By the summer of 1967, even my father was in a panic. "Chaos" is how he would later describe the situation, in his testimony before the Nova Scotia legislature. Instead of showing a profit for the year, there would be a huge and staggering loss.
My Father's Brilliant Mistake
For a decade, in the 1960s, Clairtone Sound Corp. captured the spirit of the times. Hugh Hefner owned a Clairtone hi-fi. So did Frank Sinatra and the jazz legend Oscar Peterson. In an excerpt from her new book, Nina Munk, daughter of Clairtone founder Peter Munk, reveals the inside story of the skyrocketing success and the sensational collapse of a design icon.
I was born under a falling star, in 1967, the year Clairtone Sound Corporation collapsed. My father remembers it as the worst year of his life. Clairtone was his first company, his "first love," he once called it nostalgically. Measured coldly in dollars and cents, it was his smallest and least-successful company; yet nothing my father has done since then has affected him the way Clairtone did.
A few years ago, long after making a name for himself in the gold business, and decades after Clairtone had become little more than a quirky footnote in his career, he confessed to the New York Times: "Clairtone was the single most formative experience in my life because it was so traumatic."
But I’m getting ahead of myself. Once upon a time, for a short time, Clairtone Sound Corporation was one of Canada’s most dazzling, most admired companies. It started in 1958 with four employees, $3,000, and a cramped, makeshift factory at 26 Sable Street in a Toronto suburb. The initial idea was simple: to merge contemporary Scandinavian furniture design with the latest in high-fidelity equipment.
My father, then 30 and an electrical engineer, made custom hi-fi sets for wealthy clients. His friend and partner, David Harrison Gilmour, 26, had a small business importing Scandinavian flatware, ceramics, and glass. Together, and inspired by a basic 1950s Danish sideboard, they came up with their first hi-fi model—a long, low cabinet in oiled teak with sliding doors and tapered legs. It was good-looking and functional, and it was unlike anything being made in Canada back then. Fitted inside the wooden cabinet were a Dual 1004 turntable, a Granco tube chassis, and a pair of Coral speakers hidden behind plain, wheat-coloured broadcloth from Knoll International.
In March 1959, less than four months after it was put into production, that first model, the 100-S, won a Design Award from the National Industrial Design Council. Other models followed, including the entry-level 400-S ("the Princess") and the luxurious 1000-S ("the Signature") with its wireless remote control. Then, almost overnight, it seemed, Clairtone’s stereo consoles were everywhere.
"Everybody knew about Clairtone," my father would later boast to the columnist Joan Sutton. "The Prime Minister had one, and if the local truck driver didn’t have one, he wanted one." Oscar Peterson, the legendary Canadian jazz pianist, officially endorsed Clairtone. Dizzy Gillespie and Frank Sinatra were avid fans. "Listen to Sinatra on Clairtone stereo. Sinatra does," was one of the company’s most memorable tag lines. During the company’s first five years, between 1958 and 1963, production soared from 350 units a year to 25,000 units. The pace was incredible. That year, 1963, Clairtone was listed on the Toronto Stock Exchange. And nothing, nothing at all thrilled my father so much as seeing his upstart company listed alongside Canada’s old guard, the Establishment: Massey-Ferguson, Algoma Steel, Canadian Pacific Railway, Abitibi Power & Paper, Falconbridge Nickel, Walker-Gooderham & Worts. "In those days, the TSE was as WASP a club as you can get—it was it," my father reminded me. "I was not only not WASP— I was Jewish, I was an immigrant, and I had an accent."
So great was demand for the company’s products in the early 1960s that, for a time, at Simpson’s department store in Toronto, one Clairtone hi-fi was sold every three hours. In those years, throughout the December rush, Clairtone’s factory stayed open around the clock, with cabinetmakers and assembly line workers pushing out stereo consoles in time for Christmas. Keeping up with the orders was exhausting and exhilarating. "I worked seventy- and eighty-hour weeks," the company’s former comptroller, David Pols, told me with pride, echoing other Clairtone employees I interviewed. "Sometimes, I recall, I worked all night."
Remarkably, back in the day when about the only things Canada exported were natural resources and tractors, half of Clairtone’s stereos were being sold in the U.S., at "prestige accounts" like Abraham & Straus and Bloomingdale’s in New York, Marshall Field’s in Chicago, Halle Brothers in Cleveland, and J.L. Hudson’s in Detroit. For a Canadian consumer product to be featured in the windows of Bloomingdale’s was almost unimaginable—and yet, there it was.
In 1959, when fashionable men, including my father and David Gilmour, still wore three-piece suits, an article in the Globe and Mail trumpeted Clairtone’s success in the U.S. market: "Canadians would have popped a few buttons on their vests last week if they had attended the American Music Show in New York. A stereophonic set designed and manufactured by a Canadian company founded less than a year ago by two young Canadians was the centre of attraction.… This is perhaps the first time a piece of Canadian consumer-electronic equipment has aroused such enthusiasm in the U.S."
As for my father and David, they were hailed as visionaries. They were "everybody’s darlings," in the words of the journalist Alexander "Sandy" Ross. "They were treated as movie magazines treated Rock Hudson, with awestruck approval," another journalist recalled. "Peter Munk was probably one of the most admired young men in Canada, the closest thing to a hero the Canadian business community has produced in this generation," continued Ross. "Just contemplating the Clairtone phenomenon made us all feel smart and groovy and efficient, like the Scandinavians almost."
Even my father seemed awe-struck by his own success. "There was a year when I had thirty-four speaking engagements," he recalled wide-eyed on CBC’s the fifth estate in 1978. "I stood there, at the age of 30, lecturing the stalwart, establishment members of the Canadian business community. I used to go home … and pinch myself....."
Ask my father and David about the collapse of Clairtone, and you’ll be told that the move to Nova Scotia killed their company. That’s true as far as it goes, but it may be more accurate to say that Clairtone was undone by their tendency to overreach. "Munk was too good a salesman for his own good," to quote William Mingo, chief counsel for Nova Scotia’s Industrial Estates Limited (IEL), the Crown corporation that funded Clairtone. "He could sell anything to anyone—including himself…. My, he was a promoter. My, he had energy. My, he had charm. My, he had imagination."
One thing is certain: Clairtone built one of the biggest, most modern factories in the Western hemisphere in a place entirely unsuited to manufacturing. "Stellarton’s prospects were bleak even by Nova Scotian standards," writes Harry Bruce in his 1985 biography of the businessman Frank Sobey, who served as mayor of Stellarton and president of IEL. At one point, half of Stellarton’s population had been "wholly dependent" on the coal industry. Then the mines shut down. "Without mining, the town was like a movie house without a projector," writes Bruce.
By the time my father and David acknowledged the obvious, it was too late. "The general population is basically not geared to the manufacturing frenzy and especially the five-day workweek," reported an intensive study of the factory, quietly commissioned by Clairtone in 1967. "The welfare situation is such that it has created conditions similar to Appalachia in the United States where the third generation is already on relief."
The labour force in Stellarton was only one of Clairtone’s problems. Nothing went smoothly, from all accounts. Cost controls were "nonexistent," according to the commissioned study. Roads leading to the factory were so bad that Clairtone’s stereos and TVs were often damaged en route. Getting parts for the stereos, a task that at the old plant in Rexdale, Ontario, could be organized in a single day, took several weeks. As for the manufacturing process itself, Clairtone’s inexperienced management team was over its head, and sinking: inventory went missing; unidentified parts accumulated on the factory floor; the assembly line seldom if ever ran at full speed or full capacity.
In the Clairtone archives, one memo after another foreshadows the catastrophe. "It is unbelievable and very disturbing to find that at this late date, when we are scheduled to complete 1,500 of the T-14 chassis, the flywheel assemblies have been delivered for only 550 chassis," reads one urgent note from Michael Chojnacki, Clairtone’s vice president for manufacturing. "We are still unable to commence delivery of TV sets," reads another memo. "Instead, the very few G-TV’s once again have been condemned due to electrical and mechanical problems."
By the summer of 1967, even my father was in a panic. "Chaos" is how he would later describe the situation, in his testimony before the Nova Scotia legislature in 1969. Instead of showing a profit for the year, there would be a huge and staggering loss. Anxious suppliers, figuring they’d never get paid by Clairtone, stopped shipping parts. The once-promising business of colour TV was a bust. And yet again, Clairtone was in dire financial straits.
Only a few months earlier, in late 1966, IEL had invested another $3 million in Clairtone. This time round, however, not even the Nova Scotia government was willing to throw good money after bad. For months, relentlessly, my father tapped every connection he had to raise money for Clairtone. Through the brokerage firm W.E. Hutton & Co., he sold $2 million worth of convertible debentures; to survive he needed more than that. He tried getting Clairtone listed on the American Stock Exchange. He also came close to selling Clairtone to the Singer Company, the giant U.S. conglomerate. Still, for all his ingenuity … nothing.
There’s something I haven’t told you. Just at the moment when Clairtone’s hi-fi and TV business most needed his attention, my father was chasing the next big thing: the automotive industry. In 1964, when very few North Americans had ever seen a Japanese car, he and a brilliant Australian, Pat Samuel, had bought control of Canadian Motor Industries (CMI), whose one asset was the exclusive right to assemble and sell Toyota and Isuzu cars in Canada. Depending on your point of view, that deal—a complicated manoeuvre that resulted in Clairtone’s, and the Nova Scotia government’s, brief ownership of CMI—is: (a) an example of my father’s far-sightedness, or (b) an example of his recklessness.
One way or another, what matters in a book about Clairtone is that my father’s short-lived ambition to become an automotive magnate hastened Clairtone’s downfall. There simply wasn’t enough money or managerial talent to go around. "I’ve never worked as hard as I did that year," my father told me recently, referring to the period between mid-1966 and mid-1967 when Clairtone, along with CMI, fell apart. He’s now eighty years old and still remembers every humiliating detail of the final months at Clairtone. "Everything I’ve done since then has been easy."
On August 27, 1967, eleven years, two months, and eighteen days after founding Clairtone Sound Corporation, my father and David Gilmour lost control of the company to the government of Nova Scotia. "A Canadian Success Story Turns Sour," was the headline in the Toronto Daily Star. It was over.
By the early 1970s, to lure shoppers into their grocery stores, Loblaws was running newspaper ads for games of "Double Money Bingo"; the grand prize was a free Clairtone colour TV. That’s how far the company had fallen since the heady days of Frank Sinatra, and Irving Penn, and Pierce-Arrow convertibles in New York City. In 1971, Clairtone was de-listed from the Toronto Stock Exchange. By the time the company officially closed its doors in 1972, it had become the antithesis of everything my father and David had imagined.
I was born in September 1967, less than two weeks after my father lost Clairtone. My parents sold their house a few months later, and we moved into a rental apartment in Toronto. "I ended up with less money than the mortgage was worth on my house," my father later told Executive magazine. "After being sort of a hero in Toronto for ten years and considering yourself to be a millionaire, suddenly your friends are thinning out and the same banks don’t talk to you in the same way and you don’t get invited to the same boardrooms and no universities are asking you to give the keynote address for their business graduate course. Then comes a three- or four-month period when you really wonder whether it was all just a fluke."
It was not a fluke, of course. My father became a serial entrepreneur—one of Canada’s most celebrated businessmen. When Clairtone collapsed, however, not many people were betting on him. He’d lost his credibility, and they’d lost faith. An exception was Frank Sobey, the empire builder from Nova Scotia who, as president of Industrial Estates Limited, made the grand mistake of backing my father in the first place.
In 1968, when an inquiry into the Clairtone affair was held in the Nova Scotia legislature, Sobey was called to testify. Even as he came under attack, he defended my father. "It’s a good thing we have people like Peter Munk in Canada. He’s a builder. He has the ability, he has the energy, he has the courage to go out and create industries. It’s people like Peter Munk that created all our industries in the United States and Canada.... Invariably they lost most of their capital in doing it, because they went too fast and too swift."
Sobey wasn’t finished. "It’s people like that that trigger industrial development, people like Peter Munk that have courage. The people that sit back without courage, and do a lot of talking and a lot of criticism, make no contribution to the industrial development of our country. That’s all I want to say."