Editing Nikola Tesla (section)

== AC and the induction motor ==
[[File:RMFpatent.PNG|thumb|right|upright|Drawing from {{US patent|381,968}}, illustrating the principle of Tesla's alternating current induction motor]]

In late 1886, Tesla met Alfred S. Brown, a [[Western Union]] superintendent, and New York attorney Charles Fletcher Peck.<ref>Charles Fletcher Peck of [[Englewood, New Jersey]] per [https://patents.google.com/patent/US381968A/en] {{Webarchive|url=https://web.archive.org/web/20201008142341/https://patents.google.com/patent/US381968A/en|date=8 October 2020}}</ref> The two men were experienced in setting up companies and promoting inventions and patents for financial gain.{{sfn|Carlson|2013|p=80}} Based on Tesla's new ideas for electrical equipment, including a [[thermo-magnetic motor]] idea,{{sfn|Carlson|2013|pp=76–78}} they agreed to back the inventor financially and handle his patents. Together they formed the Tesla Electric Company in April 1887, with an agreement that profits from generated patents would go {{frac|1|3}} to Tesla, {{frac|1|3}} to Peck and Brown, and {{frac|1|3}} to fund development.{{sfn|Carlson|2013|p=80}} They set up a laboratory for Tesla at 89 Liberty Street in Manhattan, where he worked on improving and developing new types of electric motors, generators, and other devices.

In 1887, Tesla developed an [[induction motor]] that ran on [[alternating current]] (AC), a power system format that was rapidly expanding in Europe and the United States because of its advantages in long-distance, [[high-voltage]] transmission. The motor used [[Polyphase system|polyphase]] current, which generated a [[rotating magnetic field]] to turn the motor (a principle that Tesla claimed to have conceived in 1882).<ref name="ReferenceB">{{cite book |title=Networks of Power: Electrification in Western Society, 1880–1930 |publisher=JHU Press |page=117 |url=https://books.google.com/books?id=g07Q9M4agp4C&pg=PA117 |isbn=978-0-8018-4614-4 |date=March 1993 |access-date=13 December 2015 |archive-date=23 March 2024 |archive-url=https://web.archive.org/web/20240323123125/https://books.google.com/books?id=g07Q9M4agp4C&pg=PA117#v=onepage&q&f=false |url-status=live }}</ref><ref>Thomas Parke Hughes, ''Networks of Power: Electrification in Western Society, 1880–1930'', pp. 115–118</ref><ref>{{cite book |url=https://books.google.com/books?id=1AsFdUxOwu8C&pg=PA204 |title=Robert Bud, Instruments of Science: An Historical Encyclopedia |page=204 |access-date=18 March 2013 |isbn=978-0-8153-1561-2 |last1=Ltd |first1=Nmsi Trading |last2=Institution |first2=Smithsonian |year=1998 |publisher=Taylor & Francis |archive-date=23 March 2024 |archive-url=https://web.archive.org/web/20240323123051/https://books.google.com/books?id=1AsFdUxOwu8C&pg=PA204#v=onepage&q&f=false |url-status=live }}</ref> This innovative electric motor, patented in May 1888, was a simple self-starting design that did not need a [[Commutator (electric)|commutator]], thus avoiding sparking and the high maintenance of constantly servicing and replacing mechanical brushes.{{sfn|Jonnes|2004|p=161}}<ref>Henry G. Prout, ''A Life of George Westinghouse'', p. 129</ref>

Along with getting the motor patented, Peck and Brown arranged to get the motor publicized, starting with independent testing to verify it was a functional improvement, followed by press releases sent to technical publications for articles to run concurrently with the issue of the patent.{{sfn|Carlson|2013|p=105-106}} Physicist [[William Arnold Anthony]] (who tested the motor) and ''Electrical World'' magazine editor [[Thomas Commerford Martin]] arranged for Tesla to demonstrate his AC motor on 16 May 1888 at the [[American Institute of Electrical Engineers]].{{sfn|Carlson|2013|p=105-106}}<ref>{{cite book |url=https://books.google.com/books?id=8j5bJ5OkGpgC&pg=PA36 |first1=Fritz E. |last1=Froehlich |first2=Allen |last2=Kent |author-link2=Allen Kent |title=The Froehlich/Kent Encyclopedia of Telecommunications: Volume 17 |page=36 |access-date=10 September 2012 |isbn=978-0-8247-2915-8 |date=December 1998 |publisher=CRC Press |archive-date=23 March 2024 |archive-url=https://web.archive.org/web/20240323123231/https://books.google.com/books?id=8j5bJ5OkGpgC&pg=PA36#v=onepage&q&f=false |url-status=live }}</ref> Engineers working for the [[Westinghouse Electric Corporation|Westinghouse Electric & Manufacturing Company]] reported to [[George Westinghouse]] that Tesla had a viable AC motor and related power system—something Westinghouse needed for the alternating current system he was already marketing. Westinghouse looked into getting a patent on a similar commutator-less, rotating magnetic field-based induction motor developed in 1885 and presented in a paper in March 1888 by Italian physicist [[Galileo Ferraris]], but decided that Tesla's patent would probably control the market.{{sfn|Jonnes|2004|p=160–162}}{{sfn|Carlson|2013|pp=108–111}}

[[File:US390721.png|thumb|right|upright|Tesla's AC dynamo-electric machine (AC [[electric generator]]) in an 1888 {{US patent|390721}}]]

In July 1888, Brown and Peck negotiated a licensing deal with George Westinghouse for Tesla's polyphase induction motor and transformer designs for $60,000 in cash and stock and a royalty of $2.50 per AC horsepower produced by each motor. Westinghouse also hired Tesla for one year for the large fee of $2,000 (${{Inflation|US|2000|1888|r=-2|fmt=c}} in today's dollars{{Inflation-fn|US}}) per month to be a consultant at the Westinghouse Electric & Manufacturing Company's [[Pittsburgh]] labs.{{sfn|Klooster|2009|p=305}}

During that year, Tesla worked in Pittsburgh, helping to create an alternating current system to power the city's streetcars. He found it a frustrating period because of conflicts with the other Westinghouse engineers over how best to implement AC power. Between them, they settled on a 60-cycle AC system that Tesla proposed (to match the working frequency of Tesla's motor), but they soon found that it would not work for streetcars, since Tesla's induction motor could run only at a constant speed. They ended up using a DC [[traction motor]] instead.<ref>{{cite web|last=Harris|first=William|url=https://science.howstuffworks.com/nikola-tesla.htm#pt2|title=William Harris, How did Nikola Tesla change the way we use energy?|page=3|publisher=Science.howstuffworks.com|date=14 July 2008|access-date=10 September 2012|archive-date=22 May 2019|archive-url=https://web.archive.org/web/20190522131016/https://science.howstuffworks.com/nikola-tesla2.htm#pt2|url-status=live}}</ref><ref name=Munson>{{cite book|title=From Edison to Enron: The Business of Power and What It Means for the Future of Electricity|publisher=Praeger|last=Munson |first=Richard|year=2005|pages=[https://archive.org/details/fromedisontoenro00muns_0/page/24 24–42]|location=Westport, CT|isbn=978-0-275-98740-4|url=https://archive.org/details/fromedisontoenro00muns_0/page/24}}</ref>

=== Market turmoil ===
Tesla's demonstration of his induction motor and Westinghouse's subsequent licensing of the patent, both in 1888, came at the time of extreme competition between electric companies.<ref>Quentin R. Skrabec (2007). ''George Westinghouse: Gentle Genius'', Algora Publishing, pp. 119–121</ref><ref>Robert L. Bradley, Jr. (2011). ''Edison to Enron: Energy Markets and Political Strategies'', John Wiley & Sons, pp. 55–58</ref> The three big firms, Westinghouse, Edison, and [[Thomson-Houston Electric Company]], were trying to grow in a capital-intensive business while financially undercutting each other. There was even a "[[war of currents]]" propaganda campaign going on, with Edison Electric claiming their [[direct current]] system was better and safer than the Westinghouse alternating current system and Thomson-Houston sometimes siding with Edison.<ref>Quentin R. Skrabec (2007). ''George Westinghouse: Gentle Genius'', Algora Publishing, pp. 118–120</ref>{{sfn|Seifer|1998|p=47}} Competing in this market meant Westinghouse would not have the cash or engineering resources to develop Tesla's motor and the related polyphase system right away.<ref name="gentlegenius">{{cite book|last1=Skrabec|first1=Quentin R.|title=George Westinghouse : gentle genius|date=2007|publisher=Algora Pub.|location=New York|isbn=978-0-87586-506-5}}</ref>

Two years after signing the Tesla contract, Westinghouse Electric was in trouble. The near collapse of [[Barings Bank]] in London triggered the [[Panic of 1890|financial panic of 1890]], causing investors to call in their loans to Westinghouse Electric.{{sfn|Carlson|2013|p=130}} The sudden cash shortage forced the company to refinance its debts. The new lenders demanded that Westinghouse cut back on what looked like excessive spending on acquisition of other companies, research, and patents, including the per motor royalty in the Tesla contract.{{sfn|Carlson|2013|p=131}}{{sfn|Jonnes|2004|p=29}} At that point, the Tesla induction motor had been unsuccessful and was stuck in development.<ref name="gentlegenius" />{{sfn|Carlson|2013|p=130}} Westinghouse was paying a $15,000-a-year guaranteed royalty<ref>Thomas Parke Hughes, ''Networks of Power: Electrification in Western Society, 1880–1930'' (1983), p. 119</ref> even though operating examples of the motor were rare and polyphase power systems needed to run it were even rarer.{{sfn|Jonnes|2004|p=161}}{{sfn|Carlson|2013|p=130}} In early 1891, George Westinghouse explained his financial difficulties to Tesla in stark terms, saying that, if he did not meet the demands of his lenders, he would no longer be in control of Westinghouse Electric and Tesla would have to "deal with the bankers" to try to collect future royalties.{{sfn|Jonnes|2004|p=228}} The advantages of having Westinghouse continue to champion the motor probably seemed obvious to Tesla and he agreed to release the company from the royalty payment clause in the contract.{{sfn|Jonnes|2004|p=228}}{{sfn|Carlson|2013|pp=130–131}} Six years later Westinghouse purchased Tesla's patent for a [[lump sum]] payment of $216,000 as part of a patent-sharing agreement signed with [[General Electric]] (a company created from the 1892 merger of Edison and Thomson-Houston).{{sfn|Cheney|2001|pp=48–49}}<ref>Christopher Cooper, ''The Truth About Tesla: The Myth of the Lone Genius in the History of Innovation'', Race Point Publishing. 2015, p. 109</ref><ref>''Electricity, a Popular Electrical Journal'', Volume 13, No. 4, 4 August 1897, Electricity Newspaper Company, pp. 50 [https://books.google.com/books?id=nNA9AQAAMAAJ&q=tesla+patent+1897+%22patent+pool%22&pg=PA50 Google Books] {{Webarchive|url=https://web.archive.org/web/20230528024213/https://books.google.com/books?id=nNA9AQAAMAAJ&q=tesla+patent+1897+%22patent+pool%22&pg=PA50 |date=28 May 2023 }}</ref>