Even from the first it was perceived that a long-term license would not be equitable to both parties, owing to the new conditions that were arising and would necessarily continue to arise from month to month. With growth and development would come a broadening experience of great value to both operating and parent company, and a lessening of timidity on the part of capital. It was this fear on the part of investors that rendered necessary the issuance of separate licenses for neighboring cities or adjoining territory, or for towns widely separated. Yet it was obvious that the near future was certain to bring changed conditions that would strongly emphasize the necessity for merging several exchanges or even all lines and exchanges within a state under one management and governed by one policy.
Thus it came about that during the four years, 1878-81, local telephone exchanges were established in many towns by individuals or small companies, on the understanding that the local owners were to furnish all the capital required to properly start and develop the industry, while, in return, the parent company would supply the telephones as fast as required, and would protect and defend the exclusive rights to operate under the Bell patents.
Early in 1877, Mr. Frederic A. Gower was appointed 'general agent for the Bell telephone' for all of New England. He assisted Graham Bell in a number of lectures, delivered a number of lectures, and visited nearly all the larger cities in his territory in the effort to secure local capital and cooperation in establishing telephone exchanges. Then he tendered his resignation to take effect on January 1, 1878, in order that he might spend much time in introducing the telephone in European cities. Thus, to take up and systematically continue the work that Mr. Gower had been so actively engaged in, a second organization was formed that may properly be referred to as a subparent company, as it enjoyed equal rights with the first company within a limited territory.
This second company was incorporated on February 12, 1878, under the general laws of the Commonwealth of Massachusetts, with an authorized capitalization of $200,000, all of which was issued in return for $50,000 in cash and for certain patent rights and other privileges valued at $150,000. Exclusive rights 'to use, license others to use, and to manufacture telephones in the New England States,' were granted to it, and during its brief existence it endeavored to thoroughly develop its allotted territory. It secured the right to erect poles and wires in a number of cities and aided in the organization of a number of local telephone companies. Though named the New England Telephone Company it was never in any way related to the later and now well-known New England Telephone & Telegraph Company of Boston.
