1918: A Pivotal Year for Philadelphia's Telephone Industry

Many may not know that much of early telephone history took place in Philadelphia.

In fact, Philadelphia is where Alexander Graham Bell first shared his invention with the American public when he introduced it at the Centennial Exhibition of 1876. In 1877, the world's first intercity phone call was made between Philadelphia and New York City. AT&T's first underground cable was built in 1912 between Philadelphia and Washington, DC.

But what about the history of the average Philadelphian actually being able to use a phone themselves?

According to Lucy Davis, in 1877, fifteen customers became the first Philadelphians to take advantage of the Bell Telephone Company of Philadelphia. In 1890, the number had only grown to 3,300.

Bell's slow growth can be credited to the fact that it took a while to set off public demand for telephones. Additionally, by 1900, the Bell Company faced new competition when Pennsylvania Congressman Robert H. Foerderer founded the Keystone Telephone Company.

*"The Commercial Exchange Building, later the Keystone Telephone Building, home of the Keystone Telephone Company from 1901 to 1944." Courtesy of https://hiddencityphila.org/2013/01/wired-city/.

As a much smaller company than Bell, Keystone advertised its local focus as a way to establish faster connections within Philadelphia. As Davis explained, a smaller number of operating centers meant that "Keystone telephone numbers were only five digits long," allowing for faster dialing than Bell's seven digit numbers. The competition in Philadelphia was so fierce that the companies even constructed exchange centers directly across the street from each other.

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The building on the left was constructed by Bell in the early twentieth century, while the one on the right belonged to Keystone. The photo was taken on Preston Street by Lucy Davis for The Encyclopedia of Greater Philadelphia.

In 1944, however, Bell won when it purchased Keystone. Though it was still years prior to the purchase, 1918 was a crucial year for establishing Bell's relative popularity within Philadelphia that allowed for its later acquisition of Keystone.

Big Business Wins

Davis noted that, "by 1917, there were 175,000 Bell Telephone subscribers and 450,000 miles of telephone wire in Philadelphia." In other words, approximately 9% of Philadelphia's total population subscribed to Bell. The company used its growing customer base to finance the purchase of other Pennsylvania competitors. The September 1918 purchase of the Central District Telephone Company was the first of these purchases. The bigger company was getting bigger.

Throughout 1918, both Keystone and Bell advertised for new (female) operators pictured below.

Keystone's advertisement was printed on January 2, 1918, while Bell's was printed two days later.

While the advertisements imply that both companies were growing, newspaper articles reveal that Bell grew at a much faster rate. Throughout 1918 the Philadelphia Inquirer highlighted national telephone stocks. During the war, trading was down overall. Keystone, however, had an especially hard time. The stock hit a record low on April 18, 1918. That record was then broken on May 28, 1918. These stock downturns reflected profits. On March 13, 1918, the Inquirer reported that, in the first two months of the year, Keystone's operating expenses increased by $23,477. The company's gains could not keep up with these increased costs, leading to a net income decline of $7,581.

A company as small as Keystone was overwhelmed by wartime demands for telephone use, while a company as large as Bell used the demand to their advantage. On March 30, 1918, just 17 days after the Inquirer reported Keystone's financial woes, the Philadelphia Tribune ran the article, "Summery From Annual Report Shows Greatness of Bell Telephone System." The article, which is pictured below, highlighted Bell's extensive growth during 1917.

Philadelphia Tribune (1912-2001); Mar 30, 1918; ProQuest Historical Newspapers: Philadelphia Tribune pg. 1

Though it would be another twenty-six years before Bell officially purchased Keystone, exploring the business trends of 1918 reveal Bell's dominance years earlier.

Sources:

"The Bell Telephone Co. of Pennsylvania." Harvard Business School Baker Library Historical Collections. https://www.library.hbs.edu/hc/lehman/company.html?company=the_bell_telephone_co_of_pennsylvania.

Davis, Lucy. "Telephones." The Encyclopedia of Greater Philadelphia. 2017. http://philadelphiaencyclopedia.org/archive/telephones/.

Kyriakodis, Harry. "Wired City." Hidden City Philadelphia. January 14, 2013. https://hiddencityphila.org/2013/01/wired-city/.

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