ORIGINS OF WESTERN ELECTRIC in the USA
Gray & Barton was a Chicago manufacturer of telegraph equipment whose primary customer was Western Union Telegraph Company. Western Union also had its own shop in Ottawa, Illinois.
In 1872 Western Union sold its Ottawa shop to Gray & Barton. The consolidation of Western Unions Ottawa shop into Gray & Barton resulted in its re-incorporation into a new company known as Western Electric. Western Union became a minority stockholder in Western Electric. Western Union branched out from its traditional role as the principal US telegraph company and established American Speaking Telephone Company to compete against American Bell Telephone Company. Western Electric became the manufacturer of telephone equipment for Western Union.
In 1881 Western Union gave up competing with Bell to concentrate its efforts in the business it knew best, that of being a Telegraph Company. Western Union sold its one-third share to launch their competing telephone products and others to start Independent telephone companies. Some had launched their products earlier, but were generally ham strung with patent lawsuits by Bell that limited their ability to continue.
Milo G. Kellogg resigned his position as superintendent of Western Electrics Chicago shop and in 1897 founded Kellogg Switchboard & Supply Company to supply telephones and switchboards to the new Independent telephone companies which, with the expiration of the Bell patent, were springing up all across the country.
Roger Conklin, 2001.