made service information available to these shops, but also supported them with national advertising, advising customers to take their radios to a member of RMS for repair. RMS was also introduced in Canada shortly afterward.

By now Philco had a new broadcast on network radio. This, however, was not a musical or entertainment program; it was the commentary of Boake Carter. Philco Radio Time aired over CBS.

The Philco factory was unionized in 1933, as the company signed a contract with the United Electrical, Radio and Machine Workers union. The same union tried to organize workers at Philco's cross-town rival, Atwater Kent, at the same time. Unlike Philco, which let the union in, A. Atwater Kent would have no part of it. He told the union to leave and not come back – and threatened to close his factory if they did.

1934 was truly Philco's year, as they captured more than 30 percent of the radio market. In June, they introduced Model 200-X, the industry's first true High Fidelity radio receiver. Representatives of the various radio manufacturers (except for Philco) had met and agreed that high fidelity reception would not be possible until at least 1935, due to certain technical problems involved with high fidelity receiver design. As a radio receiver's intermediate frequency bandwidth was increased, fidelity also increased; but at the same time, it decreased selectivity, creating increased "cross-talk" between adjacent stations. A means of making the IF bandwidth variable was needed. With the help of Hazeltine Laboratories, Philco found the answer in a selectivity control – and incorporated it into the new 200-X, getting a one year jump on the rest of the industry!

The 200-X was capable of reproducing an audio frequency range from 50 to 7500 cycles, at a time when a high end of around 4000 cycles was considered to be good. Radio programs sounded much more lifelike on a 200-X.

Philco's gross profit for 1934 was up to $33,000,000 on sales of 1,250,000 sets. Philco sold more than two and a half times as many sets that year than did its nearest competitor, RCA. And Philco was finally selling more expensive sets. The 200-X was not a huge seller due to its $200 price tag, but people were buying sets like the 16L and 16X consoles with their all-wave reception and good fidelity. In fact, in 1934, sets costing $100 were outselling lower priced consoles by a two-to-one margin.

The $10,000 investment that was used to start Philadelphia Storage Battery Company in 1906 had by now grown to $16,000,000 in assets.

In 1934, David Grimes joined Philco as an engineer in charge of home radio engineering and research. Grimes had produced his own line of radio receivers in the 1920s, and was known for his "Inverse Duplex" radio circuit. More recently, he had been employed at RCA from 1930 to 1933 as a License Engineer.

Several of the Philco Baby Grand sets received quite different cabinet treatments in January 1935. The tops of the cabinets became flat; most of them also had "shoulders" on the sides. Today the design is known as a tombstone radio; Philco's first tombstone had been introduced a year earlier (Model 60MB).

Philco's Radio Manufacturers Service program was finally introduced to Philco dealers in the United Kingdom by February 1935.

Also in the United Kingdom, ground was broken for a new Philco factory at Perivale, Greenford, Middlesex, in early spring 1935.

Many set manufacturers introduced metal tubes in their radios in June 1935. The metal tubes were a development of General Electric. Philco, however, refused to use them, preferring to stick with the standard base, glass tubes.

Instead of resorting to unnecessary "gimmicks" such as metal tubes, Philco continued to improve its high fidelity receivers. The new 1936 model 680X, introduced in June 1935, added yet another feature – the use of passive radiators, which Philco called "Acoustic Clarifiers." These were also used in the new Model 116X.

Beginning on July 1, 1935, Philco of Great Britain began issuing free insurance policies to every purchaser of a new Philco radio in that country. It covered the loss of the owner's set due to fire or theft.

Philco executives, 1935 - Click to enlargePhilco's experimental TV station, W3XE, was broadcasting some programming in 1935, but the experimental receivers used by Philco engineers used green screens identical to an oscilloscope. One year earlier, W3XE was broadcasting at a resolution of 343 lines. The resolution would increase to 441 lines in 1936.

Walter E. Holland, who had risen through the ranks to become Philco's Vice-President in charge of engineering, retired from the company in early 1936 due to poor health.

In July 1936, Philco employees went to neighboring Camden, New Jersey, to help striking RCA employees win a new contract, causing RCA's second quarter earnings to drop by $200,000 from the same period the previous year. The United Electrical, Radio and Machine Workers had gone back to Atwater Kent again in June, attempting once again to unionize the facility. A. Atwater Kent kept his promise, and closed his plant down.

In August, Philco filed another suit against RCA, claiming that "RCAgents" had managed to extract certain trade secrets from young female Philco employees over dinner dates. RCA denied all claims.

Philco's David Grimes invented a completely new chassis design, used throughout most of the 1937 home radio lineup. Called "Unit Construction," it featured a small sub-chassis which was mounted in the middle of the main radio chassis. This sub-chassis, or RF unit, floated on cushions of rubber to minimize microphonics. The Unit Construction sets may have been cheaper to manufacture, but they can be a nightmare to service, especially for the novice. Fortunately for the contemporary service man (and the restorer of today), the design only lasted for two years.

Those new 1937 Philcos also used octal tubes for the first time – but they were glass tubes. Philco never used a metal tube in a new set. In fact, a year later, the tube shield bases of the 1938 models were made in such a fashion that only an ST-style glass tube will fit inside the shield base and into the tube socket below!

Radio manufacturers were beginning to realize that set owners might want to have a convenient means of tuning in favorite standard broadcast stations, without using the tuning knob to select stations manually.

For some reason, the obvious solution of providing pushbuttons to preset favorite stations was initially overlooked, as more elaborate mechanical systems were adopted. Some radios, such as Airline, Grunow and Silvertone, adopted a telephone-type dial for quickly tuning in favorite preset stations.

Philco's Automatic Tuning system, introduced in June 1936 on its three most expensive models, was a variation of the telephone-type dial. Up to nineteen favorite stations could be preset on the Philco Automatic Tuning sets. A lever with a small knob on the end was used to select a preset station. To operate it, the lever/knob assembly was moved up to match the call letters of the desired station, pushed in, and twirled to the bottom of the dial, where it "clicked" into place. Philco provided a means to mute the set while the Automatic Tuning dial was being operated.

As this was a mechanical system, frequency drift needed to be compensated for as well as inaccuracies in the system itself. Philco developed an automatic frequency control circuit which would keep the set locked on-frequency, as long as the station was a strong one!

Philco purchased controlling interest in the Simplex Radio Corporation of Sandusky, Ohio, in 1937, in order to increase its production capacity. Philco would also add a factory in Chicago, Illinois, prior to the war. However, radios and radio-phonographs also continued to be built in Philadelphia.

Philco's sales for 1937 was $40 million, having sold 1,500,000 radios. This was a lower figure than the previous year, and Philco actually lost $100,000 that year.

Continuing its television development, Philco demonstrated a system in mid-1937 with a resolution of 441 lines. The demonstration took place in the ballroom of the Germantown Cricket Club, and featured an interview broadcast over Philco's station W3XE between CBS commentator Boake Carter and Philadelphia Athletics owner/manager Connie Mack. The company's prototype TV sets on display at the demonstration were housed in leftover 1936 Model 116PX radio-phonograph cabinet, with no dial or controls on the front panels. When the lid of a set was lifted, instead of a phonograph, the television screen and controls were revealed. A mirror under the lid allowed normal television viewing from across the room to take place. Each of the sets used twenty-six tubes.

Philco also built prototype television sets in 116PX cabinets which had controls in front, but retained the mirror-in-lid screen.

In an address before the Federal Communications Commission, James M. Skinner, who by now was also chairman of the Radio Manufacturers Association (a forerunner of today's Electronic Industries Alliance), outlined a five-point program for television development. Skinner's program called for the establishment of a single set of television standards; for television pictures to be free from blur and distortion; for nationwide television broadcasting coverage; for a choice of more than one television program in as many areas as possible; and for the lowest possible receiver cost and easiest possible tuning.

Skinner went on to say in part:

"The Radio Manufacturers Association views television as...a business which will employ many thousands of people...Television, we believe, is one of the new businesses the country needs to create new jobs. ...Just as ten years were required before general public acceptance of the motor car, and the radio developed, it is expected that it will take a similar period for television to come into general use in the average American home within range of broadcasting stations."

Neither Skinner nor Philco Vice-President Sayre M. Ramsdell foresaw television replacing radio. Skinner stated that radio was being used not only for entertainment, but also as a background while the listener was working or resting; while television required concentration, as did motion pictures.

Meanwhile, the 1938 radio models which were introduced in June 1937 represented a radical change in Philco console cabinet design. On most higher-end models, the control panel was now tilted up, as was the speaker board. This allowed greater ease of tuning, without having to bend over or squat down. "No Squat, No Stoop, No Squint" was the catch phrase of the 1938 season, and the novel Philco cabinet design was copied by some other manufacturers.

During the 1938 selling season, Philco produced its ten millionth radio, a 38-116XX. Once this milestone had been reached, Philco offered a limited number of 38-116 models with a small brass plaque mounted just under the band switch on the front panel. The plaques were engraved with "Exact Replica of The Ten Millionth Philco" and the original purchaser's name.

Since 1918, the Parris-Dunn Corporation of Clarinda, Iowa, had been developing and manufacturing a wind-operated battery charger for farm use. In early 1937, Philco contracted with Parris-Dunn to put its name on the company's Skychargers. In return Philco marketed the devices during its 1938 selling season to the rural set customer interested in buying a radio designed to operate on a 6 volt battery.

Philco did not build its own radio-phonograph consoles in the 1938 season. Instead, these were offered by the Radiobar Corporation of America as a line of "Phonograph with Philco" sets. Philco supplied the radio chassis; Radiobar mated the Philco chassis with a Capehart 78 rpm record changer and a very large, fancy floor model cabinet.

In 1938, Radio Manufacturers Service, Philco's service arm, announced a special radio training course available to RMS members through the National Radio Institute. Through this cooperative venture between RMS and NRI, an RMS member could take the course at about one-half the usual NRI fee.

The United Electrical, Radio and Machine Workers went on strike against Philco in May, just as the company was preparing to introduce its new 1939 radio line. Philco was forced to farm out its radio production to subcontractors (including Motorola) while the labor dispute was worked out. The strike was settled by September. The union won its demands on wages and hours, but Philco used the union's victory to change how it acquired parts and supplies. Ever since Philco began its assembly line, it had manufactured most of its own parts; notable exceptions being band switches (made by Oak Manufacturing), mica capacitors (Cornell-Dubilier and Micamold), chokes and transformers (Jefferson Electric in the early radio years). But after settling the strike, Philco began to purchase most parts from outside sources, cutting back on its labor force. By 1941, Philco employment had gone from a peak of 10,000 to 12,000 down to around 5,000.

Philco's 1938 unit sales slipped to one million units, while dollar sales fell to $22 million. Due to the strike and the factory being shut down from May to September as a result, Philco lost $222,000.