lephones had been leased to those who desired to
establish private lines, but it was not until May of 1877 that the
first telephone system was established with an exchange by means of
which those having telephones might talk with one another. There was a
burglar-alarm system in Boston which had wires running from six banks
to a central station. The owner of this suggested that telephones be
installed in the banks using the burglar-alarm wires. Hubbard gladly
loaned the instruments for the purpose. Instruments were installed in
the banks without saying anything to the bankers, or making any charge
for the service. One banker demanded that his telephone be removed,
insisting that it was a foolish toy. But even with the crude little
exchange the first system proved its worth. Others were established in
New York, Philadelphia, and other cities on a commercial basis. A man
from Michigan appeared and secured the perpetual rights for his State,
and for his foresight and enterprise he was later to be rewarded by
the sale of these rights for a quarter of a million dollars. The free
service to the Boston bankers was withdrawn and a commercial system
installed there.
But these exchanges served but a few people, and were poorly equipped.
There was, of course, no provision for communication between cities.
With the telephone over a year old, less than a thousand instruments
were in use. But Hubbard, who was directing the destinies of the
enterprise during Bell's absence in Europe, decided that the time
had come to organize. Accordingly the Bell Telephone Association was
formed, with Bell, Hubbard, Sanders, and Watson as the shareholders.
Sanders was the only one of the four with any considerable sum of
money, and his resources were limited. He staked his entire credit in
the enterprise, and managed to furnish funds with which the fight for
existence could be carried on. But a business depression was upon the
land and it was not easy to secure support for the telephone.
The entrance of the Western Union Telegraph Company into the telephone
field brought the affairs of the Bell company to a crisis. As we have
seen, the telegraph company had developed into a great and powerful
corporation with wires stretching across the length and breadth of
the land and agents and offices established in every city and town of
importance. Once the telephone began to be used as a substitute for
the telegraph in conveying messages, the telegraph offi
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