CHAPTER V. THE EXPANSION OF THE BUSINESS
This duplication went merrily on for years before it was generally discovered that the telephone is not an ear, but a nerve system; and that such an experiment as a duplicate nerve system has never been attempted by Nature, even in her most frivolous moods. Most people fancied that a telephone system was practically the same as a gas or electric light system, which can often be duplicated with the result of cheaper rates and better service. They did not for years discover that two telephone companies in one city means either half service or double cost, just as two fire departments or two post offices would.
Some of these duplicate companies built up a complete plant, and gave good local service, while others proved to be mere stock bubbles. Most of them were over-capitalized, depending upon public sympathy to atone for deficiencies in equipment. One which had printed fifty million dollars of stock for sale was sold at auction in 1909 for four hundred thousand dollars. All told, there were twenty-three of these bubbles that burst in 1905, twenty-one in 1906, and twelve in 1907. So high has been the death-rate among these isolated companies that at a recent conven- tion of telephone agents, the chairman's gavel was made of thirty-five pieces of wood, taken from thirty-five switchboards of thirty-five extinct companies.
A study of twelve single-system cities and twenty-seven double-system cities shows that there are about eleven per cent more telephones under the double-system, and that where the second system is put in, every fifth user is obliged to pay for two telephones. The rates are alike, whether a city has one or two systems. Duplicating companies raised their rates in sixteen cities out of the twenty-seven, and reduced them in one city. Taking the United States as a whole, there are to-day fully two hundred and fifty thousand people who are paying for two telephones instead of one, an economic waste of at least ten million dollars a year.
A fair-minded survey of the entire independent telephone movement would probably show that it was at first a stimulant, followed, as stimulants usually are, by a reaction. It was unquestionably for several years a spur to the Bell Com- panies. But it did not fulfil its promises of cheap rates, better service, and high dividends; it did little or nothing to improve telephonic apparatus, producing nothing new except the automatic switchboard - a brilliant invention, which is now in its experimental period. In the main, perhaps, it has been a reactionary and troublesome movement in the cities, and a progressive movement among the farmers.
By 1907 it was a wave that had spent its force. It was no longer rolling along easily on the broad ocean of hope, but broken and turned aside by the rocks of actual conditions. One by one the telephone promoters learned the limitations of an isolated company, and asked to be included as members of the Bell family. In 1907 four hundred and fifty-eight thousand independent telephones were linked by wire to the nearest Bell Company; and in 1908 these were followed by three hundred and fifty thousand more. After this landslide to the policy of consolidation, there still remained a fairly large assortment of independent companies; but they had lost their dreams and their illusions.
As might have been expected, the independent movement produced a number of competent local leaders, but none of national importance. The Bell Companies, on the other hand, were officered by men who had for a quarter of a century been surveying telephone problems from a national point of view. At their head, from 1907 onwards, was Theodore N. Vail, who had returned dramatically, at the precise moment when he was needed, to finish the work that he had begun in 1878. He had been absent for twenty years, developing water-power and building street- railways in South America. In the first act of the telephone drama, it was he who put the enterprise upon a business basis, and laid down the first principles of its policy. In the second and third acts he had no place; but when the curtain rose upon the fourth act, Vail was once more the central figure, standing white-haired among his captains, and pushing forward the completion of the "grand telephonic system" that he had dreamed of when the telephone was three years old.
Thus it came about that the telephone business was created by Vail, conserved by Hudson, expanded by Fish, and is now in process of being consolidated by Vail. It is being knit together into a stupendous Bell System - a federation of self-governing companies, united by a central company that is the busiest of them all. It is no longer protected by any patent monopoly. Whoever is rich enough and rash enough may enter the field. But it has all the immeasurable advantages that come from long experience, immense bulk, the most highly skilled specialists, and an abundance of capital. "The Bell System is strong," says Vail, "because we are all tied up together; and the success of one is therefore the concern of all."
The Bell System! Here we have the motif of American telephone development. Here is the most comprehensive idea that has entered any telephone engineer's brain. Already this Bell System has grown to be so vast, so nearly akin to a national nerve system, that there is nothing else to which we can compare it. It is so wide- spread that few are aware of its greatness. It is strung out over fifty thousand cities and communities.
If it were all gathered together into one place, this Bell System, it would make a city of Telephonia as large as Baltimore. It would contain half of the telephone property of the world. Its actual wealth would be fully $760,000,000, and its revenue would be greater than the revenue of the city of New York.