The History of the Telephone Part 2

As he was by profession an elocutionist, Bell was able to make the most of these opportunities. His lectures became popular entertainments. They were given in the largest halls. At one lecture two j.a.panese gentlemen were induced to talk to one another in their own language, via the telephone. At a second lecture a band played "The Star-Spangled Banner,"

in Boston, and was heard by an audience of two thousand people in Providence. At a third, Signor Ferranti, who was in Providence, sang a selection from "The Marriage of Figaro" to an audience in Boston. At a fourth, an exhortation from Moody and a song from Sankey came over the vibrating wire. And at a fifth, in New Haven, Bell stood sixteen Yale professors in line, hand in hand, and talked through their bodies--a feat which was then, and is to-day, almost too wonderful to believe.

Very slowly these lectures, and the tireless activity of Hubbard, pushed back the ridicule and the incredulity; and in the merry month of May, 1877, a man named Emery drifted into Hubbard's office from the near-by city of Charlestown, and leased two telephones for twenty actual dollars--the first money ever paid for a telephone. This was the first feeble sign that such a novelty as the telephone business could be established; and no money ever looked handsomer than this twenty dollars did to Bell, Sanders, Hubbard, and Watson. It was the tiny first-fruit of fortune.

Greatly encouraged, they prepared a little circular which was the first advertis.e.m.e.nt of the telephone business. It is an oddly simple little doc.u.ment to-day, but to the 1877 brain it was startling. It modestly claimed that a telephone was superior to a telegraph for three reasons:

"(1) No skilled operator is required, but direct communication may be had by speech without the intervention of a third person.

"(2) The communication is much more rapid, the average number of words transmitted in a minute by the Morse sounder being from fifteen to twenty, by telephone from one to two hundred.

"(3) No expense is required, either for its operation or repair. It needs no battery and has no complicated machinery. It is unsurpa.s.sed for economy and simplicity."

The only telephone line in the world at this time was between the Williams' workshop in Boston and the home of Mr. Williams in Somerville.

But in May, 1877, a young man named E. T. Holmes, who was running a burglar-alarm business in Boston, proposed that a few telephones be linked to his wires. He was a friend and customer of Williams, and suggested this plan half in jest and half in earnest. Hubbard was quick to seize this opportunity, and at once lent Holmes a dozen telephones.

Without asking permission, Holmes went into six banks and nailed up a telephone in each. Five bankers made no protest, but the sixth indignantly ordered "that playtoy" to be taken out. The other five telephones could be connected by a switch in Holmes's office, and thus was born the first tiny and crude Telephone Exchange. Here it ran for several weeks as a telephone system by day and a burglar-alarm by night.

No money was paid by the bankers. The service was given to them as an exhibition and an advertis.e.m.e.nt. The little shelf with its five telephones was no more like the marvellous exchanges of to-day than a canoe is like a Cunarder, but it was unquestionably the first place where several telephone wires came together and could be united.

Soon afterwards, Holmes took his telephones out of the banks, and started a real telephone business among the express companies of Boston. But by this time several exchanges had been opened for ordinary business, in New Haven, Bridgeport, New York, and Philadelphia. Also, a man from Michigan had arrived, with the hardihood to ask for a State agency--George W. Balch, of Detroit. He was so welcome that Hubbard joyfully gave him everything he asked--a perpetual right to the whole State of Michigan. Balch was not required to pay a cent in advance, except his railway fare, and before he was many years older he had sold his lease for a handsome fortune of a quarter of a million dollars, honestly earned by his initiative and enterprise.

By August, when Bell's patent was sixteen months old, there were 778 telephones in use. This looked like success to the optimistic Hubbard.

He decided that the time had come to organize the business, so he created a simple agreement which he called the "Bell Telephone a.s.sociation." This agreement gave Bell, Hubbard and Sanders a three-tenths interest apiece in the patents, and Watson one-tenth. THERE WAS NO CAPITAL. There was none to be had. The four men had at this time an absolute monopoly of the telephone business; and everybody else was quite willing that they should have it.

The only man who had money and dared to stake it on the future of the telephone was Thomas Sanders, and he did this not mainly for business reasons. Both he and Hubbard were attached to Bell primarily by sentiment, as Bell had removed the blight of dumbness from Sanders's little son, and was soon to marry Hubbard's daughter.

Also, Sanders had no expectation, at first, that so much money would be needed. He was not rich. His entire business, which was that of cutting out soles for shoe manufacturers, was not at any time worth more than thirty-five thousand dollars. Yet, from 1874 to 1878, he had advanced nine-tenths of the money that was spent on the telephone. He had paid Bell's room-rent, and Watson's wages, and Williams's expenses, and the cost of the exhibit at the Centennial. The first five thousand telephones, and more, were made with his money. And so many long, expensive months dragged by before any relief came to Sanders, that he was compelled, much against his will and his business judgment, to stretch his credit within an inch of the breaking-point to help Bell and the telephone. Desperately he signed note after note until he faced a total of one hundred and ten thousand dollars. If the new "scientific toy" succeeded, which he often doubted, he would be the richest citizen in Haverhill; and if it failed, which he sorely feared, he would be a bankrupt.

A disheartening series of rebuffs slowly forced the truth in upon Sanders's mind that the business world refused to accept the telephone as an article of commerce. It was a toy, a plaything, a scientific wonder, but not a necessity to be bought and used for ordinary purposes by ordinary people. Capitalists treated it exactly as they treated the Atlantic Cable project when Cyrus Field visited Boston in 1862. They admired and marvelled; but not a man subscribed a dollar. Also, Sanders very soon learned that it was a most unpropitious time for the setting afloat of a new enterprise. It was a period of turmoil and suspicion.

What with the Jay Cooke failure, the Hayes-Tilden deadlock, and the bursting of a hundred railroad bubbles, there was very little in the news of the day to encourage investors.

It was impossible for Sanders, or Bell, or Hubbard, to prepare any definite plan. No matter what the plan might have been, they had no money to put it through. They believed that they had something new and marvellous, which some one, somewhere, would be willing to buy. Until this good genie should arrive, they could do no more than flounder ahead, and take whatever business was the nearest and the cheapest. So while Bell, in eloquent rhapsodies, painted word-pictures of a universal telephone service to applauding audiences, Sanders and Hubbard were leasing telephones two by two, to business men who previously had been using the private lines of the Western Union Telegraph Company.

This great corporation was at the time their natural and inevitable enemy. It had swallowed most of its compet.i.tors, and was reaching out to monopolize all methods of communication by wire. The rosiest hope that shone in front of Sanders and Hubbard was that the Western Union might conclude to buy the Bell patents, just as it had already bought many others. In one moment of discouragement they had offered the telephone to President Orton, of the Western Union, for $100,000; and Orton had refused it. "What use," he asked pleasantly, "could this company make of an electrical toy?"

But besides the operation of its own wires, the Western Union was supplying customers with various kinds of printing-telegraphs and dial telegraphs, some of which could transmit sixty words a minute. These accurate instruments, it believed, could never be displaced by such a scientific oddity as the telephone. And it continued to believe this until one of its subsidiary companies--the Gold and Stock--reported that several of its machines had been superseded by telephones.

At once the Western Union awoke from its indifference. Even this tiny nibbling at its business must be stopped. It took action quickly and organized the "American Speaking-Telephone Company," with $300,000 capital, and with three electrical inventors, Edison, Gray, and Dolbear, on its staff. With all the bulk of its great wealth and prestige, it swept down upon Bell and his little bodyguard. It trampled upon Bell's patent with as little concern as an elephant can have when he tramples upon an ant's nest. To the complete bewilderment of Bell, it coolly announced that it had "the only original telephone," and that it was ready to supply "superior telephones with all the latest improvements made by the original inventors--Dolbear, Gray, and Edison."

The result was strange and unexpected. The Bell group, instead of being driven from the field, were at once lifted to a higher level in the business world. The effect was as if the Standard Oil Company were to commence the manufacture of aeroplanes. In a flash, the telephone ceased to be a "scientific toy," and became an article of commerce. It began for the first time to be taken seriously. And the Western Union, in the endeavor to protect its private lines, became involuntarily a bell-wether to lead capitalists in the direction of the telephone.

Sanders's relatives, who were many and rich, came to his rescue. Most of them were well-known business men--the Bradleys, the Saltonstalls, Fay, Silsbee, and Carlton. These men, together with Colonel William H. Forbes, who came in as a friend of the Bradleys, were the first capitalists who, for purely business reasons, invested money in the Bell patents. Two months after the Western Union had given its weighty endors.e.m.e.nt to the telephone, these men organized a company to do business in New England only, and put fifty thousand dollars in its treasury.

In a short time the delighted Hubbard found himself leasing telephones at the rate of a thousand a month. He was no longer a promoter, but a general manager. Men were standing in line to ask for agencies. Crude little telephone exchanges were being started in a dozen or more cities.

There was a spirit of confidence and enterprise; and the next step, clearly, was to create a business organization. None of the partners were competent to undertake such a work. Hubbard had little apt.i.tude as an organizer; Bell had none; and Sanders was held fast by his leather interests. Here, at last, after four years of the most heroic effort, were the raw materials out of which a telephone business could be constructed. But who was to be the builder, and where was he to be found?

One morning the indefatigable Hubbard solved the problem. "Watson," he said, "there's a young man in Washington who can handle this situation, and I want you to run down and see what you think of him." Watson went, reported favorably, and in a day or so the young man received a letter from Hubbard, offering him the position of General Manager, at a salary of thirty-five hundred dollars a year. "We rely," Hubbard said, "upon your executive ability, your fidelity, and unremitting zeal." The young man replied, in one of those dignified letters more usual in the nineteenth than in the twentieth century. "My faith in the success of the enterprise is such that I am willing to trust to it," he wrote, "and I have confidence that we shall establish the harmony and cooperation that is essential to the success of an enterprise of this kind." One week later the young man, Theodore N. Vail, took his seat as General Manager in a tiny office in Reade Street, New York, and the building of the business began.

This arrival of Vail at the critical moment emphasized the fact that Bell was one of the most fortunate of inventors. He was not robbed of his invention, as might easily have happened. One by one there arrived to help him a number of able men, with all the various abilities that the changing situation required. There was such a focussing of factors that the whole matter appeared to have been previously rehea.r.s.ed. No sooner had Bell appeared on the stage than his supporting players, each in his turn, received his cue and took part in the action of the drama.

There was not one of these men who could have done the work of any other. Each was distinctive and indispensable. Bell invented the telephone; Watson constructed it; Sanders financed it; Hubbard introduced it; and Vail put it on a business basis.

The new General Manager had, of course, no experience in the telephone business. Neither had any one else. But he, like Bell, came to his task with a most surprising fitness. He was a member of the historic Vail family of Morristown, New Jersey, which had operated the Speedwell Iron Works for four or five generations. His grand-uncle Stephen had built the engines for the Savannah, the first American steamship to cross the Atlantic Ocean; and his cousin Alfred was the friend and co-worker of Morse, the inventor of the telegraph. Morse had lived for several years at the Vail homestead in Morristown; and it was here that he erected his first telegraph line, a three-mile circle around the Iron Works, in 1838. He and Alfred Vail experimented side by side in the making of the telegraph, and Vail eventually received a fortune for his share of the Morse patent.

Thus it happened that young Theodore Vail learned the dramatic story of Morse at his mother's knee. As a boy, he played around the first telegraph line, and learned to put messages on the wire. His favorite toy was a little telegraph that he constructed for himself. At twenty-two he went West, in the vague hope of possessing a bonanza farm; then he swung back into telegraphy, and in a few years found himself in the Government Mail Service at Washington. By 1876, he was at the head of this Department, which he completely reorganized. He introduced the bag system in postal cars, and made war on waste and clumsiness. By virtue of this position he was the one man in the United States who had a comprehensive view of all railways and telegraphs. He was much more apt, consequently, than other men to develop the idea of a national telephone system.

While in the midst of this bureaucratic house-cleaning he met Hubbard, who had just been appointed by President Hayes as the head of a commission on mail transportation. He and Hubbard were constantly thrown together, on trains and in hotels; and as Hubbard invariably had a pair of telephones in his valise, the two men soon became co-enthusiasts.

Vail found himself painting brain-pictures of the future of the telephone, and by the time that he was asked to become its General Manager, he had become so confident that, as he said afterwards, he "was willing to leave a Government job with a small salary for a telephone job with no salary."

So, just as Amos Kendall had left the post office service thirty years before to establish the telegraph business, Theodore N. Vail left the post office service to establish the telephone business. He had been in authority over thirty-five hundred postal employees, and was the developer of a system that covered every inhabited portion of the country. Consequently, he had a quality of experience that was immensely valuable in straightening out the tangled affairs of the telephone. Line by line, he mapped out a method, a policy, a system. He introduced a larger view of the telephone business, and swept off the table all schemes for selling out. He persuaded half a dozen of his post office friends to buy stock, so that in less than two months the first "Bell Telephone Company" was organized, with $450,000 capital and a service of twelve thousand telephones.

Vail's first step, naturally, was to stiffen up the backbone of this little company, and to prevent the Western Union from frightening it into a surrender. He immediately sent a copy of Bell's patent to every agent, with orders to hold the fort against all opposition. "We have the only original telephone patents," he wrote; "we have organized and introduced the business, and we do not propose to have it taken from us by any corporation." To one agent, who was showing the white feather, he wrote:

"You have too great an idea of the Western Union. If it was all ma.s.sed in your one city you might well fear it; but it is represented there by one man only, and he has probably as much as he can attend to outside of the telephone. For you to acknowledge that you cannot compete with his influence when you make it your special business, is hardly the thing.

There may be a dozen concerns that will all go to the Western Union, but they will not take with them all their friends. I would advise that you go ahead and keep your present advantage. We must organize companies with sufficient vitality to carry on a fight, as it is simply useless to get a company started that will succ.u.mb to the first bit of opposition it may encounter."

Next, having encouraged his thoroughly alarmed agents, Vail proceeded to build up a definite business policy. He stiffened up the contracts and made them good for five years only. He confined each agent to one place, and reserved all rights to connect one city with another. He established a department to collect and protect any new inventions that concerned the telephone. He agreed to take part of the royalties in stock, when any local company preferred to pay its debts in this way. And he took steps toward standardizing all telephonic apparatus by controlling the factories that made it.

These various measures were part of Vail's plan to create a national telephone system. His central idea, from the first, was not the mere leasing of telephones, but rather the creation of a Federal company that would be a permanent partner in the entire telephone business. Even in that day of small things, and amidst the confusion and rough-and-tumble of pioneering, he worked out the broad policy that prevails to-day; and this goes far to explain the fact that there are in the United States twice as many telephones as there are in all other countries combined.

Vail arrived very much as Blucher did at the battle of Waterloo--a trifle late, but in time to prevent the telephone forces from being routed by the Old Guard of the Western Union. He was scarcely seated in his managerial chair, when the Western Union threw the entire Bell army into confusion by launching the Edison transmitter. Edison, who was at that time fairly started in his career of wizardry, had made an instrument of marvellous alertness. It was beyond all argument superior to the telephones then in use and the lessees of Bell telephones clamored with one voice for "a transmitter as good as Edison's." This, of course, could not be had in a moment, and the five months that followed were the darkest days in the childhood of the telephone.

How to compete with the Western Union, which had this superior transmitter, a host of agents, a network of wires, forty millions of capital, and a first claim upon all newspapers, hotels, railroads, and rights of way--that was the immediate problem that confronted the new General Manager. Every inch of progress had to be fought for. Several of his captains deserted, and he was compelled to take control of their unprofitable exchanges. There was scarcely a mail that did not bring him some bulletin of discouragement or defeat.

In the effort to conciliate a hostile public, the telephone rates had everywhere been made too low. Hubbard had set a price of twenty dollars a year, for the use of two telephones on a private line; and when exchanges were started, the rate was seldom more than three dollars a month. There were deadheads in abundance, mostly officials and politicians. In St. Louis, one of the few cities that charged a sufficient price, nine-tenths of the merchants refused to become subscribers. In Boston, the first pay-station ran three months before it earned a dollar. Even as late as 1880, when the first National Telephone Convention was held at Niagara Falls, one of the delegates expressed the general situation very correctly when he said: "We were all in a state of enthusiastic uncertainty. We were full of hope, yet when we a.n.a.lyzed those hopes they were very airy indeed. There was probably not one company that could say it was making a cent, nor even that it EXPECTED to make a cent."

Especially in the largest cities, where the Western Union had most power, the lives of the telephone pioneers were packed with hardships and adventures. In Philadelphia, for instance, a resolute young man named Thomas E. Cornish was attacked as though he had suddenly become a public enemy, when he set out to establish the first telephone service.

No official would grant him a permit to string wires. His workmen were arrested. The printing-telegraph men warned him that he must either quit or be driven out. When he asked capitalists for money, they replied that he might as well expect to lease jew's-harps as telephones. Finally, he was compelled to resort to strategy where argument had failed. He had received an order from Colonel Thomas Scott, who wanted a wire between his house and his office. Colonel Scott was the President of the Pennsylvania Railroad, and therefore a man of the highest prestige in the city. So as soon as Cornish had put this line in place, he kept his men at work stringing other lines. When the police interfered, he showed them Colonel Scott's signature and was let alone. In this way he put fifteen wires up before the trick was discovered; and soon afterwards, with eight subscribers, he founded the first Philadelphia exchange.

As may be imagined, such battling as this did not put much money into the treasury of the parent company; and the letters written by Sanders at this time prove that it was in a hard plight.

The following was one of the queries put to Hubbard by the overburdened Sanders:

"How on earth do you expect me to meet a draft of two hundred and seventy-five dollars without a dollar in the treasury, and with a debt of thirty thousand dollars staring us in the face?" "Vail's salary is small enough," he continued in a second letter, "but as to where it is coming from I am not so clear. Bradley is awfully blue and discouraged.

Williams is tormenting me for money and my personal credit will not stand everything. I have advanced the Company two thousand dollars to-day, and Williams must have three thousand dollars more this month.

His pay-day has come and his capital will not carry him another inch.

If Bradley throws up his hand, I will unfold to you my last desperate plan."

And if the company had little money, it had less credit. Once when Vail had ordered a small bill of goods from a merchant named Tillotson, of 15 Dey Street, New York, the merchant replied that the goods were ready, and so was the bill, which was seven dollars. By a strange coincidence, the magnificent building of the New York Telephone Company stands to-day on the site of Tillotson's store.

Month after month, the little Bell Company lived from hand to mouth. No salaries were paid in full. Often, for weeks, they were not paid at all.

In Watson's note-book there are such entries during this period as "Lent Bell fifty cents," "Lent Hubbard twenty cents," "Bought one bottle beer--too bad can't have beer every day." More than once Hubbard would have gone hungry had not Devonshire, the only clerk, shared with him the contents of a dinner-pail. Each one of the little group was beset by taunts and temptations. Watson was offered ten thousand dollars for his one-tenth interest, and hesitated three days before refusing it.

Railroad companies offered Vail a salary that was higher and sure, if he would superintend their mail business. And as for Sanders, his folly was the talk of Haverhill. One Haverhill capitalist, E. J. M. Hale, stopped him on the street and asked, "Have n't you got a good leather business, Mr. Sanders?" "Yes," replied Sanders. "Well," said Hale, "you had better attend to it and quit playing on wind instruments." Sanders's banker, too, became uneasy on one occasion and requested him to call at the bank. "Mr. Sanders," he said, "I will be obliged if you will take that telephone stock out of the bank, and give me in its place your note for thirty thousand dollars. I am expecting the examiner here in a few days, and I don't want to get caught with that stuff in the bank."

Then, in the very midnight of this depression, poor Bell returned from England, whither he and his bride had gone on their honeymoon, and announced that he had no money; that he had failed to establish a telephone business in England; and that he must have a thousand dollars at once to pay his urgent debts. He was thoroughly discouraged and sick.

As he lay in the Ma.s.sachusetts General Hospital, he wrote a cry for help to the embattled little company that was making its desperate fight to protect his patents. "Thousands of telephones are now in operation in all parts of the country," he said, "yet I have not yet received one cent from my invention. On the contrary, I am largely out of pocket by my researches, as the mere value of the profession that I have sacrificed during my three years' work, amounts to twelve thousand dollars."