Telephone Development in the United States

The bigness of the telephone interests, present and prospective, of this country is certainly best understood by the engineers. These men of figures and forecasts, whose every-day speech abounds in references to loads, insulations, and relays, have, as is well known, magnificent ideas as to the future of the industry they are building up. Already they are basing their estimates of necessary construction upon a probable twenty percent development within the next two or three decades—a prediction which means, in everyday speech, that by 1930 or 1935 there should be, if the present rate of expansion continues, one telephone for every five people in the United States, or, as it has been otherwise expressed, a telephone to every other family and as many more in places of business.

A guarantee of the essential correctness of this prediction they believe to have been established by experience. Estimates of the progress of this industry upon which experts are willing to recommend the expenditure of vast sums of money in 1905 would have been regarded as hopelessly visionary twenty years ago. The telephone-using capacity of civilized man is in fact only beginning to be appreciated. Not longer ago than 1889 it was held that when, at some time in the remote future, there should be three telephones to every one hundred people in the United States, the limit of saturation would have been reached. Of course, a somewhat more liberal use than this of the convenient instrument was expected in the cities, large and small, but no one foresaw either the extension which has taken place of farmers’ lines and ranchmen's lines into the remotest districts of the land, or the universal popularity which the utility has of late years taken on in the great cities.

After the lean years following 1893 had been succeeded by an era of national prosperity, an unlooked-for demand for telephone service grew up. Long before the end of the last decade of the nineteenth century the insufficiency of the three percent calculation had been so thoroughly proved, that daring engineers began to assure doubting financiers of the likelihood that they might henceforth bank safely upon a probable ten percent development. This, in its turn, was held to be quite the limit, one which would be reached only very gradually as the national wealth accumulated, and the number of individuals able to afford luxuries increased apace.

Yet so rapid since 1900 has been the expansion of the network of local, toll, and long-distance lines over the entire surface of the United States that a revision of all former calculations has become necessary. In the eyes of men who are to raise and spend millions upon further increase of telephone facilities, a forecast of conditions in which every fifth individual will be a telephone-user no longer seems chimerical; the millions needed for such a purpose are actually being raised and invested by cool-headed business men, in the belief that an era of universal telephony is near at hand.

Indeed, the forecasted development, though it fortunately cannot come about all at once,—since to provide for it adequately would be impossible in existing conditions of industry and finance,—is already not so far away in some sections of this country. Once a community, like a family, has acquired the telephone habit, its members are never satisfied to revert to primitive conditions. The tendency of the percentages is everywhere upward, with the far West in the lead. Most of the big towns on the Pacific coast have long since passed ten percent. Th e cities of the East, South, and Central West, though still falling a little below the class of the California communities, are in the midst of an equally noteworthy expansion. They are today, as they always have been, far better users of the telephone than are the European cities of corresponding size and importance. New York affords the stock example. In the metropolis a decade ago about 10,000 instruments were in use.

There were on October 1, 1904, 136,391 subscribers in the boroughs of Manhattan and the Bronx. In London, which has a population of 6,500,000, only 62,580 telephones were in operation at that date; in Paris, with a population of 2,600,000, 45,714 instruments; in Berlin, out of an aggregate population of about 1,800,000 there were 61,885 .subscribers. The total number of instruments in Greater New York on January 1, 1905, was 176,683. New York, therefore, although it is a little behind Boston and Chicago in percentage development, is actually the first city of the world in the number of stations operated and—such is the growth of the traffic—the local engineering force predicts that practically every family not in destitute circumstances in the metropolis will, before many more years have passed, subscribe to the service, just as now almost every place of business must.

The more general figures of the industry are equally convincing as to the plausibility of the engineers' predictions. Ten years ago the number of telephone conversations over the Bell companies' lines in the United States averaged twelve a year for each man, woman, and child. Today the average per inhabitant is forty five. This system, whose operating companies have in hand a total of 4,486,564 telephones, transmits an average of more than 7000 communications a minute, 460,000 an hour, and upwards of 11,000,000 a day, the distances traveled varying from a few feet to more than 1600 miles. In 1904 it handled more than three and one half billion messages, nearly forty times as many as the telegraph companies controlled—a number, indeed, equal to about two thirds of all the letters and postal cards forwarded as United States mail. The average number of daily calls per instrument throughout the country is 6.2.

With the extension, furthermore, of long-distance and toll services, the value of the telephone is increasing so fast that an accelerated growth is safely predicted. The limit of the usefulness of a small local system with no outside connections is soon readied; the opportunity readily to call up anybody anywhere is the boon ultimately to be bestowed on mankind by the telephone engineer. As the various communities of the North American continent are brought into communication with one another by the extension of a single comprehensive system, the worth of the individual telephone is enhanced. It is, of course, of greater consequence to be able to talk to fifty million people than to only five hundred people. Bell toll line conversations, according to the latest annual report of the American Telephone and Telegraph Company, amounted in 1904 to 300,990 daily, an average eight times greater than that of eleven years ago, and more than twice that of five years ago. Th e mileage of toll line wire has increased from 215,687 in 1896 to 1,121,228 in 1905. In some cities, as in the cotton centres of the Southwest, the annual aggregate of long-distance traffic greatly exceeds the local traffic.

Abundance of amusing as well as statistical proof of the approach of such an era of universal telephony as is implied in twenty percent development is not hard to find. Newspapers give publicity to all sorts of ingenious schemes for utilizing Mr. Bell's invention in heretofore unheard-of ways. The instrument has come to be of assistance in about all the vocations and avocations of the everyday world. Not only has it annihilated time and space on the superficial earth, but the Norwegian fishermen drop into the ocean depths a line with telephonic attachment by which the swish of the approaching herring, codfish, or mackerel is communicated to the anxious listeners above. In some of the most delicate operations of hospital surgery the telephone proves helpful, and in ordinary medical practice the country mother raises the baby to the transmitter in order that the physician. In the village may determine whether or not the cough is croupy. Concerts have been transmitted more or less successfully over the wires, and Sunday morning preaching effectively conveyed. After a recent revival, in which scores of eager “seekers” had put in their requests for prayers, the evangelist handed his secretary a list of names with their telephone numbers and with the instruction: “Just call up each one of these sisters and brothers tomorrow morning, and ask them how it goes with their souls. Tell them to keep on with their prayers and inform them that I am praying for them right along.”

Love, too, finds, naturally enough, a telephone way. Engagements, and even marriages, have been brought about over the wire by persons acquainted with each other only vocally. Indeed, a California writer has lately complained that in the progressive and telephone-saturated communities of the Coast the old-fashioned love letter has become quite out of date. There is no longer any occasion for amatory correspondence. An engaged girl whose lover lives in a town distant a score of miles confides that during the two years of their courtship not a solitary letter has passed between them. “We just call each other up a dozen times a day and say all our nice things that way.” These young people, it may be said parenthetically in defense of the telephone habit, will, if anything goes amiss and their affairs are subjected to courtroom discussion, at least not be liable to the mortification of having their love letters produced before a tittering audience.

Even weddings have been telephonically conducted. Recently in Philadelphia an attractive young widow gave herself in marriage to a second husband who at the time lay critically ill with a malignant disease at the Municipal Hospital. Four miles away from the pesthouse a magistrate pronounced over the telephone the nuptial-knotting words while the bride sat by the bridegroom's cot. Contagion fortunately cannot be conveyed by the electric currents of the telephone circuit. Indeed, the isolation of hospital wards has been quite done away with since telephones have become a part of the sick-room fixtures.

These, and almost countless other amusing trivialities which have gone the rounds of the press within the past few months, attest at least the importance which people have begun to attach to the services of the telephone. The serious features of the development now in progress have aspects hardly less astonishing than some of the apparently absurd uses to which the telephone is put. Problems of peculiar and almost sensational moment await solution.

For, in order to enable everybody to reach practically everybody else anywhere in the United States, the engineering department of a great national system must be prepared to construct and maintain a vast number of inter-connected and workable long-distance lines of such a character that stations considerably more than 3,000 miles apart can be readily brought into communication with each other. The art of telephony has not yet reached any such degree of perfection. Recent reports to the effect that the American Telephone and Telegraph Company, which is extending a long-distance line from Omaha to Denver, purposes to build forthwith from the (Colorado capital to the Pacific Coast, thus joining New York and San Francisco telephonically, have been denied authoritatively. The difficulties of maintaining a line increase progressively with its length in excess of one thousand miles. The electric currents used in telephone circuits are exceedingly minute. All sorts of disturbances along a stretch of 1500 or 2000 miles may render the service ineffectual. Between Boston and Omaha , on the longest line that is anywhere in daily use, even a severe downfall of rain upon any considerable section of the wire seriously affects the insulation, and therefore the transmission. Engineering skill is working all the while, as it has been at work for many years, in the hope so to increase the efficacy of the long-distance service that practically no limit of length will be imposed, and that not only trans-continental, but intercontinental telephony will have been effected. For the present, however, many obstacles remain to be overcome.

Another great problem grows out of the existence of competing companies. As a prime condition for proper expansion of the utility there should be a single efficient management of the telephone lines of the country. Competition makes only for anarchy and inferior service. The maximum of usefulness can be attained only under a comprehensive system.

This point deserves all possible emphasis. There is neither economic nor technical excuse for telephone competition in any American community. The “independent” movement could never have come into being but for the unfortunate persistence in this country of a crude notion that any kind of competition in any kind of industry is good. Of course, in reality what may be the life of one trade easily works destruction in another. The truth is that some forms of competition are beneficial, others extremely unhealthful and undesirable. Competitive activity in telephony has been proved by experience as well as by logic to belong to the undesirable type.

The growth of the so-called “independent” companies has from the outset been accompanied by abuses vastly worse than any that its promoters have claimed to eradicate. It has resulted, as such competition almost invariably results, in distressing waste of the savings of the people and in broad-spread impairment of the value of the utility. The movement began shortly after the expiration of the Bell patents about 1894, with the appearance of a horde of manufacturers of telephonic instruments, who crowded into a field that was popularly believed, because of the large dividends paid by the Bell company in its early years, to be full of fabulous profits. The manufacturers soon discovered that in order to create a market for their wares they must promote companies outside the Bell organization. Popular prejudice they promptly seized upon as their most valuable asset. In order that people might be induced to put money, time, and energy into independent telephone enterprises, it was necessary to make their policy one of violent criticism, and such it has continued to this day to be.

Save that in an occasional instance an independent company has had economic justification in that it was organized in territory which no Bell company had ever preempted, most of the capitalization of these enterprises represents downright waste of national resources,—of the wealth of the people created by toil and by abstention from the pleasures which the rewards of toil might have purchased. An enlightened public policy would have prevented their ever coming into existence, while allowing the Bell companies everywhere to maintain their monopoly, and holding them strictly to account for producing satisfactory results. In every place where a second telephone company has entered into competition with the Bell organization there has been waste, — installation of apparatus beyond the community's need, duplication of services, protracted irritation on the part of citizens, lowering of rates to the extent of interfering with efficiency of work. At enormous expense to themselves a number of the leading centres of population of the United States have learned — and are learning — from telephone competition the elementary lesson that public service corporations ought to be established on a reasonably profitable basis in order that citizens may be able to invest in the stocks of such corporations without the risk of losing either interest or principal.

That the independent telephone companies have no proper reason for existence has been made abundantly clear by the frequency—one might almost say the regularity—with which they go into bankruptcy. An unjustifiable business usually fails to go; the financial troubles of the independents have been many and by no means obscure. The normal course of any one of them is through a period of apparent prosperity at the outset to one of bankruptcy within from five to ten years. Richmond, Jacksonville, Detroit, and a score of other important cities have seen both the rise and the fall of rival organizations to the local Bell companies; other communities which are now subject to the manifold inconveniences of the dual system will before long have reverted gladly to monopoly. Every scheme known to the accomplished promoter has been “rigged” time and again,until the investing public has grown weary and wary. The (quotations of the securities of the principal independent companies, as listed in the stock markets of Cleveland, Toledo, and other cities, reveal accurately the status of even the strongest of the independent telephone properties.

What, then, will become of the considerable number of independent companies now operating. Can there be persistence of present conditions, which from the engineering point of view are intolerable?

It seems probable that, because of the gradual disillusionment now going on in the public mind regarding the economic value of competition in telephony, the independent companies will be obliged during the next few years either to place themselves on a very different fooling from that they now occupy, or one and all to go out of business, as so many of them have already gone. In order to survive, many of them have already found it to their advantage to ally themselves with the Bell system. In some sections of the country, as not long since in central New York, in Indiana and Rhode Island, “mergers” have been brought about between Bell companies and other companies, by the terms of which the older and more national organization takes care of all the long-distance traffic, relinquishing the local work to those who were formerly the “independents.”

Any other outcome than such harmonization of interests will be obstructive to that orderly development of the telephone utility upon which the engineering experts are basing their estimates. A great industrial combat, which might be prolonged for many years, would be wasteful of resources and destructive of national morality, and at the end one organization must triumph over all others. Peace and a reasonable degree of prosperity arc prerequisite to the highest usefulness of the telephone.

Fortunately for the general welfare, the likelihood that the independents will cease to be independent through combination into a national organization of their own is more apparent than real. Obstacles intervene. The public would never endure competition, once it became widespread. The inconvenience of a dual system with long-distance connections in every city, town, and hamlet would be distressing, the expensiveness appalling. We already have, it is true, competition of this character in telegraphy and do not suffer so severely from it, but the conditions arc dissimilar. One is not obliged to have two telegraphic instruments at one's home, and two more at the office. Though a correspondent in another city habitually uses the Western Union, one can still send him a Postal message with assurance that it will be promptly delivered. If, however, one is a user of the Bell telephone, while one's correspondent is a user only of the service of an independent company, the two people are still as far apart as if Mr. Bell had not invented the telephone. The only remedy in such circumstances is expensive and cumbersome; each man must use the service of both companies.

Another cause making against any immediate general combination of the independent companies is physical. Their plants have been built without common standards of construction and equipment, and, consequently, cannot usually be made to work in harmony. Theoretically it should be possible for a number of independent companies between, say, Pittsburg and St. Louis, to hitch up and thereby create long-distance services; practically, such a result could be accomplished only through complete rehabilitation, at tremendous expense,of many of the plants involved. The toll connections that have been established between scattered independent companies are operated only over comparatively short distances. To build up profitable long-distance lines is possible only in a system in which the contributory local and toll lines conform to the same engineering standards and are designed each to supplement the others. Independent properties, if truthfully reported upon by expert engineers, are not, therefore, in their present state likely to be attractive to capitalists looking for legitimate investment, however they may allure individual speculators.

The chances, therefore, seem to be against any sensational denoument in the present drama of telephone competition. Independent companies there will be for some time to come, since economic misconceptions die hard. There is, however, a growing disposition throughout the country to concede the usefulness of well-regulated monopoly in many kinds of public service, an d from that disposition the Bell companies will, if they continue to improve their service, normally profit. In all probability the pooling of interests between small local independent companies and the lines of the Bell system will go on apace. The increase of this practice of sub-licensing lines has been marked since the beginning of 1903, when the Census Department's bulletin relating to the telephone and telegraph industries of the United States showed that, of the telephones classified as operated by independent companies, some 84,031 were in fact in alliance under contract with the Bell system. Within two years from the appearance of the Bulletin,—that is, on January 1, 1905,—the number of this class of telephones had increased to 167,215.

So that it now appears extremely unlikely that the people of the United States will within the next twenty or thirty years undertake, as logically they must if two big competing systems of telephone should  he allowed to build rival exchanges wherever there is traffic to be handled, to invest nearly or fully four billions of dollars in properties of which from one third to one half would represent sheer waste of material resources. Both moral suasion and legislation of a general nature may be needed in certain communities to keep the fool and his money from parting company, but the whole American people will not put itself in a position to be indicted of such monumental folly. Rather, the orderly development of the telephone industry will go on up to the twenty percent stage, and possibly much farther yet.