HISTORY OF SIEMENS & HALSKE

It was during his time with the military that Werner first engaged in business.  His brother Wilhelm had filed a patent in England for a method of gold electroplating.  The sale of the rights provided the brothers with a sound income for a number of years and allowed Werner to engage in his own research, parallel to his service with the army.

The main focus of his interest was telegraphy, a field that was as yet relatively undeveloped, but Werner nevertheless recognized that it would become a "technology of the future." He built a pointer telegraph, an apparatus that proved far superior to similar devices that had been constructed to date.  Convinced that his telegraph had the potential to become a success, Werner decided to go into business: Together with a highly skilled mechanical engineer, Johann Georg Halske, he set up a company, Telegraphen-Bau-Anstalt von Siemens & Halske, in Berlin, which went into business in October 1847.

Inspired by a number of successes that began in 1848 with the construction of a telegraph line between Berlin and Frankfurt/Main, the small company grew so quickly that it soon demanded Werner's undivided attention, prompting him to take his leave of the army in 1849.  The entrepreneurial decisions he then made proved pivotal.  Since the only contracts for major telegraph lines were likely to come from government offices in those days, it was essential that the company establish a presence abroad.  This gave rise to the first branch offices outside Prussia - one in London in 1850 and another in St. Petersburg five years later.  The two foreign branches were managed by Werner's brothers Wilhelm and Carl, whom he had involved in the business early on, having taken over the role of head of the family following the untimely death of his parents.  Just eight years after starting up, Siemens & Halske had become an international company.

After the first few years of success in business, the scientist and engineer in Werner von Siemens once again came to the fore.  In 1866 he achieved his greatest accomplishment: the discovery of the dynamo-electric principle and the invention of a "dynamo-machine", its first practical application.   His invention marked the dawn of the age of electrical engineering.  (The German term for this field, "Elektrotechnik", was initially coined by Werner; it had originally been referred to as the "applied theory of electricity".)  Werner was fully aware of the importance of his discovery: "Engineering now has the means to produce electric currents of unlimited strength  cheaply and easily.  This will be of immense significance in many areas within the field as a whole".  And it was with their habitual entrepreneurial vigour that Werner and his company, Siemens & Halske, set about specializing in the areas in question ? drives, lighting and power engineering.  This was the catalyst that ultimately caused Siemens & Halske to develop into a large-scale enterprise, and by 1890, when Werner retired from the company management, its workforce had grown in number to 5,500.

Werner von Siemens, who was raised to the nobility in 1888, also made his mark as a pioneer in a non-technical field ? social policy.  His view that motivated employees were the basis for the company's success still holds true today: "It soon became clear to me that the steadily expanding firm could only be made to develop satisfactorily if one could further its interests by ensuring that all employees work together in a cheerful and efficient manner." He introduced social benefits that were frequently ahead of their time, including a company pension scheme in 1872 (many years before Bismarck introduced national insurance legislation), a nine-hour working day in the same year (when 10-12 hours were the rule else-where), and a profit-sharing scheme, the so-called "stocktaking bonus", launched in 1866.

Werner von Siemens died in Berlin on December 6, 1892.  During what had been a full and active life, his interests has also extended to public affairs.  As a member of the German Progress Party he had held a seat in the Prussian parliament from 1862 to 1866; in 1879 he had co-founded the Electrotechnical Society in Berlin; and he had set up a foundation to support the Physical-Technical Institute of the Reich, established in 1887. 

The name of Johann Georg Siemens has faded into almost total obscurity, but had it not been for him, Siemens, now a major international company, might never even have existed.  He was Werner von Siemens' cousin, and it was he who provided the start-up capital of 6,842 thalers needed to launch "Telegraphen-Bau-Anstalt von Siemens & Halske".  His was the third signature on the articles of association of October 1, 1847, alongside those of Werner and his partner Johann Georg Halske, the company's other two "founding fathers".  The funds Johann Georg Siemens provided were well invested: The small ten-man operation soon began to thrive.  In 1852, just five years after the company was formed, its workforce was 90 strong and its domestic sales exceeded 500,000 marks.  Foreign markets were highly important too, even in those days, and export sales ran to almost 450,000 marks.  Werner rapidly began to internationalize the company.  Foreign branches were set up, first in England (1850), in Russia (1855), and then in Austria (1858).  In those days, the workforce in foreign countries exceeded the number of employees in Prussia.  Werner showed a keen eye for developing markets and a distinct lack of trepidation about committing himself to business ventures "at the far end of the world." The start of operations in Japan, for example, dates back to the early 1860s, and the company installed China's first electric generator, in Shanghai in 1879.  In 1890, almost half of Siemens' 5,500 employees worked in foreign countries; nine factories generated foreign sales worth 6.6 million marks and domestic sales had risen to 23 million marks.  By 1914, Siemens had formed subsidiaries in ten countries and had set up 168 branch offices in a further 49.

In 1897, the family enterprise re-formed as a stock corporation under the name Siemens & Halske AG, a move designed to procure a broader capital base for the company and enable it compete more effectively with a number of strong new rivals, including AEG.  Power engineering, which had advanced alongside communications engineering to become the second main pillar of the company's operations, brought sustained growth until World War I.  One key event that served to further this development occurred in 1903, when Siemens merged its power engineering activities with the company Elektrizit'ts-AG vorm.  Schuckert & Co., based in Nuremberg, to form Siemens-Schuckertwerke GmbH (which later became a stock corporation in 1927).  Likewise in 1903, Siemens and AEG co-founded Telefunken, which rapidly took the lead in radio and, later, television.  In 1913, Siemens achieved sales totalling 400 million marks, and its workforce numbered 63,000.

In 1919, Carl Friedrich, Werner von Siemens' third son followed in the footsteps of his brothers Arnold (1904-1918) and Wilhelm (1918-1919) as head of the company and remained at its helm until his death in 1941, more than two decades in all.  He successfully rebuilt the enterprise, which had lost virtually all of its foreign assets as a result of World War I.  Carl Friedrich established a key principle: to concentrate company operations solely on electrical engineering, but at the same to cover "the full breadth electrical engineering." He re-oriented the company accordingly, withdrawing from "non-native" areas of business, such as automobile manufacture, and building up other fields instead, like medical engineering.  The latter developed strongly following the 1925 buy-out of Reiniger, Gebbert & Schall, a specialist enterprise for electromedical equipment, based in Erlangen, which was later integrated in 1932 to form Siemens-Reiniger-Werke AG.

The operating results reflect the economic and political instability of the day: In 1923 the Siemens workforce rose above the 100,000 mark for the first time; in 1929 it increased to 138,000.  Then, during the Great Depression, 60,000 workers had to be laid off; but by 1939 the payroll had risen to 183,000.  Sales fluctuated similarly, rising from 315 million marks in 1924 to 820 million marks in 1929, before dropping to 330 million in 1933.  In 1939 the company first posted sales in excess of one billion marks.  At the time, Siemens was the world's largest electrical company.

During World War II the company was made to conform to the requirements of the National Socialist wartime economy and was compelled to increase production of goods important to the war effort.  The use of forced labour during this era constitutes a dark chapter in Siemens' history.

By the time the war was over, most of the company's plants had either been destroyed or dismantled and roughly 80% of its assets were lost.  Siemens began to rebuild at two main locations in the West: Erlangen (Siemens-Schuckertwerke) and Munich (Siemens & Halske).  At the end of 1945, Siemens' workforce totalled 38,000.  Under the supervision of Hermann (1941-56), Ernst (1956-71) and then Peter von Siemens (1971-81), the company gradually assumed the form it has today.  The single most important step in this respect was the merging of Siemens & Halske AG, Siemens-Schuckertwerke AG and Siemens-Reiniger-Werke AG to form "Siemens AG, Berlin und Munchen" in 1966.  At the time, Siemens was Germany's biggest employer by a wide margin.  Its workforce continued to grow, passing the 200,000 mark in 1960 and rising to 300,000 in 1972.  Sales increased from DM1 billion in 1951 to more than DM5 billion in 1962, and DM11 billion in 1970.

Earlier, in 1957, Siemens had concentrated its consumer-goods manufacturing in Siemens-Electrogerte AG (which re-formed as a limited-liability company in 1966).  Household appliances passed to the joint venture Bosch-Siemens-Hausgerte GmbH in 1967.  In 1969, Siemens and AEG formed Kraftwerk Union (KWU), which advanced rapidly to become the leading company in the energy sector.  In 1977, KWU passed fully into Siemens' hands and has been part of the Power Generation Group since 1987.  In 1978, Siemens obtained the full complement of shares in Osram GmbH, a company it had originally co-founded in 1919 with AEG and Auer Gesellschaft.

Source : Siemens official website

A History of Siemens & Halske
by Bob Estreich

Ernst Werner Siemens (1816 - 1892) was an inventor in the right place at the right time. He was brought up in an increasingly technical world, but his family was not rich so he received his technical training from the Prussian Army. He served as an artillery officer. Following his participation as a second in a duel, he served a short time in prison. Here he directed his spare time to designing a process for electroplating gold and silver onto other metals. On his release from the army, he patented this invention. It proved fairly successful and brought in enough income for him to pursue his inventing talent. The electric telegraph caught his attention. Telegraphy was still based on the Morse code and needed highly trained operators. Siemens designed a mechanical system that moved a pointer to indicate the letter being received. This allowed a less trained operator to be used, who simply read off the letters and wrote them down. In October 1847 he established Telegraphen-Bauenstalt von Siemens & Halske to repair telegraphs and to manufacture the pointer telegraph. Johann Georg Halske was a competent mechanic whom Siemens had met at the Association of Physics. Both men were of poor origins, so the capital for the business came from Siemens' cousin, Johann Siemens, who must have come to be very satisfied with his investment. The pointer telegraph was a success and the business prospered. Although Siemens was a proficient inventor, his best move was to let his more business-minded brothers run the business while he continued to invent.

The company moved into other areas and started to develop into heavier engineering. It branched out into cable manufacture. Siemens did much work to use gutta-percha (an early rubber-like substance) to coat cables. The company built Germany's first coal-fired power station in 1885. Interestingly, over 100 years later it was still in the same business. It built three generator turbines and other equipment for Australia's Loy Yang power station complex, and in 1999 it built the Kogan Creek power station in Queensland. Another area of worldwide interest was the invention and production of electric motors now that reliable high voltage power was becoming available. Werner Siemens designed a practical electric motor which he was able to demonstrate in 1879 at an industrial fair in Berlin. It was powerful enough to pull a small train at seven km/hour. It also marked the start of a new industry in which Siemens & Halske prospered - electric trains and traction. The role of Johann Halske has always been rather underplayed in these inventions, but he was the man who put Siemens' ideas into practice. He believed in rugged, reliable construction, and this tradition carried on through the later years and products.

Meanwhile, another new invention was creating interest. In 1877 Mr Bell was honeymooning in Europe and demonstrating his new Telephone. Although he did not visit Germany, two of his telephones were taken to Germany by Henry Fischer, chief of the London Telegraph Office. He showed them to Heinrich von Stephan, who was the German Imperial Telegraph Administrator. Von Stephan was a very forward-thinking man who was currently having problems keeping his telegraph system up to the demand. He saw in the telephone a simple way to extend the telegraph system, without the need to employ more trained operators. He quickly ordered trials and evaluation of the Telephone. They were successful, and their suitability for his purpose became evident when he was able to call from his office in Berlin to a telegraph office in Potsdam within a week. It is interesting to note that in a letter to Bismarck he gave initial credit for the invention to Philipp Reis, a rather unappreciated pioneer of the telephone. He also correctly stated that Reis was able to transmit musical tones, but it was left to the Americans (Bell, Edison and Grey) to make the Telephone a practical instrument for speech. Von Stephan was a remarkably well-informed man for his time. He asked German manufacturers to produce telephones for him. Siemens & Halske saw it as a logical development of their telegraph manufacturing. The company responded and produced its first telephones in November 1877, and achieved production of 200 per day. Mix and Genest followed two years later. Siemens improved Bell's phone by using a horseshoe-shaped magnet instead of Bell's single bar magnet, an idea which Bell later copied. He added a whistle or a hand-cranked rattle for signalling. His telephone was a major improvement over Bell's - it could carry a signal for up to 75 kilometres.

Von Stephan was able to equip 9,789 Post Offices with the telephone by 1900, and was able to open the system to public subscribers in Berlin in 1881, using a Siemens & Halske-built exchange. By 1891 the telephone was so popular that a coinbox had to be added to some telephones to make the system available to the general public. This is an interesting contrast to the British system, where the Post Office first tried to ignore the telephone, then tried to take control by licensing it, then finally took it over by buyout.

The patent issue did not arise, as Bell had not patented the telephone in Germany. Patent law was fairly new (the first German patents had only been issued in July 1877) and international patent law was still a long way in the future. Werner Siemens therefore patented the telephone in Germany on 14 December 1877.

Bell found out about this and wrote to Siemens & Halske: "Gentlemen, it is rumoured that you are manufacturing and selling telephones in Germany. As the inventor of the articulating Telephone I write to ascertain the facts of the matter". Siemens replied "As you have failed to patent your lovely invention in Germany, we will continue production. But please inform us in which countries you have a patent so we can refuse orders from those countries. We have already declined orders from England, Austria and Belgium."

It was this same lack of an international patent system that allowed Lars Ericsson to develop his telephones in Sweden.

The telephones steadily improved as inventors sorted out the problems of the new invention. By the early 1900s Germany had many other builders of phones but Siemens & Halske, with its early start, was able to keep its place as a market leader. A distinctively German style of telephone was developing. The mechanical parts were compact and rugged, the cases plain or with only a basic attempt at decoration. Some cases had a slightly similar style to the popular Ericsson phones but were never as flamboyant or elaborately finished.

Although Johann Halske had retired from the firm in the late 1860s, the company retained his name. Werner Siemens was honoured by a doctorate from the University of Berlin in 1860, and he was made a member of the Royal Prussian Academy of Sciences in 1873. He was knighted in 1886, and was elevated to the nobility by Emperor Friedrich III in 1888. This allowed him to add "von" to his name. By the time of his death in 1892 Werner von Siemens was a wealthy, respected man.

Siemens & Halske was now a major producer of heavy industrial equipment, and telephones were only a small part of their range. A new firm, Siemens Schuckert Werke, was established in 1903 to handle their electric railway manufacturing business. It later developed into their major heavy electrical producer. The highly competitive and nationalistic European market that developed in the late 1800s meant that Siemens & Halske had to establish overseas branches to market their products and continue their growth. The overseas sales were quite successful. S&H supplied its full range to newly-industrialising Japan, for instance, in the early 1900s. Sales were so successful that a local joint venture company was established, Siemens-Schuckert Denki Kabushiki Kaisha. This company continued through two World Wars and in 1967 was renamed Fujitsu. In this respect S&H were one of the few firms to invest in foreign countries rather than just reselling into their markets.

Their refinements of Pupin's loading coil and their previous experience in cable manufacturing allowed them to lead the world in long-distance cables, and submarine cables had also become a specialty area. William (Wilhelm) Siemens in Britain had even designed a cable-laying ship, the "Faraday", specifically for submarine cables. They laid Australia's second underwater cable between the mainland and Tasmania.

Britain and its colonies were seen as major markets. Wilhelm Siemens, Werner's brother, had moved to Britain in 1843 to arrange patents and agencies for the gold-plating process. As the parent company grew, he developed a full agency whose main business at the time was selling S&H water meters. By 1858 it had become a separate company, Siemens, Halske & Co. with its own repair workshops. Halske disagreed with this, and this may have led to his departure from the company some years later. A cable workshop was built at Woolwich in 1863 and in 1865 the company was renamed Siemens Brothers.

In 1892 the London company opened a sales office in Australia, again selling water meters and telegraph equipment, but also offering the full range of product . In 1872 they supplied the South Australian Government with all the equipment to build the 2,700 km Overland Telegraph from Adelaide to Darwin. The first electric streetcar in the southern hemisphere was installed by S&H in Hobart in 1909. They constructed and operated the 11,000 km Indo-European Telegraph between London and Calcutta in 1870. They also sold into Russia, through a company established by another of the Siemens brothers.

Siemens & Halske had noticed the increasing use of automatic exchanges, but had not taken much interest. That changed when the German government decided to form an advisory consortium to automate the telephone network. S&H obtained the German rights to Automatic Electric's Strowger system in 1909 and joined the Government-led consortium. They went on to make a range of telephones that featured the unusual Strowger 11-hole "knuckleduster" dial . Eventually the Strowger system was adopted over the competing systems, and Siemens & Halske set about modifying it and improving it for large-scale production. They did not have the market to themselves, as the Government required the technology to be shared between a number of joint-venture companies. In spite of this they developed it enthusiastically to the point that STD was introduced in Germany by 1925, and the first STD public telephone in 1929.

They had marketed their first PABXs as early as 1912. Poole mentions in his 1912 book "They have equipped some six or more large exchanges on the Continent, and one for 17,000 lines is at present in process of construction for Dresden" . Their No. 16 system was also installed and evaluated by the British Post Office in installations at Edinburgh, Sheffield, Brighton and Leicester. It may also have been the model that equipped the new central Brisbane exchange in 1929. The No. 17 system, developed from this model during the 1930s, featured a high-speed motor-driven uniselector capable of 200 steps per second. A single compact switch allowed 200 four-wire circuits.

After World War 1 the company's overseas firms became their lifesaver. Restrictions were put on Germany's industrial production, but these did not apply to the overseas ventures. The overseas firms not only retained their market share, but Siemens & Halske increased manufacturing overseas to meet post-War demand.

The British government had confiscated the shares of Siemens & Halske during the war, but by 1929 the two companies had resumed contact under the Siemens Brothers name. In the interim, Siemens Brothers had produced a new bakelite telephone called the Neophone. This was the British Post Office's first Bakelite telephone. Although the BPO initially offered the Neophone (their Tele 162) in black, Siemens Brothers explored the new Bakelite technology and made the phone in ivory, jade green, red, and a very attractive mottled brownish "walnut" finish. They also provided painted finishes on request.

Siemens & Halske also kept up with new technologies. The first telex and fax machines were produced in 1931. The introduction of bakelite led to the old wooden telephones going out of production very quickly. The W28 telephone of 1928 was their first phone to use bakelite (in the handset), in both desk and wall versions. It became a standard Reichspost (German Post Office) design. The all-bakelite W38 telephone began production in 1938, but serious production was interrupted by World War 2.

A redesigned version, the W49, did not enter production in large numbers until 1958. It was then ordered by the German Post Office to feed post-War reconstruction. Its design allowed it to be used as a desk or wall telephone, a useful economy in those times. The German Post Office contracted the design to many German firms to produce the numbers required. It was even brought back into limited production in the 1990s.

The Siemens Model 100 teleprinter was a worldwide seller.

During the 1950s and 1960s the company entered the consumer electronics area with washing machines and television sets. They also started making semiconductor devices and produced their first computers.

The British company fared well until they were taken over by AEI in 1955. AEI in turn was "merged" into GEC in 1967.

In the 1980's Siemens purchased Norton Telecom in the UK, to get a foothold in the UK market and when Ferranti (who was selling ATEA equipment) came up for sale, they were also purchased.

In the late 80's GEC attempted to purchase Plessey and Siemens bought out the Plessey holdings and together with GEC formed a company called GPT. The split was GEC 60% and Siemens 40%. Then towards the mid nineties Siemens bought out the GEC share completely and the company was renamed Siemens Communications Ltd and rejoined the Siemens group of companies.

They still produce automatic exchanges, mobile phones, and computer communications equipment. The computer I am writing this on is connected to the broadband network by a Siemens modem. Modern times and increased competition from other multinationals has forced Siemens to review its business. Apart from mobile phones, the company has largely withdrawn from consumer appliances in the face of cheaper Asian products. Even in a traditionally strong area like mobiles, Siemens has been forced to combine with Nokia to remain competitive.

In spite of this, it continues as a worldwide manufacturer, long after many of its earlier competitors have disappeared. Maybe there is another hundred and seventy years ahead of it?

References

Laurence Rudolf "The Siemens Brothers Neophone and Post Office Telephone No. 162 (no longer available)

Akira Kudo "Japanese-German Business Relations : Cooperation and Rivalry in the Inter-War "

Siemens & Halske AG Catalogue, 1912.

Eli Noam "Telecommunications in Europe" 1992

Siemens AG website www.icn.siemens.com/customer/9704/11.html

J Poole "The Practical Telephone Handbook" 1912

Herbert T E and Procter W S "Telephony Vol II" 1937

Rietbergen, Peter "Europe: A Cultural History"

Webb, Michael "Richard Sapper"

Last revised: November 26, 2022