"In 1830 the great American scientist Professor Joseph Henry transmitted the first practical electrical signal. A short time before Henry had invented the first efficient electromagnet. He also concluded similar thoughts about induction before Faraday but he didn't publish them first. Henry's place in electrical history however, has always been secure, in particular for showing that electromagnetism could do more than create current or pick up heavy weights -- it could communicate.
In a stunning demonstration in his Albany Academy classroom, Henry created the forerunner of the telegraph. In the demonstration, Henry first built an electromagnet by winding an iron bar with several feet of wire. A pivot mounted steel bar sat next to the magnet. A bell, in turn, stood next to the bar. From the electromagnet Henry strung a mile of wire around the inside of the classroom. He completed the circuit by connecting the ends of the wires at a battery. Guess what happened? The steel bar swung toward the magnet, of course, striking the bell at the same time. Breaking the connection released the bar and it was free to strike again. And while Henry did not pursue electrical signaling, he did help someone who did. And that man was Samuel Finley Breese Morse.
In 1837 Samuel Morse invented the first workable telegraph, applied for its patent in 1838, anSamuel Morsed was finally granted it in 1848. Joseph Henry helped Morse build a telegraph relay or repeater that allowed long distance operation. The telegraph later helped unite the country and eventually the world.
In the early 1870s the world still did not have a working telephone. Inventors focused on telegraph improvements since these had a waiting market. A good, patentable idea might make an inventor millions. Developing a telephone, on the other hand, had no immediate market, if one at all. Elisha Gray, Alexander Graham Bell, as well as many others, were instead trying to develop a multiplexing telegraph, a device to send several messages over one wire at once. Such an instrument would greatly increase traffic without the telegraph company having to build more lines."
Farley, Tom. From Tom Farley's Telephone History Series at http://www.privateline.com/TelephoneHistory/History1.htm published 1998-2006 (Accessed 16/02/2011)