CHAPTER V. THE EXPANSION OF THE BUSINESS

The telephone business did not really begin to grow big and overspread

the earth until 1896, but the keynote of expansion was first sounded by

Theodore Vail in the earliest days, when as yet the telephone was a babe

in arms. In 1879 Vail said, in a letter written to one of his captains:

"Tell our agents that we have a proposition on foot to connect the

different cities for the purpose of personal communication, and in other

ways to organize a GRAND TELEPHONIC SYSTEM."

This was brave talk at that time, when there were not in the whole world

as many telephones as there are to-day in Cincinnati. It was brave talk

in those days of iron wire, peg switchboards, and noisy diaphragms. Most

telephone men regarded it as nothing more than talk. They did not see

any business future for the telephone except in short-distance service.

But Vail was in earnest. His previous experience as the head of the

railway mail service had lifted him up to a higher point of view.

He knew the need of a national system of communication that would be

quicker and more direct than either the telegraph or the post office.

"I saw that if the telephone could talk one mile to-day," he said, "it

would be talking a hundred miles to-morrow." And he persisted, in spite

of a considerable deal of ridicule, in maintaining that the telephone

was destined to connect cities and nations as well as individuals.

Four months after he had prophesied the "grand telephonic system," he

encouraged Charles J. Glidden, of world-tour fame, to build a telephone

line between Boston and Lowell. This was the first inter-city line. It

was well placed, as the owners of the Lowell mills lived in Boston, and

it made a small profit from the start. This success cheered Vail on to

a master-effort. He resolved to build a line from Boston to Providence,

and was so stubbornly bent upon doing this that when the Bell Company

refused to act, he picked up the risk and set off with it alone.

He organized a company of well-known Rhode Islanders--nicknamed the

"Governors' Company"--and built the line. It was a failure at first,

and went by the name of "Vail's Folly." But Engineer Carty, by a happy

thought, DOUBLED THE WIRE, and thus in a moment established two new

factors in the telephone business--the Metallic Circuit and the Long

Distance line.

At once the Bell Company came over to Vail's point of view, bought

his new line, and launched out upon what seemed to be the foolhardy

enterprise of stringing a double wire from Boston to New York. This

was to be not only the longest of all telephone lines, strung on ten

thousand poles; it was to be a line de luxe, built of glistening red

copper, not iron. Its cost was to be seventy thousand dollars, which was

an enormous sum in those hardscrabble days. There was much opposition to

such extravagance, and much ridicule. "I would n't take that line as a

gift," said one of the Bell Company's officials.

But when the last coil of wire was stretched into place, and the first

"Hello" leaped from Boston to New York, the new line was a victorious

success. It carried messages from the first day; and more, it raised the

whole telephone business to a higher level. It swept away the prejudice

that telephone service could become nothing more than a neighborhood

affair. "It was the salvation of the business," said Edward J. Hill. It

marked a turning-point in the history of the telephone, when the day

of small things was ended and the day of great things was begun. No

one man, no hundred men, had created it. It was the final result of ten

years of invention and improvement.

While this epoch-making line was being strung, Vail was pushing his

"grand telephonic system" policy by organizing The American Telephone

and Telegraph Company. This, too, was a master-stroke. It was the

introduction of the staff-and-line method of organization into business.

It was doing for the forty or fifty Bell Companies what Von Moltke

did for the German army prior to the Franco-Prussian War. It was the

creation of a central company that should link all local companies

together, and itself own and operate the means by which these companies

are united. This central company was to grapple with all national

problems, to own all telephones and long-distance lines, to protect all

patents, and to be the headquarters of invention, information, capital,

and legal protection for the entire federation of Bell Companies.

Seldom has a company been started with so small a capital and so vast a

purpose. It had no more than $100,000 of capital stock, in 1885; but

its declared object was nothing less than to establish a system of

wire communication for the human race. Here are, in its own words, the

marching orders of this Company: "To connect one or more points in each

and every city, town, or place an the State of New York, with one or

more points in each and every other city, town, or place in said State,

and in each and every other of the United States, and in Canada, and

Mexico; and each and every of said cities, towns, and places is to be

connected with each and every other city, town, or place in said States

and countries, and also by cable and other appropriate means with the

rest of the known world."

So ran Vail's dream, and for nine years he worked mightily to make it

come true. He remained until the various parts of the business had grown

together, and until his plan for a "grand telephonic system" was under

way and fairly well understood. Then he went out, into a series of

picturesque enterprises, until he had built up a four-square fortune;

and recently, in 1907, he came back to be the head of the telephone

business, and to complete the work of organization that he started

thirty years before.

When Vail said auf wiedersehen to the telephone business, it had passed

from infancy to childhood. It was well shaped but not fully grown. Its

pioneering days were over. It was self-supporting and had a little money

in the bank. But it could not then have carried the load of traffic that

it carries to-day. It had still too many problems to solve and too

much general inertia to overcome. It needed to be conserved, drilled,

educated, popularized. And the man who was finally chosen to replace

Vail was in many respects the appropriate leader for such a preparatory

period.

Hudson--John Elbridge Hudson--was the name of the new head of the

telephone people. He was a man of middle age, born in Lynn and bred in

Boston; a long-pedigreed New Englander, whose ancestors had smelted

iron ore in Lynn when Charles the First was King. He was a lawyer by

profession and a university professor by temperament. His specialty, as

a man of affairs, had been marine law; and his hobby was the collection

of rare books and old English engravings. He was a master of the Greek

language, and very fond of using it. On all possible occasions he used

the language of Pericles in his conversation; and even carried this

preference so far as to write his business memoranda in Greek. He was

above all else a scholar, then a lawyer, and somewhat incidentally the

central figure in the telephone world.

But it was of tremendous value to the telephone business at that time to

have at its head a man of Hudson's intellectual and moral calibre.

He gave it tone and prestige. He built up its credit. He kept it clean

and clear above all suspicion of wrong-doing. He held fast whatever

had been gained. And he prepared the way for the period of expansion by

borrowing fifty millions for improvements, and by adding greatly to the

strength and influence of the American Telephone and Telegraph Company.

Hudson remained at the head of the telephone table until his death, in

1900, and thus lived to see the dawn of the era of big business. Under

his regime great things were done in the development of the art. The

business was pushed ahead at every point by its captains. Every man in

his place, trying to give a little better service than yesterday--that

was the keynote of the Hudson period. There was no one preeminent

genius. Each important step forward was the result of the cooperation of

many minds, and the prodding necessities of a growing traffic.

By 1896, when the Common Battery system created a new era, the telephone

engineer had pretty well mastered his simpler troubles. He was able to

handle his wires, no matter how many. By this time, too, the public

was ready for the telephone. A new generation had grown up, without the

prejudices of its fathers. People had grown away from the telegraphic

habit of thought, which was that wire communications were expensive

luxuries for the few. The telephone was, in fact, a new social nerve,

so new and so novel that very nearly twenty years went by before it

had fully grown into place, and before the social body developed the

instinct of using it.

Not that the difficulties of the telephone engineers were over, for they

were not. They have seemed to grow more numerous and complex every year.

But by 1896 enough had been done to warrant a forward movement. For the

next ten-year period the keynote of telephone history was EXPANSION.

Under the prevailing flat-rate plan of payment, all customers paid

the same yearly price and then used their telephones as often as they

pleased. This was a simple method, and the most satisfactory for small

towns and farming regions. But in a great city such a plan grew to be

suicidal. In New York, for instance, the price had to be raised to $240,

which lifted the telephone as high above the mass of the citizens as

though it were a piano or a diamond sunburst. Such a plan was strangling

the business. It was shutting out the small users. It was clogging the

wires with deadhead calls. It was giving some people too little service

and others too much. It was a very unsatisfactory situation.

How to extend the service and at the same time cheapen it to small

users--that was the Gordian knot; and the man who unquestionably did

most to untie it was Edward J. Hall. Mr. Hall founded the telephone

business in Buffalo in 1878, and seven years afterwards became the chief

of the long-distance traffic. He was then, and is to-day, one of the

statesmen of the telephone. For more than thirty years he has been the

"candid friend" of the business, incessantly suggesting, probing, and

criticising. Keen and dispassionate, with a genius for mercilessly

cutting to the marrow of a proposition, Hall has at the same time been a

zealot for the improvement and extension of telephone service. It was he

who set the agents free from the ball-and-chain of royalties, allowing

them to pay instead a percentage of gross receipts. And it was he who

"broke the jam," as a lumberman would say, by suggesting the MESSAGE

RATE system.

By this plan, which U. N. Bethell developed to its highest point in New

York, a user of the telephone pays a fixed minimum price for a certain

number of messages per year, and extra for all messages over this

number. The large user pays more, and the little user pays less. It

opened up the way to such an expansion of telephone business as Bell,

in his rosiest dreams, had never imagined. In three years, after 1896,

there were twice as many users; in six years there were four times as

many; in ten years there were eight to one. What with the message rate

and the pay station, the telephone was now on its way to be universal.

It was adapted to all kinds and conditions of men. A great corporation,

nerved at every point with telephone wires, may now pay fifty thousand

dollars to the Bell Company, while at the same time a young Irish

immigrant boy, just arrived in New York City, may offer five coppers and

find at his disposal a fifty million dollar telephone system.

When the message rate was fairly well established, Hudson died--fell

suddenly to the ground as he was about to step into a railway carriage.

In his place came Frederick P. Fish, also a lawyer and a Bostonian. Fish

was a popular, optimistic man, with a "full-speed-ahead" temperament.

He pushed the policy of expansion until he broke all the records. He

borrowed money in stupendous amounts--$150,000,000 at one time--and

flung it into a campaign of red-hot development. More business he

demanded, and more, and more, until his captains, like a thirty-horse

team of galloping horses, became very nearly uncontrollable.

It was a fast and furious period. The whole country was ablaze with a

passion of prosperity. After generations of conflict, the men with large

ideas had at last put to rout the men of small ideas. The waste

and folly of competition had everywhere driven men to the policy of

cooperation. Mills were linked to mills and factories to factories, in

a vast mutualism of industry such as no other age, perhaps, has ever

known. And as the telephone is essentially the instrument of co-working

and interdependent people, it found itself suddenly welcomed as the most

popular and indispensable of all the agencies that put men in touch with

each other.

To describe this growth in a single sentence, we might say that the

Bell telephone secured its first million of capital in 1879; its first

million of earnings in 1882; its first million of dividends in 1884; its

first million of surplus in 1885. It had paid out its first million for

legal expenses by 1886; began first to send a million messages a day

in 1888; had strung its first million miles of wire in 1900; and had

installed its first million telephones in 1898. By 1897 it had spun as

many cobwebs of wire as the mighty Western Union itself; by 1900 it had

twice as many miles of wire as the Western Union, and in 1905 FIVE TIMES

as many. Such was the plunging progress of the Bell Companies in this

period of expansion, that by 1905 they had swept past all European

countries combined, not only in the quality of the service but in the

actual number of telephones in use. This, too, without a cent of public

money, or the protection of a tariff, or the prestige of a governmental

bureau.

By 1892 Boston and New York were talking to Chicago, Milwaukee,

Pittsburg, and Washington. One-half of the people of the United States

were within talking distance of each other. The THOUSAND-MILE TALK had

ceased to be a fairy tale. Several years later the western end of the

line was pushed over the plains to Nebraska, enabling the spoken word in

Boston to be heard in Omaha. Slowly and with much effort the public were

taught to substitute the telephone for travel. A special long-distance

salon was fitted up in New York City to entice people into the habit

of talking to other cities. Cabs were sent for customers; and when one

arrived, he was escorted over Oriental rugs to a gilded booth, draped

with silken curtains. This was the famous "Room Nine." By such and many

other allurements a larger idea of telephone service was given to the

public mind; until in 1909 at least eighteen thousand New York-Chicago

conversations were held, and the revenue from strictly long-distance

messages was twenty-two thousand dollars a day.

By 1906 even the Rocky Mountain Bell Company had grown to be a

ten-million-dollar enterprise. It began at Salt Lake City with a hundred

telephones, in 1880. Then it reached out to master an area of four

hundred and thirteen thousand square miles--a great Lone Land of

undeveloped resources. Its linemen groped through dense forests where

their poles looked like toothpicks beside the towering pines and cedars.

They girdled the mountains and basted the prairies with wire, until the

lonely places were brought together and made sociable. They drove off

the Indians, who wanted the bright wire for ear-rings and bracelets;

and the bears, which mistook the humming of the wires for the buzzing

of bees, and persisted in gnawing the poles down. With the most heroic

optimism, this Rocky Mountain Company persevered until, in 1906, it had

created a seventy-thousand-mile nerve-system for the far West.

Chicago, in this year, had two hundred thou-sand telephones in use, in

her two hundred square miles of area. The business had been built up by

General Anson Stager, who was himself wealthy, and able to attract the

support of such men as John Crerar, H. H. Porter, and Robert T. Lincoln.

Since 1882 it has paid dividends, and in one glorious year its stock

soared to four hundred dollars a share. The old-timers--the men who

clambered over roof-tops in 1878 and tacked iron wires wherever they

could without being chased off--are still for the most part in control

of the Chicago company.

But as might have been expected, it was New York City that was the

record-breaker when the era of telephone expansion arrived. Here the

flood of big business struck with the force of a tidal wave. The number

of users leaped from 56,000 in 1900 up to 810,000 in 1908. In a single

year of sweating and breathless activity, 65,000 new telephones were

put on desks or hung on walls--an average of one new user for every two

minutes of the business day.

Literally tons, and hundreds of tons, of telephones were hauled in drays

from the factory and put in place in New York's homes and offices. More

and more were demanded, until to-day there are more telephones in New

York than there are in the four countries, France, Belgium, Holland, and

Switzerland combined. As a user of telephones New York has risen to be

unapproachable. Mass together all the telephones of London, Glasgow,

Liverpool, Manchester, Birmingham, Leeds, Sheffleld, Bristol, and

Belfast, and there will even then be barely as many as are carrying the

conversations of this one American city.

In 1879 the New York telephone directory was a small card, showing

two hundred and fifty-two names; but now it has grown to be an

eight-hundred-page quarterly, with a circulation of half a million, and

requiring twenty drays, forty horses, and four hundred men to do the

work of distribution. There was one shabby little exchange thirty years

ago; but now there are fifty-two exchanges, as the nerve-centres of

a vast fifty-million-dollar system. Incredible as it may seem to

foreigners, it is literally true that in a single building in New York,

the Hudson Terminal, there are more telephones than in Odessa or Madrid,

more than in the two kingdoms of Greece and Bulgaria combined.

Merely to operate this system requires an army of more than five

thousand girls. Merely to keep their records requires two hundred and

thirty-five million sheets of paper a year. Merely to do the writing of

these records wears away five hundred and sixty thousand lead pencils.

And merely to give these girls a cup of tea or coffee at noon, compels

the Bell Company to buy yearly six thousand pounds of tea, seventeen

thousand pounds of coffee, forty-eight thousand cans of condensed milk,

and one hundred and forty barrels of sugar.

The myriad wires of this New York system are tingling with talk every

minute of the day and night. They are most at rest between three and

four o'clock in the morning, although even then there are usually ten

calls a minute. Between five and six o'clock, two thousand New Yorkers

are awake and at the telephone. Half an hour later there are twice as

many. Between seven and eight twenty-five thousand people have called

up twenty-five thousand other people, so that there are as many people

talking by wire as there were in the whole city of New York in the

Revolutionary period. Even this is only the dawn of the day's business.

By half-past eight it is doubled; by nine it is trebled; by ten it is

multiplied sixfold; and by eleven the roar has become an incredible

babel of one hundred and eighty thousand conversations an hour, with

fifty new voices clamoring at the exchanges every second.

This is "the peak of the load." It is the topmost pinnacle of talk. It

is the utmost degree of service that the telephone has been required to

give in any city. And it is as much a world's wonder, to men and

women of imagination, as the steel mills of Homestead or the turbine

leviathans that curve across the Atlantic Ocean in four and a half days.

As to the men who built it up: Charles F. Cutler died in 1907, but

most of the others are still alive and busy. Union N. Bethell, now

in Cutler's place at the head of the New York Company, has been the

operating chief for eighteen years. He is a man of shrewdness and

sympathy, with a rare sagacity in solving knotty problems, a president

of the new type, who regards his work as a sort of obligation he owes

to the public. And just as foreigners go to Pittsburg to see the steel

business at its best; just as they go to Iowa and Kansas to see the

New Farmer, so they make pilgrimages to Bethell's office to learn the

profession of telephony.

This unparalleled telephone system of New York grew up without having

at any time the rivalry of competition. But in many other cities and

especially in the Middle West, there sprang up in 1895 a medley of

independent companies. The time of the original patents had expired, and

the Bell Companies found themselves freed from the expense of litigation

only to be snarled up in a tangle of duplication. In a few years there

were six thousand of these little Robinson Crusoe companies. And by 1901

they had put in use more than a million telephones and were professing

to have a capital of a hundred millions.

Most of these companies were necessary and did much to expand the

telephone business into new territory. They were in fact small mutual

associations of a dozen or a hundred farmers, whose aim was to get

telephone service at cost. But there were other companies, probably

a thousand or more, which were organized by promoters who built their

hopes on the fact that the Bell Companies were unpopular, and on the

myth that they were fabulously rich. Instead of legitimately extending

telephone lines into communities that had none, these promoters

proceeded to inflict the messy snarl of an overlapping system upon

whatever cities would give them permission to do so.

In this way, masked as competition, the nuisance and waste of

duplication began in most American cities. The telephone business was

still so young, it was so little appreciated even by the telephone

officials and engineers, that the public regarded a second or a

third telephone system in one city as quite a possible and desirable

innovation. "We have two ears," said one promoter; "why not therefore

have two telephones?"

This duplication went merrily on for years before it was generally

discovered that the telephone is not an ear, but a nerve system; and

that such an experiment as a duplicate nerve system has never been

attempted by Nature, even in her most frivolous moods. Most people

fancied that a telephone system was practically the same as a gas or

electric light system, which can often be duplicated with the result of

cheaper rates and better service. They did not for years discover that

two telephone companies in one city means either half service or double

cost, just as two fire departments or two post offices would.

Some of these duplicate companies built up a complete plant, and gave

good local service, while others proved to be mere stock bubbles. Most

of them were over-capitalized, depending upon public sympathy to atone

for deficiencies in equipment. One which had printed fifty million

dollars of stock for sale was sold at auction in 1909 for four hundred

thousand dollars. All told, there were twenty-three of these bubbles

that burst in 1905, twenty-one in 1906, and twelve in 1907. So high

has been the death-rate among these isolated companies that at a recent

convention of telephone agents, the chairman's gavel was made of

thirty-five pieces of wood, taken from thirty-five switchboards of

thirty-five extinct companies.

A study of twelve single-system cities and twenty-seven double-system

cities shows that there are about eleven per cent more telephones under

the double-system, and that where the second system is put in, every

fifth user is obliged to pay for two telephones. The rates are alike,

whether a city has one or two systems. Duplicating companies raised

their rates in sixteen cities out of the twenty-seven, and reduced them

in one city. Taking the United States as a whole, there are to-day fully

two hundred and fifty thousand people who are paying for two telephones

instead of one, an economic waste of at least ten million dollars a

year.

A fair-minded survey of the entire independent telephone movement would

probably show that it was at first a stimulant, followed, as stimulants

usually are, by a reaction. It was unquestionably for several years a

spur to the Bell Companies. But it did not fulfil its promises of cheap

rates, better service, and high dividends; it did little or nothing to

improve telephonic apparatus, producing nothing new except the automatic

switchboard--a brilliant invention, which is now in its experimental

period. In the main, perhaps, it has been a reactionary and troublesome

movement in the cities, and a progressive movement among the farmers.

By 1907 it was a wave that had spent its force. It was no longer rolling

along easily on the broad ocean of hope, but broken and turned aside

by the rocks of actual conditions. One by one the telephone promoters

learned the limitations of an isolated company, and asked to be included

as members of the Bell family. In 1907 four hundred and fifty-eight

thousand independent telephones were linked by wire to the nearest Bell

Company; and in 1908 these were followed by three hundred and fifty

thousand more. After this landslide to the policy of consolidation,

there still remained a fairly large assortment of independent companies;

but they had lost their dreams and their illusions.

As might have been expected, the independent movement produced a number

of competent local leaders, but none of national importance. The Bell

Companies, on the other hand, were officered by men who had for a

quarter of a century been surveying telephone problems from a national

point of view. At their head, from 1907 onwards, was Theodore N. Vail,

who had returned dramatically, at the precise moment when he was needed,

to finish the work that he had begun in 1878. He had been absent for

twenty years, developing water-power and building street-railways in

South America. In the first act of the telephone drama, it was he

who put the enterprise upon a business basis, and laid down the first

principles of its policy. In the second and third acts he had no place;

but when the curtain rose upon the fourth act, Vail was once more the

central figure, standing white-haired among his captains, and pushing

forward the completion of the "grand telephonic system" that he had

dreamed of when the telephone was three years old.

Thus it came about that the telephone business was created by Vail,

conserved by Hudson, expanded by Fish, and is now in process of being

consolidated by Vail. It is being knit together into a stupendous Bell

System--a federation of self-governing companies, united by a central

company that is the busiest of them all. It is no longer protected by

any patent monopoly. Whoever is rich enough and rash enough may enter

the field. But it has all the immeasurable advantages that come from

long experience, immense bulk, the most highly skilled specialists,

and an abundance of capital. "The Bell System is strong," says Vail,

"because we are all tied up together; and the success of one is

therefore the concern of all."

The Bell System! Here we have the motif of American telephone

development. Here is the most comprehensive idea that has entered any

telephone engineer's brain. Already this Bell System has grown to be so

vast, so nearly akin to a national nerve system, that there is nothing

else to which we can compare it. It is so wide-spread that few are

aware of its greatness. It is strung out over fifty thousand cities and

communities.

If it were all gathered together into one place, this Bell System, it

would make a city of Telephonia as large as Baltimore. It would contain

half of the telephone property of the world. Its actual wealth would be

fully $760,000,000, and its revenue would be greater than the revenue of

the city of New York.

Part of the property of the city of Telephonia consists of ten million

poles, as many as would make a fence from New York to California, or put

a stockade around Texas. If the Telephonians wished to use these poles

at home, they might drive them in as piles along their water-front, and

have a twenty-five thousand-acre dock; or if their city were a hundred

square miles in extent, they might set up a seven-ply wall around it

with these poles.

Wire, too! Eleven million miles of it! This city of Telephonia would

be the capital of an empire of wire. Not all the men in New York State

could shoulder this burden of wire and carry it. Throw all the people

of Illinois in one end of the scale, and put on the other side the

wire-wealth of Telephonia, and long before the last coil was in place,

the Illinoisans would be in the air.

What would this city do for a living? It would make two-thirds of

the telephones, cables, and switchboards of all countries. Nearly

one-quarter of its citizens would work in factories, while the others

would be busy in six thousand exchanges, making it possible for the

people of the United States to talk to one another at the rate of SEVEN

THOUSAND MILLION CONVERSATIONS A YEAR.

The pay-envelope army that moves to work every morning in Telephonia

would be a host of one hundred and ten thousand men and girls, mostly

girls,--as many girls as would fill Vassar College a hundred times and

more, or double the population of Nevada. Put these men and girls in

line, march them ten abreast, and six hours would pass before the last

company would arrive at the reviewing stand. In single file this throng

of Telephonians would make a living wall from New York to New Haven.

Such is the extraordinary city of which Alexander Graham Bell was the

only resident in 1875. It has been built up without the backing of any

great bank or multi-millionaire. There have been no Vanderbilts in it,

no Astors, Rockefellers, Rothschilds, Harrimans. There are even now

only four men who own as many as ten thousand shares of the stock of

the central company. This Bell System stands as the life-work of

unprivileged men, who are for the most part still alive and busy. With

very few and trivial exceptions, every part of it was made in the

United States. No other industrial organism of equal size owes foreign

countries so little. Alike in its origin, its development, and

its highest point of efficiency and expansion, the telephone is as

essentially American as the Declaration of Independence or the monument

on Bunker Hill.

The History of the Telephone · 第 5 / 9 章