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)

3. The Moles (1941-48)

by Piero Scaruffi

The Bay Area as a Strategic Weapon

The Japanese attack on Pearl Harbor that dragged the USA into World War II had an enormous impact on the scientists of the Bay Area, since the Bay Area boasted the most advanced radio technology in the nation. In 1940 the US government sponsored a new laboratory at the MIT, the Radiation Laboratory (or "Rad Lab"), for the purpose of developing defense systems. The MIT Rad Lab became the birthplace of cybernetics thanks to the work of Norbert Wiener and others. The Rad Lab (as well as its successor, the Research Laboratory of Electronics) applied Ernest Lawrence's concept of "big science": large interdisciplinary teams working together to solve mission-critical problems. In june 1941 the USA government established a new agency (Office of Scientific Research and Development) to coordinate nation-wide scientific research for the USA military, and put Bush in charge of it. Traditionally the USA government (like every other government) had relied on top-secret military labs (or their private contractors) to develop military technology. Bush, instead, directed funding to and influenced the direction of research programs at universities. Bush's approach created a new template for interaction between science and government, as well as between science and war.

Fred Terman had graduated from the MIT in 1924 with a thesis supervised by Vannevar Bush, and the Rad Lab summoned Terman from Stanford to direct the Radio Research Laboratory, that in 1942 was being relocated to Harvard University. Terman was basically in charge of electronic warfare, a new kind of warfare that was fought in labs instead of tanks, ships or planes.

Berkeley was no less strategic, thanks to its know-how in nuclear physics. In 1942 the USA government launched the "Manhattan Project" to build a nuclear bomb, and appointed Berkeley's professor Robert Oppenheimer in charge of it. Oppenheimer applied Lawrence's concept of "big science" and assembled a large team of physicists to design the weapon. The project soon exceeded the capacity of the Berkeley campus and was moved to Los Alamos in New Mexico. It was Lawrence himself who designed an electromagnetic process to separate the explosive U-235 isotope from the U-238 isotope of uranium that led to the building of the facility at Oak Ridge in Tennessee. In parallel Edwin McMillan and Glenn Seaborg at the Radiation Lab in Berkeley used the cyclotron to discover a new element, plutonium, and immediately realized that it was even better than U-235 at sustaining an explosive chain reaction. The government rushed to build another plant, this time to produce plutonium, at Hanford in the state of Washington. The "Trinity" bomb that was detonated in july 1945 in the desert of New Mexico used plutonium. The bomb dropped on Hiroshima one month later used U-235, the one dropped on Nagasaki used plutonium.

Business was mainly affected by World War II in terms of providing high-tech components to the booming defense industry. This was a colossal business that turned several small companies into giants.

There were also cases in which companies benefited from the war in terms of learning new technologies. The Dalmo Manufacturing Company, based in San Carlos since 1944, had evolved from the shop that Tim Moseley had opened in 1921 in San Francisco to manufacture simple electrical appliances. During World War II it developed the first airborne radar antenna, which was crucial for the air force to win the war. The invention was largely the work of the Russian-born engineer Alexander Poniatoff, who had joined the company in 1934. While Moseley's company (now a joint venture with colossus Westinghouse renamed Dalmo-Victor and based in nearby Belmont) was becoming a major defense contractor, in 1944 Mosley himself invested in Alexander Poniatoff's new company Ampex, located in San Carlos, to manufacture electrical parts for radars that were hard to find. Poniatoff, however, moved into a new field, the tape recorder, a novelty that a USA soldier, Jack Mullin, had brought back from occupied Germany. It was one of Germany's fields of excellence: the magnetic tape had been invented by Fritz Pfleumer in 1927, and the first tape recorder (later dubbed Magnetophon) had been introduced by AEG in 1935 (using tape made by IG Farben, also manufacturer of the lethal gas used in Nazi extermination camps) and perfected into a high-fidelity system in 1941. In 1947 Ampex delivered its own tape recorder, which had been requested by pop star Bing Crosby and soon became a favorite among pop and movie stars.

The First Computers

This section has moved to A Brief History of Electrical Technology

The Bay Area and the Cold War

The Bay Area finally got involved in computers via a newly created offshoot of Stanford University. In 1946 Stanford spun off the Stanford Research Institute (SRI) with the purpose of creating an industrial research center that would leverage Stanford's high-tech know-how for industrial products. After six months the SRI moved off campus (to Menlo Park, which had swollen after the government had run a large military hospital there between 1943 and 1946) and began to relax its ties with the university. One of its very first projects was to improve the ENIAC: SRI replaced some key components with the latest electronic novelties and obtained a smaller machine. The original ENIAC was a 30-ton monster that covered 167 square meters of floor space and contained 17,468 vacuum tubes, 70,000 resistors, 10,000 capacitors and 1,500 relays. SRI pioneered a new business model: the first consulting firm based in an academic world but working for the military and for large corporations.

At the same time Fred Terman returned to Stanford University as the dean of the engineering school, and used his connections with the USA military (notably the recently instituted Office of Naval Research) to found and fund a new Electronics Research Lab (ERL). The Korean War (1950) brought another huge infusion of money from the Office of Naval Research to carry out research in electronics, which Terman used to open an Applied Electronics Laboratory (AEL). After the Soviet launch of the first artificial satellite, the Sputnik, the USA government rapidly increased funding for research, and the beneficiaries were mainly the MIT on the East Coast and Stanford University on the West Coast.

After the invention of the klystron, Bill Hansen had continued his research into accelerating electrons and in 1947 had inaugurated his first linear accelerator.

His former assistants, the Varian brothers, instead opened their own business in San Carlos in april 1948 to work on radio, radar and television. The ties with Stanford were still strong: Ed Ginzton, an alumnus of the klystron project, was both a director at Varian Associates and a Stanford professor. The Varian brothers chose San Carlos because that city north of Palo Alto was becoming an electronic industrial center. San Carlos was a mini-urban experiment: it had been built ex-novo between 1917 and 1925 just north of Redwood City by the Mercantile Trust Company following the arrival of the Southern Pacific railway. San Carlos was still a very tiny village in 1930, but then Charles Litton (1930s), Dalmo (1944) and Eitel-McCullough (1945) opened offices there, and around them other companies were born serving the electronic industry.

The San Francisco Renaissance and the Economic Boom

It was during World War II that the foundations for the "San Francisco Renaissance" were laid down.

In 1941 Clay Spohn established a Museum of Unknown and Little Known Objects at the California School of Fine Arts that was basically a tribute to the Dada movement and that introduced the nonconformist attitude that would be called "funk". The faculty of the California School of Fine Arts now included, besides Ansel Adams, the painters David Park and Elmer Bischoff, the two painters who epitomized the Bay Area's figurative school. However, in 1945 Clyfford Still began commuting between New York and the California School of Fine Arts (he was a permanent teacher only in 1949), and Still became instrumental in hijacking San Francisco's art scene towards New York's abstract expressionism. Clyfford Still’s shocking exhibition at the Palace of the Legion of Honor in July 1947 (of large brutal paintings) marked the death of the "school of Paris" and established the California School of Fine Arts as the counterpart to the “Berkeley school.” In April 1947 Clyfford Still announced that his paintings would no longer be exhibited in art galleries and in April 1949 he opened the Metart Galleries at 527 Bush St (at the border with Chinatown) for himself and twelve of his students (like Jesus and his twelve apostles). Mark Rothko taught at the California School of Fine Arts for a few weeks in the summer of 1947 and then again in the summer of 1949.

San Francisco had lacked a literary scene that could match the visual arts. The poets Kenneth Rexroth and Madeline Gleason started it. In 1947 Gleason organized the first festival of Modern Poetry at the Lucien Labaudt Gallery. In 1954 Gleason founded the Poetry Center at San Francisco State University and, in april 1947 organized the first "Festival of Modern Poetry". Rexroth and Gleason helped Berkeley poet Robert Duncan, one of the first openly gay intellectuals who wrote "The Homosexual in Society" in 1944. Rexroth also befriended poets William Everson, a former Catholic monk, Muriel Rukeyser, a Jewish feminist, and Philip Lamantia. In the 1940s San Francisco also witnessed a dramatic increase in black immigrants. Most of them settled around Fillmore Street, the "Harlem of the West". That street became the epicenter of nightlife and of live music.

The end of the war was unleashing the industrial potential of the USA. Industrial production rose by almost 50% in the ten years after the war. The civilian economy, busy engineering the lifestyle of the winners, was an avid consumer of new appliances. The defense economy, busy countering the moves of the Soviet Union in the "Cold War", was an avid consumer of new weapons. In 1946 a new entity joined the USA government in funding technological innovation: the venture capital firms. The three big firms that debuted in 1946 were: Boston's American Research and Development Corporation (ARD) by the French-born former Harvard Business School's dean Georges Doriot with assistance from MIT's president Karl Compton and Federal Reserve Bank of Boston's president Ralph Flanders, which was the first publicly owned venture-capital firm (that would fund spin-offs of MIT and Harvard); New York's J.H. Whitney & Company by Jock Whitney (his partner Benno Schmidt coined the term "venture capital"); and New York's Rockefeller Brothers by Laurance Rockefeller (later renamed Venrock). They were often attracted by the potential of commercializing technologies invented during the war. The exuberance of private investors spread to California, where at least two such ventures were incorporated in 1946: Industrial Capital, founded by San Francisco's stock broker and "angel" investor Edward Heller, and Pacific Coast Enterprise.

The USA was beginning one of the longest and fastest periods of economic expansion in history. The population of California had been less that 100 thousand people in 1850 and 1.5 million people in 1900. During the war it had risen from seven million to over nine million in just four years.

(Copyright © 2010 Piero Scaruffi)

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