| THE DEVELOPMENT OF TELEPHONE SERVICE |
By FRED DeLAND
PITTSBURGH, PA
XIII. The Parent Bell Companies
IT will be recalled that in the circular announcement sent out early in May, 1877, the essential text of which was reproduced in Chapter IV., the owners of the Bell patents style themselves 'the proprietors of the telephone.' These 'proprietors' in the beginning were Alexander Graham Bell, of Boston; Gardiner Greene Hubbard, of Cambridge, and Thomas Sanders, of Haverhill, each of whom held a one third interest. Then these gentlemen arranged to secure the services of Thomas A. Watson, who as a young mechanician and electrician in the Williams' shop had assisted in many of the early experiments, had made some of the early telegraph and telephone apparatus, and was familiar with Graham Bell's hopes and plans concerning the transmission of speech. In return for devoting all his time to the promotion of telephone interests, Mr. Watson received in lieu of cash payments a one tenth interest in the Bell patents. This reimbursement for services to be rendered had little tangible value at that time, but three years later could easily have been sold for more than a hundred thousand dollars. Under this arrangement Bell, Hubbard and Sanders each held a three tenths interest and Watson held one tenth.
The appearance of that first telephone circular combined with the appointment of active special agents, working on a liberal commission basis, gradually created a demand for telephones for use on private lines and for experimental purposes, and it soon became evident that quite a sum of money would have to be expended in manufacturing and delivering these instruments. But so little faith had capitalists in the future of the telephone, that it is said that Mr. Hubbard found it very difficult to raise sufficient funds to float the telephone. Thus, with a view to simplifying the conditions under which the necessary funds could be secured and the interests of the proprietors protected, on July 9, 1877, Mr. Hubbard was made trustee of the patents and empowered to exploit them for the best interests of all concerned. In turn he formed an association or partnership arrangement, "for the purpose of manufacturing and introducing said telephones into general use throughout the United States." This association was composed of only seven members during its entire life, and its affairs were managed in behalf of these seven beneficiaries by officials of their selec-
