The true tale of the Telephone and Western Union

Reading Time: 5 minutes

The Smartphone is a necessity today. We use it to send and receive text messages, take and display photos and videos, play music or games, surf the internet, road navigation, play virtual reality stuff and oh yeah make phone calls. New iPhone releases are events in themselves, where people sleep outside the Apple store before the day of the release, just to be the first one to own and operate the iPhone. The three things you can’t leave your house with now are your keys, wallet or purse, and cellphone. The telephone invention and patent is a million-dollar idea, that is still giving and producing to society at large. Imagine if you had the opportunity to get in on the ground floor of the Telephone and passed? This event really did happen and is the topic of today’s post.

Alexander Graham Bell was a teacher for the hearing impaired and an amateur inventor in his spare time. He was asked by a group of investors, one of which was his father in law Gardiner Hubbard, to help perfect the harmonic telegraph. The device allowed for multiple messages to be sent over a wire simultaneously. The telegraph was the primary mode of communication at the time, so the harmonic telegraph would have improved on the telegraphic process.

Bell, however, was more interested in developing a voice transmission device, he would later call the Telephone. The investors allowed Bell to work on both inventions with the majority of his focus on the harmonic telegraph. As one can guess from my earlier paragraph, the phone won out.

On March 7,1876, Bell was awarded a patent on the device, and three days later he made his first successful phone call to his assistant Thomas Watson. Watson would hear Bell’s words transmitted through the phone: “Mr. Watson, come here, I want you.”

Gardiner Hubbard, and Chauncy Depew were work colleagues with the railroad in NYC. The pair became friendly while Bell was still perfecting the Telephone. Bell had a few investors already but always needed more money. (who doesn’t?)
One day, Hubbard went into Depew’s office and had a friendly little chat. According to the January 1898 edition of a magazine called Electrical World. The conversation went something like this:

Hubbard:

“Depew, I have a son-in-law. He is a bright young fellow named Bell. He is a student, and not very practical in his ideas. He has invented a talking telegraph. It is a wonderful sort of an arrangement. I think it has wonderful possibilities in it for short communication for use in villages and other places and will save a great deal in messenger-boy fees, and so on. I don’t think that it will ever be of much use for long-distance messages, but it seems like it will have a field of its own.”

Depaw:

“In those days Hubbard had no money, and I had only a little. He suggested to me that I take an interest in the invention, and made a proposition that I advance $ 10,000 for which he would give me a sixth interest in the patent. I said I would think it over. The next day I went downtown and saw William Orton, who was at the time the President of the Western Union Telegraph Company. I laid the matter before him fully. He said to Me:

Orton:

“Depaw, you haven’t got much money, and as a friend, I don’t want to see you lose what you have got. That invention is practically worthless. It will never amount to anything. If it should, however, we hold prior rights upon the idea, of which Bell’s patents are simply an infringement. Don’t throw your money away!”

Depaw took Orton’s advice and didn’t invest in Bell’s Patent. At the time Depaw told the story for Electrical World in 1898, Depaw estimates his investment (if he made it) would be worth $ 30,000,000.

What Orton was talking about besides giving lousy investment advice was that in 1874, Antonio Meucci sent a telephone model and technical details to Western Union. Mr. Meucci, not only did not get a meeting with Western Union, they never gave him back his stuff and claimed to have lost it. This was 2 years before Bell’s patent was awarded. One can assume Western Union kept Meucci technical details and was trying to come up with the telephone invention themselves, but Bell beat them to the punch.

Bell company would go on to fight a 20 year legal battle over who really invented the Telephone, Bell emerged victoriously, and that’s why we know him as the inventor of the Telephone today. Depaw to his credit, looked at the miss investment chance as a blessing. He stated that if he had invested, he would have stopped working, got lazy, and just start consuming himself to death. Got to admire the guy for seeing the glass as half full.
A lot of sites including Wikipedia, wrongfully retell this story. In the retelling, Depew is a bigwig at Western Union, and Bell’s crew asked him for $100,000, not $10,000. Depew turns them down and gives them the speech Orton gave him.

Mistakes Were Made:

$10,000 is a lot of money still today. If you weren’t rich and someone came to you to invest 10k in some new technology, would you do it? Keep in mind that you go to someone you trust who’s well versed in the field and he or she tells you not to throw away your money, would you still invest? Most people will say yes, having the ability of hindsight, but I think most people will do just what Depaw did. Most people aren’t risk-takers and will take the “safe” and secure path. Can you blame them? Life is hard, with little to no guarantees. It’s the people who take chances and risks though who end up winning the bag or losing their shirts. It’s a tough call for most people.This story is the modern-day equivalent of being asked to invest in Apple computers in the late 70s or being asked to invest in Google in the late ’90s and turning it down.

Orton makes the same mistake that executives from Kodak, Excite and Blockbuster have made in my past articles. They are so entrenched and content with the status quo system or technology that when a new idea comes along they reject it outright or duck their heads in the sand and act like the invention will just fade away. And what happens? The new invention or idea ends up cannibalizing and putting out of business this industry titan. Today Western Union is best known as a system you use in Walmart and 7-11 to send money to people who don’t have a smartphone or don’t know how to use apps like Venmo, Cashapp, Paypal or Zelle. What Western union is not known as is a titan of the communication industry today. It’s a relic of the 1800s, talked about in blogs like this, or history books or in museums.

Orton and Western Union lacked vision and foresight when the future was presented to them, to hop on it and embrace it. It appears they thought the idea had some vitality; otherwise, they wouldn’t have kept Meucci device and blueprints. When Orton was presented the news by Depaw, the smart play would have been to go to Hubbard directly and ask to invest. That did not happen, and the Bell telephone company is still around today, it’s better known under its new name AT&T.