Comment by lxgr
Invented by a paranoid undertaker out of business interest, apparently:
"Strowger, an undertaker, was motivated to invent an automatic telephone exchange after becoming convinced that the manual telephone exchange operators were deliberately interfering with his calls, leading to loss of business."
I wonder if the phone company was actually out to get him!
I've heard this story before and it included the detail that his competitor's wife worked as an operator at the exchange, and his worry was she would direct calls for an undertaker to her husband instead of himself.