by Marc Seifer
Coincident with Tesla’s impending liaison with the House of Morgan and recent triumphant return from Colorado Springs, his handwriting and signature began to display a frivolous abundance of ornate embellishments. Although these samples were written in moments of gaiety in letters to the Johnsons,4 they nevertheless reveal a subconscious, qualitative change in his state of mind as compared to his usual lean, bare-bones handwriting. Graphologists note that “the paper [is] frequently treated as a substitute object…[Thus] the graphically expansive [writers]…usually are the same who not only dominate the paper, but also their environment, [just as] the graphically timid ones are also timid in other respects.”5
One could therefore speculate that Tesla was a very visible character at the affair. And just as Tesla adorned his signature, he adorned his body, wearing the latest suits, top hat, cane, and white gloves. He took extreme pride in being the leader of his field and one of the best-dressed men to walk Fifth Avenue. Now tending toward flamboyance, the inventor began to identify more heartily with the opulence and power that surrounded him.
Twenty-eight-year-old Anne Tracy Morgan, Louisa’s younger sister, was particularly taken with the dashing inventor, and they began a friendship.
“The Thanksgiving dinner at [Morgan’s home that] year was an unusually large and gay affair with its traditional four varieties of pies,”6 and Tesla was invited to the day-after event, held Friday evening.7 Anne may have seen this as an opportunity to extend their friendship; they would come to exchange letters for the duration of their lives—but Tesla saw it as a business opportunity. The wizard brought along fascinating multicolored electric bulbs that emanated dancing spiderwebs of lightning, static-electricity devices that made a person’s hair stand on end, and other wireless paraphernalia. The inventor exchanged hellos with J. P. Morgan Jr., now in his early thirties, and gave photographs of his work at Colorado Springs to Anne.
After dinner, Morgan met Tesla privately in order to discuss a possible partnership. The tenor of the times is discussed by Herbert Satterlee, a man who knew Tesla personally. Having written a virtual daily log of Morgan’s life, Satterlee deliberately deleted any reference to the Morgan-Tesla liaison; but the following paragraph, which coincides precisely with this time, appears to be a justification for the financier’s decision to back the wireless venture: “The dying year saw the completion of many combinations of the smaller companies in the steel industry…They were all getting rich. Gates was speculating in Wall Street. Judge Moore began to buy fine horses…Conversely, Reid and the others invested in large country estates…[And Morgan gambled on an oddball inventor.] Dinners at the Waldorf-Astoria and at Sherry’s and lavish entertainments were the order of the day, and everywhere there was evidence of rapidly accumulated wealth. They all seemed to think that there was no end to it.”8
Known among the clique for his collection of mistresses, Morgan extended his passion to amassing an immense hoard of treasures, including ancient coins, precious stones, tapestries, carvings, rare plates, the paintings of the masters, statues, old books, and original manuscripts. Some of his most prized possessions included first drafts of Charles Dickens’s novels, a portrait of Nicolaes Ruts by Rembrandt, a number of eleventhcentury Byzantine medallions, and a Gutenberg Bible.9 Hanging in the study was his latest acquisition, Christopher Columbus by Sebastiano del Piombo.10 It was hung next to a painting of the Commodore’s threehundred-foot-long yacht, which Morgan often preferred as a sleeping quarters to his home when it was docked near Wall Street during the boating season. Tesla eyed the del Piombo in great admiration.
“Mrs. Robinson has talked me into donating it to the Metropolitan Museum. Naturally I hate to part with it, but you know how persuasive she can be.”
The skittish Tesla had seen Morgan at close range before, but never for long periods in so intimate a way. Plagued from his youth by a series of skin conditions, Morgan’s beet-red and deformed proboscis, retouched out of all official photographs, was often swollen and coated with warts. An art dealer, encountering Morgan in a similar circumstance, was quoted as saying:
I was unprepared for the meeting…I had heard of a disfigurement, but what I saw upset me so thoroughly that for a moment I could not utter a word. If I did not gasp I must have changed colour. Mr. Morgan noticed this, and his small, piercing eyes transfixed me with a malicious stare. I sensed that he noticed my feelings of pity, and for some time that seemed centuries, we stood opposite each other without saying a word. I could not utter a sound, and when at last I managed to open my mouth I could produce only a raucous cough. He grunted.11
“I want to know, Mr. Tesla,” Morgan began, eyeing one of the inventor’s Colorado photographs, “how you survived among all of this lightning.”
“I didn’t,” Tesla said, avoiding a direct stare. “Those are multiple exposures.”
“How clever. White tells me you want to build a wireless tower?”
“I have perfected an apparatus which permits the transmission of messages to any distance without wires, making long and expensive cables as a means of conveying intelligence commercially obsolete. This creation also enables the production and manipulation of hundreds of thousands of horsepower, bringing instruments on any point of the globe into action regardless of their distance from the transmitter.”
“Instruments?”
“Telegraph keys, phones, clocks, remote photography.”
“You have a wireless means for transmitting pictures?” Morgan rebounded, raising his eyebrows.
“There is nothing novel in telephotography. Edison has been working on it since Elisha Gray’s device was presented at the 1893 Exposition. My patents simply usurp the need for using wires.”
“Don’t push my tolerance, Mr. Tesla. Your proposal as far as I understand only deals with telegraphy. I’m a simple man who wants a way to signal incoming steamers during times of fog, to send messages to Europe, maybe get Wall Street prices when I’m in England.12 Can you do this? Can you send wireless messages such long distances?”
“Indeed I can, Mr. Morgan.”
“And the problem of billing? Wouldn’t anyone with a receiver have free access to this information? I’m not about to subsidize my competitors, or the public for that matter.”
“I can guarantee absolute privacy for all messages. Broad rights have been secured which gives me a monopoly in the States and most of Europe.”
“How ‘broad’ are your costs?”
“Although this work concerns a decade of effort, I know that I am in the presence of a great philanthropist, and therefore do not hesitate to leave the apportionment of my interest and compensation entirely to your generosity.”
“Don’t flatter me, Mr. Tesla. Let’s get down to brass tacks. What will it cost?”
“My plan requires two transmitting towers, one to transmit across the Atlantic and the other across the Pacific. The former would require an expenditure of approximately one hundred thousand dollars, the latter about a quarter of a million.”
“Let’s talk about one ocean at a time. What would I get for funding the construction of a wireless plant to cross the Atlantic?”
“Its working capacity would equal at least four of the present ocean cables and it would take six to eight months to complete.”13
“What about Marconi? Stetson says his costs are one seventh of your quote.”
“That is so. However, there are key elements missing for his success, elements which can only be found in my patents, in apparatus universally identified with my name and published in writings dating back to 1890 and 1893, when Marconi was still pulling his mother’s apron strings.”
“He transmitted fourteen hundred words from ship to shore, right here in New York during last year’s America’s Cup races. I know, I was there. I saw his equipment.”
“Mere child’s play. He’s using equipment designed by others, and also the wrong frequency. The slightest changes in weather will disrupt his messages, and he has no device for creating
separate channels. I have tested his Hertzian frequencies at length, Mr. Morgan, and believe there is no commercial viability in them whatsoever.”
“Why exactly are they so wrong?”
“For one example, they do not make use of the natural electrical properties of the Earth. The Tesla currents on the other hand are tuned to the frequencies of our planet. These are continuous waves, not pulsed interruptions. In short, my way is best for transmitting substantive information, and insuring total privacy.”14
“I have a handful of articles with Marconi’s pictures all over them which appear to disagree with you. The British Post Office is using the Hertzian method.—Here’s a newspaper report I picked up in England from an Admiral who has used Marconi’s transmitters for distances exceeding 80 miles: ‘Our [ship] movements have been directed with an ease and certainty and carried out with a confidence which, without this wonderful extension of the range of signalling, would have been wholly unattainable. It is a veritable triumph for Signor Marconi.”15 And I have articles which question whether you have ever sent messages beyond the confines of your laboratory.”
“I see that I have taken up enough of your time,” the inventor said, looking at his watch. “I thank you very much for your hospitality.”
“I’m not saying we can’t do business, Mr. Tesla, but I am going to have to think this over.”
“Very good.”
Upon Tesla’s departure, Morgan took out a deck of cards and went through his nightly ritual of playing solitaire. Before him was another file on Tesla’s patents, but these were not in wireless: “Mr. Tesla’s discoveries do away with the carbon filament…[He] explained that by creating an electrostatic field, [cold vacuum] tubes could be hung anywhere in the room. [They can not burn out, because there is no filament to be destroyed]…The estimated manufacture of incandescent lamps is 50,000 a day…”16
December 10, 1900
Dear Mr. Morgan,
Appreciating the immense value of your time…I have withdrawn more or less hastily last Friday preferring to make a few condensed statements at long distance which with a small effort on your part will put you in the possession of knowledge I have gained only after a long and exhaustive study.
This lengthy letter, one of the first of many, began with a quote from Professor Adolph Slaby of Germany, who referred to Tesla as “the father of this telegraphy,” and also included quotes from Lord Kelvin and Sir William Crookes on other developments in the field, such as in the construction of his oscillator for generating wireless frequencies. The letter also pointed out Tesla’s legal position, having patented all of the fundamentals of the process, in America, Australia, South Africa, and Europe, and noted the specific flaws of Marconi’s system (pointed out above). “Apologizing for this digression…I beg you to bear in mind that my patents in this still virgin field, should you take hold of them…will command a position which, for a number of reasons will be legally stronger than that held by those of my own discovery in power transmission by alternating currents.”
Tesla ended the letter with a rousing challenge: “Permit me to remind you that had there been only faint-hearted and close-fisted people in the world, nothing great would ever have been done. Rafael could not have created his marvels, Columbus could not have discovered America, the Atlantic cable could not have been laid. You of all should be the man to embark on this enterprise…[which will be] an act of inestimable value to mankind.”17
THE FIRST BILLION-DOLLAR TRUST
Perhaps the most outrageous character living in the Waldorf was the cigarchomping robber baron and stock market manipulator, John W. (Beta-Million) Gates, co-owner of the American Steel & Wire Company. During an average day, Gates could win or lose $40,000 in a poker game, and on some occasions, the swing could be ten times that much. Conferring with Henry Clay Frick, another Waldorf occupant and occasional poker companion, Gates helped choreograph one of the biggest deals of the century.
On December 12, a dinner for the steel magnates was held in honor of Charles Schwab at the University Club. Sponsored by Schwab’s boss, Andrew Carnegie, the attendees included J. Pierpont Morgan, Edward H. Harriman, August Belmont, Jacob Schiff, John W. Gates, and Carnegie’s first manager, Henry Clay Frick.
In an unrehearsed speech after the meal, with Carnegie now absent from the meeting, Schwab expounded, in a clear and forthright manner, on the advantages of creating a giant steel trust.18 After discussions which lasted until three in the morning, Morgan began to realize the great benefit of Schwab’s plan, and within a few months he finalized the merger, placing Schwab at the head of the new $1.4 billion steel trust, the first company ever to be capitalized at over a billion dollars. Carnegie received approximately $226 million, Frick, $60 million, and Rockefeller, for his iron mines, $90 million. Gates, the “gargantuan gambler,” playing it like a poker hand, held out as long as possible, until Morgan threatened to erect a wire company without him, and so he, too, walked away with a hefty profit. By March 1901, with the creation of the new corporation, Morgan was able to add steel to his portfolio, which at this time included electrical, shipping, mining and power industries as well as telephone, railroad, and insurance conglomerates.19 Political cartoons of the day portrayed him as an Atlas with the earth on his back or as a Goliath towering over less powerful individuals, such as the king of England, the German Kaiser, or the president of the United States.
In reaction to “Morganization,” anarchy started to become a viable political alternative. Furthermore, although Morgan stood for strength and stability in business, in reality the creation of U.S. Steel was a magnificent gamble. Carnegie knew this and thus stated: “Pierpont is not an ironmaster. He knows nothing about the business of making and selling steel. I managed my trade with him so that I was paid…in bonds, not stocks! He will make a fizzle of the business and default in payments of the interest. I will then foreclose and get my properties back.”20
Schwab also feared this. Within two years, the crafty conciliator had resigned from the firm to take charge of Bethlehem Steel, a much smaller gem that was sturdy and profitable.
Thus, Morgan was to have his headaches with the steel monopoly partly because of market problems and mostly because of labor disputes, particularly a strike which nearly crippled the company. Probably the main reason why U.S. Steel succeeded was because of the invention of the automobile, which created an enormous new market.
To offset the possibility of the great conglomerate folding and to raise the potential for more revenues, Morgan “enlisted” the famous stock manipulator James Keene to create an artificial interest. Keene bought and sold large blocks of U.S. Steel to bogus investors in order to create the illusion of bullish interest.21 The sham worked, and within a few weeks the New York Stock Exchange experienced the most active trading days in history. “Big Steel’s common stock, which had been offered on the market at 38, rose almost immediately to 55 and Pierpont Morgan became the hero of the financial world and the principal demon of those who feared and hated monopoly.”22
THE TESLA DEAL
Tesla met with Morgan in the midst of these steel negotiations in attempts to solidify a deal. At the height of Christmas season, he took a cab to Morgan’s office at 23 Wall Street and handed the financier some of his specifications.
“Mr. Morgan, my plan, and my patents, which I offer to you, will command a position legally stronger than that held by the owners of Bell’s telephone or by the holders of the patents based upon my discovery in power transmission by alternating current.”
“Send me the paper work, and I’ll look it over.”
“Sir, in view of the intense activity in this field, it is desireable that I should be placed without delay in a position enabling us to profit from my advanced knowledge.”23
Morgan moved over to the window and stared down Wall Street. “If I agree to help build your station to transmit across the Atlantic, I want it understood that I am,”—and then he turned to face the Serb and lowered his voice to
barely a whisper—“a silent partner.24 Do you know what that means, Mr. Tesla?”
“Yes, sir, I do.”
“Good. I want to be frank. I do not have a good impression of you.25 You abound in controversy, you are boastful, and aside from your deal with Westinghouse, you have yet to show a profit on any other creation. On the other hand, I appreciate your talents, so let me put my cards on the table. If we proceed, whatever figure we decide upon shall be firm. I will not be bilked for continuing research funds.”26
“It is not money I seek, although these inventions, in your strong hands, with your consummate knowledge of business, can be worth an incalculable amount. You know the value of scientific advancement and artistic creation. Your terms are mine.”27
“That is not good enough. Give me specifics. Give me a figure.”
“As I stated at our first meeting, I think a hundred thousand dollars will suffice for the construction of a ninety-foot-high transatlantic transmitter.”28
“Let’s be certain on this. Shall we say one hundred and fifty thousand for the erection of said transmission tower and a fifty-fifty split on the company’s stock?”29 Morgan reached for his checkbook, wrote out a down payment, and handed it to the inventor.
Overawed at his good fortune and humbled in the presence of the king, Tesla could not stop himself. “Let the control be yours, Mr. Morgan. I insist that you take fifty-one percent and I forty-nine.”30