The largest mistake of management for all history of the American business.

Progress came slowly after the original invention. Bell and Watson worked constantly on improving the telphone's range. They made their longest call to date on October 9, 1876. It was a distance of only two miles, but they were so overjoyed that later that night they celebrated, doing so much began dancing that their landlady threatened to throw them out. Watson later recalled "Bell . . . had a habit of celebrating by what he called a war dance and I had got so exposed at it that I could do it quite as well as he could." [Watson] The rest of 1876, though, was difficult for Bell and his backers.

Bell and Watson improved the telephone and made better models of it, but these changes weren't enough to turn the telephone from a curiosity into a needed appliance. Promoting and developing the telephone proved far harder than Hubbard, Sanders, or Bell expected. No switchboards existed yet, the telephones were indeed crude and transmission quality was poor. Many questioned why anyone needed a telephone. And despite Bell's patent, broadly covering the entire subject of transmitting speech electrically, many companies sprang up to sell telephones and telephone service. In addition, other people filed applications for telephones and transmitters after Bell's patent was issued. Most claimed Bell's patent couldn't produce a working telephone or that they had a prior claim. Litigation loomed. Fearing financial collapse, Hubbard and Sanders offered in the fall of 1876 to sell their telephone patent rights to Western Union for $100,000. Western Union refused.

 

Mistake of a century

Business Western Union at that time promptly extended. For the first 11 years of the existence this company has increased the capital in 110 times. Hubbard has offered the patent for phone to it for ridiculously low price which at all did not defray all charges on researches. But president Western Union William Orton has considered the new device as a frivolous toy and the transaction has refused. The management of the prospering company did not see sense in mastering new services. It became one of the largest mistakes of management for all history of the American business.
Having received from a gate the turn, the angered Hubbard has refused attempts to sell the patent. Partners have decided to develop business independently. One more wise decision became creation of the separate enterprise which would be engaged in operation of the invention. So, on August, 1st, 1877 has appeared Bell Telephone Company, served 778 telephone lines.