Only the sound of breathing remained in the office.
Gardner Hubbard sat back down in his chair.
He placed his briefcase on his knees, his fingers repeatedly rubbing the leather surface.
Fifteen percent.
And fifteen percent of a newly established subsidiary at that.
This was worlds apart from the massive thirty percent stake in General Electric he had envisioned before coming here.
"Mr. Argyle, you are marginalizing us," Hubbard said, staring at Felix.
"By stripping the telephone business out of General Electric, even if this new company is established, all equipment procurement and line rentals will depend on General Electric. You can drain the new company's profits at any time by raising equipment prices. This fifteen percent stake might eventually be worthless."
"Psh... I'm not that bored."
Felix picked up a cigar and sniffed it at the tip of his nose.
"If I wanted to drain the profits, I wouldn't need to establish this company at all. I could directly use a patent war to drag you down and just do it myself. I'm leaving you fifteen percent because I need Bell to remain in the lab working in the field of acoustics. I need you, Attorney Hubbard, to deal with those troublesome City Halls in New England and help me obtain the franchises for erecting telephone poles in Boston and Philadelphia."
Felix lifted his eyelids, looking at Hubbard with deep meaning.
"As for Thomas Sanders, he's a leather maker. Aside from investing a little money, he's of no use to the company. How that fifteen percent stake is divided is between the three of you."
Pierce stood aside and spoke up at the right moment.
"Mr. Hubbard, these are extremely generous terms. The initial registered capital of the new company will be one million dollars, fully funded by Mr. Argyle. This means that the patent in your hands is being directly converted into one hundred and fifty thousand dollars' worth of original shares. Once the telephone network covers New York and Boston, the value of this fifteen percent will far exceed any investment you could pull on your own."
Hubbard's mind was racing with calculations.
He was a shrewd lawyer. He knew very well that Bell's electromagnetic transmitter indeed had fatal flaws.
Because they had tried countless times in their Boston lab, the sound was so weak that sentences couldn't be heard clearly at all. Without the help of Argyle's Carbon Transmitter, the telephone would never leave the lab.
Moreover, the exchange center operating downstairs had given him a huge shock.
General Electric had already finished integrating the system. It had existing poles, installation teams, and funding.
If he really went to Morgan...
Morgan would likely do as Felix said—turn them away to avoid provoking Edison.
Or, Morgan would offer even harsher acquisition terms.
"This... I need to consult with my partners."
Hubbard relented; after all, he didn't want to truly infuriate Argyle.
As a lawyer, he knew all too well the power of the Argyle Family in this country.
The fact that the other party was willing to play business with them was already the optimal choice.
Otherwise, if they encountered someone with a bad temper or who didn't care about their reputation, they might passively disappear.
"Sanders is in Boston, and Bell is in Cambridge. I cannot decide on my own to surrender control of the Bell Telephone Company."
"Exit the lobby and turn left, walk two blocks. There is a Western Union Telegraph Company branch there," Felix pointed out the door.
"The telegraph fees are on my tab. I'll give you four hours."
Felix glanced at the wall clock.
"If you haven't returned here with a signed telegram of consent by four o'clock this afternoon, then..."
Hubbard stood up and gave Felix a deep look.
"You are a dictator, Mr. Argyle."
"Wrong! I am a businessman," Felix corrected.
Hubbard carried his briefcase and strode out of the office.
The door closed, and Pierce walked to the desk.
"Boss, do you think they will agree?" Pierce asked.
"They will," Felix said, tossing his cigar onto the desk.
"As long as I want it, no one in this country can refuse me, except for the dead!"
"Go prepare the registration documents for 'American Telephone and Telegraph Company.' Write the equity structure as I just described. Inject the patent usage rights for the Carbon Transmitter and the exchange as exclusive licenses into the new company."
Pierce nodded and took notes.
"In addition," Felix tapped the desk, "go find Hayes."
A few minutes later.
Tom Hayes walked into the office.
"Boss, I heard that lawyer from Boston went to send a telegram?" Hayes asked.
"A deathbed struggle, don't mind him." Felix stood up.
"The matter of the telephone company is mostly settled. Now we need to establish a set of rules for collecting money. Come on, let's go to the Call Bureau on the first floor."
The two of them took the freight elevator to the first floor.
They pushed open the door to the Call Bureau.
Inside was still a scene of bustling activity, with twenty female operators constantly plugging and unplugging brass plugs.
"Connecting the freight department of Metropolitan Trading Company."
"Line connected."
Felix stood behind the cabinets, watching the flashing indicator lights.
"Tom, if you were a cotton futures broker on Wall Street," Felix pointed to a line currently in use.
"You received inside information about a reduction in southern cotton production and needed to immediately notify your five major clients to buy. What would you do?"
Hayes thought for a moment.
"I would send several errand boys to run to the clients' offices and deliver the message. It would take about half an hour to an hour."
"If your competitor also got the news and he had a telephone in his hand, he would only need to call the operator. Within five minutes, he could notify all his clients and sweep up the low-priced chips on the market."
Felix turned to look at Hayes.
"How much is a half-hour time difference worth on Wall Street?"
Hayes took a deep breath.
"It could be worth ten thousand dollars, or it could be worth a hundred thousand dollars."
"So..."
Felix walked to an idle cabinet and patted the wooden casing.
"For the first batch of telephone users, we won't look for ordinary citizens. We only look for Stockbrokers on Wall Street, managers of large banks, and bosses of bulk commodity trading firms like Metropolitan Trading Company."
Felix began to formulate an extremely high pricing strategy.
"Installation fee: two hundred dollars per telephone."
Felix announced the figure.
In 1870, this was equivalent to half a year's wages for a skilled worker.
Hayes's eyes widened.
"Two hundred dollars to install a microphone? Boss, that threshold is too high."
"It's not high. As long as they know this thing can let them make money before anyone else, they'll pay two thousand dollars," Felix said dismissively.
"The installation fee is just the ticket to enter. The real money-maker is the monthly rent and call fees I mentioned before."
"Every month, a fixed line maintenance fee of twenty dollars will be charged. Then, billing will be by call or by minute. Every time a call is made, the operator makes a mark in the ledger."
Felix looked at the female operators.
"Find a few smart bookkeepers to sit next to the operators. Specifically record who called whom, how many times, and for how long."
"At the end of the month, send the bill to their offices. If they dare to fall behind on payments, pull the line immediately."
Hayes calculated rapidly in his head.
New York had hundreds of brokerage firms and thousands of trading companies.
If all of them were equipped with telephones, the installation fees and monthly rent alone would result in a massive and stable cash flow every month.
"I understand, Boss."
Hayes rubbed his hands excitedly.
"This is equivalent to us building a railway that only runs in the sky. Everyone who sends a message on this railway has to pay us a toll."
"Go print the brochures, Tom," Felix said, patting Hayes on the shoulder.
"The name will be 'Time is Money—American Telephone and Telegraph Company Seizes the Initiative for You'."
________________
New York, Western Union Telegraph Company Downtown Branch.
Gardner Hubbard stood before the solid wood counter, pencil in hand, rapidly scribbling code onto a blank telegraph form.
Behind the counter, the telegraph operator watched the anxious Boston lawyer with boredom.
"Urgent. To 112 Brattle Street, Cambridge, Boston. For Thomas Sanders."
Hubbard handed the written note to the operator, slapping down a five-dollar bill at the same time.
The operator took the note and began tapping away on the transmitter.
The clicking sounds echoed throughout the office.
...
Boston.
Thomas Sanders was sitting in his leather factory office, checking the accounts.
A postman on a bicycle stopped at the factory entrance and ran into the office.
"Mr. Sanders, an urgent telegram from New York."
Sanders took the telegram and tore open the envelope. He pulled a codebook from his drawer and began translating it word by word.
The message was short, but every word carried immense weight.
"Negotiations hit an absolute wall. Argyle rejected the thirty percent stake request. Carnegie and Westinghouse paths likely blocked. The other side possesses the Carbon Transmitter and physical Switchboards, already operational on the network. They proposed a final plan: establish a new company, AT&T, with a million-dollar investment. Argyle takes eighty-five, our trio takes fifteen. Bell as Technical Director. Reply needed by four. If rejected, consequences may be severe. Consult Alexander immediately. Hubbard."
After reading the telegram, Sanders slumped back into his chair.
"Fifteen percent..." Sanders muttered to himself.
He grabbed his coat and rushed out of the office.
"Ready the carriage! To Bell's laboratory!" Sanders shouted at the coachman.
Half an hour later.
Cambridge, Alexander Bell's attic laboratory.
Bell was crouching on the floor, adjusting the positions of several tuning forks. He was still trying to improve voice clarity by changing the number of windings on the electromagnet, but with little effect.
The door was pushed open roughly.
Sanders ran in, panting for breath.
"Alexander, stop your tuning forks! Something big has happened!" Sanders slapped the telegram onto the table.
Bell stood up and read through the telegram.
His expression turned very grim.
As an inventor with backbone, being acquired by a businessman in such a near-bandit fashion was a massive blow to his dignity.
"This is robbery, Thomas," Bell said through gritted teeth.
"We can't agree. At worst, we'll see them in court."
"To hell with the court!"
Sanders slammed the table, the shrewdness of a leather merchant fully on display at this moment.
"Alexander, wake up. Don't you know the power of the Argyle Family? Can we even last until a lawsuit? If we don't agree, we might very well end up in the river tonight."
Sanders pointed at the crude equipment on the table.
"Look at these things of yours. Hubbard made it very clear in the telegram. Argyle has already built a real telephone. They have those things called Switchboards and have started operating in New York. We've fallen behind."
Bell clenched his fists unwillingly.
"But the patent rights are in my hands!"
"Patent rights don't put food on the table, and sometimes they can be deadly," Sanders said, softening his tone.
"Alexander, I know you feel humiliated. But do the math. The new company's registered capital is one million dollars, and the three of us share fifteen percent. That's one hundred and fifty thousand dollars."
Sanders counted on his fingers.
"I invested a few thousand dollars in you before, and now it's multiplied over tenfold. This deal is extremely lucrative. Moreover, he's keeping your position as Technical Director. You can continue researching your telephone, using their advanced equipment and funding. If we don't sign, the consequences are hard to say."
Bell fell silent, looking at the glass jars and coils that had accompanied him through countless days and nights.
The purity of science always seemed fragile in the face of real-world capital.
"Fifteen percent." Bell let out a long sigh. "How do we split it?"
"Equally, of course. Five percent each."
Sanders' eyes flashed as he replied immediately.
"I'll wire Hubbard back right away and tell him to sign."
Then he ran off before Bell could react, fearing the two might leave him out.
Because he knew very well that his role in Bell's company wasn't that significant.
If he could get a five percent stake in a future telephone monopoly giant, it would be an absolute windfall for him.
Even if the company required more capital later and his shares were diluted, it would still be a massive gain.
3:45 PM.
New York, Empire State Building.
Gardner Hubbard sat on a sofa in the lobby, clutching the reply he had just received.
He stood up, walked to the elevator, and gestured for the operator to take him to the top floor.
Pushing open the office door, both Felix and Pierce were there.
"Perfect timing, Lawyer Hubbard."
Felix glanced at the clock on the wall.
Hubbard walked to the desk and placed the reply on its surface.
"We agree, Mr. Argyle," Hubbard's voice was somewhat dry.
"Let's sign the transfer agreement."
Pierce immediately pushed three thick, prepared documents forward.
"These are AT&T's equity distribution papers, the patent transfer agreement, and Mr. Bell's appointment letter. Please sign as the authorized representative."
Hubbard pulled out his fountain pen. Before signing, he looked at Felix.
"Argyle. With one hundred and fifty thousand dollars, you've bought an era."
"Remember, I bought the trouble, Hubbard." Felix watched him sign. "The era is my own creation."
The signing complete, Pierce tucked the documents away.
Felix stood up.
"Mr. Hubbard. Since you are now a partner, you need to start working immediately."
"After returning to Boston tomorrow, mobilize all your political resources in the New England region. Submit an application to Boston City Hall. Demand to install telephone poles throughout the entire city of Boston. If the people at City Hall want money, give it to them."
"I want to see a long-distance telephone line connecting New York and Boston erected within three months."
Hubbard was stunned. So fast?
"Long-distance lines? A distance of several hundred miles. Signal attenuation will be very severe. Can current technology achieve that?"
"That's for Technical Director Bell to worry about. Tell him the budget of General Electric's Central Laboratory is wide open to him. Even if he has to use pure silver for the wires, he must get the sound to Boston for me."
Felix's tone was full of dominance.
Hubbard nodded, picked up his briefcase, and exited the office.
On this stifling afternoon.
American Telephone and Telegraph Company (AT&T), the behemoth that would rule the American telecommunications industry for nearly a century, was quietly born on Felix's desk through a combination of threats and inducements.
New York, Grand Central Station freight platform.
The steam locomotive's boiler let out a dull roar, and white steam condensed rapidly in the cold autumn air. The pungent smell of coal smoke mixed with the burnt scent of axle grease, filling the entire platform.
Bill, the president of the Metropolitan Trading Company, stood before a mountain of wooden crates, an unlit cigar clenched in his teeth.
His eyes were fixed on Patrick O'Neil, a thirty-year-old senior business manager of the Metropolitan Company.
"Is the check complete, Patrick?"
Bill spat out a fragment of his cigar and stared at the goods being loaded into the train cars by the porters.
"The check is complete, Mr. Bill."
O'Neil drew a heavy checkmark on the manifest with a thick pencil.
"Exactly ten carloads. Five carloads of Standard Oil's premium refined kerosene, packed in their signature blue iron drums. Three carloads of canned oat meat and salted beef from Chicago. The remaining two carloads are Umbrella Pharmaceuticals' carbolic acid solution, quinine, as well as some clockwork timepieces and steel farming tools."
Bill took the manifest and glanced at the total at the bottom.
"The purchase cost for this batch on the East Coast is twenty-five thousand dollars. Adding the freight charges from the Union Pacific Railroad and Central Pacific Railroad, the total cost is nearly thirty-two thousand dollars."
Bill slapped the manifest back against O'Neil's chest.
"Although it's a small amount, the boss wants our Metropolitan Trading Company to drive the first nail into the Pacific coast. I'm leaving it to you to hammer that nail in."
O'Neil tucked the manifest into the inner pocket of his coat.
"I understand, Mr. Bill. San Francisco isn't short of gold right now. Those nouveau riche who struck silver in Nevada, and the old money controlling timber and shipping, have plenty of Double Eagle gold coins (twenty-dollar face value) in their hands. But they lack daily necessities. The sailing ships coming around Cape Horn are too slow. Our train can cross the entire continent in seven days."
"So speed is your leverage."
Bill extended a finger and poked O'Neil's shoulder.
"Remember our rules: don't go to San Francisco for retail. We don't care about those few cents of profit margin; what you need to do is wholesale. Use these ten carloads of goods to smash open the warehouse doors of the local major distributors. Tell them that the Metropolitan Trading Company will deliver more than ten carloads of stock to them on time every month from now on. Get them to hand over all their orders."
"What if they try to drive the price down?" O'Neil asked.
"Californians are used to settling on the gold and silver standard; they look down on the greenbacks from the East. If you can get them to pay in physical gold or gold-standard drafts from the Bank of California, you can give them a five percent discount," Bill lowered his voice.
"But the bottom line is that the net profit for this batch cannot be lower than sixty percent. Those Westerners made dirty money in the mines; now it's our turn to make money off them."
In the distance, the conductor blew his brass whistle.
The porters pushed the last heavy sliding door shut and hung the iron lock.
"Get on board, Patrick." Bill took a step back.
"Once you reach San Francisco, first go to Montgomery Street and rent a decent office. After hanging up the sign, go find those influential local heavyweights."
O'Neil picked up a worn cowhide suitcase at his feet.
"I'll bring San Francisco's purse back, Mr. Bill. Give my regards to Mr. Argyle."
O'Neil turned around and strode toward the passenger car at the rear of the train. He grabbed the iron handrail and stepped up onto the platform.
The steam locomotive let out a long whistle.
The massive driving rods began to slowly push the heavy steel wheels, and the iron hooks at the car couplings made a piercing grinding sound.
Bill stood on the platform, watching the train, loaded with industrial manufactured goods from the East Coast, gradually accelerate and disappear at the end of the tracks stretching westward.
Inside the carriage, O'Neil found his seat and sat down.
This was a first-class carriage, with seats upholstered in deep red velvet.
The air was filled with the scent of cheap perfume and tobacco.
In the seat opposite him sat a fat man in a sophisticated suit, holding a pocket watch to check the time.
"Can this train really arrive in Oakland on time, young man?" The fat man tucked his pocket watch into his vest pocket and struck up a conversation.
"I've heard that in Nebraska, you sometimes encounter buffalo herds blocking the way. There are even indians sabotaging the tracks."
"That's an old story from last year, sir."
O'Neil opened his suitcase and took out a thick San Francisco business directory.
"Since the army moved into several major stations along the line, these thousands of miles of track are safer than Broadway in New York. As long as this machine has coal to burn, it can run all the way to the Pacific."
The fat man looked curiously at the book in O'Neil's hand.
"Are you going west to make your fortune? What good things did you bring?"
"Just some worthless tin cans and oil for fuel."
O'Neil didn't say much, giving a perfunctory reply before turning his gaze back to the dense list of shop names in the directory.
Outside the window, the autumn scenery of New York State receded rapidly.
Over the next few days, this iron beast ran forward tirelessly.
It passed through the cornfields of Ohio and crossed the iron bridge over the Mississippi River.
After refueling with coal and water in Chicago, it entered the vast Great Plains.
The view outside the window changed from green farmland to withered yellow grass. Occasionally, a few cowboys on horseback could be seen in the distance herding cattle.
When the train began to climb the Rocky Mountains, the temperature plummeted.
The steam locomotive's panting became heavy, and a stove was lit in the carriage.
O'Neil spent most of his time checking the ledgers or rehearsing negotiation tactics for when he reached San Francisco.
He knew that the West was not New York.
There was no vast network of connections or security teams from the Argyle Family there.
All he could rely on was the manifest in his hand and his silver tongue.
On the evening of the seventh day.
The train finally burst out of the last tunnel of the Sierra Nevada Mountains, and a stretch of grayish-blue water appeared on the horizon.
"Oakland! Terminal station, Oakland!"
The conductor, carrying a lantern, shouted loudly in the aisle of the carriage.
O'Neil closed the directory and stuffed it into his suitcase. He stood up and rubbed his stiff neck.
The salty sea breeze of the West Coast drifted in through the gaps in the window. O'Neil glanced out the window; huge ferries were docked at the pier.
San Francisco, he had arrived.