5 ~ Pluck-and-luck Edison

 

1

The adventures that befell the emaciated young inventor shortly after he arrived in the great city unnoticed and unwelcome were so singular and led to such an extreme change in his fortunes that one might well believe they were imagined by Horatio Alger. However, Edison turned up many years before Alger began his famous series of moral fictions about poor country boys winning sudden wealth in the streets of New York; one might say that Edison’s success story, on being made known some years later through the popular press, served to inspire Alger’s romances.

Tom Edison did not save a beautiful lady from a runaway horse; nor did he use his muscles to rescue a banker from footpads; nor did he perform any of the extraordinary or fantastic deeds described by some of the early and ingenuous chroniclers of his life.⁹⁷ But he was certainly quick-witted and energetic when opportunity knocked at the door.

By now he was not unused to being down on his luck. After much walking about New York he found a telegrapher he knew, but was able to borrow only one dollar of him, since the other was also out of work. One of his next calls was on Franklin L. Pope, electrical engineer and telegraph expert, who was then employed at the headquarters of the Gold Indicator Company, on Broad Street. Pope already knew of Edison, as one who had made a stock ticker of his own in Boston.

Talking with the young stranger, Pope could not but appreciate his mettle. There was great need for such a resourceful fellow at this time, the very dawn of technology in America. As William James has phrased it, both “the hour” and “the man” were being chosen by the changing environment.

At this first meeting Pope invited Edison to make his headquarters temporarily in his, Pope’s, office and to work at his experiments in the machine shop of the Gold Indicator Company. While he was waiting for a job to turn up, Edison could study the mechanism of the Laws central transmitter, which was under Pope’s superintendence and was still undergoing improvements.

By giving close attention to bis diet, Edison hoped to make his one dollar last several days. But where would he sleep in the meantime? Franklin Pope kindly suggested that for the moment he could use a cot in the Gold Indicator’s battery room, down in the cellar of the Mills Building on Broad Street. There he slept two or three nights, as he recalled, living frugally on five-cent meals of apple dumplings and coffee, while above his head millions on millions of dollars were swiftly changing hands. Meanwhile, during the daytime, Edison inspected and familiarized himself with the Laws indicator, a rather ponderous piece of telegraphic clockworks.

The gold indicator itself symbolized the union of technology and capital in the postwar era of expansion and inflation. During the war when the country’s credit had suffered so greatly, and during the postwar boom, speculation in gold reached its highest pitch; all commodity and security values were naturally affected by changes in the dollar price of gold. Thus any machine that facilitated or sped up communication concerning this key market assumed immense importance. By the 1850s the telegraph was the prime instrument for rapid financial intelligence. Changing quotations in the prices of stocks or of gold at the New York Stock Exchange were, however, still distributed momently among the brokers of the Street by hundreds of messenger boys, or “runners.” In 1865 Laws had conceived his idea of using the key of the telegraph to operate an electrical indicator, showing price changes on a centrally located board in the Gold Room of the Exchange. A year later he converted this simple apparatus into a central transmitting instrument connected by wires to the offices of outside brokers, where the telegraphed impulses were received on a dial instrument resembling the fare registers in trolley cars. So successful was this venture that three hundred brokers subscribed, at high fees, for Gold Indicator’s wire service, and imitations, in the form of Callahan’s more elaborate gold and stock quotation ticker, and even Edison’s first model, followed.

Edison had reached New York in May, or at least by the beginning of June, 1869, as indicated by a letter dated there.⁹⁸ At this season speculation in gold was rising again to the fever pitch of wartime, the price of gold fluctuating between 133 and 150 per cent of parity with the dollar’s official value. The country seemed launched upon a new inflationary boom, and virtually everyone engaged in commerce, or even farming, followed the changing price of gold.

The famished Edison, though knowing nothing about the complexities of the money market, was examining the mechanism of Laws’s cumbersome indicator one day, when suddenly the whole central transmitting instrument came to a stop with a great crash. Pope was on hand and quickly went to work to find out the cause of stoppage and to repair the machinery. But in the excitement of the moment, he could detect nothing visibly wrong. Dr. Laws himself came rushing forth from his office to learn what the trouble was, and, being even more agitated than Pope, was no more helpful.

Meanwhile, it was as if half the heart of Wall Street had suddenly stopped beating (the other half was now served by a rival wire service). Laws’s clients, finding the dial instruments in their offices had halted, grew frantic and sent messenger boys, as of old, to bring back reports of current market quotations. Within a few minutes a mob of three hundred messengers, shouting and jostling one another, were trying to fight their way into the Gold Indicator Company’s office, which could not contain them. Franklin Pope, in the melee, seemed to forget everything he knew. Dr. Laws, whom Edison remembered as “the most excited person I have ever seen,” completely lost his head and began to yell at everyone. A business Laws had struggled to build up during four years, and now having attained an annual revenue of $300,000, was threatened with immediate and total ruin.

Edison, in the meantime, had been quietly engaged in looking over the machine himself and soon ascertained the cause of the trouble. He had a pair of sharp eyes and often saw what others could not see. He then went up to Pope and Laws, who seemed to be holding a shouting match, and with some difficulty managed to convey to them his belief that he had spotted the trouble. One of the many contact springs had broken off and dropped between two gear wheels, stopping the whole mechanism, he said.

“Fix it! Fix it! Be quick, for God’s sake!” Laws yelled at him.

The young stranger then carefully removed the broken contact spring, and proceeded to reset the dial back to zero; linemen, in the meantime, were sent out to the different subscribers to set their receiving instruments in unison with the central transmitter. Within two hours the Gold Indicator’s quotations were being ground out again and communicated all over the Street.

The tempestuous Dr. Laws, having become much more composed, inquired about Edison, learned that he was out of work, and invited the youth to see him at his private office the next morning.

Laws was a man of wealth and some learning and had traveled much; his office was filled, as his visitor noticed, “with stacks of books on philosophy and science.” Edison, by contrast, seemed like a country boy lost in the big city. In response to Laws’s questions, he overcame his shyness and owned up that he himself had invented and patented a stock quotation instrument, and he had no hesitation in making suggestions as to how the Laws gold indicator might be simplified and improved. The upshot was that Dr. Laws offered to engage him at once, at a larger salary than he had ever received, to work over the mechanical maintenance of his plant, assisting Pope. Though feeling “rather paralyzed,” as he put it, Edison maintained his aplomb. Yesterday he was starving; today he was comparatively rich. The important thing for an itinerant telegrapher, however, was to seem carefree and debonair.

Throughout that summer he worked on mechanical changes in the gold indicator. In July, Pope, who had befriended him, resigned from his position with the temperamental Dr. Laws, to go into business on his own as a consulting electrical engineer, and Edison took his place.⁹⁹ His earnings were now advanced, as he remembered it, to three hundred dollars a month, a princely salary! In August, 1869, he applied for a patent on a second version of his own printing telegraph and in the next month made patent application for a third and improved model of the same instrument, this time in partnership with Pope.

A fruitful and prosperous period had opened for Edison, who now perfected a whole series of new devices, mainly refinements upon the telegraph. This instrument was Thomas A. Edison’s first great love, the primary invention out of which many other innovations were to flow, some of them eventually destined to supplant Morse’s instrument itself.

 

2

In the midst of the fantastic world that centered at Broad and Wall Streets, a world of “bulls” and “bears,” of “Robber Barons” and “Gold Bugs,” the free-lance inventor of twenty-two now sat entrenched, yet knowing nothing of the meaning or folly of all the money-changing transactions going on around his head. Edison’s sole concern was that of the good technician: to see to it that the electromagnetic machinery recording all those operations functioned properly, or to improve it. By such service, he was to be linked to the financial community during many years of his life.

In late September there was more and more excited trading in gold, which rose gradually to a peak of 150. Now came the climactic phase of one of the boldest and most scandalous financial conspiracies in American history, the attempt to “corner” the gold market in America by the “Erie Railroad Ring,” headed by Jay Gould and James Fisk. In those long-gone days when the manipulation of capital was entirely free and unregulated by the government, the Machiavellian Jay Gould had conceived the scheme of bidding up the price of gold by heavy buying operations of his syndicate, and thus seizing control of the nation’s currency from the United States Treasury. The objective was supposed to have been the engineering of a great inflationary boom that would force gold up to a price of 200 (in terms of greenback dollars), prevent resumption of specie payment against the dollar at the official par value, and raise the prices of all commodities and foodstuffs. To this end the Gould syndicate (as revealed later in a Congressional investigation) had actually made corrupt bargains with high officials of President Grant’s Administration.

In Wall Street wild rumors ran about that the available American supply of gold had been “cornered” by the Erie Ring, that the Federal government faced a crisis, and that the Treasury would be forced to take some action, though none knew what it would be. On Friday morning, September 24, 1869 — about four months after he had come to New York — Edison was at his post in the balcony of the Gold Room, presiding over the keyboard controlling the Gold Indicator’s transmitting mechanism. That morning the leaders of the “gold conspiracy” openly showed their hands by suddenly bidding up the price of gold from 150 to 165. Now the wheels of the indicator operated by Edison moved quite slowly, requiring a certain number of revolutions to register each fractional change in price by eighths, which was enough for normal markets. But on this day of madness the machine fell far behind, and it was afternoon before Edison was able to bring it up to the soaring 165 quotation. By then the whole financial structure of the country was imperiled by the wild gyrations of gold prices.

Edison, while pursuing his own tasks in a spirit of calm detachment, observed how the gold brokers around him seemed suddenly to turn into a mob of madmen. He was an eye-witness to one of the most stirring events in America’s financial history. In the memorandum he dictated long afterward he said:

 

On Black Friday we had a very exciting time with the indicators... New Street as well as Broad Street was jammed with people. I sat on top of the Western Union telegraph booth to watch the surging, crazy crowd. One man came to the booth, grabbed a pencil, and attempted to write a message to Boston. The first stroke went clear off the blank... Amid great excitement Speyer, the banker, went crazy and it took five men to hold him; and everybody lost their head. The Western Union operator came to me and said “Shake, Edison, we are O.K. We haven’t a cent.” I felt happy because we were poor. These occasions are very enjoyable to a poor man; but they occur rarely.¹⁰⁰

 

He saw Jim Fisk, clad in his velvet corduroy coat and cream-colored vest, arrive in a carriage, accompanied by ladies of the theater who were to celebrate his expected triumph, and bearing with him baskets of champagne. Edison also heard telegraph reports indicating that the Gould-Fisk pool seemed to have the entire nation’s economy at its mercy on that day. People whose businesses or securities were affected by the rise of gold and the corresponding fall of the dollar were losing millions hour by hour; others were fighting to buy gold, though in fear and trembling. Some of the brokers, he recalled, “had the complexion of cadavers,” for all but a few gave themselves up for lost.

Then toward the end of that day the United States Treasury finally took action, selling some of its reserves of gold through its New York bankers. The corner was broken, but now the brokerage firms controlled by Gould suddenly repudiated all contract payments due from them for gold they had purchased that day, and pandemonium broke loose as gold fell back again to 132. “It took us all night to get the indicator back to that quotation,” Edison said. Throughout the financial district, offices remained lighted that night, and all hands were at work.¹⁰¹

The aspiring inventor, however, took it all easily enough. He, for his part, could never understand or become infected with the mania for speculation, or for “mere money-getting,” that seemed to possess the crowds around him. All that he earned he spent as quickly as it was received; that is, he “invested” it in new apparatus to serve his inventive undertakings. He could be only a maker, an inventor — Homo faber.

 

Earlier that summer he had improved the Laws indicator by incorporating in its mechanism an alphabetical wheel and printing device. The Gold Indicator could now offer a full stock quotation service, such as its competitor, Gold & Stock Telegraph — thanks to Callahan’s invention — already boasted. That rival company had been bought out by the all-powerful Western Union, the “octopus” of telegraph companies. Rather than contend against Western Union, Laws wisely chose to accept an offer of consolidation and retired from the field with an independent fortune.

At all events, Edison had fulfilled his assignment so well that he seemed to have worked himself out of a job. The head of the new consolidated company, General Marshall Lefferts, to be sure, offered Edison a similar position. But this really meant working again as an employee of a Western Union subsidiary, and Edison had had his fill of that. He had other ideas; indeed he was on the verge of realizing his long-cherished dream of establishing himself on his own as a free-lance inventor.

On October 1, 1869, The Telegrapher displayed a half-page advertisement announcing the formation of the new firm of Pope, Edison & Company as “electrical engineers” and “constructors of various types of electrical devices and apparatus” useful in the telegraphic art. The firm would also undertake to build private telegraph lines, make a variety of scientific or experimental apparatus on order, or carry out tests of instruments and furnish written reports. This is believed to have been the first announcement of a professional electrical engineering service in the United States, the idea of it being credited jointly to Pope and Edison. The two men also had a sleeping partner, J. L. Ashley, publisher of The Telegrapher, who donated his journal’s advertising space to the enterprise, in lieu of cash. Pope, though under thirty, was a recognized telegraphic expert; he had had some scientific education and was to become, in 1884, one of the founders and, in 1886, president of the American Institute of Electrical Engineers.

In the interests of economy, it was arranged that Edison should board with his friend Pope at the latter’s home in Elizabeth, New Jersey. This, as it happened, was the very region where Edison’s ancestor, Tory John, had first settled in America, almost a hundred and fifty years earlier. Part of an old shop was rented in Jersey City, near the yards of the Pennsylvania Railroad, in which Edison was to carry on experimental work. He would rise at 6 a.m. to breakfast with Pope and his wife, catch the seven o’clock train to nearby Jersey City, and stay at his work until nearly one in the morning, when he would take a train back to Elizabeth. This iron regime was maintained all that winter; there was the half-mile walk from the station at Elizabeth to Pope’s house, and Edison remembers being nearly frozen on his early morning and nightly walks in the winter of 1870.

What did it matter if it was cold? He was truly busy; he was doing the things he had longed to do. And nowadays he attracted the serious interest of men of skill in his field, such as Pope, and men of affairs, such as General Marshall Lefferts, a former Army telegrapher who had become the Eastern Superintendent of Western Union.

Absorbed in his work though he was, Edison after a time became aware of a horrible stench pervading the Jersey City shop. In a room adjacent to his quarters there was an eccentric old fellow, one Dr. Bradley, an experimenter of the old school, who was one of the first to make precise electrical measurements with the galvanometer. In those early days of electrical science it was believed that one could perform almost any miracle by passing an electric current through an object. During Dr. Bradley’s absence, Edison, forever curious, explored his quarters to determine the source of the terrible stink. This original man’s hobby, he found, was the artificial aging of raw whisky. The old scientist had filled numerous jars with whisky, connected them with platinum electrodes held in place by hard rubber, and given them a strong charge of current with a powerful battery. The hard rubber, being full of sulphur, had produced hydrogen sulphide, which smelled like rotten eggs.¹⁰²

Despite those hideous perfumes, Edison managed to complete his work on a new type of printing telegraph, or “gold printer” as it was called, which would report by wire current gold quotations and sterling rates. The machine was to be made by Pope, Edison & Company and rented to subscribers, who were mostly importers and currency dealers, through a new commercial wire service company established for the purpose. The rental price, set at twenty-five dollars a week, moreover, was low and offered competition to similar services of Western Union. As so often happened in such cases, Western Union took steps to eliminate this competitive threat by buying up the new service within six months. Pope, Edison & Company realized fifteen thousand dollars by this transaction, Edison receiving five thousand as his share.

He was already flourishing in his trade of inventor, but this was the first large sum he had realized from such work. He had recently begun to send money to provide for his parents, and he now wrote one of his terse, telegraphic letters describing his recent progress:

 

Dear Father and Mother:

I sent you another express package Saturday, enclosed you will find the receipt for the same.

I C Edison writes me that mother is not very well and that you have to work very hard. I guess you had better take it easy after this. Don’t do any hard work and get mother anything she desires. You can draw on me for money. Write me and say how much money you will need till June and I will send the amount on the first of that month. Give love to all folks. and write me the town news. what is Pitt doing?...

Your affec. son

Thomas A.¹⁰³

 

In the year that followed his arrival in New York, a period of incessant labor, he took out seven patents covering a whole series of innovations in the telegraphic art. Although these early inventions were of minor importance they showed distinctive skills and insights. From these patents one may discern how systematically he attacked the problems set for him. The practical end in view was to improve upon the printing-telegraph apparatus, for which there was now a strong demand. But the electrical impulses to drive the printing wheel and ink it were still weak and left faint impressions in existing machines. Edison solved these problems with much mechanical ingenuity, using small relay magnets and an electrically driven escape wheel (as in a clock mechanism) to obtain more effective transmission.

He could see that even his invention of small parts or refinements for so “commercial” a machine as the printing telegraph possessed a considerable value. At the mere threat by Dr. Laws to introduce Edison’s stock quotation printer in competition with Western Union’s service, the bigger company had been persuaded to buy out Laws. So also with the “gold printer” service initiated by Pope, Edison & Company. What galled Edison, however, was that while he did almost all the work, his two partners got the lion’s share, the silent partner Ashley receiving as much as Edison, though he had not even invested any capital. In the summer of 1870, Edison therefore terminated his partnership agreement with the other two men, in friendly fashion. “I got tired,” he said dryly, “of doing all the work with compensation narrowed down to the point of extinguishment by the superior business abilities of my partners.”

His real “market,” after all, was the giant Western Union Telegraph Company, or its subsidiary, Gold & Stock Telegraph, headed by Lefferts. Organized out of a combination of smaller systems, Western Union had spanned the continent with its wires during the Civil War, then moved on ruthlessly to absorb one regional concern after another, becoming an industrial corporation of 41 million dollars capital, the “mother of trusts.” Its capital investment in equipment and plant was low, its tariff rates as high as possible. Among its earlier directors were Ezra Cornell and Amos J. Kendall, who had quickly become multimillionaires, while Samuel Morse, on whose patents the company was originally based, had been given a modest competence.

By 1870 it was noteworthy that Western Union employed a whole team of inventors, among them Elisha Gray, J. B. Stearns, D. E. Hughes, and G. W. Phelps, who was its technical director. Sometimes more than one of these inventors were assigned to work independently, without knowledge of each other, on the same problem, the company, in the end, taking over “the best features” of each one’s effort, as the phrase goes. Now General Lefferts, one of the best informed of the Western Union executives, and an engineer himself, decided to bring Edison, the youngest of the new crop of inventors, into the company’s stable. For Lefferts had observed that it was Edison who did all the work for Pope, Edison & Company and that he showed a real expertise. This smooth-shaven youth with the big head and broad brows might look like a rustic or a plain mechanic, but one could feel the cunning behind his devices, and it was amusing to hear him talk about his craft.

Though usually reserved or retiring in manner, he had nowadays, despite his deafness, a marked air of self-confidence. His speech, studded with homely illustrations of his ideas, was most pungent. He would address himself to his associates in the following fashion: “The troubles with telegraphic appliances can only be gotten out in the same way as the Irish pilot found the rocks in the harbor — with the bottom of his ship.”¹⁰⁴

One of the worst “bugs” that troubled the early wire-printing services was their way of suddenly “running wild,” and printing crazy figures. While employed by Laws in 1869, one of Edison’s best tricks had been the contriving of a central mechanism by which the receiving instruments in outside offices could be quickly regulated down to zero, and thus put in unison, from the home office. That was one of the reasons why Western Union had bought out Laws. General Lefferts is reported to have said at the time, “Edison is a genius and a very fiend for work.”

After Edison had turned in a whole series of minor inventions to Western Union, he was asked to work on the improvement of the Callahan stock printer, owned by them, which also occasionally ran wild. In order to reserve Edison’s entire services for his company, Lefferts now offered to advance him money at regular intervals for the cost of all research and experimentation on their assignments. Edison, who was then at the point of terminating his partnership with Pope and Ashley, accepted the proposal. It was typical of him, at this period, that he did so without specifying what he was to be paid by these gentlemen for his inventive services, or who was to control his patents.

Within about three weeks he was back in Lefferts’s office at Gold & Stock Telegraph, and before a group of the company’s directors he gave a demonstration of a successful unison-stop device that promptly brought stock tickers in outside brokers’ offices into alignment with the central station transmitter, whenever they began to print wild figures. The device made a profound impression on the capitalists; it seemed to them positively uncanny and would, it was obvious, save much labor and trouble. Even Callahan, whose machine Edison thus completed, said afterward in somewhat grudging praise that a ticker without the unison device would be impracticable and unsalable. At this stage of affairs money had been owing to Edison for some time on account of a whole series of telegraphic inventions.

“Well, young man” — thus Lefferts addressed him — “the committee would like to settle up the account... How much do you think they are worth?”

Edison remembered afterward that he was uncertain about what to demand. He had thought he ought to ask five thousand dollars, but might manage with three thousand. “General, suppose you make me an offer,” he said at length.

Lefferts then said, “How would forty thousand dollars strike you?”

Feeling “as near fainting as I ever got,” Edison managed to stammer that the offer seemed fair enough. He was asked to come back in three days, when a contract would be ready, and the money also.¹⁰⁵

The contract, when it was presented to him, seemed as “obscure as Choctaw,” and he signed without reading it. That it conveyed to him a sum of money rivaling in his mind the fortune of the Count of Monte Cristo was, however, plain enough. A check with his name and those immense figures on it was handed him, and he was instructed to proceed to a bank on Wall Street. He had never in his life held a check in his hand. It seemed to him, as he liked to tell the story in later years, that he was dreaming and that his vision would soon vanish. Surely “there was some Wall Street trick about this thing. I had been reading about Wall Street tricks for years... I had never been in a bank before.”

When he arrived at the window of the teller, that official “yelled out a large amount of jargon, which I failed to understand on account of my deafness.” Edison retreated, bewildered, heartbroken. For the piece of paper in his hand he had signed away all his rights, and now who would give him fifty dollars for it?

On his return, empty-handed, to the Western Union office, the long face he made provoked much laughter. Obviously the executives there had played a typical New York joke on their “hayseed.” What the bank teller had demanded of him before making payment, was some identification, which could have been provided in the first place. Now Lefferts’ private secretary accompanied Edison to the bank wicket, and the money was duly paid over to him, in a big pile of ten- and twenty-dollar bills about a foot in thickness, which he could hardly stow away in his clothing.¹⁰⁶

One feels that Edison, in later years, tended to draw the long bow in his stories picturing himself as an innocent lamb among the cunning wolves of Wall Street — a lamb who nonetheless made off with more than one bag of gold or greenbacks. According to his own account, on receiving his precious bundle, he drew his big loose overcoat about him and departed by ferry and train for Newark, where he was living at the time in a dingy boardinghouse. There he sat up all night, unable to sleep for fear of being murdered for the sake of his great hoard. In the morning he returned to New York to inquire about some way of disposing of his heavy encumbrance of legal tender. Friends advised him to go back to the same bank and open a deposit account; which he did, receiving a little book testifying to the transaction. Oh, the paradoxes and mysteries of money! Thomas Edison, who could carry in his head all the intricate design of a complex printing-telegraph apparatus and all its ramifications of wires, relays, and compound-wound magnets, could never understand the mysterious ways in which the money-men worked, with cash or mere credit, their wonders to perform. And yet he possessed his own sort of shrewdness and, one might even say, “a nose for money.” Was not his inventive work directed nowadays toward products which could pass the test of a real “commercial” demand? One large money prize appeared, as if by magic, to bring more in its train, until the greenbacks seemed to be raining down from heaven upon the same unwitting head that, only yesterday, as it were, did not know where to lay itself — if not in some cellar beneath one of the great casinos of the money-changers.