Fada Radio recalled every rheostat, defective or not, and cut prices

Fada, a small Bronx-based radio-parts maker founded by Frank A.D. Andrea in 1918, had ridden the sudden 1921-22 radio boom from a few hundred dollars a month in sales to $50,000 a month, built almost entirely on dealer trust in a young, unproven brand. Then flexible fibre strips bought in bulk from an outside supplier for its dollar rheostats turned out to be defective in a way "impossible to recognize by eye or feeling" -- undetectable at incoming inspection, and by the time it surfaced, roughly 100,000 units were already in dealers' hands nationwide.

The standard playbook for a defect that isn't your own manufacturing fault is to handle it quietly and reactively: process returns as individual complaints trickle in, replace only the units customers actually flag, and let the supplier's mistake stay a background cost absorbed one unit at a time. That approach protects cash in the short run but leaves an unknown number of bad units still in the field, and every dealer who gets stuck with one blames the manufacturer whose name is on it, not the fibre supplier nobody else has heard of.

Recalled every rheostat, defective or not, and cut prices with retroactive credit — over-compensating so the gesture cost real money and read as sincere.

Recalling all units, not just bad ones, showed dealers Fada wasn't just managing complaints.

The $25,000 cost was large relative to revenue, making the gesture credible.

Retroactive credits and price cuts gave dealers something extra, building goodwill.

The playbook was repeated a year later, showing it was policy, not improvisation.

When a defect isn't your fault, over-compensate by recalling all units and giving unasked rebates to turn a cost into trust.

" Fada applied the identical playbook again within a year when a second, more serious defect surfaced in its new $200 neutrodyne receivers (corroded transformer wire causing sets to go completely dead), suggesting the September 1922 response was an adopted company policy rather than a one-off improvisation.