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.
[Illustration: “_Mr. Bell, I heard every word you
said—distinctly!_”]
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.
[Illustration: _Artist’s conception of the first commercial
switchboard, placed in service in New Haven, Conn., 1878. In the
early days of the telephone industry, operators were men._]