Western Electric and Bell Telephone Laboratories​
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In 1869, Elisha Gray (considered a co-inventor of the telephone by many) co-founded the Gray and Barton Company. In 1872 it was renamed the Western Electric Manufacturing Company, and eventually as the Western Electric Company. They manufactured a variety of electrical products including typewriters, alarms, and lighting. They had a close relationship with Western Union, to whom they supplied relays and other equipment.
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It was purchased by AT&T in 1881 and became a massive supplier for its needs. Circa 1906, Western engineers began the investigations into what became the Rotary and Panel telephone systems.
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Western Electric had at least 2,350 assigned patents in 1925. With the exception of General Electric and Westinghouse, no other US company could compare. Western Electric spent about one million USD in 1925 on R&D according to one reference (American Independent Inventors in an Era of Corporate R&D). For many years Western Electric's Chief Engineer was Charles E. Scribner, who during his career had 441 telephone related patents issued.
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So, where does Bell Telephone Labs fit in? Certainly they have a reputation as a force behind AT&T's technological and scientific progress. On Jan 1st, 1925, a new corporation, the "Bell Telephone Laboratories," took over the Engineering Department of the Western Electric Company. So, Western Electric Engineering then Bell Labs drove engineering innovation in the Bell System. See Endnote A.
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Bell Labs was able to attract and retain some of the most brilliant minds in science and engineering, and fostered an environment of creativity and innovation that resulted in many groundbreaking discoveries and inventions including the transistor and the Laser (based on the theoretical work of Charles Townes and Arthur Schawlow, both of Bell Labs).