Long before this, in the 1880s, Edison had been unwilling to step aside for the manager who most clearly had shown precocious brilliance—Samuel Insull. Edison’s businesses would have grown manyfold if they followed the growth of the companies that Insull went on to manage in his post-Edison career.
Insull’s story is characterized by boldness of action that exceeded anything Edison had tried. When he had left Edison’s side, he had been determined to find a chief executive position. In 1892, he passed up an offer to be a vice president in Henry Villard’s North American Company in order to become president of Edison Chicago, a small electrical power utility that could pay him only half of what he had made in New York. He also had to move to Chicago, a place that seemed to a New Yorker like a “frontier town.” Willing to take risks, he picked up for a bargain price a state-of-the-art engine and pair of generators from General Electric that had been on display at the 1893 world’s fair. In only his second year on the job, he arranged to acquire his larger competitor, the Chicago Arc Light and Power Company. Branching farther out, he acquired coal mines and a steam railroad that provided vertical integration. Most innovative of all, he introduced new pricing schemes to encourage high-volume residential use spread over the entire day so that he could optimize the greatest volume of business for the least possible capital investment. With the acquisition of neighboring utilities, he created a six-thousand-square-mile regional network of power.
Insull was no less an innovator in the spending of his wealth. He gave generously to many charities and used his clout to press Chicago’s wealthiest to join him, even if they did not share his color-blind enthusiasm for some causes, including the Chinese YMCA and the education of African doctors. He paid to send a young African American singer on a study tour of Africa and an African American Pullman conductor on a European trip. Tweaking his fellow plutocrats, he built a new opera house in Chicago that by design lacked boxes: All patrons would be seated shoulder to shoulder on the same plane.
Even as Insull became famous—officially so when his portrait was placed on the cover of Time magazine in 1926—he continued to make himself available to whoever wished to call him at home, and he insisted that his phone number remain publicly available. One caller asked, “Mr. Insull, I don’t want to be rude, but some of us fellows got to talking, and we wondered, well…Are you Jewish?” (Insull answered, “Not as far as I know.”)
Insull’s generosity in philanthropy and willingness to speak personally to anyone stand out in sharp relief to the habits of Edison. When asked in 1911 to donate to a building drive for a YMCA in Port Huron, a boyhood home, Edison responded with a small pledge and provided an explanation of why he would not provide more: “I can use surplus money to greater advantage for all the people in conducting experiments.”
Edison clung to the notion that whatever he worked on would benefit the world. The cult of celebrity had constructed for him the story that whatever he touched, ipso facto, would benefit humanity. Having heard it too many times to count, he had come to believe it was empirical fact, and not recognize it for what it was: a frothy fiction created to entertain readers. Without a philanthropic agenda of his own, he could only react to whatever proposals randomly came his way.
Most of the time, his reaction was negative, but he was unpredictable. He replied no to his own town, the City of Orange, which requested a subscription to its summer concert series. Yes, $100 to the Aviation Section of the Militia of the State of Ohio. No to the “colored section” of the Orange YMCA, explaining he had already given $100 to the non-“colored” Y. Yes, a phonograph and 150 records to the Essex County Jail in Newark to “bring to the inmates a little sunshine in their confinement.” No, returning a ticket to a concert benefit during World War I for the New Jersey Soldiers’ Relief Concert because “[i]nas-much as I am paying full salary of 47 of my employees now at the front it seems to me that I am doing my share.” Yes, $25 to a telegraph-skills tournament to show that he had not “changed a particle” and would “rather have the smallpox than a swelled head.” No to Oberlin College because he was using all of his “spare cash to start the pouring of concrete houses for the labouring man.”
In fact, Edison did not himself invest in the concrete houses. A New Jersey real estate investor poured fourteen rental homes in Montclair and Orange—claiming that they would stand for a thousand years without need of any repair—but that seems to be as far as the investing got. The only philanthropist who actually paid to have concrete houses poured was Mrs. Mirabeau L. Towns, the wife of a Brooklyn attorney, who paid for twenty thousand concrete homes—concrete toy homes, that is, that were distributed among the children of low-income families in New York. The molds were miniatures of those designed by Edison.
In the early twentieth century, husband-and-wife couples maintained separate spheres, including civic and philanthropic causes. Mr. and Mrs. Edison were not exceptions: Mina Edison’s ideas about social improvement were hers alone. In the 1910s and 1920s, her favorite cause was “play and recreation,” which she believed should be “woven through the warp of our whole existence.”
Other social issues also drew her attention. She and fellow members of the local Woman’s Club of Orange took on the alarming appearance of low-necked ball gowns, but their ability to enforce their own definition of what she called “a high tone of quiet respectability” was limited to the club’s own balls. She also belonged to the Housewives League, which was incensed about the retail price of eggs. To make their point, the league rented a storefront and members personally sold eggs for less than local grocers. With Mina’s participation, the affair drew the attention of the press, which described the unusual tableau of various classes mingling at the league’s store: “Handsomely gowned women waited on poor Italian and negro housewives, who were eager to take advantage of the bargains in eggs. Other women opened the crates and did heavy lifting.”
Mina did not have the imagination to address big problems, and Edison, who had the imagination, did not have the interest. The one philanthropic venture to which he attached his name was the Edison Scholarship, which was first awarded in 1929. It was conceived by one of Edison’s staff members and was intended to encourage high school students to pursue technical studies in college. Each of the forty-eight states and the District of Columbia were to name a top scholarship designate, and these finalists would answer a questionnaire addressing moral fitness as well as general knowledge, with questions composed not just by Edison, but also by the other judges, who included Henry Ford and Charles Lindbergh. This elaborate nationwide selection apparatus would lead to the selection of a single winner who would receive a four-year scholarship to the Massachusetts Institute of Technology.
In his business and research projects, Edison became more timid as he became older. While in his thirties, he had had the energy to tackle a problem that had seemed to many to be insoluble: the “subdivision” of the electric light that would make indoor use technically and economically feasible. In his forties, he had continued to dream big and put his winnings from the electric light business into the mining business. It had ended disappointingly, but he cannot be criticized for timidity. In his fifties, he did make another sizable bet. However, for this venture, pursuing the improvement of the battery for an electric car, he had financing from Ford that insulated him from personal risk. He continued to steer clear of risk in his sixties and seventies.
Perhaps his timidity was a simple matter of the aging process, but Samuel Insull provides a counterexample. At the time of the market crash in 1929, Insull was himself seventy years old, but his age did not prevent him from personally attempting to save the country from the worsening depression. Insull was everywhere, financing new infrastructure projects, rescuing beleaguered textile and shipbuilding industries, saving the city of Chicago when it teetered on the edge of bankruptcy. Biographer Forrest McDonald writes that “it appeared as if he were attempting to carry the entire American economy on his shoulders.”
; Insull put everything he had into the battle against impersonal economic forces far more powerful than he. His personal fortune had increased from around $5 million in 1927 to $150 million in 1929. But his wealth resided entirely in shares of his holding company, the publicly traded Insull Utility Investments. By 1932, those shares were worthless, and he had fallen so far in debt that a banker described him as “too broke to be bankrupt.”
Hundreds of thousands of investors in Insull Utility Investments had placed their faith in him and had ridden along as the stock plummeted to the ground. They then turned upon the man they had viewed as civic benefactor. The trajectory of his public career ended catastrophically. Insull was indicted for mail fraud, embezzlement, and violations of the Bankruptcy Act, enduring three trials in 1934 and 1935, and winning exoneration in all three. (The prosecution’s case in one instance had not been helped when it introduced as supporting evidence Insull’s tax returns, which showed that his annual salary was more than $500,000 a year before the collapse, but his charitable contributions had annually exceeded even that.) Insull died in 1938 in Paris, taking with him firsthand knowledge of Edison that only he possessed. He had told a State Department escort in 1934 that he had “hundreds of stories” from an earlier time before there were codes of ethics in business, but “I think that it is best to let them die with me. If I told them I would be accused of sullying Edison’s memory and that I certainly have no desire to do.”
Edison never had to pass through a mortifying ordeal such as Insull’s trials. Nor did he ever feel a civic obligation to offer service to the community that was his longtime home, as Insull did in Chicago. Edison had always sought isolation to protect his work routines, first in Menlo Park, and then in West Orange, but this isolation left him unaware of what his neighbors thought of him and his factories. When environmental problems, including mercury poisoning, caused by his battery plant’s use of industrial chemicals were called to his attention by a member of his staff, he was dismissive. The pollution, however, and the complaints, continued for years. One resident who lived across the street from the plant sought to protect his daughter’s endangered health by demanding that the company either control its emissions or buy his house so he could move elsewhere, and if the company did neither, he promised he would personally kill Edison. The residents had no way of knowing that Edison’s company had hired a shady fixer to pay the mayor and other local officials to turn their attention elsewhere (and we know this only because the fixer, Joseph McCoy, talked about his activities in his reminiscences as matter-of-factly as if his assigned post had been at a lab bench).
Edison was self-absorbed, isolated, and convinced that he, and only he, knew best how to manage his business affairs. For a founder like Edison, interested in retaining control above all else, the only possible successor would be pliable by temperament and a close relation by blood. For Mina Edison, keeping control of the business within the family was also a matter of the highest priority. Charles Edison, her next-to-youngest child, was an amiable and compliant young man perfectly fitted to the role. In 1914, at the age of twenty-four, Charles was named “first assistant” to his father.
As a child placed in the care of a French governess, his education had begun well before starting kindergarten. But he had been an indifferent student at the Hotchkiss School in Connecticut. By his own admission, he was not much interested in becoming an engineer when he went to Boston Tech (soon to be relocated to Cambridge and renamed the Massachusetts Institute of Technology). After three years of college, he could not muster the interest to finish his degree, especially when he had a more interesting opportunity dangled before him. He chanced to mention to a family friend his lack of interest in the specialized studies awaiting him in the fourth year at college. This friend happened to be the head of the Boston Edison Company and in a position to offer an unusual job to an undergraduate with no prior work experience: CEO-in-training, at full salary. Charles would rotate through the various departments and “see what makes a business tick.” Even if his older half brother Tom had once lamented being the son of the famous inventor, Charles had no cause for similar complaint.
When Charles told his parents of his plan to abandon the remaining course work for his degree and spend the next year as a senior management apprentice in a real business, his father readily assented and his mother eventually came around. After his year at Boston Edison, he and a buddy set off on a cross-country trip that took them to Colorado and then to California, where they ran out of money and relied on their own ingenuity to get themselves back home. This brief experiment in self-reliance came to an end, of course, when he took his assigned position at his father’s side at Thomas A. Edison, Inc.
Charles’s older sister, Madeleine, would say years later that she hated being asked the question “What does it feel like to be Edison’s daughter?” Looking back, she said, “It didn’t feel like anything but having a nice father that I cared about.” She did sometimes wonder if her friends were genuine friends of hers or “Thomas Edison’s daughter’s friends.” Charles, however, had no reason to doubt the genuineness of one friendship he had struck up two years before he joined his father’s business—with Henry and Clara Ford’s only child, Edsel, who was three years younger than Charles. Both young men would very early take up positions of nominal power at their fathers’ companies, and both would discover that their fathers would not be willing to step aside, even with the passing of years. Whether they anticipated how their futures would mirror each other’s, they did sense that they already shared the experience of being children of famous fathers, just as their fathers were beginning a friendship that was partly based on the two men recognizing the similarity of their experiences as celebrities. Charles and Edsel also shared an impulse to defy their fathers in small ways. Both were cigarette smokers and conspiratorially savored the discovery that the other also had failed to follow his father’s anticigarette strictures. “Dear Fellow Criminal,” Charles began a letter to Edsel in 1914, reporting on the latest tests at the Edison lab of an electric light system for cars. He closed, “Sincerely yours in Crime.”
In his first year at Thomas A. Edison, Inc., Charles was not given much to do. Even had he been inclined to begin to make changes immediately, he would not have been able to do so. His father made clear that he had final say over all company matters, small and large. The only place Charles had some autonomy was by stepping off the premises. He and two senior company officials decided to set up an experimental side business, selling Edison phonographs out of a retail shop in nearby East Orange. Each of the three put in $10,000 as passive investors. The plan was to hire a store manager and test new marketing techniques that once validated in practice could be adopted by Edison’s nationwide network of phonograph dealers. The Edison Shop of East Orange would depart from standard retail practice by selling only phonographs. By renting space in an unlikely location, a low-income neighborhood devoid of other retail storefronts, the investors believed that their success in the face of unpromising circumstances would hasten the wide adoption of their new approach to selling phonographs in a specialty shop.
Edison gave his approval, with this proviso: “You fellows mustn’t expect me to carry you.” The terms would be the same as for other dealers, though if they should end up losing money in the venture, he said he might make them whole. The three partners vowed never to accept Edison’s largesse. “It’s a bet,” said one. “If we lose we shan’t welch; we’ll pocket our losses and smile.”
Of the three investors, Charles Edison was the one who showed the earliest understanding of the absurdity of filling a tony shop with classical music and live recitals to sell the most expensive phonographs as if it sat on Fifth Avenue, not in a dreary working-class suburb amid households struggling to stay solvent. In September 1914, after the store had been open one week, he playfully wrote Carolyn Hawkins, his girlfriend in Cambridge, that “the store is going fine and tomorrow we’re going to figure up how little we are loosing [sic].
” As a newly christened tradesman, he was happy to report that he did not “have to pretend to be a gentleman anymore.” He did notice that the prospective customers who had responded to an invitation-only opening “were all to [sic] rich to buy this week although several have come in and sneered fashionably at us since.” Charles offered to send pictures of the shop so Hawkins could sneer, too.
Without waiting, Edison boasted to a business colleague that Charles—proudly referred to as “that boy of mine”—was proving a great success at the phonograph shop. To his credit, Charles did not make any such claims for himself. The shop, ill-conceived from the start, produced sparse sales and ran up debts that it could not repay. After three years of operation, it owed Thomas A. Edison, Inc., more than $21,000, a situation that alarmed Charles more than his two partners. “This is awful,” he wrote William Maxwell, one of the other investors. “What can we do?” Maxwell was not concerned and argued that the “experimental” nature of the store had “done a good deal of good” for the company. No one else could see the claimed benefits—Maxwell himself had complained to the hapless store manager that “it seems incredible that day after day should pass without the sale of a single instrument.” None of the investors were willing to continue the dismal experiment; the shop closed.
The ignominious end of the Edison Shop did not noticeably harm Charles’s nascent career as a business executive. In 1917, he was promoted from assistant to the founder to acting CEO. The rapid advance—he was still only twenty-seven—came not because Thomas Edison believed the time had arrived to permit a younger generation to step forward. Nor did it come because Charles had been carefully rotated through the various departments, as he had at Boston Edison, to gain a panoptic view of Thomas A. Edison, Inc. His father had continued to run the phonograph business unilaterally as always, and the executive education he provided Charles consisted primarily of posing trivia questions at home: How many records were rejected at the plant today? What is the name of the Edison dealer in Dubuque? Charles’s promotion came only because the Naval Consulting Board needed Thomas Edison’s presence full-time in Washington and at a Navy research laboratory. When the father departed, the son became the head of the company—temporarily.
The Wizard of Menlo Park Page 30