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BELL TELEPHONE QUARTERLY

VOLUME I, 1922

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INFORMATION DEPARTMENT AMERICAN TELEPHONE AND TELEGRAPH COMPANY

195 Broadway, New York

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BELL TELEPHONE QUARTERLY

VOLUME J, 1922

TABLE OF CONTENTS APRIL, 1922

Foreword, H. B. Thayer 1

The Radio Telephone Situation, A. H. Griswold 2

The Work of the Bell Telephone Securities Company, D. F.

Houston 13

The Telephone's Development (An Abstract of Verbal Testimony), ./. J. Carty 23

Some Notes on Statistics, S. L.< Andrew 38

Progress of the Joint Committee on Relations of Supply and

Signal Circuits, Bancroft Gherardi 49

Notes on Recent Occurrences 55

Organization Changes 63

JULY, 1922

What Are We Trying To Do?, H. B. Thayer 1

Some Thoughts on Organization and Executive Work, W. S.

Gifford 5

Sleet Storms, A. B. Crunden 14

The Recent Parliamentary Investigation of the Telephone Situ- ation in Great Britain, S. L. Andrew '. 23

Conference of Personnel Group, Bancroft Gherardi 39

Business Principles in Organization Practice, C. I. Barnard. ... 44 Progress in Cooperation with the National Electric Light As- sociation, H . P. Charlesworth 49

Technical Papers Published During Quarter Just Ended 51

Notes on Recent Occurrences 54

OCTOBER, 1922

Ideals of the Telephone Service, J. J. Carty 1

Notes on Radio, 0. B. Blackwell 12

Service in the Making, A'. W. Waterson 26

Poles, F. L. Rhodes 34

World's Telephone Statistics, S. L. Andrew 45

Abstracts of Recent Technical Papers from Bell System Sources. 55

Notes on Recent Occurrences 62

4

Single Copy, 50c

$1.50 per Year

Bell Telephone Quarterly

APRIL, 1922

Contents

Foreword H.B. Thayer

The Radio Telephone Situation . . A. H. Griswold

The Work op the Bell Telephone Securities Company D. F. Houston

The Telephone's Development (An Abstract of Verbal Testimony) . .J.J. Carty

Some Notes on Statistics S. L. Andrew

Progress of the Joint Committee on Relations op Supply and Signal Circuits Bancroft Gherardi

Notes on Recent Occurrences . . .

Organization Changes

/si

American Telephone and Telegraph Company

New York

Bell Telephone Quarterly

A MEDIUM OF SUGGESTION AND A RECORD OF PROGRESS

Published quarterly for the Bell System by the American Telephone and Telegraph Company

Subscription, $1.50 per year, in United States and Canada; single copies, 50 cents

Address all communications to

INFORMATION DEPARTMENT

AMERICAN TELEPHONE AND TELEGRAPH COMPANY

195 Broadway, New York

Vol. I APRIL, 1922 No. ]

Foreword

BEING a young, active and progressive institution, the Bell Telephone System is continually doing new things, sometimes in service to the public, sometimes in operating technique, sometimes in com- mercial policy. The new thing may be done in any part of the country. These new things are interesting to telephone men in other parts of the country. If they are experiments in service or technique and are successful, they ultimately become generally known by being standardized and covered by specifications and de- scribed in bulletins. There are some even more im- portant innovations, interesting even in the nebulous state and more so as they become accomplished facts, which the presidents and general officers would like to observe during the experimental period. I refer to the type of things which we have usually discussed in con- ferences of presidents and general managers. As a medium of suggestion, a report of progress and perhaps an announcement of results on matters of that type between conferences, we launch with this number the Bell Telephone Quarterly.

H. B. Thayer.

[1]

The Radio Telephone Situation

RADIO today is a magic word throughout the country and, like anything else occupying head- ^ lines, much has been said of it, both good and bad, which it has not rightfully deserved.

What is radio? While it would probably take volumes to give a complete explanation of radio, yet perhaps it can be briefly explained in the following manner.

In the ordinary alternating current electric light and power circuit, such as used to furnish light to homes and power to factories, the periodicity of the electrical current is almost universally sixty cycles per second. In other words, there are sixty complete reversals of the electrical current every second. At this low periodicity or frequency practically all of the electrical energy is confined to the wire system and none of it radiated into space. However, by sufficiently increasing the frequency or period of oscillation of an electrical circuit and by suitable circuit arrangements a large proportion of the electrical energy generated may be radiated into space as electro-magnetic waves. These electro-magnetic waves travel through space with the speed of light and have frequencies varying from around 15,000 to several million cycles per second.

In order to transmit a telephone message by radio the amplitude of the high frequency waves sent out is made to vary in accordance with the variation of current produced by the voice in an ordinary telephone circuit. The problem of producing these high frequency electrical waves and of thus controlling them by telephone currents has been solved in a satisfactory manner only by means of the three-electrode vacuum tube.

During our development of the vacuum tube in con- nection with the telephone repeater, we found that it was possible to make larger and more powerful tubes which could be used for radio telephony, and it was this development that brought about the memorable and re- markable experiments of 1915, when we talked by radio to Paris, San Francisco and Honolulu. Subsequently

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Bell Telephone Quarterly

the laboratories of the Bell System have diligently con- tinued their development and research work, until today the fundamentals of radio telephone communication are fairly well established, and the kind of equipment neces- sary is generally known, although it has not been com- mercially produced except for such real uses as have been found in the field of telephone communication.

The Patent Situation

At the same time development by others of radio and allied equipment was taking place and, as might be ex- pected, it was not long before it was found that the patent situation was considerably involved and that the public would be unable to obtain the full benefits of radio unless some arrangement could be made between the holders of the patent rights which would permit of unhampered development. Accordingly, at the request of the United States Government, the General Electric Company and the American Telephone and Telegraph Company entered into a cross-license patent agreement, effective as of July 1, 1920. In general, by this agreement the American Telephone and Telegraph Company received licenses in the field of commercial and public service radio telephony, while the General Electric Company received licenses in the field of amateur radio telephony and all radio telegraphy.

Following the execution of the principal agreement between the American Telephone and Telegraph Company and the General Electric Company an extension agree- ment was entered into whereby the General Electric Company may extend to the Radio Corporation of America any of the licenses which the General Electric Company received under the principal agreement, and likewise the American Telephone and Telegraph Company may extend to the Western Electric Company any of the licenses which the American Telephone and Telegraph Company received under the principal agreement. Sub- sequently, the Westinghouse Electric and Manufacturing

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Bell Telephone Quarterly

Company, who also had been at work in the radio field, entered into the agreement in the same patent license fields as the General Electric Company and Radio Cor- poration of America.

Prior to all this, the Radio Corporation of America had been formed, had taken over the interests of the Marconi Company in the United States and had entered into an agreement with the General Electric Company whereby it acquired rights to use and sell all radio equip- ment which the General Electric Company was licensed to manufacture.

The situation today, therefore, is as follows: In general, radio telephone equipment for commercial or public service uses is provided by the American Tele- phone and Telegraph Company or through its manu- facturer, the Western Electric Company. Amateur radio telephone equipment, radio telephone broadcasting re- ceiving sets, and radio telegraph equipment are manu- factured by the General Electric Company and West- inghouse Company and are sold through the Radio Cor- poration. The underlying principle throughout this cross-licensing agreement is to insure and make available to the public the complete development of radio.

Radio Telephony a Supplement to and Not a Substitute for Wire Service

The interest of the Bell System in radio lies in what- ever application it may have to the possible future development of telephone services. In the Bell System or any other system based on sound economic principles, the fundamental consideration in any communication problem is the provision of the type of facilities which will give the best and most economical service to meet the particular set of conditions involved. In this there is made no distinction between wires and radio, as the premise is the proper type of communication and the con- clusion may be wires or radio. However, it happens that the inherent features of radio telephony are such that

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Bell Telephone Quarterly

it has no economic or service application in the United States, or in any other place where conditions are similar, except as a supplement or auxiliary, in certain instances, to the wire service, but in no case a substitute therefor. The real applications of radio are in communications across wide stretches of water, in ship to ship, in ship to shore, in airships to land, in possibly some other types of mobile stations, in some forms of broadcasting where the same communication is given simultaneously to a large number of people, and in remote cases where, due to geographical or other conditions, it is impossible or im- practicable to place wire lines. All of these applications will be recognized as supplements to the regular wire service and not substitutes for them. For the regular telephone services both local and long distance, for which wires are now so extensively employed in the United States, the limitations of radio are such that it cannot be used.

Radio Telephony Can Never Replace Universal Wire Service

The general telephone communication goal in the United States is universal service. This is merely a brief way of saying that any person, anywhere, at any time, can quickly, reliably and at a reasonable cost, talk with any other person anywhere else in the United States, and for this talk these two persons will have available facilities for their personal, private and uninterrupted use. Radio does not meet these requirements. It pro- vides unguided transmission, sending out its message broadcast to anyone within range properly equipped to receive it, while wires, although they came first in scien- tific development, really represent the refinement of the art and provide guided transmission directed only to the person for whom intended. Scientifically it is actually more remarkable that we are able to guide messages by means of wires than to send them out broadcast by radio.

The number of communications which can be trans- mitted simultaneously by radio is narrowly limited.

[5]

Bell Telephone Quarterly

Daily over 60,000,000 telephone calls take place over wires in the United States. In New York City 4,000,000 calls are handled per day and 100,000 calls per minute during the busy hours. The facilities of the ether within any reasonable practical range are so limited that but a very small fractional part of such an enormous volume of messages could be handled by radio. Further, the real applications of radio as hereinbefore outlined will un- doubtedly demand greater facilities than the ether will afford and it is certainly desirable that the ether be con- served for such real and necessary uses. If this is not done, it will be almost hopeless to expect that satis- factory service can be given even in the real fields of radio.

The cost of radio equipment and operation for uni- versal service would be enormous. The investment of the Bell System in the United States today is less than $200 per subscriber's station, including both local and long distance lines, and comprehending all the poles, wires, cable, conduit, equipment, land, buildings and accessories of the entire system. It is impossible to con- ceive at any cost any form of radio equipment which would provide the same universal telephone service.

However, suppose an attempt were made to set up such a radio service. It can be imagined to be along either of two lines: First, the apparatus at each subscriber's premises might be kept as simple as possible, and ar- ranged only to connect that subscriber to a central office in a manner similar to that by which each subscriber is now connected by wire. Second, by making the sub- scriber's apparatus more complicated, the subscriber might be given apparatus enabling him to directly connect with other stations in his vicinity, and he would reach more distant subscribers by connecting to a central office. It is impossible to imagine any arrangement so compre- hensive as to enable him to directly reach all other subscribers.

In the first case his apparatus would consist of both

[6]

Bell Telephone Quarterly

transmitting and receiving equipment with suitable signal- ing and power apparatus and with some form of antenna. It would need to be much more complete and reliable than any of the present simple forms of amateur equip- ment. In this case the radio equipment would merely take the place of the wire connection between the sub- scriber and the central office, but the cost of the radio equipment would be much greater than the total cost per subscriber of the entire existing telephone wire plant. In addition central offices and trunks, involving very expensive and elaborate radio apparatus, would be re- quired to complete the connections.

On the second assumption, part of the central office expenditures would be avoided, but the cost of the apparatus at each subscriber's station would run into thousands of dollars, and in addition a considerable part of the central office expenditures would still be necessary.

For long distance service radio has a more favorable application than it has for local service, but again it is found here that both in first cost and subsequent cost of operation it is many times more expensive than for wire circuits and does not approach them in reliability or free- dom from interference and is not secret.

Thus the cost of a complete radio plant for either local or long distance service or both is far in excess of the corresponding wire plant, and not only is the first cost of radio equipment greater than for wire equipment, but the experience to date indicates that the cost of oper- ation of radio is greater per dollar of investment than for wire plant. This means that radio telephone service, even if it were possible, must have rates, in order to pay the costs of operation, many times greater than charged for the present wire service.

From the above it is evident that the cost of radio service would be excessive and that the character of the very limited service which could be given by radio would be so far inferior to the service now given over wires that the general public, even if they could afford to pay for it, would not tolerate it.

[7]

Bell Telephone Quarterly

The words of the Secretary of Commerce, Mr. Hoover, at the recent Radio Conference in Washington are inter- esting and to the point:

"I think it will be agreed at the outset that the use of the radio telephone for communication between single individuals as in the case of the ordinary telephone is a perfectly hopeless notion."

Some Present Applications of Radio Telephony

Let us then consider some of the applications of radio telephony which in the present state of the art can now be foreseen. Between moving vehicles, ships, ships and shore, airships and ground, and similar classes of services radio telephony has an application. All of these are possible fields, and as time goes on, it may be expected that they will be developed into useful auxiliaries to the wire service. Recently interesting and successful experiments on ship to shore transmission were conducted with the United States Steamship America, operating by radio in connec- tion with our Deal Beach radio station and thence over land wires to New York and other points. These tests showed that ship to shore service is possible but whether or not it is established as a commercial service must necessarily depend upon its value, which must be great enough to make the service self-sustaining.

Transoceanic wireless telephony is, of course pos- sible, as was demonstrated by us in 1915. However, [he present costs are very great and before it can be generally employed, the commercial value, as in the case of ship to shore, will have to be determined and assured. A factor operating seriously against such service is the great difference in time between countries located widely apart.

Broadcasting

One of the most interesting applications of radio telephony is that of broadcasting, which is not intercom- munication but a one-way service. It is in this field

[8]

Bell Telephone Quarterly

that radio, by virtue of its inherent nature, seems to have great possibilities. At the present time broadcasting is being done by various departments of the Government, by certain manufacturers or agents of radio apparatus, by experimenters, by newspapers, and until recently by amateurs. The existing broadcasting transmitting sta- tions are operating in the particular interest of the owners of such stations and are not providing broadcast- ing transmitting service for the use of the public in general. The American Telephone and Telegraph Com- pany controls the important patents on radio telephone broadcasting transmitting equipment for general public use and consequently is being besieged with requests to sell radio telephone broadcasting equipment or to pro- vide radio telephone broadcasting service. We are selling the broadcasting equipment and so many of these requests have been received that it has become apparent that if every one who desires his own broadcasting equipment should purchase it, there will soon be so many broadcast- ing stations all operating on the same or a comparatively few number of wave lengths that real service from any of them will be impossible. Accordingly, we are now establishing in New York on the Walker-Lispenard building a broadcasting station of the latest and best type known to the art. It is not planned that we put on any program ourselves but rather provide the facilities over which others may broadcast at specified rates. We could doubtless provide and broadcast a splendid pro- gram, but by such a procedure we would be inviting the public to purchase receiving equipment in order to hear our program and we would be committed to the indefinite continuance of a service for which no revenues would be received. By providing facilities for the use of others it rests with those who broadcast to furnish a class of program to which the general public will desire to listen. It is thought that in this manner the true attitude of the public toward broadcasting may be determined, as it is realized that at present the public is in a more or less optimistic state of mind and that broadcasting must be

[9]

Bell Telephone Quarterly

placed on a much more sound basis if it is to remain as a valuable service.

If the experimental broadcasting station in New York is commercially successful, it is our plan to establish, as circumstances warrant, similar stations throughout the country, and not only may each station have available for use in connection with it all of the local lines in the zone served by that station but also at some future time it may be possible that all of such broadcasting stations throughout the country may, if conditions warrant, be tied together by the long line plant, so that any one, from practically any point, may use any num- ber or all of these stations simultaneously if he so desires. It is our thought that only in this manner can the best, cheapest, and most extensive radio broadcasting service be given.

It should be understood that this service will not react to the exclusion of private or other broadcasting service and will not necessarily in any way directly dis- place such services. However, it is obvious that every one cannot own his own broadcasting equipment, and unless some provision for service such as we have outlined is made, only a limited number of people in the country will have broadcasting service available for their use.

Present Laws and Proposed Regulations

The present radio laws, which were made originally in 1905 and later modified in 1912 and adopted by Con- gress, cover principally the international situation with reference to radio telegraphy, as radio telephone service was not practicable at that time. With the rapid de- velopment of radio telephony, particularly since the war, there has been a strong realization that the present radio laws are entirely inadequate for the present situation and not only is the international communication question now under consideration but also the national problem. During February the Secretary of Commerce appointed a Committee to consider radio telephone matters. This

[10]

Bell Telephone Quarterly

Committee first met on February 27th and has been care- fully considering the requirements for radio telephony with the idea, through subsequent legislation, of provid- ing space in the ether for the necessary and real services. It is proposed in the preliminary report of the Secretary's Committee that a large part of the available space in the ether be set aside for various kinds of broadcasting, with a small reservation for ship to shore, for transoceanic and for fixed station service. The temporary assignments which the Committee have suggested for the desirable uses of radio are naturally limited by the ether and by the character of practical apparatus so that no one of the services will probably receive as full an allotment as might be desired.

It is hoped that the proposed legislation will provide reservations in the ether for what now seems to be the possible applications of radio telephony to the public service in order that these applications may have an op- portunity for development along proper lines. It is also desirable that there be established and maintained a rigid regulation of radio matters with the end in view that prime consideration will always be given to the necessary and essential uses of radio.

The Bell System and Radio

While we have important exclusive rights protected by patents, our interest in the extension of our field of service overshadows any interest in any patent or group of patents. Above all, we do not want to obstruct the work or play of scientists and amateurs. Progress fol- lows experiment and use. In this new art we should experiment and encourage the experiments of others but without prejudice to later enforcement of our rights if and when such enforcement becomes necessary to the efficiency of a public service.

The question of most interest in the Bell System is naturally — "What do we propose to do with radio?" We propose to keep in mind our main purpose which is

[11]

Bell Telephone Quarterly

to furnish to the people of the United States as wide a range of communication facilities as possible. It may mean service with ships, railway trains and airplanes. It may mean a transatlantic service, but promises cannot now be made. It may mean broadcasting, the future of which cannot be determined as yet. It should be remembered that radio telephony, with its scope definitely limited by natural conditions, has only reached an ele- mentary stage, even in its possible fields. Bearing in mind our fundamental policy of providing the best and most economical type of facilities to meet any given set of conditions, we shall continue our work of developing whatever possibilities there are for radio in the field of telephone communications.

A. H. Griswold.

[12]

The Work of the Bell Telephone Securities Company

THE Bell Telephone Securities Company is the latest addition to the group of companies which form the Bell System. The purpose of its organ- ization is stated in the Annual Report of the American Telephone and Telegraph Company for 1921, and I need not set it forth at length here. It will be sufficient to say that its main function is to disseminate information about Bell System securities to the public, particularly to Bell telephone users, and, when desired, to advise in- terested investors and to facilitate their transactions in Bell System securities, and thereby to aid in securing a more widely distributed ownership.

Even now there is a wide ownership of the stock and other securities of the Bell System. The savings of sev- eral hundred thousand men and women throughout the country have gone into the building of the Bell telephone plant. But it will require the savings of many new in- vestors to take care of future extensions. The demands for service now are heavy and they will continue with the growth of the telephone habit and with increases in population and business.

There are today over 197,000 stockholders of the American Company. The increase has been steady and rapid. In 1900 there were only 7,500 stockholders; ten years later the number had risen to 20,400; by 1915 it was 65,500; and at the end of 1921 it was 186,342. The wide distribution of the shares among individuals is re- vealed by the fact that 29 was their average holding; 176,085 stockholders owning less than 100 shares each.

Largely because of the fact that the telephone was invented in Boston and first financed in that locality, the Bell System and its securities are better known and under- stood, and the holdings are largest in New England and New York which today owns approximately 74% of it.

[13]

Bell Telephone Quarterly

As the service has been extended, the ownership has spread; but it is desirable to increase this distribution still further. Very many more people over the Nation, who are the Company's customers, can and should acquire some of its stock. They can buy the stock in the market at a price which gives a reasonable return, and this is the only way in which those who are not now stockholders and are not employees can secure the stock.

This wider distribution of Bell System securities will add to the number of those who have safe invest- ments. Customers who became shareholders, will take an interest in the Bell Telephone Companies and will ac- quire an understanding of their problems and needs. It will also lay broader financial foundations for the Bell System, and will aid it to secure, at a lower cost, the money needed for extensions of the service.

Money Required for Extensions

It is clearly to the interest of the public, no less than to that of the System, that the latter's financial structure should be strong. It takes much money annually to pro- vide for its new business. The requirements of the people for telephone facilities imposes the task upon the System of providing approximately $215,000,000 each year for additions and replacements. These requirements cannot be ignored. They must be met. The sum involved is huge even to people who recently have been taught to think in billions. Think of it in this way and the meaning of it can be grasped: The Bell Telephone System must provide more money each year, to give the public the facilities it demands, than any government in Europe, except those of Great Britain, Germany, Russia, Austria and Italy, expended annually for all public purposes before the Great War. The sum is greater than the yearly pre- war expenditures of Spain, Brazil, Argentina, or Canada. It is much greater than the present annual expenditure of New York State. It is not much less than the expenditure of Japan in 1913, and it is two and a half

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Bell Telephone Quarterly

times that of the United States the year before the Civil War.

The greater part of the sum needed annually must be secured through the sale of stocks or other securities; and the System's financial condition must be such as to attract the funds of investors. No pressure can be brought to bear upon them. The Company cannot, like governments, secure funds through any compulsory process.

It is not contemplated that the plans to promote customer ownership and to secure a wider distribution of securities, will provide a substitute for former methods of raising new capital, but rather that they will sup- plement and facilitate them. It is expected, however, that they will result in substantial additions to the sum of money secured in other ways, and, especially, that they will promote better relationships.

The First Campaign Succeeds

The organization of the Securities Company was com- pleted, and the Company was ready to enter upon the tasks assigned to it on September 15, 1921. Before this date, there had been under consideration a campaign for the sale by the Southwestern Bell Telephone Company of $2,500,000 of 7% cumulative preferred stock. In a comparatively short time the requisite plans were completed.

The territory of the Southwestern Company is very large, and it was recognized that the task of organizing it would be exceedingly heavy. It was determined to organize it piece-meal and to make haste slowly. It was recognized that the economic conditions of the territory were not satisfactory. In fact, in certain financial quarters, we were assured that there was little or no money in that territory seeking investment and especially in a 7% stock to be sold at par. The Southwest is largely agricultural, and it was well-known that the farmers, especially the cattlemen, were hard hit. The oil boom

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Bell Telephone Quarterly

had collapsed; and the lumber industry was much de- pressed. Still, the officers both of the Southwestern Bell and of the Securities Company, were confident that reasonable success could be obtained.

The territory finally selected for beginning operations was in the division embracing Houston, Galveston and Beaumont. Contacts were established with local banks and investment houses, all of which expressed confi- dence in the Company and its security and willingness to cooperate. Meetings of the employees were held in each of the cities. Circulars were distributed and the requisite advertising matter was inserted in the leading papers. Immediately following the organization of this division, attention was directed to Kansas and to the development of the work in that State. Later the other divisions in Texas were organized. On November 21, 1921, the machinery was set in motion in Eastern Mis- souri, especially in St. Louis, and subsequently was extended throughout Missouri, and about the beginning of the new year the necessary steps were taken to begin the selling of the stock in Arkansas and Oklahoma.

On an average for the entire Southwestern territory, the campaign ran approximately three months and a half and the entire amount of the authorized issue was sold before March 25.

In this campaign, 25,000 shares of preferred stock were disposed of to approximately 6,500 people, the average number of shares sold to each purchaser being less than four. It is interesting and significant that at a time of great depression, so many individuals were able to save and willing to invest $2,500,000 in securities, and by doing so, to assist in providing additional facilities for their own use. These communities gain from being able to retain this sum of money at home for construction purposes, and the individuals gain from their investment in a sound security yielding a reasonable return. The Company welcomes the investors as stockholders, whose cooperation it will have in rendering the best possible service at the lowest possible cost.

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Bell Telephone Quarterly

Typical and Instructive Incidents

Many interesting incidents occurred in connection with the sale of this stock. At Wichita Falls, Texas, a blind man purchased five shares of stock from a girl teller in the commercial office. When first told about the stock, the man said he had read nothing about it because he was blind. The girl then told the story of the Southwestern Company's 7% preferred stock, which interested the blind man very much. However, he left without signing the purchase contract. The next day he returned. He asked for the same girl and had her make out a check for his signature covering the payment on five shares. The following day he appeared and asked for the General Manager. He was taken to the Local Manager, to whom he said: "I am now an owner of your Company. I have found out that my next-door neighbor has been trying to get telephone service for over three months. As an owner of your Company I would like to know why you have not furnished him the service." The Local Manager saw an opportunity to clear up a situation. He explained that there were no telephone facilities in the neighborhood at that time and that a special in- stallation in' advance of the completion of the regular construction, which was under way, would cost $400 or $500. The blind man got the story thoroughly. He slapped the desk emphatically and said: "As one of the owners of this Company I would not let you give that man service at such an installation cost. I will go back there and explain to him that he should wait until your new cable is installed."

In another Texas town, a prominent citizen had a prejudice against corporations in general. A telephone man was at his residence repairing his telephone, and when the job was finished, attempted to sell Telephone Preferred to the gentleman's wife. During the conver- sation, her husband came in and listened attentively. Finally he told the telephone man that if all the public service companies' employees were as interested and as

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Bell Telephone Quarterly

loyal as he, the companies would never have any trouble with the public, the commissions or the courts.

An encouraging result as the campaign progressed was the change of attitude in the financial quarters previously mentioned. After our campaign had been running a few weeks, an offer was made to underwrite $2,500,000 of the issue. This was not accepted, but investment houses were allotted $1,000,000 to sell on the same commission as that paid to telephone em- ployees. Other underwriting offers were made by eastern bankers.

The attitude of the banks was decidedly friendly. Many of them made direct sales; all spoke well of the stock when investors sought information from them. They recognized that our partial-payment plan fosters thrift and thus helps the community. The friendly attitude of the banks increased the feeling of confidence among their patrons and had a most helpful reaction throughout the territory.

Wisconsin Makes a Record

The next large task of the Securities Company was undertaken in cooperation with the Wisconsin Telephone Company. That Company planned to sell $5,000,000 7% Cumulative Preferred Stock. The resulting campaign which has just closed with an over-subscription of several hundred thousand dollars, is a pointed example of the working out of the formula —

Preparation + Enthusiasm = Success.

In the Wisconsin territory, which is compact, an intensive plan was adopted. Work was to begin March 1st and to last from six to eight weeks. Of the issue of $5,000,000, it was hoped to seU $4,000,000 during the campaign, and the remainder during the next few months. Every employee had a place in the selling organization; the necessary routines and forms were ready; and pub- licity material was prepared and ready for distribution. But on February 22nd and 23rd the State was swept

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Bell Telephone Quarterly

by the worst sleet storm in its history. Over 10,000 telephone poles went down, and all forms of transpor- tation were paralyzed.

Because of the damage, the derangement of traffic, and the necessary resulting work of restoration, which fully occupied the Wisconsin Company's plant forces, it was announced that the opening day would be post- poned until March 6. However, some of the material was already in employees' hands, and the banks had started their publicity work, so it was decided to let those go ahead who could do so. Under these severe handicaps, the Wisconsin Company made advance sales of $3,100,000 worth of stock; and before the end of the fourth day after the formal opening (March 9th, to be exact), the entire $5,000,000 had been over-subscribed. Approximately two-thirds of the stock was sold for cash; employees sold a little more than half the issue; the sales averaged less than five shares for each purchaser; and as a result, the Wisconsin Company has about eleven thousand new stockholders.

While, of course, no pressure was brought to bear on any employees to make sales, yet the fact that every- one was assigned to a definite place in the campaign organization was a great impetus to them. A quota of 6 shares for every employee was used in figuring the quotas of the various exchanges; and on this basis, 22 out of 80 exchanges had "gone over the top" in the first four days. Oconomowoc, the first one to pass its quota, did so by four o'clock the first day announced for the opening of the campaign. Its quota was 132 shares and up to Friday night, March 3, it had sold 404 shares.

In his comment on the campaign, President McGovern says: "One of the outstanding features of this sale is that many people did not seem to look into the real merits of the stock, but relied very largely on what our people said to them. Of course, the fact that most all the banks in the State are favorable to our stock proposition, has very materially assisted in the sales."

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Bell Telephone Quarterly

Fine Public Relations

As in the Southwest, so in Wisconsin, there were happenings which reveal not only the enthusiasm and enterprise of the employees but also the good-will of the people and the satisfactory relations which such a cam- paign establishes.

At Oshkosh, one of the linemen was very much dis- couraged because he thought that he would be unable to make any sales. His spirit was good, but he was afraid that stock selling was too complicated for him. The plant supervisor did his best to encourage him, but apparently with little success. The next day the lineman came in smiling and said that on his way home he had stopped in to have his shoes repaired and had sold the cobbler $2,500 worth of stock with very little effort.

Early in the course of the campaign, a charwoman working for the Company, who spoke very broken English, came to the desk where telephone bills are paid and with- out any comment handed in five $20 bills. The teller asked her what the money was for. She replied in rather broken English: "Stock — corner grocer." After a great deal of difficulty it developed that the charwoman had sold a share of the stock to a corner grocer, had col- lected $100, and had not even given him a contract or receipt.

The first share of stock in the Wisconsin campaign was sold by Miss Bond. This sale was made to an invalid woman, who had read the Company's announce- ment of the sale of stock and telephoned in, asking to have someone come out and explain it to her. Miss Bond responded and had no difficulty in answering the woman's questions and in making the sale.

In a certain section of Milwaukee, there is a German shopkeeper who is very influential in his community, and who has generally been opposed to the Wisconsin Com- pany. On the whole, he has been rather anti-corporation. One day this storekeeper telephoned in to the security manager's office and asked him to send a number of stock

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application blanks to his shop. In explanation, he said that his friends and customers were coming in to his store, that they were discussing the stock, that he thought they ought to be purchasing some, and that he wanted a supply of blanks for them.

The success of this campaign evidences not only the confidence of the people of Wisconsin in the Wisconsin Telephone Company but also their thrift and their readi- ness to invest their savings in sound securities.

Pointing Out the Desirability of American Tele- phone and Telegraph Stock

A third undertaking of a slightly different type is that in cooperation with the Chesapeake & Potomac Telephone Company in the District of Columbia, West Virginia, Maryland, and Virginia, and the Bell Telephone Company of Pennsylvania, embracing Pennsylvania, Delaware and the southern part of New Jersey, to secure a wider distribution of American Telephone and Tele- graph stock in those territories. I have already pointed out that it is desired especially to interest the users of the Bell telephone throughout the Nation, in the stock of the American Company. New stock of this Company, when issued, can be offered only to stockholders, and, under certain regulations, to employees; and the only way in which others can secure the stock, is either by purchasing rights, or by buying the stock at the market. In the territories of the Chesapeake & Potomac Company and of the Bell of Pennsylvania, through the employees of the Company with the cooperation of banks, the at- tention of subscribers was called to the American Tele- phone and Telegraph Company stock. Steps were taken to furnish them full information concerning its invest- ment value, and it was indicated that arrangements could be made in many cases, if it was desired, for them to pay for the stock in installments. The undertaking has met with a very hospitable reception and large response. Many who were not acquainted with the stock and its

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value, welcomed an opportunity to know about it and to invest their savings. It is estimated that as a result of this work there will be a net gain in these districts of between 3,500 and 4,000 non-employee stockholders of the American Telephone and Telegraph Company, pur- chasing from 35,000 to 37,000 shares.

It is clearly desirable that investors throughout the Nation be informed concerning the securities of the Bell System, their safety, and how they can be acquired. Numerous inquiries alone indicate that it is desirable to spread such information. The Securities Company is therefore planning to keep before the people of each community by means of window cards, bill enclosures, and in certain cases through advertisements or circulars, the kind of Bell S}Tstem securities which subscribers might interest themselves in, and the steps they should take to purchase them. As the securities must be purchased in the open market, we plan to have the purchaser file his order, to assist him in securing its execution with the minimum delay and expense through a bank or a responsi- ble broker with which he may wish to deal, and in certain cases, where payment in installments is desired, to assist him in arranging with some bank to handle the trans- action.

These, and other activities of the Securities Company which will develop along appropriate lines as circum- stances suggest, will involve in most cases close coopera- tion with the Associated Companies and the intelligent and enthusiastic participation of their employees. These things we know that we can always confidently count upon; for the keynote of the Bell System is teamwork and high consideration for the Company's welfare as well as for that of the American people whom it serves.

D. F. Houston.

[22]

The Telephone's Development

Some of the early history of the development of the telephone art as freely edited from the verbal testimony of John J. Carty, Vice President of American Telephone and Telegraph Company, in charge of development and research, before the Public Service Commission, State of New York, at Albany, New York, March 15, 1922.

IN the beginning of the development of the telephone art — when the telephone was first being introduced to the public — all that there was to the telephone system was a couple of telephones and the principle upon which the telephone could work. That principle was known. There were two telephones that would barely work and there was about 100 feet of wire tying them to- gether. It was almost impossible to hear through the in- strument even in the next room. In fact, it was said by some that you could not hear at all, but speech was trans- mitted. That was all that there was to start with and all that was known about the telephone was known by Mr. Bell and Mr. Watson. Watson was the man who made the original telephone, the man who heard the first words; Bell was the one who spoke them; and between them those two men knew all there was about the telephone and nobody else in the world anywhere knew anything about it. That is what we had to start with. Attempts were made to talk over an actual line and finally talking was accomplished from Boston to Cam- bridge; but there were no signalling devices and no tele- phone circuits as we know them now, so that to start with they copied the telegraph line, which was a line of iron wire run upon house-tops and using the ground as an earth return.

To illustrate how little was known about telephoning at that time: a copy of the instrument exhibited by Bell at the Philadelphia Centennial, in 1876, was taken to

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England by Sir William Thomson who was the greatest scientist of the time. When it reached England it was somewhat damaged and there was nobody there that could make it work.

The instruments were soon modified into a little differ- ent type so that talking could be accomplished over a line, say, a mile or two long. It was necessary to talk and listen through the same instrument, there being no special transmitter then, but the telephone was put to the mouth and then to the ear alternately. It was soon found that while the telegraph line worked very well for telegraph it did not work well for telephone because of all sorts of difficulties, noises and cross-talk from telegraph circuits lightning storms and other serious disturbances.

There were no telephone switchboards and the early switchboards were telegraph switchboards used to change a line once a day or so without any regard to speed. The telephone switchboard must change the switching of the lines hundreds of times a day. The problems are quite different. There was no cable of the telephone type that was satisfactory. A half a mile or a mile of the cable was more than these instruments could talk through. For several years the instrument was regarded, and with much reason, as but a scientific toy without business importance. In those places where we succeeded in getting it in business houses, it was largely through favor rather than on the merits of the instruments and it was regarded as a business nuisance and a scientific toy.

With the art in such a miserable state and so much unknown, and such a multitude of difficulties it was found very difficult to make any business arrangements at all to get it introduced because conservative and capable business institutions felt that it was entirely speculative. The plan adopted was to induce individuals in different localities to take out licenses, the object being to intro- duce the telephone throughout every part of the United States. All through the country licenses were issued to small concerns, men, of course, who had no experience whatever in the business and with absolutely no knowl-

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edge of it, but who were attracted by its novelty and by the arguments that were made to get them to come in.

Difficulties were encountered by everybody who un- dertook to install the telephone — by all of the licensees — and they knew nothing about the troubles or their remedy, or whether there was a remedy or not. They were con- stantly appealing to the licensor company for help and arrangements were made to render the service required to give them help in their problems. Laboratories, in which Dr. Bell and Watson worked and in which they invented the telephone, were taken over and Mr. Watson was put in charge and the staff was begun. They first thought that perhaps medical men who knew all about the ear and the voice might be ab'.e to solve these prob- lems but they could give no help whatever, although the best of them were consulted. The company then went to professors of physics. There were no professors of electrical engineering at that time because there wasn't any such thing as an electrical engineer, or electrical engineering.

But they gathered together the very best men that could be obtained at that time to advise the licensees, not only on the technical side, but on legal questions, on questions of how to keep books in this new sort of business and other problems that arose. So that there started and grew up at once a nucleus of what is now often referred to as the staff at headquarters, being the general staff. They were what we might now call liaison officers, to obtain the best understanding with the licen- sees and help them out the best way.

Transmitter and Receiver Development

For a long time there was no real transmitter as we know it, it being necessary to use what we now call the receiver for talking as well as for listening. The first instruments did not have any permanent magnet so it was impossible to use an ordinary telephone receiver with- out carrying around a battery with it. One of the im-

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portant steps was to introduce a permanent magnet. The receiver passed through the stage to where, I suppose, we tried out thousands of different types, many thousands of different models, and a few years ago, I counted up the number that were actually made standard and there were about 50 different types that had been standardized from time to time and then superseded by others.

Early transmitters were what we call magneto. There was no battery at all. It was just like talking through the telephone receiver and they were very lacking in power and it was possible to talk for onry a short distance. Then came the battery transmitter, invented by Blake, the use of which was a very revolutionary step forward, but with the need for greater and greater distances of talking over longer and longer wires, it became necessary to have transmitters that were more and more effective. The transmitter of Blake was superseded, after passing through a long series of evolutions itself, by what is known as the granular carbon transmitter which, instead of fixed pieces of carbon working against a piece of platinum, uses granules of carbon that are actuated by the diaphragm. The original granular carbon transmitter came from a minister of some church in England, the Reverend Mr. Hunning. The Bell Company bought his patent and a long series of experiments was undertaken and finally the idea of Hunning was made available for the public. He would not have known his own transmitter.

From the Hunning transmitter has been developed the transmitter that is now used universally in this country and is also the standard all over the world wher- ever they have the best instruments. Of course, even now we are constantly working to perfect these instru- ments still further. Something over 70 types of trans- mitter have been made standard from time to time and replaced by others.

Improving Transmission

In the beginning it was necessary to use a telegraph line, which was made of iron. The iron and the telegraph

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construction worked very well indeed for the telegraph, but it did not work so well for the telephone, because the telephone was the most sensitive instrument known and it was capable of being actuated by very minute currents that would not interfere with the telegraph. We had great difficulty with cross-talk and all kinds of devices were tried to remedy difficulties arising from induction. There were literally hundreds of these induction killers. They were very successful in killing the induction but they also were successful in killing the talk so that nothing ever came from that line of development.

A wire was strung from Boston to Lawrence, about 26 miles, on telegraph line. Anybody listening on that telephone line could hear all the telegraph messages. It was as though we had, as I once said, an old-fashioned drum corps and each drummer began drumming a separate tune.

All kinds of experiments were tried. We tried the use of different kinds of steel and iron wire. Wire was run from Boston to Lowell that had a spiral cut all around it. Somebody had a theory that the voice would follow that spiral. A line of four iron wires was built from Boston to Providence and on Sunday, when nothing else was doing on the wires, it was possible to talk on one of them, but if you tried to talk at the same time on the other wire, there was confusion. Then, to make matters worse, a new fangled telegraph system was started which used very high frequency current and that practically destroyed the business of the line altogether.

There was tried out between Boston and Providence, at my suggestion — in fact, I tried the experiment myself — what is now known as a metallic circuit. Instead of using the earth as a ground, a return wire was employed. That is now the standard and the strange thing is that we ever did use the ground.

This metallic circuit experiment was a very great success and we planned to build a line to New York, but there were limitations in the iron wire itself, even using the metallic circuit, and when we put a number of these

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circuits on the same line, we still got cross-talk. These difficulties were overcome by the development of hard drawn copper wire which is one of the most fundamental contributions that has ever been made to telephony. A line was built from New York to Boston, using the hard drawn copper wire, but we still had cross-talk from neighboring circuits and that had to be overcome, so a method of transposition was adopted. All of the licensee companies experienced these same difficulties with line trouble during the early days of the telephone history, and when the general staff worked out a solution for a trouble for one of these licensees, it took care of all the rest at the same time.

In working out the increasing distances over which one could talk, we had to take into account, not only the line, but the instruments. There were two schools of thought. At an International Congress which I attended in France, the best European thought was to solve the problem of talking from New York to San Francisco by loud speaking transmitters. We had studied the problem ourselves and reached the conclusion that the loud speaking transmitter was not the way to accomplish the purpose. If we used the loud transmitter, it would be necessary to put in more complicated apparatus in the subscribers' stations and more powerful batteries and switches, and the cross-talk with these instruments would require a re-arrangement of the switchboards and cables which would cost many millions of dollars, so we made the attack on the line.

When the electric trolley was introduced, it presented a very serious problem because the noise it caused in the telephone circuit made talking difficult and in many cases impossible. Also, current from the trolley wires operated the central office switchboard signals and caused currents also to flow through the ground and onto the lead cables of the telephone companies, corroding the cables by what is known as electrolysis. After a number of years of work- ing, a practical solution of this electrolysis trouble was arrived at and was adopted by all of the licensee companies.

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The extension of high tension circuits of power lines also presented serious problems. To meet them, various measures were adopted. One was to devise protectors, an apparatus designed to produce as near practical im- munity from fire and personal hazards as possible. The study of the problem of high tension circuits is still being continued because what was high tension at the begin- ning, is now very low tension. Two thousand volts was high tension and now we are talking about 200,000 volts.

Cable Construction

As the demand for telephones increased, it became necessary to devise a solution for the problem presented by an increasing number of overhead telephone wires. For physical reasons and also for legislative reasons, we had to put our wires underground. We did not know how to make them work if put underground. That was the problem presented to the general staff, a problem, of course, which they had been working on from the begin- ning, but very intense work was conducted. While it was possible to talk for considerable distances when the wires were on poles, it was found that a mile of cable would cut down the transmission as badly as 100 miles of open wire. The first cables that were employed were rubber or gutta percha, both of which were good insula- tors as far as keeping the'current on the wire was concerned, but for some reason or other, they seemed to destroy the talk. Early in 1881, I participated in experiments which were conducted by the licensor company when all the possible types of cables we could think of were put down. Cable was run in the neighborhood of Attleboro, Mass., between the tracks of the railroad for a number of miles, in which all sorts of devices were tried out. The first big ad- vance or help that we got was in the introduction of cotton into the cables instead of rubber. Cotton had always been regarded as a very poor insulation but it was found that this was due to the presence of moisture and by heating the cable and driving out the moisture and

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quickly covering it with lead pipe, a very high degree of insulation was obtained and it was much less objection- able than the rubber because you could talk farther through such a cable and cross-talk was not so great.

Many experiments were conducted with that type of cable and a great deal of it was put down, but in these experiments of 1881-1883, cable half a mile long of the best that we could manufacture so impaired the trans- mission over the telephone line that talking to the suburbs of Boston was very greatly hindered, or even prevented, by the interposition of a mile or a half mile of cable.

The cable problem had to be solved before the wires could go underground, and the solution did not come before the wires accumulated so rapidly that the author- ities ordered them underground. As a matter of fact, Mayor Grant sent his men out with axes and actually chopped down the poles in New York.

The cotton cable was very greatly improved and finally it was superseded by paper, and the paper cable was put through a process of evolution until now it is the type usually employed. The experiments conducted by the general staff on this problem were continuous and were directed, not only to developing local cable, but also to developing long distance cable. Another way to state this problem is to say that it involved making the cables cheaper and also making cables so that we could talk through them. Of course, there is no use in making a cheap cable if you could not talk through it. So that, as in all the work we do, we have got to look to service first, and then, keeping the grade of service right, go as far as we humanly can in making it more economical.

It is interesting to trace the development of the 2,400 wire cable, which is one of the most recent types, following a long series beginning with the earliest type of rubber cable and thence going, by various stages, to a type of cable that would give only 100 wires in one sheath. That 100 wire cable cost as much, or probably more, than the 2,400 wire cable did. But that is not all. Space under- ground in New York is so precious that in certain regions,

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it is almost impossible to get any more room for ducts, so that, unless these cable improvements had been made, there would be certain parts of New York where it would be hard to supply service at any cost.

Long distance telephoning was another problem alto- gether. To talk through long distance seemed, at times, to be forever an insuperable difficulty. One of the im- portant steps was the invention of the loading coil by Dr. Pupin. He had a very good idea and our company ob- tained his patent rights but, as is usual in such cases, the patent, while explaining the principle, did not by any means show how to make it on a practical scale. Our progress in developing long distance cable transmission was something like this : we succeeded in talking very well through a cable from New York to Newark with the Pupin coils and other arrangements in association with them. Our further work carried us to Philadelphia, and by further research, we were able to talk to Wilmington, Delaware, and finally to Washington. Still continuing to develop, always making new discoveries and advance- ments, we succeeded in talking all the way underground from Boston to Washington.

The congestion which was encountered in the local wires in the beginning is now being felt in the trunk lines joining the different cities together. They are be- coming so numerous that they have to be put into cables, so that the problem having been solved locally, we have to go on and solve it all over again for long distances. At the present time, we have, by means of a remarkable new type of cable, succeeded in talking from Boston to Harrisburg, and our experiments show that we now have a type of cable that will talk all the way from Boston to Chicago, and in fact, the cable is now being extended to that city.

One of the important phases of cable development is the effect of the growth of central offices upon the use of cable. The larger the central office became, the greater the congestion of wires in the neighborhood of the office. One central office in the early days had 2,400 wires coming

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in from four directions to the roof, and a sleet storm came, weighted the wires and that pulled over the struc- ture and almost took the roof away. Large central offi- ces would be impossible without cables and when we have advanced the cable art, we have made larger central offices possible. These two factors react on each other.

The Evolution of the Switchboard

The switchboard in the beginning, as I have said before, was a telegraph switchboard, a very crude type, very good indeed for the telegraph, but not swift enough or certain enough for the telephone. These switchboards were used and soon, under Mr. Watson and his assistants, began to be improved until a very good switchboard was evolved for one operator only. That was about 1878 or 1879, but as the number of lines grew, we had to have more operators, and then more switchboards. These operators had to call out to each other for the lines that they wanted, and the central office soon became a sort of bedlam. The methods of connecting were very imperfect and interconnection between one operator and another, or from one office to another, was attended, even under the best circumstances, by great delay, by extraordinary errors, compared to what we now have, and by constant cutting off and intermittent conversations.

The switchboard immediately began a process of evolution. These difficulties of communicating from operator to operator were overcome in the multiple switch- board which was one of the very important and perma- nent contributions to the art. By means of the multiple switchboard, if an operator receives a call for a sub- scriber in her own central office, she could connect directly to that subscriber without asking somebody else to help. That principle is still employed.

The early switchboards had very imperfect signalling devices and in general, were very, very crude. In the beginning, the central office operator had no power gen- erator as we now know it, and she would have to turn a

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crank the way the subscribers formerly did and now do in the country.

The business continued to grow, notwithstanding all these difficulties, and about 1886 and 1887, quite a large number of telephones had to be provided for the down- town offices in New York City. They were scattered in two or three different offices and worked so unsatisfac- torily that it was decided to consolidate them. This consolidation presented a very serious switchboard prob- lem because with these large switchboards, the cost seemed to go up, not in direct proportion to the number of subscribers, but in almost geometric proportion, and it was difficult to get them to work, and looking forward at the complications and the expenses of such switchboards, it was really appalling.

The general manager of the New York Telephone Company stated several times at conferences, that the best he could see in regard to the switchboard problem was that it meant that all he had to do was get enough telephones, and the company would go broke. The expense seemed to be going up and would have gone up, if we had kept on that track, at a rate very much more rapidly than the increase of revenue from subscribers and there really was at that time a crisis. The telephone rates were $150 a year; that was the cheapest telephone you could get in New York City, and the metallic circuit was being put in at $240 a year.

One point after another was overcome. One type of switchboard after another was devised and the telephone, instead of being greatly restricted in New York as was then feared and as it would have been if we had not made these improvements, spread out all over the city and state. Without these switchboard improvements, of course, the development could not have taken place.

One of the very gratifying developments was the re- moval from the subscriber's station of the crank which had to be turned and the batteries which had to be renewed. This improvement was made by the intro- duction of the common battery system. The old type of

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Bell Telephone Quarterly

instrument was an annoyance to the subscriber and a great expense to the licensee, and the introduction of the common battery system was attended with most gratify- ing results in the central offices, because without any addi- tional labor, in fact with greater ease, the central office operator could handle a much larger number of calls with really less effort, with much greater promptness and without some of the worst annoyances that attended the working of the previous system. One of them was that under the old system, the operator had to be continually listening in and annoying a customer asking "Are you through?" whereas with the new system, signals are exhibited when subscribers are finished and when they want to talk, so that the operator does not have to, and, as a matter of fact, does not listen in unless the sub- scriber signals her to do so when he wants attention.

The Machine Switching System

There has been a great change in the economics affecting operators. The war placed women in the work which had always been done by men, and women are now continuing in that kind of occupation. It completely changed the situation with respect to the supply of operators. Also with the increase in trunk lines and other complications, the space which an operator can reach is about exhausted and the general staff have studied the problem to see what could be done about it and that brings us to the consideration of the machine switching system, or automatic system. That has been a subject which has occupied our attention for ten or fifteen years pretty steadily, with a view to finding out what place such machinery has in the properly organized telephone system.

Our tendency has been, all the time, to introduce machinery wherever it gives a better result to the public, or wherever it can be attended by economy of any kind. The fundamentals of this system were tried out for a number of years in Newark, and the other features of it were under trial for a long time, in New York City,

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for handling trunk lines. The most recent installation was at Omaha, and there much interest was exhibited as to how the subscribers would regard it. The result was that subscribers, a lot of them, sat up until 12 o'clock at night so that they could be the first to send the call. The business started off in the morning and went through almost without a hitch, and the entire comment of the public and the press was most gratifying.

The Problem of Manufacture

In the early days there were very few sources avail- able for the manufacture of telephone apparatus. There was a concern at Indianapolis owned by Gilliland; one at Cincinnati, Post & Company; another at Baltimore, Davis & Watts; Charles Williams & Company in Boston which was the firm that manufactured the first telephone ever made for Bell, and the Western Electric Company in New York and in Chicago.

Licenses were issued to these manufacturers but it was found that there was a great diversity in product and it was necessary to have the parts constructed so as to fit into a complete system. The telephone itself, of course, does not work in isolation. Its operation depends, not only on its own condition, but on the condition of the instrument with which the communication has been held, and on the condition of every intermediate thing in the plant, so that the discordant results in construc- tion were very troublesome. Also, it would seem that some of these companies were not as strong as they should have been and that starting to install a switch- board, which would last fourteen or fifteen years, it was not all put in at once; the licensee companies did not put in any more than they could possibly help to save idle investment, but a manufacturing company was committed, when it put in a certain type of switchboard, to add parts to that, so that it was necessary to get some ar- rangement to insure continuity of supply of all the parts that were needed.

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For these and for other reasons, these manufacturing companies were brought together into a single company. Very little was done with the factories at Cincinnati and Baltimore, but Williams of Boston, Gilliland of Indian- apolis, and the Western Electric Company combined their talent, utilizing the best men of each concern, in fact all of their good men were selected and all the workmen that would go, and factories were established in New York City. This was the beginning of the Western Elec- tric Company, as the manufacturing branch of the Bell System.

Necessity for Development and Research Work

If we did not continue this work the progress would cease. I don't like to criticize any of the foreign gov- ernments, but in order to illustrate my point I must bring out the fact that where we have hundreds and hundreds of men developing, they have four or five. That is, practical development and research as we know it here in America is unknown among the government administrations abroad. They have not conducted these developments in the manner that we have here in this country. And the result is that, looking over the entire contributions that have been made to the telephone art, the developments have been made here in this country, and there has been no substantial contribution to the art that has been made by any of these governments. Now, they have departments fordoing these things, but they are not done. The best that they have abroad today is what they have taken from us. But in their method of organizing, their methods of use have not been developed, because they have not had general staffs to develop these systems. Take it even in the matter of their military necessities, the general staff of the French Army under Foch was the most brilliant that was ever known, and it was well known that a communication system was necessary for the conduct of war, but when the war broke their own administration was unable to

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provide them with a communication system and it was necessary for the Americans to superimpose upon France and the neighboring countries a communication system within nine months that the foreign governments had failed to provide in forty years.

Now, if we stopped this development work we would dam up progress and we would fall into a condition as bad as there is abroad. Science is constantly advancing. Our country is growing. Business is expanding. New ideas are springing up in business, and new requirements are made. We want to talk greater and greater dis- tances. We must be prepared to talk to South America. We are already talking to Cuba. There is no doubt we will be talking to Europe. We must go on expanding. To stop now would mean that the business would have to grow, but it would be conducted with the methods that we now know, which are well adapted for the present development, but we know they are not best for the development of ten or fifteen years hence. When we start putting in a plant now we are not building it for one year or two; we are building it for a long period and we must have in mind that it must grow, and that that new growth must always be in accord with the de- mands of the time.

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Some Notes on Statistics

With Special Reference to the Telephone Business

The Origin of Statistics

IN the popular mind statistics is frequently looked upon as a science of recent development which deals with uninteresting figures at its best and with involved mathematical concepts at its worst. Yet the use of crude statistical methods runs back as far as re- corded history; and probably the evolution of no subject is more closely interwoven with the needs and develop- ment of peoples than is that of statistics. The history of statistics through the past ages is no mere catalog of suc- cessive steps in the development of a scientific basis of recording facts, but rather is a story of persistent efforts to obtain a working knowledge of the fundamental ele- ments in the lives of nations — first, with respect to their population and material resources and, later, with respect to their economic and social relationships also. From the earliest records of organized social and political com- munities, the enumeration and compilation of statistical data has played an integral and vital part in their ex- istence. The apportionment of taxes and the organiza- tion of armies were practically impossible without some degree of statistical information concerning the re- sources in materials and man power of the tribe or nation. One of the earliest known statistical compilations took place about 3050 B.C. and concerned the collection of data regarding the population and wealth of Egypt in order to make arrangements for the construction of the pyramids. Both secular and sacred history are filled with instances of the taking of censuses of population in order to determine the fighting strength of nations and as a basis for levjdng taxes. Until the 17th or the 18th century, however, practically the sole use of such censuses was to aid the government in its administrative work or in its military aspirations.

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The Beginning of Modern Statistical Methods

Modern statistics developed from two apparently independent schools of research, one in Germany which became prominent about the middle of the 18th century and the other in England which originated about a century earlier. Statistics as first used in Germany applied to lectures or books upon descriptive political science and was considered as a science of populations, similar to what is now known as demography. Etymo- logically, statistics means the science of states, and not until the development of the English school of political arithmetic was statistics looked upon as primarily a study of numerical data.

Interest in statistical compilations was aroused in England during the middle of the 17th century after the disastrous visitations of the plague had caused the publication of weekly reports of the burials, and later the christenings, in London. In 1662 Captain John Graunt of London published his "Observations on the Bills of Mortality" which contained the results of his observation and measurement of the births and deaths in London and is one of the first recorded analytical studies of a strictly statistical nature. This field of study was at that time called "Political Arithmetic," but by the early part of the 19th century it had largely absorbed the descriptive political science school in Germany, from which it took over the term "statistics."

The first journal of the Royal Statistical Society, which was founded in London in 1834, defined statistics as "the ascertaining and bringing together of those facts which are calculated to illustrate the condition and pros- pects of society." Further expansion in the scope and meaning of statistics took place at this period, and from the name of a science or art of state-description by numer- ical methods the word was transferred to those figures with which it operated. When .this occurred, the term soon lost its peculiar application to data concerning the

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state and was used in referring to any collection of numeri- cal data, covering psychology, biology and other sciences, as well as political economy.

Thus statistics in modern usage has come to mean primarily a method or tool by means of which numerical data in any field may be analyzed and interpreted. In its development statistics has, of course, borrowed very largely from the older science of mathematics. Using processes largely mathematical in character, the student of statistical methods formulates the rules of procedure for handling groups of data, and the specialists in various fields of knowledge apply these rules to their own par- ticular problems.

The Application of Statistics to Business

But while statistics has had a long and distinguished career in the service of public administration and private scientific research, it is true that the application of statistical methods of analysis to business data is a de- velopment of recent origin. This is because business administration itself has only recently taken on the aspects of a distinct science, with the process of evolu- tion from small individual enterprises to large corporate organizations which has been coincident with the growth and improvement of transportation and communication. Moreover, the use of statistical methods in business has been facilitated by the recent progress in the invention and manufacture of mechanical labor-saving devices which have made it possible to undertake much statistical work which was formerly prohibitive from the stand- point of both cost and time. The increase in legislation affecting business has also served to stimulate the expan- sion of statistical work in industry. So long as business was conducted by small units, each with a limited market, there was a tendency to regard statistical work as an unnecessary luxury; but with the development of busi- ness as a science, statistical analysis is destined to play the same vital part in business administration as it has

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in the progress of other sciences. Indeed, the progress made in business statistics in the last few years has been so pronounced that " statistical control" is rapidly becoming an actuality in many lines.

Business Statistics Defined

To make clear the scope and character of that branch of statistics which has come to be called business statistics, it is perhaps advisable to attempt briefly to define "statistics" as it commonly applies to business admin- istration.

The man in the street looks upon statistics as the systematic collection, classification and tabulation of numerical facts, and his idea of a statistician is a man who knows how many males of foreign parentage, be- tween the ages of twenty and thirty, are employed in mining occupations in the State of Nevada. The more scientific person probably thinks of statistics as a method mathematical in its operation, in which numerical data are analyzed through complex calculations of aver- ages, units and the like.

The business statistician himself, however, thinks of his work as the collecting, classifying and interpreting of ascertained facts — including facts not subject to numerical statement — primarily with the aim of disclos- ing some further and hitherto unascertained facts. He thinks of his duties as those of assembling and selecting data, analyzing and combining them, and presenting and explaining them in such a way that they tell much more than they do in their primary, unrelated form. The opportunity for work of this character obviously pervades all branches of any business organization. Moreover, the field for such statistical work is not con- fined merely to the analysis and interpretation of internal operating and financial data, but includes the study of general business and economic conditions and the influence of these conditions upon the individual business.

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Bell Telephone Quarterly

The Development of Telephone Accounting

In considering the progress already made in the field of statistical analysis of business operations, it should be remembered that accounting work is to a large extent the basis of statistics and that the introduction of scientific accounting methods is itself a comparatively recent development. This applies to the telephone busi- ness as well as to other lines of industry.

While the telephone was invented forty-five years ago, only for the past fifteen years or so has the telephone been a widespread public service. During this period the first work was naturally the erection of an adequate accounting system to show the financial condition of the business. It was necessary to set up refined methods for the separation of capital and income, the proper treatment of depreciation, etc. Practically all available time was devoted to the development of uniform accounts and standard reports, correct plant and maintenance accounting, suitable records of departmental expendi- tures and forms of accounts for general publication. Along with all this, careful plans have been worked out for extending the use of accounts by administrative officers, placing in the hands of responsible officials ac- counts practically arranged as working tools for every- day use. In the Bell System most of this work has been accomplished during the past fifteen years, a period within which the number of company-owned telephone stations has increased from two millions to nine millions.

The Field for Statistical Analysis of Internal Telephone Data

Under such circumstances it would be surprising if the work of statistical analysis had progressed to the same degree as the accounting work. Development of the business has gone on faster than development of the necessary statistical personnel. Thus, at the present time, the Bell System is in possession of an admirable accounting system and a comprehensive set of primary

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records — operating as well as financial — but has not advanced so far in the development and application of methods of statistical analysis. The magnitude of the business has made necessary such a voluminous mass of records and reports that many useful facts as to past conditions now he buried, while significant elements of current operations are frequently subordinated. It seems apparent, therefore, that we have reached the point where there is not so pressing a need to extend and sensitize the accounting system as a whole as there is need to proceed further with the scanning, sifting and interpreting of results now shown by the accounts and operating records, and the presentation of the significant facts, trends, ratios and units through appropriate graphical and other statistical forms. Even as close cooperation has been established between the Accounting Department and other Departments in the working up of accounting data, in like measure close cooperation can profitably be estab- lished between the Departments in the work of statistical analysis. It is a matter of general concern that all accounts are under proper check so that figures finally lodged in the balance sheet are absolutely correct accord- ing to the accounting instructions; should not equal care be taken that all accounts and operating records are subjected to suitable and adequate statistical analysis not merely as to the correctness of the figures, but as to the significance and interpretation of the figures? While the accounts show very definitely what has happened, statistical work is designed to show, from an analysis of operating as well as accounting data, exactly where it has happened, why it has happened, and who or what is responsible.

The Influence of External Forces

As already indicated, the field of business statistics is by no means limited to the analysis of internal financial and operating records. One of the fundamental char- acteristics of present-day industrial organization is the

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Bell Telephone Quarterly

instabilit}r of business activity. This instability is mani- fested in individual businesses and in business as a whole. Business may be improving or it may be growing worse, but it is never static. Because they directly or indirectly affect profits, these fluctuations in business activity are of paramount interest to the business man; and their accurate measurement and analysis through the application of scientific statistical methods is consequently a matter of prime importance. This applies to the tele- phone as well as to other businesses, even though the telephone business is one of relative stability as compared with business in general.

Perhaps the most common form of analysis of business data is the comparison of crude data for a current month with corresponding figures either for the preceding month or for the same month of the preceding year, or for both. However, direct comparisons of business data either as between different months or periods of the same year, or as between the same month or periods of different years, are in most cases liable to give rise to more or less misleading conclusions, because of the presence in the crude data of the effect of two influences: namely, seasonal variation (which affects the accuracy of the com- parison in the first case) and normal growth or long time trend (which affects the accuracy of the comparison in the second case).

As an illustration of this point, take an example applicable to the telephone business. Suppose, for instance, that the number of originating local calls in a certain exchange area during the month of August is reported as 3% less than the number in the preceding month of July, but 5% greater than the number in the month of August of the preceding year. This compari- son of August with the preceding July does not neces- sarily indicate unfavorable traffic conditions or results in August; indeed, since local traffic in that month is usually less than that in July as a result of the effect of normal seasonal influences, the fact that the decrease in August as compared with July is only 3% may even indicate an

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Bell Telephone Quarterly

improvement in conditions. In the comparison of August with the same month of the preceding year, the element of seasonal variation is largely eliminated but no allow- ance is made for the element of normal growth. Thus, the fact that local traffic is 5% greater than in the same month of the preceding year does not necessarily indicate that the volume of traffic is as great as it ought to be. If the normal annual growth in local traffic in the exchange area in question happened to be in excess of 5%, the traffic results in the current August would be unfavorable rather than favorable.

The Statistical Measurement of External

Forces

Therefore, in dealing with business data in which the influences of long time trend and seasonal variation are present, accurate conclusions can generally be reached only if the effects of these influences are eliminated. In a forthcoming Statistical Bulletin issued by the Statistical Division of the American Telephone and Telegraph Com- pany a statistical method is described whereby the effect of these influences can be removed, the method being one which has been carefully tested both in the analysis of general business data and in the analysis of statistics of the telephone business. For purposes of explanation, figures on the monthly production of pig iron over the past 19 years are used in the Bulletin, because reliable homogeneous figures on pig iron production are available for a period of satisfactory length and because these figures are relatively free from complications which are irrelevant to a discussion of the general statistical method involved. The analysis of homogeneous series of figures within the telephone business, however, can proceed along identical lines. The accompanying chart shows the result of the application of the method to local traffic in a certain telephone exchange area.

After the effects of seasonal variation and long-time trend have been eliminated from any series of business

[45]

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Bell Telephone Quarterly

data, the corrected figures will usually be characterized by a broad wave-like movement similar in general form, though of different amplitude, to the cyclical swings of business activity through its alternate periods of pros- perity and depression. In the case of telephone data, the comparison of figures analyzed by this method (where applicable) with external indices of general business, similarly analyzed, will permit proper conclusions to be drawn as to whether the current movements reflected by the telephone figures are reasonable and satisfactory in the light of general business conditions, or whether they indicate the existence of some abnormal condition which warrants examination from an administrative standpoint. The establishment of a consistent relationship, or correla- tion, between two or more analyzed series of telephone figures will also prove serviceable for administrative pur- poses, since the development of inconsistencies in these relationships will also generally indicate the presence of some condition warranting administrative investigation.

Statistical Aid in Forecasts

Not only is accurate analysis of past and present performance serviceable for administrative purposes and necessary for proper conclusions as to the real trend of current movements, but the measurement of the elements of long-time growth and seasonal variation by the sta- tistical method described in the above-mentioned Statis- tical Bulletin affords, it is believed, an improved basis for forecasts, especially forecasts in which it is necessary to allow for the effect of general business conditions. The normal trend of long-time growth may be projected into the future and, where forecasts by months are desired, the projected annual trend may be translated into monthly figures in accordance with the normal seasonal variation. Such a projection, if limited to a period not more than five years in advance, should prove in the case of most series of telephone statistics to provide a substantially accurate forecast of future trends in so far as these

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Bell Telephone Quarterly

elements are concerned. If, furthermore, a fairly con- sistent relationship can be shown to have existed in the past between a given telephone series and some index of outside business conditions, a still more accurate forecast can be provided by modifying the figures indicated by the projected normal to allow for the influence of the probable future course of business conditions.

Conclusion

The particular phases of statistical and accounting work discussed above do not, of course, cover the whole field for such work in the Bell System. They are cited merely to indicate in a general way the undeveloped opportunities which still exist for further application of statistical methods of analysis, and to call attention to the need for the progressive development of these oppor- tunities. Much splendid statistical work is already es- tablished in all parts of the System, but before the field can be thoroughly covered a considerable amount of experimental work is still to be done.

S. L. Andrew.

L48j

Progress of the Joint Committee on Relations of Supply and Signal Circuits

YOU have all heard of E. K. Hall's "Four C's Program" — Contact, Conference, Confidence, Cooperation. Once again, this time in the matter of our relations with power and lighting companies, the advantage of this method of handling questions, in which both sides have a constructive interest, is demonstrated. For many years the problems arising from the prox- imity of supply (electric light and power) circuits and signaling circuits have required the attention of the engineers of both classes of public service companies and, in many cases, questions have arisen requiring also the attention of the executives. These questions have to do with relations between the two classes of circuits — at crossings, at conflicts (that is, close paral- lelism where there is a chance of physical contact between the wires), on jointly used poles, and in con- nection with inductive interference. Questions arising from the foregoing relations, and particularly from the last one, inductive interference, have been troublesome and from time to time have created controversies. Oc- casionally these have resulted in commission or court proceedings. Considering the magnitude of both systems and the opportunities for differences, these have been few in number, but their possibility was always present and somewhat more than a year ago the settlement of some of these questions took on a more threatening aspect. It appeared that the time had come when the industries concerned must either get together and settle the questions concerned by cooperative effort or there would be much controversy, litigation and bad feeling resulting in necessarily unfavorable reactions on the public relations and service of both parties.

Accordingly, an arrangement was perfected between the Bell System and the National Electric Light Asso- ciation, the great organization of the lighting and power companies of the United States, by which a Joint Com-

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Bell Telephone Quarterly

mittee was appointed, this Committee consisting of men of recognized standing in both industries, so that any conclusion reached by them would be generally recog- nized as having the very highest standing. This Com- mittee held its first meeting on March 26, 1921, at which meeting there was a general discussion of the questions involved and a unanimous decision that it would be to the interest of both industries to work out the questions under consideration in a friendly and cooperative spirit. A Sub-Committee of the Joint Committee consisting of R. F. Pack and Bancroft Gherardi was appointed, and proceeded in accordance with its instructions, to form a committee of engineers to assist it in analyzing the situ- ation and to prepare a report setting forth certain prin- ciples of procedure for the treatment of situations of proximity and to recommend such further work as might be necessary. The Committee of Engineers appointed consisted of W. J. Canada, A. E. Silver and F. H. Lane for the National Electric Light Association, and H. P. Charlesworth, S. P. Grace, H. S. Osborne and H. S. Warren for the Bell System.

A second meeting of the Joint Committee was held on March 7, 1922, at which the report referred to above was received and adopted. The Joint Committee also prepared the following letter transmitting the report.

New York, March 7, 1922.

Member Companies of the N. E. L. A. Associated Companies of the Bell System.

We are sending you herewith a copy of the report of the Sub- Committee of this Committee, which report is recommended as a basis for the handling of relations between the electric light and power circuits of the N. E. L. A. Member Companies and the com- munication circuits of the Associated Companies of the Bell System.

As to the relations between the two classes of circuits at cross- ings, conflicts, and jointly used poles, the Committee recommends a definite guide to practice, subject to satisfactory agreement as to jointly used poles between the parties concerned as to terms and conditions.

As to parallel construction, general principles are recommended which show the way to a satisfactory solution of specific cases.

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Bell Telephone Quarterly

Your Committee has instructed a Sub-Committee consisting of M. R. Bump, R. F. Pack and Bancroft Gherardi to proceed with the further work as recommended under Section II (Standards of Construction and Operation), and to report before May 15.

Your Committee, as soon as standards of construction and operation are adopted, will consider whether principles can be es- tablished to aid in the fair allocation of the costs of coordinative measures. In the meantime, your Committee believes that with the cooperative spirit which now is evident, a mutually equitable adjustment can and should be made in each specific case. It is understood that any adjustments made will not be considered as precedents by either party to the prejudice of future understandings.

Your Committee wishes to emphasize the fact that the most important factor in this whole situation, and the one which will contribute in the greatest degree to the solution of all these ques- tions, is close cooperative working between the two classes of com- panies, and the taking up and working out of problems in advance of the doing of actual construction. It is of primary importance that power and communication companies cooperate in the prepa- ration of such plans with a view to coordinating their construction, both with respect to the immediate construction proposed and general arrangements for future development, as obviously the necessary adjustments can best be made while the work is in a paper stage. With the way clear as to how the solution of these problems may be obtained through cooperative work, it would not seem necessary, and certainly it is inadvisable, to undertake to settle such questions by resorting to controversial proceedings which necessarily produce feelings of animosity which are not limited in their influence to the particular situation in question.

In conclusion, your Committee desires to express its apprecia- tion of the general cooperative spirit in which such questions have been handled throughout the country during the year in which your Committee has been at work in endeavoring to find a solution of the problems satisfactory and fair to both parties.

[Signed]

0. D. Young, Chairman, General Electric Company, New York, N. Y.

R. H. Ballard, Southern California Edison Company, Los Angeles, Cal.

M. R. Bump, H. L. Doherty & Company, New York, N. Y.

H. M. Byllesby, Represented by R. F. Pack, H. M. Byllesby & Com- pany, Chicago, 111.

J. J. Carty, American Telephone and Telegraph Company, New York,

N. Y.

Bancroft Gherardi, American Telephone and Telegraph Company, New York, N. Y.

E. K. Hall, American Telephone and Telegraph Company, New York,

N. Y.

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Bell Telephone Quarterly

L. H. Kinnard, The Bell Telephone Company of Pennsylvania, Phila- delphia, Pa.

Martin J. Insull, Middle West Utilities Company, Chicago, 111.

Robert Lindsay, Cleveland Electric Illuminating Company, Cleveland, O.

Ben S. Read, The Mountain States Telephone and Telegraph Company, Denver, Col.

Paul Spencer, United Gas Improvement Company, Philadelphia, Pa.

Guy E. Tripp, Westinghouse Electric & Manufacturing Company, New York, N. Y.

M. H. Aylesworth, Secretary, National Electric Light Association New York, N. Y.

The Sub-Committee Report, with the letter given above, has been printed in full and widely distributed. The recommended plan for the solution of inductive interference situations and the conclusions of this report are quoted below.

Recommended Plan for the Solution of Inductive t Interference Situations

I. General principles.

A. Cooperative planning for all new construction.

B. The location, construction and operation of all supply and signal circuits in conformity with generally co- ordinated methods, including precautionary measures which can reasonably be applied under generally pre- vailing conditions as distinguished from special situations.

C. Where specific coordinative measures are necessary, those providing the best engineering solution should be applied. This involves —

1. Meeting service requirements of both systems.

2. The coordinative measures applied shall be selected without regard to whether they apply to one system, or the other system or both.

3. The solution to be based as far as practicable on the state of the art at that time.

4. Measures of coordination wholly bjr separation should be considered with other measures of coordination where the former will not sacrifice economy and practicability and the convenience of rendering present and future service.

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Bell Telephone Quarterly

D. Neither party should assume to be the judge of the service requirements of the other system, or of what constitutes good practice in that system.

E. Existing cases to be cleared up in an orderly and syste- matic way as occasion requires in accordance with the above principles.

II. Standards of Construction and Operation in accord with the foregoing principles.

A. Adoption of more detailed principles as soon as possi- ble for temporary use.

B. Preparation by further cooperative work based on the existing state of the art of definite standards covering all classes of inductive exposures.

III. Development Work.

As soon as it can be done without interfering with the work recommended under II above, a cooperative study of the art shall be made in order to determine what practicable measures, if any, may be developed and adopted to lessen the contributing characteristics of both systems.

CONCLUSIONS

Your Sub-Committee believes that great progress has been made toward the solution of the problems arising out of the proximity of supply and signal circuits and to further promote the satisfactory working out of these situations recommends as follows:

1. That the Joint Committee, if they approve, adopt the prin- ciples and standards herein set forth and recommend them for general use by the respective utilities.

2. That special emphasis be given to the importance of working out problems of interference before definite plans are made for construction both with regard to immediate extensions and to general plans for future development.

3. That when differences do arise, every effort be made to arrive at a settlement through negotiations rather than resorting to court or commission proceedings.

4. That arrangements be made for proceeding with further cooperative studies along the lines indicated herein.

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Bell Telephone Quarterly

We wish to express our appreciation of the broad spirit of co- operation with which the engineers assisting us have approached this matter.

When the Joint Committee adjourned their meeting of March 7th, it was the unanimous feeling of all that " What's well begun is half done."

Bancroft Gherardi.

L54

Notes on Recent Occurrences

Ship to Shore Radio Telephone Test, March 5

THE American Telephone and Telegraph Company conducted its first ship-to-shore radio-telephone test for the press in conjunction with the Radio Corporation of America on the evening of Sunday, March 5th. The purpose was to show the progress that has been made by the Bell System engineers toward working out the maximum value of the radio as a supplement to te- lephony. The test was carried on between the American Telephone and Telegraph Company's radio station at Deal Beach, New Jersey, and the United States Line Steamship America, homeward bound from Europe and at the time about 370 miles from Ambrose Light.

Representatives of all the New York newspapers and press associations were invited by the American Tele- phone and Telegraph Company to meet a group of the Company's engineers on the top floor of its Long Lines building at 24 Walker Street, New York. There direct connection was made with Deal Beach, and sitting around two long tables each guest was supplied with a telephone receiver and listened in on the conversations with the ship in the distant Atlantic, and later themselves talked with some of their friends on board.

The progress that has been made in the work was clearly revealed to the listeners when the difficulties that attended the development of radio service was exposed to them. Everyone is now familiar with the fact revealed by aviation that there are pockets in the air. That similarly there are pockets in the ether was made clear by the " faint spells'" which for some time delayed the beginning of successful conversation and the sudden unaccountable interferences that at times broke into the communications. On the other hand the demonstration amply proved that the conditions of the ether have been sufficiently mastered to enable the American Telephone

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and Telegraph Company to undertake a guaranteed ser- vice on business terms.

The test showed notably that two-way radio com- munication could be established over the same wave circuit, and that it is quite feasible to connect the radio with the regular nation-wide wire system. Thus anyone on the lines of the Bell System, anywhere in the country, using the ordinary telephone instrument, can talk at ease with friends in the middle of the Atlantic.

These important features of the test were appropri- ately signalized by connecting Captain William Rind of the America with Mr. H. B. Thayer, President of the American Telephone and Telegraph Company, in his country home near New Canaan, Connecticut. Although Captain Rind was 370 miles at sea and Mr. Thayer was talking on an ordinary line connecting with a small ex- change, they could hear each other as easily as if they were in adjacent houses. After the greetings natural to the occasion, Mr. Thayer inquired what weather Captain Rind was having. He replied that the America had had a stormy voyage, that now after some hours of good weather the sea was beginning to pick up a bit again under a head breeze, and that he expected to reach Ambrose at about four o'clock Monday afternoon and dock by seven. Mr. Thayer then extended hearty con- gratulations and bid Captain Rind and his ship "Good night!"

The America has been specially equipped by the Radio Corporation of America in cooperation with the American Telephone and Telegraph Company for these experiments. The experiments are continuing. In these tests two-way radio telephony has in fact been accom- plished over a distance of 1,600 miles. To supply a connection that far, however, cannot be guaranteed. The future depends chiefly upon equipping enough ships with the composite sets, permitting simultaneous opera- tion of the radio telephone and the radio telegraph, so that radio telephoning will not have to be discontinued while radio telegrams are being received and sent. But

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on the evening of March 5th it was made evident that long distance telephony is practicable at sea as well as on land.

General Carty's Address at the Civic Forum, Philadelphia, March 8, 1922

AT a meeting of the Philadelphia Forum, held in /-\ the Academy of Music on the evening of Wed- *■ -* nesday, March 8th, John J. Carty, Vice President of the American Telephone and Telegraph Company, delivered an address on World Electrical Communication. General Carty recounted many of the major technical developments in telephony since the founding of the art. The telephone amplifier or loud speaker was used, so that although General Carty spoke in an ordinary tone of voice, every word that he said could be heard by every one of the more than 2,800 persons present with a clear- ness and ease that was surprising to them and evoked their spontaneous enthusiasm.

General Carty in his introductory remarks referred to the fact that the telephone was born in 1876, just 100 years after the founding of the Republic in the Declara- tion of Independence. Another striking parallel to which he called attention was that as Franklin, America's fore- most electrical pioneer, was born in Boston but early moved to Philadelphia to begin his great career, so, too, the Telephone was born in Boston and came to Phila- delphia at the Centennial Exposition of 1876 to receive its first notable recognition.

After the more formal part of his address General Carty had a motion picture shown depicting the assem- bling of a telephone instrument. The audience found it both very instructive and most amusing. General Carty then had the Academy of Music connected with the trans- continental circuit to San Francisco, and the audience by means of the amplifying of the loud speaker was im- pressed and entertained by conversation with the test- board men in San Francisco, by phonograph music

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Bell Telephone Quarterly

played in San Francisco, and by a violin solo by Miss Betty Bates, the twelve year old daughter of Harry Bates, the commercial representative of the American Telephone and Telegraph Company in California. This demonstration was notable in that it was the first in which two-way transmission had been secured across the continent over a two-wire circuit. Indeed, as Miss Bates was furnished with a telephone receiver, she was able herself to hear the applause in Philadelphia that greeted her playing.

A circuit was then set up to the offices of the Phila- delphia Public Ledger, and the editor, John J. Spurgeon, without leaving his desk addressed the audience and read them news dispatches from Washington, Chicago, Tokio, London, and Guatemala, which would not be available to the public in the newspapers until the following morning.

The demonstrations were closed by radio broad- casting from the Bell System transmitting station at Deal Beach, New Jersey. In order to avoid the great amount of interference from electric sign and other power cir- cuits which would be incurred if the radio receiver were installed in the city itself, it was set up at Narbeth, six miles west of Philadelphia, and the messages carried on into the Academy of Music by wire. This had the advantage of showing that the coordination of the radio and the wire systems is entirely practicable. Once more the loud speaker made every sound easily audible to every person in the audience. In this way they listened to weather reports, bugle calls, music, con- versation and even radio messages from ships at sea. During these demonstrations neighboring transmitting stations very kindly refrained from sending, in order to leave the ether clear for the Philadelphia Forum.

The audience was intensely interested and showed their hearty appreciation by frequent applause. The various demonstrations of the evening had convincingly proven to them what General Carty had told them in his address that the American Telephone and Telegraph

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and its Associated Companies are introducing to the world "an electrical system of communication which reaches out to the uttermost limits of the earth and carries with it the sublime hope that some day it will be utilized in bringing together the people of all nations into one common brotherhood."

Mr. Gifford's Address at Boston, March 9, 1922

THE Boston Directors of the American Telephone and Telegraph Company gave a dinner at the Copley Plaza Hotel in that city on the evening of Thursday, March 9th, to Mr. H. B. Thayer, the President, and Mr. W. S. Gifford, one of the Vice Presi- dents of that Company. About eighty of the more important Boston bankers and brokers were invited to meet and talk with Mr. Thayer.

At a meeting in the evening to which some 600 other prominent people were invited, Mr. Gifford made an address on the financial aspects of the telephone business. He pointed out that the remarkable nation-wide service of the Bell System required for its maintenance an organ- ization employing 250,000 persons and an equipment valued at over $1,500,000,000. He showed that while the population and the business of the United States have grown about 50% since 1900, the telephone service, in- dicated by the number of telephones in use, had increased 900%, to 14,000,000 in the same time. The audience learned that at the present time 47% of the 195,000 stockholders of the American Telephone and Telegraph Company, holding 53% of the $555,000,000 of stock, are in New England.

Leading up to demonstrations of recent achievements, Mr. Gifford stated that the research and development work done by the scientists and engineers of the American Telephone and Telegraph Company resulted in the saving of millions of dollars to the Associated Companies and consequently to their subscribers all over the country.

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Mr. F. A. Stevenson, Director of the Long Lines Department of the Bell System, then conducted a demon- stration of radio telephony transmitting speaking and music from the Company's radio station at Green Harbor, Massachusetts, 40 miles away. A telephone amplifier, specially installed for the occasion, enabled every one present, sitting in their chairs and without any individual telephone receiver, to hear with perfect ease and dis- tinctness. Neighboring transmitting stations cooper- ated by giving the Green Harbor-Copley Plaza demon- stration right of way through the ether.

This was followed by a demonstration of the telephone service of the Long Lines Department over its two longest circuits by a roll-call from Boston to Havana, Cuba, a distance of 1,827 miles, including 100 miles of submarine telephone cable between Key West and Havana, and then a roll-call from Boston to San Francisco, a distance of 3,593 miles. In both cases the telephone amplifier en- abled the audience to hear the conversation and music in Havana and in San Francisco as clearly as they could Mr. Thayer, Mr. Gifford, and Mr. Stevenson talking in their presence.

In closing Mr. Gifford confirmed Secretary Hoover's statement that the use of the radio telephone for private communication between single individuals was quite hope- less and in view of the achievements of long distance telephony entirely unnecessary. He defined the real value of wireless to be for purposes of broadcast publi- cation and for supplementing the wire system in cases when connection by wire is impracticable as between ships at sea or between ship and shore.

The Patent Suit of General Squier

THE system of multiplex telephony and telegraphy now in use by the American Telephone and Telegraph Company, by which it is possible to transmit several telephone conversations and a large number of telegraph messages over one line, simultane-

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ously, has been made possible only by the ingenuity and persistence of the engineers of the Bell System in over- coming the many obstacles to the use of such a system on commercial circuits, and by the advent and perfection of such inventions as the wave filter and the distortion- less amplifier which are covered by patents owned by the American Telephone and Telegraph Company.

The basic requirements for such a system have long been known. There are a large number of patents, both United States and foreign, bearing dates from 1892 on, which disclose the fundamentals of such a system. Among these are the United States patents issued in January, 1911, in the name of George Owen Squier, now Major General of the Signal Corps, which he asserts are in- fringed by the system now in use.

These patents were taken out under the provisions of an early law which remits the government patent fees, pro- vided the patentee stipulates that the invention may be ♦used by government officials in government work, "or by any other person in the United States." Until recently this has been construed by every one, including the telephone company, General Squier himself and the United States Patent Office, to mean that the inventions of such patents were free to any member of the public. Subsequent to the commercial installation of carrier current systems by the telephone company, General Squier has contended for a different interpretation of that law. It is the view of the telephone company that General Squier's present interpretation of the law is erroneous and further that his acquiescence in the former interpretation during the development and installation of these commercial systems estops him from now adopt- ing an inconsistent attitude.

The Squier patents, moreover, are believed by the telephone company to disclose no advance over the systems shown in prior patents, and it is further con- vinced that the telephone company's system does not infringe those patents, even assuming a margin of in- vention for them.

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Negotiations between the telephone company and General Squier have been in progress for some time past with a view to determining what, if any, rights he has under the patents. The telephone company, on the other hand, has been anxious to accord to General Squier what credit may be due him for advancing this art and to pay him whatever his contribution might be worth, while on the other hand, it has realized that unless the patents were valid and contained features of substantial value and especially unless his title to non-government use of the patents was valid, it would not be justified in paying a substantial amount for a license under them.

As a solution of the difficulty, the telephone company has taken an option under which it may acquire the right to use the inventions of the Squier patents, if it shall be judicially determined that its views as to the validity and scope of the Squier patents and their dedi- cation to the public, are wrong.

A suit for the determination of these questions was begun on March 14, 1922, and will be pressed to the earliest possible determination by both parties.

The Annual Meeting

THE annual meeting of the stockholders of the American Telephone and Telegraph Company was held at the headquarters building at 195 Broadway, New York, on March 28th and all the directors were re- elected by a vote of 3,542,132 shares, there being no dis- senting votes cast.

The stockholders representation was very satisfactory, there being over 100 shareholders present in person and over 123,000 shareholders represented by proxies.

President Thayer spoke briefly on some of the matters covered by the annual report and by unanimous vote the transactions of the past year were approved.

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Organization Changes

UNDER this caption will be announced only elections or appointments to the offices of Presi- dent, Vice President and General Manager with brief statements of service in the Bell System of new incumbents.

American Telephone and Telegraph Company

Edgar S. Bloom elected a vice president:

Construction engineer for New York City, New York Tele- phone Company, 1897 to 1905; general plant superintendent, Pacific Telephone and Telegraph Company; plant superinten- dent for State of New York, except New York City, New York Telephone Company, 1909; generid superintendent of plant operations, American Telephone and Telegraph Company, 1910; second vice president, Southwestern Bell Telephone Company, 1912; one of the receivers of the Central Union Telephone Company, 1914 to 1919; elected president, Central Union Telephone Company, 1919; president of the Indiana Bell Telephone Company and the Cleveland Telephone Com- pany (name changed to Ohio Bell Telephone Company), vice president, Illinois Bell Telephone Company, 1920; chairman of the Board of Directors of the Ohio Bell Telephone Company and Indiana Bell Telephone Company, 1921.

New York Telephone Company

Eugene S. Wilson elected a vice president:

On account of the prolonged illness of General Counsel Swayze, Mr. Wilson has taken charge of the presentation of the Company's case in the State-wide rate case. Appointed special counsel for the Southwestern Telegraph and Telephone Company, 1913; went to Chicago as special counsel for the American Telephone and Telegraph Company in the case of William A. Reed vs. American Telephone and Telegraph Company, 1914; general counsel for the Central Group at Chicago, 1916; vice president of the American Telephone and Telegraph Company, in charge of rate matters, 1920.

Illinois Bell Telephone Company

W. R. Abbott elected president:

Cashier of Westchester Telephone Company (New York), 1889 to 1890; order clerk, Metropolitan Telephone and Tele-

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graph Company (New York), 1890; Chicago Telephone Com- pany, 1893, serving as order clerk, chief clerk to general super- intendent, special agent in charge of rights of way and claims, superintendent of suburban division, general commercial superintendent and general manager; vice president and director, 1920.

F. 0. Hale elected vice 'president and general manager:

Entered the traffic department of Bell Company operating in Eastern Pennsylvania, Ohio and West Virginia, 1903; superintendent, 1907; entered engineering department of the American Telephone and Telegraph Company, 1909; appointed chief engineer of the Southwestern Bell Telephone System, 1912; later general manager for the States of Missouri and Arkansas; appointed chief engineer of the Illinois Bell Tele- phone Company, 1921.

Southern Bell Telephone & Telegraph Company and Cumberland Telephone & Telegraph Company

Frederick H. Reid elected operating vice president:

Entered employ of Company as clerk in office of General Superintendent, 1902; chief clerk to General Superintendent, 1904; chief clerk to General Manager, 1907; assistant to Vice President and General Manager, 1913; assistant general manager, 1915; general manager since 1920.

Wisconsin Telephone Company

W. R. McGovern elected president:

Entered telephone business at Milwaukee, 1901; chief engineer of the Central Group of Bell Telephone Companies, at Chicago, 1916 to 1919; general manager, Wisconsin Bell Telephone Company, 1919; vice president, 1920.

Western Electric Company

Dr. Frank B. Jewett appointed vice president in charge of engineering manufacturing and service to telephone companies:

Entered employ of the American Telephone and Telegraph Company, 1904; assistant chief engineer of the Western Electric Company, 1912, in charge of all development and research work; chief engineer, 1916; elected a vice president and director of the Company, 1921.

[64]

A-

Single Copy, 50c $1.50 per Year

Bell Telephone Quarterly

JULY, 1922

Contents

What Are We Trying to Do? . . . . H. B. Thayer

Some Thoughts on Organization and Executive Work W. S. Gifford

Sleet Storms A.B.Crunden *a

The Recent Parliamentary Investi- &-.

gation of the Telephone Situation in Great Britain S. L. Andrew

Conference of Personnel Group . . Bancroft Gherardi

Business Principles in Organization Practice C.I. Barnard

Progress in Cooperation with the National Electric Light Associa- tion . H. P. Charlesworth

Technical Papers Published During Quarter Just Ended

Notes on Recent Occurrences

American Telephone and Telegraph Company

New York

iccA*b*^x'

•4 h.

'

Bell Telephone Quarterly

A MEDIUM OF SUGGESTION AND A RECORD OF PROGRESS

Published quarterly for the Bell System by the American Telephone and Telegraph Company

Subscription, $1.50 per year, in United States and Canada; single copies, 50 cents

Address all communications to

INFORMATION DEPARTMENT

AMERICAN TELEPHONE AND TELEGRAPH COMPANY

195 Broadway, New York

Vol. I JULY, 1922 No. 2

What Are We Trying To Do?

The presidents of the Associated Companies of the Bell System met with the executives of the American Telephone and Telegraph Company for a fwe-day conference at Yama Farms on June 3rd. During the meeting a photograph was taken which appears as a frontispiece in this issue of the Bell Telephone Quarterly.

President H. B. Thayer of the American Telephone and Telegraph Company presided and gives the keynote of the conference in the statement which follows.

EVERY business enterprise, of course, has a purpose. It may be to make money for its owners and nothing more. It must make money if it is sound. Its purpose as well as its methods may be nar- rowly conceived or the reverse. What is the purpose of the Bell System, and how does it propose to accomplish it? In charting a course it is necessary for a mariner to locate his present position. In defining our objective, it will assist us not only to locate our present position but also to remember how we reached it.

With one or two changes in corporate form, the American Telephone and Telegraph Company's history begins with the invention of the telephone. It took the

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telephone as a laboratory model and made it an instru- ment of national service, a service wider than can be found in any other country, and of a quality not else- where approached. In short, its life spans the whole history of the telephone and the character of its service is unrivaled.

The Bell System is the only organization, outside the Federal Government, which carries the whole responsi- bility for national service. The only other agencies that may come to mind in this connection are the railroads and the telegraphs. But the railroads individually cover only certain sections of the country and there is more than one telegraph company attempting a national tele- graph service.

There are certain peculiarities in the Bell System situation and service which must be noted. While it discharges a national function, it is governed by state laws, and in some states must operate through state corporations. This necessitates a number of operating units and a central organization rendering the services for them which can most efficiently and economically be centralized. A consumer may not be directly con- cerned as to whether or not a distant friend or corre- spondent has certain facilities or conveniences. He may not be interested in discovering whether this distant correspondent or friend has electric light or electric power for transportation. But it is likely to be of interest to him and possibly may be of vital interest to know that he has a telephone and that it is possible for him to be quickly connected with him. Coordination of functions and the standardization of plant are essential to a na- tional telephone service. They make a central organiza- tion necessary and render it efficient and economical.

The operating companies are largely owned by the American Telephone and Telegraph Company. That is owned by more than 200,000 stockholders, investors not speculators, and as the result of conservative financing and careful management, after forty-five years there is back of every dollar of capital stock of the American

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What Are We Trying To Do?

Telephone and Telegraph Company approximately two dollars' worth of property.

Having briefly surveyed our present position as a part of the nation's equipment, let us consider what we should try to do in the future.

Can there be any doubt? Is there more than one course open? Is there any difference in interest between the public and our stockholders? I cannot see any. If we serve our stockholders wisely and efficiently, we shall render the largest benefit to the public. The success of the Company depends upon the measure of good-will of the community which it can get and hold. We must give the best and broadest service possible. We must provide a service which will not only keep pace with the growth of the country, but also with the constantly increasing use of the telephone. We must make our charges low enough to enable every person who ought to have a telephone, to have one, and at the same time we must earn enough to attract capital to take care of this growth. To earn more than is necessary to maintain and extend the service, would evidence poor judgment and in the end would be bad business for our stockholders : to earn less would be an injury to the public. There must be no waste. The best brains we have must be applied increasingly to effect economies in construction, main- tenance and operation. We must struggle unceasingly for better service and lower rates, but in the interest of the public, as well as of our stockholders, we must resist every misconceived attempt to decrease rates to a point which would make it impossible for the Company to keep up and give the best service any one knows how to give. We cannot have fat years and we must not have lean years.

We must stand by our tested traditions and principles. The Bell System is a continuing organization and it is dedicated to a high and important service. We, who are responsible for its direction, must not temporize. We must have guiding convictions and take a long look into the future. We are responsible to the nation, to our stock-

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holders, and to those who come after us, for the con- tinued success of the Bell System. While yielding nothing that is good in our organization and its methods, we must continually strive for whatever is better. Con- servatism in principles and progress in methods are the traditions of the Bell System, and they must be main- tained.

That is what we are trying to do.

H. B. Thayer.

[4]

Some Thoughts on Organization and Executive Work

WHAT is organization? And why is organiza- tion? What are the functions of an executive ? We hear a great deal about organization in the business world. We hear that this man is a great organizer, or that man is a capable executive. We still hear at times of " Captains of Industry." We occasionally hear of a good Administrator, although the terms "administrator," "administration," and "administrative" are largely confined to governmental affairs. In business we hear more and more of "Committees" and "Con- ferences." All of these words and phrases are descriptive of certain types of machinery by which modern business is carried on.

In the hope that others might be stimulated to think about the subject, I have set down some notes as to the significance of these terms. They are simply suggestions based to some extent on personal experience and con- viction, and even more upon observation of successful executives in their work.

In the first place, we are not in the business of being organizers as such, or executives for the sake of being executives — though indeed one might believe the re- verse of this to be true, judging by the requests for employment which we frequently receive from men who "want a job as an organizer or an executive." These men might almost as well say they would like a job somewhere as a captain, and feel perfectly well qualified to fill the job whether it be a captain in the army or captain of an ocean liner.

Organization and all the machinery associated with it are not ends in themselves, but tools for the accom- plishment of some desired result. This seems too obvious to need to be stated; but it is easy to forget the obvious unless we are constantly on guard. We must constantly study our organization to see if it is best fitted to give

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results. Moreover, we must not overlook the fact that while it is a tool, and in most cases an indispensable tool, it is not the only tool needed for accomplishment.

Organization is a rather simple tool to construct. The difficulty lies in first analyzing clearly the job to be done. For example, here are five men who want to unite to build a cooperative apartment house. Each of the five must not start off independently to buy lumber or engage an architect or dig the foundations. They must first lay out and plan what they want and then determine what needs to be done to secure what they want. After this has been done, the problem becomes one of setting up the organization. This involves a decision as to what part each can do best, and an agreement that some one of the five shall be in charge of coordinating the work.

Organization a Means to an End

Organization means order. We may of course be- come so fascinated with organization in . itself and for itself, with the game of organizing, that we overdo it. We may, for instance, become so enamored of organiza- tion charts that because a particular set-up, which we know works well and is useful, cannot be charted, we change the organization.

There are real temptations to the lover of order and system. His protection lies in constantly keeping in mind the end to be attained and making all of his plans with that end in view. To be a good organizer requires sound judgment, ability clearly to perceive the goal sought, an analytical mind, and a certain fondness for order. A real organizer is always creative: it requires a man with a creative imagination clearly to perceive the goal sought.

Many of us are asked from time to time for a good book on organization. It is true that much could be written on the fundamental principles of organization, but no book could be written which would properly instruct exactly how any particular work or business

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Organization and Executive Work

should be organized. Study and books may help define the problem somewhat and perhaps lay down some fundamental principles which will assist in solving it, but no text-book where you would find your problem stated and the answer given in the back of the book would be a safe guide.

There is nothing mathematical about organization in business. It is true, for instance, that probably no chief executive should have more than five or seven people reporting to him. This, however, is due to the average limitations on the part of the average man to direct and coordinate comfortably a number of functions. The exceptional man might find it quite possible to carry on his work as a chief executive with as many as twelve people reporting to him, or another man who might also be successful as an executive might prefer only three. In other words, you can never escape from the human side of the business and the fact that you are dealing not with machines but with human beings. So that even after you have organized your job and laid out the theoretical organization which can best accomplish it, you will almost always find it necessary to make variations from this theoretically sound organization to meet the peculi- arities and temperaments of the individuals who are to carry on the work. It is always a good plan to have the ideal in mind and to work toward it; but by all means do not try to crowd human beings into a theoretical scheme when they do not fit.

Duties of an Executive

The executive may be merely an executive; that is, he may carry out plans and programs which have been laid down for him. That is in fact the primary job of an executive. He must deal with men and women; there- fore he must have sympathy, tact, and force, and must know when to be firm and when to be conciliatory. His must not be a single-track mind — he must be alert and able to see many things at the same time, but must not permit himself to be overwhelmed by details. He must

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always watch for actual results — must know the difference between real accomplishment and making a show of accomplishment. Above all must he be just and fair in his treatment of his subordinates, and should always be a leader.

An executive generally must be even more than this. He must be also an administrator. That is, he is not only expected to carry out plans laid down for him, but he is expected in part to make plans and carry them out on his own initiative and to assist in determining broad policies for the business as a whole. He must therefore have initiative, imagination, and judgment. These qualities are inherent; the}' cannot be acquired. They can, however, be improved by training and experience.

There are several waj'S of performing the functions of an executive. Sometimes a man's personalhy will enable him to be a good executive even though he dis- regard many of the generally accepted methods of super- vising a large organization. Generally speaking, however, a good executive should not be too busy. This is par- ticularly true if in addition to being an executive he is to do some general administrative work. The mistake should not be made, however, of assuming that because an executive's desk is always clear, he is a good executive. It is an admirable thing to have a clear desk, but with it must go certain principles of work which will keep the executive in touch with his department and enable him to impress his personality upon it.

More Than a Clearing-house

I remember once hearing of a boy who asked a man what sort of work he did in a company. The man was a high executive. His reply stated his job too modestly, but it illustrates the point. He replied that people came in to see him, stated what they wanted to know, and then he referred them to the proper department of the organization. The boy said he understood perfectly, because in his father's business the}r had an usher — he sat at the desk out in the hall — who did just that. An executive who does just that may really be somewhat

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more than an usher, but not much. He does not impress his personality upon his work. He is merely a sort of clearing-house.

It is necessarjr, of course, for an executive to see that work is property distributed and coordinated in his organization, but it is also necessary for him to keep in constant touch with his men and with the work which is being done under him. He should always be available to his immediate subordinates. In my opinion, this is more important than that he should be accessible to people outside of his organization. He should discuss their problems with his subordinates and give them the benefit of his advice, and avail himself of every means of keeping in touch with them and keeping them in touch with him.

Besides this, an executive should have some line of contact with the men in his organization below the rank of those who report immediately to him. He should call for information from anyone in his organization from time to time— although, of course, he should never issue instructions or orders except through his immediate subordinates. By thus calling for information from any- one he is able to get a first-hand knowledge of the men working in the business and of their mental attitude toward their work. This seems to me a very important point, although its soundness from an organization standpoint is frequently questioned. People who are in love with organization as such feel that everything should " follow the lines of organization," with the result that a single fact wanted will often have to be requested through eight or ten people and after the fact is ascer- tained will have to be reported back through the same eight or ten people. Such a procedure reminds one of the old nursery rhyme, " Stick won't beat dog, dog won't bite cat," etc.

Getting the Work Done

It cannot be too frequently stated that really to be effective an executive must always keep his mind on

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what it is that he is trying to accomplish. Of course this will never be anything but what is for the good of the business. So it be consistent with the good of the busi- ness, ambition is a good thing, but the desire for self- aggrandizement and the desire for power not as a means to an end but as an end in itself, are most serious human failings to be dealt with in running an organization. From the standpoint of getting the work done, it often makes no material difference whether a particular line of work is in one branch of the organization or in another. The organization as a whole will never function without cooperation between the branches, and with cooperation, the placing of work in one department rather than another is often of no material consequence. A desire, however, on the part of one executive to build larger at the expense of some other executive is very often a cause of friction and difficulty. With the successful executive the problem is not one of finding additional work to add to his organization, but of preventing jobs which do not belong to his organization being assigned to it. The executive who works hard to add to the size of his depart- ment condemns himself as a good executive.

Another difficulty in the practical operation of a large organization is frequently due to a lack of clear definition of responsibility and authority. Every ex- ecutive is entitled to know clearly where his responsi- bilities begin and end, and he is entitled to have definitely the authority which will enable him to meet his responsi- bilities. Not only is every executive entitled to this, but when he in turn divides up his responsibilities and authorities among his immediate subordinates he must be especially careful to see that those authorities and responsibilities are clearly defined and understood. He cannot under any condition blame a subordinate for something for which the subordinate has no authority because without authority he cannot properly be held responsible.

A good executive realizes that there are a good many ways, and probably several very effective ways, of

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Organization and Executive Work

accomplishing a given result. He will have no foolish pride of opinion, no troublesome prepossessions. He will welcome intelligent opposition and suggestion from any- one and be quick to surrender a prejudice. While he will impress his personality on his organization, he will not insist that everything be done his way, as this will kill initiative and enthusiasm and make his organization a mere machine.

A Good Judge of Men

Finally, a good executive must be a first-rate judge of men. Perhaps his most important task is the selecting of his department heads. If he does this wisely and suc- cessfully, a good part of his task is done. Having se- lected them, he must trust, inspire, and lead them. He must command and retain their confidence and must be frank with them and fair to them. A successful general is one under whose leadership a staff and rank and file will work and die with enthusiasm.

While authority and responsibility must be clearly defined for executive work, there is, as I have already pointed out, another type of work which I have called administrative. It is not altogether possible to define the authority and responsibility for administrative work. The responsibility for such work is to some extent joint with all the higher executives of an organization. The final decision undoubtedly rests with the head of the organization, but he will wish to take counsel frequently with those who are not primarily responsible for the matter under discussion.

This counsel the chief executive may obtain by dis- cussions with one individual at a time, possibly asking the opinion only of those whose judgment concerning the matter in question is especially valued. Some executives from temperament or even preference have been known to follow this plan only.

It is my personal belief that by far the best results are obtained by Conference. To some minds Conferences are a waste of time. Much is said that does not appear

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Bell Telephone Quarterly

to bear upon the point under discussion. There is often a good deal of talk, but when important matters of policy are to be decided, I feel sure that the time used or even used up in conferences is very much worth while. When the chaff has been winnowed out, the wheat will be found. It is important in a conference that everyone be given an opportunity to talk at length, that ideas expressed be listened to with tolerance by all. A prominent man once said that people's personalities and peculiarities meant no more to him than the weather. While this is going too far, nevertheless a conference held with a view to de- termining policies is not a place where tact and finesse are so necessary as freedom of speech. I realize that in business, one-man authority and responsibility, with the speed of action which results therefrom, is thought by many to be a great deal more effective than the slower process of conferences. I feel sure, however, that in an organization where large matters are at stake and where military authority and discipline are not required, the only safe and efficient way to determine policies is to confer deliberately and at length. Of course, the head of the organization must finally decide, and after decid- ing, act with firmness and confidence.

The Uses of Committees

Another type of machinery, excellent for the accom- plishment of certain results, is the "Committee." A committee differs in my mind from a conference in that it usually has definite responsibility and authority and acts by unanimous or majority vote. The committee is a slow way of accomplishing results, but where several branches of an organization are involved and each is responsible for a part of the answer, it is proper under some circumstances that the final decision should be made by a committee in which every part of the organiza- tion represented thereon assumes joint responsibility. The race is not always to the swift, and to accomplish our end which we are constantly keeping in sight, in

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Organization and Executive Work

some circumstances a committee is a splendid piece of machinery.

A committee, it seems to me, should always have a chairman. I recall an incident during the war when the Secretary of War appointed a number of committees, each composed of representatives of our army and some of the Allied military representatives who were in Wash- ington. The committees were appointed without chair- men. A most distinguished representative of one of our Allies respectfully suggested to the Secretary that their experience in the war had shown committees to be of little value unless a chairman, or at least a "convener," were appointed. No action was taken, however, and the next day the inevitable happened: the committees failed to meet, no one knew who was to call meetings, and in fact no one was quite sure who his associates were on the committees. It was a very striking example of the failure of committee work to function properly without a chairman or at least a " convener."

Organization inherently imposes some restrictions upon freedom. Organization means teamwork, and teamwork means working for the good of the team. Pride of authorship, desire to be personally in the limelight, any tendency to build up one's own reputation by criticizing or belittling others, are all disastrous to the successful working of an organization. After all, com- mon sense and hard work, combined with a sympathetic consideration for others and pride in the institution will result in each man going ahead as far as his inherent abilities will permit, in spite of the size and complexity of large organizations. " Captains of industry" belong to the pioneer days that are past. Large modern business organizations require executives who are also wise administrators. It is the day of statesmanship in business.

W. S. Gifford.

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Bell Telephone Quarterly

Sleet Storms

IT is very pleasant, opening the front door on the morning after a sleet storm, to look upon the fairy- land to which the familiar surroundings have been suddenly transformed. The wind has ceased and the tall trees, encased in ice which sparkles like diamonds in the sunlight, are very beautiful as viewed upon their back- ground of blue sky. Delicate icicles are pendent every- where and flocculent masses of snow upon bushes and fences are glazed with a coating of glittering ice enamel. You observe with some regret how the sleet has crushed the bushes and that the trees have lost many of their boughs. However, this does not spoil the frosty splendor of the morning. Returning indoors you take down your telephone to find that it is out of commission. The same sort of icy load which has maimed your trees and hun- dreds of others in the vicinity has also broken down hun- dreds— perhaps thousands — of telephone circuits, de- stroying in a night property which was months or years in building.

In the early days in the telephone business the ex- change distribution plant and the toll lines were entirely aerial and exposed to the weather. As a result of years of research and development work carried on by tele- phone engineers, means have been developed whereby it has become possible to place a great part of the exchange distribution plant in underground and aerial cables where it is well protected from damage by sleet storms; cables have been developed in recent 3rears for toll cir- cuits which are economical under certain conditions.

Despite the development of greatly improved types of outside plant and the investment of many millions of dollars in its installation, there remains and probably will long remain a very considerable amount of plant which is exposed to weather conditions. It is not eco- nomical, even though it might be technically possible, to provide the extremely expensive types of protected cable routes unless the number of circuits is sufficiently large to

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Sleet Storms

reduce the cost of their installation and operation to a point somewhere near the costs of aerial wire circuits; to do otherwise would result in making the cost of service too great for the average user.

However, the types of aerial plant now in use are such as to withstand all weather conditions excepting storms of a violent character. Sleet storms cause the most damage and in these days constitute about the only adversary, short of some general catastrophe, which can stop the service for more than a very brief space of time.

The Combination of Ice and Wind

The damage done by sleet to the wire plant of a telephone system is more severe and diasatrous where the duration of the storm is considerable, especially if accompanied by high winds. Sleet is by nature the pre- cipitation of water vapor, condensed in the upper atmos- phere, which approaches the ground in a partly frozen condition. Its beginning may be either as rain, in which case to turn to sleet it must fall into a stratum of air colder than that in which it originated, or as snow, in which case the opposite must have taken place; that is, the snow in its descent must have encountered an air temperature slightly above freezing point. Under typical sleet conditions the chilled rain falls upon the trees, telephone wires and other objects, and through a decline in the temperature is frozen thereupon. The freezing process continues as long as the rain continues to fall and the temperature does not rise. The icy coating may grow until the accumulated weight becomes enormous and the stoutest structures barely support their burden.

If sleet falls for a number of hours, each single tele- phone wire may acquire a solid ice coating three inches thick vertically and accompanied by even longer icicles. Whereas the weight of the wires in the normal span between two poles in a 40 wire lead is less than 200 pounds, such an ice coating may add a weight of about 15,000 pounds to the load supported by each pole. If a heavy gale is blowing, the pole is further subjected to a

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Bell Telephone Quarterly

bending force due to the wind pressure on the sleet- covered wires. Subjected to such tremendous stress, the line frequently fails. When the line might stand the strain, nearby trees are often crushed or blown down upon it, bearing it to the ground and smothering it with masses of shattered boughs. The forces which nature unloosens in the sleet storm are too powerful for us to contend with. We have to suffer the blow, be it what it may, then clear away the debris and make a fresh start.

Last Winter's Storm Toll

The winter of 1921-22 distinguished itself by some terrific storms, making it memorable to many thousands of telephone workers.

On November 27, 28 and 29, 1921, a storm of unusual violence swept the New England States. This was the earliest storm of last winter; the latest was on April 10, 1922, when Minnesota and Nebraska were visited by a storm which destroyed over 21,000 poles of the North- western Bell Telephone Company, disrupting the tele- phone service at more than 70 exchanges. On January 25, 1922, a heavy storm traveled Northwest through North and South Carolina, the sleet continuing inter- mittently three days and three nights. The City of Savannah, down in the " Sunny South," was covered with a mantle of ice. A newspaper account states that "Fairyland in all its glory could not have presented a prettier sight." However, the conditions held no charm for the telephone construction men as the rain continued for several days after the storm and it was only after the hardest kind of a fight in rain, mud, slush and swamp that service was eventually re-established.

In Michigan and Wisconsin a storm of unusual severity raged over a wide area on February 21st, 22d and 23d. The damage to the telephone plants in both of these states was enormous. The Storm King was evidently not satisfied with his efforts in Michigan, for on March 29th he most unexpectedly re-visited that

[16]

Sleet Storms

state and again destroyed an immense quantity of plant. There is room for disagreement with King Sleet as to the thoroughness of his first onslaught, for he made an almost complete wreck of the wire systems throughout the Northern half of the main peninsula of Michigan. Succeeded as it was by bitter cold and high winds, the storm cut off from all communication with the outside world some dozens of cities, towns and hamlets. The residents of these places were without telephone or telegraph communication, without mail or railroad service, without electric light or power. It was dangerous to walk along the streets because of falling branches, trees, wires, signs or roofing material. Life in this section slowed down almost to a standstill. The plants of many small public utilities were practically wiped out, and in some cases resulting financial ruin so far deters their reconstruction.

The Work of Restoration

As the extent of the storm became evident the Mich- igan State Telephone Company organized for the work of restoration on a huge scale. Supplies of all sorts in immense quantity were rushed to strategic points for dis- tribution, without waiting to learn precisely where and in what amount the poles, wires and other items would be required. Crews of men were recruited and equipped and sent forward by rail as far as possible and thence on snowshoes. The distribution of the extremely heavy telephone equipment presented a most difficult task. Even with chains on all four wheels, trucks could not operate; horses could not be kept on the roads. Only by dint of Herculean efforts on the part of the men were the stores pushed into the devastated districts.

So aggressively, however, was the work carried on that by the middle of March circuits had been restored to all Michigan State Telephone Company points. Many had been re-established it is true in temporary form, but every town on the Bell routes was again connected up with the outside world.

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Bell Telephone Quarterly

North of the sleet area in Michigan there was one of the hardest snowstorms that the inhabitants have any knowledge of. Snow was piled fifteen and twenty feet deep. Buildings such as small barns, granaries and coops were literally buried. It illustrates the difference be- tween sleet and snow storms that in the snow belt the Bell toll lines and exchange plant stood up very well, in contrast to the havoc further South.

Wisconsin's Experience Typical

The conditions in Wisconsin were very similar to those in Michigan. The following extracts from a report by the Bell representative at Oshkosh are typical:

"Everybody was on the job early the morning of the twenty- second and we were all needed. Wires, poles, crossarms and trees were groaning under their load of solid ice and commenc- ing to fall. Ole Rasmussen started North on the Marinette line and got out as far as Jackson Street road, when the big fifty-foot poles began to fall around him. Ole was completely penned in with his machine by poles falling in front and behind him and he was mighty lucky to escape injury or possibly death. He walked back to the office, delivered his report, then, nothing daunted, headed North again on foot.

"At 6 P.M. there was no possible way to get word into headquarters at Appleton; trains were at a standstill, trolley lines and other modes of transportation out of the question. One of our men waited all night at the depot, but could get no information as to the probable movement of trains. On the morning of the twenty-third, Oscar Bahr and Charles Erbers- berger volunteered to walk it. They took our reports and in the teeth of the blizzard they headed North. They fought their way through and arrived at Neenah at 4 P.M. with a complete report of line conditions between Fond du Lac and Neenah which they delivered to the district wire chief, Carl Thomas, who had come down from Appleton. Oshkosh was in darkness and there was no power for three days, but thanks to the emer- gency gas engine we managed to keep things going."

How the storm affected the telephone girls can be glimpsed from the following report by a supervisor at Superior, Wis.:

"J. E. Bonnell, district traffic supervisor, Eau Claire dis- trict, had arrived in Superior early Tuesday afternoon. Upon

[18]

Sleet Storms

attempting to reach the office next morning, he encountered a large snowdrift immediately in front of the hotel and in the center of the drift, a young lady, almost exhausted from her efforts to get through. Investigation disclosed that it was one of the operators, Miss Crowley, who, notwithstanding her dimi- nutive size, had battled her way six blocks to get to work. At about this time, William Deharde, wire chief, came along and after a time they reached the office. They found the night force still on duty and in addition the chief operator and as- sistant and two or three of the day girls. These people were almost exhausted from their fight to reach the office but were bravely tackling the job of rendering telephone service to a storm-bound city. At about 8:30 A.M., twelve girls had ar- rived and breakfast was obtained for the night force. Folding cots and blankets were also provided and a supply of dry cloth- ing for those who had come through the storm. Miss Gilbert, local supervisor, came in after fighting her way through twenty blocks of drifts and storm, and after changing to dry clothing and resting a bit took her place at the board. From this time on the girls came in one by one, some in overalls and boots, others in hiking clothes and still others in their ordinary street clothes; all wet and cold but ready to help in relieving the load of the others. By eleven a force of twenty-five people had arrived and in the afternoon six others reported; the load was being handled in nice shape and the regular reliefs were started. Those operators who lived within two or three blocks of the office made their way to their homes to sleep and the balance either slept on the cots provided at the office or at the hotel.'-'

The Damage in New England

The three days' storm which smote the New England States in November last, began on Saturday, the 26th, with a light drizzling rain which continued almost con- stantly during the next two days. Early Sunday morning the freezing process began and the rain froze rapidly upon anything it touched. On Sunday afternoon the first total telephone failures were reported and by the early hours of Monday trouble was widespread in general. The Southern parts of New Hampshire, Vermont and Maine, all of Massachusetts, except the seacoast, and portions of Rhode Island and Connecticut were literally overwhelmed. The country in the afflicted areas looked much as it must have appeared in the ice age; the sleet- CIS]

Bell Telephone Quarterly

covered trees looked like glaciers adrift in a sea of ice. Highways were like rivers of smooth, unbroken ice bearing the ruin of great trees, thousands of fallen tele- phone poles and a confusion of debris carried by the furious wind. Thousands of miles of costly copper wire, ice-coated, strewed the highways in hopelessly tangled and twisted masses. The work of clearing the wreckage and renewing telephone service was both arduous and dangerous. Work was begun long before daybreak and continued far into the night. One man tells of seeing an emergency cable spliced by the light of a bonfire built of limbs of trees torn off by the storm. At the time it was bitterly cold and so dark that a man fifteen feet from the fire was invisible. From the same locality comes a story of two linemen who carried an emergency cable through a swamp, waist deep in icy mud, climbed out, dried off before a roaring fire and resumed their work. Men frequently labored with trees and wires falling about them. One foreman saw eighteen poles come down in a row near where he was working. The breaking of a pole was accompanied by a crack like the report of a rifle, followed by a loud crackling as the ice was shaken from hundreds of feet of telephone wire, then came a "boom" like the distant roar of a big gun as the heavy pole crashed to the earth.

Heavy Supply Requirements

The restoration of the Bell telephone service after the several storms of last winter was in each case effected with reasonable promptness. The fine spirit of the em- ployees was everywhere evinced and some idea of the quantity of materials which the Western Electric Com- pany was called upon to deliver this winter on emergency shipments may be had by reference to the following list of a few principal items ordered following the storms in New England in November, and in Michigan and Wis- consin in February:

[20]

Sleet Storms

10,000 poles 20,000 crossarms 42,000,000 feet of bare copper wire 8,000,000 feet of covered wire 420,000 glass insulators

The assembly and shipment of these major items together with much miscellaneous material was entirely completed in nine days in each case, more than 50 per cent, of the whole being shipped in the first three days.

Loss Due to Storms Provided For

The losses in the property investment occasioned by sleet storms are, under the standard accounting of the Bell Companies, provided for, like other depreciation losses, by the reserve for depreciation. Suitable reserves are, of course, imperative in view of the hazards to which the telephone plant is exposed, both from the standpoint of the company, whose property may be destroyed and revenue cut off, and from that of patrons whose business and social needs require substantial continuity of telephone service.

The depreciation reserves of the Bell System are built up by charging to operating expenses regularly in monthly installments the amounts necessary, on the average, to provide for depreciation costs — including those caused by storms — during the service life of plant. This is the sound policy for the protection of the investor in Bell Telephone securities. In its absence the sleet losses of the past winter would be at this time a most dangerous and unsettling financial factor. As matters actually stand, the reserves of the Companies are charged and will absorb, without detriment to the investors, the entire storm depreciation costs, which were in excess of $7,500,- 000. This covers only the original cost of the plant destroyed and the cost of extraordinary repairs, including temporary facilities used in restoring service, minus net credits for salvage recovered. While an immediate expenditure of cash capital is required to reconstruct the

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Bell Telephone Quarterly

plant, this new capital is represented by new plant. In addition there must be reckoned the very considerable losses in revenue due to plant being temporarily out of service. Such losses cannot, of course, be charged as ex- pense but must be absorbed by the telephone companies out of their margin of surplus earnings of the past. Of the total storm destruction mentioned, the New England Bell Telephone Companies suffered to the extent of more than one and a half millions of dollars. The damage to the Long Lines Department of the American Telephone and Telegraph Company was nearly one million dollars. The damages to the Wisconsin Telephone Company and Michigan State Telephone Company were approxi- mately two millions of dollars. The Northwestern Bell Telephone Company had over nine hundred thousand dollars of plant destroyed, and The Pacific Telephone and Telegraph Company about six hundred thousand dollars. Not a single Bell Telephone Company in the country escaped. This storm damage is recognized as a part of the cost of furnishing telephone service. Some years it is heavier than others, but it is always a factor.

Allen B. Crtjnden.

[22]

The Recent Parliamentary Investigation of the Telephone Situation in Great Britain

THE telephone system of Great Britain comprises about 1,000,000 telephone stations, together with some 450,000 miles of toll, or " trunk," wires. The whole telephone plant is now owned by the British Government, with the exception of the local exchanges in the city of Hull and on the island of Guernsey in the English Channel, which are owned by the respective local authorities. The Government system is operated by the Post Office, which also operates the national tele- graph system as well as the postal service.

British Telephone History

While the operation of telephone service in Great Britain is now practically entirely in the hands of the Government, the telephone was introduced (in 1878) and was first developed by private companies. Almost from the very beginning of the service, however, the attitude of the Government was distinctly unfavorable to its development under private auspices. Ten years before the introduction of the telephone, legislation had been enacted which declared the operation of public telegraph service to be a Government monopoly, and the Government had accordingly acquired the various pri- vately owned telegraph properties. Telephone service had not long been in operation before the Postmaster General secured a court decision to the effect that a tele- phone system was a telegraph system within the meaning of the provisions of the Act creating the Government telegraph monopoly. Upon this decision the Govern- ment did not at once acquire the private telephone sys- tems as it was empowered to do, but adopted a policy of issuing limited licenses to private telephone companies. The terms of these licenses were such as to impede rather than to stimulate the development of the telephone business. They imposed restrictions upon the companies as to areas of activity and the acquisition of rights-of-

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Bell Telephone Quarterly

way; they levied a substantial royalty upon the gross earnings of the companies; and, finally, the licenses terminated in 1911 with no provision for the conduct of the business thereafter. Even under these restrictive licenses, however, a number of private companies under- took to develop telephone service in the various parts of the country; but by 1892 the various small companies had been consolidated into the largest company, the National Telephone Company, Ltd. In 1896 the toll lines of the National Telephone Company were acquired by the Government and the operation of the lines there- after was given over to the Post Office. Local telephone service, however, was still left in the hands of the Na- tional Company.

At this stage in the history of British telephony there arose a theory that competition in the telephone business would be desirable from the standpoint of both rates and service; and in 1899 legislation was enacted permitting municipalities to establish and operate tele- phone systems in competition with local exchanges of the National Telephone Company. But while telephone competition had considerable support in theory, it made little progress in actual practice. Very few municipalities took advantage of the legal authority accorded them to enter the telephone business; and of the municipal systems actually established only the two already men- tioned— those at Hull and Guernsey — have survived up to the present time. In 1900, the Post Office under- took the construction of a competing exchange in London; but even before this exchange had been completed and brought into operation, the Government recognized the futility of telephone competition and in 1901 made an agreement with the National Telephone Company which provided for a division of the London business, with identical rates and free intercommunication. In 1905 the Government, having definitely decided not to extend the license of the National Telephone Company, agreed to purchase the entire property of the Company at the expiration of its license in 1911. The property

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Telephone Situation in Great Britain

thus acquired, comprising 561,738 stations, was turned over to the Post Office.

Restrictive Influences upon Telephone Development

So far as underlying physical and economic condi- tions are concerned, it might reasonably be expected that the telephone development of Great Britain would be as high as, if not higher than, that in any other coun- try in the world. The territory of Great Britain is compact and is densely inhabited by a homogeneous population; her activities are chiefly industrial and com- mercial, and she ranks high in point of national wealth. As a matter of fact, however, the telephone develop- ment of Great Britain is exceeded by that of a number of other foreign countries, and in comparison with that in the United States is very low indeed. At the end of 1921 the number of telephones per 100 population was only 2.2 in Great Britain, as against 12.8 in the United States.

It is perhaps true that the British people are char- acterized by a certain conservatism towards the adoption of new methods, such as those involved in a widespread use of the telephone. But the failure of Great Britain to attain a telephone development commensurate with her natural advantages may be attributed only in small part to the influence of national habits. Undoubtedly the chief causes of the relative backwardness of British telephone development are to be found in conditions arising out of the relationship of the Government to the service. Governmental authority assumed virtual control of the telephone when the new art was first introduced into the country. The Government at once committed itself to a policy which, by the restrictive provisions incorporated in the franchises of the com- panies, distinctly hampered the free development of the service by private enterprise. By the time that efficient and adequate toll service had become an im- portant factor in stimulating telephone growth, the

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Bell Telephone Quarterly

Government had already acquired all the toll lines of the country and development was retarded by an insufficiency of toll facilities, with resulting adverse reactions upon service, which still persists. Moreover, at the stage of telephone progress when, judging from experience in the United States, a very rapid expansion, aided by proper rate policies, might have been expected through the extension of the service among the smaller users — with the consequent increase in the value of the service to the larger users — the Government further restricted the incentive of private enterprise by indicating that the National Telephone Company's license would not be extended after its expiration in 1911. The actual ac- quisition by the Government of the entire control and operation of the service in 1911 was a natural culmina- tion of a policy adopted thirty years previously.

The Latest Parliamentary Investigation

Public dissatisfaction with the British telephone service has been vigorously expressed for years. This dissatisfaction has been evidenced by constant criticism on the part of the press, by frequent complaints by public bodies, and by investigations by special committees of Parliament. The adverse criticism has been directed not against the character of the plant and equipment, which is in general comparable with the character of the physical property of the telephone systems in this coun- try, but rather against the defects in the scheme of administrative organization of the service and the re- sultant limitations upon efficient and economical oper- ation. The purpose of this article, however, is not to analyze the deficiencies which have been pointed out in these criticisms, but merely to consider the more im- portant aspects of the present telephone situation in so far as they are disclosed by the recent report of the latest Parliamentary investigation.

In 1920, a proposal involving further considerable general increases in telephone rates — a substantial in- crease in rates had been effected during the war period —

[26]

Telephone Situation in Great Britain

was brought forward by the Post Office authorities after an investigation by a Departmental Committee on Tele- phone Rates. Strong public opposition to this proposal developed, and a Parliamentary committee was ap- pointed, which, after a short investigation, approved the increases desired by the Post Office; and these in- creases were put into full effect April 1, 1921. Public dissatisfaction with the new rates continued, however, and assumed such proportions that the Government felt it advisable to have a second Parliamentary com- mittee appointed "to inquire into the organisation and administration of the Telephone Service and the method of making charges." This committee was not able to complete its work before the close of the Parliamentary session of 1921, and early in 1922 its members were re- appointed to constitute a third committee to complete the investigations of the second committee and to report its findings upon those matters which had been included within the scope of the second committee's inquiry.

In March, 1922, this third committee submitted a report* embodying its conclusions based upon the vo- luminous testimony taken by its predecessors, including memoranda of investigations made by members and representatives sent to the Continent and to the United States.

There is no indication that the Committee was influenced by political considerations; its report was a unanimous one, and impartiality and breadth of view are evident throughout its pages. This fact is important, because the impartiality and thoroughness of the Com- mittee not only lend added weight to its formal con- clusions, but also put significance into some statements in its report which might otherwise pass with little notice. At the same time, it should be borne in mind that the members of the Committee were, of course, not experienced in telephone operations; however, their sug- gestions as to the organization and business aspects of the

*Report from the Select Committee on the Telephone Service 1922, together with the Proceedings of the Committee. Ordered, by the House of Commons, to be printed, 20th March, 1922.

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Bell Telephone Quarterly

telephone service can undoubtedly be regarded as well founded.

At the very beginning of the Committee's report occurs this significant statement:

"Before dealing in detail with the terms of the reference, it seems proper to mention one observation or conclusion which has a general bearing. We have been impressed with the ca- pacity, assiduity and single-mindedness of the officials of the Post Office who have given testimony before us. They are men devoted to the public service, keenly watchful for its welfare, well skilled in their calling, untiring in their efforts, and with an intimate knowledge of their duties. Yet there is something wanting. No one acquainted with the evidence before your Committee can fail to be struck with the almost universal antagonism — often, it may be, unreasonable — manifested so widely and persistently against British telephone administra- tion. From study of or personal experience in the Scandinavian kingdoms your Committee learn that this spirit is not so preva- lent there, nor in Canada, nor in the United States, nor in Switzerland. The public in those countries are more disposed to approve the telephone management, and when they do not, they enter, in a sense, into friendly partnership with it to discuss alterations and devise improvements. In the British Isles this disposition is conspicuously absent. The public have little mind to help the Post Office, which we think unfortunate; the Post Office, on the other hand, have given some ground for saying that it appears to believe that the public was made for the Post Office, and not the Post Office for the public. It tends too much to a cast-iron application of regulations in an improper way. We do not wish to lay undue stress upon these character- istics, but we cannot leave them out of sight in submitting this Report."

The above passage is significant in emphasizing the necessity for the cultivation of good relations be- tween a public service and the public served.

Matters of Organization

In dealing in detail with the question of the organ- ization of the telephone service, the most important aspect which is discussed in the Committee's report is the proposal, often made before, that the operation of the telephone and telegraph services be separated from that of the postal service. The Committee recognized

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Telephone Situation in Great Britain

that the wire services are commercial in character to a greater degree than the mail service, and are much more technical. To quote —

" We have given much consideration to the question whether the Telegraph and Telephone Departments of the Post Office should be separated from the Postal Department or not. So far back as 1898 a Select Committee on Telephones reported with reference to telephone competition that it should be carried on by a distinct and separate branch of the Post Office, and should in future be conducted under strictly business-like conditions by a staff specially qualified for such a duty. This recommendation seems to have been put aside on the ground that the telegraph service had been merged into the postal service, and that there were serious objections to separating the department which was responsible for telephones from that directing the telegraphs. At that period this fortuitous combination of circumstances may have been natural, but we think it was a mischance for the telephones. In Sweden, Norway and Denmark the telegraph and telephone department is quite separate from that of the mails, and after years of experience this arrangement is in those countries held to be entirely justified. In Canada and the United States the mails are in the hands of the State, and the telegraphs and telephones are under private management with a certain degree of State control or regulation; and the marked progress of telephone development in all these countries is quoted as showing that the telephone administration has been handicapped in this country by its association with the mails. In the United Kingdom the carriage of letters has always been upheld as the main foundation on which Post Office manage- ment rests, and when the telegraph and telephone undertakings were in turn transferred to the Post Office, it seems to have been decided to patch them into the existing organisation rather than to alter the organisation to suit the extended conditions. This plan cannot rightly subsist if great telephone extension is the need of the country and should be its policy. Telephone business is essentially commercial, and if it is to be developed adequately it must be administered on commercial and somewhat inde- pendent lines. The official Post Office witnesses stated in evi- dence that the separation would involve great difficulties, while other competent representative authority supports it.

"Your Committee consider that the re-organisation of the telephone administration on more commercial lines is the fundamental requirement for efficient development, and that if it is carried out wisely it will prove a solution of most of the failings which have been disclosed. They accordingly recom-

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Bell Telephone Quarterly

mend the separation of the telegraph and telephone department on the one hand from that of the mails on the other."

In suggesting methods whereby its recommendation as to the separation of the wire services from the postal service might be effected, the Committee recommends the creation of a Department of Communications organ- ized along functional lines — at least in so far as super- visory positions are concerned — the development of this organization to be entrusted "to a body largely composed of men of wide administrative experience not connected with the Civil Service."

The only other point of general interest in the report in regard to organization is a brief but perhaps significant reference by the Committee to the possibility of turning the telephone service back to private operation:

"There is another topic which should be touched upon under the heading of organisation. It is not within our reference to consider the restoration of the telephone service to private enterprise, for which practically all United States authorities claim advantages. "

Matters of Administration

Under the heading of administration, the Committee discussed many matters, chief among which from the standpoint of interest to telephone men in the United States is the matter of service in rural areas.

The almost total failure of the British Post Office to provide service for the population of the rural areas is well known. Indeed, rural development is practically unknown, or at least entirely inadequate, in the case of nearly every country in which telephone service is oper- ated by the Government, largely because the needs of the farmers have not been properly considered in the preparation of Government rate schedules. This fact is recognized by the Committee, which takes the position, in general, that if the Post Office itself is not prepared to furnish service in ruralareas, it should not unreasonably restrict the initiative , of the farmers in arranging to provide telephone service for themselves:

[30]

Telephone Situation in Great Britain

"Another fundamental question of policy is the following. It must be definitely determined whether the Post Office tele- phone administration is to be entirely responsible for the de- velopment of all telephone service, or should on occasions let someone else perform it under Post Office sanction. Take, by way of illustration, sparsely-populated agricultural districts. Is the Post Office to employ its own official exclusively to maintain the service, or ought it to delegate a certain amount of responsi- bility to the subscribers themselves? Upon the correct solution of the problem here involved hangs largely the future of rural telephone development.* * * The witness who represented the National Farmers' Union advocated semi-private lines under Government supervision or licence, and seemingly desired that farmers should put up the wires and maintain the line. In Canada and the United States there are hundreds of small rural telephone companies or groups whfMe the members construct and operate a telephone system for their own use, linking up with the central system and paying a flat rate of from $3 to $9 per telephone for switching service. * * *

"Your Committee are of opinion that the Post Office has not taken a sufficiently broad view of this general question of rural telephone development, and has failed to realise that the advantages of extending the system into rural areas are shared by other classes of subscribers. It is incumbent on our telephone administration to have a definite policy of development, and it should consider how far, in the interests of the system as a whole, it is prepared to go towards making the telephone service available throughout the Kingdom at a cost within reach of the inhabitants of rural areas. In other countries the initiative is usually taken by the prospective subscribers, and, though allowance must be made for different national characteristics, your Committee believe that a great deal might be done in country districts here to stimulate greater co-operative effort."

American telephone men will naturally agree with the principle involved in the Committee's recommenda- tions as to the employment of private initiative in the development of rural areas. Even under British condi- tions, however, there are probably two sides to the proposition somewhat timidly advanced by the Com- mittee that municipalities and other local authorities not necessarily in rural areas be permitted to meet their own telephone needs under certain circumstances and

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Bell Telephone Quarterly

with certain safeguards. It seems significant that the Committee should recommend that:

"Any area should be allowed to become responsible for its own telephone system on condition that it can show that (i) tele- phone facilities are not available at reasonable rates; (ii) a responsible authority is prepared to undertake the work; (iii) proper financial guarantees are forthcoming; and (iv) definite plans and estimates have been prepared, and oppor- tunity given to the Post Office for approval or criticism. Should the purchase of existing plant be contemplated, the value would be assessed by the Railway and Canal Commission unless the parties could agree upon the price to be paid. If new plant is required, it might be supplied at cost price through the Post Office, which by reason of the large purchases the Post Office makes ought in ordinary circumstances to be at less cost than the responsible authority could purchase for themselves."

It is also interesting to note that the Committee made no sweeping declaration either in favor of or against automatic telephony. After briefly commenting on this type of apparatus, the report states:

"The quality of the service is a point on which public opinion has a right to be heard, but the means of attaining it is a technical matter which is chiefly one for the administration."

In the domain of finance, the Committee was naturally desirous of suggesting possibilities for reductions in expenses which would permit a general rate reduction; the report, however, contains only two recommendations of this character. First, it recommends that there be a substantial reduction in the amounts currently charged against revenue in respect of depreciation. The reasoning behind this recommendation is by no means clear, and it is impossible without more information on the ac- counts and finances of the system in recent years than has been made public to reach a definite conclusion as to the soundness of the Committee's views in this technical matter. Second, the Committee recommends a change in accounting practice by which the overhead expenses in connection with new construction and renewals would be charged to capital account and to the " Depreciation

[32]

Telephone Situation in Great Britain

Account," respectively, instead of being "debited to the year's revenue" as is the present practice. So far as the brief reference to the matter in the report permits conclusions to be drawn, and without a clear understand- ing of the term "overhead expenses" as used, the changes involved in this recommendation appear to be in accord with the Bell System accounting practice whereby cer- tain overhead expenses are distributed over direct charges to Construction, Removal and Maintenance costs — the portion cleared to Removal expense being charged ultimately to the Depreciation Reserve. The Committee estimated that the reductions in operating expenses that would result from the adoption of these recommendations would be equivalent to a horizontal rate reduction of probably not less than 8 per cent.

Before leaving the subject of administration, the Committee cited an example of the unfavorable reaction of deficient administration upon service:

"Delays in transmission are traceable to several sources, the chief among them being an insufficiency of trunk lines. The trunk system, which has been operated by the Post Office since 1896, is admitted by them to compare unfavourably with the long distance service in America, and your Committee believe the main cause to be that the Post Office do not persistently grasp the fact that the public will not freely use the system unless they can rely upon prompt communication at the lowest possible tariff, and that the provision of really adequate facilities creates a demand for trunk service."

Rate Matters

In considering the comments and recommendations of the Committee in regard to telephone rates, it should be remembered that the rates in effect at the time of the Committee's inquiry were substantially those pro- posed by the Post Office Departmental Committee on Telephone Rates in 1920 and put into full effect April 1, 1921. These rates put every subscriber in Great Britain upon a readiness-to-serve charge system of rates, with- out differentiation between business and residence service.

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Bell Telephone Quarterly

The readiness-to-serve charge was $37.40 (£8-10-0) in London; $35.20 (£8-0-0) in the largest four cities except London (Birmingham, Glasgow, Liverpool and Man- chester); and $33.00 (£7-10-0) in all other places. The rate for each local call was 2% cents (lj^d.) and was the same throughout Great Britain. Party lines were not provided for, except in the case of subscribers distant more than a mile from a central office.

It would be interesting to undertake a detailed com- parison of telephone rates in Great Britain and in the United States. It is obvious, however, that such a comparison would be exceedingly difficult, if not impossi- ble, since proper allowance cannot be made for the in- fluence of such factors as the difference in price levels between the two countries, the radical difference be- tween the structures of the rate systems, and the equally important differences in the scope and quality of service provided under the rates. Nevertheless, it is possible to compare approximately the average telephone rate increases which have taken place in the two countries since the beginning of the World War. In Great Britain the increases carried by the rates introduced on April 1, 1921, brought exchange rates to a level officially esti- mated to be 80 per cent, over pre-war and brought toll rates to about 100 per cent, above pre-war. In the United States the exchange rates of the Bell System were only about 35 per cent, higher at the end of 1921 than in 1914, while the toll rates were only about 20 per cent, higher.

In setting up their rate system, the Departmental Committee on Telephone Rates was largely influenced by the cost-of-service theory of rate-making. The Committee attacks this theory in the very first para- graph of that section of its report which deals with rates, quoting with approval an American statement made in 1901, or over 20 years ago, that "it is wise and just to base rates on other considerations than cost" in large as well as small communities. In the Committee's own words :

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Telephone Situation in Great Britain

"The preceding observations bring into prominence the conclusion that general telephone extension and rural telephone development are very closely allied, because rural development has little chance of taking place freely without distribution of expenses on the basis, just suggested, of value for services rendered. * * * It is an acknowledged circumstance that a high development in residence telephones is a great factor in accelerat- ing general development, and this consideration leads to the prevalent practice in Canada, the United States, and other countries of offering residence connections at lower rates than business connections, although such a course cannot always be justified on a cost basis. * * *

" It is no doubt easier to make a uniform rate which applies to the whole of Great Britain. * * * But the inflexibility of such a rate militates against development, as it ignores local condi- tions and the linking-up of community of interests which can so judiciously foster it. In agricultural districts, for instance, communication with a market town is often a crucial matter, and such rates cannot be satisfactory if based on absolute distance. Numerous instances of hardship inflicted by the rigid application of one adamantine rule for differing conditions have been brought before us. Forcible argument has been adduced against rural areas, which have natural disadvantages arising from few or remote subscribers, having to pay the same uniform rate as in town areas. If they cannot be supplied more cheaply, they ask to be allowed to try for themselves. While your Committee fully recognise the necessity for basic principles, the application of these principles to local requirements should be a matter of careful study with a view to obtaining the maxi- mum traffic at the lowest possible cost."

These are strong statements, but there will be little inclination on the part of telephone men in this country to dispute the principles which they express, or to dis- agree as to the restrictive effect upon development of the kind of rate schedule to which they refer.

In regard to the total abolition of flat rates in all exchanges and the setting up of a universal system of readiness-to-serve charges with no differentiation be- tween business and residence service, which were effected by the April 1, 1921, rate change, the recommendations of the Committee are either not comprehensive or not technically sound. The utmost that the Committee felt able to recommend is the following (" message rate"

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Bell Telephone Quarterly

being the equivalent of " readiness-to-serve " in Bell System terminology) :

"Your Committee, after giving their most careful attention to all the above considerations, have arrived at the following conclusions: — (i) We recommend that the message rate be the broad basis of any method of charging; (ii) we are convinced that for business lines in a large city the flat rate stands con- demned, while for very small places or for residences in restricted areas, although theoretically objectionable, it may be the means of accelerating development; and (iii) on the ground that de- velopment will be encouraged, we think that, without departing very largely from the basis of the message rate, some principle of differentiation or elasticity is desirable, as, for instance, by charging a lower annual installation rental for residences than for business premises."

Experience in the United States indicates that the conclusion that the readiness-to-serve charge system of rates is the proper basis for charging is fundamentally incorrect. Such a system of rates restricts use of the telephone to a marked extent, thereby reducing the value of the service and tending to restrict development. It would appear that the desire of the Committee, fre- quently expressed in its report, that telephone service should be widely distributed in Great Britain is not likely to be realized under such a rate system.

The final conclusion of the Committee as to rate reductions, which is of a very general character and is based apparently upon their consideration of possible reductions in operating expenses, is given in the following statement:

"If our conclusions are approved, we recommend an im- mediate reduction of 10 per cent, on subscribers' accounts provisionally and without prejudice to any subsequent rear- rangement to carry out our recommendations."

The Committee's report ends with the following comment:

"Your Committee are very much alive to the fact that the financial success of some of these recommendations is dependent upon a better spirit of co-operation between the Post Office and the public. To secure this success a more sjTnpathetic recogni-

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Telephone Situation in Great Britain

tion is vital by the Post Office, on the one hand, that the public are human beings with human feelings and frailties, and not mere automatons for making the telephone accounts balance; and by the public, on the other, that there are often real hidden technical difficulties and that an attitude of chronic suspicion does not help to solve them."

The Aftermath of the Investigation

Just what will be the ultimate effect of the findings and recommendations of the Committee upon the future administration of telephone affairs still remains to be seen. As regards telephone rates, a downward revision of rates to take effect July 1st of this year was announced by the Post Office shortly after the publication of the Committee's report, this revision apparently being based upon the decline in wages, amounting to about 20 per cent., which has arisen out of the reduction of cost of living bonuses which has followed the fall in prices. However, the announcement of the new rates indicates that no change in the readiness-to-serve charge system of local rates has been made, except that a moderate differential has been provided in the readiness-to- serve charge as between business service and residence service.

As regards the organization and administration of the service, Post Office authorities have definitely stated that the Committee's proposal for the separation of the wire services from the postal service will not be accepted; and, so far as is known, no official action has been taken as to any of the other vital improvements which were so forcefully recommended in the Committee's report.

In its report, the Committee was not slow to praise American telephone organization and its results; and the telephone men and women of the United States may rightfully feel gratified at the favorable recognition accorded by the Committee to the service, development and administrative methods for which they are responsi- ble. However, when the adoption of American methods

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Bell Telephone Quarterly

is recommended in government organizations, the in- flexibility of governmental institutions proves an in- surmountable barrier.

S. L. Andrew.

Editorial Note:

It is difficult to reach an exact conclusion as to the amount of reduction in the new rates, announced by the Postmaster General to take effect July 1st, as compared with the rates which were super- seded. Apparent^, however, the new rates still leave the general level of exchange rates about 60 per cent., and of toll rates about 80 per cent., higher than before the War. The following extract from a debate in the House of Commons on May 4th on Post Office affairs shows that some of the suggestions made by the Parliamentary Committee were considered by the Post Office in determining the new rates, and also illustrates some of the difficulties which arise in attempts to compare British rates with American rates:

"The Postmaster General (Mr. Kellaway):

"I come now to a part of the service which has always occupied my mind a good deal, and that is the provision of improved telephone facili- ties in the country districts. The present charges are undoubtedly prohibitive, and amount in a great number of cases to a rental of as much as £20 (§88.00) per annum. This is due to the fact that you have heavy capital charges in connection with most of the rural extensions. The Select Committee attach great importance to this point, and I have been influenced a great deal by their recommendation on this subject in the proposal which I am about to make. Where not less than eight sub- scribers can be obtained the rental will be £8 ($35.20). The instalment rental will be £8 (S35.20) per subscriber, the local and trunk fees being charged according to the ordinary tariff, and in the case of subscribers at a distance of more than one mile extra mileage will be charged at the standard rate. I think that is a very substantial reduction compared with the present rates. (An Hon. Member: 'What is the amount of the reduction?') The present charge is £20 ($88.00) and it is proposed to reduce it to £8 ($35.20), and therefore the amount of the reduction is £12 ($52.80). A day sendee only will be provided for this class of users, but the cost of the night service, if required, can be met by an additional charge on the subscribers themselves.

"Lieut. Colonel Wheler* 'What does a day service actually mean?'

"Mr. Kellaway: From 9 A.M. to 7 or 8 P.M. It will be necessary in this case to ask for an agreement for a minimum of three or eight years, according to the capital cost involved."

(Rates in Great Britain have been converted into TJ. S. dollars at the current rate of exchange.)

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Conference of Personnel Group

IF anybody was to ask me what was discussed at the recent conference of the Personnel Group which I had the privilege of attending in April, I should answer in two words — "Team Work." The conference held continuous sessions for a week and all of the papers and the discussion dealt with team work and the results which can be accomplished through it — team work be- tween all employees and all departments; team work, which involves everyone from the j^oungest splicer's helper to the superintendent of plant; from the newest operator to the superintendent of traffic; from the clerk last enrolled in the commercial office to the general commercial superintendent; from the office boy to the general manager and the president. Team work was dis- cussed from every point of view: from the point of view of the morale which must go with it; of the confidence there must be between the various individuals of the organization and the various sections of the organization; from the point of view of the information that the mem- bers of the team must have as to objectives, and from the point of view of what the objectives themselves were and should be.

Comparatively speaking, the team work of the Bell System has always been good. The system has been noted among industrial and public service corporations for this characteristic. During and immediately subse- quent, to the war, however, there was a general let-down in the morale of all organizations and the Bell System was not free from the effect of these influences. Im- mediately after the management of the telephone prop- erties was returned from Federal control by the Post- master-General, an intensive study of this question was taken up and efforts were made throughout the whole Bell System, not only to restore the morale and the team work to the pre-war standards, but to exceed these standards wherever possible, and without question it is always possible to exceed a team work standard, because

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Bell Telephone Quarterly

it is impossible to conceive of team work which is so perfect that it cannot be better.

The record of achievement which was reported at the conference was truly a remarkable one, not only in what had already been accomplished, but in the clear indica- tions of what still can be attained by continued and further applications of the work discussed. What took place at the conference may be naturally divided into three parts.

First — reports by representatives of the general staff in regard to the objectives and plans in connection with operation and the part that employees' representation could take in assisting in the attaining of these objectives. Mr. R. H. Burcher, Assistant Vice President, presented a paper on " Operating Objectives of the Bell System and How and Where Personnel and Public Relations Activities Can Help to Attain Them." Mr. R. F. Estabrook, Traffic Results Engineer, presented a paper entitled, "Carrying Out the Public Relations and Personnel Relations Policies in Traffic Work," and Mr. F. P. Valentine, Assistant Commercial Engineer, gave a paper on "Some Business Aspects of Telephone Operations."

These papers combined gave a picture of the operating problems from the Plant, Traffic and Commercial stand- points, discussing the objectives and showing how through team work and the cooperation of all results could be obtained which otherwise were not obtainable.

Second — were a number of papers of operating officials of various Associated Companies dealing with the work already accomplished through employee representa- tion. Mr. H. L. Badger, General Superintendent of Plant, Bell Telephone Company of Pennsylvania, de- scribed employee representation in the Plant Department of that company. Mr. Verne Ray, Superintendent of Maintenance, Illinois Bell Telephone Company, described the operation of the public relations committees and the pink ticket plan in use in Chicago. Employee repre- sentation in the Traffic Department of the American Telephone and Telegraph Company was discussed by

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Conference of Personnel Group

Mr. J. L. R. Van Meter, General Traffic Manager of the Long Lines Department, and the operation of service committees in the Traffic Departments was described by Mr. R. L. Barrows, General Supervisor of Traffic, Bell Telephone Company of Pennsylvania; Mr. Hermann Thomas, General Supervisor of Employment, Long Lines Traffic Department, American Telephone and Telegraph Company, and Mr. B. J. Bowen, General Superintendent of Traffic, New England Telephone and Telegraph Company. "Demonstration Switchboards — Their Usefulness with Employees and the Public," was presented by the Honorable Franz C. Kuhn, President of the Michigan State Telephone Company.

Third — were papers which dealt particularly with team work for other than the operating features of the telephone problem. The Hon. D. F. Houston, President of the Bell Telephone Securities Company, gave a talk on telephone financing and sale of preferred stock to sub- scribers ; Mr. W. P. Banning, of the Information Depart- ment of the American Telephone and Telegraph Com- pany, talked on "Motion Pictures for Employees and the Public," and Mr. W. J. O'Connor, of the Southwestern Bell Telephone Company, on the "How and Why of Per- sonnel Work in the Bell System."

The papers referred to above, all of which except Mr. Houston's have been printed and distributed, by no means include all that came before the conference. Oral reports were made by many operating officials and others of the results which they had been obtaining. These reports were equally as interesting as the papers, and even they left undescribed much which is going on in various companies. Mr. J. P. Downs, General Traffic Manager of the New York Telephone Company, discussed public relations work in the Traffic Department of that com- pany, and Mr. W. H. Winter, General Superintendent of Plant of the Bell Telephone Company of Canada, made a most interesting statement as to