Theodore Gary and Telephone Growth: The Real Story
By Sandy Coons
From the birth of telephone history 99 years ago, until more recent
years conflict seemed to go hand in hand with the industry's development. The patent on
the telephone was a race between Alexander Graham Bell and Elisha Gray when Bell
filed a patent application and Gray filed a caveat on the telephone the same day. The Bell
system enjoyed a slow 17 years as a monopoly before independent phone companies
sprang up. One of the leaders of the Independents' fight against the Bell control was
Theodore Gary of Macon.
Theodore Gary was a successful man, one who left his mark in Macon,
the state of Missouri and the nation. Any endeavor business he was involved in seemed to
flourish. So it was when he went into the telephone business at the age of 42.
Gary was active in a variety of business ventures and programs
beneficial to Macon and Missouri. In the real estate and town site business he was
responsible for Gary's Addition and Sunnyside Addition in Macon. He organized the
Macon Building and Loan Association and served as its secretary. Features of this
business would reappear 25 years later when the state legislature passed laws regulating
such associations and prescribing methods of bookkeeping similar to the plan adopted by
Gary. He helped organize and promote an adequate water supply for Macon, helped the
city acquire a library, built its hospital and a cemetery. His work as chairman of the
Hudson County Road Commission was a prelude to chairmanship of the Missouri State
Highway Commission. His years as Highway Commission Chairman from 1921 to 1926
saw great expansion of Missouri roads and brought recognition of his efficient, well-
planned methods of achieving his goals. But it was his connection with the telephone, and
the acquisition of dial system as described by his biographer Henry P. Bobbins and in
"The Story of Independent Telephony", that extended his influence nationwide and
In 1896 Gary and his family had just returned from Ashley, Ind., where
Gary had been in the banking business. Gary considered Macon his home town. He had
moved to Macon at the age of 22 in 1878 and lived there the rest of his life excepting two
years. Gary and Alee Hudson, former editor of the Macon Times and a man of
progressive ideas as Gary was, became partners in a real estate, loan and insurance
NEWCOMER TO AN INFANT INDUSTRY
Gary knew nothing about the telephone business when the owner of the
local Independent phone plant listed his property for sale with Gary and Hudson. Gary's
curiosity was aroused and he found that the Macon telephone company was a sound
business, but that the owner was selling because of personal conflicts with some
subscribers. He learned more about the business from an ardent telephone enthusiast. On
checking, he found that the Columbia telephone company was also for sale.
Gary bought the Macon plant and Hudson took an option on the
Columbia plant. At middle age Gary decided to embark in a new career which would
bring him into opposition, with the Bell organization. Some Macon residents were
incredulous that Gary would go into a business he knew nothing about; others said he
might not know everything about it, but he would put someone in charge who did. Others
said that anything he went into was bound to be a success. Others expressed relief at the
change in. management knowing that they would get good service from "the politest man
in town." .
Under Gary the Macon plant was rebuilt and expanded and its
subscriber list grew. Gary was concerned with profit, but he was also concerned in
developing service. His business practices and improvements were recognized outside
Macon city limits when other towns began to clamor for "the kind of telephone service
Gary gives Macon"..
Within a few years Gary and his company owned telephone plants in
Joplin, Nevada, Carthage, Independence, St. Joseph, Atchison and Topeka. The firm
would continue to expand, later going international. But Gary had other contributions to
offer the struggling Independent telephone movement.
BELL MONOPOLY CHALLENGED
The Bell company had a monopoly for 17 years until the Bell patent
expired. Before the Independent competition arose Bell had less than 300,000 telephones
in use. During its monopoly period ell concentrated on large populations centers and
then mainly the close subscribers to the plant which reaped the most profit. In Kansas
City with a population of 200,000 in the early days only 4,000 had phones. Small towns
were ignored. The Independent telephone movement developed to fill in the gap as the
"electrical toy" became a demanded service.
Depending on its monopoly Bell employed high rates and had little
emphasis on service. As the Independent competition began to tell, however, Bell cut
rates severely to kill off competition and used lawsuits against Independent companies.
Small town people saw through the cut rates in most cases, knowing that once
competition was eliminated high rates would follow. Belt was more successful with legal
proceedings. If an Independent switchboard was found to infringe any way on any Bell
patent the switchboard was destroyed. Topeka's Independent switchboard was burned in
the street. Mobile's was demolished by a sledgehammer. At one Bell convention a gavel
was used which was made of 35 pieces of Independent switchboards whose companies
had been forced out of business. As the conflict grew more heated the Independents
realized that to survive they must unify against the organized, centralized Bell powers.
Theodore Gary helped pioneer the Independent organizations.
GARY ACTIVE IN UNIFYING INDEPENDENTS
Gary attended his first out of state telephone convention in 1902 when
the Interstate Independent Telephone Association met in Chicago for the first time. When
the meeting threatened to flounder and turn into a social event with no permanent
organization, Gary took the floor saying, "We from Missouri did not come here for a lark.
We came to form an interstate association which would be strong in all states and benefit
the industry." He recommended electing officers from all states, not just Chicago area
representatives, creation of a constitution and other means to carry out their purpose. His
suggestions were followed.
In 1906 the interstate association merged with an international
Independent association and became the International Independent Telephone
Association. Gary served as the organization’s first vice president and second
In addition to unifying the Independent companies Gary wished to
incorporate good business practices and an emphasis on service to stabilize the existing
firms and offset Bell attempts to drive Independents out. Gary was disgusted with
conscienceless promoters who built up companies to sell and had little more regard for
honest, but careless men who failed to put their business on a sound basis. Every
Independent failure brought more Bell glee.
So Gary spoke and wrote on successful management, suggestions on
serving subscribers, how to treat employees. Information on the Gary system's methods
were always available to the Independents. During the bankers panic of 1907 Gary
shrewdly published a booklet on Independent Telephony, printed on the finest paper and
well-illustrated, which persuasively described reasons for safety of investment in
Independent telephone property. He later noted that the Independent telephone industry
suffered much less financially during this period than did other industries.
A WORTHY OPPONENT
The Bell system's confidence in disposing of the isolated, unorganized
Independent firms in a one-at-a-time style waned with the strengthening of Independent
organizations. At this point the Bell system recalled as its head another Theodore,
Theodore N. Vail, one of the most powerful figures in America's industrial history. It was
Vail's theory that the telephone was a natural monopoly, and his theory was espoused by
many big city newspapers. But, the country press defended the Independents. The tide
also swung in the Independent's favor for awhile when the attorney generals of six states
brought anti-trust suits against Bell telephone and its subsidiaries. Gary suggested that the
Kansas Independent Association adopt a resolution asking Congress to declare telephone
companies common carriers, subject to usual legal regulations. Congress promptly
approved such a law and this action, among others, worried Bell.
Bell had an ace in the hole—long distance. For an Independent to
obtain long distance from Bell it would have to agree to terms dangerous to
Independents. Gary could have gotten a special contract without the limiting terms for his
company, but he stuck with the rest of the Independents until later when he participated
in the 1913 Kingsbury agreement between Bell and the Independents later which settled
this issue and other vital matters.
As Bell was realizing that its opponent was not easily vulnerable, the
Independents were realizing that battles between the two caused mutual ruin and were a
hardship in communities where the battles were being fought. The Independent formed a
Committee of Seven, including Theodore Gary, to begin negotiations with Bell that
would result in the elimination of competition at certain points and provide long distance
to every community. The general plan worked out was for the company with the largest
business in a community to take over its rival. This was done in such a way to preserve
the balance between the two factions. Gary, was active in negotiating equitable
eliminations of competition and took great care to protect the jobs of employees whose
firms changed hands. These negotiations resulted in the historic Kingsbury
BELL RESISTS THE AUTOMATIC
A.B. Strowger, a Kansas City undertaker, conceived the idea of a telephone system which
would do away with the delay and mistakes of manual operators. He imagined an electric
switch driven by electro-magnets which would be controlled by the subscriber to connect
the subscriber with the party desired. Strowger turned his idea of the automatic, later
called the dial system, into reality. He successfully sold the idea to the Independents, but
Bell refused to buy the "machine switching" equipment. The Strowger Automatic
Telephone Exchange Co. became a part of the Independent organization, making and
installing the equipment for Independent firms. Whenever Bell bought out an
Independent telephone company, however, that company would follow Bell policy and
quit buying automatic equipment. This hurt the equipment manufacturer and in-directly
threatened the Independents who used automatic equipment. Gary took an interest in the
Strowger equipment as part of the Independent organization. He attempted many times to
talk Vail into buying automatic equipment to insure the manufacturers stability.
In 1901 the Strowger company changed to the Automatic Electric
Company, which was formed to expand the Strowger interests. Meanwhile Gary had no
luck convincing Bell to change its policy.
But, after World War I the government was still in control of telegraph,
cable and telephone business. A wage controversy arose between Bell and its Boston
employees. Gary heard about the fight and paid close attention to the Boston proceedings
sensing a change in the wind. Bell was forced to settle the wage dispute by giving the
employees double what had been expected. The only way to meet this increase was by a
sharp rise in subscribers' costs, which was unacceptable to subscribers, or to turn to the
automatic to save money.
PURCHASE CONTROL OF DIAL
Gary moved swiftly and in 1919 he and Frank H. Woods purchased
control of the Automatic Electric Company and Gary again brought the question to Bell.
This time Bell's answer was affirmative. By 1926 Gary and his associates were making or
licensing 80 per cent of the automatic telephone equipment in the world.
EXPANDS BEYOND GARY'S DREAMS
Theodore Gary worked at some 40 undertakings before building his
telephone system into world business and was involved in other ventures afterward. Yet
without devoting his entire life to the business, Gary's expertise, was so great that on the
fiftieth anniversary of the telephone's invention, he was asked to write an article for the
prestigious Saturday Evening Post. Gary wrote on "The Independents - Their Part in
Developing the Telephone in the U.S." Of the development of the telephone, Gary said he
had lived to see its "marvelous expansion" far beyond his dreams.
For more information on the telephone and Macon, please click here to read these related stories - Chariton Telephone and First Macon Telephone.