XIV

IMPROVEMENT AND EXPANSION

    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  The free service to the Boston bankers was withdrawn and a commercial system installed there.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.