It is hard for us to believe today, but it took a very long time for the price of electronics to come down far enough to be cheaper than equivalent mechanical devices.
In 1965 some consumer electronic things like radios, tape recorders, and TV sets still used some vacuum tubes because they were still cheapter than transistors at that point in time.
So, stamping out and assembling springs and gears was cheaper than making and assembling transistors for a Touch Tone pad in those years. All components were discrete in those days.
As mentioned, in another thread it was stated that it was cheaper to do many pre-processing steps on electro-mechanical gear than in the electronic CPU because the CPU was so damn expensive compared to the EAM gear. Most computer centers of that era had EAM gear on standby to do supplemental tasks like card sorting or card deck printing rather than have the expensive computer do it. Further, it was even cheaper despite the cost of paying a person to run the EAM machine instead of the automatic computer.
While others claim Touch Tone saved the phone company money, I still assert it was more expensive for them, esp in non-common- control offices. I don't think tone interpreters for common- control offices were that cheap either.
I note that PBX operators had 20 pps dials while the rest of us had 10 pps. Some kids experimented and found 20 pps worked at home. Now, it was easy to modify the dial to go faster -- so why didn't Bell have everyone at 20 pps -- faster utilization of equipment? I strongly suspect there were valid technical reasons not to.
Indeed, from what I recall from Bell Labs Record, it took quite some time (well into the 1970s) that Bell equipment could really make good use of fast dialing. Eventually they would start interpreting digits as they came in and begin route set up before the whole number was dialed.
[TELECOM Digest Editor's Note: I had a couple of Hayes Modems which could be switched between pulse and tone dialing, and you could set the 'speed' of the pulsing or the 'speed' of the tone signals. You could make both modes go quite fast; with tone dialing so fast that it was little more than just a single blip in your ear, and most times it would work quite well. Only on occassion the modem would give its short little blip or tone burst when dialing *before* the line was set up to allow it, and you would have to redial, but usually it worked okay. PAT]