Almon B. Strowger was granted US patent # 447,918 on 10 march 1891 for an "Automatic Telephone Exchange". He was an undertaker in Kansas City who felt sure that the local telephone operator, who was somehow connected to his competitor (I've heard wife, girlfriend, sister, etc.), was diverting all calls for mortuary services away from his business.
His original system was not a "dial" as we have come to think of it, but a series of push-buttons, which required five wires (plus ground return) go the central office. In operation, the calling party lifted the receiver and then pressed the appropriate buttons (keys, he called them). As stated in his patent application, for calling 315 one would press the first key three times, the second key once, and the third key five times. At the end of the conversation (or in the event of a mis-dial) the caller pressed the "P" key to restore the switch train. Three of the wires were for the number keys, one for the "P" key, and one for talking.
As I understand it, his brother-in-law operated a machine shop in La Porte, IN, and Strowger went there to actually produce his switch. The first operational model was installed in La Porte on3 November 1892.
Charles G. Gray Senior Lecturer, Telecommunications Oklahoma State University - Tulsa (918) 594-8433