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Island, New York. In 1885 the cables ing telephone dates from the discovof the world were 73,779 miles, of eries of Alexander Graham Bell and which more than 40,000 lay between others in the last quarter of that centAmerica and Europe. In 1903 there ury.

The Bell instrument was pubwere 19 cables in existence between licly exhibited in 1876 and came into the two countries, several of which, commercial use the following year. however, were not in use. In 1903 the was slow in coming into general apCommercial Cable Company laid a preciation, even though its usefulness cable 7,846 miles long across the was clearly apparent. From the origiPacific, with termini at San Francisco nal method of a single wire connecting and the Philippine Islands, and sta- two stations only, the exchange systions at Hawaii, Midway Island, and tem was invented, which was the one Guam.

thing needful to enhance and extend Side developments of the telegraph the utility of the new invention.

. have been numerous and are scarcely Within seven years every city or town second in importance to the main sys- in the United States of 10,000 inhabittem. Among these are the District ants or more, and many smaller com

, Telegraph Company, the Gold and munities, had an exchange. Stock Telegraph Company, and the That was the real beginning of the systems of private lines extensively telephone.

telephone. Concerning the situation used by newspapers, business men, as it then existed, it has been well said and large corporations. These have that all was industrial and scientific become such features of modern busi- confusion. Rival inventors ness life that it is not possible to com- promptly, and the business was saved prehend how public and private affairs only by the consolidation in 1881 of could now be conducted without them. the six companies which had sprung The development of the telegraph has into existence. The mechanical and kept pace with its commercial prog- scientific problems that remained to ress. Thousands of new inventions be solved were seemingly insolvable have added to its efficiency until the “ Gibraltar of impossibilities.” perfected machine of the Twentieth All that those had who followed Bell century bears little resemblance, save and Watson, his associate, was “ that in fundamental principles, to its origi- part of the telephone which we call the nal of 1846.

receiver. This was practically the Although the electrical production sum total of Bell's invention, and reand transmission of sound was con- mains to-day as he made it. It was sidered and experimented with by then, and is yet, the most sensitive scientists long before the middle of the instrument ever put to general use in Nineteenth century, the efficient speak- any country.

There were no



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switchboards of any account, no cables following year, 5,187 had been inof any value, no wires that were in any stalled, but even then the instrument sense adequate, no theory of tests or was little more than a toy. A decade signals, no exchanges, no telephone later the number of instruments in system of any sort whatever." *

use had increased nearly eighty fold That was in 1881. But in 1878 the – to 380,277. The years immediately New England Bell Telephone Com- following also showed an increase, but pany had been organized for New a much smaller one proportionately, England and the Bell Telephone Com- the number of instruments installed pany for the United States; in the by 1895 being 660,817 — less than following year the National Bell Tele- double the number in 1878. phone Company arose as a consolida- The most dangerous competitor the tion of the two and was, in turn, suc- Bell telephone ever had was the Westceeded in 1880 by the American Bell ern Union Telegraph Company, which Telephone Company. The telephone was early in the field with the invenwas passing through a business ex- tions of Elisha Gray and Thomas A. perience which strikingly resembled Edison; but the patent litigation that that of the telegraph: a small begin- ensued was ended by compromise and

a ning, great and rapid expansion, in- the relinquishment of its telephone venting rivalry and patent infringe- branch by the telegraph company. ment, sharp competition, and the final Other rivals were not formidable and extinction of injurious rivalry by the the Bell people had a monopoly that consolidation of opposing interests. still holds at the end of nearly 40 Nine years after the American Bell

years. The commercial systems of the Telephone Company had become the whole country were unified, apparatus controlling corporation (in 1899) it was harmonized and standardized, and was taken over by the American Tele- the business was developed at every phone and Telegraph Company, which point along both industrial and scienhad been originally started to handle tific lines. As a result, the Bell comthe long-distance branch of the busi- pany was built up into a powerful ma

chine, the interests of which became But it had been a long and weary so completely and strongly interwoven progress before this point of business with the varied interests of the counimportance had been attained. In the

try that it held a position in which, if spring of 1875 there was not a single not impregnable, it was certainly able telephone in practical use in the to withstand powerful attacks. United States. Before the close of the

Strong attacks finally did come. As

the term of the fundamental patents * Herbert N. Casson, The History of the Telephone, p. 115.

owned by the Bell company ended, in


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dependent systems, based on the old independent systems furnishes abundpatents but with new additional fea- ant evidence of how they met and sattures, sprang up. At first the inde- isfied a great need. In 1880 there were pendent systems were established in the entire country 148 telephone where the Bell had not occupied the systems and 54,139 stations or telefield. Later they made their way into phones. In 1902 there were 4,151 syssome of the larger cities (Chicago, tems and 2,315,297 stations or teleCleveland, St. Louis, Philadelphia, In- phones. Including the rural lines,

, dianapolis and others) to operate in there were 9,136 systems. Of the direct competition with the Bell com- 4,151 commercial and mutual systems, panies. The first independent system the independents had 4,107, but the was installed in 1883, during the ex- Bell companies had more wire, more istence of the Bell patents, but slow subscribers, and more telephones, and progress in competition with the old naturally handled more messages. In established companies was made. Be- 1911 there were nearly 8,000,000 statween 1883 and 1894 only 74 such sys- tions in the entire country, of which tems were started, most of them small about 6,000,000 were in the Bell sysaffairs and some of them operating tem and about 2,000,000 in the indeunder the Gray and Edison patents. perdent systems. After 1894, with the expiration of the After years of experimenting by Bell patents, their installation was Hertz, Lodge, Henry and others, the more rapid, so that by 1902 there were wireless telegraph came into use in 3,039 such systems in operation,

in operation, 1901, and within the next ten years though most of them were small and several systems — the Marconi, the of a local character.

De Forrest and others -- were in A notable development of the in- operation. Before 1911 the wireless dependent systems was in the rural or was in common use on the Trans-Atfarmers' lines. This was particularly lantic steamships, on battleships, and so in the Middle West, where the in- on steamships of domestic maritime dependents secured their strongest lines. Wireless stations were numerhold, 75 per cent. of the systems being ous along the seaboard. Most of the established in Illinois, Indiana, Iowa, communication by this method was and Missouri. The rural telephone be- over water space, but transmission of came an important factor in the vil- messages across land already points lage and the farm life of that section to future success in that direction. of the country. It brought hitherto .

Although the wireless telegraph isolated small communities and the cannot be said to have attained great lonely farmhouses in touch with each commercial importance, its utility on other and the large business centres. both land and sea has already been The increase in the number of these amply demonstrated. This latest


mode of communication has long cuss its status. Its value as a means passed the experimental stage and of oceanic communication has been promises to rival the ocean cable in strikingly demonstrated by the recent importance. Combined with the wired Titanic disaster, when over 700 lives telegraph, there are practically no

saved by wireless distress limits to the uses of the wireless sys- signals.

signals. Laws have already been tem. That it has already assumed passed requiring all ocean-going pasworld-wide importance is shown by senger steamers to be equipped with the three international conferences wireless receiving stations available held recently (in 1911 and 1912) to dis- day and night.*.




The Federal apportionment during the Civil War - The ten per cent. tax on State banks — Reorganization of

the National banking system - Advantages of the new system — Subsequent modifications of the banking law of 1866 — The financial panic of 1873 — The following reaction - The crisis of 1893 - A decade of remarkable prosperity - The panic of 1907 The Aldrich-Vreeland Act — Shortcomings of the National banking law Present financial conditions and tendencies.

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War is an everlasting source of ited, as will be remembered, to $300,confusion and distress to the financial 000,000

000,000 — was to be so apportioned systems of a nation, and the Civil

James D. Reid, The Telegraph in America : Its

Founders, Promoters and Noted Men (New York, War in the United States proved no

1879 and 1886); Herbert N. Casson, The History exception to this rule. Banking in- of the Telephone (Chicago, 1910); Frederick A.

Collins, Wireless Telegraphy: Its History, Theory stitutions throughout the country

and Practice (New York, 1909); William Mayer, were in a very precarious state. Had Jr., Wireless Telegraphy, Theory and Practice not the wise, far-sighted system of

(New York) and American Telegraphy and En

cyclopedia of the Telegraph (New York, 1909); National banks been introduced at Telephones and Telegraphs, 1902 and 1907 (Re

port of the United States Census Bureau, Washthis crucial juncture, financial ruin to

ington, 1906 and 1909); monthly summary of the country must have resulted. Be

commerce and finance of the United States, Janu. fore this system actually came into

ary, 1899 and July, 1902 (Washington, 1899 and

1902); Thomas T. Eckert, The Telegraph, ch. xix. operation, however, the exigencies of in Chauncey M. Depew (ed.) One II undred Years the war had compelled Congress to

of American Commerce (New York, 1895); A. E.

Kennelley, Wireless Telegraphy and Wireless flood the Nation with paper currency Telephony (New York, 1909). issued directly by the Government.

† Prepared for this History by Henry Clews,

Banker, New York City, author of Twenty-eight The entire issue of currency — lim- Years in Wall Street, etc.



among the various States, one-half formly everywhere. When it was seen according to the representative popu- that this was precisely what the Nalation of each and the other according tional banking system offered, the to the capital, resources, and business spread of the latter was speedy. By done by each State at the time. But October of 1866 the total number of the same cause that previously re- National banks in the country had tarded the start of the National bank- reached 1,644 — more than doubling ing system now prevented its exten- themselves in less than two years. sion. In January of 1865 there were The increase has been steady ever only 683 banks which had taken ad- since, save for a few normal drops, acvantage of the new law in their organ- counted for by transitory conditions ization, and the State banks were still from which the recovery has been comcontinuing to conduct their business paratively rapid. along the old lines as best they could. The National banks, having formed Accordingly the aid furnished the the very bone and sinew of American Government through this new market banking for nearly fifty years, it is defor its bonds was, despite the bright sirable that we here look more inprospect it seemed to hold, decidedly tently into the processes of their opermeagre for a time.

ation. At the outset it may be said It was thus purely as a matter of that the new system preserved all the self-protection and public expediency advantages of the old, gaining its that the law of March 3, 1866, impos- strength by the many new advantages ing a 10 per cent. tax upon all notes it offered. In the first place it proissued by State banks was passed. vided a uniform bank-note issue, bearThis law went into effect on August ing a constant value which was the 1, 1866, and at once furnished the same in all localities, so that a note isefficient check to the issues of State sued in Massachusetts, for instance, banks so long sought by the wisest was accepted as unhesitatingly in financial heads in the country.

Texas or California or Florida as it Immediately the process of reor

would have been in the State whence ganization set in. As a matter of fact, it came. Furthermore, the installait was not the Government alone that tion of a new method of engraving benefited by a change from the old, and issuance safe-guarded the pubworn-out, heterogeneous banking sys- lic and banks alike against countertem which had long been a nuisance to feits in a way never before possible; the country at large. Business itself while, by its system of redemption, demanded a change - a change which exchange was made merely nominal. should be truly National and at the Three other provisions were immense same time quite safe, operating uni- factors in further protecting the pub



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