Educator Resources

Telephone &amp; Light Patent Drawings



Alexander Graham Bell


Thomas Edison



The Growth of the Corporation

A vision such as Bell's could not become a reality without enormous sources of capital (money) to mass-produce telephones, lay cables, and establish switchboards. Likewise the incandescent light was of little use until houses could be linked by electric wires to powerful generators.

Until the Industrial Revolution, a shop owner did not need to raise great sums of money to invest in expensive machinery. He probably made his goods by hand and sold them directly to the customer. He therefore did not need to advertise his goods far and wide. A business was usually the responsibility of one person, a proprietor, who hired others and accepted total financial responsibility if the venture went under. Partnerships were able to raise greater capital because two or more people pooled their money. But if their partnership failed, all the partners were personally liable; any assets they owned could be seized to pay their debts.

The Civil War gave impetus to many new industries on a scale never before seen in America. What was needed was a new way to fund them. The corporation solved the problem. Corporations are legal entities chartered by state governments. To establish a corporation, money is raised from many investors. Each investor then owns shares of the company, represented by the stock certificates the corporation issues to its shareholders. If the company earns a profit, the corporation will divide its profit with its investors and pay dividends. (The greater the number of shares you own, the greater your dividend.) The value of the corporation's stock will go up. But if the corporation fails, each investor will only lose what he or she invested.

When the U.S. government granted Edison and Bell their patents, it put them at a distinct advantage over their competitors. They and they alone were given the right to profit from their inventions for a specified time period (today it is 20 years). While both men were primarily inventors, not entrepreneurs, neither wasted time before either founding companies or granting their patent rights to others for manufacture. The Edison Electric Light Company was chartered in 1878 and led eventually to what we know as the General Electric Company. With his laboratory and many assistants at Menlo Park, New Jersey, Edison pioneered the establishment of the large research centers of today. The Bell Telephone Company was founded in 1877. In 1899 American Telephone and Telegraph (AT&T) became the parent company of the Bell System.

Corporations were not without their ill effects. They further distanced management from the workers, who did not share in the companies' profits as did stockholders. Left unregulated, huge corporations often ate up their smaller competition. By 1900 Bell Telephone had situated 800,000 phones in America, far more than any competitor. Long after Bell's patent expired, it had the edge in developing long-distance services, and it monopolized them. The Interstate Commerce Act (1877) and Sherman Anti-Trust Act (1890) were passed to ensure that competition among companies could continue to thrive.


Mackay, James. Alexander Graham Bell: A Life. New York: John Wiley & Sons, Inc., 1997. An up-to-date and scholarly account.

Silverberg, Robert. Light for the World: Edison and the Power Industry. Princeton, NJ: D. Van Nostrand Co., 1967. Especially good for the connection between invention and industry.

Twain, Mark. The Autobiography of Mark Twain. Edited by Charles Neider, New York: Harperperennial Library, 1959 (still in paper). See Chapter 45, which has a hilarious account of Twain's attempt to be an investor in new inventions, including the telephone.

Vries, Leonard de. Victorian Inventions. New York: American Heritage Press, 1971. A delightful pictorial account, including many fanciful ideas that were never marketed.

The Sound and the Silence. An excellent two-part video about the life of Alexander Graham Bell. Available from Turner Home Entertainment #6295.


The Documents

Refer to Caption Alexander Graham Bell s Telephone Patent Drawing Record Group 241 Records of the Patent and Trademark Office National Archives and Records Administration National Archives Identifier: 302052

Refer to Caption Thomas Edison s Electric Lamp Patent Drawing Record Group 241 Records of the Patent and Trademark Office National Archives and Records Administration National Archives Identifier: 302053

Article Citation
