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228 of the kind that the new telephone industry had had to face, and its disastrous outcome was exceedingly discouraging. The immediate loss to the New York company was nearly $100,000, while the indirect loss in delaying extensions and improvements and in diverting investment from the treasuries of the injured companies was very large.

The only remarkable change in financial circles occurring in 1881 was the flurry in the stock market that followed the assassination of President Garfield on July 3, 1881. To the far-sighted financier that "agitation approaching a panic" may have indicated the beginning of the general depression that gradually overspread the country and proved most severe in 1885.

On July 14, 1881, the New York Tribune editorially asserted that

the agitation that caused the flurry was utterly without foundation and that the proportion of business done upon a cash basis is larger than ever, and the proportion of business done without borrowing, on the capital of the firms engaged, is larger than ever. . . . Nor has there ever been a time when the earnings of the people were on the whole as large as they are now. Wages are good, while prices are relatively low.

But from the telephone speculator's point of view, the ill effect of that July flurry was more than offset, so far as the investing public was concerned, by the admirably wise and now famous telephone decision rendered by Judge Lowell on June 27, 1881, in the suit begun on June 22, 1880, in the Eaton-Spencer case. In part that opinion read as follows:

If the Bell patent were for a mere arrangement, or combination of old devices, to produce a somewhat better result in a known art, then, no doubt, a person who substituted a new element not known at the date of the patent might escape the charge of infringement. But Bell discovered a new art—that of transmitting speech by electricity—and has a right to hold the broadest claim for it which can be permitted in any case; not to the abstract right of sending sounds by telegraph, without any regard to means, but to all means and processes which he has both invented and claimed. . . . The claim is not so broad as the invention. . . . An apparatus made by Reis, of Germany, in 1860, and described in several publications before 1876, is relied on to limit the scope of Bell's invention. Reis appears to have been a man of learning and ingenuity. He used a membrane and electrodes for transmitting sounds, and his apparatus was well known to curious inquirers. The regret of all its admirers was, that articulate speech could not be sent and received by it. . . . A century of Reis would never have produced a speaking telephone by mere improvement in construction.

President Arthur proved a worthy successor to the lamented Garfield, and his strong and conservative policy appeared to win the confidence of the people, many of whom had been led to expect a more radical and less safe administration. Thus the year 1882 opened