The Bell interests of the late 1870s began to exploit their telephone patent with a rental scheme, where their products were rented to customers who would contract with other suppliers for a connection. Both Bell and Western Union soon discovered that it was actually the subscription service and not the rental that was creating the most profit once the telephone switchboard and central offices were injected. These were staffed by human operators who connected the calls using the personal names of the clients.
By late 1879 and early 1880, telephone numbers were first used in Lowell, Massachusetts. This is due to a recent outbreak of the measures, where Dr. Moses Greeley Parker was afraid that the four operators of the town would not be able to provide their services should they become ill, and the town would be cut off from the telephone. This was taken to be quite an emergency, as being a telephone operator took a great deal of training and could not easily be replaced.
Therefore, Dr. Parker recommended that numbers be used for Lowell's 200 telephone subscribers so that any substitute operators would be quickly trained to use the system in case of an emergency where the usual staff would become unavailable.
Dr. Parker became so convinced of the strength of his idea that he began buying stock, with great faith in the potential of the telephone once numbers were introduced.
Even with the use of numbers, it was still common for people to use the name as well as the number to achieve a connection. It was not until the 1920's that mechanical dialing occurred and telephone numbers became the unique standard. Strictly numerical phones started in the 1950's.
Source by Steve Cowen