Part 3

The commercial development of the telephone had begun and the time had come for a more definite organization than the rather informal arrangement that had been made between Bell, Sanders and Hubbard, into which Watson had by this time been admitted.

This took the form of a trusteeship, instituted in July, 1877, by these four owners of the patents. Hubbard was trustee and virtual executive head of the enterprise. It was he who introduced the policy of leasing instruments instead of selling them and who introduced the system of licenses to authorized agents or licensees throughout the country for the commercial development of the telephone, laying the foundation for the Bell System of today.

Telephones first were leased in pairs. The lessee put up his own wire to connect his telephone with that of a friend or neighbor, or ran the line between his home and place of business. There was no way he could talk by telephone with others in the community who leased instruments.

The interconnection of these individual subscribers awaited the development of the telephone switchboard. The first switchboard was installed in the office of E. T. Holmes, in Boston, in May, 1877, and connected four banks and a manufacturing concern. It connected these few telephones in the daytime by wires that were used for a burglar alarm system at night. New Haven, Conn., became the first city in the world to have a commercial telephone exchange. A switchboard connecting eight lines and 21 subscribers went into service there in January, 1878.

Two years later in April, 1880, the American Bell Telephone Company was organized. It greatly developed the telephone organization and business throughout the country. A line from Boston to Providence was built in 1881. Service between Boston and New York, 235 miles, opened in 1884.

An important step in the attainment of a nation-wide telephone service was the organization of American Telephone and Telegraph Company in 1885. This company was formed to build and operate long distance lines to interconnect the regional companies that had developed, by merger and growth from early licensee companies.

To attain the ideal of universal telephone service, it became increasingly important to extend the long distance lines even farther, to carry on continuous investigation in the practical development of the telephone art, to make further progress toward the standardization of apparatus, equipment and methods and to handle economically and efficiently the many general problems shared by the telephone companies. In 1900, therefore, the American Telephone and Telegraph Company took over the assets of the American Bell Telephone Company and became the headquarters company of the Bell System.

The Future Holds Great Promise

Year after year, the Bell System has provided service of steadily increasing value to more and more people. Through times of boom and depression, during all-out war and postwar readjustment, and now in a period of defense preparation, the Bell companies have improved and strengthened the communications network in order to do the best possible job for the nation. Here are some of the accomplishments that have been made in the period since 1920:

■ Fast, accurate dial service has been extended to more than four-fifths of all Bell System telephones.

■ Sturdy cable lines, capable of carrying thousands of conversations, now reach from border to border, and from coast to coast. These transcontinental cable lines are invaluable for maintaining communications in case of a national emergency.

■ A microwave radio relay route, carrying both telephone conversations and television programs, now spans the nation.

■ The regional companies of the Bell System have enlarged their facilities in order to take care of about 160,000,000 telephone conversations per day—more than four times as many as in 1920.

■ Drawing Americans closer together, long distance facilities have been expanded in order to handle more than 2,600,000,000 intercity calls a year, compared to about 270,000,000 in 1920.

■ Radio-telephone provides regular service overseas, to ocean liners, coastal and inland watercraft, motor vehicles, trains and airplanes.

Your telephone is more valuable

Your telephone is a much better “buy” than ever before. Many more people now have telephones, and local calling areas have been extended. You can call more people and more can reach you.

These days, when the cost of nearly everything is higher than ever before, the price of telephone service has remained relatively low. On the average, since the Korean war, the cost of telephone service has gone up much less than the cost of other things you buy.

1920 30,000 1954 156,000 Chart based on study of 170 U. S. cities over 50,000 population.

Over the years there has been a remarkable reduction in long distance rates. Between 25 of the principal cities in the country, the average day rate for station calls has dropped from $6 in 1920 to about $1.55 today. The day rate for a New York-San Francisco station call has been reduced from $16.50 to $2.50. Overseas rates have been cut drastically since the service opened in 1927. A New York-London call that cost $75 in 1927 now costs only $12 in the daytime, or $9 nights and Sundays.

The goal—constantly improving service

The Bell System strives constantly to improve service. New devices, new systems, promise more and better telephone service at the lowest possible cost.

Dial service is being extended, of course, to more and more communities. Also, new equipment now enables operators to dial many long distance calls straight through to distant telephones without the assistance of other telephone operators along the route. Operator long distance dialing networks now crisscross the country, reaching out to about 3,600 cities and localities. Other localities are constantly being joined to these networks.

In more than 40 towns special installations enable customers to dial long distance calls directly to more than 11,000,000 telephones from coast to coast. An “electric brain” receives a number as it is dialed and completes the call. An automatic accounting system gathers the information for billing. Bell telephone engineers plan the extension of this Direct Distance Dialing to serve the whole nation in a decade or so.

Bell System mobile telephone service is now a reality in most major cities and on many highways. “Traveling telephones” are numerous on ships that ply coastal and inland waterways, and a growing number of passenger trains now offer regular telephone service. In addition, private line mobile telephone systems, leased and serviced by the various Bell telephone companies, are being used increasingly by police departments, utilities and industrial concerns.

With the help of fast, economical construction methods and new transmission techniques, the Bell companies are improving and extending telephone service in rural areas. Power-driven augers quickly drill pole holes. Special plows place wire underground and cover it, in one operation. By means of special equipment, both electric power and telephone conversations can travel to farms over the same wires.

These methods have helped telephone engineers and construction forces put in rural telephone facilities three times faster than ever before. Gradually, the telephone is eliminating the traditional isolation of farm life. Rural localities have been linked by literally tens of thousands of miles of new pole lines, by modern central office buildings, by the most up-to-date switchboards. Great strides are being made in improving the quality of rural telephone service.

With the steady pressure of world tensions, the Bell System has taken many steps to make sure that America’s defense needs will be met. The telephone companies have a good foundation to build on. Telephone buildings are of unusually strong construction. The entire United States is blanketed by a network of telephone circuits. American cities are underlaid by networks of underground cables, which, as wartime experience in Japan showed, would not generally be destroyed even by atom bombs.

The nation is now spanned—coast to coast, and north to south—by “backbone” communication routes. Calls between cities can be routed over many alternate paths, and destruction of telephone facilities at one point would be like throwing a pebble through a huge spider web. While service at the one point might be temporarily interrupted, the nation-wide communications web would continue to function. Because of the strength and flexibility of the telephone network, the basic means of communication in the nation’s Civil Defense setup has been built around the telephone.

Throughout America the work of improving and strengthening the telephone system goes on. The goal is to help make the nation invulnerable against attack, and to provide the public with the best possible service, at reasonable cost, in rural communities, in cities, and on intercity routes.

Story without an ending

Neither chance nor mere good fortune has brought this nation the finest telephone service in the world. Americans enjoy this service as a result of their own enterprise and common sense.

The people of this nation have found more and more ways to use the telephone in their daily lives. They have encouraged initiative and invention. They have made the job of providing telephone service a public trust. At the same time, they have given the telephone companies, under regulation, the freedom and resources to do their job as well as possible.

In this climate of freedom and responsibility, the Bell telephone companies have provided service of steadily increasing value. And the quality of service has been steadily improved.

In the years since World War II, the public demand for service has been so great that the Bell System has carried out the most extensive construction program ever undertaken in so short a time by any single enterprise. The people of America made this program possible. Since the war, and through 1954, they have invested about seven billion dollars of their savings in Bell System securities, and this money has been used to construct new telephone buildings, buy new equipment, and extend service.

Now, some ten years after the war, the term “extend service” means much more than being able to provide a telephone for those who want it. Today, the telephone in America has gained many new dimensions as the Bell System offers more and more things to meet the wants of the American people—things that add even more variety and convenience to its service. Telephones in attractive colors that blend or contrast with any decorative scheme; telephones with illuminated dials that can be seen in the dark; telephones with push buttons to answer as many as six lines; equipment that will automatically answer calls when no one is in, and give and take recorded messages—these are only a few of many.

Bell System men and women, with experience and skill, backed by the great flexibility of their communications network, are writing the story of steadily improving telephone service—a story that will have no ending.

Printed in U.S.A. 8-55

Transcriber’s Notes

—Silently corrected a few typos.

—Retained publication information from the printed edition: this eBook is public-domain in the country of publication.

—In the text versions only, text in italics is delimited by _underscores_.