In making this settlement with the Western Union, the Bell interests not only eliminated a competitor but gained great material advantages.They took over about 56,000 telephone stations located in 55 cities and towns.They also soon acquired the Western Electric Manufacturing Company, which under the control of the Western Union had developed into an important concern for the manufacture of telephone supplies.Under the management of the Bell Company this corporation, which now has extensive factories in Hawthorne, Ill., produces two-thirds of the world's telephone apparatus.With the Western Electric Vail has realized the fundamental conception underlying his ideal telephone system--the standardization of equipment.For the accomplishment of his idea of a national telephone system, instead of a parochial one, Mr.Vail organized, in 1881, the American Bell Telephone Company, a corporation that really represented the federalization of all the telephone activities of the subsidiary companies.The United States was divided into several sections, in each of which a separate company was organized to develop the telephone possibilities of that particular area.In 1899 the American Telephone and Telegraph Company took over the business and properties of the American Bell Company.The larger corporation built toll lines, connected these smaller systems with one another, and thus made it possible for Washington to talk to New York, New York to Chicago, and ultimately--Boston to San Francisco.An enlightened policy led the Bell Company frequently to establish exchanges in places where there was little chance of immediate profit.Under this stimulation the use of this instrument extended rapidly, yet it is in the last twenty years that the telephone has grown with accelerated momentum.In 1887 there were 170,000 subscribers in the United States, and in 1900 there were 610,000; but in 1906the American Telephone and Telegraph Company was furnishing its service to 2,550,000 stations, and in 1916 to 10,000,000.Clearly it is only since 1900 that the telephone has become a commonplace of American existence.Up to 1900 it had grown at the rate of about 13,000 a year; whereas since 1900 it has grown at the rate of 700,000 a year.The explanation is that charges have been so reduced that the telephone has been brought within the reach of practically every business house and every family.Until the year 1900 every telephone subscriber had to pay $240 a year, and manifestly only families in affluent circumstances could afford such a luxury.About that time a new system of charges known as the "message rate" plan was introduced, according to which the subscriber paid a moderate price for a stipulated number of calls, and a pro rata charge for all calls in excess of that number.Probably no single change in any business has had such an instantaneous effect.The telephone, which had hitherto been an external symbol of prosperity, suddenly became the possession of almost every citizen.
Other companies than the Bell interests have participated in this development.The only time the Bell Company has had no competitor, Mr.Vail has said, was at the Philadelphia Centennial in 1876.Some of this competition has benefited the public but much of it has accomplished little except to enrich many not over-scrupulous promoters.Groups of farmers who frequently started companies to furnish service at cost did much to extend the use of the telephone.Many of the companies which, when the Bell patents expired in 1895, sprang up in the Middle West, also manifested great enterprise and gave excellent service.These companies have made valuable contributions, of which perhaps the automatic telephone, an instrument which enables a subscriber to call up his "party" directly, without the mediation of "central,"is the most ingenious.Although due acknowledgment must be made of the honesty and enterprise with which hundreds of the independents are managed, the fact remains that they are a great economic waste.Most of them give only a local service, no company having yet arisen which aims to duplicate the comprehensive national plans of the greater corporation.As soon as an independent obtains a foothold, the natural consequence is that every business house and private household must either be contented with half service, or double the cost of the telephone by subscribing to two companies.It is not unlikely that the "independents" have exercised a wholesome influence upon the Bell Corporation, but, as the principle of government regulation rather than individual competition has now become the established method of controlling monopoly, this influence will possess less virtue in the future.In addition to these independent enterprises, the telephone has unfortunately furnished an opportunity for stockjobbing schemes on a considerable scale.The years from 1895 to 1905 witnessed the growth of many bubbles of this kind; one group of men organized not far from two hundred telephone companies.They would go into selected communities, promise a superior service at half the current rates, enlist the cooperation of "leading" business men, sell the stock largely in the city or town to be benefited, make large profits in the construction of the lines and the sale of equipment--and then decamp for pastures new.The multitudinous bankruptcies that followed in the wake of such exploiters at length brought their activities to an end.
