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In 1919, Siemens faced major challenges. In the aftermath of World War I, the company had to readjust to the peacetime economy and reestablish itself on the global market.
The war and the terms of the Treaty of Versailles had a major impact on Siemens’ development. The company lost almost 40 percent of its capital, including almost all its international patent rights. The situation was further exacerbated by the loss of most of the company’s foreign subsidiaries and sales offices. Siemens’ management responded to these challenges by implementing internal restructuring measures and introducing mechanized mass production. Many manufacturing operations and company processes were successfully streamlined to enhance their efficiency.
Under the leadership of Carl Friedrich von Siemens, the Head of the House of Siemens after 1918, the company, its legally separate subsidiaries and its affiliated companies limited their activities to the field of electrical engineering. At the same time, however, they aimed to cover all the field’s applications. It was largely due to this strategy of unity and diversity that Siemens was once again one of the world’s five leading electrical engineering companies by the mid-1920s.
To merge their lighting activities in the incandescent lamp business, AEG, Siemens & Halske and the Deutsche Gasglühlicht AG form the OSRAM GmbH KG on July 1, 1919. Siemens held a 40-percent stake in the joint venture. Faced with the loss of international markets as a result of the war and stagnating technological development, Germany’s leading incandescent lamp manufacturers had concluded that cost-efficient production – and thus increased competitiveness – could be achieved only by joining forces.
The new company’s efficiency was greatly enhanced by rigorously streamlining manufacturing processes, combining individual production steps and making increased use of machinery.
In 1924, OSRAM signed an international incandescent lamp agreement that gave its signatories extensive specific rights and, in effect, divided up the global incandescent lamp market. OSRAM also established sales offices worldwide. As a result, the company was one of world’s largest lamp manufacturers in the 1930s, with a market share of 70 percent in Germany alone.
In 1881, Germany’s first telephone exchange went into service in Berlin. In the years that followed, the telephone’s importance as a means of communication increased continuously. By 1900, not only local networks but also the first long-distance connections were in operation. The range of these connections was limited, however, to about 35 kilometers. To extend it, the company redoubled its efforts to improve long-distance telephony. Leveraging the insights of physicist Michael Pupin, Siemens researchers substantially improved transmission range and quality at the beginning of the 20th century.
Initially, almost all telephone connections in Germany were overhead lines – and therefore easily damaged. In the winter of 1909, heavy storms and sleet shut down the telephone system in the northern part of the country for weeks. As a result, the Reichspostamt – the German Post Office, which operated the country’s telephone system – decided to replace its network of overhead lines with pupinized cables that ran underground. Inductors incorporated into the telephone lines at regular intervals improved speech intelligibility considerably.
In 1912, Siemens & Halske began laying the Rhineland Cable, a pupinized line linking the east German state of Brandenburg with the industrial cities of the Rhineland via Berlin. During the 1920s, Siemens was involved in further expanding the German telephone system and linking it with those of other countries. In 1937, 1.1. billion telephone calls were placed within the European telephone network.
In the aftermath of World War I, Siemens lost almost all its subsidiaries and affiliated companies. This made the company all the more determined – in the interest of its long-term competitiveness – to regain access to the international markets. To systematically tap the East-Asian market, Siemens-Schuckertwerke established a joint venture with Furukawa of Japan in August 1923. Headquartered in Kawasaki, the new company operated under the name Fusi Denki Seizo KK. Siemens held a 30-percent stake in the joint venture.
In the early 1920s, Germany’s electrical engineering industry lagged far behind that of other countries. To catch up with international developments, Siemens’ management reactivated old business connections in the U.S. At the time, companies such as the Westinghouse Electric Company were global leaders in power engineering. In October 1924, following lengthy negotiations, Sieme