October 16, 2020 • 44 mins
Who was Alexander Graham Bell? Why did he create the Bell Telephone Company? How was AT&T created?
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Episode Transcript
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Speaker 1 (00:04):
Welcome to Tech Stuff, a production from I Heart Radio.
Hey there, and welcome to tech Stuff. I'm your host,
Jonathan Strickland. I'm an executive producer with iHeart Radio and
a lot of all things tech. It is time for
a classic episode and we are going to have a
three partner in a series of classics. So this is
(00:26):
going to be part one of three, and it's all
about A. T and T, a huge company that has
more than a century worth of history to it. So
that's why I ended up being a three partner. And
of course I could easily record another part to this.
Just the amount of stuff that's happened in the past
seven years alone would warrant such a thing, and maybe
(00:49):
I will. But first let's listen back to where it
all began with the A. T. And T story Part one.
We've had other discussions about other companies that, you know,
you have to start with like a like the company
appearance General General Electric. You know, you have to go
back way before General Electric to really talk about the company.
So in this case, we have to talk about a man,
(01:09):
a man who has been credited officially and through other
sources as the inventor of the telephone although as we
all know, when it comes to inventions, it's a lot trick.
It's very tricky to narrow it down to a single person.
It takes a research society to make a technology, and
turns out that there are a lot of people who
are working on things all at the same time, and
(01:31):
sometimes it's just the person who gets the first. In
the case of Alexander Graham Bell, Uh, not that he
didn't work very hard and make great contributions. It's just
that there were other people doing the same sort of stuff. Right,
So in February, on February eighteen seventy six, that is
when he filed this first pattern yep to a way
(01:52):
to electronically transmit speech by quote causing electrical undulations similar
informed to the vibrations of the air accompanying the said
voke or other sounds substantially as set forth end quote. Now. Uh,
it's interesting he had already written the patent out earlier
in January of that year, but there was a peculiar
(02:13):
sort of legal loophole that he had to leap through
in order for him to get this patent recognized in
not just the United States, but also the United Kingdom.
See the UK had a rule that stated if you
wanted to patent something in the UK, it could not
first have been patented anywhere else. So Graham Bell writes
up this patent he wants to get patented. He's ready
(02:35):
to submit it, except that he first has to get
over to the UK. And uh, guys, who don't know
if you're familiar with this. In eighteen seventy six, there
were very few options on how to get from say
the United States to England that didn't involve a really
long journey, right. It was basically swimming a horse right
across that. Yep, you just hitch a steam of horses
to a boat and say, giddy up. I mean, we
(02:58):
didn't really research that part, so we'd be a little inaccurate.
Make sure you tweet us and let us know. But no, no,
I mean, you know, because a telecommunications were not a
thing at this point, because he hadn't patented it yet,
all right, So it was it was taken a while,
and so as it turned out, that very same day,
another electrician began the filing process. I don't think actually
(03:20):
filed what he what he did. We're talking about Elisha
Gray and Elishah Gray or or We'll just call him
Gray because first of all, I assume it's Elisha. I
did not look up at the pronunciation of his first name.
But Mr Gray had submitted a preliminary application for a
similar apparatus. It was also called a caveat. That was
the technical name for the preliminary application. He submitted a
(03:42):
caveat for consideration for a patent the very same day
that Graham Bell posted it filed his pen or technically
Bell's lawyer filed the pattern right here in the United
States we're talking about, yes, exactly. So Gray applied for
a pattern with a very similar idea, and the story
go and I don't know the truth of this, And
in fact, I have proposed to Lauren, not romantically, I
(04:06):
mean an episode title. I've proposed to her that we
actually cover the content the topic of Alexander Graham Bell
and Elisha Gray, because the story about who got that
patent is really interesting and I think could merit its
own episode at any rate. Uh. The story is that
Bell's lawyer got a look at Gray's application, which included
(04:31):
an element that was not in Bell's work. But then
when the patent was filed, there was a little scroll
in the margin that covered the same idea. So the
story is that Bell's lawyer, or perhaps Bell himself, It
all depends upon the account you read, lifted an idea
directly from Gray's work in order to essentially beat him tempt.
(04:56):
So Bell's patent application goes in ahead of raise, and
so Bell is at least initially awarded the patent, although
it was not uncontested. There was actually quite a vigorous
battle in the legal system of that was gone for
a few years. And so moving ahead on in that
(05:17):
same year March tenth, eighteen seventy six, and remember he's
already filed the patent, But it was only on March tenth,
eighteen seventy six that we had the famous message from
Alexander Graham Bell to his assistant Thomas Watson. Mr Watson
being in another room in the same building. Yeah, and
and he heard it over this device what would what
would become the telephone, and the message, of course was
(05:41):
Mr Watson, come here, I want you. And it turns
out that Corey to the story, Alexander Graham Bell had
acidentally spilled some acid and needed Thomas Watson to come
over and help him clean it up before it did
any damage to the surroundings. So not only was March tenth,
eighteen seventy six the first phone call, it was the
first emergency phone call. So yeah, that's a fun little
(06:07):
little side note about this. And we are leading up
to the company, but we have to lay this groundwork. Yeah,
and I find all of this pretty fascinating overall. So,
so on October eighth of that year, eighty six, they
had the first two way telephone call between Watson and Bell. Now,
before it was a one way thing. You you could
have a transmitter and receiver essentially. Now there was one
(06:29):
on either side. You could actually have this communication. And
this is where Bell introduced his idea of what the
perfect telephone salutation was, Hoi hoi, yeah, which is what
Mr Burns says when he picks up the phone on
on the Simpsons, Hoy hoy, that's delightful. Yeah, Alexander Graham,
Bell and everyone involved in phone companies hated the word hello.
(06:51):
They did, and we've got some notes about that. In
just a little bit. There was there was a very
serious and an intense contention about this. Do you wonder
it was important with a capital I? But so in
Bell was getting financial backing from the fathers of two
of his students at Boston University, Thomas Sanders and um
(07:13):
Gardner Hubbard, and wound up forming the Bell Telephone Company right.
In fact, at first he tried to sell the telephone
patents to a rival company called Western Union. You may
have heard of that company. At the time, it was
the largest corporation in the world, and he offered to
sell it to them for the princely sum of one
hundred thousand dollars, and Western Union told him to take
a long walk off a short pier. Yeah, they didn't
(07:35):
at that particular point in time understand what this whole
telephone thing was about. They were like, that's a toy.
We don't get it right. If you wanted to send
a message to someone, why would you go through all
this bother when you could just telegraph it to them.
We've got perfectly good telegraph lines and swimming horses, why
exactly So, so they they poo pooed the idea, and
(07:56):
that's when Bell decided to go the other route and
form this company. And with that financial backing that Lauren
talked about, the Bell Telephone Company came into being. UM
and UH at first, it was a pretty modest affair
in the early days. They were seven seventy eight telephones
in existence period, and the company had a grand total
(08:18):
of one employee, and that one employee was Thomas Watson,
the former assistant to Alexander Graham Bell, and he was
He was paid the salary of three dollars per day
and also had one tenth interest in the company, which,
as it turns out, would probably be worth a little
bit more than his salary. Yeah, so Bell goes ahead
(08:38):
with his company. Uh. Meanwhile, Gray, who had done some
work for Western Union and had founded a company called
Western Electric that was acquired by Western Union, began to
compete against Bell, and uh, it got pretty nasty. Bell
started to look into how he wanted to well, really
the company was looking into how they wanted to form
(09:00):
the business, and they took a queue off the Morse
Company Telegraph Company and went with a franchise model. The
idea being that they would they would license out technology
and telephones and things of that nature to companies that
wanted to oversee the administrative efforts of handling this kind
(09:20):
of local regionalized phone system. And so Bell would end
up getting a company Bell would end up getting a
portion of that revenue uh in return for the fact
that they're licensing the technology to this other company. Right right,
because until Bell's patents would expire, the company was the
exclusive manufacturer and provider of telephones. UM. Those those patents
(09:43):
would expire in and that was a date that everyone
in Bell was very very anxious about. They were cognizant
of it, they were anxious about it. There were other
companies that did attempt to spring up despite this um
this legal uh monopoly that the Bell system had because
(10:04):
of the patents. UH. But we'll talk about that in
a second before we get too far into this, because
there's a lot to talk about. Let's take a quick
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go check that out. Okay, so we're now up to
eighteen seventy eight. Now, in eight seventy eight, that's when
we saw the first regional telephone company actually launched. Not
this was one operated by Bell Telephone, right, it was
a franchise called New Haven District Telephone Company and uh
(11:53):
in New Haven, Connecticut. And Bell and Western Union began
to compete even more viciously. They were both launching franchises
across the United States. Western Union began to use leverage
by saying that they would not install any telegraph lines
in any locations that were using Bell systems. So any
region that relied heavily upon telegraph services wouldn't do business
(12:14):
with Bell because they were afraid that they did, they
would never have any improvements or repair or maintenance of
the telegraph systems or even operation of the telegraph system.
So it's kind of you know, holding Bell Systems hostage thing.
You don't you know, if you don't uh, you don't
get to play in this game because I own this game. Um. Now,
Western Union's telephones were based on the work of two inventors,
(12:37):
one of them Elisha Gray and the other Thomas Edison. Yeah,
so some big names here. And on September twelve, that's
when Bell Telephone Company sued Western Union, which is a
big story because Bell had a small fortune at his disposal.
Western Union was the largest corporation in the world at
(13:00):
that time. It worth more than forty one million dollars
and had the backing of a certain powerful family in
the United States, the Vanderbilts, And so it was a
big deal that Bell would go up against this corporate giant.
And that same year Gardner Hubbard, one of those financiers
who backed the Bell system in the very early days,
(13:21):
hired on a man named Theodore Newton Vale to act
as general manager slash president of Bell Telephone. Right. Veil
had previously worked for the US Postal Service and and
he was very key in orchestrating this legal battle. Yeah,
it's also interesting because Veil will play another important role
a bit further down the line. Veil had kind of
(13:42):
on again off again relationship with Bell Telephone. Not necessarily
all by choice, no, no, but but he did help
shape the company and absolutely and even as early as this,
he had this vision of building a national long distance
telephone network um and doing it before Bell's patents ran out,
so which was hugely ambitious, incredibly ambitious, a little too
(14:04):
ambitious it might turn out to be. In eighteen eighty,
Alexander Graham Bell decided to resign from the Bell Telephone
Board of directors um and the next year one Thomas
Watson would also resign. So at this point the two
inventors who gave the company the very basic invention that
it was all centered around, had left the board of
(14:25):
directors at that time, I believe was putting a lot
of pressure on. They didn't really see the immediate monetary
purpose of this whole nationwide network thing, and so they
were they were really getting down people's throats about like,
we kind of want to make money, we kind of
put some money in, we kind of want a little
bit back, And this is digging your heels in. Yeah,
(14:47):
this is a whole lot of us giving you money
and not a whole lot of us getting anything back. Right. Yeah,
there were there were many years when this company was
operating in debt because they were setting this stuff up. Also,
interest seeing little side note, Thomas Watson had a second
career after his work with telephone systems. He would begin
(15:08):
a career as a ship builder. He built ships him. Yeah,
it's kind of interesting, I just thought it was neat two.
This is about when Western Union and Bell Systems settle
this lawsuit. That's this ongoing dispute that had been pretty
much taking up all their time over the last couple
of years um because the pen infringement lawsuits were something
(15:32):
that was just nasty on all parts. Well, in that settlement,
Western Union ended up selling its telephone network to Bell,
so that was a network that was what there was. Like,
that's significant, So fifty five more cities go to Bell Systems.
Bell in return promised Western Union of its telephone rental revenue.
(15:53):
So Bell Telephone also acquired from Western Union the company
Western Electric that was the one that was founded by
Elisha Gray and that became a T and T s
manufacturing division. Hey guys, it's Jonathan from twenty. We are
going to take a quick break, but we will be
right back. So here's just a little information about how
(16:19):
the phone system used to work in the United States.
It used to be that you would go to a
store to get a phone and you leased it. You
didn't own that phone, so you actually that phone remained
the property of the parent company, which at this time
is Bell Systems, and shortly will become a T and T,
and so you would pay a leasing fee, and in turn,
(16:40):
the company that you got it from was likely not
directly a T and T. It was probably some regional
office that also was leasing that same phone from a
T and T. Certainly at this point it was Bell Systems.
But yeah, so Bell Systems leases out a phone to
a regional office, the regional office leases the phone out
to the custom So you didn't you never actually owned
(17:02):
that phone, which I think some people might find a
little unusual today because they think, well, I bought this
piece of electrically. I mean, you turn off the service. Fine,
I understand that, but that's my phone. Um, yeah not
back then, Nope, you were just renting it. Really, So
Western Union gets out of the way. So Bell system
effectively becomes a monopoly. And according to research terms of
(17:25):
telephone network capacity, yeah, they're they're pretty much the There
are other competing telephone networks, but they're all they're all
technically illegal at this time because this is still exactly so.
According to researcher John Brooks, Bell Telephone would have a
level more than six hundred patent infringement lawsuits against other
(17:45):
companies over the course of a decade, and they won
every single one of them. Because anytime a company would
come up, like there were companies that were trying to
create telephone systems in rural areas that Bell just had
not reached, and so they wanted to give people the
benefit of this technology. Bell did not have either the
ability or interest to go into that market. So they
(18:07):
would go ahead and do it themselves, and then Bell
would soothe them because they you can't do that. We
have the exclusivity rights to this technology, um, and you know,
and there's like, We're gonna get there and just give
us time. Meanwhile, everyone's like, but I wanted to call
my buddy. There's no nothing to call them on other
than sticking ahead out the window and shotting, hey, Jeb,
so I don't know why his name is Jeb short
(18:28):
for Jebediah eighty five. That is when a T and
T is officially formed as a subsidiary of Bell. Yeah,
and this is the the formal implementation of VAL's vision
of creating a long distance network. That's the main purpose
of a T and T. So a T and T
is all about building out a long distance network so
(18:51):
that people can call each other across states and across countries.
Right by the end of eighty five, the company would
established the very first long distance connection between New York
and Philadelphia. It was capable of hand handling a huge
one call at a time, one call capacity. So I
can just imagine the circuits being busy over and over
(19:12):
and thinking they need to just wrap this up. Those
people in Philly are chatter boxes. Uh yeah, So that
was but it was really more of a proof of
concept obviously at that point, not necessarily something that was
going to be terribly practical. We're talking a little bit
about how expensive these phone calls were too. Oh yeah, yeah,
they got a little little dear. Um So that same
(19:33):
year was when the state of Indiana passed a law
restricting the price of telephone rental fees. So remember I
was saying, you rent your telephone, both the regional offices
do it and then the customers do it. But because
Bell was the only game in town, they could pretty
much dictate what those rental prices were going to be. Uh.
This this lawsuit said, well, you need to cut back
(19:56):
on those costs. So um Bell's response, The company's response
was saying, well, you know, we have to have these
prices because the service is expensive to to build out,
to administer, to maintain. We cannot operate at a lower cost.
We if we were to lower these this amount of money,
we would not make a profit. We would lose money
(20:18):
on the deal. We can't do it. So your phones
are off and they shut off the phones in Indiana. Yeah,
no more calls India. Yeah sorry, and um it would
be a couple of years before they would when service
was restored for one corporation to have. Yeah. Some people
(20:39):
said the A. T and T statement was that this
was an example of quote the futility of public action
and ignorance end quote, saying that you know, you guys
were all upset and you told us that we had
to do this thing, but you didn't understand that we
were doing it because that's financially what we have to do.
Other people said, no, A T and T held the
state hostage by saying you don't get phone calls until
(21:00):
you play ball, which I think is a fair that's
that's that's pretty awful. So well, without actually looking at
the financial books share and knowing that the company did
operate in debt for a while, entirely it's hard to say,
although you know at the time they were positing themselves
as sort of a public service almost that's right, akin
to something like the post Office, which would become much
(21:22):
more their their message in a few years. So seven
that was the first year that Theodore Vale resigned as president. Yea,
that that was directly, I think in due to his
frustration with the board, like he was saying earlier. And
there was a dispute with some Boston financial backers as well,
and all of that kind of fed into Veil's resignation.
(21:47):
He just decided that that was not where he needed
to be, so that he leaves. Don't worry, He's part
of the story is not over yet without him. Meanwhile,
in eighteen eighty nine, the Bell system would adopt the
first official Bell logo. Yeah what it looked like a bell? Yeah, okay,
that makes sense alright. That was when the first long
(22:09):
distance connection was established between New York and Chicago. And
this was the real display of long distance. You know,
New York to Philadelphia was impressive. New York to Chicago
was a much greater distance. So this was marked by
a ceremonial phone call. Graham Bell would make that one
as well, yep, Alexander Graham bells on the call. I
(22:29):
did not see who he was calling. Maybe it was
just you know, prank calls, and he was making prank
calls to Chicago and ordering pizza and then saying, our
pizza is better than your pizza. I can only hope,
I would really hope. So, I mean you think prank
called pizza, it fits so the after all, the very
first call on a mobile phone was a prank call.
But the capacity of this line was just like the
one from Philadelphia, one at a time, and it cost
(22:52):
nine dollars for the first five minutes, which you you
did the math on inflation, yeah, I used in the
inflation calculator. Now, normally I would use the Bureau of
Labor Statistics calculator, which factors in the consumer price index,
but that only goes back to n So I used
the inflation calculator. I honestly don't know where they pulled
(23:13):
their their figures from. So, but based upon the inflation calculator,
that nine dollars would translate into sixty dollars today. So
sixty dollars for five minutes of a phone call. So,
if you think your cell phone bill is high. Yeah,
that's no talk about how I'm almost all the minute.
Well those minutes are precious. Look how much they cost
back in the eighties. Uh so that was when those
(23:38):
patents that we were talking about expired. Yeah, and uh
the day had happened. The columns at Bell System tremble.
Then there was a great whaling. Over the next ten years,
six thousand independent telephone companies would open across the United States.
Now these were legal at this point because the patents
no longer gained exclusivity rights to Bell Systems. So you
(23:59):
had all these companies that suddenly could operate legally within
the United States and offer a competing product or service. Rather,
there are some problems here. So let's say, Lauren, that
you and I both live in the same city back
in eight and it's a small city that Bell System
really hasn't gotten into. But there's this regional company that
(24:19):
has introduced a telephone system, and a second regional company
that competes and also sets up a telephone system. You
become a customer of one of those companies, I become
the customer of the other company. And then one night
you realize, Hey, I left my notes at work. I
need you to grab them and bring them home. Uh,
and you know, can you swing by my place and
(24:39):
you try and call me, but you can't because you're
on one system and I'm on the other, and there's
no interconnectivity. Right, And this was partially because you know,
those those lines might literally not have been connected, and
even if they were, you're talking to The way that
telephones worked at the time is is you would you
would pick it up, and you would get an operator
and tell the operator where you want your call to
go to operation or would manually switch you through, manually
(25:02):
look at a system of switches and figure out the
route to get your call to that house or that
other phone, right or as long as the line wasn't engaged,
they could try the line, but if it's not on
their system, then you couldn't call them. So so there
there were speaking of these these numbers of customers, there
were some seven hundred thousand customers using these other services
(25:23):
and about a million using Bell. Yeah, so around that
so when you think about that six thousand companies and
seven hundred thousand customers and then one company and a
million customers, that shows you that they were still they
were still effectively a monopoly because there was no other
single company that could compete with them. So while they weren't,
(25:45):
by the letter of the law, a true monopoly as
in the only game in town, effectively that's what they were.
And one of the things that happened in was that well,
the Pacific Telephone and Telegraph Company, which later became Pacific Telesis,
opened the first exchange operated entirely in a language other
than English within the United States, operated in Chinatown in
(26:06):
San Francisco, and it was all in Chinese. All the
customers spoke Chinese, and all the operators spoke Chinese. Eight
that's when A. T and T acquired its former rival,
Western Union. And I sure probably some people said ha
ha when it happened. So remember Western Union was the
company that had they purchased those patents from Bell, this
(26:28):
would be a totally different story. There would not have
been an A T and T. But instead they had
decided to fight against Bell and Bell Systems, and now
they became a property of A T and T itself.
Um So A T. T acquires the assets of the
American Bell Telephone Company, which means that A T and
T the subsidiary, now becomes the parent company. Yeah, so
(26:51):
A T and T was now the big company. The
student has become the teacher. So eight is when we
can say the company of A. T and T really
came into being. It was no longer a subsidiary or division.
It was it was in charge. So by this time
the company's size was pretty big. You know. Keep in
mind when it was founded there was one employee. Now
(27:13):
there were a million, three two thousand phones in the
system and more than forty five thousand employees. And that
same year, researchers independently developed a theory about something called
loading coils. The loading coils are a part of technology
that was very important in the early days of the
(27:33):
telephone system. It actually would reduce the rate at which
a traveling telephone signal would weaken, which made it possible
to build longer phone lines and build out this long
distance network. Right that That loss of signal is called attenuation,
and it right, it's it's a loss of intensity of
a signal as it travels through any medium, right Yeah,
So this was a huge help and getting around just
(27:55):
a practical problem that existed with the technology. So several
other advancements would be made later on. We have more
to say about the early days of A T and T.
But first let's take another quick break. Al right, So
back to A T and T. In nineteen oh four,
(28:18):
we start seeing some states began to pass laws requiring
the interconnection between phone networks. And it's still a state
by state case basis at this point, so it's not like, um,
it's not like this is a national movement yet, but
it's starting to kind of develop into that. And remember
A T and T. There, they were taking a pretty
(28:40):
nasty competitive approach. Nasty might be the wrong word, how
about enthusiastic. Yeah, So, but technically this is what everyone
had to do. Everyone was building out their networks and
not connecting with other networks. A T and T had
the most power here because they had the largest number
of customers among any single telephone company. So by not
(29:04):
playing ball by not allowing connectivity with these other networks.
If you know that A T and T is the
big telephone company and that the majority of the people
you would want to get in touch with are going
to be connected to that company, that's the company you
go with, even if there's a regional company that ends
up having a better deal for you financially. If no
one you know is on that service then and you
(29:27):
can't get a call from another service, right, So just
imagine for you cell phone users out there that if
you're an a T and T customer, you would be
unable to call anyone using Verizon, Sprint, or T Mobile,
and the same would be true for each of those companies.
No one would be able to call anyone cross company.
Then you see how how this becomes a problem. But
this is still in the early days. So we get
(29:48):
to nineteen o six, right, Yeah, it was around that
time that the head of the Chicago Bell Exchange instituted
coin operated telephones to prevent people from freeloading in in shops,
you know, drug stores something might have a telephone in them,
and since it was still relatively expensive to place calls,
this was a way they you know, it was a
nickel perk hall and um. By by six, there were
(30:11):
nearly forty coin operated telephones in Chicago, And now you
don't see them hardly anywhere. Yeah, I love seeing them
in movies these days, because once in a while, like
maybe an airport or something, you might see some, but
otherwise they're you know, they used to be everywhere heck,
I remember where they were everywhere. Oh yeah, yeah, I
remember that too. I'm not that young. Was big. That
(30:34):
is the year that Theodore Veil became president of A
T and T again again, Well, he had technically been
president of Bell I think, yeah, that's true. Previously he
was president of Bell and now he's first of the
time president of A T and So he was brought
back on when the JP Morgan group had gained a
majority control of A T and T and said, you
know this Veil guy, we like what he has to say.
(30:55):
We're going to put him back on the top of
the company. Yeah, j P. JP Morgan especially like because
he was still alive at the time, and he's specifically
I'm possibly even called up Veil. I think Veil was
in South America at the time doing stuff and you know,
had been retired, and he convinced him to come out
of retirement. Yep. And Veil again started to really laid
(31:16):
down the vision of A T and T and started
an ad campaign in nineteen o eight, and Veil would
really be responsible yet again for setting the vision of
A T and T. He' set up a challenge to
have a line, a single line stretching from New York
to San Francisco in the next seven years. It's pretty
again ambitious, it's very ambitious considering the technology at the time.
(31:38):
So en eight he starts to kind of spearhead an
ad campaign that set the A, T and T corporate policy. Yeah,
that this was this was the other really big important
part of his vision, and and it was connected to
this a single line concept. Yeah, it was one policy,
one system, universal service. The idea here being that in
order to guarantee that you could that every person in
(32:01):
America would have access to telephones, you had to essentially
take the stance of we're the only game in town,
because if there's none of this interconnectivity through different companies,
that's the only option you have is you have to
have someone come out and become the dominant player so
that everyone has access to the phone and can call
anyone else. He also Vail had this very kind of
(32:23):
pro monopoly stance of competition is what turns consumers away
from brands. It's this this kind of cutthroat thing that
happens is bad publicity for everyone. So if you know,
just it's kind of that doctor horrible sort of thing
like where the world is terrible place, and I just
need to rule it. Yeah. Now, it's exactly that kind
(32:44):
of approach. In fact that I had read several things
about how the the telegraph companies had entered an era
of competition and they all decided they did not like
that very much. And so the telephone company was following
the same route. They weren't so crazy about competition. And
to be fair, this is a case where competition wasn't
really helpful to the consumer simply because of that lack
(33:06):
of interconnectivity. It wasn't that you know, the problem with
is that without the competition, you don't have the benefit
of the consumer being able to choose the right kind
of plan or price or whatever. But on the downside
is you know, if there's no interconnectivity, then it really
gets you stuck. Yeah, and in these early days that
was the bigger issue. So, um, some important, very important
(33:29):
thing in the history of the phone industry happens. Well,
phones were still new enough that we didn't really have
phone etiquette. Yeah, And so Bell would publish a a
little Bell Engineer magazine would would sponsor contest for the
best essay about the proper telephone etiquette, and they published
the best essay um and this was kind of when
(33:53):
the war on hello began. Yeah, so hello was being
adopted as the salutation of choice by a lot of people,
and phone executives and other people thought that this was
a vulgar means of greeting someone on the phone. I
have a quote from that winning essay. It is, would
you rush into an officer up to the door of
a residence and blurt out, Hello, Hello, who am I
(34:15):
talking to? No one should open conversations with phrases such
as Mr Wood of Carson Sun's wishes to talk with
Mr White without any unnecessary and undignified hello's. Huh. Now.
I remember hearing once upon a time an apocryphal tale
that the telephone is what gave rise to the word hello,
(34:36):
But in fact, the word hello pre dates the telephone
by a few decades. I think the earliest written examples
date from the eighteen thirties. However, I will say that
the telephone gave rise to the popularity of the word hello.
And obviously, you know, any any sensible civilized human being
would use ahyhoy uh. There's all ends of other etiquette
(35:00):
notes in these manuals that were coming out at the time,
one from California instructed speakers to speak directly into the mouthpiece,
keeping the mustache out of the opening. Yes, and that
would come into play again in the late two thousand's,
like the two thousand ten era, when hipsters would come
back and the mustache got out of control again. Come on, guys, seriously,
(35:22):
candlebar mustaches are amazing. It's not anyone's one before. So
what you're saying is that you had one before it
was cool. Uh. T and T becomes a government sanctioned
monopoly as the result of an antitrust lawsuit, he said,
ignoring her appointedly. It's documented in something that's called the
Kingsbury Commitment. So at that time, A T and T
(35:45):
divested itself of controlling interest in Western Union, so you
know they had acquired it earlier. Now they divested their
control of it and also allowed competing telephone services to
connect to the A T and T long distance network.
They had to do so with a fee. There was
a toll fee every time they would connect to A
T and T S line. So that's how A T
and T could gain revenue through this this relationship. A
(36:07):
right JP Morgan was still a partial owner of A
T and T at the time, and he was fighting
with the lawmakers known as trustbusters, who were trying to
uh trying to break up A T and T right
up until he passed away in this year in ninet
and Veil did not continue the fight the way that
Morgan really wanted to. He he chose to dominate through
this kind of terrifically sneakily backhanded cooperation with these smaller
(36:32):
independent companies, and because it meant that he still made
money from them, a lot of money. Yeah, I mean,
you know this, this worked out really well for everyone
except the independence because you know, the the arrangement helps
allow customers of different telephone companies connect with each other
because it mandates that A T and T has to
play with everyone's uh so the network interconnectivity is now
(36:55):
no longer a problem. But it gave A T and
T permission to function like a national utility, and and
it would dominate the telephone market until ninety uh And
some would argue, well beyond that, Well, yeah, well it's
certainly into the eighties two, you could argue, and so
so right, So, if independent companies wanted to use the
widespread bell system. They had to agree to use Bell's equipment,
(37:16):
they had to adhere to their standards, and they had
to again pay fees. So if you use of those wires.
If you're thinking that this antitrust story sounds familiar, it
will get increasingly familiar as this series goes on. Yes,
one competitor wrote that that this entire ordeal was like
trying to fight an octopus, which I just think is
terrifically like, I want that steampunk comic book about that.
(37:37):
I'm moving on into nineteen fourteen, we see another technological development,
the three element vacuum tube, which was an amplifier that
enabled the first transcontinental line to exist, which didn't exist yet,
it hadn't been laid down yet, but this technology is
what made it possible. All right, This is an important
advancement because of that aforementioned attenuation. And you know, unless
(37:59):
people could come up with a better material than copper
to transmit a signal with, or or a way to
amp amplify the signal, it just wasn't going to work.
And Dr leed to Forrest created this audion uh three
element vacuum tube, and it would be really big, and
lots of other industries that enabled the development of radio, radar, television,
(38:19):
and computers right up until transistors became a thing in
the nineteen sixties. Yeah. Yeah, you have to go all
the way. Remember that the first transistor isn't even invented
in the prototype stage until the late forties. So from
this point until the late forties, just in the in
the lab, not not let alone out in the real world.
(38:39):
This is this is the best the technology could offer
us at the time, right, Yeah, I think nineteen sixties
was a number that was incorrect listening to Jonathan Well,
by the nineteen sixties it was certainly common, and the
fifties it wasn't common because they still had they still
had to refine the design. Certainly, the first transistor looks terrible.
That's very generous. Um. And meanwhile, via eighteen ties manufacturing
(39:02):
subsidiary that we have previously mentioned, Western Electric Company International
affiliates were starting to sell equipment around Europe, South America
and also in Japan and Australia. Yeah. Yeah, we could
not call them yet, but that would that would change shortly,
relatively speaking. January fifteen, that's when the first long distance
call is between Alexander Graham Bell in New York and
(39:24):
Thomas Watson all the way in San Francisco Thomas Watson.
So this was this is that promise about getting that
that long distance connection all the way from coast to
coast in the United States. It also had two other
connections on that one call. There was the President of
the United States who was in Washington, d C. And
(39:44):
Thomas Vale, who at the time was in Jekyl Island,
Georgia's there. I've been there as well, so yeah, it's
kind of interesting. I think I've even seen a historic
plaque that referenced this. But then again, I have a
feeling that Jackyl Island must be the place where they
make those historic plaques because they are everywhere. So the
cost for those first three minutes of phone time on
(40:07):
a typical long distance call between New York and San
Francisco is twenty dollars and seventy cents in nineteen fifteen dollars. Now,
in this one, I used the Bureau of Labor Statistics
because that was late enough for me to do that.
That's based on the consumer Price Index, so that's the
general price of goods and services in one year versus
another year. So based on that twenty and seventy cents
(40:29):
is about four hundred seventy nine dollars. So that's how
much it would cost you for three minutes of phone
time on a call between New York and San Francisco. Yikes.
Uh So nineteen sixteen was the first year that they
started testing phone service to Europe. It would not work
for another little bit. Yeah, and so this phone service,
(40:51):
you might think, oh, did they lay a really long cable. No,
the early phone service that would become the Transatlantic phone
service was based on radio waves, not on a physical cable.
Nineteen seventeen, that's the beginning of the US involvement in
World War One. Employees start to volunteer for service during
World War One, and A T and T develops the
(41:11):
first air to ground ground to air radio communications systems.
And that was also in the U S. Government took
control of a nation's telephone services. They would not give
it back to its proprietary owners until nineteen nineteen. Yeah,
it was considered a wartime resource. So getting to nineteen nineteen,
that's when Bell System first dial telephones. There they are
(41:34):
released in Norfolk, Virginia. And so before this, like we
said before, you would pick up a phone, and you
would speak to an operator who would make the physical
switching to let you complete your call. The dialing, of course,
is more what we're familiar with today, unless we've all
just used the automated settings on our smartphones and don't
even remember how to dial anymore. But in general, it's
(41:54):
where you type in the series, or in this case
they were rotary phones, you would dial literal around the dial.
Did you ever use a rotary phone? Okay? Just checking.
That was also the year that Vale retired for the
second time. He would he would die the following year.
So in nineteen twenty one, the United States government passed
the Willis Graham Act, which removed antitrust restrictions to the
(42:18):
telephone industry. So it's essentially saying open game for for
a T and T and would acquire over two hundred
and seven thousand telephones worth of exchanges within the next
six years after this was passed. It was really again
to help facilitate that interconnected network of telephone systems, so
this is continuing the work that was done back in
(42:41):
nineteen um and it was also so that the United
States wouldn't be played with hundreds of networks that had
no inner connectivity. But it also meant that it gave A.
T and T the ability to really cubment itself as
a monopoly in the United States. So nineteen twenty two
was a big year for multiple reasons, and that's the
year we're gonna end this first episode on A T
(43:02):
and T launched the w e a F radio station
in New York, which was the very first radio station
to broadcast a commercial. It's also the very first radio
station to broadcast a college football game. Princeton beat University
of Chicago. On August two, nineteen twenty two, Alexander Graham
Bell died and on August four, nineteen twenty two, during
(43:23):
Alexander Graham Bell's funeral, all telephone service was suspended for
a full minute in memory of Bell. So you know
you're important when an entire country's communication system shuts down. Yeah.
So that's a pretty powerful stuff. That wraps up the
A T and T story. Part one originally published on
(43:45):
November four, two thousand thirteen. We will be back next
week to continue this with Part two, and until then,
if you guys have any suggestions for future topics I
should cover on tech stuff, send me a message via Twitter.
The handle is tech stuff h W and I'll talk
to you again really soon. Y text Stuff is an
(44:08):
I Heart Radio production. For more podcasts from I Heart Radio,
visit the i heart Radio app, Apple Podcasts, or wherever
you listen to your favorite shows.
Welcome to Tech Stuff, a production from I Heart Radio.
Hey there, and welcome to tech Stuff. I'm your host,
Jonathan Strickland. I'm an executive producer with iHeart Radio and
a lot of all things tech. It is time for
a classic episode and we are going to have a
three partner in a series of classics. So this is
(00:26):
going to be part one of three, and it's all
about A. T and T, a huge company that has
more than a century worth of history to it. So
that's why I ended up being a three partner. And
of course I could easily record another part to this.
Just the amount of stuff that's happened in the past
seven years alone would warrant such a thing, and maybe
(00:49):
I will. But first let's listen back to where it
all began with the A. T. And T story Part one.
We've had other discussions about other companies that, you know,
you have to start with like a like the company
appearance General General Electric. You know, you have to go
back way before General Electric to really talk about the company.
So in this case, we have to talk about a man,
(01:09):
a man who has been credited officially and through other
sources as the inventor of the telephone although as we
all know, when it comes to inventions, it's a lot trick.
It's very tricky to narrow it down to a single person.
It takes a research society to make a technology, and
turns out that there are a lot of people who
are working on things all at the same time, and
(01:31):
sometimes it's just the person who gets the first. In
the case of Alexander Graham Bell, Uh, not that he
didn't work very hard and make great contributions. It's just
that there were other people doing the same sort of stuff. Right,
So in February, on February eighteen seventy six, that is
when he filed this first pattern yep to a way
(01:52):
to electronically transmit speech by quote causing electrical undulations similar
informed to the vibrations of the air accompanying the said
voke or other sounds substantially as set forth end quote. Now. Uh,
it's interesting he had already written the patent out earlier
in January of that year, but there was a peculiar
(02:13):
sort of legal loophole that he had to leap through
in order for him to get this patent recognized in
not just the United States, but also the United Kingdom.
See the UK had a rule that stated if you
wanted to patent something in the UK, it could not
first have been patented anywhere else. So Graham Bell writes
up this patent he wants to get patented. He's ready
(02:35):
to submit it, except that he first has to get
over to the UK. And uh, guys, who don't know
if you're familiar with this. In eighteen seventy six, there
were very few options on how to get from say
the United States to England that didn't involve a really
long journey, right. It was basically swimming a horse right
across that. Yep, you just hitch a steam of horses
to a boat and say, giddy up. I mean, we
(02:58):
didn't really research that part, so we'd be a little inaccurate.
Make sure you tweet us and let us know. But no, no,
I mean, you know, because a telecommunications were not a
thing at this point, because he hadn't patented it yet,
all right, So it was it was taken a while,
and so as it turned out, that very same day,
another electrician began the filing process. I don't think actually
(03:20):
filed what he what he did. We're talking about Elisha
Gray and Elishah Gray or or We'll just call him
Gray because first of all, I assume it's Elisha. I
did not look up at the pronunciation of his first name.
But Mr Gray had submitted a preliminary application for a
similar apparatus. It was also called a caveat. That was
the technical name for the preliminary application. He submitted a
(03:42):
caveat for consideration for a patent the very same day
that Graham Bell posted it filed his pen or technically
Bell's lawyer filed the pattern right here in the United
States we're talking about, yes, exactly. So Gray applied for
a pattern with a very similar idea, and the story
go and I don't know the truth of this, And
in fact, I have proposed to Lauren, not romantically, I
(04:06):
mean an episode title. I've proposed to her that we
actually cover the content the topic of Alexander Graham Bell
and Elisha Gray, because the story about who got that
patent is really interesting and I think could merit its
own episode at any rate. Uh. The story is that
Bell's lawyer got a look at Gray's application, which included
(04:31):
an element that was not in Bell's work. But then
when the patent was filed, there was a little scroll
in the margin that covered the same idea. So the
story is that Bell's lawyer, or perhaps Bell himself, It
all depends upon the account you read, lifted an idea
directly from Gray's work in order to essentially beat him tempt.
(04:56):
So Bell's patent application goes in ahead of raise, and
so Bell is at least initially awarded the patent, although
it was not uncontested. There was actually quite a vigorous
battle in the legal system of that was gone for
a few years. And so moving ahead on in that
(05:17):
same year March tenth, eighteen seventy six, and remember he's
already filed the patent, But it was only on March tenth,
eighteen seventy six that we had the famous message from
Alexander Graham Bell to his assistant Thomas Watson. Mr Watson
being in another room in the same building. Yeah, and
and he heard it over this device what would what
would become the telephone, and the message, of course was
(05:41):
Mr Watson, come here, I want you. And it turns
out that Corey to the story, Alexander Graham Bell had
acidentally spilled some acid and needed Thomas Watson to come
over and help him clean it up before it did
any damage to the surroundings. So not only was March tenth,
eighteen seventy six the first phone call, it was the
first emergency phone call. So yeah, that's a fun little
(06:07):
little side note about this. And we are leading up
to the company, but we have to lay this groundwork. Yeah,
and I find all of this pretty fascinating overall. So,
so on October eighth of that year, eighty six, they
had the first two way telephone call between Watson and Bell. Now,
before it was a one way thing. You you could
have a transmitter and receiver essentially. Now there was one
(06:29):
on either side. You could actually have this communication. And
this is where Bell introduced his idea of what the
perfect telephone salutation was, Hoi hoi, yeah, which is what
Mr Burns says when he picks up the phone on
on the Simpsons, Hoy hoy, that's delightful. Yeah, Alexander Graham,
Bell and everyone involved in phone companies hated the word hello.
(06:51):
They did, and we've got some notes about that. In
just a little bit. There was there was a very
serious and an intense contention about this. Do you wonder
it was important with a capital I? But so in
Bell was getting financial backing from the fathers of two
of his students at Boston University, Thomas Sanders and um
(07:13):
Gardner Hubbard, and wound up forming the Bell Telephone Company right.
In fact, at first he tried to sell the telephone
patents to a rival company called Western Union. You may
have heard of that company. At the time, it was
the largest corporation in the world, and he offered to
sell it to them for the princely sum of one
hundred thousand dollars, and Western Union told him to take
a long walk off a short pier. Yeah, they didn't
(07:35):
at that particular point in time understand what this whole
telephone thing was about. They were like, that's a toy.
We don't get it right. If you wanted to send
a message to someone, why would you go through all
this bother when you could just telegraph it to them.
We've got perfectly good telegraph lines and swimming horses, why
exactly So, so they they poo pooed the idea, and
(07:56):
that's when Bell decided to go the other route and
form this company. And with that financial backing that Lauren
talked about, the Bell Telephone Company came into being. UM
and UH at first, it was a pretty modest affair
in the early days. They were seven seventy eight telephones
in existence period, and the company had a grand total
(08:18):
of one employee, and that one employee was Thomas Watson,
the former assistant to Alexander Graham Bell, and he was
He was paid the salary of three dollars per day
and also had one tenth interest in the company, which,
as it turns out, would probably be worth a little
bit more than his salary. Yeah, so Bell goes ahead
(08:38):
with his company. Uh. Meanwhile, Gray, who had done some
work for Western Union and had founded a company called
Western Electric that was acquired by Western Union, began to
compete against Bell, and uh, it got pretty nasty. Bell
started to look into how he wanted to well, really
the company was looking into how they wanted to form
(09:00):
the business, and they took a queue off the Morse
Company Telegraph Company and went with a franchise model. The
idea being that they would they would license out technology
and telephones and things of that nature to companies that
wanted to oversee the administrative efforts of handling this kind
(09:20):
of local regionalized phone system. And so Bell would end
up getting a company Bell would end up getting a
portion of that revenue uh in return for the fact
that they're licensing the technology to this other company. Right right,
because until Bell's patents would expire, the company was the
exclusive manufacturer and provider of telephones. UM. Those those patents
(09:43):
would expire in and that was a date that everyone
in Bell was very very anxious about. They were cognizant
of it, they were anxious about it. There were other
companies that did attempt to spring up despite this um
this legal uh monopoly that the Bell system had because
(10:04):
of the patents. UH. But we'll talk about that in
a second before we get too far into this, because
there's a lot to talk about. Let's take a quick
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tech now. So there are a ton of TV shows
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I really enjoyed the show. H John Benjamin plays the
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(11:31):
and events. Uh, you just gotta go see it, So
go check that out. Okay, so we're now up to
eighteen seventy eight. Now, in eight seventy eight, that's when
we saw the first regional telephone company actually launched. Not
this was one operated by Bell Telephone, right, it was
a franchise called New Haven District Telephone Company and uh
(11:53):
in New Haven, Connecticut. And Bell and Western Union began
to compete even more viciously. They were both launching franchises
across the United States. Western Union began to use leverage
by saying that they would not install any telegraph lines
in any locations that were using Bell systems. So any
region that relied heavily upon telegraph services wouldn't do business
(12:14):
with Bell because they were afraid that they did, they
would never have any improvements or repair or maintenance of
the telegraph systems or even operation of the telegraph system.
So it's kind of you know, holding Bell Systems hostage thing.
You don't you know, if you don't uh, you don't
get to play in this game because I own this game. Um. Now,
Western Union's telephones were based on the work of two inventors,
(12:37):
one of them Elisha Gray and the other Thomas Edison. Yeah,
so some big names here. And on September twelve, that's
when Bell Telephone Company sued Western Union, which is a
big story because Bell had a small fortune at his disposal.
Western Union was the largest corporation in the world at
(13:00):
that time. It worth more than forty one million dollars
and had the backing of a certain powerful family in
the United States, the Vanderbilts, And so it was a
big deal that Bell would go up against this corporate giant.
And that same year Gardner Hubbard, one of those financiers
who backed the Bell system in the very early days,
(13:21):
hired on a man named Theodore Newton Vale to act
as general manager slash president of Bell Telephone. Right. Veil
had previously worked for the US Postal Service and and
he was very key in orchestrating this legal battle. Yeah,
it's also interesting because Veil will play another important role
a bit further down the line. Veil had kind of
(13:42):
on again off again relationship with Bell Telephone. Not necessarily
all by choice, no, no, but but he did help
shape the company and absolutely and even as early as this,
he had this vision of building a national long distance
telephone network um and doing it before Bell's patents ran out,
so which was hugely ambitious, incredibly ambitious, a little too
(14:04):
ambitious it might turn out to be. In eighteen eighty,
Alexander Graham Bell decided to resign from the Bell Telephone
Board of directors um and the next year one Thomas
Watson would also resign. So at this point the two
inventors who gave the company the very basic invention that
it was all centered around, had left the board of
(14:25):
directors at that time, I believe was putting a lot
of pressure on. They didn't really see the immediate monetary
purpose of this whole nationwide network thing, and so they
were they were really getting down people's throats about like,
we kind of want to make money, we kind of
put some money in, we kind of want a little
bit back, And this is digging your heels in. Yeah,
(14:47):
this is a whole lot of us giving you money
and not a whole lot of us getting anything back. Right. Yeah,
there were there were many years when this company was
operating in debt because they were setting this stuff up. Also,
interest seeing little side note, Thomas Watson had a second
career after his work with telephone systems. He would begin
(15:08):
a career as a ship builder. He built ships him. Yeah,
it's kind of interesting, I just thought it was neat two.
This is about when Western Union and Bell Systems settle
this lawsuit. That's this ongoing dispute that had been pretty
much taking up all their time over the last couple
of years um because the pen infringement lawsuits were something
(15:32):
that was just nasty on all parts. Well, in that settlement,
Western Union ended up selling its telephone network to Bell,
so that was a network that was what there was. Like,
that's significant, So fifty five more cities go to Bell Systems.
Bell in return promised Western Union of its telephone rental revenue.
(15:53):
So Bell Telephone also acquired from Western Union the company
Western Electric that was the one that was founded by
Elisha Gray and that became a T and T s
manufacturing division. Hey guys, it's Jonathan from twenty. We are
going to take a quick break, but we will be
right back. So here's just a little information about how
(16:19):
the phone system used to work in the United States.
It used to be that you would go to a
store to get a phone and you leased it. You
didn't own that phone, so you actually that phone remained
the property of the parent company, which at this time
is Bell Systems, and shortly will become a T and T,
and so you would pay a leasing fee, and in turn,
(16:40):
the company that you got it from was likely not
directly a T and T. It was probably some regional
office that also was leasing that same phone from a
T and T. Certainly at this point it was Bell Systems.
But yeah, so Bell Systems leases out a phone to
a regional office, the regional office leases the phone out
to the custom So you didn't you never actually owned
(17:02):
that phone, which I think some people might find a
little unusual today because they think, well, I bought this
piece of electrically. I mean, you turn off the service. Fine,
I understand that, but that's my phone. Um, yeah not
back then, Nope, you were just renting it. Really, So
Western Union gets out of the way. So Bell system
effectively becomes a monopoly. And according to research terms of
(17:25):
telephone network capacity, yeah, they're they're pretty much the There
are other competing telephone networks, but they're all they're all
technically illegal at this time because this is still exactly so.
According to researcher John Brooks, Bell Telephone would have a
level more than six hundred patent infringement lawsuits against other
(17:45):
companies over the course of a decade, and they won
every single one of them. Because anytime a company would
come up, like there were companies that were trying to
create telephone systems in rural areas that Bell just had
not reached, and so they wanted to give people the
benefit of this technology. Bell did not have either the
ability or interest to go into that market. So they
(18:07):
would go ahead and do it themselves, and then Bell
would soothe them because they you can't do that. We
have the exclusivity rights to this technology, um, and you know,
and there's like, We're gonna get there and just give
us time. Meanwhile, everyone's like, but I wanted to call
my buddy. There's no nothing to call them on other
than sticking ahead out the window and shotting, hey, Jeb,
so I don't know why his name is Jeb short
(18:28):
for Jebediah eighty five. That is when a T and
T is officially formed as a subsidiary of Bell. Yeah,
and this is the the formal implementation of VAL's vision
of creating a long distance network. That's the main purpose
of a T and T. So a T and T
is all about building out a long distance network so
(18:51):
that people can call each other across states and across countries.
Right by the end of eighty five, the company would
established the very first long distance connection between New York
and Philadelphia. It was capable of hand handling a huge
one call at a time, one call capacity. So I
can just imagine the circuits being busy over and over
(19:12):
and thinking they need to just wrap this up. Those
people in Philly are chatter boxes. Uh yeah, So that
was but it was really more of a proof of
concept obviously at that point, not necessarily something that was
going to be terribly practical. We're talking a little bit
about how expensive these phone calls were too. Oh yeah, yeah,
they got a little little dear. Um So that same
(19:33):
year was when the state of Indiana passed a law
restricting the price of telephone rental fees. So remember I
was saying, you rent your telephone, both the regional offices
do it and then the customers do it. But because
Bell was the only game in town, they could pretty
much dictate what those rental prices were going to be. Uh.
This this lawsuit said, well, you need to cut back
(19:56):
on those costs. So um Bell's response, The company's response
was saying, well, you know, we have to have these
prices because the service is expensive to to build out,
to administer, to maintain. We cannot operate at a lower cost.
We if we were to lower these this amount of money,
we would not make a profit. We would lose money
(20:18):
on the deal. We can't do it. So your phones
are off and they shut off the phones in Indiana. Yeah,
no more calls India. Yeah sorry, and um it would
be a couple of years before they would when service
was restored for one corporation to have. Yeah. Some people
(20:39):
said the A. T and T statement was that this
was an example of quote the futility of public action
and ignorance end quote, saying that you know, you guys
were all upset and you told us that we had
to do this thing, but you didn't understand that we
were doing it because that's financially what we have to do.
Other people said, no, A T and T held the
state hostage by saying you don't get phone calls until
(21:00):
you play ball, which I think is a fair that's
that's that's pretty awful. So well, without actually looking at
the financial books share and knowing that the company did
operate in debt for a while, entirely it's hard to say,
although you know at the time they were positing themselves
as sort of a public service almost that's right, akin
to something like the post Office, which would become much
(21:22):
more their their message in a few years. So seven
that was the first year that Theodore Vale resigned as president. Yea,
that that was directly, I think in due to his
frustration with the board, like he was saying earlier. And
there was a dispute with some Boston financial backers as well,
and all of that kind of fed into Veil's resignation.
(21:47):
He just decided that that was not where he needed
to be, so that he leaves. Don't worry, He's part
of the story is not over yet without him. Meanwhile,
in eighteen eighty nine, the Bell system would adopt the
first official Bell logo. Yeah what it looked like a bell? Yeah, okay,
that makes sense alright. That was when the first long
(22:09):
distance connection was established between New York and Chicago. And
this was the real display of long distance. You know,
New York to Philadelphia was impressive. New York to Chicago
was a much greater distance. So this was marked by
a ceremonial phone call. Graham Bell would make that one
as well, yep, Alexander Graham bells on the call. I
(22:29):
did not see who he was calling. Maybe it was
just you know, prank calls, and he was making prank
calls to Chicago and ordering pizza and then saying, our
pizza is better than your pizza. I can only hope,
I would really hope. So, I mean you think prank
called pizza, it fits so the after all, the very
first call on a mobile phone was a prank call.
But the capacity of this line was just like the
one from Philadelphia, one at a time, and it cost
(22:52):
nine dollars for the first five minutes, which you you
did the math on inflation, yeah, I used in the
inflation calculator. Now, normally I would use the Bureau of
Labor Statistics calculator, which factors in the consumer price index,
but that only goes back to n So I used
the inflation calculator. I honestly don't know where they pulled
(23:13):
their their figures from. So, but based upon the inflation calculator,
that nine dollars would translate into sixty dollars today. So
sixty dollars for five minutes of a phone call. So,
if you think your cell phone bill is high. Yeah,
that's no talk about how I'm almost all the minute.
Well those minutes are precious. Look how much they cost
back in the eighties. Uh so that was when those
(23:38):
patents that we were talking about expired. Yeah, and uh
the day had happened. The columns at Bell System tremble.
Then there was a great whaling. Over the next ten years,
six thousand independent telephone companies would open across the United States.
Now these were legal at this point because the patents
no longer gained exclusivity rights to Bell Systems. So you
(23:59):
had all these companies that suddenly could operate legally within
the United States and offer a competing product or service. Rather,
there are some problems here. So let's say, Lauren, that
you and I both live in the same city back
in eight and it's a small city that Bell System
really hasn't gotten into. But there's this regional company that
(24:19):
has introduced a telephone system, and a second regional company
that competes and also sets up a telephone system. You
become a customer of one of those companies, I become
the customer of the other company. And then one night
you realize, Hey, I left my notes at work. I
need you to grab them and bring them home. Uh,
and you know, can you swing by my place and
(24:39):
you try and call me, but you can't because you're
on one system and I'm on the other, and there's
no interconnectivity. Right, And this was partially because you know,
those those lines might literally not have been connected, and
even if they were, you're talking to The way that
telephones worked at the time is is you would you
would pick it up, and you would get an operator
and tell the operator where you want your call to
go to operation or would manually switch you through, manually
(25:02):
look at a system of switches and figure out the
route to get your call to that house or that
other phone, right or as long as the line wasn't engaged,
they could try the line, but if it's not on
their system, then you couldn't call them. So so there
there were speaking of these these numbers of customers, there
were some seven hundred thousand customers using these other services
(25:23):
and about a million using Bell. Yeah, so around that
so when you think about that six thousand companies and
seven hundred thousand customers and then one company and a
million customers, that shows you that they were still they
were still effectively a monopoly because there was no other
single company that could compete with them. So while they weren't,
(25:45):
by the letter of the law, a true monopoly as
in the only game in town, effectively that's what they were.
And one of the things that happened in was that well,
the Pacific Telephone and Telegraph Company, which later became Pacific Telesis,
opened the first exchange operated entirely in a language other
than English within the United States, operated in Chinatown in
(26:06):
San Francisco, and it was all in Chinese. All the
customers spoke Chinese, and all the operators spoke Chinese. Eight
that's when A. T and T acquired its former rival,
Western Union. And I sure probably some people said ha
ha when it happened. So remember Western Union was the
company that had they purchased those patents from Bell, this
(26:28):
would be a totally different story. There would not have
been an A T and T. But instead they had
decided to fight against Bell and Bell Systems, and now
they became a property of A T and T itself.
Um So A T. T acquires the assets of the
American Bell Telephone Company, which means that A T and
T the subsidiary, now becomes the parent company. Yeah, so
(26:51):
A T and T was now the big company. The
student has become the teacher. So eight is when we
can say the company of A. T and T really
came into being. It was no longer a subsidiary or division.
It was it was in charge. So by this time
the company's size was pretty big. You know. Keep in
mind when it was founded there was one employee. Now
(27:13):
there were a million, three two thousand phones in the
system and more than forty five thousand employees. And that
same year, researchers independently developed a theory about something called
loading coils. The loading coils are a part of technology
that was very important in the early days of the
(27:33):
telephone system. It actually would reduce the rate at which
a traveling telephone signal would weaken, which made it possible
to build longer phone lines and build out this long
distance network. Right that That loss of signal is called attenuation,
and it right, it's it's a loss of intensity of
a signal as it travels through any medium, right Yeah,
So this was a huge help and getting around just
(27:55):
a practical problem that existed with the technology. So several
other advancements would be made later on. We have more
to say about the early days of A T and T.
But first let's take another quick break. Al right, So
back to A T and T. In nineteen oh four,
(28:18):
we start seeing some states began to pass laws requiring
the interconnection between phone networks. And it's still a state
by state case basis at this point, so it's not like, um,
it's not like this is a national movement yet, but
it's starting to kind of develop into that. And remember
A T and T. There, they were taking a pretty
(28:40):
nasty competitive approach. Nasty might be the wrong word, how
about enthusiastic. Yeah, So, but technically this is what everyone
had to do. Everyone was building out their networks and
not connecting with other networks. A T and T had
the most power here because they had the largest number
of customers among any single telephone company. So by not
(29:04):
playing ball by not allowing connectivity with these other networks.
If you know that A T and T is the
big telephone company and that the majority of the people
you would want to get in touch with are going
to be connected to that company, that's the company you
go with, even if there's a regional company that ends
up having a better deal for you financially. If no
one you know is on that service then and you
(29:27):
can't get a call from another service, right, So just
imagine for you cell phone users out there that if
you're an a T and T customer, you would be
unable to call anyone using Verizon, Sprint, or T Mobile,
and the same would be true for each of those companies.
No one would be able to call anyone cross company.
Then you see how how this becomes a problem. But
this is still in the early days. So we get
(29:48):
to nineteen o six, right, Yeah, it was around that
time that the head of the Chicago Bell Exchange instituted
coin operated telephones to prevent people from freeloading in in shops,
you know, drug stores something might have a telephone in them,
and since it was still relatively expensive to place calls,
this was a way they you know, it was a
nickel perk hall and um. By by six, there were
(30:11):
nearly forty coin operated telephones in Chicago, And now you
don't see them hardly anywhere. Yeah, I love seeing them
in movies these days, because once in a while, like
maybe an airport or something, you might see some, but
otherwise they're you know, they used to be everywhere heck,
I remember where they were everywhere. Oh yeah, yeah, I
remember that too. I'm not that young. Was big. That
(30:34):
is the year that Theodore Veil became president of A
T and T again again, Well, he had technically been
president of Bell I think, yeah, that's true. Previously he
was president of Bell and now he's first of the
time president of A T and So he was brought
back on when the JP Morgan group had gained a
majority control of A T and T and said, you
know this Veil guy, we like what he has to say.
(30:55):
We're going to put him back on the top of
the company. Yeah, j P. JP Morgan especially like because
he was still alive at the time, and he's specifically
I'm possibly even called up Veil. I think Veil was
in South America at the time doing stuff and you know,
had been retired, and he convinced him to come out
of retirement. Yep. And Veil again started to really laid
(31:16):
down the vision of A T and T and started
an ad campaign in nineteen o eight, and Veil would
really be responsible yet again for setting the vision of
A T and T. He' set up a challenge to
have a line, a single line stretching from New York
to San Francisco in the next seven years. It's pretty
again ambitious, it's very ambitious considering the technology at the time.
(31:38):
So en eight he starts to kind of spearhead an
ad campaign that set the A, T and T corporate policy. Yeah,
that this was this was the other really big important
part of his vision, and and it was connected to
this a single line concept. Yeah, it was one policy,
one system, universal service. The idea here being that in
order to guarantee that you could that every person in
(32:01):
America would have access to telephones, you had to essentially
take the stance of we're the only game in town,
because if there's none of this interconnectivity through different companies,
that's the only option you have is you have to
have someone come out and become the dominant player so
that everyone has access to the phone and can call
anyone else. He also Vail had this very kind of
(32:23):
pro monopoly stance of competition is what turns consumers away
from brands. It's this this kind of cutthroat thing that
happens is bad publicity for everyone. So if you know,
just it's kind of that doctor horrible sort of thing
like where the world is terrible place, and I just
need to rule it. Yeah. Now, it's exactly that kind
(32:44):
of approach. In fact that I had read several things
about how the the telegraph companies had entered an era
of competition and they all decided they did not like
that very much. And so the telephone company was following
the same route. They weren't so crazy about competition. And
to be fair, this is a case where competition wasn't
really helpful to the consumer simply because of that lack
(33:06):
of interconnectivity. It wasn't that you know, the problem with
is that without the competition, you don't have the benefit
of the consumer being able to choose the right kind
of plan or price or whatever. But on the downside
is you know, if there's no interconnectivity, then it really
gets you stuck. Yeah, and in these early days that
was the bigger issue. So, um, some important, very important
(33:29):
thing in the history of the phone industry happens. Well,
phones were still new enough that we didn't really have
phone etiquette. Yeah, And so Bell would publish a a
little Bell Engineer magazine would would sponsor contest for the
best essay about the proper telephone etiquette, and they published
the best essay um and this was kind of when
(33:53):
the war on hello began. Yeah, so hello was being
adopted as the salutation of choice by a lot of people,
and phone executives and other people thought that this was
a vulgar means of greeting someone on the phone. I
have a quote from that winning essay. It is, would
you rush into an officer up to the door of
a residence and blurt out, Hello, Hello, who am I
(34:15):
talking to? No one should open conversations with phrases such
as Mr Wood of Carson Sun's wishes to talk with
Mr White without any unnecessary and undignified hello's. Huh. Now.
I remember hearing once upon a time an apocryphal tale
that the telephone is what gave rise to the word hello,
(34:36):
But in fact, the word hello pre dates the telephone
by a few decades. I think the earliest written examples
date from the eighteen thirties. However, I will say that
the telephone gave rise to the popularity of the word hello.
And obviously, you know, any any sensible civilized human being
would use ahyhoy uh. There's all ends of other etiquette
(35:00):
notes in these manuals that were coming out at the time,
one from California instructed speakers to speak directly into the mouthpiece,
keeping the mustache out of the opening. Yes, and that
would come into play again in the late two thousand's,
like the two thousand ten era, when hipsters would come
back and the mustache got out of control again. Come on, guys, seriously,
(35:22):
candlebar mustaches are amazing. It's not anyone's one before. So
what you're saying is that you had one before it
was cool. Uh. T and T becomes a government sanctioned
monopoly as the result of an antitrust lawsuit, he said,
ignoring her appointedly. It's documented in something that's called the
Kingsbury Commitment. So at that time, A T and T
(35:45):
divested itself of controlling interest in Western Union, so you
know they had acquired it earlier. Now they divested their
control of it and also allowed competing telephone services to
connect to the A T and T long distance network.
They had to do so with a fee. There was
a toll fee every time they would connect to A
T and T S line. So that's how A T
and T could gain revenue through this this relationship. A
(36:07):
right JP Morgan was still a partial owner of A
T and T at the time, and he was fighting
with the lawmakers known as trustbusters, who were trying to
uh trying to break up A T and T right
up until he passed away in this year in ninet
and Veil did not continue the fight the way that
Morgan really wanted to. He he chose to dominate through
this kind of terrifically sneakily backhanded cooperation with these smaller
(36:32):
independent companies, and because it meant that he still made
money from them, a lot of money. Yeah, I mean,
you know this, this worked out really well for everyone
except the independence because you know, the the arrangement helps
allow customers of different telephone companies connect with each other
because it mandates that A T and T has to
play with everyone's uh so the network interconnectivity is now
(36:55):
no longer a problem. But it gave A T and
T permission to function like a national utility, and and
it would dominate the telephone market until ninety uh And
some would argue, well beyond that, Well, yeah, well it's
certainly into the eighties two, you could argue, and so
so right, So, if independent companies wanted to use the
widespread bell system. They had to agree to use Bell's equipment,
(37:16):
they had to adhere to their standards, and they had
to again pay fees. So if you use of those wires.
If you're thinking that this antitrust story sounds familiar, it
will get increasingly familiar as this series goes on. Yes,
one competitor wrote that that this entire ordeal was like
trying to fight an octopus, which I just think is
terrifically like, I want that steampunk comic book about that.
(37:37):
I'm moving on into nineteen fourteen, we see another technological development,
the three element vacuum tube, which was an amplifier that
enabled the first transcontinental line to exist, which didn't exist yet,
it hadn't been laid down yet, but this technology is
what made it possible. All right, This is an important
advancement because of that aforementioned attenuation. And you know, unless
(37:59):
people could come up with a better material than copper
to transmit a signal with, or or a way to
amp amplify the signal, it just wasn't going to work.
And Dr leed to Forrest created this audion uh three
element vacuum tube, and it would be really big, and
lots of other industries that enabled the development of radio, radar, television,
(38:19):
and computers right up until transistors became a thing in
the nineteen sixties. Yeah. Yeah, you have to go all
the way. Remember that the first transistor isn't even invented
in the prototype stage until the late forties. So from
this point until the late forties, just in the in
the lab, not not let alone out in the real world.
(38:39):
This is this is the best the technology could offer
us at the time, right, Yeah, I think nineteen sixties
was a number that was incorrect listening to Jonathan Well,
by the nineteen sixties it was certainly common, and the
fifties it wasn't common because they still had they still
had to refine the design. Certainly, the first transistor looks terrible.
That's very generous. Um. And meanwhile, via eighteen ties manufacturing
(39:02):
subsidiary that we have previously mentioned, Western Electric Company International
affiliates were starting to sell equipment around Europe, South America
and also in Japan and Australia. Yeah. Yeah, we could
not call them yet, but that would that would change shortly,
relatively speaking. January fifteen, that's when the first long distance
call is between Alexander Graham Bell in New York and
(39:24):
Thomas Watson all the way in San Francisco Thomas Watson.
So this was this is that promise about getting that
that long distance connection all the way from coast to
coast in the United States. It also had two other
connections on that one call. There was the President of
the United States who was in Washington, d C. And
(39:44):
Thomas Vale, who at the time was in Jekyl Island,
Georgia's there. I've been there as well, so yeah, it's
kind of interesting. I think I've even seen a historic
plaque that referenced this. But then again, I have a
feeling that Jackyl Island must be the place where they
make those historic plaques because they are everywhere. So the
cost for those first three minutes of phone time on
(40:07):
a typical long distance call between New York and San
Francisco is twenty dollars and seventy cents in nineteen fifteen dollars. Now,
in this one, I used the Bureau of Labor Statistics
because that was late enough for me to do that.
That's based on the consumer Price Index, so that's the
general price of goods and services in one year versus
another year. So based on that twenty and seventy cents
(40:29):
is about four hundred seventy nine dollars. So that's how
much it would cost you for three minutes of phone
time on a call between New York and San Francisco. Yikes.
Uh So nineteen sixteen was the first year that they
started testing phone service to Europe. It would not work
for another little bit. Yeah, and so this phone service,
(40:51):
you might think, oh, did they lay a really long cable. No,
the early phone service that would become the Transatlantic phone
service was based on radio waves, not on a physical cable.
Nineteen seventeen, that's the beginning of the US involvement in
World War One. Employees start to volunteer for service during
World War One, and A T and T develops the
(41:11):
first air to ground ground to air radio communications systems.
And that was also in the U S. Government took
control of a nation's telephone services. They would not give
it back to its proprietary owners until nineteen nineteen. Yeah,
it was considered a wartime resource. So getting to nineteen nineteen,
that's when Bell System first dial telephones. There they are
(41:34):
released in Norfolk, Virginia. And so before this, like we
said before, you would pick up a phone, and you
would speak to an operator who would make the physical
switching to let you complete your call. The dialing, of course,
is more what we're familiar with today, unless we've all
just used the automated settings on our smartphones and don't
even remember how to dial anymore. But in general, it's
(41:54):
where you type in the series, or in this case
they were rotary phones, you would dial literal around the dial.
Did you ever use a rotary phone? Okay? Just checking.
That was also the year that Vale retired for the
second time. He would he would die the following year.
So in nineteen twenty one, the United States government passed
the Willis Graham Act, which removed antitrust restrictions to the
(42:18):
telephone industry. So it's essentially saying open game for for
a T and T and would acquire over two hundred
and seven thousand telephones worth of exchanges within the next
six years after this was passed. It was really again
to help facilitate that interconnected network of telephone systems, so
this is continuing the work that was done back in
(42:41):
nineteen um and it was also so that the United
States wouldn't be played with hundreds of networks that had
no inner connectivity. But it also meant that it gave A.
T and T the ability to really cubment itself as
a monopoly in the United States. So nineteen twenty two
was a big year for multiple reasons, and that's the
year we're gonna end this first episode on A T
(43:02):
and T launched the w e a F radio station
in New York, which was the very first radio station
to broadcast a commercial. It's also the very first radio
station to broadcast a college football game. Princeton beat University
of Chicago. On August two, nineteen twenty two, Alexander Graham
Bell died and on August four, nineteen twenty two, during
(43:23):
Alexander Graham Bell's funeral, all telephone service was suspended for
a full minute in memory of Bell. So you know
you're important when an entire country's communication system shuts down. Yeah.
So that's a pretty powerful stuff. That wraps up the
A T and T story. Part one originally published on
(43:45):
November four, two thousand thirteen. We will be back next
week to continue this with Part two, and until then,
if you guys have any suggestions for future topics I
should cover on tech stuff, send me a message via Twitter.
The handle is tech stuff h W and I'll talk
to you again really soon. Y text Stuff is an
(44:08):
I Heart Radio production. For more podcasts from I Heart Radio,
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