B737-700 CREW HAD THE OXYGEN MASKS DROP BECAUSE OF MISSET PRESSURIZATION OUTFLOW VALVE CTL.

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NO PRESSURIZATION AFTER TKOF; MASKS DROPPED. ORIGINATED FLT WITH ON-TIME PUSH. ALL WAS NORMAL WHILE REACHING 10000 FT ON DEP. FO WAS FLYING. WE JUST COMPLETED CLEAN-UP AFTER TKOF; I REACHED TO PLACE LNDG GEAR HANDLE TO 'OFF' POS AND AT SAME TIME GOT A WARNING HORN. INITIALLY; MY MIND WAS ASSOCIATING GEAR HANDLE TO HORN -- WHY? I DIRECTED FO TO LEVEL OFF; BUT HE APPARENTLY DID NOT HEAR ME. SEVERAL OTHER CALLS FROM ATC WERE RECEIVED. I REQUESTED WE LEVEL AT 10000 AND ADVISED THEM WE HAD A PRESSURIZATION PROB. MEANWHILE; THE FO NOTICED THE CABIN RATE OF CLB WAS HIGH AND CABIN ALT WAS 9000 FT AND CLBING. HE DONNED HIS OXYGEN MASK; BUT DID NOT LEVEL OFF OR DSND; BUT RATHER ACFT CLBED TO 14000 FT WHEN HE NOTICED THE PAX OXYGEN MASK LIGHT WAS ON. THEN HE STARTED A DSCNT. OBVIOUSLY; THE COCKPIT NOISE LEVEL WAS QUITE HIGH. I WAS COORDINATING WITH ATC AND ONCE I REALIZED MASKS WERE DEPLOYED; I REQUESTED IMMEDIATE RETURN TO ABQ. NO EMER WAS DECLARED. I THEN TALKED TO FLT ATTENDANT AND TOLD THEM PROB. WE WERE RETURNING AND THERE WAS NO NEED TO WEAR MASKS. I THEN MADE A PA TO PAX; TOLD THEM WE HAD A PRESSURIZATION PROB AND WERE RETURNING TO ABQ. NORMAL LNDG WAS MADE AND TAXI TO GATE. OPS HAD EMT STANDING BY AT MY REQUEST IN CASE ANY PAX HAD PHYSIOLOGICAL PROBS. ONLY 1 COMPLAINED OF EAR HURTING. ON DSCNT FOR LNDG FO NOTICED THE PRESSURE CTLR SWITCH WAS IN THE 'MANUAL' POS INSTEAD OF 'AUTO.' I NOTIFIED DISPATCH; MAINT AND CHIEF PLT ONCE ON GND. OPS GAVE US SPARE ACFT AND WE CONTINUED TRIP. IN RETROSPECT; I SHOULD HAVE TAKEN CTL OF ACFT IMMEDIATELY AND LEVELED AT 10000 FT WHILE FO DID TROUBLESHOOTING. IN ATA; COCKPIT WORK LEVEL WAS HIGH WITH ADDED NOISE OF HORN AND RADIOS ADDING TO CONFUSION. THE CAUSE: APPEARED TO BE THE FO BEING INTERRUPTED DURING HIS PREFLT FLOW AND NOT MOVING THE SWITCH BACK TO 'AUTO.' UNFORTUNATELY; THE BEFORE ORIGINATING CHKLIST (CHALLENGE/RESPONSE) DOES NOT ADDRESS THAT SWITCH EITHER. IN THE FUTURE MY 10000 FT CHK WILL INCLUDE THE CABIN ALT IN THE CORRECT CTL SWITCH POS. THIS WAS A PREVENTABLE INCIDENT.