4. First case study – the subdivision of the light - HM Treasury

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F05 Ch4 Subdivision of the light.doc 05/04/2006 19:34:00 Technological roulette – a multi-disciplinary study of the dynamics of innovation in electrical, electronic and communications engineering. 4. First case study – the subdivision of the light operation again. As a result of this success, Edison was appointed as Pope’s assistant and, shortly afterwards, when Pope left to set up his own company, was promoted and given a salary of $300 a month. Clark 1977,p28 In his new position he worked to improve the Laws’ indicator and succeeded in enhancing its performance so that it matched the performance of that of a rival company, the Gold & Stock Telegraph Company. Shortly after, the Laws company was taken over by Western Union, from whose employ Edison, once again, resigned, this time to set up in business with Pope and J. N. Ashley, the publisher of The Telegrapher, as bespoke electrical engineers and as a general telegraphic agency. The firm, offered to supply clients with raw materials or finished apparatus and even to draw up telegraphic patents on their behalf. Edison designed his Universal Stock Printer and perfected a new printer, the “gold printer,” which was leased to subscribers for twenty-five dollars a week. Once again, Western Union responded to the threat of competition by buying out its rival. Edison’s share of the sale price was $5000 and he used it to set up on his own account. Marshall Lefferts, a Western Union executive, bid to obtain exclusive rights to his services. He began to finance Edison’s research, setting specific tasks which left Edison with little time to work for anyone else. In due course, Lefferts decided to make a firm contractual arrangement with Edison. He offered $40,000 for the patent rights to the improvements he had been making to the company’s equipment. Edison had thought they were worth, perhaps, $5,000, but asked Lefferts to name his price. By all reports he was Clark 1977, p30 astounded at the magnitude of the offer. The ease with which this money was acquired whetted Edison’s appetite and prompted him to enter into all manner of deals with a variety of business partners, and without any particular regard for the contractual niceties of the arrangements. In the spring of 1871, an automatic telegraph system, designed by George D. Little, had been bought by 109 Jehl 1937 Fig. 4.37 The automatic telegraph (1871)
F05 Ch4 Subdivision of the light.doc 05/04/2006 19:34:00 Technological roulette – a multi-disciplinary study of the dynamics of innovation in electrical, electronic and communications engineering. 4. First case study – the subdivision of the light a group of businessmen who formed the automatic Telegraph Company to operate it. The machine did not function efficiently, so the company asked Edison to sort out the technical difficulties. He acceded and, for a fee of $40,000, agreed to assign to the company rights Clark 1977,p48 to any improvements that he was able to make. In 1873, Edison was working on the quadruplex telegraph, a system in which four signals could be sent over a single pair of wires. Initially he agreed to assign any patents to Western Union for a consideration to be mutually agreed. He then went on a trip to England and, on his return, reneged on the deal. As a result of this reversal Western Union’s chief engineer, George B. Prescott, was brought in on the understanding he would be known as joint inventor and would receive some of the profits from any quadruplex device patented by Edison. William Orton, the company’s President, did not consider that this deal provided sufficient security for an advance of the $10,000 that Edison needed to settle urgent debts, so Edison turned to Western Union’s competitor, the Automatic Telegraph Company for the money. He went on with the development of the quadruplex telegraph over a wire running from New York to Albany and back to New York and, by the late autumn of 1874, was ready for field trials before the Western Union board. The weather was bad and Edison knew that it could cause trouble, so, as an insurance against failure, he ‘fixed’ the results. “I had picked the best operators in New York, and they were familiar with the apparatus,” he later said. “I arranged that if a storm occurred, and the bad side got shaky, they should do the best they could and draw freely on their imaginations. They were sending old messages.” Not surprisingly, the quadruplex was accepted and it was soon installed on the lines linking New York with Boston and Philadelphia. In December 1874, Western Union paid Edison $5,000 on account and agreed to buy the relevant patents for $25,000 plus a royalty of $233 a year for each circuit on which they were used. 110 Jehl 1937 Fig. 4.38 The alphabetical keyboard telegraph (1872)
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