Engineers began experimenting with electrically powered instruments, such as music boxes and player pianos, in the 1800s. But the first attempts at an amplified instrument did not come until the development of electrical amplification by the radio industry in the 1920s.
One of the earliest innovators was Lloyd Loar, an engineer at Gibson Guitar Company. In 1924, Loar developed an electric pickup for the viola and the string bass. In Loar's pickup design, the strings passed vibrations through the bridge to the magnet and coil, which registered those vibrations and passed the electric signal on to an amplifier. The first commercially advertised electric guitar, made by the Stromberg-Voisinet company in 1928, utilized a similar pickup, with vibrations being picked up from the soundboard.
The goal of these early innovators was to amplify the natural sound of the guitar, but the signal was too weak. It was only when engineers utilized a more direct pickup system, in which the electromagnet registered string vibration from the strings themselves, that the modern electric guitar became a reality. The first commercially successful model, the so-called "Frying Pan," was developed and marketed by George Beauchamp and Adolph Rickenbacker in 1932. (Check out this site for more information.)
The Rickenbacker "Frying Pan" was an electric Hawaiian model, played flat in the lap, and it caught on immediately with Hawaiian-style guitarists. The standard or "Spanish" style electric guitar, however, sounded so different from an acoustic guitar that it was slow to be accepted. The first artist to develop a playing style unique to the electric guitar was Charlie Christian (in 1939). At the same time, a few individuals began experimenting with a new kind of electric guitar, using the same pickup as earlier designs but mounting the pickup on a solid block of wood. Les Paul, who was already a well-known acoustic guitarist, built such a guitar on a four-by-four piece of pine and nicknamed it "The Log." Leo Fender, a former radio repairman, introduced a mass-produced solid-body electric guitar in 1950, and Gibson introduced a model endorsed by Les Paul himself in 1952. The solid-body guitars didn't have the feedback problems that characterized hollow-body electric guitars, and they had greater sustain.
In the 1950s and 1960s, rock stars secured Gibson and Paul's designs, as well as Fender's famous Stratocaster, a permanent place in American culture. Since then, every generation has found a surprising new way of making the instrument sing. By all accounts, its potential is limitless.
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