The First Telephone Exchange—The Bell Telephone
Association—Theodore N. Vail—The Fight with the Western
Union—Edison and Blake Invent Transmitters—Last Effort of the
Western Union—Mushroom Companies and Would-be Inventors—The
Controversy with Gray—Dolbear's Claims—The Drawbaugh Case—On a
Firm Footing.
Through public interest had been aroused in the telephone, it was still very far from being at the service of the nation. The telephone increases in usefulness just in proportion to the number of your acquaintances and business associates who have telephones in their homes or offices. Instruments had to be manufactured on a commercial scale, telephone systems had to be built up. While the struggles of the inventor who seeks to apply a new idea are often romantic, the efforts of the business executives who place the invention, once it is achieved, at the service of people everywhere, are not less praiseworthy and interesting.
A very few telephones had been leased to those who desired to establish private lines, but it was not until May of 1877 that the first telephone system was established with an exchange by means of which those having telephones might talk with one another. There was a burglar-alarm system in Boston which had wires running from six banks to a central station. The owner of this suggested that telephones be installed in the banks using the burglar-alarm wires. Hubbard gladly loaned the instruments for the purpose. Instruments were installed in the banks without saying anything to the bankers, or making any charge for the service. One banker demanded that his telephone be removed, insisting that it was a foolish toy. But even with the crude little exchange the first system proved its worth. Others were established in New York, Philadelphia, and other cities on a commercial basis. A man from Michigan appeared and secured the perpetual rights for his State, and for his foresight and enterprise he was later to be rewarded by the sale of these rights for a quarter of a million dollars. The free service to the Boston bankers was withdrawn and a commercial system installed there.
But these exchanges served but a few people, and were poorly equipped. There was, of course, no provision for communication between cities. With the telephone over a year old, less than a thousand instruments were in use. But Hubbard, who was directing the destinies of the enterprise during Bell's absence in Europe, decided that the time had come to organize. Accordingly the Bell Telephone Association was formed, with Bell, Hubbard, Sanders, and Watson as the shareholders. Sanders was the only one of the four with any considerable sum of money, and his resources were limited. He staked his entire credit in the enterprise, and managed to furnish funds with which the fight for existence could be carried on. But a business depression was upon the land and it was not easy to secure support for the telephone.
The entrance of the Western Union Telegraph Company into the telephone field brought the affairs of the Bell company to a crisis. As we have seen, the telegraph company had developed into a great and powerful corporation with wires stretching across the length and breadth of the land and agents and offices established in every city and town of importance. Once the telephone began to be used as a substitute for the telegraph in conveying messages, the telegraph officials awoke to the fact that here, possibly, was a dangerous rival, and dropped the viewpoint that Bell's telephone was a mere plaything. They acquired the inventions of Edison, Gray, and Dolbear, and entered the telephone field, announcing that they were prepared to furnish the very best in telephonic communication. This sudden assault by the most powerful corporation in America, while it served to arouse public confidence in the telephone, made it necessary for Hubbard to reorganize his forces and find a general capable of doing battle against such a foe.
Hubbard's political activities had brought to him a Presidential appointment as head of a commission on mail transportation. In the course of the work for the Government he had come much in contact with a young man named Theodore N. Vail, who was head of the Government mail service. He had been impressed by Vail's ability and had in turn introduced Vail to the telephone and aroused his enthusiasm in its possibilities. This Vail was a cousin of the Alfred Vail who was Morse's co-worker, and who played so prominent a part in the development of the telegraph. His experience in the Post-office Department had given him an understanding of the problems of communication in the United States, and had developed his executive ability. Realizing the possibilities of the telephone, he relinquished his governmental post and cast his fortunes with the telephone pioneers, becoming general manager of the Bell company.
The Western Union strengthened its position by the introduction of a new and improved transmitter. This was the work of Thomas Edison, and was so much better than Bell's transmitter that it enabled the Western Union to offer much better telephonic equipment. As we have seen, Bell's transmitter and receiver were very similar, being about the same as the receiver now in common use. In his transmitter Edison placed tiny bits of carbon in contact with the diaphragm. As the diaphragm vibrated under the sound-impulses the pressure upon the carbon granules was varied. An electric current was passed through the carbon particles, whose electrical resistance was varied by the changing pressure from the diaphragm. Thus the current was thrown into undulations corresponding to the sound-waves, and passed over the line and produced corresponding sounds in the receiver. Much stronger currents could be utilized than those generated by Bell's instrument, and thus the transmitter was much more effective for longer distances.
Bell returned from Europe to find the affairs of his company in a sorry plight. Only the courage and generalship of Vail kept it in the field at all. Bell was penniless, having failed to establish the telephone abroad, even as Morse before him had failed to secure foreign revenue from his invention. Bell's health failed him, and as he lay helpless in the hospital his affairs were indeed at a low ebb. At this juncture Francis Blake, of Boston, came forward with an improved transmitter which he offered to the Bell company in exchange for stock. The instrument proved a success and was gladly adopted, proving just what was needed to make possible successful competition with the Western Union.
Prolonged patent litigation followed, and after a bitter legal struggle the Western Union officials became convinced of two things: one, that the Bell company, under Vail's leadership, would not surrender; second, that Bell was the original inventor of the telephone and that his patent was valid. The Western Union, however, seemed to have strong basis for its claim that the new transmitter of the Bell people was an infringement of Edison's patent. A compromise was arranged between the contestants by which the two companies divided the business of furnishing communication by wire in the United States. This agreement proved of the greatest benefit to both organizations, and did much to make possible the present development and universal service of both the telephone and telegraph. By the terms of the agreement the Western Union recognized Bell's patent and agreed to withdraw from the telephone business. The Bell company agreed not to engage in the telegraph business and to take over the Western Union telephone system and apparatus, paying a royalty on all telephone rentals. Experience has demonstrated that the two businesses are not competitive, but supplement each other. It is therefore proper that they should work side by side with mutual understanding.
Success had come at last to the telephone pioneers. Other battles were still to be fought before their position was to be made secure, but from the moment when the Western Union admitted defeat the Bell company was the leader. The stock of the company advanced to a point where Bell, Hubbard, Sanders, and Watson found themselves in the possession of wealth as a reward for their pioneering.