It can be generated more or less anywhere along the path. I don't think it was typically generated at the caller's local switching station, because often there's some delay before it starts, and I didn't think that level of information was communicated. However, sometimes you would get some ringing and before a final signal tone (busy, fast busy, call cannot be completed as dialed, etc).

The phone system has almost always been a heterogeneous distributed system with lots of different capabilities though, so lots of possibilities.

I have a hard time listening to podcasts or audiobooks, but I like to try to listen to Evan Doorbell's Telephone Tapes, a bunch of old (mostly 1970s) recordings of the phone system with recent commentary from the person who made most of the recordings. http://www.evan-doorbell.com/production/group1.htm