United States Record Corporation

Record company that was founded by Eli Oberstein in May 1939 but went bankrupt in 1940. From almost the beginning, the company was under scrutiny for allegations of receiving financial backing from a syndicate controlling 150,000 jukeboxes. Eli Oberstein himself was distrusted by several large music publishers who were concerned about collecting royalties from jukebox play. The company had two subsidiary labels: Varsity, a 35¢ popular brand; and Royale, a more expensive line reserved mostly for classical material. This brand retailed for 75¢ - $1.50. The first preliminary catalog of Varsity and Royale records appeared in June, 1939. It included almost exclusively reissues of other companies' recordings, especially of decade-old material from Crown (5) and some dubbed Gennett Records and Paramount material, but there was no disclosure to that effect. Artists were masked by pseudonyms on most issues and some selections were even retitled. Oberstein attempted to coerce several popular artists he had managed during his tenure at RCA Victor to defect to his new company by invoking his artist-management contracts. Such strong-arm tactics did not work, and most artists either bought out their contracts or legally challenged Oberstein and prevailed. Nevertheless, several artists did move to his fledgling labels, including Harry James (2), Will Osborne, Roy Eldridge, Rudy Vallee, [a301372] and Buddy Clark (3). The first original recordings for these labels were made in August, 1939 at Harry Smith (4)'s studio at 2 West 46th Street, New York. By October of that year, Oberstein had acquired the former American Record Corporation's studios at 1776 Broadway and recording operations were moved there. Records were pressed by Scranton Button Company, in which Oberstein acquired a 30% interest. Poor management decisions doomed United States Record Corporation. Oberstein's constant meddling with his performers (he was overbearing in the studio and forced mediocre compositions on them) was always a problem. He got into trouble by recording Johnny Messner And His Orchestra's mildly risqué "hit", "She Had To Go And Lose It At The Astor", which incurred a lawsuit threat for defamation from the Astor's managing director. Although Royale attracted major talent (such as violin virtuoso [a1534329], Alfred Mirovitch and Jascha Zayde) and received positive reviews, it was not enough to save the company. By the summer of 1940 it faced mounting legal and financial problems. Leeds Music Corp. sued for unpaid royalties, and this sparked a succession of suits by other publishers. On September 5 United States Record Corporation had debts of $250,000 and filed a petition for reorganization. Its bankruptcy also took down Scranton Button Company. The latter's connection with United States Record Corporation was severed, and the pressing plant was reorganized as the Scranton Record Company.