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IV. The Telephone Evolves

At this point telephone history becomes fragmented and hard to follow. Four different but related stories begin: (1) the further history of the telephone instrument and all its parts, (2) the history of the telephone business, (3) the history of telephone related technology and (4) the history of the telephone system. Due to limited space I can cover only some major North American events. Of these, the two most important developments were the invention of the vacuum tube and the transistor; today's telephone system could not have been built without them.

Progress came slowly after the original invention. Bell and Watson worked constantly on improving the telphone's range. They made their longest call to date on October 9, 1876. It was a distance of only two miles, but they were so overjoyed that later that night they celebrated, doing so much began dancing that their landlady threatened to throw them out. Watson later recalled "Bell . . . had a habit of celebrating by what he called a war dance and I had got so exposed at it that I could do it quite as well as he could." [Watson] The rest of 1876, though, was difficult for Bell and his backers.

Bell and Watson improved the telephone and made better models of it, but these changes weren't enough to turn the telephone from a curiosity into a needed appliance. Promoting and developing the telephone proved far harder than Hubbard, Sanders, or Bell expected. No switchboards existed yet, the telephones were indeed crude and transmission quality was poor. Many questioned why anyone needed a telephone. And despite Bell's patent, broadly covering the entire subject of transmitting speech electrically, many companies sprang up to sell telephones and telephone service. In addition, other people filed applications for telephones and transmitters after Bell's patent was issued. Most claimed Bell's patent couldn't produce a working telephone or that they had a prior claim. Litigation loomed. Fearing financial collapse, Hubbard and Sanders offered in the fall of 1876 to sell their telephone patent rights to Western Union for $100,000. Western Union refused.

On April 27, 1877 Thomas Edison filed a patent application for an improved transmitter, a device that made the telephone practical. A major accomplishment, Edison's patent claim was declared in interference to a Notice of Invention for a transmitter filed just two weeks before by Emile Berliner. This conflict was not resolved until 1886 however, Edison decided to produce the transmitter while the matter was disputed. Production began toward the end of 1877. To compete, Bell soon incorporated in their phones an improved transmitter invented by Francis Blake.

Blake's transmitter relied on the diaphragm modifying an existing electrical current, an outside power source. This was quite different than the original invention and its improvements. Bell's first telephone transmitter used the human voice to generate a weak electro-magnetic field, which then went to a distant receiver. Bell later installed larger, better magnets into his telephones but there was a limit to what power the human voice could provide, Myer indicating about 10 microwatts.

On July 9, 1877 Sanders, Hubbard, and Bell formed the first Bell telephone company. Each assigned their rights under four basic patents to Hubbard's trusteeship. Against tough criticism, Hubbard decided to lease telephones and license franchises, instead of selling them. This had enormous consequences. Instead of making money quickly, dollars would flow in over months, years, and decades. Products were also affected, as a lease arrangement meant telephones needed to be of rental quality, with innovations introduced only when the equipment was virtually trouble free. It proved a wise enough decision to sustain the Bell System for over a hundred years.

In September, 1877 Western Union changed its mind about telephony. They saw it would work and they wanted in, especially after a subsidiary of theirs, the Gold and Stock Telegraphy Company, ripped out their telegraphs and started using Bell telephones. Rather than buying patent rights or licenses from the Bell, Western Union decided to buy patents from others and start their own telephone company. They were not alone. At least 1,730 telephone companies organized and operated in the 17 years Bell was supposed to have a monopoly.

Most competitors disappeared as soon as the Bell Company filed suit against them for patent infringement, but many remained. They either disagreed with Bell's right to the patent, ignored it altogether, or started a phone company because Bell's people would not provide service to their area. In any case, Western Union began entering agreements with Gray, Edison, and Amos E. Dolbear for their telephone inventions. In December, 1877 Western Union created the American Speaking Telephone Company. A tremendous selling point for their telephones was Edison's improved transmitter. Bell Telephone was deeply worried since they had installed only 3,000 phones by the end of 1877. Western Union, on the other hand, had 250,000 miles of telegraph wire strung over 100,000 miles of route. If not stopped they would have an enormous head start on making telephone service available across the country. Undaunted by the size of Western Union, then the world's largest telecom company, Bell's Boston lawyers sued them for patent infringement the next year.

On January, 28 1878 , the first commercial switchboard began operating in New Haven, Connecticut. It served 21 telephones on 8 lines consequently, many people were on a party line. On February 17, Western Union opened the first large city exchange in San Francisco. No longer limited to people on the same wire, folks could now talk to many others on different lines. The public switched telephone network was born. Other innovations marked 1878.

On February 21, 1878, the world's first telephone directory came out, a single paper of only fifty names. George Williard Coy and a group of investors in the New Haven District Telephone Company at 219 Chapel Street produced it. It was followed quickly by the listing produced by the oddly named Boston Telephone Despatch Company. [First directory]

In 1878 President Rutherford B. Hayes administration installed the first telephone in the White House. [First tele] Mary Finch Hoyt reports that the first outgoing call went to Alexander Graham Bell himself, thirteen miles distant. Hayes first words instructed Bell to speak more slowly. [Hoyt]

In that year the Butterstamp telephone came into use. This telephone combined the receiver and transmitter into one handheld unit. You talked into one end, turned the instrument round and listened to the other end. People got confused with this clumsy arrangement, consequently, a telephone with a second transmitter and receiver unit was developed in the same year. You could use either one to talk or listen and you didn't have to turn them around. This wall set used a crank to signal the operator.

The Butterstamp telephone.

http://atcaonline.com/phone/index.html (external link)

On August 1, 1878 Thomas Watson filed for a ringer patent. Similar to Henry's classroom doorbell, a hammer operated by an electromagnet struck two bells. Turning a crank on the calling telephone spun a magneto, producing an alternating or ringing current. Previously, people used a crude thumper to signal the called party, hoping someone would be around to hear it. The ringer was an immediate success. Bell himself became more optimistic about the telephone's future, prophetically writing in 1878 "I believe that in the future, wires will unite the head offices of the Telephone Company in different cities, and that a man in one part of the country may communicate by word of mouth with another in a distant place."

Subscribers, meanwhile, grew steadily but slowly. Sanders had invested $110,000 by early 1878 without any return. He located a group of New Englanders willing to invest but unwilling to do business outside their area. Needing the funding, the Bell Telephone Company reorganized in June, 1878, forming a new Bell Telephone Company as well as the New England Telephone Company, a forerunner of the strong regional Bell companies to come. 10,755 Bell phones were now in service. Reorganizing passed control to an executive committee, ending Hubbard's stewardship but not his overall vision. For Hubbard's last act was to hire a far seeing general manager named Theodore Vail. But the corporate shuffle wasn't over yet. In early 1879 the company reorganized once again, under pressure from patent suits and competition from other companies selling phones with Edison's superior transmitter. Capitalization was $850,000. William H. Forbes was elected to head the board of directors. He soon restructured it to embrace all Bell interests into a single company, the National Bell Company, incorporated on March 13, 1879. Growth was steady enough, however, that in late 1879 the first telephone numbers were used.

On November 10, 1879 Bell won its patent infringement suit against Western Union in the United States Supreme Court. In the resulting settlement, Western Union gave up its telephone patents and the 56,000 phones it managed, in return for 20% of Bell rentals for the 17 year life of Bell's patents. It also retained its telegraph business as before. This decision so enlarged National Bell that a new entity with a new name, American Bell Company, was created on February 20, 1880, capitalized with over seven million dollars. Bell now managed 133,000 telephones. As Chief Operating Officer, Theodore Vail began creating the Bell System, composed of regional companies offering local service, a long distance company providing toll service, and a manufacturing arm providing equipment. For the manufacturer he turned to a previous company rival. In 1880 Vail started buying Western Electric stock and took controlling interest on November, 1881. The takeover was consummated on February 26, 1882, with Western Electric giving up its remaining patent rights as well as agreeing to produce products exclusively for American Bell. It was not until 1885 that Vail would form his long distance telephone company. It was called AT&T.

On July 19, 1881 Bell was granted a patent for the metallic circuit, the concept of two wires connecting each telephone. Until that time a single iron wire connected telephone subscribers, just like a telegraph circuit. A conversation works over one wire since grounding each end provides a complete path for an electrical circuit. But houses, factories and the telegraph system were all grounding their electrical circuits using the same earth the telephone company employed. A huge amount of static and noise was consequently introduced by using a grounded circuit. A metallic circuit, on the other hand, used two wires to complete the electrical circuit, avoiding the ground altogether and thus providing a better sounding call.

The brilliant J.J. Carty introduced two wireservice commercially in October of that year on a circuit between Boston and Providence. It cut noise greatly over those forty five miles and heralded the beginning of long distance service. Still, it was not until 10 years later that Bell started converting grounded circuits to metallic ones. And ten years after that until completion.

Depending on local conditions and economies, some independent telephone companies did not introduce two wire for decades after. Consider this example from the Magazine Telephone Company of central Arkansas: "After the end of WW II, the R.E.A. System was introduced to the area. This electrification project induced noise into the one wire magneto system that was currently in use by the Telephone Company. Henry [Stone] converted the magneto system to a new system called common battery. Instead of just one wire, common battery required two metallic wires for each circuit."

For a short but well detailed history of an independent telco, visit the Magazine Telephone Company:

http://www.magtel.com/heritage.htm (external link)

On February 28, 1885 AT&T was born. Capitalized on only $100,000, American Telephone and Telegraph provided long distance service for American Bell. Only local telephone companies operating under Bell granted licenses could connect to AT&T's long distance network. Vail thought this would continue the Bell System's virtual monopoly after its key patents expired in the 1890s. He reasoned the independents could not compete since they would be isolated and without long distance lines. With licensed companies providing local service, Western Electric manufacturing equipment and AT&T providing long distance, Vail's structuring of the Bell System was now complete.

In September 1887, Vail resigned from American Bell. They lost a great man. He was at odds with Bell's Boston bankers and financiers, people who often ignored an area if profits might be marginal. J. Edward Hyde explained the situation best:

"The singular worship of profits so disgusted Theodore Vail that he left the Bell Company in 1887. As a parting shot, he wrote: 'We have a duty to the public at large to make our service as good as possible and as universal as possible, and that earnings should be used not only to reward investors for their investment but also to accomplish these objectives.' Bell management thanked him for his comments and wished him a happy retirement. Those he left behind had neither his visionary business sense nor his sensible principles of customer service. Ignoring the protests of customers regarding exorbitant rates and the pleas of rural areas for service at any price, Bell's leadership plundered selected profitable areas during the remaining years of their exclusive ownership without realizing that they were pinning a target on their own chest in the neglected regions. Undoubtedly Bell's management suspected that bad times lay just on the other side of the initial patent expiration. Incredibly, they did nothing to prevent the deluge. In the cities where the Bell had its biggest stake, competitors appeared on nearly every corner." [Hyde]

In 1889 the first public coin telephone came into use in Hartford, Connecticut. The first payphones were attended, with payment going to someone standing nearby.

In 1892 Bell controlled 240,000 telephones. But the independents were coming on fast, especially by using better technology. The first automatic dial system began operating that year in La Porte, Indiana. The central office switch worked in concert with a similar switch at the subscriber's home, operated by push buttons. Patented in 1891 by Almon B. Strowger, this Step by Step or SXS system, replaced the switchboard operator for placing local calls. People could dial the number themselves. The first automatic commercial exchange began operating in La Porte, Indiana in 1892.

Strowger's switch required different kinds of telephones and eventually models with dials. A.E. Keith (internal link), J. Erickson, and C.J. Erickson (internal link) later invented the rotating finger-wheel needed for a dial. The first dial telephones began operating in Milwaukee's City Hall in 1896. Independents were quick to start using the new switch and phones.

The Bell System did not embrace this switch or automation in general, indeed, a Bell franchise commonly removed "Steppers" and dial telephones in territories it bought from independent telephone companies. Not until 1919 did the Bell System start using Strowgers durable and efficient switching system. This tardiness contributed to Bell's poor reputation around the turn of the century. Almon Strowger went on to help form Automatic Electric, the largest telephone equipment manufacturer for the independent telephone companies. 

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Resources

[First tele] From the official White House web site biography on President Hayes: http://www.whitehouse.gov/WH/glimpse/presidents/html/rh19.html (2000) (back to text)

[First directory] Stern and Gwathmey. Once Upon a Telephone: An Illustrated Social History. New York. Harcourt Brace and Company. 1994, 46

Image of that directory (external link), courtesy of Gwillim Law. (external link) (back to text)

Hyde, J Edward, The Phone Book: What the telephone company would rather you not know, Henry Regenry Company, Chicago, 1976, 23. ISBN Number 0-8092-8008-6 (back to text)

[Hoyt] Finch, Mary Hoyt "Hello, This is the White House." Good Housekeeping, June 1986 (back to text)

Watson, Thomas. Exploring Life: The Autobiography of Thomas Alva Watson. New York: D. Appleton and Company. 1926, 95 (back to text)