by Jill Jonnes
Those who remained to celebrate into the wee hours, and they were many, felt thrilled. The reporter for the Buffalo Morning Express captured their rapture, declaring, “Great are the powers of electricity…. It makes millionaires. It paints devils’ tails in the sky and floats placidly in the waters of the earth…. It creeps into every living thing…. Last night it nestled in the sherry. It lurked in the pale Rhine wine. It hid in the claret and sparkled in the champagne. It trembled in the sorbet electrique…. Small wonder that the taste was thrilled and that the man who sipped was electrified, if nothing more. Energy begets energy.”39 All felt energized themselves as they emerged from the world’s largest office building to a cold gray January dawn and the snow-covered streets. “There was not a man who went home [that morning who] did not feel the wheels of commerce whirring in his head and hear the buzz of the mighty dynamos of the electric dinner surging in his ears, beating about him, driving away all other thoughts and drowning all other contemplation save the glorious knowledge that the introduction of power had been commemorated.”40
The War of the Electric Currents was over. George Westinghouse, Nikola Tesla, and the alternating current had won. The world was about to be forever changed. Great indeed are the powers of electricity.
George Westinghouse; Thomas Edison (in chair), circa 1890s; Nikola Tesla, ever dapper, in his hotel room in the 1930s
CHAPTER 13
Afterward
WESTINGHOUSE
Three titans of America’s Gilded Age—Thomas Edison, Nikola Tesla, and George Westinghouse—dreamed of spreading the ethereal power of electricity throughout the world. But in the wake of the War of the Electric Currents, only George Westinghouse among the Promethean three truly stayed the electrical course. He alone of the three completely mastered the new industrial order of gigantic capital, swift and treacherous change, and colossal corporate enterprise. Ever the audacious innovator and empire builder, George Westinghouse continued to make prodigious advances in AC technology and capacity, determined to make AC electricity so cheap, abundant, and versatile that it could power anything, including the heaviest locomotives. He had no doubt that once that was so, the whole world would embrace electricity. Yet such was the new American industrial order that George Westinghouse had had to share his great AC prize with his far bigger rival, General Electric, or risk repeated corporate attacks. That great concession made, Westinghouse also began setting up foreign affiliates in France, Italy, and Russia, the first links in spanning the whole globe with the Westinghouse-generated “ethereal fluid.”
Guido Pantaleoni, the cultured young Italian engineer who had worked for Westinghouse in the early AC days, returned occasionally to Pittsburgh. He found that while his former boss “would often be highly entertaining … very witty, fond of puns, he really had only one thing definitely and always on his mind, and it would be quite disconcerting … to be interrupted suddenly by questions such as: How is that machine doing?” Pantaleoni was struck by how even more absorbed Westinghouse now was. “Business matters were gradually coming more and more to the front…. In business he was a real Giant; I have never met a human being who in that period when he was at his prime could keep track and direct as many things simultaneously; he had a farsightedness that was almost uncanny to me; every new idea was almost immediately analyzed by him and acted upon before you realized what was in his mind.”1 George Westinghouse, having triumphed at Niagara with his dynamos, saw his electric works flourish while thousands of other businesses collapsed or barely survived the grinding years of the 1890s depression. He was free to plunge forward in the way he loved best—boldly and recklessly, erecting ever bigger works to manufacture ever more gargantuan machines, all in pursuit of cheaper, more efficient power. He delighted in his freedom to operate on such a monumental scale.
Not long after the Niagara plant began operations, Westinghouse was already developing a better version of Englishman Charles Algernon Parsons’s revolutionary steam turbine, a completely new technology for America. These machines, far more powerful than steam engines and far smaller, soon became the standard means of running generators in electrical plants and factories. Wrote Westinghouse biographer Henry Prout, “The obsolescence of the engine-type alternator was almost pitiful. Here was a branch of heavy engineering built up at great cost and backed by years of experience. In the coming of the turbogenerator this experience was mostly thrown away, for the engineering … was so radically different … designers had to start practically anew … at enormous expense and through years of effort.”2 Other industrialists might have blanched at such waste, but Westinghouse did not blink an eye. He was always, as Prout said, after progress over profits.
As Westinghouse traveled restlessly among his many businesses, he continued his lifelong practice of seeking out brilliant inventor/engineers, buying their patents, and then collaborating with them to create even better industrial versions. A French physicist, Maurice Leblanc, had invented an air pump that could signally improve the efficiency of the new steam turbines. General Electric helped itself to the invention, and Leblanc swiftly sued. George Westinghouse happened to be in Paris in 1901 and had a friend find Leblanc and bring him to his hotel on the rue de l’Arcade. Westinghouse genially inquired, “So it is you who have sworn to make the fortune of all the lawyers in America. Can we come to terms?” He then proceeded to arrange to buy Leblanc’s patents, which he would share with GE. He also hired Leblanc as a consultant for Société Anonyme Westinghouse in France. Leblanc became an enthusiastic collaborator, for he adored Westinghouse: “He was before all things a perfect gentleman and a great-hearted man, and he himself a mechanician beyond compare … [as were] his vigor and power of work.”3
Maurice Coster, who ran the French Westinghouse operation, was returning to Paris on the train with his boss after a “very hectic day in Havre. We had a compartment to ourselves and I said to him, ‘Mr. Westinghouse, can you go to sleep after such a busy day?’ He replied, ‘Coster, I never think of the past. I go to sleep thinking only of what I am going to do tomorrow.’”4 With this constant forward thinking, Westinghouse squandered no mental energy on what might have been. This forward focus resulted in his receiving a new patent about every six weeks during his career, or almost four hundred patents. These were not speculative inventions, but products of proven commercial value. Westinghouse had learned the hard way the crucial nature of patents in this new industrial order, and ferocious defense of his company’s patents was standard corporate strategy.
It was inevitable that Westinghouse would seek to apply the benefits and advantages of electricity to the era’s most important infrastructure—trains and streetcars, a form of transportation already so improved by his air brake and automatic signaling inventions. In 1896, he began collaborating with the Baldwin Locomotive Works to incorporate electricity into moving trains. When Westinghouse designed AC systems to power the Manhattan elevated and the New York subway system, the dynamos were so gigantic that they had to be assembled in special shops at the East Pittsburgh plant. But that AC power still had to be converted to DC to run the train engines, a challenge Westinghouse sought aggressively to solve.
Following the pattern of Chicago’s White City and Niagara Falls, in 1905 Westinghouse showcased his hugely ambitious new AC locomotive project in the most high-profile, high-wire way. During the first two weeks of May 1905, the top railway men of forty-eight nations convened, a thousand strong, in Washington, D.C., for the International Railway Congress held every five years. Westinghouse had reluctantly agreed to serve as chairman, for he harbored a great dislike of public speaking. For two weeks, the delegates strolled about the one hundred pavilions gaily arrayed about the grounds of the Washington Monument, there to inspect the multitude of technical exhibits. They assembled for lectures and speeches, visited the White House, and were feted in grand style.
On May 16, when the International Railway Congress ended, Westinghouse escorted three hundred of these railroad men on a special
train back to Pittsburgh to witness a practical demonstration of his latest triumph, a powerful locomotive operating strictly on AC power. Once in Pittsburgh, the silk-hatted gentlemen of the railroad world assembled in the company’s grimy rail yards, gussied up for the occasion with red, white, and blue bunting. Before them stood two locomotives, one the familiar powerful steam engine, the other a strange boxy affair with accordion wires on its flat roof attached to overhead electric lines. The Westinghouse engineers had worked so feverishly to be ready, there had been as yet no trial run of this strange engine. “This was the first electric locomotive of its size, the first alternating-current locomotive, and the first real main-line electric locomotive.”
The demonstration was a rousing success. Westinghouse, in his time-tested hard-charging way, then undertook to bring the New York, New Haven, and Hartford Railroad over to the single-phase system. In June 1907, the work was complete and regular service began. Company historians later saw this project as the “consummation of Westinghouse’s great career, for it combined into one masterful work of engineering his revolutionary contributions” in railways and AC.5
In the first years of the twentieth century, the Westinghouse Electric & Manufacturing Company was expanding steadily, each passing prosperous year bringing bigger sales and higher dividends. From 1901 to 1907, sales doubled from $16 million to $33 million. By mid-1907, the company stock was yielding a very handsome 10 percent dividend. In his usual fashion, Westinghouse had been audaciously wading into the financial markets to underwrite his tremendous expansions and innovative enterprises, first increasing the amount of stock, then floating collateral trust bonds and debenture bonds. During the spring and summer of 1907, once again financial weakness and jitters overseas began to infect the New York Stock Exchange. On August 10, the jitters escalated into outright terror, and the market began a precipitous downward slide. The nation nervously wondered once again about its banks. “America’s obsolete banking system was like an immense tangle of dry brush and timber waiting for a spark,” Jean Strouse wrote in her biography of J. P. Morgan. “There were in 1907 nearly twenty-one thousand state and national banks across the country, with no coordinated management or pool of common reserves. Most of them lent their surpluses to correspondent banks in New York, the national money center, and the New Yorkers lent the money out to the Stock Exchange, individuals, and business. Banks beyond the Hudson could call in the loans at a moment’s notice.”6 All September, Americans leerily eyed the markets and their fragile financial institutions, waiting for more woe. In a case of monumental bad timing, two wealthy American speculators tried to corner copper in early October, setting off a chain reaction of bankruptcies—including a mining firm, two brokerages, and a bank. Then word surfaced that one speculator was a trustee at Knickerbocker Trust in Manhattan. Depositors, in this era before deposit insurance, sensed a structural wobble and began lining up at the trust’s lavish Fifth Avenue offices to extract their dollars.
George Westinghouse was at his company’s New York offices at 165 Broadway in Manhattan during these lovely but anxious October days, himself trying to raise money. A recent Westinghouse foray into the stock market to raise $7.5 million for the electric company had yielded barely $2 million. With the company humming with success and prosperity, George Westinghouse had allowed its debt to balloon to $44 million, $30 million of that being in bonds, another $14 million being notes due immediately or soon. Now nervous banks were once again calling in loans. On a cool, bright Friday, October 18, Westinghouse telegraphed to Walter Uptegraff, his longtime financial secretary, to come quickly to Manhattan. Westinghouse and his faithful aide spent a grim Saturday reviewing the books. The foreign companies, launched as part of Westinghouse’s great electrical dream of worldwide AC, had been a huge financial drain. The intrepid Pittsburgh magnate needed $4 million in cash right away. Such sums were not, of course, to be found on Wall Street in its present prostrate state. So they ferried across to Jersey City and boarded the Glen Eyre for the rail journey back to Pittsburgh. The next day, Westinghouse had the painful task of immediately laying off 1,500 men at the air brake and electrical companies, cushioning the blow by saying it was only temporary.
Westinghouse’s public relations man, Ernest Heinrichs, noticed as soon as he walked into the Westinghouse Building that Monday morning of October 21 that something seemed amiss, for there was “an atmosphere of ominous oppression pervading the offices. Conversations were carried on in whispers. Everybody seemed to have a feeling of fearful expectancy, as if some dangerous catastrophe was about to descend upon the place. Although nobody appeared to have any idea what was going to happen.”
By Tuesday there could be no question something big was brewing. “The telephone leading into Mr. Westinghouse’s office was unusually busy. The ‘boss’ sat in his chair during the entire day, except for an hour when he went to the Duquesne Club to eat his lunch. Besides the busy telephone, many strange visitors made their appearance, and one after another was ushered into the big office and the door pushed closed behind him.” Westinghouse had spent all day Monday and most of Tuesday trying to raise his millions in Pittsburgh. And he had been hopeful until 2:00 P.M. Then word came that back east in Manhattan, the Knickerbocker Trust had given out its last dollars to its desperate depositors and then closed its ornate doors for good at Fifth Avenue and 34th Street. With that, the panic was unleashed. As Heinrichs prepared to leave for the day, Westinghouse stepped into his office and said, “You had better stay close to the telephone this evening. I may have something for you to give to the papers.” Nothing more. The company’s vice president had no greater inkling of what was impending. At 5:30 that afternoon, as he and Westinghouse were finishing discussions about some routine matter, his boss said pleasantly, “I shall have a new job for you tomorrow.”
“What’s that?”
“Receiver of the Electric Company.” The bankruptcy papers were being prepared as they spoke.7
When Heinrichs returned the next morning to the office, he found a newspaper friend from the Pittsburgh Chronicle Telegraph waiting for him. The reporter wanted a statement about the stunning news that the Westinghouse Electric & Manufacturing Company, the Westinghouse Machine Company, and the Security Investment Company had all gone belly-up and were in receivership. Heinrichs was shocked, but he maintained his composure, saying, “Oh, yes, you want a statement from Mr. Westinghouse.” When he walked through to his boss’s office, Heinrichs found Pennsylvania’s U.S. senator George T. Oliver and Pittsburgh political boss Chris Magee, both sitting there grim faced. Westinghouse looked as serene as ever and pleasantly said he’d soon have a statement. When it came, it emphasized the phenomenal prosperity of these companies and depicted the bankruptcy as a temporary and unfortunate expedient until the present “financial stringency” was resolved.
Throughout that sad and unnerving day, Wednesday, October 23, streams of friends and well-wishers filed in to see Westinghouse in his office. Western Union boys bounded in and out. The chief appeared unperturbed and said buoyantly to one aide, “By the way, MacFarland, I’ve got an idea now for our turbine that will make a sensation when we bring it out.”8 Westinghouse emerged to join his office staff for lunch. As they ate sandwiches, he munched on an apple. At one point, he turned to Heinrichs and urged him when talking to his many newspaper friends, “Do not forget to make it very emphatic to them that this receivership is not the end of the company…. [The] company is fundamentally as sound and solid as ever, and it will emerge out of this unfortunate situation a greater and more prosperous concern than ever.”9 The bankruptcy was a great shock to both insiders and outsiders, but with money so tight, Westinghouse saw no alternative. He treated it matter-of-factly. “‘I grant you this is not pleasant,’ he told one friend. ‘But it isn’t the biggest thing in the world. All large business has its ups and downs. The crisis through which we are passing is only part of our day’s work.’”10
Back in Manhattan, as the Panic of 1907 unf
olded, the world turned once again to J. P. Morgan, now seventy, a powerful man with a plutocrat’s large belly, the legendary ferocious eyes, and a monstrous nose, red and deformed from acne rosacea. In wake of the Panic of 1893, Morgan’s firm had restructured so many failed railroads, he now had a hand in half of America’s rails, the nation’s economic lifeblood. His combining of U.S. Steel from Carnegie’s firm and other smaller rivals had created the country’s first billion-dollar corporation in 1901. So only J. Pierpont Morgan had the reputation and power to steady the floundering economy. The great financier returned from an Episcopal gathering in Richmond just as the run on Knickerbocker began. Hunkered down in his sumptuous Madison Avenue library, smoking his huge Cuban cigars, he conferred over the next few days with the nation’s most powerful bankers and money men, bailing out interests he felt worthy of the effort, advancing huge hunks of millions as needed. He and his associates let certain weak banks, trusts, and firms fail. Working with the U.S. secretary of the Treasury, Morgan and his allies during the next few weeks staved off complete calamity. One of his partners later said, “In the dark days of 1907, he knew no fear, he believed in the country & himself & imparted pluck & spirit to others & infused strength & hope into men 20, 30, 40 years younger than himself. If he had given way, the whole house of financial cards would have fallen.”11
Others suspected Morgan had gained some great advantage while others suffered disaster. Among them was a highly skeptical President Theodore Roosevelt. TR had deeply angered Wall Street by attacking its entrenched system of power. The day the Knickerbocker collapsed, Roosevelt emerged from a fifteen-day hunting trip deep into the Louisiana bayous, where he had bagged and eaten bear, turkey, squirrel, opossum, and wildcat. In a speech the next day, he acknowledged that many financiers were blaming his policies for Wall Street’s woes. But he stated firmly his intention of punishing “successful dishonesty” among wealthy manipulators and swindlers. TR wondered privately in a letter whether “certain malefactors of great wealth” were not shaking things up to their own nefarious purposes “so that they may enjoy unmolested the fruits of their own evil-doing.”12