(May 1, 2018) For the past one-hundred-and-fifty years few Americans enjoyed a better reputation than Alexander Graham Bell. Not only is he credited with inventing the telephone, the gadget is said to be an unintended by-product of his efforts to discover a device that would enable his deaf fiancée to hear. He went on to found the Bell System, which dominated telecommunications for a century. In Bell Labs his company gave America the World’s finest industrial research laboratory until the parent company was required to subdivide into pieces by an antitrust consent decree thirty six years ago. In one tribute, at a time when ordinary businessman were rarely so honored, the U. S. Post Office issued a ten cent stamp picturing Bell’s image almost eighty years ago. For much of the twentieth century Bell’s American Telephone and Telegraph Company was America’s biggest corporation. As students, nearly all of us were taught to admire Bell’s inventiveness, perseverance, integrity and accomplishments.
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In reality the Bell legend is false. AT&T’s century-long dominance of the telephone industry empowered it to perpetuate a bogus narrative. When AT&T controlled ninety percent of America’s telephones, there were few voices to contradict the company’s version of history. After AT&T was broken apart by the 1982 consent decree, nearly all of the minority voices had been silenced. The true story of how Bell got his patents involves dishonesty, Patent Office collusion, and downright bribery. It all happened during the second term of Ulysses Grant’s presidency, whose Administration was saturated with corruption.
On February 14, 1876 Elisha Gray of Chicago’s Western Electric Company filed a provisional patent for “An Apparatus Using Telegraphic Means to Transmit and Receive Sounds.” At the time, Western Electric was an independent company that sold equipment to Western Union and other telegraph companies. The “Apparatus,” therefore, was targeted at Western Union, which was the biggest telegraph operator in 1876. Bell’s future father-in-law, Gardiner Hubbard, was a Boston patent attorney who disliked Western Union, which he wanted the U. S. Post Office to forcibly take over.
Somebody at the Patent Office illegally told Hubbard about Gray’s patent application. Hubbard hurriedly wrote-up a competing one for Bell and bribed a Patent Office employee to falsely record that Bell’s application had arrived several hours earlier than Gray’s. (Hubbard had earlier funded a laboratory for Bell in order for Bell to invent a method of sending multiple telegrams over a single wire simultaneously.)
On February 24, 1876 Hubbard sent Bell to an unlawful and secret meeting with a Patent Office examiner in Washington. The examiner permitted Bell to inspect Gray’s patent. The inspection enabled Bell to learn how Gray intended to accomplish the telephonic task and Bell unscrupulously copied Gray’s description to the margins of his own patent application. It was an illegal post-facto augmentation.
Bell’s application was approved on March 7, 1876. The rapid approval is suspicious since normally months elapse before a patent is granted. Also unusual was the absence of hearings to resolve whether Bell’s patent overlapped with Gray’s. Unbeknownst to Gray, Bell’s first demonstration of his telephone on 10 March used a microphone device depicted in Gray’s patent. Since Gray was not informed of the illegal collusion between the Patent Office and Bell, he sent Bell a congratulatory note after the demo.
Hubbard wanted Bell’s telephone to be exhibited at the 1876 Centennial Industrial Exhibition slated for Philadelphia that summer. But Bell was reluctant because he knew his microphone was unreliable and obviously pirated from Gray. Although his exhibit at the Centennial was based on Gray’s theory, Bell changed some of the components in Gray’s microphone transducer design. When Hubbard soon thereafter learned of a superior transducer developed in Germany, he purchased the component’s technical rights. With Bell’s purloined version of Gray’s patent and the German transducer, Hubbard offered to sell the integrated telephone technology to Western Union, but the telegraph giant turned him down.
Alexander Graham Bell basically dropped out of the picture after Hubbard soon thereafter hired a businessman to manage the company that would become AT&T. Western Union fought back in 1878 by questioning the validity of Bell’s patents as compared to those of Gray. The company also hired Thomas Edison to develop a microphone that would prove to be better than Hubbard’s German technology. Edison’s version was so successful that it remained the dominant sound-to-electricity transducer used in the telephone industry until the 1970s. I remember those carbon-granual-filled discs about the size of a Ritz cracker that were accessible merely by unscrewing the voice cover of a typical telephone handset.
While Western Union and AT&T were battling in the courts, Western Union’s CEO died unexpectedly. The company soon fell under the control of Jay Gould, a notorious Wall Street denizen. Gould had little interest in transforming Western Union into a telephone company. Instead, he liked to use the company to gain an advantage on the stock exchange by getting advance notice of important news events transmitted over Western Union wires. The Associated Press, for example, relied upon telegraphy instead of telephony for news dissemination because the infant telephone technology could only transmit a short distance compared to telegraphy.
Gould settled the lawsuit with AT&T on terms that gave Western Union forty percent of the profits for Bell’s telephone systems in New York and Chicago. Western Union was also allocated twenty percent of the Bell patent royalties over their seventeen year life, which expired in 1893. Only years later did Gray learn of Bell’s patent theft. Since Gould’s settlement required that Western Union officially acknowledge Bell as the inventor of the telephone and AT&T acquired Western Electric in 1881, Gray had no recourse.
Other companies were victims of Bell’s illegal patent monopolization. One was Tennessee-based Pan Electric Telephone Company, which was organized in 1883. Among its officers were Joseph E. Johnston, Isham Harris, J. D. C. Atkins, Augustus Garland, and Dr. J. W. Rogers. Johnston was formerly a Confederate General and Atkins a former Rebel Colonel. Harris was Tennessee’s Confederate wartime governor and Rogers was an Episcopal Rector in Memphis. Garland had earlier served in the Confederate Congress.
Initially AT&T wanted to buy Pan Electric, especially after the latter’s telephone devices were tested at Bell’s laboratory (then in Boston) and found to be superior. Ultimately patent litigation ensued in which Pan Electric challenged the legitimacy of Bell’s patents and Bell accused Pan Electric of being a patent troll. Bell won, but the entire affair became political with Republicans supporting Bell and Democrats supporting Pan Electric. But that’s another story, and a good one.
Source: Derek Cheung and Eric Brach, Conquering the Electron, (Lanham, Md.: Rowman & Littlefield, 2011), 54-65; Russell Pizer, The Tangle Web of Patent 174465