It was literally an audible translation of 1s and 0s.
Traditional phonelines were only able to transmit noise - this was the solution for transmitting data. 

 I think this corroborates your explanation. Regardless, i found it entertaining 😂

https://youtu.be/GCe6xnxdN1Y 

 Great little animation. 
Yes, by default, the speaker was active during the handshake for the user to confirm that all was well.