History: Vail, Monopoly, AT&T

[David Farber <farber () central cis upenn edu>]

From: haynes () cats ucsc edu (James H. Haynes)
Subject: History: Vail, Monopoly, AT&T
Date: 30 Mar 1994 06:51:05 GMT
Organization: University of California, Santa Cruz




There's some interesting stuff in the new book, "The Story of
Telecommunications" by George P. Oslin.  Oslin is the 93-year-old
former PR man for Western Union.  A lot of the following is quoted
from the book, slightly altered.


Theodore N. Vail was related to Alfred Vail, one of Morse's partners
and one of the most important inventors in early telegraphy.  Theodore
was a telegraph operator, got a job as a mail clerk on trains, and
improved mail handling so much that he was called to Washington in
1873 to improve the railway mail.  In 1876 he was appointed General
Superintendent of Railway Mails.  He quit to join the Bell Telephone
Company in 1878.  He was given charge of the territory within a
33-mile radius of New York.


An experimental office was used at the Holmes Burglar Alarm Company at
194 Broadway [note that Western Union headquarters, and later AT&T
headquarters was at 195 Broadway].


AT&T was incorporated in 1885 as a long-distance subsidiary of
American Bell, with Vail as president.  He resigned as president in
1887 because he was dissatisfied with the American Bell president and
directors declaring a dividend payment instead of plowing the profits
back into the company.


In 1907 AT&T was was in dangerous financial condition.  The bankers
asked Vail to return as president.  At first he refused, saying that
at sixty-two he was too old, but he had just sold a South American
transit development for $3 million, his wife and son had died, and he
needed to keep busy, so he accepted.


At the time Western Union had a near monopoly on the telegraph
business.  It was owned by Jay Gould and run by his man Thomas Eckert;
they ran the business for their own profit and left it in seedy
condition.  Vail in contrast stressed service, cultivated public
relations, was popular with the press for keeping the public informed.


In 1909 AT&T was rich enough and WU was poor enough that AT&T bought
control of WU and made Vail the president.  Goes on to tell how Vail
made over WU with redecorating offices and raising salaries.  AT&T
moved its headquarters into the WU building at 195 Broadway after a
$1.3 million improvement.  In 1913 the Justice Department complained
about the communications monopoly and AT&T agreed to divest WU.
Newcomb Carlton because president of WU and continued Vail's policies
there.  Vail resigned from AT&T because of ill health in 1919 and died
the following year.




haynes () cats ucsc edu  haynes@cats.bitnet