Western Electric and the Bell System - A SURVEY OF SERVICE

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The American Telephone and Telegraph CompanyIICORPORATE DEVELOPMENT OF AT&TIdeas are elusive. It is hard to say just when Alexander Graham Bell conceived thepossibility of transmitting intelligible speech over wires. It is easier to pinpoint the datewhen Bell felt his work far enough advanced to seek to protect it by patent. On March6, 1876 he and two backers, Thomas Sanders and Gardiner G. Hubbard, formed theBell Patent Association. The following day, the United States Patent Office issuedpatent number 174,465, called "improvement in telegraphy" in answer to Bell’sapplication. This patent contained specifications for the telephone instrument. ByJanuary 30, 1877, the Bell Patent Association held four fundamental patents and wasready to market the new device. In July, in Boston, the first telephone company wasformed as "Bell Telephone Company, Gardiner G. Hubbard, Trustee." The name of thecompany seems a bit peculiar today but the trustee system was common in those days,particularly in New England.To spread the use of the invention, Hubbard offered licenses to form telephonecompanies to any accredited organization that would agree to finance and conductsuch a business.About the same time, Sanders interested a group of Massachusetts and RhodeIsland financiers in the telephone. This group formed the New England TelephoneCompany (not connected with the present New England Telephone and TelegraphCompany) and agreed both to buy their telephones from the Bell Company and to leasethem to their subscribers. The two companies also agreed to provide connecting linesbetween their territories.The success of the venture led the Bell group to form another company to leasetelephones in the rest of the country. The trustee arrangement was ended and aMassachusetts corporation was formed as the Bell Telephone Company. Patent rightswere assigned to the New England Company for their states and to the Bell TelephoneCompany for the rest of the country. However, within a year the two companies hadmerged to form the National Bell Telephone Company. It, too, had headquarters inBoston but unlike its predecessors it was the first telephone company to achieve anyreal prominence.On March 20, 1880, the Bell interests formed the American Bell TelephoneCompany, a Massachusetts corporation with a capitalization of $10,000,000, inresponse to the need for more capital. By the articles of incorporation, this companywas permitted to own stock in other companies. It was about this time that stockownership began to spread. In December, 1880 there were 540 shareholders. OnJanuary 1, 1881, the first dividend - $3.00 a share - was declared.By 1881 a clear policy of licensing had been established. The parent companyfurnished the telephones and retained the right to provide connecting links betweenterritories so as to form intercommunicating systems. Eventually these licenses
ecame permanent and, in addition to confirming territorial rights, included the right toparticipate in all future inventions as well as those existing at the time. Each of theterritorial companies paid rental to the parent company and the parent company wasrepresented in each as a stockholder. Gradually the parent company acquiredsubstantial holdings in these companies as a result of providing financial assistance forexpansion.There were now about 300 telephone companies operating under American BellTelephone Company licenses. Many held licenses only for a city. Each operated fairlyindependently, without the benefit of knowing how similar problems had been solved inother locations and there was a danger that quality standards would vary from place toplace. Moreover, the growing popularity of the telephone indicated that it couldincrease in service greatly through interconnection of exchanges.WESTERN ELECTRIC ENTERS THE BELL SYSTEMWestern Electric’s entry into the Bell System in 1882 provided a source forcompatible telephone equipment of high quality. In 1885 the American Telephone andTelegraph Company was formed in New York (as a subsidiary of American Bell) to buildthe lines needed to connect the scattered exchanges "in each and every city, town, orplace . . . with one or more points in each and every other city, town, or place ... of theUnited States, and in Canada, and Mexico . . . and also by cable and other appropriatemeans with the rest of the world." - essentially the function now performed by the LongLines Department of AT&T.This was the goal as stated by Theodore N. Vail, at that time general manager of theAmerican Bell Telephone Company, and subsequently first president of AT&T. Morethan any other man, Vail was responsible for the conception and realization of the BellSystem network. His enthusiasm evoked a predictable response. There were somewho shared his enthusiasm; others praised his vision and let it go at that; and manyothers shook their heads in practical disbelief.At their annual meeting in March, 1900, American Bell stockholders voted to makeAT&T the central organization of the Bell System. American Bell conveyed its assets toAT&T, which served as the coordinator of activities among the operating companiesand also retained operation of interconnecting networks.In 1911, AT&T announced its plans to reorganize operating companies into statewideor larger territorial units. "Each associated company . . . will become anautonomous whole, with its own local control and identity, and within the limits of thegeneral policy and authority, absolute on matters pertaining to or which affect only thatterritory," the AT&T annual report stated. This policy continues to guide Bell Systemoperations today.In December, 1913, AT&T agreed to provide long distance connection of Bell Systemlines to the numerous independent telephone systems which had developed after theexpiration of the Bell Patents. 2 This arrangement contributed to the development of theentire telephone industry in the United States and it is because of this access to the BellSystem’s nation-wide network that each of America’s telephones may be connected toall the others.
Page 1 and 2: Western Electricand theBell SystemA
Page 3 and 4: TABLE OF CONTENTSI The Bell System
Page 5 and 6: The Bell SystemaConcept in ActionIT
Page 7: Part I:Our Bell System“Partners
Page 11 and 12: AT&T’s ROLE IN THE BELL SYSTEMThe
Page 13 and 14: department sets technical requireme
Page 15 and 16: OWNERS OF THE BELL SYSTEMSome 2,250
Page 17 and 18: Bell Telephone LaboratoriesIIIThe g
Page 19 and 20: the designs and specifications for
Page 21 and 22: The Bell Telephone CompaniesIVThe c
Page 23 and 24: operations. How these things are do
Page 25 and 26: History of Western ElectricVIn Janu
Page 27 and 28: growing desire by Americans to exhi
Page 29 and 30: "Nash Fish," for which its inventor
Page 31 and 32: Less than a year later, in October,
Page 33 and 34: In the spring of 1946, the first mu
Page 35 and 36: contributions to this team effort h
Page 37 and 38: Structure of Western ElectricVIWest
Page 39 and 40: Long-range planning, for example, b
Page 41 and 42: company locations except major Work
Page 43 and 44: defined in their delegations, and m
Page 45 and 46: Manufacturing-Area AFacilityBALTIMO
Page 47 and 48: Manufacturing-Area CFacilityALLENTO
Page 49 and 50: 3. Determine long-range space requi
Page 51 and 52: HouseInauguratedPennsylvania (forme
Page 53 and 54: The primary responsibility of an in
Page 55 and 56: circuits needed in a telephone cent
Page 57 and 58: Purchasing and TransportationThe Vi
Page 59 and 60:
The Manager - Plant Design and Cons
Page 61 and 62:
Organizations Reporting to Assistan
Page 63 and 64:
Government Sales and Administration
Page 65 and 66:
Labor CounselThe Labor Counsel deal
Page 67 and 68:
easonableness of Western’s earnin
Page 69 and 70:
has primary responsibility for its
Page 71 and 72:
Principal Subsidiaries of Western E
Page 73 and 74:
acre site. The company also operate
Page 75 and 76:
The Manufacturers junction Railway
Page 77 and 78:
Communications Services and Product
Page 79 and 80:
these purchases represent a signifi
Page 81 and 82:
1-S Automatic Call Distributing Sys
Page 83 and 84:
vertical member in conjunction with
Page 85 and 86:
dialing area. The extension of dial
Page 87 and 88:
Obviously, this investment cannot s
Page 89 and 90:
"We must know our way around among
Page 91 and 92:
(e) 'Vestrex" shall mean Westrex Co
Page 93 and 94:
ecording studios or outside the Uni
Page 95 and 96:
non-discriminatory as between licen
Page 97 and 98:
to furnish, the same, of manufactur
Page 99 and 100:
(a) requiring sales, at non-discrim
Page 101:
APPENDIX A.• Bell Telephone Compa
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