Bell’s first telephone patent had been granted on March 7, 1876, but was earning no return. Sanders and Hubbard had advanced all they could. In order to eke out his small personal income as a teacher, and to provide funds for further experimentation, Bell began, early in 1877, to give lectures at which he demonstrated the telephone. These were well attended, and accounts of them were widely published. A few forward-looking people began to realize the usefulness of the telephone. In May, 1877, the first telephones were put into use on a commercial basis. Soon people throughout the country began to inquire about how to get into the telephone business. How the Bell System was formed The commercial development of the telephone had begun and the time had come for a more definite organization than the rather informal arrangement that had been made between Bell, Sanders and Hubbard, into which Watson had by this time been admitted. This took the form of a trusteeship, instituted in July, 1877, by these four owners of the patents. Hubbard was trustee and virtual executive head of the enterprise. It was he who introduced the policy of leasing instruments instead of selling them and who introduced the system of licenses to authorized agents or licensees throughout the country for the commercial development of the telephone, laying the foundation for the Bell System of today. Telephones first were leased in pairs. The lessee put up his own wire to connect his telephone with that of a friend or neighbor, or ran the line between his home and place of business. There was no way he could talk by telephone with others in the community who leased instruments. [Illustration: “_Mr. Bell, I heard every word you said—distinctly!_”] The interconnection of these individual subscribers awaited the development of the telephone switchboard. The first switchboard was installed in the office of E. T. Holmes, in Boston, in May, 1877, and connected four banks and a manufacturing concern. It connected these few telephones in the daytime by wires that were used for a burglar alarm system at night. New Haven, Conn., became the first city in the world to have a commercial telephone exchange. A switchboard connecting eight lines and 21 subscribers went into service there in January, 1878. Two years later in April, 1880, the American Bell Telephone Company was organized. It greatly developed the telephone organization and business throughout the country. A line from Boston to Providence was built in 1881. Service between Boston and New York, 235 miles, opened in 1884. An important step in the attainment of a nation-wide telephone service was the organization of American Telephone and Telegraph Company in 1885. This company was formed to build and operate long distance lines to interconnect the regional companies that had developed, by merger and growth from early licensee companies.