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One of the serious limitations of the null-type radio direction finder has been the "night-effect" error caused by the horizontally polarized component of the downcoming sky wave, which is picked up in the horizontal elements of the loop. Two types of attack on this problem are represented by the "Adcock antenna" and the "compensated loop." The Adcock antenna is effective because of its construction without horizontal elements, but suffers from low pickup of the desired vertically polarized components. On the other hand, the compensated loop consists of a standard loop plus an auxiliary horizontal antenna mounted on the loop, from which is obtained a voltage for neutralizing the undesired loop pickup. The latter system offers the greater advantages in terms of good pickup and compactness of structure, but has not received adequate consideration by previous investigators. This paper presents an analysis of the compensated loop in the general case, together with the results of detailed calculations for direction finders covering a wide range of wavelengths, with two specific examples for 550 and 1100 meters. The analysis shows that when the earth has a high reflection coefficient the system is capable of providing complete or nearly complete neutralization with no tuning required other than an initial adjustment, and even with poor earth conditions, substantial reduction in errors is obtainable.