Some recent authors have argued that Gray should be considered the true inventor of the telephone because Alexander Graham Bell allegedly stole the idea of the liquid transmitter from him.

In 1870, financing for Gray & Barton Co. was arranged by General Anson Stager, a superintendent of the Western Union Telegraph Company.

Gray later gave up his administrative position as chief engineer to focus on inventions that could benefit the telegraph industry.

Gray's inventions and patent costs were financed by a dentist, Dr. Samuel S. White of Philadelphia, who had made a fortune producing porcelain teeth.

White wanted Gray to focus on the acoustic telegraph which promised huge profits instead of what appeared to be unpromising competing inventions such as the telephone.

[7] In 1871 the Great Chicago Fire destroyed the city and its telegraph infrastructure, Gray & Barton was hired to rebuild it.

This was one of the earliest electric musical instruments using vibrating electromagnetic circuits that were single-note oscillators operated by a two-octave piano keyboard.

Gray also built a simple loudspeaker in later models consisting of a vibrating diaphragm in a magnetic field to make the oscillator tones audible and louder at the receiving end.

On July 27, 1875, Gray was granted U.S. patent 166,095 for "Electric Telegraph for Transmitting Musical Tones" (acoustic telegraphy).

His experiments with transmitting musical tones went further, and on February 15, 1876 Elisha Gray was granted US Patent for electro-harmonic telegraph with piano keyboard.

Gray's patent stated that the telautograph would allow "one to transmit his own handwriting to a distant point over a two-wire circuit."

On Monday morning February 14, 1876, Gray signed and had notarized the caveat that described a telephone that used a liquid transmitter.

The suspension also gave Bell time to amend his claims to avoid an interference with an earlier patent application of Gray's that mentioned changing the intensity of the electric current without breaking the circuit, which seemed to the examiner to be an "undulatory current" that Bell was claiming.

[20] Bell returned to Boston and resumed work on March 9, drawing a diagram in his lab notebook of a water transmitter being used face down, very similar to that shown in Gray's caveat.

[22] Although Bell has been accused of stealing the telephone from Gray[23] because his liquid transmitter design resembled Gray's, documents in the Library of Congress indicate that Bell had been using liquid transmitters extensively for three years in his multiple telegraph and other experiments.

In April, 1875, ten months before the alleged theft of Gray's design, the U.S. Patent Office granted 161,739 to Bell for a primitive fax machine, which he called the "autograph telegraph."

[24] After March 1876, Bell and Watson focused on improving the electromagnetic telephone and never used Gray's liquid transmitter in public demonstrations or commercial use.

Wilber stated that, contrary to Patent Office rules, he showed Bailey the caveat Gray had filed.

Wilber's affidavit contradicted his earlier testimony, and historians have pointed out that his last affidavit was drafted for him by the attorneys for the Pan-Electric Company which was attempting to steal the Bell patents and was later discovered to have bribed the U.S. Attorney General Augustus Garland and several Congressmen.

[28] However, the marginal note was added only to Bell's earlier draft, not to his patent application that shows the seven sentences already present in a paragraph.

Bell testified that he added those seven sentences in the margin of an earlier draft of his application "almost at the last moment before sending it off to Washington" to his lawyers.