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Western Electric Company (sometimes abbreviated WE and WECo ) was an American electrical engineering company, the manufacturing arm of AT&T from 1881 to 1995. It was the scene of a number of technological innovations and also some seminal developments in industrial management. It also served as the purchasing agent for the member companies of the Bell System.

History

In 1856, George Shawk purchased an electrical engineering business in Cleveland, Ohio. In 1869, he became partners with Enos M. Barton and, later the same year, sold his share to inventor Elisha Gray. In 1872 Barton and Gray moved the business to Clinton Street, Chicago, Illinois and incorporated it as the Western Electric Manufacturing Company . They manufactured a variety of electrical products including typewriters, alarms, and lighting and had a close relationship with the telegraph company Western Union to whom they supplied relays and other equipment.

In 1875, Gray sold his interests to Western Union, including the caveat that he had filed against Alexander Graham Bell's patent application for the telephone. The ensuing legal battle over patent rights, between Western Union and the Bell Telephone Company, ended in 1879 with Western Union withdrawing from the telephone market and Bell acquiring Western Electric in 1881.

Western Electric Company was the first company to join in a Japanese joint venture with foreign capital. It invested in Nippon Electric Company, Ltd. in 1899. Western Electric held 54% of NEC at the time. Their representative in Japan was Walter Tenney Carleton.

A few years later WECO secretly purchased controlling interest in Kellogg Switchboard & Supply company, a principal competitor, but was forced by a lawsuit to sell.

Early on, Western Electric also managed a thriving electrical distribution business, furnishing its customers with non-telephone products made by other manufacturers. This electrical distribution business was spun off from Western Electric in 1925 and organized into a separate company, Graybar Electric Company.

Bell Labs was half-owned by Western Electric.

Development of a monopoly

In 1915, Western Electric Manufacturing was incorporated in New York, New York as a wholly owned subsidiary of AT&T, under the name Western Electric Company, Inc .

All telephones in areas where AT&T subsidiaries provided local service, all components of the public switched telephone network (PSTN), and all devices connected to the network were made by Western Electric and no other devices were allowed to be connected to AT&T's network. AT&T and Bell System companies were rumored to employ small armies of inspectors to check household line voltage levels to determine if non-leased phones were in use by consumers.

Western Electric-made phones were owned not by individual customers, but by local Bell System telephone companies. — all of which were in turn owned by AT&T, which also owned Western Electric itself. Each phone was leased from the phone conmpany on a monthly basis by customers, who generally paid for their phone and its connection many times over in cumulative lease fees. This monopoly made millions of extra dollars for AT&T and Western Electric, which had the secondary effect of subsidizing telephone service, which kept basic local phone service very low - under $10 per month, including the leased phone. After divestiture, basic dial tone service went up in price by leaps and bounds, and the customer was now responsible for all of his wiring and telephone equipment. Many phones made by Western Electric carried the following disclaimer permanently molded into their housings: "BELL SYSTEM PROPERTY—NOT FOR SALE." Telephones also labeled with a sticker marking the Bell Operating Company that owned the telephone. To increase revenues, the Bell System sometimes remodelled older-design returned phones with new housings, then leased them for use in new installations. The longevity of Western Electric phone models and the limited number of new designs was a direct result of AT&T and Bell System control of new phone sales in a monopolistic system.

AT&T also strictly enforced policies against buying and using phones by other manufacturers. A customer who insisted on using a phone not supplied by the Bell System had to first transfer the phone to the local Bell monopoly, who leased the purchased phone back to the customer for a monthly charge plus a 're-wiring' fee. In the 1970s, after some consumers began buying phones from other manufacturers anyway, AT&T changed its policy for its Design Line telephone series by selling customers the phone's housing, retaining ownership of the mechanical components — which still required paying AT&T a monthly leasing fee.

Until 1983, Western Electric telephones and/or their inner mechanical components could only be leased by subscribers and never sold, and so had to be repaired at no charge if they failed. This led Western Electric to pursue extreme reliability and durability in design in hopes of minimizing service calls. In particular, the work of Walter A. Shewhart, who developed new techniques for statistical quality control in the 1920s, helped lead to the legendary quality of manufacture of Western Electric telephones. In 1983, Western Electric telephones began being sold to the public through the newly created American Bell subsidiary of AT&T, under the American Bell brand name. One of the terms of the Modification of Final Judgment that led to the Bell System divestiture prohibited AT&T from using the Bell name after January 1, 1984; prior to this, AT&T's plan was to market products and services under the American Bell name, accompanied by the now familiar AT&T globe logo.

One of AT&T's integrated rivals in providing phone service within the U.S., General Telephone and Electronics (GTE), also operated an equipment manufacturing arm, Automatic Electric.

In 1905 Western Electric began construction of the Hawthorne Works on the outskirts of Chicago and which, by 1914 had absorbed all manufacturing work from Clinton Street and Western Electric's other plant in New York. Later large factories included the Kearny Works and Columbus Works.

Technological innovations

In 1928, Western Electric issued the first American telephone with a single handset, having both the transmitter and receiver placed thereon (previous telephones had been of the "candlestick" type). This telephone was known as the "102" phone, and had a round base; it was succeeded in 1930 by the "202" phone, which featured upgraded electronics (sidetone suppression) and a more stable oval base.

The next significant upgrade came in 1937 with the introduction of the "302" phone. Designed by the noted industrial designer Henry Dreyfuss, this telephone included the ringer within its rectangular housing; previous models (including the candlestick) had required a separate bell box called a "ringer box". The 302 was followed by the "500" phone, which would become the most extensively-produced telephone model in the industry's history. Initially released in 1949, it was continually updated over time, reflecting new materials and manufacturing processes, such as quieter and smoother dial gearing and a printed circuit board in the "network" (the phone's circuit module). The Model 500 was discontinued in 1986, in favor of a Touch-Tone version that also electronically emulated a rotary dial.

Other innovations included the Princess telephones of the 1950s and Trimline telephones of the 1960s, and the development of Touch-Tone dialing as a replacement for rotary dialing.

In 1929, Western Electric was also a big player in early cinema sound systems. It created the Western Electric Universal Base, a device by which early silent cinema projectors could be adapted to screen sound films. It also designed a wide-audio-range horn loudspeaker for cinemas. This was estimated to be nearly 50% efficient, thus allowing a cinema to be filled with sound from a 3-watt amplifier. This was an important breakthrough in 1929 because high-powered audio valves were not generally available back then.

In addition to being a supplier for AT&T, Western Electric also played a major role in the development and production of professional sound recording and reproducing equipment, including: