J.P. Morgan on Innovation

During 1889 Thomas Edison held business interests in many electricity-related companies, General Electric's Wikipedia history records: the Edison Lamp Company, a lamp manufacturer in East Newark; the Edison Machine Works, a maker of dynamos and large electric motors in Schenectady; Bergmann and Company, a manufacturer of electric lighting devices; and the Edison Electric Light Company, which held the patents and financed Edison's lighting experiments with backing from J. P. Morgan and the Vanderbilt family. Henry Villard, a longtime Edison supporter and investor, proposed consolidating these interests, a proposal supported by Samuel Insull, who served as Edison's secretary and later became a financier. In 1889 Drexel, Morgan and Co., the firm founded by Morgan and Anthony Drexel, financed Edison's research and helped merge several of the separate companies under one corporation, forming the Edison General Electric Company, incorporated in New York on April 24, 1889, which also acquired the Sprague Electric Railway and Motor Company in the same year. Morgan's backing of Edison dated to 1878, when he financed the Edison Electric Illuminating Company.

General Electric took shape in the 1892 merger that fused the Edison General Electric Company with the Thomson-Houston Electric Company, a consolidation the company's Wikipedia history credits to the conception and orchestration of financier J. P. Morgan. Thomson-Houston, led by Charles Coffin, traced its origins to the American Electric Company of New Britain, Connecticut, formed in 1880. Incorporation took place in New York, the Schenectady works serving as headquarters long afterward, with both companies' original plants continuing under the GE banner. Steinmetz came aboard in 1893 through the purchase of a smaller New York company, a genius in mathematics and electronics who accumulated over two hundred patents and proved a major force in advancing the company. In 1896 General Electric was one of the original twelve companies listed on the newly formed Dow Jones Industrial Average, where it remained for 122 years, though not continuously. The merger became a template for Morgan's method: combine competing manufacturers, then capitalize the combination at a scale no rival could challenge.

In 1900 Nikola Tesla persuaded Morgan that a trans-Atlantic wireless communication system, built on his theories of electrical conduction through the earth and atmosphere, would outperform the short-range radio apparatus Guglielmo Marconi was then demonstrating, his biography records. In what may have been a philanthropic investment, Morgan gave Tesla one hundred fifty thousand dollars, and Tesla offered him fifty-one percent control of the resulting patents. The letter of agreement was scarcely signed before Tesla resolved to enlarge the facility, eventually sited at Wardenclyffe, to incorporate terrestrial wireless power transmission, which he believed would sharpen the system's competitiveness. Morgan refused to give any further money toward the project, and with Tesla unable to secure other capital, development stalled and the site was abandoned by 1906. The episode displays the classic Morgan pattern: full backing for a founder's defined thesis, and none at all for a scope change.