Western Electric and the Bell System
A SURVEY OF SERVICE

Edited By Albert B. Iardella

Published by Western Electric Company, 195 Broadway, New 
York, N.Y.


WESTERN ELECTRIC AND THE BELL SYSTEM
A SURVEY OF SERVICE

Copyright 1964 Western Electric Company, Incorporated

Printed in U.S.A

***************************************

TABLE OF CONTENTS


I The Bell System - A Concept in Action


PART ONE:

OUR BELL SYSTEM "PARTNERS"

II American Telephone and Telegraph Company

III Bell Telephone Laboratories

IV The Bell Telephone Companies



PART TWO:

WESTERN ELECTRIC

V History of Western Electric

VI Structure of Western Electric

VII The Nine Divisions

VIII Principal Subsidiaries of Western Electric



PART THREE:

SPECIFICS OF SERVICE

IX Communications Services and Products



Afterword: The Future

Appendix: The "Consent Decree,"

***************************************

Preface

This book is intended primarily for Western Electric men 
and women entering management positions, and has as its 
purpose the presentation of information that will 
contribute to a clear understanding of what the Western 
Electric Company represents and what it is seeking to 
accomplish.

The book has been designed to provide a convenient source 
of information concerning the foundations, objectives, 
achievements and operations of Western Electric.  It is 
hoped that this survey will show how the company and each 
of its parts contribute to the fulfillment of our two major 
goals:

(1)	Assisting the Bell System to bring into being 
increasingly better, faster, more reliable and more 
versatile communications, and

(2)	Aiding the United States Government in its defense 
and space activities.



Vii

***************************************

I - The Bell System - a Concept in Action

The telephone is so basic a convenience today it is hard to 
realize that the invention is less than a century old.  In 
this brief span of time, the Bell System has grown from an 
imaginative concept of 'universal service" into a reliable 
and versatile reality which provides America with the 
finest communications in the world.

All this has come about as the result of the integrated and 
cooperative efforts of the Bell System units constantly to 
improve the quality and increase the variety of 
communications services offered to the public.  It is the 
concept of service to the public which unifies the Bell 
System, and in realizing this concept, Western Electric has 
played a leading part.

Growth, to help the Bell System meet the growing need for 
communications services, has been a constant factor in 
Western Electric for the more than 82 years the company has 
been a member of the Bell System.  The details of this 
growth, cited later in this book, show how Western Electric 
has continually redefined responsibilities and refocused 
efforts to achieve more effective concentration on its main 
goal: providing the Bell Telephone companies with the means 
whereby each can offer new, improved and expanded 
communications to the public it serves.

As the Bell System has grown in service, it has grown in 
size.  The success of the Bell Telephone companies in 
supplying reliable and versatile communications at 
reasonable cost has resulted in the introduction of new 
types of communications.  As Theodore N. Vail - the man who 
conceived of the Bell System as a nationwide network - said 
many years ago, "The Bell System is strong because we are 
all tied up together; and the success of one is therefore 
the concern of all."

Curiously, the Bell System's dedication to service has 
tended in effect to disguise the complexity of the job 
involved.  Today telephone service is so reliable that most 
people take it for granted.  The subscriber expects to 
reach the one he is dialing in a matter of seconds whether 
the call is across the town or across the country.  It is 
doubtful if most people are aware that the Bell System's 
nationwide network must be capable of handling two and one-
half million-billion inter-connections to link each of the 
more than 80 million telephones in the United States with 
all the others.

The nation-wide Bell System network, which has been 
described as the largest computer in the world, is the 
result of teamwork by people at AT&T, Bell Telephone 
Laboratories, Western Electric, and the Bell Telephone 
companies.  Close cooperation between Western Electric and 
Bell Laboratories engineers has resulted in the 
introduction of countless communications products and 
services.  Similarly, the close relationships between 
Western Electric and each of the operating companies embody 
a spirit of united service to the public.

Evidence of this teamwork is everywhere.  Nation-wide 
Direct Distance Dialing is a tribute to it.  New telephone 
products like the Panel phone and the telephone sets for
TOUCH-TONE(R) service result from it.  The habit of 
teamwork accounts for the speed with which telephone 
service is restored in the wake of hurricane or flood.  
But, far and away, the most important if least spectacular 
evidences of teamwork can be found in the day-to-day 
operation of the business.  It is the reliability of Bell 
System communications as much as their versatility and 
flexibility which justifies the motto used in many Western 
Electric advertisements: We work best because we work 
together.

No single organization chart covers the entire Bell System.  
From an organization standpoint, each Bell Telephone 
company is an independent corporate enterprise.  Each has 
its own Board of Directors, responsible for directing each 
company's affairs.  AT&T's relations with these companies 
come primarily from stock ownership and the voice in the 
affairs of the corporation that naturally and legally is 
extended to every stockholding interest.  There are also 
important contractual relations between each of the 
associated companies and the parent company, AT&T, based on 
the agreements with the original local companies licensing 
the use of the Bell patents.(1)

Similarly, the manufacturing and supply organization - 
Western Electric - which likewise exists as a distinct 
corporate organization, has supply contracts with the 
associated companies that define its obligations to them.  
In the same way, Bell Telephone Laboratories is a distinct 
corporate organization.  Each differs from an operating 
company in that it is entirely functional rather than 
territorial and is not a public utility.

The Bell System is, therefore, a product of evolution as 
well as innovation.  To see how the structure has grown so 
that all units combine their efforts for the common goal of 
service, this survey of Western Electric and the Bell 
System opens with a history and description of AT&T.  After 
this review of the parent company, Bell Laboratories 
functions are described and then those of the Bell 
Telephone companies.

***************************************
Foot Note 1 - When many of these local companies merged 
into the present associated companies, the new companies 
assumed the contractual obligations of the original 
licensee companies, in most cases without appreciably 
changing the original agreements, in some cases with new 
license contracts similar in form.
***************************************

Part I:

Our Bell System "Partners"
***************************************

II - The American Telephone and Telegraph Company


CORPORATE DEVELOPMENT OF AT&T

Ideas are elusive.  It is hard to say just when Alexander 
Graham Bell conceived the possibility of transmitting 
intelligible speech over wires.  It is easier to pinpoint 
the date when Bell felt his work far enough advanced to 
seek to protect it by patent.  On March 6, 1876 he and two 
backers, Thomas Sanders and Gardiner G. Hubbard, formed the 
Bell Patent Association.  The following day, the United 
States Patent Office issued patent number 174,465, called 
"improvement in telegraphy" in answer to Bell's 
application.  This patent contained specifications for the 
telephone instrument.  By January 30, 1877, the Bell Patent 
Association held four fundamental patents and was ready to 
market the new device.  In July, in Boston, the first 
telephone company was formed as "Bell Telephone Company, 
Gardiner G. Hubbard, Trustee." The name of the company 
seems a bit peculiar today but the trustee system was 
common in those days, particularly in New England.

To spread the use of the invention, Hubbard offered 
licenses to form telephone companies to any accredited 
organization that would agree to finance and conduct such a 
business.

About the same time, Sanders interested a group of 
Massachusetts and Rhode Island financiers in the telephone.  
This group formed the New England Telephone Company (not 
connected with the present New England Telephone and 
Telegraph Company) and agreed both to buy their telephones 
from the Bell Company and to lease them to their 
subscribers.  The two companies also agreed to provide 
connecting lines between their territories.

The success of the venture led the Bell group to form 
another company to lease telephones in the rest of the 
country.  The trustee arrangement was ended and a 
Massachusetts corporation was formed as the Bell Telephone 
Company.  Patent rights were assigned to the New England 
Company for their states and to the Bell Telephone Company 
for the rest of the country.  However, within a year the 
two companies had merged to form the National Bell 
Telephone Company.  It, too, had headquarters in Boston but 
unlike its predecessors it was the first telephone company 
to achieve any real prominence.

On March 20, 1880, the Bell interests formed the American 
Bell Telephone Company, a Massachusetts corporation with a 
capitalization of $10,000,000, in response to the need for 
more capital.  By the articles of incorporation, this 
company was permitted to own stock in other companies.  It 
was about this time that stock ownership began to spread.  
In December, 1880 there were 540 shareholders.  On January 
1, 1881, the first dividend - $3.00 a share - was declared.

By 1881 a clear policy of licensing had been established.  
The parent company furnished the telephones and retained 
the right to provide connecting links between territories 
so as to form intercommunicating systems.  Eventually these 
licenses became permanent and, in addition to confirming 
territorial rights, included the right to participate in 
all future inventions as well as those existing at the 
time.  Each of the territorial companies paid rental to the 
parent company and the parent company was represented in 
each as a stockholder.  Gradually the parent company 
acquired substantial holdings in these companies as a 
result of providing financial assistance for expansion.

There were now about 300 telephone companies operating 
under American Bell Telephone Company licenses.  Many held 
licenses only for a city.  Each operated fairly 
independently, without the benefit of knowing how similar 
problems had been solved in other locations and there was a 
danger that quality standards would vary from place to 
place.  Moreover, the growing popularity of the telephone 
indicated that it could increase in service greatly through 
interconnection of exchanges.


WESTERN ELECTRIC ENTERS THE BELL SYSTEM

Western Electric's entry into the Bell System in 1882 
provided a source for compatible telephone equipment of 
high quality.  In 1885 the American Telephone and Telegraph 
Company was formed in New York (as a subsidiary of American 
Bell) to build the lines needed to connect the scattered 
exchanges "in each and every city, town, or place . . . 
with one or more points in each and every other city, town, 
or place ... of the United States, and in Canada, and 
Mexico . . . and also by cable and other appropriate means 
with the rest of the world." - essentially the function now 
performed by the Long Lines Department of AT&T.

This was the goal as stated by Theodore N. Vail, at that 
time general manager of the American Bell Telephone 
Company, and subsequently first president of AT&T.  More 
than any other man, Vail was responsible for the conception 
and realization of the Bell System network.  His enthusiasm 
evoked a predictable response.  There were some who shared 
his enthusiasm; others praised his vision and let it go at 
that; and many others shook their heads in practical 
disbelief.

At their annual meeting in March, 1900, American Bell 
stockholders voted to make AT&T the central organization of 
the Bell System.  American Bell conveyed its assets to 
AT&T, which served as the coordinator of activities among 
the operating companies and also retained operation of 
interconnecting networks.

In 1911, AT&T announced its plans to reorganize operating 
companies into state-wide or larger territorial units.  
"Each associated company . . . will become an autonomous 
whole, with its own local control and identity, and within 
the limits of the general policy and authority, absolute on 
matters pertaining to or which affect only that territory," 
the AT&T annual report stated.  This policy continues to 
guide Bell System operations today.

In December, 1913, AT&T agreed to provide long distance 
connection of Bell System lines to the numerous independent 
telephone systems which had developed after the expiration 
of the Bell Patents.2 This arrangement contributed to the 
development of the entire telephone industry in the United 
States and it is because of this access to the Bell 
System's nation-wide network that each of America's 
telephones may be connected to all the others.


REGULATORY AGENCIES

As early as 1910, by means of the Mann-Elkins Act, the 
Federal Government vested certain interstate telephone 
tollrate authority in the Interstate Commerce Commission.  
In 1934, this commission was superceded by the Federal 
Communications Commission, which had broad regulatory 
authority and which continues today as the body regulating 
the interstate rates and services of the Bell System.  In 
addition, since almost the beginning of the century, state 
regulatory bodies, usually called Public Service 
Commissions or the like, have regulated the intrastate 
rates and services of telephone companies.  In Texas rates 
are regulated by various city bodies.

Both Federal and state regulatory bodies exercise direct 
control over the accounting, rates and services of the Bell 
Telephone companies and indirect control of Western 
Electric's prices and profits.

*********************************************************
Foot Note 2 - The terms of the agreement are contained in 
the so-called "Kingsbury Commitment," a letter to the U.S. 
Attorney General dated December 13, 1913 and signed by 
Nathan C. Kingsbury, at that time vice president of AT&T.  
Elsewhere in this letter, AT&T announced its intention of 
disposing of such telegraph stock as it owned and noted 
that the company would not acquire any more competing 
telephone companies.
*********************************************************


AT&T's ROLE IN THE BELL SYSTEM

The American Telephone and Telegraph Company, the Bell 
System's parent organization, acts as an operating unit and 
a service group.  Before examining the activities these 
functions require, however, it seems wise to make two 
points concerning the use of words.

First of all, the term "Bell System" refers mainly to a 
concept of service rather than a sharply defined entity.  
It is rather like the British Commonwealth, and a little 
like Dixie in this respect.  The Bell System provides 
communications services through the actions and operations 
of the Bell Telephone companies and AT&T's Long Lines 
Department.  Use of the term "Bell System" is a convenience 
to suggest the common purpose and shared responsibility of 
the various companies contributing to the operation, 
growth, and improvement of the whole nationwide network and 
the international connecting links.

Note also that terms denoting parts of the corporate 
structure vary from company to company.  In Western 
Electric, for example, the word "Division" is used to 
identify basic functions such as manufacturing, engineering 
and legal.  In AT&T, however, the word "Department" is used 
for this purpose.  With this in mind, let us look at the 
relationship of AT&T to other Bell System members and also 
examine the company's structure.

AT&T's basic relationship to other units of the Bell System 
has five aspects.

1.  AT&T owns 99.82 per cent of Western Electric stock.  
The equipment, services, and supplies that Western Electric 
furnishes the operating units of the Bell System are 
characterized by their compatibility, their reliability, 
uniform high quality and reasonable cost.

2.  AT&T shares ownership of Bell Telephone Laboratories 
with Western Electric.  Bell Telephone Laboratories carries 
on an intensive program of basic research and develops 
prototype designs for new communications equipment.  This 
equipment, when manufactured in volume to uniform 
standards, enables the 23 Bell Telephone companies to 
furnish their subscribers with top quality communications 
services.

3.  Of the 23 Bell Telephone companies, 21 are majority-
owned subsidiaries of  AT&T, which holds a substantial 
minority interest in the remaining two.

4.  To assist in and coordinate the activities of these 
operating companies, AT&T undertakes various studies and 
furnishes various services from its General Departments 
which are of System-wide application and which would 
therefore involve substantial duplication of effort if 
carried out individually by the separate companies.

5.  The Long Lines Department of AT&T interconnects the 
local facilities into a continental network.  The same 
network carries radio and television programs and a variety 
of other communications across the nation.  Long Lines also 
provides the Bell System with overseas service to 160 
foreign countries.

The basic relationship between AT&T and the operating 
companies is defined by the license contract.

The term "license contract" dates from the early days of 
the Bell System when local companies were first licensed to 
use Bell telephones.  Universal service results from a 
division of responsibilities, some filled by AT&T and some 
by the associated operating companies according to where 
and how the work can be done best.  To reimburse AT&T for 
the services it provides under the license contract, the 
operating companies pay one per cent of their operating 
revenues (excluding certain minor items).

The concept of teamwork which unites all units of the Bell 
System results in practice in an active interplay of 
activities by all the component units, AT&T incurring major 
expense to assure the increasing efficiency, versatility 
and utility of the companies in which it owns stock.  As 
the goal of service is common to all Bell System 
"partners," so shared responsibility is the means whereby 
these companies have worked together to realize the goal.


CORPORATE STRUCTURE

The basic policy of AT&T is determined by the Board of 
Directors.  Members of the Board are elected to one year 
terms by AT&T shareowners at each annual meeting.  The 
number of these directors may vary, according to the by-
laws, from 15 to 19, with the exact number at any one time 
established by the Board itself.  The Chairman of the Board 
also serves as the Chief Executive Officer of the company.  
One or two other AT&T officials are also members of the 
Board.

Most of the directors are men of national reputation in 
business or education who are otherwise unconnected with 
the Bell System.  The Board's basic responsibility is to 
assure sound management of the company in terms of present 
operations and long-term plans; in general, detailed
technical aspects of operating the business are not of
direct concern to them.

To the Chief Executive Officer, however, they are of great 
concern.  As the top man in management, his task is to 
direct the activities of a company that is divided 
functionally into two basic organizations, the General 
Departments and Long Lines.


THE GENERAL DEPARTMENTS

The General Departments, employ about 3,000 people.  The 
two largest of these departments are Operations and 
Engineering.  In general, the operating companies deal 
directly with the appropriate General Department except in 
matters of general Bell System policy which are referred to 
the AT&T president and his cabinet of vice presidents.

Operating companies turn to the AT&T Engineering Department 
for performance and cost information and advice regarding 
types of equipment and systems.  This department sets 
technical requirements for new equipment and systems, and 
establishes the operation and performance objectives 
followed by Bell Laboratories and Western Electric in their 
development and manufacturing work.  Additionally, 
Engineering coordinates other System units - Bell 
Laboratories, Western Electric and operating companies - in 
the introduction of new equipment and methods and maintains 
data needed by an operating company to determine 
comparative costs of alternative installations.  It also 
assists operating companies on depreciation matters, and on 
procedures for studies of telephone plant, revenues and 
expenses.

The Operations Department includes several divisions, each 
interested in a specific, essential aspect of providing 
communications service locally.  These tend to parallel the 
departmental structure of the operating companies.  The 
Plant Division, for example, develops methods and routines 
for putting in and maintaining all apparatus and equipment 
within an operating company's jurisdiction.  This Division 
additionally advises the companies on the purchase and use 
of necessary tools and vehicles.  The Traffic Division is 
mainly devoted to finding ways for operating companies to 
improve service and reduce the costs of providing it.  
Traffic measures are developed that operating companies can 
use in analyzing and interpreting traffic results and 
trends.  In addition, Traffic explores new operating 
methods and facilities, and provides ways by which an 
operating company can determine what sort of equipment 
would best suit its purposes.

The Rate Division within AT&T's Operations Department 
advises operating companies on ways to realize the widest 
practical use of telephone services through overall 
treatment of rates and regulations.  The Commercial 
Division helps operating companies establish good relations 
with its existing customers through sound methods, 
practices and procedures.  In addition, it helps with 
estimates of future service demands.

Other divisions of the Operations Department advise 
operating companies regarding special communications 
requirements of government agencies, and prepare System-
wide operating results for operating companies to use in 
improving performance.

A department that has grown in importance in recent years 
deals with Marketing matters.  This unit has three 
divisions, Marketing Development, Sales, and Data 
Communications Training.  The first, Marketing Development, 
analyzes information relating to customer wants and needs, 
plans products to meet those needs, and then helps the 
operating companies evaluate sales results.  The Sales 
Division advises and assists the operating companies in 
setting up sales programs, while the Training Division 
develops training material and provides instruction on data 
communications for operating company engineers and 
marketing personnel.

Financial, accounting and statistical experts staff the 
Departments reporting to the Comptroller and the Treasurer.  
A prime function of the Comptroller's organization is 
arranging for temporary funding for operating companies 
pending final cash advances of one sort or another.  The 
Department also assists the operating companies in tax 
matters, and arranges to have each company audited annually 
by independent public accountants.  Comptroller's also 
furnishes advice and information to operating companies 
regarding accounting and actuarial matters connected with 
License Contract costs, separations and revenue divisions, 
rate cases, and accrual rates for service pensions.  The 
Treasury Department keeps operating companies abreast of 
factors influencing Bell System financing, as well as 
handling the many details related to that financing.

The Legal Department provides assistance and advice to 
operating company counsel on matters of general Bell System 
interest, and represents the operating companies before 
certain governmental courts and commissions.  Other General 
Departments assess the System's dealings with the public, 
personnel and the rest of the business community, and 
formulate System-wide programs designed to enhance the 
relationship.  In addition, these units continually conduct 
new studies related to their work, and survey other 
authoritative material in order to make it available to the 
entire System.

The various General Departments also receive in a steady 
stream copies of reports made by the operating companies 
concerning local activities pertinent to their interest.  
This material is evaluated by the appropriate organization 
and is compiled with similar studies by the operating 
companies themselves into over-all comparative performance 
indexes for both the AT&T management and for operating 
companies to use in improving operational effectiveness.


LONG LINES DEPARTMENT

The purpose for which AT&T was originally formed in 1885 
interconnecting various intrastate telephone exchanges - is 
the responsibility of AT&T Long Lines Department.  The 
extensive switching equipment, cables, microwave systems 
and associated equipment that comprise Long Lines' 
interstate network makes possible telephone service across 
the nation and around the world.  But this is only a part 
of the story.  Long Lines also provides teletypewriter 
exchange service (TWX), transmits TV and radio programs 
from city to city and coast to coast along with coded data, 
telephotographs and messages using private line telephone 
and telegraph facilities.

Long Lines has the autonomy of an operating company even 
though it is organizationally a part of AT&T.  Its Board of 
Directors, consisting of AT&T vice presidents and Long 
Lines operating heads, set the general operational policy 
that is implemented by the Chief Executive Officer through 
the organizations headed by his operational aides.

Long Lines is organized geographically as four areas.  Each 
of these areas - Eastern, Central, Southwestern and Western 
- has its own plant, traffic, commercial, engineering and 
staff organizations as extensions of the Long Lines 
headquarters in New York City.

There are about 28,000 Long Lines employees working in 43 
states and the District of Columbia.  Plant investment 
represents about nine per cent of the Bell System total.  
Responding to the increasing demand for its service, Long 
Lines has made substantial increases to its investment in 
recent years.

Interstate networks exceed 76 million circuit miles and 
consist principally of cable, radio and open wire.  In 
addition there are underseas cables connecting the U.S. 
mainland with Jamaica, Puerto Rico, Hawaii, the British 
Isles and the European Mainland.  From Hawaii a trans-
Pacific cable forms a link with Japan.  Other overseas 
communications are transmitted via radio.


OWNERS OF THE BELL SYSTEM

Some 2,250,000 people own an interest in the Bell System 
through their investments in AT&T stock.  Of these, over 
300,000 are Bell System employees who have purchased shares 
through payroll allotments.  AT&T has more than twice as 
many common stockholders as any other corporation in the 
United States - more than the next two companies combined 
in fact.

Just about every type of American is represented in this 
assembly, including farmers, clerks, lawyers, clergymen, 
mechanics, civil servants, teachers, merchants, widows and 
retired people.  The man who became AT&T's two millionth 
shareowner in 1961, for instance, was a small town druggist 
in Kansas.

These investors have supplied a good part of the capital 
that has been required to realize the Bell System's 
potential of growth.  They have invested in the company in 
expectation of receiving a reasonable rate of return and, 
indeed, AT&T dividends have a well-deserved reputation for 
their uninterrupted regularity since 1881.  The dividends 
have risen, too.  For about 15 years ending in 1921, for 
instance, the rate was $8.00 per share per year.  From 1922 
to 1959, the rate was $9.00 a share.  When the stock was 
split three-for-one in April, 1959, the rate was set at 
$3.30 (equivalent to $9.90 on the old basis).  Following 
stockholder approval in April, 1964, the stock was again 
split two-for-one with a dividend rate of $2.00 established 
for the new shares.

Geographically, AT&T stock is more widely held than the 
stock of any other corporation, and it is distributed in 
general accord with the investment wealth of the country, 
with a somewhat higher ratio in New England where the 
telephone was invented and originally financed.

At the end of 1901, shortly after AT&T had succeeded 
American Bell as parent company of the Bell System, 87 per 
cent of the owners were located in New England.  As 
increasing amounts of new capital were required, the 
distribution of AT&T owners extended more and more into the 
Eastern states.  Starting in 1915 - when the long distance 
lines reached the West Coast, the Central and Pacific 
states began to be represented more definitely in the AT&T 
shareowner family.  By 1930, the approximate present-day 
geographical distribution was achieved: New England 20 per 
cent; Eastern 40 per cent; Central 15 per cent; Pacific 10 
per cent; all others 15 per cent.

There were 7,536 shareowners of AT&T in 1900.  Within 12 
years the 50,000th owner joined the company family. Just 
six years later - 1918 - the 100,000 mark was passed.  By 
late 1930 the number of owners had climbed to a half 
million.  The one-millionth milestone was reached in May, 
1951 within a few weeks of the 75th anniversary of the 
invention of the telephone.  The two-millionth shareowner 
was added to the list just 10 years later, in June, 1961.

Approximately 28 per cent of the shareowners have held 
their AT&T stock for 10 years or more.  And 15 per cent 
have been shareowners for at least 15 years.

Some 803,000 accounts are in the names of women.  As 
individual owners, women outnumber men two to one.  
Furthermore, 600,000 shareowners are represented by joint 
accounts - usually man and wife.

Each year, AT&T reports its 30 largest shareowners to the 
Federal Communications Commission.  A recent report reveals 
that this group is comprised of 22 bank nominees (who may 
hold stock for hundreds of customers in each account), 
three brokers, two insurance companies and three banking 
firms.  The aggregate holdings of these 30 accounts 
represent only 5.65 per cent of the total stock; each of 
these accounts holds stock in a fiduciary, or trust 
capacity.

Only one shareowner, a brokerage house holding many 
thousands of accounts for its clients, has slightly more 
than one per cent of the total stock outstanding.  The 
maximum ownership of any individual is less than one-
thirtieth of one per cent.

***************************************

III - Bell Telephone Laboratories

The gradual evolution of Bell Telephone Laboratories as a 
separate entity in the Bell System and its subsequent 
history reflect the ever-increasing importance of creative 
technology in communications.  As early as 1883, the 
American Bell Telephone Company maintained an experimental 
shop in Boston to supplement the activities of its 
Electrical and Patent Department.  In 1884, this 
organization was officially recognized as the Mechanical 
Department, though the function it performed would today be 
called research and development.

By 1907, the Mechanical Department had become the 
Engineering Department of AT&T and was broadly responsible 
for Bell System engineering, development, and research 
work.  This department established engineering standards 
for plant design, prepared central office specifications 
and advised the associated companies on current plant and 
traffic problems.  It also tested and inspected all 
telephones and apparatus manufactured by Western Electric, 
whether in Chicago or New York.  However, Western Electric 
also maintained laboratories in Boston for work connected 
with the development of equipment and apparatus, the basic 
design of which was supplied by the AT&T Engineering 
Department.

In 1907, the Western Electric and AT&T research and 
development staffs were consolidated as the Western 
Electric Engineering Department at 463 West Street, New 
York.  AT&T's Engineering Department retained its general 
responsibility for the compatibility of the growing Bell 
System as to equipment and service and Western Electric 
assumed responsibility for the testing and inspection of 
its telephones and apparatus.  The research and development 
activities consolidated at West Street gradually expanded 
in response to the pressing need for improvement and 
advance in telephony.

Increasing importance of basic research in the development 
of communications during the early 20's led to the 
consolidation of Western Electric Engineering Department 
and a part of the AT&T engineering department as Bell 
Telephone Laboratories on January 1, 1925.  Ownership of 
the new company was shared equally by AT&T and Western 
Electric with the Board of Directors chosen from executives 
of each of the owner companies.  This arrangement 
emphasizes the Laboratories dual function in serving the 
specific needs of both Western Electric and the Bell 
Telephone companies.

To this end, Bell Telephone Laboratories performs at cost 
scientific research and development work for the Bell 
System in communications in two broad areas.  AT&T 
authorizes and pays for research and fundamental 
development projects in such fields as physics, chemistry, 
metallurgy, electronics, acoustics and mathematics which 
relate to the science of communications and for systems 
engineering projects which seek to develop applications of 
technological advances in these fields in terms of Bell 
System service.  Western Electric authorizes and pays for 
development and design of new apparatus and equipment and 
works with the Laboratories to develop a means of 
translating the designs into items capable of economical 
production in quantity.  In addition, work performed for 
the U.S. Government by Bell Laboratories is authorized by 
Western Electric and by Bellcomm Inc.

Since inception, Bell Laboratories has been pre-eminent in 
communications technology.  At first a good part of the 
Laboratories' effort went into hardware development to 
increase the reliability and life of the equipment Western 
Electric produced and the operating companies used.  A 
further large effort has been devoted to developing ways to 
increase the efficiency of Bell System equipment.  An 
example of this is TASI (Time Assignment Speech 
Interpolation), a Laboratories development that doubled the 
capacity of the first two trans-Atlantic cables by 
utilizing the milliseconds of silence in ordinary speech 
for further transmission.

Today the technical work of the Laboratories is divided 
into three major fields: Research, Systems Engineering, and 
Development.

Research represents the search for new knowledge, for new 
scientific principles.  Although carried out in scientific 
disciplines which closely relate to the art of 
communication, research is not aimed at specific changes in 
the telephone system.  Rather it is concerned with trying 
"to outguess the future" as to where the unexplored areas 
of science may yield discoveries of value to the telephone 
industry and exploring these areas in depth.

Although the Research Departments comprise only about 12 
per cent of the technical staff of the Laboratories, they 
represent the fountainhead from which have flowed thousands 
of discoveries that have shaped the character of today's 
and tomorrow's communications systems.  In 1937, Dr. 
Clinton J. Davisson received a Nobel Prize and, in 1956, 
three others - Drs. W. H. Brattain, W. Shockley and J. 
Bardeen - shared another; hundreds of others have received 
awards and honors representing major distinction in their 
fields.

Systems Engineering represents a relatively recent addition 
to the Laboratories' organizational structure, but the 
function itself goes back many years.  Systems engineers 
have intimate knowledge of telephone plant and operations 
and maintain close contact with telephone company engineers 
concerning the Bell System's needs and opportunities for 
economy and improvement.  Systems engineers also keep in 
close touch with Labs' research and fundamental 
development.  Their function is to match new knowledge and 
new approaches to the needs.  They outline a broad 
technical plan for a development (such as electronic 
switching, communications satellites or T-1 carrier), its 
objectives, and its economic and service worth or military 
value.

The Systems Engineering Departments together comprise about 
17 per cent of the Labs' technical staff.

Largest of the technical groupings are the Development 
Departments, totaling about 70 per cent of the technical 
personnel.  Slightly less than a third of these are located 
in Branch Laboratories in Western Electric manufacturing 
locations at Burlington, Winston-Salem and Greensboro, 
North Carolina; Allentown and Laureldale, Pennsylvania; 
Columbus, Ohio; Merrimack Valley, Massachusetts; 
Indianapolis, Indiana; Kearny, New Jersey; and Baltimore, 
Maryland.

Development engineers have the responsibility of carrying 
out the project, creating detailed plans, developing 
hardware and equipment as needed, and providing WE with the 
designs and specifications for manufacture or purchase.  
Development work covers such areas as transmission, 
switching, electronic components, telephones and other 
customer products, power systems, data communications, 
outside plant, switchboards, and a number of developments 
for the Defense Department - including the Nike family of 
missile systems, radio command guidance, and underwater 
sound systems.

In practice, of course, research, systems engineering, and 
development all work very closely together and with Western 
Electric and the Bell Telephone companies.  Feedback from 
manufacturing, for example, often is an important factor in 
determining paths of scientific inquiry pursued in 
Research, as well as being a major consideration in Systems 
Engineering and Development.  And, of course, the needs of 
the telephone companies are controlling in establishing 
objectives for both Bell Telephone Laboratories and the 
Western Electric Company.

The interrelationship of groups in the Laboratories is 
illustrated by the transistor.  Discovery of the transistor 
effect came out of research into the nature of 
semiconductors.  Its perfection as a device was carried on 
by the Development organization concerned with electronic 
components.  When it had reached a stage of development, in 
terms of performance and economical manufacture, that made 
it feasible for use in the telephone system, Systems 
engineers begin to design communications around it.  These 
systems were then carried through to working hardware by 
the Development engineers and into manufacture by Western 
Electric.

For many years, both Bell Laboratories and Western Electric 
concentrated their cooperative effort on helping the Bell 
Telephone companies make telephone service available to 
more and more Americans.  In recent years, however, the 
Bell System network has been used to transmit more kinds of 
communications.  AT&T and the operating companies, 
therefore, now look more than ever to Bell Laboratories for 
innovations and improvements resulting from technological 
advance.

Most Bell Laboratories activities are carried on at four 
locations in New York and Northern New Jersey:

463 West Street, New York - now principally used for 
administrative and staff work.

Murray Hill, New Jersey - the main center of research work 
and of much of the work in electronic component development 
and transmission systems and development.

Whippany, New Jersey - the center for military research and 
development work.

Holmdel, New Jersey - a laboratory opened in 1962, with 
work going on in such fields as electronic switching, data 
communications transmission and switching, and new types of 
telephone equipment for the customer.

In Spring, 1964, Bell Laboratories announced plans to build 
a new center for development work on electronic switching 
systems near Naperville, Illinois fairly close to WE's 
Hawthorne Works.  About 1,200 people are scheduled to work 
at the laboratory when it is completed in 1966, including 
the electronic switching organization at Holmdel and a 
small number of WE engineers from Hawthorne Works and the 
Systems Equipment Engineering organization.

***************************************

IV - The Bell Telephone Companies

The communications research and development programs 
carried on at Bell Laboratories ... the equipment and 
services that Western Electric supplies . . . and the 
coordination of the entire Bell System effort provided by 
AT&T continue only so that the Bell Telephone company 
subscriber receives the variety of reliable communications 
service he desires.  The Bell Telephone companies are the 
last link in a chain of service which joins together all 
these other efforts.  Their success in meeting the needs of 
their subscribers measures the effectiveness of the entire 
Bell System.

The responsibility for satisfying the subscriber is not 
only an obligation which the Bell Telephone companies have 
accepted for themselves.  It is recognized by law.  Forty-
seven state commissions, and city councils in Texas 
regulate the activities of the operating companies in the 
territories they serve and evaluate their effectiveness in 
serving.  Under these regulations, the operating companies 
must carry on their business in terms of local needs.  
Expansion programs have to be planned and engineered to be 
worthwhile to the local customers.  Rates for service must 
be justified on the basis that the revenues are necessary 
to meet the costs of doing business within a particular 
area.  Since they are accountable under regulation and 
speak for the customer, the Bell Telephone companies, 
naturally enough, have a great deal of influence in setting 
the course of the whole Bell System.

There are 23 Bell Telephone companies, of which 21 are 
subsidiaries in which AT&T owns more than 50 per cent of 
the capital stock.  These 23 companies are:

New England Telephone and Telegraph Company

New York Telephone Company

New Jersey Bell Telephone Company

Bell Telephone Company of Pennsylvania

Diamond State Telephone Company (which serves Delaware)

Chesapeake and Potomac Telephone Company (which serves 
Washington, D.C.)

Chesapeake and Potomac Telephone Company of Maryland

Chesapeake and Potomac Telephone Company of Virginia

Chesapeake and Potomac Telephone Company of West Virginia

Southern Bell Telephone and Telegraph Company

Ohio Bell Telephone Company

Michigan Bell Telephone Company

Indiana Bell Telephone Company

Wisconsin Bell Telephone Company

Illinois Bell Telephone Company

Northwestern Bell Telephone Company

Southwestern Bell Telephone Company

Mountain States Telephone and Telegraph Company

Pacific Northwest Bell Telephone Company

Pacific Telephone and Telegraph Company

Bell Telephone Company of Nevada (a wholly owned subsidiary 
of Pacific Tel. & Tel.)

Southern New England Telephone Company (in which AT&T owns 
less than 20 per cent of the capital stock)

Cincinnati and Suburban Bell Telephone Company (in which 
AT&T owns just under 30 per cent of the capital stock)

(AT&T also owns less than three per cent of Bell Telephone 
Company of Canada stock.  Personnel of these two companies 
exchange pertinent information, and AT&T provides services 
to Bell Telephone of Canada under a license contract.)

The relationship between AT&T and the operating companies 
could be misunderstood, particularly by those who 
automatically equate stock ownership with ironbound 
controls.  The wide variety of local conditions existing in 
so large a nation as ours make close surveillance 
impractical.  Service arrangements and equipment 
requirements vary markedly from one part of the country to 
another.

And even within the territory of a particular operating 
company, needs can vary markedly from year to year, from 
place to place.  These needs can best be evaluated by men 
on the spot who can foresee special service requirements 
resulting from a mushrooming suburban community, for 
instance, or who can estimate the growth pattern of a 
community and therefore determine the necessity and 
location for additional central offices.

Each of the Bell Telephone companies has a Board of 
Directors composed of business men, educators and other 
prominent persons familiar with the problems and 
possibilities of their local area.  The particular 
corporate structure varies slightly in details from one 
operating company to another, but we can describe the 
management organization of a typical (and hypothetical) 
operating company.

Reporting to the Board of Directors of such a company, and 
responsible for its operations is the president.  Reporting 
directly to the president are company officers heading 
organizations equivalent to Western Electric Divisions, 
although in most operating companies' terminology they are 
described as departments.  These generally include the 
following: operating, personnel, information (or public 
relations), secretary, legal, treasurer, and comptroller.  
A vice president and general manager heads the operating 
department which includes the functions and services of the 
general plant manager (including construction and plant 
engineering), the general traffic manager (including 
central office and PBX operators), the general commercial 
manager (including rates and telephone development studies, 
business office activities and the servicing of public 
telephones) and the chief engineer (including building 
equipment, outside plant and radio transmission).

Essentially, AT&T asks only that the operating companies be 
well run, that they provide good service, treat employees 
equitably, maintain a favorable image among the public they 
serve and return reasonable profits on the money invested 
in their operations.  How these things are done, by and 
large, is left to the operating companies.

AT&T naturally keeps close watch on trends which seem to be 
developing in a way that could affect the business.  AT&T 
is the Bell System's contact with Federal Agencies such as 
the FCC, and there are many special services performed by 
AT&T under the terms of the license contract already 
discussed.  Without such centralized coordination by AT&T, 
achievements like the nation-wide changeover to dial TWX 
service in September, 1962 and the continuing System-wide 
move toward total Direct Distance Dialing would be 
impossible.

The contractual relationships between Western Electric and 
the Bell Telephone companies is embodied in the Standard 
Supply Contract that Western Electric has with each of the 
operating companies.

These contracts outline the materials and services that 
Western Electric will provide to the operating telephone 
companies at their request and include the terms and 
conditions upon which these materials and services are 
provided.

One of the provisions of the Standard Supply Contract 
succinctly explains the uniqueness of the relationship 
between WE and the telephone companies.  This is the one 
that states "nothing herein contained obligates the 
Telephone Company to purchase any materials from the 
(Western) Electric Company." WE can retain their business 
only by virtue of the quality of its products and services 
and its low prices.

That our company does supply much of the Bell Telephone 
companies' needs is tacit recognition of the 
resourcefulness of WE people in meeting the requirements of 
the operating companies and a validation of the concept of 
teamwork which unifies the Bell System's efforts.


***************************************

Part Two:

Western Electric

***************************************

V - History of Western Electric


In January, 1869, a laconic entry in the Journal of the 
Telegraph announced that the firm of Shawk and Barton had 
been formed in Cleveland, Ohio for the manufacture of fire 
and burglar alarms and other electrical devices.  This was 
the acorn of enterprise.

Today, Western Electric is one of the top dozen 
corporations in American industry.  Growth to help the Bell 
System meet growing public demand for its services has been 
a constant factor in Western Electric's history.

At the outset it was a small company, a shoestring 
enterprise of which the physical plant comprised the 
equipment of the former Western Union repair shop in 
Cleveland.  George Shawk had been the foreman of the shop, 
Learning it was to be up for sale, he looked for a partner 
to share the purchase with him.  The man he found was Enos 
M. Barton, a 27-year-old telegrapher from Rochester, N.Y. 
They opened for business in January, 1869.

Among the new firm's customers was a former Oberlin College 
Physics professor, Elisha Gray.  An inventor, Gray used the 
small company as a source for parts and models for his 
experiments.  He and Barton soon found they shared a common 
enthusiasm for the future of electrical apparatus - 
particularly telegraphic devices.  Barton foresaw a long-
range development for the company in which be had invested 
all of his meager capital.  He looked to make it into a 
manufacturing Plant capable of playing a leading part in 
the dawning electrical age, and Gray soon came to share his 
convictions.  Shawk, however, felt such plans were too 
ambitious and offered to sell his half-interest to Gray.

Both Gray and Barton were acquainted with Anson Stager, 
former Chief of the U.S. Military Telegraphs during the 
Civil War.  Learning of their plans, Stager advanced Gray 
the money needed to buy the half interest and also agreed 
to become an equal partner at such time as the two men 
could arrange to move the business to Chicago.  An 
agreement to this effect was signed on November 18, 1869 
and by the end of the year the firm of Gray and Barton was 
open for business in Chicago.

From the first, the company gained a reputation for 
integrity and quality workmanship in the manufacture of 
telegraph apparatus, fire and burglar alarms, the Gray 
telegraph printer and other devices.  Then the great fire 
of 1871 ravaged Chicago.  The fire was extinguished within 
two blocks of the Gray and Barton shop and their emergency 
service in producing equipment to restore communications in 
the stricken city won public approval and brought 
unprecedented business in supplying apparatus for the 
permanent replacement of equipment consumed by the flames.  
In 1872, the $150,000 Western Electric Manufacturing 
Company was organized as successor to Gray and Barton.  It 
soon became a major manufacturer of Morse instruments and 
began greater production of the Gray printer telegraph.

By 1876, the Western Electric trademark, affixed to a wide 
variety of electrical equipment, had gained high prestige - 
gratifying progress for a firm less than 10 years old that 
numbered but 65 people on the payroll.  At the Centennial 
Exposition held that year in Philadelphia, Western Electric 
won five gold medals for devices of its own manufacture.

At the same exposition, Alexander Graham Bell demonstrated 
a device which he called the telephone.  His patent for the 
telephone, U.S. No. 174,465, had been issued four months 
before, on March 7.

On January 28, 1878, the first commercial telephone 
exchange in the world opened for service at New Haven.  The 
first directory appeared a month later.  It listed 50 
names.

The popularity of the telephone had grown to such an extent 
that by the end of 1881 there were 70,000 telephones in 
service.  On January 12 of that year, the Inter State 
Telephone Company opened the first commercially successful 
long distance line spanning the 45 miles between Providence 
and Boston.  Almost every month new exchanges were opening 
and much experimentation was being carried on concerning 
long distance transmission.  The quality of service varied 
markedly, however, and there was no attempt at 
standardization by the various telephone companies.

It was apparent to the American Bell Telephone Company that 
common standards and a common purpose shared by the people 
who made telephone equipment and those who operated it 
would prove essential to the orderly development of the 
telephone.  Since Western Electric had pioneered much 
electrical equipment and telephone apparatus - the Scribner 
switchboard, for example - the company was clearly well 
qualified to manufacture Bell Telephone equipment.  
Moreover it has a reputation for high quality products 
built to offer reliable, long-lived service.


WESTERN ELECTRIC ENTERS THE BELL SYSTEM

Thus early in 1881, General Stager, Western Electric 
president, and Theodore N. Vail, at that time general 
manager of the American Bell Telephone Company, explored 
the possibility of Western Electric becoming the 
manufacturing unit of the Bell System.  As a result, the 
Bell company acquired an interest in Western Electric 
Manufacturing Company.

Further capital expansion was required and as a result, in 
late November, 1881 the company was reorganized as the 
Western Electric Company of Illinois with a capitalization 
of $1,000,000 in which the American Bell Company had a 
major interest.  The first manufacturing contract between 
the parent organization and Western Electric was signed on 
February 6, 1882.

Western Electric's entry into the Bell System was the 
capstone to General Stager's career.  In January, 1885 
failing health made it necessary for him to resign the 
presidency of the company.  In March, a month before his 
60th birthday, he died.  William S. Smoot, of the Remington 
Arms Company, succeeded Stager as president but died within 
a year, to be succeeded by Enos M. Barton.  At his 
accession, the fin-n be had helped to found 17 years before 
had become one of the largest units in the Bell System.

These early years of Western Electric's existence had been 
an era of expansion for the whole American economy.  So 
vast the scope of growth, so rapid the rate, it was 
difficult for anyone to assess the change.  With pride in 
achievement, there was a growing desire by Americans to 
exhibit their progress to the world.  The four hundredth 
anniversary of the discovery of the New World provided an 
excuse for such an exhibit.

In 1890, the announcement that a world fair was to be held 
in Chicago two years later provoked a frenzy of activity by 
businessmen anxious to display the superiority of their 
wares.  The Bell System designed and constructed a record-
breaking 900-mile circuit between New York and Chicago.  
The circuit was personally opened by Alexander Graham Bell 
early in 1892 and was in full operation for several months 
before the delayed World Colombian Exposition finally 
opened.

By 1900, increasing business had created for the company a 
substantial competence in purchasing.  To Harry B. Thayer, 
manager of the company's New York branch, it was evident 
that if the items required by the various Bell Telephone 
companies could be purchased through Western Electric it 
would greatly simplify the task of insuring uniformity of 
quality and compatibility throughout the whole expanding 
network.


BUYING FOR THE BELL SYSTEM

Thayer discussed the idea with Theodore Spencer, general 
superintendent of the Bell Telephone Company of 
Philadelphia.  The first supply contract was signed by WE 
and the Philadelphia company in 1901.  By 1913, supply 
contracts had been executed with all the associated 
companies in the Bell System.  Since then, supply of items 
needed by Bell System companies for their operations has 
become a major part of WE's activity.

In 1897, the company constructed a building at 463 West 
Street, New York as Eastern headquarters of the business 
and to house the New York shop.  About the same time, WE 
introduced some major innovations in business that have 
since become standard throughout industry.  These included 
dimensional drawings of piece parts, the use of personnel 
records, specification and quality standards, and the 
establishment of training courses for college graduates who 
had come to the company. Many new distributing houses were 
also opened. In 1903 Barton authorized the construction of 
the first buildings of the Hawthorne Works at Cicero, 
Illinois.

By 1906, there were over 4,000,000 telephones in the 
country.  In the same year, 1906, Western Electric 
established a pension plan for employees - one of the 
earliest in American industry.

When, in 1907, Theodore N. Vail became president of the 
American Telephone and Telegraph Company, he undertook a 
reorganization of finances, general management, and 
engineering and research work.  In the summer of that year, 
AT&T development personnel moved their laboratory from 
Boston to New York and merged with a similar group of 
Western Electric people.  At the same time a number of WE 
development engineers in Chicago relocated in New York to 
form a part of the new centralized unit.  Up to this time, 
all telephones and apparatus made by Western Electric, 
whether in Chicago or New York, had been inspected in 
Boston by a section of AT&T headquarters engineering.  Now, 
inspection was taken over by Western Electric as a new 
function of its manufacturing activities.

The increasing responsibilities of the business as well as 
the advance of years had undermined Barton's health.  In 
1908, at the age of 66, he sought a less active role.  
Thayer was elected president to succeed him and Barton 
became chairman of the board, retaining this office until 
his death seven years later at the age of 73.  By now the 
nation had well over 6,000,000 telephones and WE's 
Hawthorne plant had continued to expand through the 
construction of additional buildings to meet the demands of 
the Bell Telephone companies.

The increasing demand for communications equipment required 
concentration on this job.  Accordingly, the company 
disposed of its power apparatus manufacturing business in 
1909.


"ONE POLICY, ONE SYSTEM, UNIVERSAL SERVICE"

In the fall of 1908, AT&T first made use of national 
advertising to tell the story of the Bell System as an 
institution of American life.  The theme of the message was 
"one policy, one system, universal service" and the parent 
company was to devote much energy in the years ahead 
realizing this end.

Impelled by the goal of a nation-wide network, Bell System 
engineers pursued scientific developments eagerly, seeking 
knowledge for practical application.  Late in 1912 Dr. Lee 
De Forest demonstrated a revolutionary device to a group of 
Western Electric and AT&T engineers.  It was an improved 
version of the prototype vacuum tube he had first conceived 
in 1906 and could, under some circuit conditions operate as 
a true amplifier.  One of the Bell System engineers at the 
demonstration, H. D. Arnold, set out to produce a higher 
vacuum tube.  His success made the three-element tube a 
reliable amplifying tool.

About the same time the oscillating capabilities of the 
vacuum tube were discovered independently by De Forest and 
E. H. Armstrong, and vast possibilities in carrier systems 
and in radiotelephone systems were opened up.  By mid-1914 
these possibilities were put into practical realization.  
Moreover, regarding audio breakthroughs in all respects, 
dependable engineering let life's activities have impact 
surprising by one s ordinary knowledge.

On October 21, 1915 the first trans-Atlantic radiotelephone 
call was placed between Arlington, Virginia, and Paris.  
The brief conversation was also picked up in Honolulu.  
Earlier in the year telephone service over wires had 
spanned the country from coast to coast; now trans-Atlantic 
radiotelephony had been proved to be possible.

In 1916, engineers of Western Electric and AT&T in 
cooperation with the United States Navy conducted a 
mobilization test and established a nation-wide 
communications network of telephone, telegraph, radio and 
teletypewriter service among points on the continent and 
ships deployed in the adjacent waters.  This communications 
network proved to be of great value when the United States 
entered the war in April, 1917.  One of its first off-
shoots was the ship-to-shore radio telephone equipment 
which Western Electric supplied the Navy in quantity.

The emergence of aircraft as an effective military weapon 
resulted in the need for air-to-ground communications and 
here again Western Electric was a pioneer.  WE also 
supplied U.S. Army cantonments, throughout the country with 
telephone equipment while the company's British branch 
developed a submarine detector, the "Nash Fish," for which 
its inventor, G. Howard Nash, was decorated by the British 
Government. WE's total sales during the war amounted to 
$31,918,000.


THE NETWORK GROWS IN SERVICE

With the Armistice, Western Electric refocused its interest 
on contributing to the Bell System network.  There were now 
10,000,000 Bell System and connecting telephones in the 
country.  The figure had doubled in just ten years.  In 
1919, the Bell System announced plans for the introduction 
of dial telephone service.  This was to prove a major 
undertaking for the Bell System's manufacturing and supply 
unit.

In 1922 Western Electric organizations handling Bell System 
telephone business were separated organizationally from 
those concerned with its electrical supply business.

In 1923 construction began on the Kearny Works.  The first 
production there was of telephone cable, in 1925.

The Bell System's rapid growth during the '20's and the 
consequent need for enormous quantities of apparatus and 
equipment made it quite clear that serving the growing 
nation-wide Bell System network had become a full time 
responsibility for Western Electric.  Consequently, in 
1925, WE formed the Graybar Electric Company, named in 
honor of Enos M. Barton and Elisha Gray, for the purpose of 
handling its electrical supply business.  The increasing 
responsibility of Bell System requirements dictated a 
further separation and, in 1928, Graybar's common stock was 
sold to its employees - a new departure in large 
corporation ownership.  WE's interest in Graybar was 
limited to preferred stock, the last shares of which were 
retired in 1941.

During 1918 Western Electric's various foreign operations 
had been regrouped in a subsidiary called International 
Western Electric Company.  In 1925, as an additional step 
in its effort to concentrate on serving the needs of the 
expanding Bell Telephone network, WE sold the subsidiary.  
Earlier in the same year, the Western Electric engineering 
department at West Street, New York, was incorporated as 
the Bell Telephone Laboratories.(3)

As an outgrowth of its research in telephony, Bell 
Laboratories developed and Western Electric produced, in 
1926, the equipment that made sound motion pictures 
practicable.  Early in 1927 Bell Laboratories gave the 
first public demonstration of television by wire when the 
then Secretary of State, Herbert Hoover, engaged in a brief 
conversation with AT&T president Walter S. Gifford on a 
relay between Washington and New York.


***************************************
Foot Note 3 - See Chapter III.
***************************************


A bit earlier in the year, commercial radiotelephone 
service opened between New York and London - with Western 
Electric equipment providing the means.  Then came the 
formal opening of telephone service between the United 
States and Mexico.

As the Bell Telephone network continued to expand, Western 
Electric concentrated on the production of step-by-step and 
panel dial-switching equipment to replace manual central 
office equipment.  In 1929 work began on a third great 
manufacturing location, the present Baltimore Works.  At 
mid-year, the country had never seemed more prosperous -nor 
had any of the other units of the Bell System.  The number 
of telephones in the nation now stood at 20,000,000.

On October 29,1929, some 16,000,000 shares of stock changed 
hands on the New York Stock Exchange.  In a stark 
demonstration that the science of economics also observes 
the law of gravity, values of corporate stock plummeted 
$15,000,000,000 by the end of the year.  Ahead lay long 
years of near-paralysis for the American economy.  Western 
Electric was to operate in the red for three years.

In 1931, the Bell System inaugurated teletypewriter 
exchange service whereby any subscriber in the TWX network 
could be switched to any other subscriber.  Equipment for 
this purpose was provided by Western Electric's subsidiary, 
the Teletype Corporation.

On November 1, 1931 Western Electric acquired the Nassau 
Smelting and Refining Company at Tottenville, on Staten 
Island, New York.  By this means, the company obtained a 
facility adequate to permit it to handle Bell System scrap, 
centralize scrap reclamation and assure the System of a 
dependable supply of secondary non-ferrous metals.


INNOVATION FOR DEVELOPMENT

The long-range development of the Bell System continued 
despite the Great Depression.  In particular, overseas 
telephone service was expanded to many parts of the globe.  
In 1930, for example, Poland, Finland, Argentina, and 
Australia - among other distant lands - were linked to the 
United States by telephone.  In 1931, Indonesia, Romania, 
Brazil, and the Hawaiian Islands were some of the points 
added; in 1933, India, Yugoslavia, the Mandate of 
Palestine, and Nicaragua; and in	1934, Syria and Japan.

Then, on April 25, 1935, Walter Gifford, AT&T president, 
called T. G. Miller, vice-president - Long Lines.  The call 
from one office to another at 32 Avenue of the Americas 
traveled over a 23,000 mile circuit to become the first 
round-the-world telephone conversation.

During the same year, Bell Laboratories and WE engineers 
began development work that was to change the shape of 
America's telephones.  This was the design of the combined 
handset telephone.  Called the 300 desk set, it was 
introduced commercially by the Bell System in 1937.

There were innovations of major significance in equipment, 
too.  The first coaxial cable, used initially for multi-
channel telephone tests, was installed between New York and 
Philadelphia in 1936.  Toward the end of the year, a 
demonstration of the capabilities of coaxial cable was held 
for the press by Bell Telephone Laboratories.  Less than a 
year later, in October, 1937, the trial began of a new type 
of central office switching equipment - crossbar - that 
greatly improved the speed of telephone calls and made 
direct dialing a reality.  Shortly afterwards, WE 
installers began work on a crossbar office at Troy Avenue 
in Brooklyn, New York.  This office, the nation's first 
commercial crossbar installation, cut into service on 
February 13, 1938.


WESTERN ELECTRIC IN WORLD WAR II

Begun in economic disaster, the '30's ended in War.  As 
Germany once again prepared to overrun Europe, America 
began to arm.  In June, 1939 the Federal Government 
authorized Western Electric to proceed with the manufacture 
of Signal Corps test sets.  This order for more than 
$700,000 of equipment was WE's first major government 
contract of World War II.

To be ready for the worst, the United States rapidly sought 
to develop effective armed forces.  A vast chain of new 
military camps and bases came into being, each requiring 
extensive communications facilities.  At the same time, 
American industry faced the familiar wartime problems of 
scarcity of men, materials, and equipment.  In addition to 
a primary responsibility to supply communications equipment 
and services to the Bell Telephone companies, the needs of 
the Government became increasingly important.  The skills 
acquired in serving the Bell System enabled WE to help meet 
these needs.  In 1940, total WE sales to the Government 
reached $3,500,000.  At the end of 1941, the figure stood 
at $41,000,000.

With Pearl Harbor, the United States found itself engaged 
in a conflict of unparalleled scope.  From the beginning of 
hostilities the Army and Navy indicated their confidence in 
the company's manufacturing and engineering skills by 
entrusting Western Electric with the development and 
production of numerous electronic devices - gun directors, 
bomb release computers, radar systems and underwater war-
fare equipments.

As the war progressed, an increasing proportion of the 
company's manufactures for the Government consisted of 
radar and associated equipment.  In all, WE supplied 70 
different types of radar during World War II.  Their dollar 
volume equaled half of all the radar purchases made by the 
Government.

By utilizing peacetime facilities to the utmost, by 
subcontracting, and by extensive leasing of existing plant 
facilities, Western Electric was able to limit its 
emergency plant investment to less than $6,000,000.  This 
policy not only shortened the interval between development 
and production but also avoided construction expense that 
would otherwise have added to the overall burden on the 
nation's war economy.  From 1942 through 1945, Western 
Electric supplied the Government with more than 
$2,300,000,000 worth of equipment for the Armed Forces.

Service to the nation's defense effort was by no means 
concluded with the end of World War 11.  Development work 
on the Nike missile had begun before the end of the war and 
in periods of crisis ever since, notably during the Korean 
Conflict, the company has hastened to respond to emergency 
needs.  The history of WE since 1945 is replete with 
contributions to the nation's defense and space programs, 
examples of which are cited later in this book.


POST WAR RECONVERSION

When victory came, America found there were problems in 
returning to peace.  For Western Electric, re-conversion 
proved a formidable task.  The Hawthorne Works had to 
reconvert 90 per cent of its manufacturing area.  At 
Kearny, re-conversion was involved to the extent of about 
50 per cent of the telephone shops.  The third WE Works at 
Baltimore required little re-conversion as the normal wire 
and cable facilities there were used during the war for 
materials of similar character required by the Armed 
Forces.

Western Electric's contribution to victory had necessarily 
resulted ill a concentration on war work largely to the 
exclusion of its normal effort in serving the Bell System.  
The War Production Board had permitted only those additions 
and improvements to Bell System facilities that were 
necessary to the conduct of the war or for the repair and 
maintenance of essential civilian communications.

The shift in Western Electric activity from war emergency 
to the demands of peace can be clearly seen in the figures 
for 1945.  Of total Bell Telephone sales of $188,916,000, 
about 37 per cent occurred during the final quarter of the 
year.  In these first months of peace, Western Electric 
delivered 600,000 telephones - 60 per cent of the company's 
total telephone production for the year.  It represented a 
higher production rate than at any previous time in 
history.

At the end of 1945, there were 27,946,000 telephones in the 
United States of which 22,446,000 were Bell Telephones.  At 
the end of 1961 the year the number of AT&T shareowners 
passed two million - there were 84,450,000 telephones in 
the United States of which 68,640,000 were Bell.

Yet numbers can only suggest the whole story of 
accomplishment.  Today, the flexibility and versatility of 
the Bell System communications services which Americans 
make use of and depend on - and the array of instruments, 
apparatus, and equipment providing them - are far and away 
the finest in the world.


NEW PLANTS, NEW PRODUCTS, NEW PEOPLE

In helping make this so, virtually a new Western Electric 
has come into being since World War 11.  At the end of 
1945, company investment in plant stood at $163,143,000.  
Included in this figure were $5,771,505 representing war 
emergency plant.  There were 80,029 employees. Just 18 
years later, investment in plant and equipment exceeded 
$906,183,000 and there were more than 147,000 WE people.  
Well over two-thirds of all employees are now engaged in 
the manufacture of products which did not exist at the end 
of World War II.  Of the 11 Western Electric locations 
designated as Works - Hawthorne, Kearny, Baltimore, 
Allentown, Indianapolis, North Carolina, Merrimack Valley, 
Omaha, Columbus, Oklahoma City, and Kansas City - all but 
the first three have been built since 1947, and all of the 
three pre-war Works have been so enlarged and renovated as, 
in effect, to qualify as new facilities.

In the spring of 1946, the first multi-channel ultra-high 
frequency microwave system in the Bell System was placed in 
service in Southern California.  Six weeks later, another 
microwave system linking Nantucket with the Massachusetts 
mainland opened for service.  These two events foreshadowed 
the Bell System's intricate and widespread web of microwave 
systems which have since become a standard part of the 
integrated Bell Telephone network.

In the following year, a major manufacturing development 
was announced which also helped provide the means for Bell 
Telephone companies to meet the demands for communications.  
The product was called Alpeth cable, an acronym indicating 
that aluminum and polyethylene comprise the cable 
sheathing.  It came about, characteristically, as a result 
of Western Electric's search for better ways of making 
products of high quality at low cost.

It was in 1947, too that WE's manufacturing division 
devoted considerable effort to the development of 
engineering techniques for the production of No. 5 crossbar 
- initially designed for use in telephone company offices 
adjacent to metropolitan areas.  Other new products 
developed about the same time: No. 4 toll crossbar, 
Automatic Message Accounting (AMA) equipment and the 555 
PBX.

The country's first No. 5 crossbar office cut into service 
at Media, Pennsylvania on July 11, 1948.  Twelve days 
earlier, on June 29, the 30,000,000th Bell telephone was 
installed in Marshalltown, Iowa.  The following day at 
Murray Hill, New Jersey, Bell Telephone Laboratories held 
the first public demonstration of a device that was to 
usher in the new era of electronics.  This was the 
transistor.

The fortnight of firsts symbolizes the concerted efforts of 
Western Electric and its Bell System teammates in meeting 
the immediate requirements and building for the long-term 
development of the nationwide Bell Telephone network.  In 
effect, it has proved to be a cycle of progress.  As the 
component members of the Bell System worked together to 
provide more and better communications services, their 
success in this respect stimulated further demand, calling 
for a larger effort that, in turn, has induced a still 
greater demand.

The increase in the use of coaxial cable illustrates this 
trend.  On October 1, 1948, a $12,500,000 coaxial cable 
system opened to link the East and Midwest.  During 1949, 
this network was extended 7,600 miles.  A decade later 
there were 83,000 miles of Bell System TV circuits.  And 
the product has been steadily improved, too.  The coaxial 
cable which Western Electric now makes contains 12 coaxial 
units that can carry 11,160 conversations at the same time, 
or -with a lesser number of conversations - a variety of 
other communications like DATAPHONE service and TV.

(Needless to say, it hasn't been roses all the way.  As a 
member of the American industrial community, Western 
Electric has naturally shared in the downturns as well as 
the rises in the economy.  In fact, history has shown that 
the demands of the telephone companies are quite volatile 
and WE must expand and contract its production to meet the 
needs of the Bell System.  Western Electric's fluctuations 
in Bell business volume and earnings have been as great as 
those experienced by other manufacturers who serve a 
variety of customers.)

During 1950, the kinds of telephones offered the public by 
the Bell Telephone companies increased.  In response to the 
goal of service, for example, the "500" desk set telephone 
was brought into production at the company's newly opened 
Indianapolis Works.  During the same year, production began 
on the volume control telephone, designed for the benefit 
of the hard of hearing.

Then came the nite-light telephone, the Speakerphone, the 
CALL DIRECTOR(R) (1958) and the PRINCESS(R) telephone 
(1960).  Production of color telephones began in 1954 and 
soon outpaced the regular black sets.  The CARD DIALER(R) 
moved from the Indianapolis Works' model shop, where new 
telephone designs are produced for preliminary test and 
evaluation, to a regular production line in 1961, and then 
came the TRIMLINE(R) telephone and the telephone set for 
TOUCH-TONE(R) service in 1963.

But more significantly, the current of change altered 
products made by Western Electric of which the average Bell 
Telephone company subscriber is hardly aware.  This is the 
vital, unseen switching equipment that enables him to call 
any of the millions of telephones in the United States in a 
matter of seconds, and reach the majority of other 
telephones in the world.

In 1952 Western Electric shipped the first 4A crossbar 
switching equipment, a key element in the nation-wide long 
distance operator toll dialing program.  Direct Distance 
Dialing, first demonstrated in 1951 with a cross-country 
call from the Mayor of Englewood, New Jersey, to the Mayor 
of Alameda, California, has grown in service so that at 
present well over half of all Bell Telephones can reach a 
distant number without the need for operator assistance.

During the late '50s and early '60s development work 
progressed on a new concept of switching which will 
gradually supersede electromechanical switching in the Bell 
System.  Initial production on two Electronic Switching 
Systems (ESS) began in 1963.  One of these is for central 
offices and the other for private branch exchange use.  The 
first commercial central office was scheduled for service 
at Succasunna, New Jersey, in July, 1965, and the second, 
in Baltimore, about the same time.  The first commercial 
system for private branch exchange use was installed at 
Cocoa Beach, Florida in 1963.

Toll transmission has altered greatly, too.  In 1949, for 
example, only radio carried overseas calls; cable was the 
backbone of the telephone network stretching across the 
continent.

Today, an intricate web of radio relay systems now provides 
routes for many of the daily toll telephone calls and for 
most of the network television transmission while underseas 
cable systems span oceans.

The Bell System's recent underseas cables make use of a 
repeater (developed by Bell Laboratories and manufactured 
by Western Electric) which enables a single cable to 
transmit in both directions.  Hitherto, the Bell System 
used separate cables.  Thus, through the Bell Laboratories 
-Western Electric teamwork, underseas cable repeaters were 
designed and produced to span the Atlantic.  And, through 
the continuing research for better ways of serving, these 
repeaters, of revolutionary design when first produced in 
1955, were superseded just seven years later by equipment 
of new design which afforded improved service.


NEW AND BETTER WAYS OF SERVING

The list of new communications products and services that 
have come into being through Bell System teamwork is a long 
and satisfying one.  Western Electric's contributions to 
this team effort have taken the form of an intensive search 
for better, faster and more economical service to the 
operating companies.

To maintain the lowest possible prices and at the same time 
maintain the traditionally high level of Bell System 
quality, Western Electric people constantly seek new and 
more efficient means of doing business.  To this end, they 
have devised new manufacturing processes and machines, 
developed new materials handling and storage, making ever 
more effective use of special skills and working with 
40,000 suppliers to determine bow best to use the products 
and services they supply.  There is scarcely a single 
operation in the company's manufacturing, service and 
supply activities that cannot support evidence of how basic 
the quest for innovation is to Western Electric's concept 
of serving the Bell Telephone companies.


SERVICE TO THE NATION

As a result of work undertaken by Bell Telephone 
Laboratories and Western Electric at the request of the 
military, Nike Ajax became the United States' first 
operational ground-to-air anti-aircraft missile in 1954.  
In 1958, Nike-Hercules became operational.  It has three 
times the range of Ajax, is able to intercept intruders at 
altitudes from less than 1,000 feet to over 100,000 feet, 
and can also destroy certain types of short-range tactical 
missiles.  Next came development work on Nike Zeus, 
designed to help protect the nation from attack by ICBM's, 
with the still more advanced and efficient Nike X presently 
under development.  Western Electric and Bell Laboratories 
also worked together to produce the guidance system for the 
nuclear-warhead Titan I ICBM.

Other major defense contributions made by Western Electric 
in recent years include the DEW (Distant Early Warning) 
Line and its extensions; White Alice, a 3,000-mile 
communications system which ties together far-flung Alaskan 
defenses; the Aleutian Communications System; SAGE (Semi-
Automatic Ground Environment) System; BMEWS (Ballistic 
Missile Early Warning System); a military undersea cable 
system, MILS (Missile Impact Locating System); and of 
course, the world-wide network for Project Mercury which 
has served America's astronauts so well.  Significantly, 
each of these projects requires co-ordination efforts of 
great magnitude to realize the challenge of reliability and 
the urgency of deadline.  All were delivered, fully 
operational on schedule.


THE CONSENT DECREE

On January 24, 1956, a Final judgment restricting, with 
certain exceptions, AT&T and its operating subsidiaries to 
furnishing regulated common carrier communications services 
and furnishing services or facilities for the Government 
but preserving the long-standing relationships between the 
manufacturing, research and operating members of the Bell 
System, was entered in the United States District Court in 
Newark, New Jersey.  This judgment brought to a close the 
Justice Department's seven-year-long antitrust suit against 
Western Electric and AT&T that sought to separate the Bell 
System's manufacturing from its operating and research 
functions.

Western Electric is limited, with certain exceptions, to 
the manufacture of equipment of a type manufactured for 
sale to the companies of the Bell System for common carrier 
communications services, and to any business of a character 
or type engaged in for the Bell System. (These limitations, 
however, do not apply to the manufacture of equipment for 
the Government or to any business engaged in for the 
Government.) This restriction applies to the activities of 
WE subsidiaries as well.

The judgment also requires that any applicant be licensed 
for any equipment under all existing or future United 
States patents of the Bell System.  Such patents issued 
prior to the date of the judgment must be licensed on a 
royalty-free basis.  Any patents issued subsequent to that 
date must be licensed at reasonable and non-discriminatory 
royalties.

The judgment also requires Western Electric to furnish to 
any applicant (other than foreigners or companies 
controlled by foreign interests) who is licensed under the 
judgment, manufacturing drawings and specifications 
relating to any licensed equipment that WE manufactures for 
sale to Bell System companies, and furnish them at a 
reasonable charge or charges.(4)


THE EVE OF ADVANCE

In reviewing any record of achievement as notable as that 
which summarizes Western Electric activities in recent 
years, there is a danger that the details of accomplishment 
will obscure the total design of which they form a part.  
Many more examples could easily be adduced, many more 
figures cited, to demonstrate that since World War II, the 
company has undergone a period of major innovation.  But 
though citations support, they do not explain, and Western 
Electric's effort has been only a means to an end.

The success with which the company has provided better and 
more economical equipment and service is not the result of 
separate actions aimed at coping with a series of 
individual requests, nor has it been a passive response to 
the urgency of Bell System needs.

Rather the initiative of Western Electric's continuing 
contribution to the improvement and expansion of the Bell 
Telephone network results from the close cooperation and 
shared responsibility of WE people and their Bell System 
teammates in meeting their common purpose.  It is because 
we are a member of the Bell System that Western Electric 
has concentrated always on the long-range development of 
communications.  In this sense, even our records of the 
'50s and '60s are of interest not as accomplishments in 
themselves but as preparations for further development.  
The past is prologue.

***************************************
Foot Note 4 - The full text of the judgment appears as the 
appendix of this book.
***************************************

VI - Structure of Western Electric

Western Electric's basic job is much the same today as it 
was in 1882 - to provide the Bell System with a reliable 
source of high quality communications equipment.  In 1882, 
however, there were only 60,000 Bell telephones in the 
country and a nation-wide network existed only as an 
ultimate (and to some scoffers, an unlikely) aspiration.  
Eighty-two years later, in 1964, the Bell Telephone network 
linked each of over 70 million Bell telephones with all the 
others - and the number keeps rising.  That this network 
exists as a flexible, versatile, and reliable reality, that 
it continues to grow in service, is due in large measure to 
the complex and compatible communications equipment and the 
supporting services supplied by Western Electric.

Needless to say, the volume of present-day Bell Systems 
communications has greatly altered the ways in which 
Western Electric fills its function as the manufacturing 
and supply unit of the Bell System.  Yet volume of demand 
does not alone establish the challenge and define the 
responsibilities that Western Electric accepts in 
fulfilling this function.

As we have seen, "new arts" in telephony have greatly 
changed the course of communications since World War II.  
They will continue to do so, creating for Western Electric 
the further challenge of providing new equipment and better 
service in an era of industry-wide technological advance.

But manufacturing products and supplying supporting 
services, though basic and major aspects of WE's total 
activity, are not the whole story.  They are, after all, 
parts of a sum of activity which in its totality gives 
Western Electric a place unique in American industry.  The 
uniqueness derives from the concept of service to the Bell 
Telephone companies.  This concept is fundamental to the 
personality of Western Electric, unifying the efforts of WE 
people in the six areas of the company's function for the 
Bell System: manufacturing, systems equipment engineering, 
installation, distribution, repair, and purchasing.

A detailed description of how and where WE people work 
within the organizational structure of the company to fill 
their common goal of service comprises the next chapter.  
The nine company divisions in their particularity provide 
the means whereby the company fulfills its mission in the 
Bell System and serves the defense and space communications 
needs of the Government.

Before examining the details of operations, however, it is 
reasonable to survey the formal structure of management in 
Western Electric and to review the basic concepts and 
objectives that company management seeks to implement.  
These concepts and objectives define the mission of service 
to the Bell System.  Also in this chapter it is appropriate 
to summarize the standing committees which establish the 
procedures for general implementation of the policies that 
guide the management of the company's affairs in the 
continuing performance of the job.


BASIC OBJECTIVES AND CONCEPT OF MANAGEMENT

The Bell System exists to furnish communications services 
to meet the public demand, and the contribution it makes to 
the national welfare in meeting this demand depends upon 
the speed, quality, volume, responsiveness, and cost of its 
service.  The System developed integrated research-
development and manufacturing-supply units to meet its 
needs.  Western Electric, as its manufacturing and supply 
unit, has the responsibility to provide the operating 
companies with all materials and supplies they may order 
from Western, when required, at the lowest cost consistent 
with required quality and reliability.

WE management is charged with the responsibility for 
carrying out company objectives with "the highest degree of 
performance of which it is capable and in a manner 
consistent with the best industrial practices anywhere." 
There are seven objectives in evaluating the effectiveness 
of management action in carrying out this responsibility:

First - Service, Quality and Cost - Nothing less than good 
service, high quality and reasonable costs will be 
satisfactory.

Second - Earnings - The business must realize adequate 
earnings.  It must be kept financially healthy so that it 
can do those things required to insure service, quality and 
cost objectives.

Third - Treatment and Performance - Fair treatment of the 
customer and pleasant performance must be the rule at all 
times, under all circumstances.

Fourth - Balanced Consideration - Consideration of the 
customer, the employee, the public and the shareholder must 
be in sound balance and eminently fair to all.

Fifth - Research and Development - There must be constant 
and adequate effort on research and development in all 
fields of our endeavors for progress in production, quality 
and employment conditions.

Sixth - Long Range Planning - The importance of the long 
pull must never be overlooked in the solution of current 
problems.  Long range planning is essential to continued 
success.

Seventh - Stature as a Management - Integrity and dignity 
by all concerned are vital to successful management.


THE STRUCTURE OF MANAGEMENT

These seven considerations are constants to which general 
and specific company policies ever refer.  It was, for 
instance, the desire to integrate service operations and 
increase their value in terms of the changing needs of the 
Bell System that led to the creation of the Service 
Division in a major company reorganization announced on 
August 1, 1962.  Similarly, WE's continuing and searching 
cost reduction program, which affects every aspect of 
operations, derives from and is supported by the obligation 
of management to maintain reasonable costs.  Also, these 
seven goals are of equal import, each serving to support 
the others.

Long-range planning, for example, both requires and 
encourages vigorous research and development programs, 
contributes to earnings and seeks to continue the tradition 
of superlative service, high quality and low cost that is 
the bedrock of our business.

It is a challenging program, indeed, for management.  The 
question is, who is management?

In the sense that each of us performs his job with maximum 
efficiency and effectiveness, we are all managers.  
However, in an organization as large and complex as Western 
Electric, it is sometimes difficult to see how all the 
activities of all employees inter-relate and contribute to 
an ultimate end.  This being so, management can sometimes 
seem to exist as only a very vague "they.' Yet the 
structure of WE management, following the normal corporate 
hierarchy, is quite clear in pattern and based on the logic 
of review and delegation.  Western Electric is 99.82 per 
cent owned by the American Telephone and Telegraph Company.  
Like the other Bell System companies, basic direction is 
invested in a board of directors.  In 1964, there were 14 
Directors: six prominent business leaders, one educator and 
seven officers of the company.

The Board in its discretion appoints various of its members 
to its Executive Committee.  The Executive Committee can 
exercise most of the powers of the Board of Directors in 
the management of the affairs of the company during the 
intervals between meetings of the Board of Directors.  
However, the Executive Committee does not have power to do 
a number of things, including the filling of vacancies on 
the Board or on any committee of the Board.  Also, it may 
not amend the by-laws of the company.

As Chief Executive Officer of the company, the President 
supervises, directs, and controls, subject to the control 
of the Board of Directors, the business and affairs of the 
company.


THE EXECUTIVE POLICY COMMITTEE

The Executive Policy Committee is not the same as the 
Executive Committee of the Board of Directors, although 
there may be company Vice Presidents who are members of 
both.

The Executive Policy Committee is composed of Vice 
Presidents appointed by the President to review 
recommendations of company-wide significance submitted by 
divisions, officers and regular or special committees, and 
to take appropriate action on these recommendations.  On 
its own initiative, the Executive Policy Committee can 
originate special studies relating to broad outlines of 
company policy and operations and to assign topics for 
consideration and recommendations to appropriate committees 
or divisions.

The management of the company is undertaken through nine 
divisions, each under the direction of a Vice President, 
and each in turn responsible to the President.

The management of the various divisions is autonomous 
within the limits of the company policy, and those limits 
are prompted by sound consideration of company results and 
objectives. (There are some exceptions in specific areas 
where the President or Board of Directors has delegated the 
authority and responsibility to one division or to one 
officer to act for another division or for the entire 
company.)

In addition to the Executive Officers and certain 
administrative officers who are among the officers elected 
by the Board of Directors there are some 100 Administrative 
Officers and Assistant Administrative Officers, who are 
appointed.  In this group are the heads of major 
organizations at headquarters, the managers at various 
locations and their major assistants.  These men implement 
company policy through the various divisions and through a 
number of standing and special committees.

Like most large corporations, Western Electric does much of 
its planning through committees as a convenient means for 
establishing procedures to implement policies.  As noted, 
some are appointed by the Board of Directors, others by the 
President or other officers of the company.  These 
committees operate within specified areas.  In policy 
matters or matters of company significance which require 
action broader than the prescribed authority of the 
particular committee, the committee's recommendations are 
presented to the Executive Policy Committee for 
consideration and action.

There are a number of important committees that warrant 
mention here.  These are made up largely of Executive 
Officers and Administrative Officers and their functions 
are described in the GI series issued by Secretary's 
Organization.5

These committees are: Employee Benefit Committee; General 
Personnel Committee; Labor Relations Committee; Realty 
Committee; Contributions and Memberships Committee; 
Publications Committee; Research and Development Committee; 
Management Development Advisory Committee; Vail Medal 
Committee of Award.


THE CHAIN OF SUPERVISION

The various line and staff organizations reporting to the 
Vice Presidents and Administrative Officers will be 
described in detail in the next chapter.  As this point, in 
the discussion of WE Management it might be wise to outline 
the structure of supervision: Chief Executive Officer; 
Executive Officer; Administrative Officer; Assistant 
Administrative Officer; Superintendent; Assistant 
Superintendent; Department Chief; Section Chief.

The functions of the Chief Executive Officer and Executive, 
Administrative and Assistant Administrative Officers have 
been noted above.  The superintendent level is usually 
referred to as the fourth level of management in Western 
Electric.  Included in this group are managers of 
Distributing Houses, Installation Areas and Manufacturing 
Shops as well as certain managers in staff organizations at 
headquarters.  At all company locations except major Works 
and Plants and Headquarters the superintendent is the chief 
management man on the spot.


***************************************
Foot Note 5 - It may be noted here that company directives 
and instructions are published in three forms. (I) General 
Instructions are the principal information on which all 
other directions or instructions are based. Basically they 
cover three areas:	the duties, responsibilities and 
authority of Executive and Administrative Officers; 
descriptive charts showing the general structure of 
organization; the membership and duties of major 
committees. (2) Directives are issued to establish the 
duties and responsibilities of company officers and the 
policies which they implement. (3) Instructions are issued 
to inform organizations of the subject matter of the GI's 
and the Directives.
***************************************
 
A typical superintendent has three assistant 
superintendents reporting to him.  In turn the typical 
assistant superintendent has three department chiefs 
reporting to him.  Departments vary in size from location 
to location and from division to division.  Some 
manufacturing locations have departments of more than 100 
people working on a single component.  Other departments, 
particularly in engineering and staff organizations may 
have as few as two people because of the highly technical 
or professional nature of the work performed.

At most locations, the section chief is the first level of 
management.(6)

The installation organization of the Service Division has a 
unique problem in conducting work at thousands of different 
locations every year.  On small jobs, where it is not 
feasible to have a full time supervisor at the site, an "in 
charge' man is frequently named.  He has certain 
supervisory functions to perform between visits from his 
designated job supervisor.


***************************************
Foot Note 6 - At some older locations, there are also group 
chiefs, who report to the section chiefs.  There are 
relatively small numbers of these, however.
***************************************

VII - The Nine Divisions


This chapter summarizes the activities carried on by the 
nine Western Electric Divisions, and is, therefore, 
necessarily replete with detail.  There is consequently a 
danger that the concentration on detail will obscure the 
focus of the overall purpose of this complex of activity.  
For this reason it might be well to preface the 
descriptions that follow with a general observation and a 
brief review.

The general observation comes close to being a truism; it 
is simply this: activities are not carried on for their own 
sake.

Each activity undertaken by an employee is a contribution 
to the company's ultimate objectives and the value of any 
effort, therefore, depends not just on the care with which 
it is performed as a particular operation but on the 
contribution it makes to the overall excellence of the 
whole endeavor.  For this reason, it is well to bear in 
mind that all the activities of all WE organizations are 
carried on to further the common purpose, just as all the 
members of the Bell System work together.

Within Western Electric, the concepts and objectives of 
management, as outlined in the previous chapter, provide 
the general direction for the company's effort in providing 
the products and services wanted by the Bell Telephone 
companies.  The same values enable the company to fill its 
other mission of service to the nation.

The various committees supply general procedures for 
implementing policies prompted by WE's objectives and for 
managing the company's affairs.  The supervisory hierarchy 
provides the means of translating objectives and procedures 
into action, evaluating the response, and assuring the 
common purpose of effort.  And all of these operate to 
organize the activities of each of the nine Divisions into 
which the complex of Western Electric is divided 
administratively.

These Divisions, each headed by a Vice President, are: 
Manufacturing, Service, Administration, Engineering, 
Defense Activities, Legal and Patent, Finance, Personnel 
and Public Relations, and Organization Planning.

Three of these Divisions - Manufacturing, Service, and 
Defense Activities - employ about 95 per cent of WE people 
and are directly concerned with the fulfillment of WE's 
mission.

The component organizations and groups within each of these 
Divisions require a wide range of job skills and interests 
to carry on their particular operations.  Not everyone in 
Manufacturing actually produces a product or directs those 
who do.  To operate a Works or Distributing House or carry 
out installation work calls for supporting services in wide 
array: engineers, draftsmen, accountants, industrial, labor 
and public relations personnel, nurses, guards, 
stenographers, and planning people, to name but a few.  
Because they are employed at a particular location in a 
particular Division, they are carried as members of that 
Division.

The other six WE Divisions - Administration, Engineering, 
Legal and Patent, Finance, Personnel and Public Relations, 
and Organization Planning - are chiefly concerned with 
providing direction, advice, and assistance in their 
particular fields of interests as defined in their 
delegations, and most - but not all - of the people in 
these Divisions are located at company Headquarters in New 
York.


MANUFACTURING

In terms of employees, this is by far the largest of the 
nine Divisions.  The total number of employees accounts for 
about 63 per cent of all WE people.

The array of products and their component parts 
manufactured in Western Electric totals some 50,000 
different items.  The list covers everything from 
telephones (and a score of different types of telephones 
are manufactured at Indianapolis Works) and switchboards, 
switching equipment, wire and cable, microwave systems, to 
many of their component parts.  A good number of these 
items are made in quantity - about seven million telephones 
a year, for instance, and billions of feet of wire and 
cable.  Many others, however, are made only in the hundreds 
or thousands during the course of the year to perform 
highly specialized functions or to maintain the 
serviceability of Bell System equipment which has been long 
in use though still reliable in operation.

There is similar contrast in size: crossbar frames over 
eight feet high and thermistors so small they are nearly 
invisible.  Some WE products like coils and certain 
mechanical switches are relatively simple to understand; 
others are so complex in assembly, so special in function 
as to seem at first glance incapable of uniform quality 
production.  The underseas repeaters that Western Electric 
produces to provide two-way transmission over a single 
underseas cable, for example, consist of painfully precise 
assemblies of 5,000 parts built to provide at least 20 
years of continuous service.

One thing is common to all these items despite their 
diversity of size, volume, and function: the mark of 
uniform high quality.

Supported by the tradition of craftsmanship which dates 
from the founding of the company, maintained by the quest 
for continuing innovation in product and service, Western 
Electric quality is compounded from fine materials, 
engineering skills and the efforts of able personnel.  Of 
equal importance is the concerted effort by all WE people 
to provide equipment and services at the most reasonable 
cost possible.

The scale of the job in itself makes this an immense 
challenge.  To meet the challenge so that all parts of WE's 
total manufacturing effort contribute to the company's 
overall goals, the Manufacturing Division, under the 
direction of a Vice President, has four major subdivisions, 
each headed by a Vice President.

These subdivisions are:

Vice President - Manufacturing - Area A has reporting to 
him Baltimore Works, Indianapolis Works, Kearny Works and 
the Buffalo Plant.  He also is responsible for supervision 
of the company's interest in Nassau Smelting and Refining 
Company, Inc. (see Chapter 8).

Vice President-Manufacturing-Area B has reporting to him 
Columbus Works, Hawthorne Works, Oklahoma City Works and 
Omaha Works.  He is also responsible for supervision of the 
company's interest in Teletype Corporation and 
Manufacturer's junction Railway Company (both discussed in 
Chapter 8).

Vice President-Manufacturing-Area C has reporting to him 
Allentown Works, (and the Laureldale Plant), Kansas City 
Works, Merrimack Valley Works, and North Carolina Works.

Vice President-Manufacturing Staff has reporting to him the 
Division Comptroller and Engineer of Manufacture.

The general and specific duties, responsibilities, and 
authorities of this management are listed in detail in the 
G.I. 2 series, published by the Secretary's organization.  
At this point it might be more helpful to survey the 
various items produced at each of the locations in the 
three Manufacturing Areas, and then review briefly the 
functions performed by the organizations reporting to the 
Vice President -Manufacturing Staff.

An understanding of the organization of the Manufacturing 
Division requires a brief digression into intra-company 
terminology.  It's a question of semantics, really.  Words 
like "Plant," "Works," and "Shops," when capitalized have 
specific meanings at WE, though the reasons may not always 
be clear and the distinctions do not necessarily apply 
elsewhere in the Bell System.

To take one example, Webster's defines "plant" as "... the 
machinery, apparatus, fixtures, etc., sometimes the real 
estate employed in carrying on a trade or mechanical or 
other industrial business." In Western Electric usage, 
"Plant" has a more limited meaning.  Strictly speaking, 
there are only two WE Plants - with a capital P. One is at 
Buffalo, New York; the other in Laureldale, Pennsylvania.

Specifically, "Plant" refers to a separate, medium-sized 
manufacturing facility, encompassing several "Shops."  
"Shop" is used to describe a manufacturing unit under the 
direction of a superintendent, that produces one particular 
product family, like crossbar equipment or cable.  Major 
manufacturing facilities, which comprise many Shops, are 
designated Works.  There are 11 WE Works and they are 
responsible for the great bulk of the company's 
manufacturing output.

Five of these Works operate satellite Shops with large 
manufacturing facilities employing sizable numbers of 
people and located physically apart from the Works to which 
each reports.  The Burlington Shops, for example, where the 
Speakerphone and ground radar and missile guidance 
equipment for the armed forces are made, covers well over 
700,000 square feet of manufacturing space.

With these distinctions in mind, the constitution of the 
three Manufacturing Areas is easier to understand.  It is 
as follows:



Manufacturing-Area A



Facility and Principal Products

BALTIMORE WORKS
Baltimore, Md.
Occupied 1930

Toll, exchange, coaxial, and submarine cable; Telephone 
cords and plugs; Cable terminals; Terminal strips and 
protectors; Rubber-covered wire
***************************************
BUFFALO PLANT
Tonawanda, N. Y.
Occupied 1946

Equipment wiring cable;	Telephone cords;
Enameled wire; Insulated wire
***************************************
INDIANAPOLIS WORKS (Main Plant)
Indianapolis, Ind.
Occupied 1950

Telephone sets and components
***************************************
Washington Street Shop
Indianapolis, Ind.
Occupied 1957

Miscellaneous subscriber apparatus
***************************************
KEARNY WORKS(Main Plant)
Kearny, N. J.
Occupied 1925

Switchboards and consoles; Key equipment; Cable, wire; 
Miscellaneous wired equipment; Relays, jacks, keys
***************************************
Marion Shops
Jersey City, N. J.
Occupied 1947

Portable test sets; Rectifiers; Power equipment
***************************************
Fair Lawn Shops
Fair Lawn, N. J.
Occupied 1956

Coils, resistors, transformers, keys
***************************************
Clark Shop
Clark Township, N. J.
Occupied 1959

Submarine cable repeaters and components
***************************************
Queensboro Shop
Middle Village, N. Y.
Occupied 1929

Miscellaneous woodwork
***************************************


Manufacturing-Area B

Facility and Principal Products
***************************************
COLUMBUS WORKS
Columbus, Ohio
Occupied 1959

Crossbar and electronic switching equipment; Relays, 
including wire spring type Inductors, transformers, 
networks
***************************************
HAWTHORNE WORKS  (Main Plant)
Chicago, Illinois
Occupied 1905

Step-by-step, panel, and electronic PBX switching 
equipment; announcement systems, power equipment, cable, 
wire; Relays, capacitors, switches, jacks, keys;  
Transformers, inductors, networks; Ferrites, tools
***************************************
Clearing Shops
Bedford Pk., Illinois
Occupied 1937

Steel strand; Pole line hardware
***************************************
Montgomery Shops
Montgomery, Illinois
Occupied 1955

Data-Phone data sets; Wire spring relays; Test sets
***************************************
OKLAHOMA CITY WORKS
Oklahoma City, Okla.
Occupied 1960

Crossbar switching equipment; Coin telephones; Relays; 
Resistors
***************************************
OMAHA WORKS
Omaha, Neb.
Occupied 1958

Crossbar and PBX switching equipment; Relays, including 
wire spring type; Cable and wire
***************************************

Manufacturing-Area C

Facility and Principal Products
***************************************
ALLENTOWN WORKS
Allentown, Pa.
Occupied 1948

Semiconductors; Electron tubes; Dry reed and mercury 
switches; Mercury relays; Switchboard lamps
***************************************
KANSAS CITY WORKS
Lee's Summit, Mo.
Occupied 1961

Semiconductors; Electron tubes and switchboard lamps; Dry 
reed and mercury switches; Telephone repeaters; Carrier and 
microwave radio relay equipment
***************************************
LAURELDALE PLANT
Laureldale, Pa.
Occupied 1952

Semiconductors; Electron tubes
***************************************
MERRIMACK VALLEY WORKS(Main Plant)
North Andover, Mass.
Occupied 1956

Carrier and radio relay, telephone, telegraph and 
television transmission equipment; Telephone and telegraph 
repeaters, coils, transformers, capacitors, resistors, 
ferrites; Synthetic quartz crystal
***************************************
Lawrence Shop
Lawrence, Mass.
Occupied 1957

BELLBOY(R) receivers
Telephone repeaters and carrier
***************************************
NORTH CAROL]INA WORKS(Main Plant)
Winston-Salem, N. C.
Occupied 1954

Transmission equipment
In-band signaling units
Wage guide type equipment
***************************************
Chatham Road Shops
Winston-Salem, N. C.
Occupied 1946

Military equipment
***************************************
Waughtown Street Shops
Winston-Salem, N. C.
Occupied 1947

Military relays, deposited carbon resistors, capacitors
Missile guidance equipment
***************************************
Burlington Shops
Burlington, N. C.
Occupied 1946

Military equipment
Speakerphone
***************************************
Greensboro Shops
Greensboro, N.C. 
Occupied 1950

Missile guidance equipment; Printed wiring boards; Data 
transmission systems; Precision gears and servo mechanisms
***************************************

Manufacturing-Staff

The Manufacturing-Staff organization, comprising the 
Division Comptroller and his staff and the Engineer of 
Manufacture and his staff, is located at company 
headquarters in New York and carries on the following 
principal functions: coordinating manufacturing engineering 
and cost reduction programs, preparing capital budgets, 
allocating production programs, analyzing operating 
performance, coordinating labor and industrial relations 
and handling relations with WE subsidiaries.


Division Comptroller

Basically, the Division Comptroller's group acts as a 
consulting and service organization for other parts of the 
Manufacturing Division.  Among the assignments carried out 
on a continuing basis is an aggressive development program 
involving application to business procedures of electronic 
data processing and other new or evolving data and method 
research techniques and clerical practices.  The staff 
members also:

1.  Develop, interpret and distribute Divisional 
instructions.

2.  Coordinate, analyze and publish financial and cost 
accounting data relating to the Division, and advise and 
assist on effective auditing procedures.

3.  Advise and assist on various methods of inventory 
control including coordinating requirements and authorizing 
purchase of centrally purchased raw materials, and 
authorizing the redistribution of raw materials or parts in 
restricted supply.

4.  Supply advice and assistance to manufacturing 
locations on labor relations matters and coordinate them 
within the Division and with other divisions and assist in 
the formulation of general labor relations policies, and 
provide much the same advice and assistance as regards 
industrial relations matters.

5.  Analyze and coordinate quarterly production estimates 
submitted by the Administration Division, allocate 
production among the Works and arrange for firm quarterly 
production estimates by each location.

While this description is by no means inclusive of all 
areas of interest to the Manufacturing Division 
Comptroller, it does serve to indicate the range and depth 
of liaison carried out by this organization within the 
Manufacturing Division and on behalf of Manufacturing with 
other organizations within the company.


Engineer of Manufacture

Similarly, the Engineer of Manufacture organization directs 
and coordinates the wide range of engineering activities 
carried on within the Manufacturing Division.  To this end, 
the Engineer of Manufacture and his staff:

1.  Collaborate with Bell Telephone Laboratories on 
materials, processes and product designs that will be the 
responsibility of the Manufacturing Division.

2.  Allocate and coordinate the development of 
manufacturing processes, practices, and facilities.

3.  Determine long-range space requirements for 
manufacturing locations.

4.  Maintain and coordinate a vigilant cost reduction 
program in an its aspects.

5.  Collect and prepare technical information concerning 
Manufacturing Division products for sale to licensees.

6.  Negotiate contracts between the Manufacturing 
Division and the U.S. Government covering manufacturing 
facilities to be provided or financed by the Government for 
the manufacture of products for the Government.

7.  Collaborate with the Engineering Division to 
determine whether a new product under development will be 
purchased or manufactured, and on broad aspects of Western 
Electric-Bell Telephone Laboratories relationships, 
coordination, and planning.


SERVICE

The Service Division and the Administration Division were 
created on August 1, 1962 in a reorganization designed to 
assure the continuing responsiveness through changing times 
by Western Electric to the needs for its services by the 
Bell Telephone companies.

Reporting to the Vice President-Service are: Vice 
President-Service-East, in New York; Vice President-
Service-West, in Chicago; General Manager-Systems Equipment 
Engineering, in Newark, New Jersey; General Manager-Staff, 
located in New York.

Reporting to the Vice President-Service-East are the 
General Managers of the Northeastern Region, Eastern Region 
and Southern Region.  Reporting to the Vice President-
Service-West are the General Managers of the Southwestern 
Region, Mountain-Northwest Region, Pacific Region and 
Central Region.

At the time the reorganization was announced, WE President 
H. I. Romnes said, "Western Electric has three basic 
missions - production, service to Bell Telephone companies 
and national defense.  In the company's new structure these 
basic missions are directly reflected in the 
responsibilities assigned....

"The new Service Division, by linking Distribution, Repair, 
Installation and Equipment Engineering on a regional basis, 
win bring us closer to the people we serve.  This is 
especially important at a time when telephone technology is 
changing so fast.  Assuring the quality and delivery of the 
many new and complex Bell System services requires close 
working relationships on a continuing basis.  The regional 
organization of the Service Division should provide us as 
close a liaison with the operating units of the Bell System 
as the Branch Laboratories in our factories do with the 
System's research and development unit."

Previous to the creation of the Service Division, 
distribution and installation activities were carried on by 
separate nationwide organizations joined structurally under 
the title Telephone Sales.  Although now integrated with 
Systems Equipment Engineering and organized managerially 
into seven geographical regions, they provide fairly 
distinct functions.  A review of what WE people concerned 
with distribution, installation, and Systems Equipment 
Engineering do, therefore, seems in order.


Distribution

Thirty-five Distributing Houses link WE to the Bell 
Telephone companies we serve.  These Houses, most of which 
have been built or replaced since World War 11, serve as 
both supply centers and repair shops.

WE's first Distributing House was established in 
Philadelphia in 1901 when the first standard supply 
contract was signed.  Before then, Bell Telephone Companies 
placed their orders directly on WE factories.  The company 
did no reconditioning work.  The growth of the Bell System 
network, however, created a need for Western Electric to 
increase its scope of service.  More than that, the 
advantages of a centralized supply service on a day-to-day 
basis and during emergencies were clearly demonstrated by 
the operation.  The repair and reconditioning of equipment 
by the company for the Bell Telephone companies was a 
natural adjunct to the supply service.  The following table 
illustrates the growth of Distributing Houses since 1901.



  House                                   Inaugurated

  Pennsylvania (formerly Philadelphia)    1901

  St. Louis                               1902

  Denver                                  1903

  Kansas City                             1903

  San Francisco                           1903

  Illinois                                1904

  Cincinnati                              1904

  New York                                1904

  Pittsburgh                              1904

  Atlanta                                 1905

  Indiana                                 1906

  Los Angeles                             1906

  Minneapolis                             1907

  Seattle                                 1907

  Boston                                  1908

  Dallas                                  1908

  Michigan                                1908

  Portland                                1910

  Cleveland                               1912

  Houston                                 1912

  New Orleans                             1912

  Connecticut (formerly New Haven         1913

  Washington                              1923

  Milwaukee                               1924

  Long Island (formerly Brooklyn)         1926

  New Jersey (formerly Newark)            1926

  Jacksonville                            1927

  Syracuse                                1953

  Nashville                               1955

  Carolinas                               1958

  Phoenix                                 1958

  Miami                                   1960

  Westchester                             1961

  Salt lake City                          1962

  Omaha                                   1963


As noted above, the majority of the Distributing Houses are 
now located in quarters built since World War II.  In some 
cases, the new quarters have been relocated some miles from 
the cities where they were originally established.  As a 
result, some of the names have changed.  For example, when 
distribution people in Illinois moved from Chicago to West 
Chicago, the name was changed to the Illinois Distributing 
House.  The same holds true for the former Newark House, 
now called the New Jersey House and located in the town of 
Union; the Pennsylvania Distributing House, now located in 
the Philadelphia suburb of King of Prussia; the Indiana 
House at Indianapolis; the Carolinas House at Charlotte, 
North Carolina, and the Connecticut House, Orange, 
Connecticut.

Typically, a WE Distributing House stocks about 10,000 
different items including materials of WE manufacture and 
the many supplies from stationery to lineman's tools - that 
the company purchases and stocks for the Bell Telephone 
companies.  Some 10,000,000 telephone sets are 
reconditioned in the Distributing House repair shops 
annually, along with many other types of communications 
apparatus, such as teletypewriter equipment, switchboards, 
and central office and electronic equipment.

At each Distributing House, the physical plant, shipping, 
repair functions and billing procedures are based on the 
concept of service.  To this end, WE people strive 
constantly to improve their service through reduction of 
costs and the shortening of intervals between order and 
delivery.

Despite the immensity of the job, more than 98 per cent of 
all materials ordered through these Distributing Houses by 
the Bell Telephone companies is delivered on schedule - and 
WE is actively seeking to better even this record.  As a 
result, there has been a marked increase in "same day" 
deliveries during recent years.  In the same spirit, 
distribution and repair costs have been reduced close to 20 
per cent over the past decade, despite increases in 
operating costs and labor.

Space in every Distributing House is reserved for use by 
the local Bell Telephone company, and special areas are 
engineered and equipped for telephone company truck loading 
in most houses.  Illustrating Bell System teamwork, 
distribution people work side by side with telephone 
company personnel to get the job done economically, swiftly 
and accurately.  The advantages of this teamwork are 
strikingly demonstrated during emergency.  That 
communications services damaged or destroyed during 
hurricanes, for instance, are so quickly restored to normal 
is, in large measure, the result of this teamwork 
responding to crisis.


Installation

Making substantial contributions to the Western Electric 
goal of superlative service are the people of the Service 
Division engaged in installation work.  Here, too, the 
drive is for ever better ways of filling the needs of the 
Bell Telephone Companies - an objective pursued in terms of 
consistent high quality, reasonable cost and the quest for 
shorter installation intervals.

So basic is the installation of central office switching 
equipment to the expansion of the Bell Telephone network 
that it is a bit surprising to realize that before there 
were telephones there were WE installers at work.  These 
men worked on the premises of customers, wiring and placing 
in service call bells, annunciators, fire and burglar 
alarms and the variety of other equipment that Western 
Electric made in its early days.  The tradition of a 
quality job efficiently done was already firmly established 
when Western Electric joined the Bell System in 1882 and 
these installers became involved in a new and rapidly 
developing technology.

The dedication to quality is as strong today.  What has 
changed, of course - and changed so greatly - is the 
complexity of installation work.  The character of this 
work, the skills and perseverance it requires, create a 
group of employees unique in industry.

The primary responsibility of an installation crew is to 
set up switching equipment, connect it, test it and turn it 
over on schedule ready for use as a part of the nation-wide 
Bell Telephone network.  This is the final link in WE's 
chain of service which joins the research of Bell Telephone 
Laboratories with the actual operation of compatible and 
reliable equipment by the Bell Telephone companies.

About 87 major operations are required for the installation 
and test of a modern 10,000-line dial central office.  Such 
an office would include about 500,000 feet of cable and 
wire and 225 tons of switching and power equipment.  
However, the Service Division installs a variety of other 
equipment as well, including multi-line switchboards for 
business and the Government, radio relay stations, and 
terminal equipment for underseas cable systems.  Perhaps no 
other aspect of company operations affords so wide a survey 
of Western Electric's scope of effort to serve the Bell 
Telephone companies.

Annually, WE installers may work on some 77,000 jobs in as 
many as 7,500 different locations.  As a result it is 
nearly impossible to select a typical installation 
location.  Installers may and do work just about everywhere 
in the United States - in large cities, small towns, on 
isolated mountain peaks and southwestern deserts.  While it 
is true that