A History of Silicon Valley

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These are excerpts from Piero Scaruffi's book
"A History of Silicon Valley"


(Copyright © 2010 Piero Scaruffi)

2. The Scouts (1925-40)

by Piero Scaruffi

Stanford and Electrical Engineering

A pivotal event in the history of the Bay Area's high-tech industry took place in 1925: Harris Ryan's student Frederick Terman (a ham radio fan who had also studied at the MIT in Boston with Vannevar Bush) joined Stanford University to work at Ryan's pioneering radio-communications laboratory. Terman was the son of a Stanford professor, so he represented a highly educated generation that had been raised in the Bay Area, a step forward from the immigrants of previous decades. Within two years the young apprentice had become a visionary on his own, fostering the new science at the border between wireless communications and vacuum-tube electronics. Terman didn't just perfect the art of radio engineering. The Bay Area offered precious few opportunities for employment, and during the Great Depression that started in 1929 virtually none. Terman encouraged his students to start their own businesses rather than wait for jobs to be offered to them. After all, Stanford had perfected a number of engineering technologies that could potentially be of general interest (one being the resistance-capacity oscillator built by Bill Hewlett in 1935). Many of those students were coming from the East Coast. He encouraged them to start businesses in the Bay Area. He viewed the university as an incubator of business plans. It was a step up from Harris Ryan's philosophy of encouraging cooperation between academia and industry.

By the time Ryan retired in 1931 and Cyril Elwell's Federal Telegraph Corporation (FTC) moved east, a vibrant industry was taking hold around the university. Several of them were spin-offs of the early radio companies. Stanford's student Ralph Heintz, a former radio amateur and employee of Earle Ennis, had started a business to install short-wave radios on ships and airplanes, and in 1926 founded Heintz & Kaufmann in San Francisco; but soon had to start manufacturing their own vacuum tubes to compete with RCA, for which they hired radio hobbyists Bill Eitel and Jack McCullough. Litton Engineering Laboratories had been founded in 1932 by ham-radio hobbyist, Stanford's student and FTC's manager Charles Litton at his parents' Redwood City home to manufacture tools for vacuum tube manufacturers (the same job he had at FTC). Litton invented the glass lathe that mechanized the process of making vacuum tubes. Eitel-McCullough (later Eimac) was formed in 1934 in San Bruno by Heintz's employees Bill Eitel and Jack McCullough to develop better vacuum tubes for the amateur or ham radio market (which would become the Armed Forces' favorite tubes during the war). Another FTC employee, German-born Gerhard Fisher invented the metal detector in 1928, and founded Fisher Research Laboratories in 1931 in his home's garage in Palo Alto. Many of these independents who scouted the market for radio communications and electronics had started out as ham radio amateurs, some of them at a very early age.

At the time, Stanford was a minor university, and not many scholars of international standing were willing to join its ranks. The world sent many Europeans (especially Jews) to the USA, but almost all to the universities of the East Coast. The head of the department of Mathematics at Stanford, Hans Blichfeldt, was the son of Danish paesants who immigrated to the USA. Admitted to Stanford despite his lack of formal education, he had to spend a year in Germany (Leipzig) in order to finish his dissertation: German universities had a far better reputation than Stanford, especially in mathematics. After he retired in 1938, he was succeeded by the Austro-Hungarian Jew Gabor Szego, who had fled Europe after the rising of Nazism and in 1940 convinced his friend Gyorgy Polya to join him. "George" Polya would go on to become the world's expert in heuristics, the rules of thumb that mathematicians use to find solutions, a topic on which he published an influential book, "How to solve it" (1945), originally written in German in Switzerland but rejected by European publishers. While all of these mathematicians were brilliant, none compared with the likes of John VonNeumann and Kurt Goedel who flocked to the East Coast universities (not to mention Albert Einstein).

Berkeley and Nuclear Engineering

Meanwhile, another industry came to the Bay Area because of just one creative scientist and his groundbreaking invention. U.C. Berkeley had opened LeConte Hall in 1924 to enlarge its Department of Physics and had gone on a hiring spree to fill it with young talents. In january 1931 one of these young physicists, Ernest Lawrence, hired in 1928 from Yale University, designed the first successful cyclotron (a particle accelerator). It was theoretically known that nuclear particles undergo transformations as they travel faster, but no lab had devised a machine yet that could accelerate particles to the point that this phenomenon would be observable. It was called "cyclotron" because its principle was to send particles in a loop through the same accelerating field, thus increasing their speed with each cycle. A former FTC executive, Leonard Fuller, had become the head of the Electrical Engineering Department at the University of California and had managed to obtain from FTC a 1000-kilowatt generator that Lawrence used to build his monster (actually quite small, just 66 centimeters in diameter). The Radiation Laboratory that Lawrence opened that year in august right halfway between LeConte Hall and the campus' bell tower (and later moved up the hill and renamed Lawrence Berkeley Lab) became one of the most celebrated research centers for atomic energy and would bring several of the world's most promising scientists to Berkeley. Another nuclear physicist, Robert Oppenheimer, had joined UC Berkeley in 1929, one year after Lawrence. He was important in shaping the intellectual mood of the campus with his passion for Eastern philosophy and his donations to socialist causes. During the 1930s several of his friends, relatives (including the woman he married in 1940) and students were affiliated with the Communist Party. Lawrence and Oppenheimer created in Berkeley a school of nuclear physicists that would eventually take the leadership away from Western Europe.

The relevance of atomic energy became more and more self-evident as the 1930s progressed. And not only for energy physics. John Lawrence, brother of Lawrence Berkeley Labs' founder, realized that it could be useful in another field too: in 1936 he founded the Donner Laboratory to conduct research in nuclear medicine. In 1939 Ernest Lawrence was awarded the Nobel Prize in Physics, the first time the prize came to the Bay Area. As important as Lawrence's engineering/scientific achievements was his concept of "big science": he created a large interdisciplinary team of engineers and scientists to focus on a practical project. It didn't come out just of good will, but also because of necessity: the construction of his increasingly bigger cyclotrons required an increasingly larger number of specialists in different disciplines. Lawrence's team would include four future Nobel Prize winners (Edwin McMillan, Luis Alvarez, Glenn Seaborg and Emilio Segre) as well as mechanical engineers such as William Brobeck, as well as the physicians who followed his brother John. Last but not least, he was skilled at obtaining donations from philanthropists, a difficult task in the middle of the Great Depression.

The Stanford counterpart to Lawrence was Swiss physicist Felix Bloch, who fled the Nazis in 1934. He and Oppenheimer organized a joint Berkeley-Stanford seminar on theoretical physics that brought European science to the West Coast. Bloch would become Stanford's first Nobel laureate. Meanwhile, young graduate Bill Hansen imported know-how about Lawrence's accelerator and set out to find a way to use high-frequency waves to accelerate electrons to high energy.

New Inputs

The vast activity in radio engineering convinced the Navy in 1933 to open a base between Palo Alto and San Jose called Naval Air Station Sunnyvale and later renamed Moffett Field. The contacts that had existed between the Bay Area's engineering companies and the military bureaucracy had found a first major outlet. In 1939 the USA government would up the ante by establishing the Ames Aeronautical Laboratory (renamed NASA Ames Research Center in 1958) at Moffett Field. The area to the north would develop into the town of Mountain View, and the area to the south would develop into Sunnyvale (originally the two were part of just one huge Mexican ranch).

The local tradition of radio engineering led an immigrant to settle in San Francisco to conduct his experiments: in 1927 Philo Farnsworth, a stereotypical amateur who had been discovered in Utah by San Francisco's venture capitalists Leslie Gorrell and George Everson, carried out the first all-electronic television broadcast (based on a theory that he had conceived as a teenager). His team included the young Russ Varian and Ralph Heintz. In 1931 the investors decided to cash in, and they sold the company to the Philadelphia Storage Battery Company (later renamed Philco), at the time the main maker of home radios in the USA and therefore in a much better position to mass-manufacture television sets. The power of RCA, however, was such that the Russian-born scientist Vladimir Zworkyn of their New Jersey laboratories was credited by the media with inventing television. Farnsworth's reputation was saved by his good San Francisco friend Donald Lippincott, formerly a Magnavox engineer and now an attorney, who (in 1930) defended the young inventor's intellectual property against RCA. Lippincott inaugurated a tradition of strong intellectual-property attorneys in the Bay Area that would be crucial to the development of the high-tech industry run by young inventors.

Culture and Society

Meanwhile, San Francisco was changing. It had become one of the financial capitals of the USA. In 1930 its Ferry Building was the second busiest transportation terminal in the world after Manhattan. The Bayshore Highway opened in 1932 to Palo Alto, and in 1937 reached San Jose (in 1964 it would be renamed US101, previously the number for El Camino Real). The rapidly spreading urban area required the building of the Oakland Bay Bridge and of the Golden Gate Bridge, completed respectively in 1936 and 1937. The latter was the longest bridge yet built in the world. Rich patrons allowed the city to open its own Museum of Art (1935) and to found the first professional ballet company in the USA (1933), the San Francisco Opera Ballet, whose protagonists were three brothers, William, Harold and Lew Christensen, who had cut their teeth in the vaudeville. William Christensen on Christmas Eve of 1944 premiered Pyotr Tchaikovsky's "Nutcracker" in the USA, turning that ballet into an enduring nation-wide Christmas tradition.

Capitalizing on the pioneers of the previous generation, the arts flourished. Both the Bohemian Club and William Randolph Hearst's newspaper encouraged the opening of galleries and museums. Among the new talents were the surrealist sculptor Adaline Kent, one of Ralph Stockpole's student at the California School of Fine Arts (established in 1871, now the San Francisco Art Institute), the Japanese-born painter Chiura Obata, famous for his 1927 paintings of the Sierra Nevada, who founded the East-West Art Society, and the bizarrely reclusive Achilles Rizzoli, who between 1935 to 1944 created intricate visionary architectural drawings in the "art noveaux" style. German-born abstract expressionist painter Hans Hofmann moved to U.C. Berkeley in 1930 and became the most influential teacher of the Bay Area, pushing for curricula that were heavy on modern art, a fact that turned the Bay Area into one of the friendliest regions for experimental artists.

The shift away from the school of social realism and towards the European avantgarde, begun with Hofmann, picked up speed in 1936 with Erle Loran, who, coming from France, promoted cubism in Berkeley.

The Bay Area was probably the only place in the world where the dominant fine art was photography (perhaps as a reaction to Los Angeles' moving-picture industry): after Ansel Adams, it had produced Dorothea Lange, famous for her work on the homeless of the Great Depression, Imogen Cunningham, famous for her industrial landscapes of the late 1920s, and James Weston, based in Carmel, famous for his still lifes and nudes of the late 1920s. Seven Bay Area-based photographers (including Adams, Cunningham, Weston and Weston's apprentices Willard Van Dyke and Sonya Noskowiak) founded Group f/64 in opposition to Alfred Stieglitz's pictorialism that had dominated photography in the first decades of the century. The group held their first (highly publicized) exhibition in 1932.

Another art that was relatively unique to San Francisco (as far as the USA goes) was wall painting, heavily influenced by Diego Rivera's work in Mexico. Rivera himself worked in San Francisco ("The Allegory of California" in the Stock Exchange, "The Making of a Fresco Showing the Building of a City" for the California School of Fine Arts, and "Pan American Unity" for the San Francisco City College). In 1936 muralist Edith Hamlin painted the Western-themed murals for the Mission High School.

Whereas the dominant art in Los Angeles generated colossal revenues and the arts on the East Coast created world-famous movements, San Francisco artists were mostly independents and eccentrics, just like the hobbyists of radio engineering. In 1935 art historian Grace Morley founded the San Francisco Museum of Art, the second museum in the US devoted exclusively to modern art. At the time it was not common at all for a woman to be in such a position of power. Under her leadership, the city began the shift from European modernism to US abstract art. For example, she purchased Jackson Pollock’s "Guardians of the Secret" (1943) when Pollock was not famous at all.

Again, San Francisco had its own idea of what "modern art" was: in 1946 Morley hired filmmaker Frank Stauffacher to start the "Art in Cinema" series, that inspired the California School of the Arts to assign a film course to Sidney Peterson. Peterson, who had been a painter and sculptor in France at the time of Dada, directed the manifesto of the San Francisco avantgarde with poet James Broughton: "The Potted Psalm" (1946).

In 1939 San Francisco celebrated its status as a vibrant center of innovation with a World's Fair (the "Golden Gate International Exposition") that was held on an artificial island in the middle of the bay, Treasure Island. Its highlight was Ralph Stackpole's 24-meter tall colossus "Pacifica" (dynamited in 1942 to make room for a naval base). In the years that it lasted 16 million visitors came to visit. In 1911 James Phelan, who had made his fortune during the Gold Rush as a trader and a banker and had then become the mayor of San Francisco and was soon to become senator of California, had a villa built in the south bay, precisely in the hills of Saratoga overlooking Santa Clara Valley. Phelan had bequeathed this villa (named "Montalvo" in honor of the 16th century spanish writer who coined the name "California") to the state so that it could be turned into a cultural center to support promising artists, writers, musicians and architects. It took a while, but in 1939 Villa Montalvo opened the doors to an artist residency program, the first one of the Western states.

The great musical innovator of the Bay Area (and perhaps of the whole nation) was Henry Cowell, a bisexual who spent four years in prison for that "crime", who in 1930 commissioned the Russian instrument builder Leon Theremin to create the first electronic rhythm machine (the "Rhythmicon") and who in 1935 taught the influential course "Music of the Peoples of the World" at UC San Francisco (already tested in 1933 at the New School for Social Research in New York) promoting atonality, non-Western modes, percussion ensembles and even chance composition; and who was probably the first classical composer to live a parallel life as a successful pop songwriter. In San Francisco his pupil Lou Harrison took advantage of the Bay Area's ethnic Babel and incorporated Chinese opera, Native-American folk, jazz and later the gamelan music of Indonesia into Western classical music. In New York his other pupil John Cage became famous by expanding on several of his master's intuitions.

Rich patrons also funded its legendary nightlife, a legacy of "Barbary Coast" that religious groups tried in vain to suppress. In 1936 Joe Finocchio opened the gay bar "Finocchio's" on Broadway. Those were the years of the Great Depression, which had started with the financial collapse of 1929. However, not a single bank failed in San Francisco. The Bay Area was certainly affected by the crisis, but it fared a lot better than the rest of California and of the USA. In fact, it was during the Great Depression that San Francisco leapfrogged to the higher ranks of metropolitan areas, despite remaining a relatively small city in itself. After growing rapidly since the earthquake (416,000 people in 1910), the population stabilized at 634,000 during the 1930s. Residential growth was now spreading to the north, east and south. At the time San Francisco was famous around the country for its ethnic diversity, but little else. At the end of the 1930s San Francisco was still a relatively lawless place. A popular joke was that the organized crime of Chicago and New York had no chance to infiltrate San Francisco because the entire city was just one big racket.

The south Bay was quietly emerging from its rural isolation. In 1938 a group of San Jose artists (mostly from San Jose State University) formed the San Jose Art League. In 1941 the painter and actress Marjorie Eaton founded an arts colony in the Palo Alto foothills after purchasing and renovating the historical ranch of Juana Briones.

Stanford and the Industry

Stanford University was becoming a major center of innovation, and its doctrine of encouraging entrepreneurship was beginning to pay off. In 1937 Fred Terman's students William Hewlett and David Packard started working on an audio-oscillator. In january 1939 they founded a company called Hewlett-Packard in a Palo Alto garage. Their first customer was Walt Disney: the Hollywood animation company purchased their oscillator in 1939 for the animation film "Fantasia". Also in 1937 Stanford University's professor William Hansen teamed up with two hobbyists who had a brilliant idea: brothers Sigurd Varian (an airplane pilot) and Russ Varian (a Stanford dropout who had roomed with Hansen, and a former engineer in Philo Farnsworth's television laboratory). They were refining an electronic device that worked as an amplifier for generating electromagnetic waves at higher frequencies than radio frequency (microwaves). Working with Hansen at Stanford they developed the klystron tube, the first generator of microwaves. This invention revolutionized and greatly improved radar technology (and, in fact, enabled airborne radars, Sigurd Varian's original motivation) on the eve of World War II. The Varian Brothers had developed the klystron in a Stanford lab, but Litton started producing it for them, and selling it even in Europe. The radar dish broadcasts pulses of microwaves, which bounce back whenever they hit an object in a time interval that reveals the distance of the object.

These pioneers knew each other well via Stanford: in 1938 Terman organized a research team around Russ Varian, with Charles Litton reporting to him and Dave Packard reporting to Litton.

In 1940 the rich Sperry Corporation of New York, which specialized in aircraft navigation equipment, basically "bought" Hansen and the klystron from Stanford, rewarding Stanford with a huge investment in the Electrical Engineering lab that allowed the lab to grow even more rapidly. Stanford already had a national reputation in high-voltage power transmission, and now had found the money to expand in electronics too. The Varian story was a further refinement of the FTC story: interaction between industry and university that leads to an advanced technology whose first customer is the government and its first application is warfare.

Another company to benefit from the invention of the radar was Eimac. Its tubes were ideal for the high-voltage high-frequency requirements of the military radar. Furthermore, after in 1938 FCC adopted a new frequency for television broadcast, VHF (88-108 MHz), Eimac had pretty much the only tubes that worked well at such a high frequency. Eventually, even GE and RCA had to start reselling Eimac's tubes.

Progress in Electronic Computation

This section has moved to A Brief History of Electrical Technology

High-tech Construction

The New Deal and World War II sent huge government investments to the West Coast. Henry Kaiser, who had paved roads in Cuba, was one of the contractors for the colossal concrete Hoover Dam (inaugurated in 1936), then built the first integrated steel mill in the Pacific states (at Fontana, near Los Angeles, in 1942). During World War II his shipyards built thousands of cargo ships (Richmond alone in the north Bay built 727) employing the latest technology (inherited from the prefabrication techniques of dam building) that allowed him to shorten the shipbuilding process from one year to 48 days. Those shipyards alone caused a population boom. Kaiser was getting immensely rich but his conglomerate was actually known for treating the workers humanely. In the 1940s Kaiser's corporate welfare programs was among the most generous in the USA. After two more giant dams (the Bonneville and Grand Coulee Dams), Kaiser then ventured into aluminum, steel, real estate, broadcasting and many other businesses.

The Hoover Dam also created the fortune of another Bay Area construction and engineering company, the one that would become number one in the country. Started by a railroad worker, Warren Bechtel, it remained (and still remains) privately held within the family. Bechtel also built San Francisco's Bay Bridge (1936). In 1937 John McCone created Bechtel-McCone-Parsons (BMP) to build oil refineries, starting with one in Richmond. In 1940 Bechtel began expanding abroad with a project in Venezuala. In 1942 it built Marin City, north of the Golden Gate Bridge, for guest worker housing during the wartime boom of shipyards. It then ventured into power plants and chemical plants all over the world.

The Aerospace Industry in Los Angeles

The Bay Area was also home to early aviation (after all, John Joseph Montgomery of Santa Clara College had built one of the earliest airplanes in the 1880s, two decades before the Wright brothers), although not much came out of it: Allan Loughead started out in San Francisco with his Alco Hydro-Aeroplane Company in 1912 before founding Lockheed in Los Angeles a decade later.

The history of aviation in the Los Angeles area well illustrates how California developed via the interaction between defense spending, university and industry. Aviation was, after all, the first high-tech industry to spread globally from California.

In 1921 Donald Douglas founded an aircraft-building company in Los Angeles to commercialize his "Cloudster", the first airplane to lift a load exceeding its own weight, and in 1925 Claude Ryan founded a company in San Diego to build the Ryan M1 (Charles Lindbergh's "Spirit of St Luis" that flew from New York to Paris in 1927 was a Ryan plane). In 1926 Allan Loughead, Jack Northrop and Kenneth Jay founded yet another company to build aircrafts, Lockheed. Both Douglas and Lockheed soon came to rely on lucrative contracts from the military (e.g., the World Cruisers of 1924, the T2D-1 torpedo bomber of 1927, the flying boat Sinbad of 1930).

Using a donation by philanthropist Daniel Guggenheim, the California Institute of Technology (formerly Throop Polytechnic Institute) opened the Guggenheim Aeronautical Laboratory (GALCIT) in 1928. The lab featured a state-of-the-art wind tunnel and teachers such as Harry Bateman (a British mathematician), Todor Karman (a Hungarian physicist) and Douglas' chief engineer Arthur Raymond. This group pioneered the collaboration among university research, industrial labs and government agencies that would become common in the Bay Area. That collaboration changed a world that was still dominated by railroads.

Meanwhile an important decision was taken by the government. The Post Office had launched air mail in 1918 using old British planes built by Geoffrey de Havilland at the Aircraft Manufacturing Company (Airco), then the largest aircraft manufacturer in the world. Transcontinental air mail had begun in 1924 but the complexity of manning the equipment required for safe long-distance air travel had prompted the government to subcontract mail delivery to commercial airlines. A scandal led in 1934 to a law ordering the dissolution of holding companies mixing airlines and aircraft manufacturers, thus boosting competition in the field.

One year after its DC-1 had set a new record for coast-to-coast flight (11 hours from Los Angeles to New York in april 1935), Douglas struck gold with the 21-passenger DC3 (first delivered to American Airlines in june 1936) that did for air travel what the Ford Model T did for car travel. Its transcontinental record, meanwhile, was beaten repeatedly by Howard Hughes' H-1 Racer planes, down to 7 hours in 1937. By 1939 Southern California was home to most of the aircraft industry of the USA and Douglas airplanes were carrying more than 90% of civilian air passengers.

Meanwhile at GALCIT the self-taught Jack Parsons experimented with solid-fuel rockets (the JATO of 1942), Karman's student Frank Malina with liquid fuel (the WAC Corporal of 1945, built jointly by Douglas and GALCIT), and the Chinese-born Qian Xuesen, aka Hsue-shen Tsien, even speculated about nuclear-powered rockets. In 1942 these university researchers (Karman, Malina, Parsons) founded a company, Aerojet Engineering, thus pioneering the model of the start-up. In 1944 Karman, Parsons and Malina founded the Jet Propulsion Laboratory (JPL) to work on rockets, ostensibly a joint project between the army and the university, and in 1945 Karman was drafted by the military to start Project RAND at Douglas, the prototype of the "think tank", later turned into the self-standing RAND Corporation (1948).

World War II made the fortune of several other aircraft builders: Northrop, who founded his own company in 1939 in Los Angeles, Jim McDonnell, who established his firm in St Louis (Missouri) also in 1939, and, of course, Boeing (founded in 1916 in Seattle by William Boeing, that reached its wartime apogee with the B-29 of 1944, the first intercontinental bomber). In the Los Angeles area the other big ones (besides Douglas, Lockheed and Northrop) were Vultee (originally founded by Jerry Vultee and Vance Breese as the Airplane Development Corporation in 1932 to sell six-passenger V-1 passenger planes to American Airlines) and Dutch Kindelberger's North American Aviation, another huge beneficiary of military contracts. Lockheed became a darling of the Air Force when its Lockheed Advanced Development Projects (LADP), aka "Skunk Works", located on the northern side of the San Gabriel mountains, established in late 1943 under Kelly Johnson, designed the first jet fighter of the USA, the P-80 Shooting Star, later followed by other strategic projects like the spy plane U-2 (1957) and the F-104 Starfighter (1958). By 1943 the industry had already built 100,000 warplanes. By the end of the war industrial production in the Los Angeles area was second only to the Detroit area. Uniquely in history, Los Angeles had been industrialized in a brief period of time (the war) and largely by government intervention, creating a third massive industrial region (after the Northeast and the Midwest). In other words, World War II had the side effect of revolutionizing the economy of California and of integrating California with the national industrial complex. World War II accelerated western migration, California's population growing from 7 million in 1940 to 10.5 in 1950, until in 1962 California passed New York state as became the most populous state. If California had been one of the three top beneficiaries of military spending during the World War, it would become the number one in 1958 during the Cold War.

Weird people already abounded in those days. For example, architect Julia Morgan was designing a castle on the coast for newspaper magnate William Randolph Hearst (eventually completed in 1947). But rocket science went beyond the extravagant. The esoteric cult Ordo Templi Orientis, founded in Germany by Theodor Reuss, had spread to Britain, where it fell under the sell of magician Aleister Crowley, who had turned it into his own personal cult, known as "Thelema" from the manifesto published by Crowley as "The Book of the Law" (1904). By the end of World War II only the California chapter survived, surprisingly led by one of the most distinguished rocket scientists, Jack Parsons.


(Copyright © 2010 Piero Scaruffi)

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