He was versed in patent lore from Alpha to Omega; and as the trial proceeded, he became convinced that the Bell patent was valid. He notified the Western Union confidentially, of course, that its case could not be proven, and that "Bell was the original inventor of the telephone."The best policy, he suggested, was to withdraw their claims and make a settlement. This wise advice was accepted, and the next day the white flag was hauled up, not by the little group of Bell fighters, who were huddled together in a tiny, two-room office, but by the mighty Western Union itself, which had been so arrogant when the encounter began.
A committee of three from each side was appointed, and after months of disputation, a treaty of peace was drawn up and signed. By the terms of this treaty the Western Union agreed--(1) To admit that Bell was the original inventor.
(2) To admit that his patents were valid.
(3) To retire from the telephone business.
The Bell Company, in return for this surrender, agreed--(1) To buy the Western Union telephone system.
(2) To pay the Western Union a royalty of twenty per cent on all telephone rentals.
(3) To keep out of the telegraph business.
This agreement, which was to remain in force for seventeen years, was a master-stroke of diplomacy on the part of the Bell Company.
It was the Magna Charta of the telephone. It transformed a giant competitor into a friend. It added to the Bell System fifty-six thousand telephones in fifty-five cities. And it swung the valiant little company up to such a pinnacle of prosperity that its stock went skyrocketing until it touched one thousand dollars a share.
The Western Union had lost its case, for several very simple reasons: It had tried to operate a telephone system on telegraphic lines, a plan that has invariably been unsuccessful, it had a low idea of the possibilities of the telephone business;and its already busy agents had little time or knowledge or enthusiasm to give to the new enterprise.
With all its power, it found itself outfought by this compact body of picked men, who were young, zealous, well-handled, and protected by a most invulnerable patent.
The Bell Telephone now took its place with the Telegraph, the Railroad, the Steamboat, the Harvester, and the other necessities of a civilized country. Its pioneer days were over. There was no more ridicule and incredulity. Every one knew that the Bell people had whipped the West-ern Union, and hastened to join in the grand Te Deum of applause. Within five months from the signing of the agreement, there had to be a reorganization; and the American Bell Telephone Company was created, with six million dollars capital. In the following year, 1881, twelve hundred new towns and cities were marked on the telephone map, and the first dividends were paid --$178,500. And in 1882 there came such a telephone boom that the Bell System was multiplied by two, with more than a million dollars of gross earnings.
At this point all the earliest pioneers of the telephone, except Vail, pass out of its history.
Thomas Sanders sold his stock for somewhat less than a million dollars, and presently lost most of it in a Colorado gold mine. His mother, who had been so good a friend to Bell, had her fortune doubled. Gardiner G. Hubbard withdrew from business life, and as it was impossible for a man of his ardent temperament to be idle, he plunged into the National Geographical Society. He was a Colonel Sellers whose dream of millions (for the telephone) had come true; and when he died, in 1897, he was rich both in money and in the affection of his friends. Charles Williams, in whose workshop the first telephones were made, sold his factory to the Bell Company in 1881 for more money than he had ever expected to possess.
Thomas A. Watson resigned at the same time, finding himself no longer a wage-worker but a millionaire. Several years later he established a shipbuilding plant near Boston, which grew until it employed four thousand workmen and had built half a dozen warships for the United States Navy.
As for Bell, the first cause of the telephone business, he did what a true scientific Bohemian might have been expected to do; he gave all his stock to his bride on their marriage-day and resumed his work as an instructor of deaf-mutes.
Few kings, if any, had ever given so rich a wedding present; and certainly no one in any country ever obtained and tossed aside an immense fortune as incidentally as did Bell. When the Bell Company offered him a salary of ten thousand dollars a year to remain its chief inventor, he refused the offer cheerfully on the ground that he could not "invent to order." In 1880, the French Government gave him the Volta Prize of fifty thousand francs and the Cross of the Legion of Honor. He has had many honors since then, and many interests. He has been for thirty years one of the most brilliant and picturesque personalities in American public life. But none of his later achievements can in any degree compare with what he did in a cellar in Salem, at twenty-eight years of age.
They had all become rich, these first friends of the telephone, but not fabulously so. There was not at that time, nor has there been since, any one who became a multimillionaire by the sale of telephone service. If the Bell Company had sold its stock at the highest price reached, in 1880, it would have received less than nine million dollars--a huge sum, but not too much to pay for the invention of the telephone and the building up of a new art and a new industry. It was not as much as the value of the eggs laid during the last twelve months by the hens of Iowa.
But, as may be imagined, when the news of the Western Union agreement became known, the story of the telephone became a fairy tale of success.
