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In 1893, Russian inventors S.M. Berdichevsky-Apostolov and M.F. Freudenberg developed an automatic telephone exchange (often called a PaBX or 'telephone exchange') with 250 numbers. A demonstration of an early PaBX model took place ​​in the workshop of Odessa University but was not met with overwhelming support in Russia. As a result, in 1895, the inventors patented a telephone exchange in the UK. This is where joint efforts with Berdichevsky-Apostolov ended: Berdichevsky-Apostolov returned to Odessa and Freudenberg remained in England for a long time, continuing to seek the support of foreign entrepreneurs.

When still working together, the inventors had found that the practical success of ​​PaBXs was determined by its capacity, which must be no less than 10,000 numbers. To this end they continued to work, each in his own separate way.

In 1896 Berdichevsky-Apostolov created the first PaBX system with 10,000 numbers. In the proposed system, peculiar dialers were already present (number selectors, relays and other PaBX selectors). Modern automatic telephone exchanges still utilize systems based on these basic principles. Each subscriber set at the station consisted of a 100-pin plug-board. The combination of closing the circuit between two plug-boards allowed a 'spoken chain' with another subscriber to take place, one of the possible 10,000 in the subscriber station. Station sets of each subscriber comprised of current-spreading devices and linear polarization switches for receiving impulses.

M.F. Freudenberg further advanced the principles of high capacity PaBXs. He was looking for solutions to avoid the use of bulky calling devices with multi-pin fields. In this case the inventor believed that it was important only if the high-capacity PaBX could be more profitable than a manual station of the same capacity. So he doubted the need for one or more costly calling switches since it lowered the capacity of the PaBX when compared to manual service stations. In 1895, while in England, Freudenberg developed and patented a pre-selector (a device to automatically search for subscribers) for PaBXs with 10,000 number capacity. M.F. Freudenberg was convinced that in a 10,000-line subscriber system, the need would not arise for more than 1,000 calls to take place simultaneously. Therefore, he deduced, it was enough to cater for 500 simultaneous calls rather than the 5,000 that was envisaged for the previously patented equipment. Thus it was possible to achieve a very significant reduction in the cost of the device.

In further studies, the inventor also identified another way to solve the problem, which was also implemented in the so-called PaBX. In 1896, he created a line selector (per thousand lines) with a common multiple field for batch calling and provided counter-switches, which were prototypes and then introduced group selectors. A working model of this PaBX system was shown in Paris in 1898. The results of the tests were successful but shareholders could not convince society to move away from exploiting manual telephone exchanges.

Upon his return to Russia M.F. Freudenberg continued to work on telephony. The last of his inventions in this area was a device to switch subscribers to the telephone network via group distributors (connected to a central station by two wires). Freudenberg tried to achieve more efficient use of the subscriber line.