An agreement was reached in November of 1879 the Western Union Company gave up all its patents, claims, network and inventory of 56,000 phones (a Western Union phone at right). In return, they would receive 20% of the rentals over the next seventeen years--the life of the Bell patents. With this victory, a new company was chartered; the American Bell Telephone Company.
The company flourished in the 1880s. In 1881, American Bell purchased controlling interest in the Western Electric Company. This is interesting for two reasons. First, Western Electric Company was Elisha Gray's Electrical Supply Company. In fact, it was originally "Gray and Barton." Second, this is the company that supplied phones to Western Union. In 1882, Western Electric became the sole supplier to the Bell Companies.
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