When studying Edison's life and business prowess, author
Neil Baldwin makes some important observations. First, Edison's
brilliance as a marketer, who used his own name in all his ventures. This
gave Edison's businesses, which were not as well-known as his inventions,
instant credibility in the eyes of consumers.[1] Historian Edmund Morris also notes that
Edison’s marketing was a stroke of genius, especially when one considers the
fact that his competitors often had a better product. For example, as a proponent of DC (Direct
Current) electricity, Edison was forced to construct numerous power stations to
supply the necessary electricity to his customers, since DC current loses its
power when transported long distances by wire.
Edison’s competitors, who used AC (Alternating Current) electricity did
not have to deal with this impediment, and thus had an advantage. Edison reacted by labeling his competitors as
dangerous and offering a service that was less reliable than his own.[2] Edison himself recognized this strategy when
he wrote, “Just as certain as death, Westinghouse will kill a customer
within 6 months after he puts in a system of any size.”[3]
Eventually, Edison’s infatuation with DC current would fail
as the superiority of AC current became abundantly clear to consumers. As a result, Edison had to adapt yet another business
tactic. Instead of simply admitting
defeat or continuing in a futile battle with a competitor who already has a far
superior product, Edison elected to unite his forces with those of his foe. Edison’s merger with Thomas-Houston Electric,
which used AC, allowed Edison to continue operating his business as the new
General Electric, which would last long into the subsequent decades.
This merger cannot be seen purely as a victory for Edison, however. As author Tom McNichol points out in his book, AC/DC: The Savage Tale of the First Standards War, Edison may have been the public face of the new General Electric, but he had suffered a massive loss. McNichol writes:
Although Edison was the public face of the company, he owned only about 10 percent of the firm’s stock. The rest was controlled by Wall Street bankers, among them J.P. Morgan. Henry Villard was a financier himself; he had organized the highly profitable Northern Pacific Railroad, and like Westinghouse, was more a dealmaker[4]
Electricity became a booming industry during the early years of the twentieth century and remained one of the few businesses that remained relatively untouched by the Great Depression. As Gene Smiley, historian from Marquette University points out, the electricity industry began a mad rush to earn the services of their customers. Westinghouse, General Electric and other companies began producing not just electricity coverage, but various appliances to help make life for everyday Americans easier and more efficient.[5] As can be seen from the charts below, electricity, during the early years of the twentieth century, was a booming business that had tons of promise:
Historians note that Edison’s loss in the business arena that
was electricity left him at a substantial disadvantage. Edison was no longer a heavy hitter in the
industry but instead had been reduced to a mere side note. And while their observations are sound, they
ignore Edison’s tenacity to remain a part of the game. Edison did not simply die away, he had to
evolve and change, which is why his experience as an entrepreneur is worthy of
taking note. Though Edison could have
remained simply a scientific figure, known for his many amazing inventions, he elected
to be more. Edison remained inside a booming
American industry that he had not only helped to create, but had seen evolve,
even beyond himself. And while that evolution
took electricity to newer heights that even Edison could not imagine or reach,
he still managed to remain a relevant and important figure within the business
world.
[1]
Niel Baldwin, Edison: Inventing the Century University of Chicago
Press edition. Chicago: University of Chicago Press, 2001.
[2]
Edmund Morris, Edison (New York: Random House Publishing, 2019) Pp.
238-242.
[3]
Thomas Edison, in George Westinghouse, Westinghouse Electric Co., October
6th, 1892. http://edison.rutgers.edu/digital/document/SC92085a1
[4] Tom
McNichol, AC/DC: The Savage Tale of the First Standards War (San
Francisco: Jossey-Boss Publishing, 2006). Pp. 133.
[5] Gene
Smiley, “The U.S. Economy in the 1920s.”
EH.net. Economic History Association. https://eh.net/encyclopedia/the-u-s-economy-in-the-1920s/
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