September 2, 2019 • 44 mins
General Electric has been around for more than 100 years. It's recently been in a bit of a slump. How did this company get started?
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Speaker 1 (00:04):
Welcome to Tech Stuff, a production of I Heart Radios
How Stuff Works. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer with
How Stuff Works in iHeart Radio and I Love All
Things Tech. And In mid August two thousand nineteen, by
(00:25):
financial analyst named Harry Marcopolis released a one hundred seventy
five page report alleging that g E that is General Electric,
the venerable company that is more than a century old,
was secretly on the verge of insolvency. He claimed the
company was using accounting tricks to hide an enormous threat
(00:47):
to its very existence, something akin to the Shenanigans in
Ron polled years ago. And giving Marcopolis some credibility was
his own history. He had raised warning flags about Bernie
made Off before the world found out about made Off's
Ponzi scheme. And to learn more about Ponzi schemes, you
should look up the classic Stuff you should Know episode
(01:09):
All about It. It's great, particularly with the way Chuck
adopted It's a Ponzi scheme into that and subsequent episodes.
Now as I record these episodes, the report and the
responses to it are still part of the news cycle.
GE and some third party analysts have disputed Marcopolis's findings,
(01:31):
claiming that Marcopolis himself actually stands to earn a lot
of money by taking down GE. And Marcopolis has said
he was hired by a Hedge fund to look into
GES practices, but he refuses to name the fund as
of the recording of this podcast. Meanwhile, some other third
parties seem to agree with at least some of Marcopolis's findings,
(01:52):
and GE has been under increased scrutiny for its accounting
practices over the last few years. So there are a
lot of answered questions around this, and it's by no
means a settled matter. I don't know if Marcopolis's allegations
reflect reality, and in fact, if I'm being totally honest,
I don't even understand all of those allegations. And in
(02:14):
the interest of full disclosure, I have not read the
full one page report, but I did think it would
be good to do a full rundown on the history
of General Electric. It is an incredibly influential company, and
it spans many industries it has had and and it's
(02:35):
heart to stress how big an impact it has had
on the history of the United States in particular and
tech in general. Now I should also add that back
in two thousand twelve, Chris Palette and I recorded three
episodes about the history of GE. But Tech Stuff was
a different kind of show back in those days, so
(02:56):
I thought it might be good to take a deeper
dive into the history and see how GE shaped technology.
And beyond that being said, if I were to do
a comprehensive history on the company and all its subsidiaries,
this series would last a dozen episodes or more. So
to avoid making this episode and this podcast turned into
(03:16):
Ge Stuff, I'm going to try and focus on what
I think are some of the most important historical moments
of GE. And a lot of that is in those
early years. So let's go back to where it all began.
And like many corporate histories, this involves going back to
older companies that would form the foundation for the one
we actually want to talk about. So strap in guys
(03:38):
and women and all others. I don't mean to lump
everybody in under the term guys. Anyway, we all know
about Thomas Edison, right He was an inventor. He was
an entrepreneur. He was a master at self promotion and more.
And some folks might throw in some less complementary labels
(03:58):
in there, perhaps suggesting he was also a thief, or
if that's going too far, someone willing to take credit
for the work of people who are working beneath him.
But whatever your opinion of the fellow, Edison got stuff done.
In the eighteen seventies, Edison was working on the light bulb,
and no, he didn't invent the light bulb, but that's
(04:19):
a story for another podcast. In fact, my former co
host Chris Poulett and I actually did cover that story
in an episode titled tech Stuff Gets a Bright Idea,
which published on October twenty nine, two thousand twelve. But
Edison did make improvements on the lightbulb, working with his
engineers to discover a material to serve as a suitable
(04:40):
filament to incandess brightly enough and long enough to be
a practical use. In eighteen seventy eight, Edison founded a
company to concentrate on that goal. It was the Edison
Electric Light Company. He had some big names in US history,
particularly US financial history, as his vester's folks like the Vanderbilts,
(05:02):
and JP Morgan. Now Morgan is going to become very
important to this story. Now. At the time, he had
yet to find a suitable approach. The lightbulbs he made
would burn out in just a few hours. The following year,
in eighteen seventy nine, his company produced a light bulb
able to last for forty hours. Not superb by any means,
(05:24):
but a real sign of progress, and Edison boldly stated
that his company would make electricity affordable enough so that
only the wealthy would ever burn candles. That same year, again,
eighteen seventy nine, for those who have forgotten, a couple
of teachers created their own company. Edwin James Houston was
a physics teacher, and Alihu Thompson taught chemistry and mechanics
(05:49):
at the Central High School for Boys in Philadelphia. They
created a company called the American Electric Company in New Britain, Connecticut,
with the help of some local and susters. In three
a different group of investors, this time from Massachusetts, bought
out the company from the original group of investors and
(06:10):
the company got a new name, the Thompson Houston Electric Company.
Thompson would head up the research and development department, which
was called the model room. A fellow named Charles A. Coffin,
the head of the investors, would lead the company and
act as a sort of president and chief financial officer,
while Elwyn W. Rice led the manufacturing part of the business.
(06:34):
Both of those names will be important for ge and
Charles Coffin wasn't a physicist by nature. No, he was
a man with a lot of soul. And by that
I meant he was a shoe manufacturer. As a dad
joke for you. So where many of his fellow investors,
They were all from the shoe manufacturing industry, and they
(06:56):
were all located in Lynn, Massachusetts, and they pulled their
money to purchase this burgeoning, this this blossoming electric utility company,
the Thompson Houston Electric Company, would relocate its headquarters to Lynn, Massachusetts.
And we'll get back to that company in just a second.
Edison was not just working on lamps in the eighteen
(07:17):
seventies and eighteen eighties. He was also creating some of
the first generators. These are devices that would convert mechanical
energy into electrical energy. On December seventeenth, eighteen eighty, he
founded the Edison Electric Illuminating Company. In eighteen eighty two,
he was responsible for building and operating the first steam
(07:37):
generated power station in London to power street lamps and
a few private homes that were not far from the
power plant. In New York, he was responsible for creating
an electric power distribution system called Pearl Street Station, which
supplied electricity to fifty nine whole customers in Lower Manhattan.
(07:57):
Now at the time, not everyone was old on the
idea of this new fangled electricity replacing candles and gas lamps,
so as an incentive, Edison's company offered the first three
months of service at no charge. He also began to
acquire smaller businesses that were likewise getting into the electrical
(08:18):
power generator game, and by eighteen ninety this motley group
of companies merged to form Voltron, and by Voltron, I
mean they became the Edison General Electric Company. It was
this company that in eight installed electrical wires and switching
equipment in the United States White House, and that made
(08:40):
Benjamin Harrison, the twenty third President of the United States,
the first US president to have electricity in the White House.
Back to the Thompson Houston Electric Company. Like Edison, Charles
Coffin was determined to be a big player in the
electricity generating business. He had led Thompson Houston to go international,
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and he bought out a British company called the Brush Company,
which did not sell brushes. No, it was actually founded
by a guy named Charles Brush, and it was a
company that had patents for stuff like dynamos and had
been in litigation with Thompson Houston Electric Company over some technologies.
But we all know the old saying, right, if you
(09:23):
can't beat them, by them, and that's what Thompson Houston
Electric Company did. So both Edison General Electric Company and
the Thompson Houston Electric Company were buying up competitors and
more importantly, patent holders, so they each had dozens of
patents to their name, and they were quickly becoming the
(09:45):
dominant players in electricity generation and distribution in the Northeast
United States. And there was just enough overlap to make
business tricky for both companies. Without stepping on the toes
of the other, they could have become great rivals, and
in fact they kind of were. Henry Villard, who was
the president of Edison General Electric Thomas Edison, wasn't involved
(10:07):
in the day to day operations of the company. Villard
had an idea. Both Edison and Thompson Houston were in
a bit of a cash crunch as the market was
in a bit of a slump. In addition, because both
companies owned dozens of patents, that made it hard to
be the sole provider of any kind of electrical infrastructure.
(10:28):
Business was too expensive. It was not just expensive to
lay out the infrastructure, but you had all these legal
battles that would come up because one company would allege
that the other company was infringing on one or more patents.
There were several lawsuits pending around patents, and there would
likely be even more in the future. Villard wanted to
solve all these problems by having the two companies merge.
(10:51):
Edison reportedly hated this idea and advised against it. Villard
felt that the Edison company was in a dominent position
and could effectively define the terms of the merger, and
so he tried to move on ahead. Then we get
back to JP Morgan, the financier, that he had arrived
at a similar conclusion regarding the merger, but he felt
(11:15):
that the Thompson Houston company was actually the one that
was in a stronger position, and because Morgan was Mr
money Bags. He went behind Villard's back and began wheeling
and dealing to make the merger happen, but on very
different terms than what Villard was thinking. Morgan's spearheaded the
effort to merge these two companies together to form a
(11:38):
new entity, one that would become known as the General
Electric Company and later g E. The headquarters for the
company would be in Schenectady, New York, and Morrigan effectively
removed Thomas Edison and Henry Villard from any sort of
leadership role. Edison didn't even know about the merger until
(11:58):
the day before it at actually happened. Yikes, With their
powers and patents combined, the two former competitors could rapidly
expand throughout the Northeast and beyond and moreover, the merger
meant that the electric utilities industry in the United States
was now split between just two companies because General Electric
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Companies had been swooped up, you know, all Thomas Houston
and Edison Electric had brought up all these smaller utilities,
as had Westinghouse, the other big competitor in the US.
So now the electric utilities industry in the United States
was a do Woppoli. It was either General Electric or
it was Westinghouse and General Electric and Westinghouse had been
(12:43):
part of a patent pool agreement in eight so this
was a big deal. It would also mean the end
of the war of the currents between direct current and
alternating current. I have a little bit more to say
about that in a minute now. I'm a two minds
about this merger that JP Morgan initiated. Generally speaking, I'm
(13:06):
in favor of competition in markets because that's usually what
ends up being best for the consumer. It's way better
if you have options and choices because companies will do
different things in order to get customers, which usually means
cutting a better deal. But we're also talking about era
in which most people didn't even have access to electricity.
(13:28):
The infrastructure itself had not been laid out, so there
was a real need to do that, and with competition
in the way, it made laying out the basic infrastructure
to get electricity to people harder to do. The same
thing would be true of the telecommunications industry getting telephone
lines out to people. It was tough to do that
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while also competing with other companies, and it could mean
that you could have different standards, corporate defined standards that
are incompatible with one another, laying out different regions. It
was just a big mess. So you could argue that
the monopoly like approach was actually beneficial at least to
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establish the infrastructure. It just wasn't a good thing to
have as an ongoing thing. The newly formed company started
in eighteen nine two and Charles Coffin would serve as
the first president. So though you could trace the history
as far back as eighteen seventy eight, I think is
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a reasonable reckoning day for g s natal day. Now
we're gonna take a quick break, but when we come back,
we'll talk a little bit more about what GE was
doing during its first few years of existence. In eighteen
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nine three, Edison's company developed an electric locomotive that could
use electric city to reach speeds of around thirty miles
per hour, which the company showed off at the Chicago Exposition.
This was another opportunity to demonstrate how electricity could be
used to a curious audience, and it helped promote the industry.
You gotta remember again, in eighteen nine three, electricity is
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a brand new concept and to show that it had
the power to do something that typically would be done
with a steam engine was a very compelling use case.
In eighteen, Thomas Edison chose to sell his shares in
General Electric. He would continue to serve as a consultant
for the company, but the Wizard of Menlo Park would
(15:38):
no longer be seen as the driving force or voice
for General Electric, and to be fair, ever since the
formation of the company, he had little say in its direction.
While the name and headquarters favored Edison's old company, the
management for General Electric largely came from the Thompson Houston
Electric Company. So Edison out and at just four years old,
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General Electric would become part of financial history. See in
eight six there was this guy named Charles Dow and
he took stocks of twelve large industrial companies to create
a stocks average, and it was a sort of indicator
as to how things were going in the industrial market overall.
(16:22):
You would watch the averaged performance of these twelve companies
and that would kind of tell you how things were going.
As a broad rule of thumb, one of those twelve
original companies was you guessed it, General Electric. All of
the original dozen companies, GE would be the only one
to survive and remain on the dal Jones Industrial Average
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for more than a century, though spoiler alert, GE was
removed from the dal Jones Industrial Average in two thousand
and eighteen, but I'll talk more about that in a
later episode. Also in eighteen, s Eli Hu Thompson, one
of the founders of the Thompson Houston Electric Company and
a consultant at GE, created an improved X ray tube.
(17:09):
So let's talk about X rays for a second. X
rays are a type of electromagnetic radiation, and they have
a very short wavelength, much shorter than visible light. So
if you were to look at a spectrum of electromagnetic
radiation from longer wavelengths to shorter at the longest end
would be radio waves. Those stretch very long, in some
(17:32):
cases more than a kilometer. Then if you move down
the spectrum you come to microwaves. Below that are infrared waves.
Then you have visible light, then you have ultra violet light,
then you have X rays. If you were to go
even smaller on the wavelength scale, you would then reach
gamma rays. X rays form when a charged particle like
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an electron, experiences acceleration or deceleration, and you want to
have it be in a very controlled way to generate
specific X rays of a particular wavelength. Vilhelm Conrad Runchen
and I always mess up that name. I apologize, but anyway,
this is the fellow who first discovered X rays in
eight He was working with cathode ray tubes in a lab.
(18:18):
These are crt s, is the sort of stuff you
would find in old television sets. And he had concluded
that there was a type of ray that was invisible
to the eye, and it could pass through lots of
solid stuff, like heavy black paper. In fact, he figured
it could pass through lots of different stuff, and it
could cast shadows of solid objects. It could pass through
(18:39):
flesh but not bone. And one of the earliest experiments
he conducted with this discovery was to use film to
capture an X ray image of his wife's hand so
that she could see the skeletal structure of her hand.
So an X ray tube converts energy. Specifically, it converts
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electrical energy into two other types of energy. One of
those is heat and the other is X radiation. Ideally,
you want to produce specific X radiation and you want
to minimize heat production because really heat represents waste, it's
lost energy. In this case, so are the way we
think of heat being waste energy for a car engine.
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As another example, so, an X ray tube is a
particular type of cathode ray tube. That means inside the tube,
which looks a little bit like a lightbulb, you have
an element called a cathode and you have another called
an anode. Electrical current flows through the tube and electrons
flow from cathode to anode. The cathode connects to the
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negative side of the circuit, the anode connects to the
positive side. So in other words, you can think of
the cathode as the component that sheds or contributes electrons.
The anode is the component that accepts electrons. As part
of this process, a electrons lose energy as they moved
through the circuit, and this generates X radiation. The material
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in the anode and the energy of the electrons determines
how much of the energy gets converted into heat rather
than X radiation. Modern X ray tubes frequently have tungsten anodes.
And there's a lot more we could explore with X rays,
but honestly, I think that would require its own episode,
so we'll just leave it here. Just know that the
X ray tubes are pretty similar to the tubes you'd
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find in old CRT televisions or monitors, though not modern
TVs or displays because they they don't use cathode ray
tubes anymore. The important thing for our episode here is
that GE became a leader in that space, with Thompson
creating the improved X ray tube just one year after
X rays had even been discovered. In nineteen hundred, Thomas Edison,
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still working as a consultant for General Electric, partnered with
Willis R. Whitney and Charles Steinmitz to create the first
industrial research laboratory in the United States. The purpose of
the facility was to act as an experimental division for GE,
where engineers and scientists would work on innovating new technologies
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and new applications of existing tech, and even making scientific breakthroughs.
It was in this facility where GE researchers could conduct
original research projects. The functions of this facility closely resembled
a model practiced in German universities. Much of the early
work in the research lab focused on improving the existing
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technologies that GE was producing at the time. It was
only after a few years that the engineers were starting
to look at totally new types of technology, scientific principles
and applications. Also, this is where we get a little
Monty Python and the Holy Grail with the lab. The
original lab was not particularly grandiose. It was a barn
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located behind the house of one of the rese searchers
for GE. But, and this will probably come as a
surprise to absolutely nobody, because they were working with electricity
and heating elements, that particular lab ended up catching fire
and it burned down. After that, GE re established the
lab in Schenectady, New York. The head of the research
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division was a professor from m I. T. And I'm
sure there were many more fires over the following years,
but as far as I know, none of them burned
the whole lab down to the ground again. One early
invention to come out of the lab was the electric
fan in two. Now, there is a small issue with this,
and that other inventors had already created electric fans years earlier.
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An inventor with the fabulous name Skylar Scott's Wheeler built
one in eighteen eighty two, twenty years before GE would
file patents for its electric fan design. Another guy named
Philip Deal took the electric fan and flipped it a bit,
creating the first ceiling fan. He essentially took a fan blade,
(23:05):
attached it to a sewing machine motor, and then bolted
that motor to the ceiling in seven Now, I'm not
sure what innovations General Electric contributed to the electric fan,
but I will tell you I looked at lots of
different sources when I was creating these these episodes, and
many of them talk about two G. E invents the
(23:26):
electric fan, which clearly is not the case. Uh No,
they might have come out with an electric fan, and
they probably did create some interesting innovations with the fan,
but they didn't truly invent it had been around for
two decades already. In nineteen o three, GE acquired the
Stanley Electric Manufacturing Company, which manufactured transformers. In fact, William Stanley,
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the founder of the company, was the developer of the transformer.
And a transformer in this case isn't a robot in disguise. Rather,
it's an electrical device that inverts alternating current electricity from
one voltage to another, and depending upon its design, a
transformer can step up or step down the voltage and
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it only works on alternating current, so let's talk a
bit about this and why it's important. Alright, at the
dawn of the age of electricity, you had the current wars,
the brew haha over whether regions should invest in direct
current or alternating current for the purposes of distributing electricity.
(24:31):
Edison was in favor of direct current. Direct current is
the same sort of current you'd get with a battery.
The electricity flows one way only through the circuit. It's
a one direction type of thing. It's simple. But at
the time, transmitting direct current over longer distances was impractical.
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So it worked fine if you were in a dense
urban environment and you could build power generation plants at
regular spots around the region, but it wouldn't didn't work
so great if you're talking about stretching across rural areas.
That the transmitting direct current at lower voltages was inefficient.
You lost too much electricity along the way, and it
(25:14):
higher curtains. That was considered higher voltages, I should say
it was considered very dangerous. Now inter alternating current with
alternating current, the flow of electricity reverses many times a second,
going one way down the path and then reversing to
go the other way, and One benefit of this approach
is that you can create transformers to step up the
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voltages for purposes of transmitting electricity over long distances, and
then have another transformer on the other end to step
the voltage back down so it can be used in
households safely. And it all has to do with electromagnetism.
Electricity flowing through a coil of wire creates a magnetic field,
and if it's alternating current going through that coil, so
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it's you can think of it as going down the
coil of wire and then reversing and going up the
coil of wire and doing that many many many times
per second. Well, then it creates a fluctuating magnetic field. Now,
if you were to bring a second coil of wire
within that fluctuating magnetic field from the first coil of wire,
(26:19):
something interesting happens. All Right, We've got coils A and B.
Each coil is wrapped around its own ferro magnetic core
of iron or steel, something that can be magnetized. We
run an alternating current of electricity through Coil A. Then
we bring coil B with no current running through it,
(26:39):
close enough so that it is within the fluctuating magnetic
field that is generated as a consequence of coil a's
electric current. That fluctuating magnetic field then induces a second
electric current to flow through coil B. So now coil
B is carrying a current because of being in that
(27:00):
fluctuating magnetic field from coil A. Even more interesting is
that if coil B has more coils or turns as
we call it, than coil A does, the current running
through coil B will have a higher voltage. The relationship
between the number of turns is called the transformer turns ratio.
So a power plant could run current through a line
(27:22):
to a transformer and, through the use of two sets
of coils, step up the voltage significantly for a long
distance transmission, where higher voltage is more efficient. I wonder
if Thomas Edison was peeved the General Electric was purchasing
companies that were building tech for alternating current applications. Actually,
(27:43):
I don't have to wonder he was. He was pretty
pretty upset about He did not like the idea of
losing the War of the currents. Even well after that
war was settled. In nineteen o five, GE formed the
Electric Bond and Share Company also known as ABASCO E
(28:04):
B a s c O. This was a holding company.
Holding company as a company that exists largely to hold
onto the stock of other companies. Usually a holding company
doesn't actually, you know, do anything. Its purpose is truly
just financial in nature. Ge used the employee retirement Investment
(28:27):
fund for its employees to purchase securities from smaller electric
utility companies. This was largely in an effort to monopolize
the electric utility industry. This was something that financier JP
Morgan was very keen on doing. A few other utilities
holding companies would be would would pop up and scoop
(28:50):
up other regional companies, and so you started to see
even less competition in the region, and this would spell trouble.
I'll explain more in a second, but first let's take
another quick break. Now I'm going to stick with this
(29:11):
story about the holding company for a moment, and then
we'll give back to the timeline. We're gonna go down
this particular path just to get a complete picture of
this story. So Abasco ends up controlling tons of companies
and would even form subsidiaries of its own holding company
(29:32):
to oversee groups of these because there were just so many.
So you might have a subsidiary of Abasco that itself
was a holding company for like ten other companies. So
eventually the United States government pays attention and comes to
oppose the monopolization of utilities and says, you know, it
was okay when we were laying out the infrastructure to
(29:53):
make sure people got access to electricity, but now we're
not so comfortable with one company having this much control
roll over electricity distribution. This reached a crescendo in ninety
five when Congress passed the Public Utility Company Holding Act.
That act gave the securities an Exchange Commission, or sec
(30:13):
the authority to break up holding companies so that the
individual states in the United States could oversee operations within
their borders. Abasco fought tooth and nail to keep its holdings,
but ultimately lost that battle, and afterwards the entity that
was Abasco would reorganize and become an investment company. Now
(30:35):
I include the story here because it's just one of
many examples of how General Electric drew focus and criticism
for its operations, and it shows how powerful and influential
the company has been over the years. All right, now
we're gonna jump back to the timeline that we were
covering before. So around the same time that Abasca was forming,
(30:57):
a GE engineer named Ernst Alexanderson developed a type of
high frequency alternator and we now call the Alexanderson alternator,
and it was for the purposes of creating a radio transmitter.
He was doing this upon request from another guy, an
inventor named Reginald Fessenden, who had been trying to solve
the problem of sending sound over radio waves, essentially radio broadcasting.
(31:22):
Fessenden had figured out that he needed a much higher
frequency alternator than what was currently available to achieve his goal,
so he sent out the request to GE and Alexanderson
started to work on the project. An alternator, by the way,
is a device that creates an alternating current. The Alexanderson
alternator could create a continuous radio wave, and that's a
(31:45):
radio wave with a constant amplitude and frequency. I won't
go into it further here, as I've done plenty of
episodes about radio waves and technology, but it would be
an early example of how general electric would become an
important part of the history of radio. So far, I've
been talking about electric utilities and radio waves. But around
the same time, so nineteen o five or so, General
(32:07):
Electric would also dip its enormous corporate toe into the
tempting waters of consumer appliances. The first one I could
find on General Electric's own website was the Model D
twelve and electric toaster. Other sources cite a nineteen o
six electric range as the first consumer product. The toaster,
(32:29):
by the way, looks terrifying to me because it doesn't
have any solid surfaces. It's essentially a couple of racks,
open air racks that holds slices of bread and they
are placed on either side of a series of unprotected
heating coils. So I would imagine this thing was quite
(32:51):
the fire hazard in its day. Oh and in case
you wonder, like how does this stuff work, that's easy.
Conductive materials, that is, materials that can conduct electrons are
usually not perfect conductors most of the time. Now, if
you can cool one down to near absolute zero, you
can get a super conductor that doesn't lose any conductivity.
(33:14):
Uh and if you use larger gauges of conductive material,
you reduce resistance. But because of a variety of factors,
most conductors have a certain amount of resistance to electric current.
Based on all these different variables, that resistance manifests as heat. Now,
normally we don't want heat in our conductive materials. Electronics
(33:37):
don't respond too well with getting hot. But with stuff
like electric ranges and toasters, the whole point is to
generate heat. We use materials that have a resistance so
that enough electrical energy will convert to heat in order
to cook or toast whatever it is we're exposing to
those elements. On the other end of the scale from
a countertop toaster is the deliver verge made to the
(34:01):
New York Central Railroad in the company supplied thirty electric locomotives,
each weighing in at ninety four tons. The locomotives had
two thousand, eight hundred horsepower each. This isn't just an
interesting tidbit in Gees history. The electric locomotive and rails
(34:23):
in New York would shape the development of Manhattan itself,
as did the electrical infrastructure. So one could argue that
modern Manhattan wouldn't look anything like it does today without
general electrics business in the area. That general electrics involvement
itself was what helped shape the modern appearance of Manhattan,
(34:46):
and because I'll probably forget about it before I get
to the recent past. In a later episode, not very
long ago from the recording, General Electrics spun off its
locomotive business in a merger with another locomotive company called
wab Tech w A B T e C. The eleven
billion dollar deal saw GE and its shareholders take fifty
(35:09):
point one percent stake in the ownership of this new company,
with wab Text shareholders getting the other forty nine point nine.
This was part of the larger effort to shed some
of g S businesses. As I think it's already apparent
that the company had grown extremely large, with lots of
different departments involved in various industries. That was true even
(35:31):
in the early nineteen hundreds, but it gets way more
apparent as this series will go on. In nineteen o nine,
engineers at General Electric, led by a guy named William Coolidge,
developed the ductal tungsten filament for incandescent light bulbs. Tungsten
holds together well at high temperatures, and it gives off
(35:52):
a warm light when it incandescees, but it's also a
pretty tough metal to work with. Coolidge created a process
that made the metal easier and more appliable to work with,
and it was off to the races. It made the
Edison design much more efficient and practical, and it quickly
became the standard material for light bulbs. It's essentially the
same stuff you'd find in the filament in an incandescent
(36:15):
light bulb today. In nineteen eleven, we have another acquisition
sort of. General Electric absorbed a company called the National
Electric Lamp Association or NILA in e l A, and
that organization traced its own history back to nineteen o one.
G had already been part of NILA's history, having become
(36:37):
a shareholder in the company back in nineteen o two,
just one year after it was founded, and providing the
old Brush Electric Company facilities to serve as NILA's headquarters.
Over time, General Electrics stake in the company grew, and
federal courts took notice, and there were talks of antitrust concerns,
and GE was essentially told it had to dissolve NILA,
(37:00):
so General Electric absorbed NILA into its own overall business.
NILA had recently finished building an industrial complex in Cleveland, Ohio,
and NILA Park would become the first industrial park in
the United States. And here's where I admit I finally
looked up the definition for an industrial park because I've
(37:21):
heard the term hundreds of times but never really thought
to see exactly what the definition was. So imagine my
surprise to find out it means pretty much what it
sounds like. An industrial park is an area that is
zoned for industrial development, kind of like how a business
park or an office park is an area zoned for offices.
(37:41):
Sometimes the obvious answer is in fact the correct one.
In nineteen twelve, ge researchers developed improved vacuum tubes which
would help usher in the early era of electronics. Before
the development of the transistor, the vacuum tube was crucial
for electronics. A vacuum tube is also known as a
(38:03):
thermionic valve. Thermionic gives you a hint of One of
the important concepts in this device has to do with heat,
and vacuum tubes are in many ways similar to cathode
ray tubes or light bulbs. Like a cathode ray tube,
a vacuum tube has a cathode and an anode separated
from each other inside a glass tube, and as the
(38:24):
name vacuum tube tells, us. The inside of the tube
has no air in it. It is a vacuum. Heating
the cathode causes it to shed electrons in a process
called thermionic emission. Applying a positive voltage to the anode
plate attracts those electrons across the gap in the vacuum,
(38:44):
creating a current flow. A vacuum tube with just two electrodes,
the cathode and the anode, is called a diode. This
is a type of tube that allows electricity to only
flow in a single direction, so it's like a one
way street electrical current. That we also have to remember
that we described current as the direction of positive to negative,
(39:06):
so this is confusing. Electrons are traveling from negative to positive,
but we call the currents direction the opposite. So current
flows from anode to cathode, even though electrons are flowing
from cathode to anode. And I know it's confusing, and
I blame Benjamin Franklin, But that's another story. One important
(39:27):
task these diodes did was convert alternating current to direct current.
This was important since electricity transmission was through alternating current,
but most devices you would plug into outlets relied on
direct currents, so you had to be able to convert them.
But vacuum tubes didn't just stop there. Back in seven
(39:47):
lead to Forest, an American inventor created the first triode
vacuum tube. So this was a vacuum tube with three electrodes.
You had the anode, you had the cathode, and the
third electrode was a control grid. Think of it as
a sort of filter or mesh between the cathode and
the anode. So the cathode is shedding electrons, the anode
(40:11):
is accepting electrons, and the control grid is between the two.
Connectors to the control grid allow for a change and
voltage to be applied to the grid itself. So adjusting
the voltage to the control grid acts as a kind
of valve, adjusting exactly how many electrons can flow from
the cathode to the anode. So if you applied a
(40:32):
negative voltage to the control grid, the control grid will
repel electrons, right because like charge will repel like charge.
Negative repels negative, and that would mean that you would
slow down the stream going from cathode to an notte.
So it's almost like turning a tap of water and
(40:52):
turning it so that the water is barely trickling out.
If you apply a strong enough negative charge to the
control grid, it you turn off the flow entirely. But
if you apply a positive voltage, that increases the number
of electrons that flow through to the anode. And in fact,
such a vacuum tube can be used to amplify an
electrical signal. So let me explain how that works really quickly.
(41:15):
See a small signal coming into the control grid, perhaps
one created by say a radio wave, can be converted
into a much larger signal with the exact same wave form.
Another example is using a microphone. If you're using a microphone,
you're speaking into the microphone. The vibrations caused by the
sounds you are making cause a diaphragm to move inside
(41:37):
the microphone. That in turn causes a tiny electro magnet
to generate a weak electrical signal, and the signal is
far too weak to power a speaker. But let's say
you send this electrical signal so that feeds into the
control grid of a triode vacuum tube. It will control
the flow of electrons through that tube, and you could
(42:00):
have a much more powerful electrical signal coming out of
that tube. That matches the one you created coming out
of your microphone, and that one would be enough for
you to send to a speaker to power it. It's
really pretty darn cool. Vacuum Tubes would be used in
all sorts of early electronics, and they would usher in
an age of rapid development, though it was also one
(42:23):
in which those electronics were all very large, because vacuum
tubes are pretty big themselves, so a computer with vacuum
tubes and computers would come much later, but a computer
running on vacuum tubes would by necessity take up a
great deal of space, and it would also generate a
lot of heat. It wouldn't be until the development of
the transistor that these problems would be surmounted and we'd
(42:45):
be able to miniaturize electronics. Now, I think this is
a good place for us to leave off with the
story of GE to recap the company formed during an
era of industrialization and was largely under the influence of
a monopoly sick capitalist that being JP Morgan. It had
hardly any competition to speak of, being part of a
(43:06):
do woppoli with Westinghouse and having far more of the
market share in the United States, and its focus on
research and development as well as acquisitions, meant it was
becoming increasingly powerful and cementing its near future. Now, in
the next episode, we'll look at how ge would play
an important part in establishing radio broadcasting in the United States,
(43:27):
as well as its early history with NBC, and we'll
also learn about how the US government began to chip
away at some of the moves Morrigan had made in
the early years of the company. But for now, it's
time to sign off. If you guys have suggestions for
future episodes of tech Stuff, why not send me an
email the addresses tech Stuff at how stuff works dot
com or pop on over to our website that's tech
(43:49):
stuff podcast dot com. You're gonna find an archive of
all of our past episodes there. You're also going to
find links to our social media accounts, so you can
leave us a message on things like Facebook or Twitter.
And you'll also find a link to our online store,
where every purchase you make goes to help the show
and we greatly appreciate it, and I'll talk to you
again really soon. Text Stuff is a production of I
(44:17):
Heart Radio's How Stuff Works. For more podcasts from I
heart Radio, visit the i Heart Radio app, Apple podcasts,
or wherever you listen to your favorite shows.
Welcome to Tech Stuff, a production of I Heart Radios
How Stuff Works. Hey there, and welcome to tech Stuff.
I'm your host, Jonathan Strickland. I'm an executive producer with
How Stuff Works in iHeart Radio and I Love All
Things Tech. And In mid August two thousand nineteen, by
(00:25):
financial analyst named Harry Marcopolis released a one hundred seventy
five page report alleging that g E that is General Electric,
the venerable company that is more than a century old,
was secretly on the verge of insolvency. He claimed the
company was using accounting tricks to hide an enormous threat
(00:47):
to its very existence, something akin to the Shenanigans in
Ron polled years ago. And giving Marcopolis some credibility was
his own history. He had raised warning flags about Bernie
made Off before the world found out about made Off's
Ponzi scheme. And to learn more about Ponzi schemes, you
should look up the classic Stuff you should Know episode
(01:09):
All about It. It's great, particularly with the way Chuck
adopted It's a Ponzi scheme into that and subsequent episodes.
Now as I record these episodes, the report and the
responses to it are still part of the news cycle.
GE and some third party analysts have disputed Marcopolis's findings,
(01:31):
claiming that Marcopolis himself actually stands to earn a lot
of money by taking down GE. And Marcopolis has said
he was hired by a Hedge fund to look into
GES practices, but he refuses to name the fund as
of the recording of this podcast. Meanwhile, some other third
parties seem to agree with at least some of Marcopolis's findings,
(01:52):
and GE has been under increased scrutiny for its accounting
practices over the last few years. So there are a
lot of answered questions around this, and it's by no
means a settled matter. I don't know if Marcopolis's allegations
reflect reality, and in fact, if I'm being totally honest,
I don't even understand all of those allegations. And in
(02:14):
the interest of full disclosure, I have not read the
full one page report, but I did think it would
be good to do a full rundown on the history
of General Electric. It is an incredibly influential company, and
it spans many industries it has had and and it's
(02:35):
heart to stress how big an impact it has had
on the history of the United States in particular and
tech in general. Now I should also add that back
in two thousand twelve, Chris Palette and I recorded three
episodes about the history of GE. But Tech Stuff was
a different kind of show back in those days, so
(02:56):
I thought it might be good to take a deeper
dive into the history and see how GE shaped technology.
And beyond that being said, if I were to do
a comprehensive history on the company and all its subsidiaries,
this series would last a dozen episodes or more. So
to avoid making this episode and this podcast turned into
(03:16):
Ge Stuff, I'm going to try and focus on what
I think are some of the most important historical moments
of GE. And a lot of that is in those
early years. So let's go back to where it all began.
And like many corporate histories, this involves going back to
older companies that would form the foundation for the one
we actually want to talk about. So strap in guys
(03:38):
and women and all others. I don't mean to lump
everybody in under the term guys. Anyway, we all know
about Thomas Edison, right He was an inventor. He was
an entrepreneur. He was a master at self promotion and more.
And some folks might throw in some less complementary labels
(03:58):
in there, perhaps suggesting he was also a thief, or
if that's going too far, someone willing to take credit
for the work of people who are working beneath him.
But whatever your opinion of the fellow, Edison got stuff done.
In the eighteen seventies, Edison was working on the light bulb,
and no, he didn't invent the light bulb, but that's
(04:19):
a story for another podcast. In fact, my former co
host Chris Poulett and I actually did cover that story
in an episode titled tech Stuff Gets a Bright Idea,
which published on October twenty nine, two thousand twelve. But
Edison did make improvements on the lightbulb, working with his
engineers to discover a material to serve as a suitable
(04:40):
filament to incandess brightly enough and long enough to be
a practical use. In eighteen seventy eight, Edison founded a
company to concentrate on that goal. It was the Edison
Electric Light Company. He had some big names in US history,
particularly US financial history, as his vester's folks like the Vanderbilts,
(05:02):
and JP Morgan. Now Morgan is going to become very
important to this story. Now. At the time, he had
yet to find a suitable approach. The lightbulbs he made
would burn out in just a few hours. The following year,
in eighteen seventy nine, his company produced a light bulb
able to last for forty hours. Not superb by any means,
(05:24):
but a real sign of progress, and Edison boldly stated
that his company would make electricity affordable enough so that
only the wealthy would ever burn candles. That same year, again,
eighteen seventy nine, for those who have forgotten, a couple
of teachers created their own company. Edwin James Houston was
a physics teacher, and Alihu Thompson taught chemistry and mechanics
(05:49):
at the Central High School for Boys in Philadelphia. They
created a company called the American Electric Company in New Britain, Connecticut,
with the help of some local and susters. In three
a different group of investors, this time from Massachusetts, bought
out the company from the original group of investors and
(06:10):
the company got a new name, the Thompson Houston Electric Company.
Thompson would head up the research and development department, which
was called the model room. A fellow named Charles A. Coffin,
the head of the investors, would lead the company and
act as a sort of president and chief financial officer,
while Elwyn W. Rice led the manufacturing part of the business.
(06:34):
Both of those names will be important for ge and
Charles Coffin wasn't a physicist by nature. No, he was
a man with a lot of soul. And by that
I meant he was a shoe manufacturer. As a dad
joke for you. So where many of his fellow investors,
They were all from the shoe manufacturing industry, and they
(06:56):
were all located in Lynn, Massachusetts, and they pulled their
money to purchase this burgeoning, this this blossoming electric utility company,
the Thompson Houston Electric Company, would relocate its headquarters to Lynn, Massachusetts.
And we'll get back to that company in just a second.
Edison was not just working on lamps in the eighteen
(07:17):
seventies and eighteen eighties. He was also creating some of
the first generators. These are devices that would convert mechanical
energy into electrical energy. On December seventeenth, eighteen eighty, he
founded the Edison Electric Illuminating Company. In eighteen eighty two,
he was responsible for building and operating the first steam
(07:37):
generated power station in London to power street lamps and
a few private homes that were not far from the
power plant. In New York, he was responsible for creating
an electric power distribution system called Pearl Street Station, which
supplied electricity to fifty nine whole customers in Lower Manhattan.
(07:57):
Now at the time, not everyone was old on the
idea of this new fangled electricity replacing candles and gas lamps,
so as an incentive, Edison's company offered the first three
months of service at no charge. He also began to
acquire smaller businesses that were likewise getting into the electrical
(08:18):
power generator game, and by eighteen ninety this motley group
of companies merged to form Voltron, and by Voltron, I
mean they became the Edison General Electric Company. It was
this company that in eight installed electrical wires and switching
equipment in the United States White House, and that made
(08:40):
Benjamin Harrison, the twenty third President of the United States,
the first US president to have electricity in the White House.
Back to the Thompson Houston Electric Company. Like Edison, Charles
Coffin was determined to be a big player in the
electricity generating business. He had led Thompson Houston to go international,
(09:01):
and he bought out a British company called the Brush Company,
which did not sell brushes. No, it was actually founded
by a guy named Charles Brush, and it was a
company that had patents for stuff like dynamos and had
been in litigation with Thompson Houston Electric Company over some technologies.
But we all know the old saying, right, if you
(09:23):
can't beat them, by them, and that's what Thompson Houston
Electric Company did. So both Edison General Electric Company and
the Thompson Houston Electric Company were buying up competitors and
more importantly, patent holders, so they each had dozens of
patents to their name, and they were quickly becoming the
(09:45):
dominant players in electricity generation and distribution in the Northeast
United States. And there was just enough overlap to make
business tricky for both companies. Without stepping on the toes
of the other, they could have become great rivals, and
in fact they kind of were. Henry Villard, who was
the president of Edison General Electric Thomas Edison, wasn't involved
(10:07):
in the day to day operations of the company. Villard
had an idea. Both Edison and Thompson Houston were in
a bit of a cash crunch as the market was
in a bit of a slump. In addition, because both
companies owned dozens of patents, that made it hard to
be the sole provider of any kind of electrical infrastructure.
(10:28):
Business was too expensive. It was not just expensive to
lay out the infrastructure, but you had all these legal
battles that would come up because one company would allege
that the other company was infringing on one or more patents.
There were several lawsuits pending around patents, and there would
likely be even more in the future. Villard wanted to
solve all these problems by having the two companies merge.
(10:51):
Edison reportedly hated this idea and advised against it. Villard
felt that the Edison company was in a dominent position
and could effectively define the terms of the merger, and
so he tried to move on ahead. Then we get
back to JP Morgan, the financier, that he had arrived
at a similar conclusion regarding the merger, but he felt
(11:15):
that the Thompson Houston company was actually the one that
was in a stronger position, and because Morgan was Mr
money Bags. He went behind Villard's back and began wheeling
and dealing to make the merger happen, but on very
different terms than what Villard was thinking. Morgan's spearheaded the
effort to merge these two companies together to form a
(11:38):
new entity, one that would become known as the General
Electric Company and later g E. The headquarters for the
company would be in Schenectady, New York, and Morrigan effectively
removed Thomas Edison and Henry Villard from any sort of
leadership role. Edison didn't even know about the merger until
(11:58):
the day before it at actually happened. Yikes, With their
powers and patents combined, the two former competitors could rapidly
expand throughout the Northeast and beyond and moreover, the merger
meant that the electric utilities industry in the United States
was now split between just two companies because General Electric
(12:21):
Companies had been swooped up, you know, all Thomas Houston
and Edison Electric had brought up all these smaller utilities,
as had Westinghouse, the other big competitor in the US.
So now the electric utilities industry in the United States
was a do Woppoli. It was either General Electric or
it was Westinghouse and General Electric and Westinghouse had been
(12:43):
part of a patent pool agreement in eight so this
was a big deal. It would also mean the end
of the war of the currents between direct current and
alternating current. I have a little bit more to say
about that in a minute now. I'm a two minds
about this merger that JP Morgan initiated. Generally speaking, I'm
(13:06):
in favor of competition in markets because that's usually what
ends up being best for the consumer. It's way better
if you have options and choices because companies will do
different things in order to get customers, which usually means
cutting a better deal. But we're also talking about era
in which most people didn't even have access to electricity.
(13:28):
The infrastructure itself had not been laid out, so there
was a real need to do that, and with competition
in the way, it made laying out the basic infrastructure
to get electricity to people harder to do. The same
thing would be true of the telecommunications industry getting telephone
lines out to people. It was tough to do that
(13:49):
while also competing with other companies, and it could mean
that you could have different standards, corporate defined standards that
are incompatible with one another, laying out different regions. It
was just a big mess. So you could argue that
the monopoly like approach was actually beneficial at least to
(14:11):
establish the infrastructure. It just wasn't a good thing to
have as an ongoing thing. The newly formed company started
in eighteen nine two and Charles Coffin would serve as
the first president. So though you could trace the history
as far back as eighteen seventy eight, I think is
(14:32):
a reasonable reckoning day for g s natal day. Now
we're gonna take a quick break, but when we come back,
we'll talk a little bit more about what GE was
doing during its first few years of existence. In eighteen
(14:54):
nine three, Edison's company developed an electric locomotive that could
use electric city to reach speeds of around thirty miles
per hour, which the company showed off at the Chicago Exposition.
This was another opportunity to demonstrate how electricity could be
used to a curious audience, and it helped promote the industry.
You gotta remember again, in eighteen nine three, electricity is
(15:17):
a brand new concept and to show that it had
the power to do something that typically would be done
with a steam engine was a very compelling use case.
In eighteen, Thomas Edison chose to sell his shares in
General Electric. He would continue to serve as a consultant
for the company, but the Wizard of Menlo Park would
(15:38):
no longer be seen as the driving force or voice
for General Electric, and to be fair, ever since the
formation of the company, he had little say in its direction.
While the name and headquarters favored Edison's old company, the
management for General Electric largely came from the Thompson Houston
Electric Company. So Edison out and at just four years old,
(16:01):
General Electric would become part of financial history. See in
eight six there was this guy named Charles Dow and
he took stocks of twelve large industrial companies to create
a stocks average, and it was a sort of indicator
as to how things were going in the industrial market overall.
(16:22):
You would watch the averaged performance of these twelve companies
and that would kind of tell you how things were going.
As a broad rule of thumb, one of those twelve
original companies was you guessed it, General Electric. All of
the original dozen companies, GE would be the only one
to survive and remain on the dal Jones Industrial Average
(16:45):
for more than a century, though spoiler alert, GE was
removed from the dal Jones Industrial Average in two thousand
and eighteen, but I'll talk more about that in a
later episode. Also in eighteen, s Eli Hu Thompson, one
of the founders of the Thompson Houston Electric Company and
a consultant at GE, created an improved X ray tube.
(17:09):
So let's talk about X rays for a second. X
rays are a type of electromagnetic radiation, and they have
a very short wavelength, much shorter than visible light. So
if you were to look at a spectrum of electromagnetic
radiation from longer wavelengths to shorter at the longest end
would be radio waves. Those stretch very long, in some
(17:32):
cases more than a kilometer. Then if you move down
the spectrum you come to microwaves. Below that are infrared waves.
Then you have visible light, then you have ultra violet light,
then you have X rays. If you were to go
even smaller on the wavelength scale, you would then reach
gamma rays. X rays form when a charged particle like
(17:53):
an electron, experiences acceleration or deceleration, and you want to
have it be in a very controlled way to generate
specific X rays of a particular wavelength. Vilhelm Conrad Runchen
and I always mess up that name. I apologize, but anyway,
this is the fellow who first discovered X rays in
eight He was working with cathode ray tubes in a lab.
(18:18):
These are crt s, is the sort of stuff you
would find in old television sets. And he had concluded
that there was a type of ray that was invisible
to the eye, and it could pass through lots of
solid stuff, like heavy black paper. In fact, he figured
it could pass through lots of different stuff, and it
could cast shadows of solid objects. It could pass through
(18:39):
flesh but not bone. And one of the earliest experiments
he conducted with this discovery was to use film to
capture an X ray image of his wife's hand so
that she could see the skeletal structure of her hand.
So an X ray tube converts energy. Specifically, it converts
(18:59):
electrical energy into two other types of energy. One of
those is heat and the other is X radiation. Ideally,
you want to produce specific X radiation and you want
to minimize heat production because really heat represents waste, it's
lost energy. In this case, so are the way we
think of heat being waste energy for a car engine.
(19:22):
As another example, so, an X ray tube is a
particular type of cathode ray tube. That means inside the tube,
which looks a little bit like a lightbulb, you have
an element called a cathode and you have another called
an anode. Electrical current flows through the tube and electrons
flow from cathode to anode. The cathode connects to the
(19:45):
negative side of the circuit, the anode connects to the
positive side. So in other words, you can think of
the cathode as the component that sheds or contributes electrons.
The anode is the component that accepts electrons. As part
of this process, a electrons lose energy as they moved
through the circuit, and this generates X radiation. The material
(20:06):
in the anode and the energy of the electrons determines
how much of the energy gets converted into heat rather
than X radiation. Modern X ray tubes frequently have tungsten anodes.
And there's a lot more we could explore with X rays,
but honestly, I think that would require its own episode,
so we'll just leave it here. Just know that the
X ray tubes are pretty similar to the tubes you'd
(20:29):
find in old CRT televisions or monitors, though not modern
TVs or displays because they they don't use cathode ray
tubes anymore. The important thing for our episode here is
that GE became a leader in that space, with Thompson
creating the improved X ray tube just one year after
X rays had even been discovered. In nineteen hundred, Thomas Edison,
(20:52):
still working as a consultant for General Electric, partnered with
Willis R. Whitney and Charles Steinmitz to create the first
industrial research laboratory in the United States. The purpose of
the facility was to act as an experimental division for GE,
where engineers and scientists would work on innovating new technologies
(21:16):
and new applications of existing tech, and even making scientific breakthroughs.
It was in this facility where GE researchers could conduct
original research projects. The functions of this facility closely resembled
a model practiced in German universities. Much of the early
work in the research lab focused on improving the existing
(21:36):
technologies that GE was producing at the time. It was
only after a few years that the engineers were starting
to look at totally new types of technology, scientific principles
and applications. Also, this is where we get a little
Monty Python and the Holy Grail with the lab. The
original lab was not particularly grandiose. It was a barn
(21:58):
located behind the house of one of the rese searchers
for GE. But, and this will probably come as a
surprise to absolutely nobody, because they were working with electricity
and heating elements, that particular lab ended up catching fire
and it burned down. After that, GE re established the
lab in Schenectady, New York. The head of the research
(22:20):
division was a professor from m I. T. And I'm
sure there were many more fires over the following years,
but as far as I know, none of them burned
the whole lab down to the ground again. One early
invention to come out of the lab was the electric
fan in two. Now, there is a small issue with this,
and that other inventors had already created electric fans years earlier.
(22:44):
An inventor with the fabulous name Skylar Scott's Wheeler built
one in eighteen eighty two, twenty years before GE would
file patents for its electric fan design. Another guy named
Philip Deal took the electric fan and flipped it a bit,
creating the first ceiling fan. He essentially took a fan blade,
(23:05):
attached it to a sewing machine motor, and then bolted
that motor to the ceiling in seven Now, I'm not
sure what innovations General Electric contributed to the electric fan,
but I will tell you I looked at lots of
different sources when I was creating these these episodes, and
many of them talk about two G. E invents the
(23:26):
electric fan, which clearly is not the case. Uh No,
they might have come out with an electric fan, and
they probably did create some interesting innovations with the fan,
but they didn't truly invent it had been around for
two decades already. In nineteen o three, GE acquired the
Stanley Electric Manufacturing Company, which manufactured transformers. In fact, William Stanley,
(23:50):
the founder of the company, was the developer of the transformer.
And a transformer in this case isn't a robot in disguise. Rather,
it's an electrical device that inverts alternating current electricity from
one voltage to another, and depending upon its design, a
transformer can step up or step down the voltage and
(24:10):
it only works on alternating current, so let's talk a
bit about this and why it's important. Alright, at the
dawn of the age of electricity, you had the current wars,
the brew haha over whether regions should invest in direct
current or alternating current for the purposes of distributing electricity.
(24:31):
Edison was in favor of direct current. Direct current is
the same sort of current you'd get with a battery.
The electricity flows one way only through the circuit. It's
a one direction type of thing. It's simple. But at
the time, transmitting direct current over longer distances was impractical.
(24:51):
So it worked fine if you were in a dense
urban environment and you could build power generation plants at
regular spots around the region, but it wouldn't didn't work
so great if you're talking about stretching across rural areas.
That the transmitting direct current at lower voltages was inefficient.
You lost too much electricity along the way, and it
(25:14):
higher curtains. That was considered higher voltages, I should say
it was considered very dangerous. Now inter alternating current with
alternating current, the flow of electricity reverses many times a second,
going one way down the path and then reversing to
go the other way, and One benefit of this approach
is that you can create transformers to step up the
(25:36):
voltages for purposes of transmitting electricity over long distances, and
then have another transformer on the other end to step
the voltage back down so it can be used in
households safely. And it all has to do with electromagnetism.
Electricity flowing through a coil of wire creates a magnetic field,
and if it's alternating current going through that coil, so
(25:58):
it's you can think of it as going down the
coil of wire and then reversing and going up the
coil of wire and doing that many many many times
per second. Well, then it creates a fluctuating magnetic field. Now,
if you were to bring a second coil of wire
within that fluctuating magnetic field from the first coil of wire,
(26:19):
something interesting happens. All Right, We've got coils A and B.
Each coil is wrapped around its own ferro magnetic core
of iron or steel, something that can be magnetized. We
run an alternating current of electricity through Coil A. Then
we bring coil B with no current running through it,
(26:39):
close enough so that it is within the fluctuating magnetic
field that is generated as a consequence of coil a's
electric current. That fluctuating magnetic field then induces a second
electric current to flow through coil B. So now coil
B is carrying a current because of being in that
(27:00):
fluctuating magnetic field from coil A. Even more interesting is
that if coil B has more coils or turns as
we call it, than coil A does, the current running
through coil B will have a higher voltage. The relationship
between the number of turns is called the transformer turns ratio.
So a power plant could run current through a line
(27:22):
to a transformer and, through the use of two sets
of coils, step up the voltage significantly for a long
distance transmission, where higher voltage is more efficient. I wonder
if Thomas Edison was peeved the General Electric was purchasing
companies that were building tech for alternating current applications. Actually,
(27:43):
I don't have to wonder he was. He was pretty
pretty upset about He did not like the idea of
losing the War of the currents. Even well after that
war was settled. In nineteen o five, GE formed the
Electric Bond and Share Company also known as ABASCO E
(28:04):
B a s c O. This was a holding company.
Holding company as a company that exists largely to hold
onto the stock of other companies. Usually a holding company
doesn't actually, you know, do anything. Its purpose is truly
just financial in nature. Ge used the employee retirement Investment
(28:27):
fund for its employees to purchase securities from smaller electric
utility companies. This was largely in an effort to monopolize
the electric utility industry. This was something that financier JP
Morgan was very keen on doing. A few other utilities
holding companies would be would would pop up and scoop
(28:50):
up other regional companies, and so you started to see
even less competition in the region, and this would spell trouble.
I'll explain more in a second, but first let's take
another quick break. Now I'm going to stick with this
(29:11):
story about the holding company for a moment, and then
we'll give back to the timeline. We're gonna go down
this particular path just to get a complete picture of
this story. So Abasco ends up controlling tons of companies
and would even form subsidiaries of its own holding company
(29:32):
to oversee groups of these because there were just so many.
So you might have a subsidiary of Abasco that itself
was a holding company for like ten other companies. So
eventually the United States government pays attention and comes to
oppose the monopolization of utilities and says, you know, it
was okay when we were laying out the infrastructure to
(29:53):
make sure people got access to electricity, but now we're
not so comfortable with one company having this much control
roll over electricity distribution. This reached a crescendo in ninety
five when Congress passed the Public Utility Company Holding Act.
That act gave the securities an Exchange Commission, or sec
(30:13):
the authority to break up holding companies so that the
individual states in the United States could oversee operations within
their borders. Abasco fought tooth and nail to keep its holdings,
but ultimately lost that battle, and afterwards the entity that
was Abasco would reorganize and become an investment company. Now
(30:35):
I include the story here because it's just one of
many examples of how General Electric drew focus and criticism
for its operations, and it shows how powerful and influential
the company has been over the years. All right, now
we're gonna jump back to the timeline that we were
covering before. So around the same time that Abasca was forming,
(30:57):
a GE engineer named Ernst Alexanderson developed a type of
high frequency alternator and we now call the Alexanderson alternator,
and it was for the purposes of creating a radio transmitter.
He was doing this upon request from another guy, an
inventor named Reginald Fessenden, who had been trying to solve
the problem of sending sound over radio waves, essentially radio broadcasting.
(31:22):
Fessenden had figured out that he needed a much higher
frequency alternator than what was currently available to achieve his goal,
so he sent out the request to GE and Alexanderson
started to work on the project. An alternator, by the way,
is a device that creates an alternating current. The Alexanderson
alternator could create a continuous radio wave, and that's a
(31:45):
radio wave with a constant amplitude and frequency. I won't
go into it further here, as I've done plenty of
episodes about radio waves and technology, but it would be
an early example of how general electric would become an
important part of the history of radio. So far, I've
been talking about electric utilities and radio waves. But around
the same time, so nineteen o five or so, General
(32:07):
Electric would also dip its enormous corporate toe into the
tempting waters of consumer appliances. The first one I could
find on General Electric's own website was the Model D
twelve and electric toaster. Other sources cite a nineteen o
six electric range as the first consumer product. The toaster,
(32:29):
by the way, looks terrifying to me because it doesn't
have any solid surfaces. It's essentially a couple of racks,
open air racks that holds slices of bread and they
are placed on either side of a series of unprotected
heating coils. So I would imagine this thing was quite
(32:51):
the fire hazard in its day. Oh and in case
you wonder, like how does this stuff work, that's easy.
Conductive materials, that is, materials that can conduct electrons are
usually not perfect conductors most of the time. Now, if
you can cool one down to near absolute zero, you
can get a super conductor that doesn't lose any conductivity.
(33:14):
Uh and if you use larger gauges of conductive material,
you reduce resistance. But because of a variety of factors,
most conductors have a certain amount of resistance to electric current.
Based on all these different variables, that resistance manifests as heat. Now,
normally we don't want heat in our conductive materials. Electronics
(33:37):
don't respond too well with getting hot. But with stuff
like electric ranges and toasters, the whole point is to
generate heat. We use materials that have a resistance so
that enough electrical energy will convert to heat in order
to cook or toast whatever it is we're exposing to
those elements. On the other end of the scale from
a countertop toaster is the deliver verge made to the
(34:01):
New York Central Railroad in the company supplied thirty electric locomotives,
each weighing in at ninety four tons. The locomotives had
two thousand, eight hundred horsepower each. This isn't just an
interesting tidbit in Gees history. The electric locomotive and rails
(34:23):
in New York would shape the development of Manhattan itself,
as did the electrical infrastructure. So one could argue that
modern Manhattan wouldn't look anything like it does today without
general electrics business in the area. That general electrics involvement
itself was what helped shape the modern appearance of Manhattan,
(34:46):
and because I'll probably forget about it before I get
to the recent past. In a later episode, not very
long ago from the recording, General Electrics spun off its
locomotive business in a merger with another locomotive company called
wab Tech w A B T e C. The eleven
billion dollar deal saw GE and its shareholders take fifty
(35:09):
point one percent stake in the ownership of this new company,
with wab Text shareholders getting the other forty nine point nine.
This was part of the larger effort to shed some
of g S businesses. As I think it's already apparent
that the company had grown extremely large, with lots of
different departments involved in various industries. That was true even
(35:31):
in the early nineteen hundreds, but it gets way more
apparent as this series will go on. In nineteen o nine,
engineers at General Electric, led by a guy named William Coolidge,
developed the ductal tungsten filament for incandescent light bulbs. Tungsten
holds together well at high temperatures, and it gives off
(35:52):
a warm light when it incandescees, but it's also a
pretty tough metal to work with. Coolidge created a process
that made the metal easier and more appliable to work with,
and it was off to the races. It made the
Edison design much more efficient and practical, and it quickly
became the standard material for light bulbs. It's essentially the
same stuff you'd find in the filament in an incandescent
(36:15):
light bulb today. In nineteen eleven, we have another acquisition
sort of. General Electric absorbed a company called the National
Electric Lamp Association or NILA in e l A, and
that organization traced its own history back to nineteen o one.
G had already been part of NILA's history, having become
(36:37):
a shareholder in the company back in nineteen o two,
just one year after it was founded, and providing the
old Brush Electric Company facilities to serve as NILA's headquarters.
Over time, General Electrics stake in the company grew, and
federal courts took notice, and there were talks of antitrust concerns,
and GE was essentially told it had to dissolve NILA,
(37:00):
so General Electric absorbed NILA into its own overall business.
NILA had recently finished building an industrial complex in Cleveland, Ohio,
and NILA Park would become the first industrial park in
the United States. And here's where I admit I finally
looked up the definition for an industrial park because I've
(37:21):
heard the term hundreds of times but never really thought
to see exactly what the definition was. So imagine my
surprise to find out it means pretty much what it
sounds like. An industrial park is an area that is
zoned for industrial development, kind of like how a business
park or an office park is an area zoned for offices.
(37:41):
Sometimes the obvious answer is in fact the correct one.
In nineteen twelve, ge researchers developed improved vacuum tubes which
would help usher in the early era of electronics. Before
the development of the transistor, the vacuum tube was crucial
for electronics. A vacuum tube is also known as a
(38:03):
thermionic valve. Thermionic gives you a hint of One of
the important concepts in this device has to do with heat,
and vacuum tubes are in many ways similar to cathode
ray tubes or light bulbs. Like a cathode ray tube,
a vacuum tube has a cathode and an anode separated
from each other inside a glass tube, and as the
(38:24):
name vacuum tube tells, us. The inside of the tube
has no air in it. It is a vacuum. Heating
the cathode causes it to shed electrons in a process
called thermionic emission. Applying a positive voltage to the anode
plate attracts those electrons across the gap in the vacuum,
(38:44):
creating a current flow. A vacuum tube with just two electrodes,
the cathode and the anode, is called a diode. This
is a type of tube that allows electricity to only
flow in a single direction, so it's like a one
way street electrical current. That we also have to remember
that we described current as the direction of positive to negative,
(39:06):
so this is confusing. Electrons are traveling from negative to positive,
but we call the currents direction the opposite. So current
flows from anode to cathode, even though electrons are flowing
from cathode to anode. And I know it's confusing, and
I blame Benjamin Franklin, But that's another story. One important
(39:27):
task these diodes did was convert alternating current to direct current.
This was important since electricity transmission was through alternating current,
but most devices you would plug into outlets relied on
direct currents, so you had to be able to convert them.
But vacuum tubes didn't just stop there. Back in seven
(39:47):
lead to Forest, an American inventor created the first triode
vacuum tube. So this was a vacuum tube with three electrodes.
You had the anode, you had the cathode, and the
third electrode was a control grid. Think of it as
a sort of filter or mesh between the cathode and
the anode. So the cathode is shedding electrons, the anode
(40:11):
is accepting electrons, and the control grid is between the two.
Connectors to the control grid allow for a change and
voltage to be applied to the grid itself. So adjusting
the voltage to the control grid acts as a kind
of valve, adjusting exactly how many electrons can flow from
the cathode to the anode. So if you applied a
(40:32):
negative voltage to the control grid, the control grid will
repel electrons, right because like charge will repel like charge.
Negative repels negative, and that would mean that you would
slow down the stream going from cathode to an notte.
So it's almost like turning a tap of water and
(40:52):
turning it so that the water is barely trickling out.
If you apply a strong enough negative charge to the
control grid, it you turn off the flow entirely. But
if you apply a positive voltage, that increases the number
of electrons that flow through to the anode. And in fact,
such a vacuum tube can be used to amplify an
electrical signal. So let me explain how that works really quickly.
(41:15):
See a small signal coming into the control grid, perhaps
one created by say a radio wave, can be converted
into a much larger signal with the exact same wave form.
Another example is using a microphone. If you're using a microphone,
you're speaking into the microphone. The vibrations caused by the
sounds you are making cause a diaphragm to move inside
(41:37):
the microphone. That in turn causes a tiny electro magnet
to generate a weak electrical signal, and the signal is
far too weak to power a speaker. But let's say
you send this electrical signal so that feeds into the
control grid of a triode vacuum tube. It will control
the flow of electrons through that tube, and you could
(42:00):
have a much more powerful electrical signal coming out of
that tube. That matches the one you created coming out
of your microphone, and that one would be enough for
you to send to a speaker to power it. It's
really pretty darn cool. Vacuum Tubes would be used in
all sorts of early electronics, and they would usher in
an age of rapid development, though it was also one
(42:23):
in which those electronics were all very large, because vacuum
tubes are pretty big themselves, so a computer with vacuum
tubes and computers would come much later, but a computer
running on vacuum tubes would by necessity take up a
great deal of space, and it would also generate a
lot of heat. It wouldn't be until the development of
the transistor that these problems would be surmounted and we'd
(42:45):
be able to miniaturize electronics. Now, I think this is
a good place for us to leave off with the
story of GE to recap the company formed during an
era of industrialization and was largely under the influence of
a monopoly sick capitalist that being JP Morgan. It had
hardly any competition to speak of, being part of a
(43:06):
do woppoli with Westinghouse and having far more of the
market share in the United States, and its focus on
research and development as well as acquisitions, meant it was
becoming increasingly powerful and cementing its near future. Now, in
the next episode, we'll look at how ge would play
an important part in establishing radio broadcasting in the United States,
(43:27):
as well as its early history with NBC, and we'll
also learn about how the US government began to chip
away at some of the moves Morrigan had made in
the early years of the company. But for now, it's
time to sign off. If you guys have suggestions for
future episodes of tech Stuff, why not send me an
email the addresses tech Stuff at how stuff works dot
com or pop on over to our website that's tech
(43:49):
stuff podcast dot com. You're gonna find an archive of
all of our past episodes there. You're also going to
find links to our social media accounts, so you can
leave us a message on things like Facebook or Twitter.
And you'll also find a link to our online store,
where every purchase you make goes to help the show
and we greatly appreciate it, and I'll talk to you
again really soon. Text Stuff is a production of I
(44:17):
Heart Radio's How Stuff Works. For more podcasts from I
heart Radio, visit the i Heart Radio app, Apple podcasts,
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