The "War of Currents" Edison, Tesla and Company Fought 100 Years Ago Is Becoming a Movie — and It's a Thrilling Story

This is one of the most important business stories in American history. On the eve of the decisions that would set the course of technology in America and the world, the desire, pettiness, power and vision of everyone involved tangled together, with consequences that reached far.

The team behind The Imitation Game is making its next move: the director and screenwriter will again bring the story of a scientific giant to the screen next year. The Imitation Game — the story of Alan Turing, the father of computing, breaking Germany's code system and turning the course of World War II — took seven Oscar nominations in 2015 and won Best Adapted Screenplay.

This time the film is called The Last Days of Night, and it is worth watching not only for the strong team behind it but for its subject: the story turns on the fight over direct current and alternating current in the late 19th century, between the camps of Thomas Edison and George Westinghouse.

That subject is one of the most important business stories in American history. It was not only a fight over a new technology but a long, textbook business war, and it drove the electrification of the whole country.

It is every bit as dramatic as Steve Jobs's ouster and return. At least half of the technological arc of the 20th century traces back to this story: alternating current came to rule the world of its day, and the modern American corporation took shape here, the marker being Morgan's role in creating General Electric, a name still famous today. But what you can't overlook is who was involved:

The one we know best is Edison, inventor of the incandescent bulb and designer of the world's first direct-current grid. Then J.P. Morgan, the financier behind the creation of a string of important companies in modern American history, who by the early 20th century had become the world's creditor. The Serbian-born scientist Nikola Tesla, a name now tied more to electric cars, though he was a key force in turning electric power into a business. And the American inventor and entrepreneur George Westinghouse, whose other role of note was founder of Westinghouse Electric.

Because of his friendship with Edison, the famous Henry Ford also drifts in and out of this history.

This is not the first time the story has reached the screen. The Prestige, the well-known 2006 film starring Christian Bale, worked in the feud between Tesla and Edison. The history is gripping enough that, besides The Last Days of Night, a second film, The Current War, is in preparation at the same time.

What makes it dramatic: on the eve of the decisions that would set the course of technology in America and the world, the desire, pettiness, power and vision of everyone involved tangled together, with consequences that reached far.

Edison: In His Own Domain, Admitting a Rival's Achievement Was Impossible

Edison was without question the most important figure in this gripping fight, and the most flamboyant.

We have heard no end of uplifting Edison stories: born poor, a grade-school dropout, deaf from an early age, and still a genius who invented the telegraph and the phonograph and held more than 1,500 patents, which won him the title of "King of Invention" from the public and the press.

We tend to forget Edison's other role. As founder of the Edison Electric Light Company, the predecessor of General Electric, he turned to research on commercial systems soon after inventing the incandescent bulb in 1879. A reporter who interviewed him summed him up this way: "What matters most is that Edison chases practicality and economic return."

In 1882, after the incandescent bulb had replaced a growing number of kerosene lamps and won broad acceptance in the market, Edison built the first real power-generation and lighting network, and began delivering direct current.

All of this made Edison's name, above all when he lit up Morgan's Manhattan mansion, and he knew just as well how to sell himself through the press. That brought the Edison Electric Light Company customers, and capital too.

His first customers included J.P. Morgan & Co., Park Bank and the Drexel syndicate, companies and financial groups with enormous influence. Edison already understood what capital was worth, and he kept testing how far a partnership between scientific invention and syndicate money could go. That is also what put him ahead of his many competitors.

As Edison's lighting business expanded and its customer list grew, the physical limits of direct current became harder to ignore: a DC central station could cover only about a mile in every direction, nowhere near enough for demand on a large scale. By the end of 1884, Edison had built just 18 independent central stations in the United States.

Alternating current's advantages were plain: it could travel long distances, it lost less power on the way, and it cost less. Its only drawback was the danger of high voltage.

Edison seized on that one drawback and would not let go, while shutting his eyes to every other advantage of alternating current, treating them in fact with contempt.

George Westinghouse saw what alternating current could become, and his partnership with Nikola Tesla bore down hard on Edison. Within a single year of entering the power business, the founder of Westinghouse Electric had built or begun building 68 AC central stations, which made him Edison's strongest competitor.

In fact, when Westinghouse built his first AC plant in 1886, senior people at Edison's company wanted to buy the advanced AC systems available in Europe. Edison stalled and put them off, insisting the systems were too expensive and unsafe.

The real reason was his character, stubborn and proud. He feared a new system would block the spread of direct current and destroy what he had built from nothing. Electricity, he felt, was his own domain, and admitting a rival's achievement was simply too hard.

So through the last stretch of the 19th century, when the competition was at white heat, Edison played on the public's fear of electricity and began a run of public smears against Westinghouse and alternating current. To protect the standing of his direct current, he even staked his reputation on a defense of the high-voltage electric chair, all to fix alternating current and death together in the public mind.

This genius of invention stood stubbornly against alternating current, mostly out of pride and self-regard, and so misjudged the future.

Tesla and Ford: Who Would Have Guessed That 100 Years Later Both Would Be Car Brands

What Nikola Tesla did not expect was that his first boss, and in a way his idol, Edison, would become an implacable rival.

America was in the middle of an immigration wave in the 1880s, and Tesla, born in Serbia, reached New York in 1884. Before that he had gone to Paris as a trainee engineer for Edison's company, helping expand Edison's power business in Europe.

Tesla had already mastered the design of the AC motor before he came to New York. To his disappointment, he could demonstrate a working machine and still not find a single interested investor. And when he described his ideas for AC systems to Edison, the response left him just as low.

Edison had no interest at all. He thought the research had no future, that it was a pure waste of time.

The outcome was no surprise. Edison was busy pushing his DC central stations and DC generators out into the world. Next to an inventor the whole world was watching, no one was going to stake capital on an unknown young man.

The tension between Tesla and Edison soon broke open. Tesla designed a new machine for the company to replace its old DC generators, but when he asked Edison to pay the promised $50,000, Edison answered, "You don't understand our American humor."

That was the fuse for Tesla's departure. His luck stayed poor afterward, until he founded the Tesla Electric Company in 1887 and had a laboratory of his own. Westinghouse then took notice; Tesla joined his company in 1888 and stood with him in the AC camp as a consultant.

Westinghouse, who had always kept quiet, began hitting back at Edison from this point on.

The war ran until 1895, when the AC generating station at Niagara Falls — the place the power industry thought could prove it best — was finished and sent current 35 kilometers away. It used Tesla's AC generators and AC transmission. Even the steel magnate Andrew Carnegie brought his wife and children to Niagara Falls on a kind of pilgrimage.

What's interesting is that the famous Henry Ford turns up in this history too. He worked as an engineer at Edison's company from 1891, and two years later was promoted to chief engineer at General Electric.

Not long after, he left to follow his love of designing and building cars, and founded the Ford Motor Company. You know the rest.

Tesla's name we remember in another form. The electric car company Elon Musk founded in 2003 was named for the scientist. More than a century on, a name long forgotten has become the byword for the electric car.

J.P. Morgan: He Let Edison Command the Game, and Then Put Him Out of It

Edison could start the war of currents largely because J.P. Morgan was backing him from behind.

Morgan showed an unusual head for business from an early age, and uncanny judgment in speculation. When the Cooke syndicate was wiped out in the Black Thursday panic of September 18, 1873, bringing down 5,000 commercial companies and 57 securities firms with it, Morgan made $1 million. Overnight, the Morgan firm he ran took the leading position in financing the U.S. government.

In 1878, Morgan saw the enormous potential of electric power in the incandescent bulb Edison had built, and decided to become his backer. By then people generally believed the panic of 1873 was over, and more and more wealthy men were bringing capital into a booming New York.

In the late spring of 1882, Edison was in and out of Morgan's office building at 23 Wall Street. By then Morgan's income had reached $500,000 a year, the center of gravity of his empire had shifted entirely from London to New York, and he was unmistakably the leader of Wall Street.

To promote Edison's work, Morgan decided to show off the incandescent light in his own grand house on Madison Avenue. Later, Morgan's deep pockets let Edison lock up a monopoly on DC technology and gave him a foothold in the press, which in the war that followed handed him the advantage in public opinion, and he used it against Tesla and Westinghouse.

But what Morgan cared about was always the business opportunity. He had once held out an olive branch to Westinghouse as well, trying to build a new company together. Westinghouse, who loathed bankers, turned him down.

In 1892, following his commercial interests, Morgan engineered the merger of the Edison General Electric Company and the Thomson-Houston Electric Company. The new firm was renamed the General Electric Company, and Morgan became its largest shareholder.

This lover of monopoly capital also helped create U.S. Steel and the Bell Telephone Company, big companies of American capitalism's golden age. All the way to 1989, J.P. Morgan & Co. went on ruling American finance, at times even playing the part of the Federal Reserve.

General Electric and Westinghouse: In the End Both Edison and Westinghouse Lost to Capital

In 1888, with the fight between Edison and Westinghouse at its hottest, Edison reorganized his light company and his other entities into Edison General Electric, with $12 million in registered capital. By 1889 it was the largest company in the United States, earning $7 million a year with close to $700,000 in profit.

But under heavy competition from AC systems, Edison's company steadily lost market share and its finances turned bad, which led Morgan to reorganize General Electric.

By the account in Empires of Light, Edison General Electric had sales of $11 million in 1891 and profits of $1.4 million, an 11% margin. Thomson-Houston had sales of $10 million and profits of $2.7 million, a 26% margin. Looking at the two balance sheets, picking the team that could make the larger profit was plainly the choice that served commercial value.

Edison took no part in the merger, and the press read it as a lone inventor sold out by Wall Street. His biographer once said: "To Morgan it made no difference who ran it, so long as the result was a great trust with him as the boss."

His company was sold out from under him, and the bankers had not told him a word in advance. Edison was bitter about it, and in the end left for good.

Westinghouse's company hit a financial crisis of its own at the height of the fight. But on the strength of his formidable lobbying and Tesla's support, Westinghouse was also reorganized, in 1891, and came through, the difference being that Westinghouse still ran his company.

Westinghouse Electric grew steadily into the early 20th century. From 1901 to 1907 its sales rose from $16 million to $33 million. In 1907 its stock returned a handsome 10%, which emboldened Westinghouse to move into the financial markets. But weakness and turmoil in foreign financial markets began once again to shake the New York exchange, and Westinghouse Electric could not escape the threat of bankruptcy.

In December 1908, a year or so after the reorganized electric company reopened, Westinghouse was no longer the man at the top: the New York and Boston bankers who had eyed the company for years took control of most of it.

Edison or Westinghouse, both lost to capital in the end, and both left the companies they had once commanded.

Looking back, this is without question a rich, tangled, sprawling story. The two films built on it, The Current War and The Last Days of Night, both open in 2017, and they will fight a box-office war of their own.

The Current War is directed by Alfonso Gomez-Rejon, who made Me and Earl and the Dying Girl, with Benedict Cumberbatch, the "Sherlock" actor, and Jake Gyllenhaal playing Edison and Westinghouse. The casting alone is enough to draw eyes.

The Last Days of Night, just announced, is adapted from Graham Moore's novel of the same name, due out in September. Moore won Best Adapted Screenplay at the 87th Academy Awards for The Imitation Game. In the novel, Westinghouse makes the products, Tesla has the ideas, and Edison is busy building an empire of electric power all his own.

Loosely, you could call this a film about corporate warfare, but the subject is important enough that it may as well be seen as a restaging of giants creating a world: how, in the stretch from roughly 120 years ago to 100 years ago, the world was shaped by their will and their power.

In the end, the last days of night were gone.

Cover image from: pixabay