EDISON IN COMMERCE AND MANUFACTURE
AN applicant for membership in the Engineers' Club of Philadelphia is required to give a brief statement of the professional work he has done. Some years ago a certain application was made, and contained the following terse and modest sentence:
Although in the foregoing pages the reader has been made acquainted with the tremendous import of the actualities lying behind those "etc., etc.," the narrative up to this point has revealed Edison chiefly in the light of inventor, experimenter, and investigator. There have been some side glimpses of the industries he has set on foot, and of their financial aspects, and a later chapter will endeavor to sum up the intrinsic value of Edison's work to the world. But there are some other interesting points that may be touched on now in regard to a few of Edison's financial and commercial ventures not generally known or appreciated.
It is a popular idea founded on experience that an inventor is not usually a business man. One of the exceptions proving the rule may perhaps be met in Edison, though all depends on the point of view. All his life he has had a great deal to do with finance and commerce, and as one looks at the magnitude of the vast industries he has helped to create, it would not be at all unreasonable to expect him to be among the multi-millionaires. That he is not is due to the absence of certain qualities, the lack of which Edison is himself the first to admit. Those qualities may not be amiable, but great wealth is hardly ever accumulated without them. If he had not been so intent on inventing he would have made more of his great opportunities for getting rich. If this utter detachment from any love of money for its own sake has not already been illustrated in some of the incidents narrated, one or two stories are available to emphasize the point. They do not involve any want of the higher business acumen that goes to the proper conduct of affairs. It was said of Gladstone that he was the greatest Chancellor of the Exchequer England ever saw, but that as a retail merchant he would soon have ruined himself by his bookkeeping.
Edison confesses that he has never made a cent out of his patents in electric light and power—in fact, that they have been an expense to him, and thus a free gift to the world. [18] This was true of the European patents as well as the American. "I endeavored to sell my lighting patents in different countries of Europe, and made a contract with a couple of men. On account of their poor business capacity and lack of practicality, they conveyed under the patents all rights to different corporations but in such a way and with such confused wording of the contracts that I never got a cent. One of the companies started was the German Edison, now the great Allgemeine Elektricitaets Gesellschaft. The English company I never got anything for, because a lawyer had originally advised Drexel, Morgan & Co. as to the signing of a certain document, and said it was all right for me to sign. I signed, and I never got a cent because there was a clause in it which prevented me from ever getting anything." A certain easy-going belief in human nature, and even a certain carelessness of attitude toward business affairs, are here revealed. We have already pointed out two instances where in his dealings with the Western Union Company he stipulated that payments of $6000 per year for seventeen years were to be made instead of $100,000 in cash, evidently forgetful of the fact that the annual sum so received was nothing more than legal interest, which could have been earned indefinitely if the capital had been only insisted upon. In later life Edison has been more circumspect, but throughout his early career he was constantly getting into some kind of scrape. Of one experience he says: [Footnote 18: Edison received some stock from the parent
lighting company, but as the capital stock of that company
was increased from time to time, his proportion grew
smaller, and he ultimately used it to obtain ready money
with which to create and finance the various "shops" in
which were manufactured the various items of electric-
lighting apparatus necessary to exploit his system. Besides,
he was obliged to raise additional large sums of money from
other sources for this purpose. He thus became a
manufacturer with capital raised by himself, and the stock
that he received later, on the formation of the General
Electric Company, was not for his electric-light patents,
but was in payment for his manufacturing establishments,
which had then grown to be of great commercial importance.]
"In the early days I was experimenting with metallic filaments for the incandescent light, and sent a certain man out to California in search of platinum. He found a considerable quantity in the sluice-boxes of the Cherokee Valley Mining Company; but just then he found also that fruit-gardening was the thing, and dropped the subject. He then came to me and said that if he could raise $4000 he could go into some kind of orchard arrangement out there, and would give me half the profits. I was unwilling to do it, not having very much money just then, but his persistence was such that I raised the money and gave it to him. He went back to California, and got into mining claims and into fruit-growing, and became one of the politicians of the Coast, and, I believe, was on the staff of the Governor of the State. A couple of years ago he wounded his daughter and shot himself because he had become ruined financially. I never heard from him after he got the money."
Edison tells of another similar episode. "I had two men working for me—one a German, the other a Jew. They wanted me to put up a little money and start them in a shop in New York to make repairs, etc. I put up $800, and was to get half of the profits, and each of them one-quarter. I never got anything for it. A few years afterward I went to see them, and asked what they were doing, and said I would like to sell my interest. They said: 'Sell out what?' 'Why,' I said, 'my interest in the machinery.' They said: 'You don't own this machinery. This is our machinery. You have no papers to show anything. You had better get out.' I am inclined to think that the percentage of crooked people was smaller when I was young. It has been steadily rising, and has got up to a very respectable figure now. I hope it will never reach par." To which lugubrious episode so provocative of cynicism, Edison adds: "When I was a young fellow the first thing I did when I went to a town was to put something into the savings-bank and start an account. When I came to New York I put $30 into a savings-bank under the New York Sun office. After the money had been in about two weeks the bank busted. That was in 1870. In 1909 I got back $6.40, with a charge for $1.75 for law expenses. That shows the beauty of New York receiverships."
It is hardly to be wondered at that Edison is rather frank and unsparing in some of his criticisms of shady modern business methods, and the mention of the following incident always provokes him to a fine scorn. "I had an interview with one of the wealthiest men in New York. He wanted me to sell out my associates in the electric lighting business, and offered me all I was going to get and $100,000 besides. Of course I would not do it. I found out that the reason for this offer was that he had had trouble with Mr. Morgan, and wanted to get even with him." Wall Street is, in fact, a frequent object of rather sarcastic reference, applying even to its regular and probably correct methods of banking. "When I was running my ore-mine," he says, "and got up to the point of making shipments to John Fritz, I didn't have capital enough to carry the ore, so I went to J. P. Morgan & Co. and said I wanted them to give me a letter to the City Bank. I wanted to raise some money. I got a letter to Mr. Stillman; and went over and told him I wanted to open an account and get some loans and discounts. He turned me down, and would not do it. 'Well,' I said, 'isn't it banking to help a man in this way?' He said: 'What you want is a partner.' I felt very much crestfallen. I went over to a bank in Newark—the Merchants'—and told them what I wanted. They said: 'Certainly, you can have the money.' I made my deposit, and they pulled me through all right. My idea of Wall Street banking has been very poor since that time. Merchant banking seems to be different."
As a general thing, Edison has had no trouble in raising money when he needed it, the reason being that people have faith in him as soon as they come to know him. A little incident bears on this point. "In operating the Schenectady works Mr. Insull and I had a terrible burden. We had enormous orders and little money, and had great difficulty to meet our payrolls and buy supplies. At one time we had so many orders on hand we wanted $200,000 worth of copper, and didn't have a cent to buy it. We went down to the Ansonia Brass and Copper Company, and told Mr. Cowles just how we stood. He said: 'I will see what I can do. Will you let my bookkeeper look at your books?' We said: 'Come right up and look them over.' He sent his man up and found we had the orders and were all right, although we didn't have the money. He said: 'I will let you have the copper.' And for years he trusted us for all the copper we wanted, even if we didn't have the money to pay for it."
It is not generally known that Edison, in addition to being a newsboy and a contributor to the technical press, has also been a backer and an "angel" for various publications. This is perhaps the right place at which to refer to the matter, as it belongs in the list of his financial or commercial enterprises. Edison sums up this chapter of his life very pithily. "I was interested, as a telegrapher, in journalism, and started the Telegraph Journal, and got out about a dozen numbers when it was taken over by W. J. Johnston, who afterward founded the Electrical World on it as an offshoot from the Operator. I also started Science, and ran it for a year and a half. It cost me too much money to maintain, and I sold it to Gardiner Hubbard, the father-in-law of Alexander Graham Bell. He carried it along for years." Both these papers are still in prosperous existence, particularly the Electrical World, as the recognized exponent of electrical development in America, where now the public spends as much annually for electricity as it does for daily bread.
From all that has been said above it will be understood that Edison's real and remarkable capacity for business does not lie in ability to "take care of himself," nor in the direction of routine office practice, nor even in ordinary administrative affairs. In short, he would and does regard it as a foolish waste of his time to give attention to the mere occupancy of a desk.
His commercial strength manifests itself rather in the outlining of matters relating to organization and broad policy with a sagacity arising from a shrewd perception and appreciation of general business requirements and conditions, to which should be added his intensely comprehensive grasp of manufacturing possibilities and details, and an unceasing vigilance in devising means of improving the quality of products and increasing the economy of their manufacture.
Like other successful commanders, Edison also possesses the happy faculty of choosing suitable lieutenants to carry out his policies and to manage the industries he has created, such, for instance, as those with which this chapter has to deal—namely, the phonograph, motion picture, primary battery, and storage battery enterprises.
The Portland cement business has already been dealt with separately, and although the above remarks are appropriate to it also, Edison being its head and informing spirit, the following pages are intended to be devoted to those industries that are grouped around the laboratory at Orange, and that may be taken as typical of Edison's methods on the manufacturing side.
Within a few months after establishing himself at the present laboratory, in 1887, Edison entered upon one of those intensely active periods of work that have been so characteristic of his methods in commercializing his other inventions. In this case his labors were directed toward improving the phonograph so as to put it into thoroughly practicable form, capable of ordinary use by the public at large. The net result of this work was the general type of machine of which the well-known phonograph of today is a refinement evolved through many years of sustained experiment and improvement.
After a considerable period of strenuous activity in the eighties, the phonograph and its wax records were developed to a sufficient degree of perfection to warrant him in making arrangements for their manufacture and commercial introduction. At this time the surroundings of the Orange laboratory were distinctly rural in character. Immediately adjacent to the main building and the four smaller structures, constituting the laboratory plant, were grass meadows that stretched away for some considerable distance in all directions, and at its back door, so to speak, ducks paddled around and quacked in a pond undisturbed. Being now ready for manufacturing, but requiring more facilities, Edison increased his real-estate holdings by purchasing a large tract of land lying contiguous to what he already owned. At one end of the newly acquired land two unpretentious brick structures were erected, equipped with first-class machinery, and put into commission as shops for manufacturing phonographs and their record blanks; while the capacious hall forming the third story of the laboratory, over the library, was fitted up and used as a music-room where records were made.
Thus the modern Edison phonograph made its modest debut in 1888, in what was then called the "Improved" form to distinguish it from the original style of machine he invented in 1877, in which the record was made on a sheet of tin-foil held in place upon a metallic cylinder. The "Improved" form is the general type so well known for many years and sold at the present day—viz., the spring or electric motor-driven machine with the cylindrical wax record—in fact, the regulation Edison phonograph.
It did not take a long time to find a market for the products of the newly established factory, for a world-wide public interest in the machine had been created by the appearance of newspaper articles from time to time, announcing the approaching completion by Edison of his improved phonograph. The original (tin-foil) machine had been sufficient to illustrate the fact that the human voice and other sounds could be recorded and reproduced, but such a type of machine had sharp limitations in general use; hence the coming into being of a type that any ordinary person could handle was sufficient of itself to insure a market. Thus the demand for the new machines and wax records grew apace as the corporations organized to handle the business extended their lines. An examination of the newspaper files of the years 1888, 1889, and 1890 will reveal the great excitement caused by the bringing out of the new phonograph, and how frequently and successfully it was employed in public entertainments, either for the whole or part of an evening. In this and other ways it became popularized to a still further extent. This led to the demand for a nickel-in-the-slot machine, which, when established, became immensely popular over the whole country. In its earlier forms the "Improved" phonograph was not capable of such general non-expert handling as is the machine of the present day, and consequently there was a constant endeavor on Edison's part to simplify the construction of the machine and its manner of operation. Experimentation was incessantly going on with this in view, and in the processes of evolution changes were made here and there that resulted in a still greater measure of perfection.
In various ways there was a continual slow and steady growth of the industry thus created, necessitating the erection of many additional buildings as the years passed by. During part of the last decade there was a lull, caused mostly from the failure of corporate interests to carry out their contract relations with Edison, and he was thereby compelled to resort to legal proceedings, at the end of which he bought in the outstanding contracts and assumed command of the business personally.
Being thus freed from many irksome restrictions that had hung heavily upon him, Edison now proceeded to push the phonograph business under a broader policy than that which obtained under his previous contractual relations. With the ever-increasing simplification and efficiency of the machine and a broadening of its application, the results of this policy were manifested in a still more rapid growth of the business that necessitated further additions to the manufacturing plant. And thus matters went on until the early part of the present decade, when the factory facilities were becoming so rapidly outgrown as to render radical changes necessary. It was in these circumstances that Edison's sagacity and breadth of business capacity came to the front. With characteristic boldness and foresight he planned the erection of the series of magnificent concrete buildings that now stand adjacent to and around the laboratory, and in which the manufacturing plant is at present housed.
There was no narrowness in his views in designing these buildings, but, on the contrary, great faith in the future, for his plans included not only the phonograph industry, but provided also for the coming development of motion pictures and of the primary and storage battery enterprises.
In the aggregate there are twelve structures (including the administration building), of which six are of imposing dimensions, running from 200 feet long by 50 feet wide to 440 feet in length by 115 feet in width, all these larger buildings, except one, being five stories in height. They are constructed entirely of reinforced concrete with Edison cement, including walls, floors, and stairways, thus eliminating fire hazard to the utmost extent, and insuring a high degree of protection, cleanliness, and sanitation. As fully three-fourths of the area of their exterior framework consists of windows, an abundance of daylight is secured. These many advantages, combined with lofty ceilings on every floor, provide ideal conditions for the thousands of working people engaged in this immense plant.
In addition to these twelve concrete structures there are a few smaller brick and wooden buildings on the grounds, in which some special operations are conducted. These, however, are few in number, and at some future time will be concentrated in one or more additional concrete buildings. It will afford a clearer idea of the extent of the industries clustered immediately around the laboratory when it is stated that the combined floor space which is occupied by them in all these buildings is equivalent in the aggregate to over fourteen acres.
It would be instructive, but scarcely within the scope of the narrative, to conduct the reader through this extensive plant and see its many interesting operations in detail. It must suffice, however, to note its complete and ample equipment with modern machinery of every kind applicable to the work; its numerous (and some of them wonderfully ingenious) methods, processes, machines, and tools specially designed or invented for the manufacture of special parts and supplemental appliances for the phonograph or other Edison products; and also to note the interesting variety of trades represented in the different departments, in which are included chemists, electricians, electrical mechanicians, machinists, mechanics, pattern-makers, carpenters, cabinet-makers, varnishers, japanners, tool-makers, lapidaries, wax experts, photographic developers and printers, opticians, electroplaters, furnacemen, and others, together with factory experimenters and a host of general employees, who by careful training have become specialists and experts in numerous branches of these industries.
Edison's plans for this manufacturing plant were sufficiently well outlined to provide ample capacity for the natural growth of the business; and although that capacity (so far as phonographs is concerned) has actually reached an output of over 6000 complete phonographs PER WEEK, and upward of 130,000 molded records PER DAY—with a pay-roll embracing over 3500 employees, including office force—and amounting to about $45,000 per week—the limits of production have not yet been reached.
The constant outpouring of products in such large quantities bespeaks the unremitting activities of an extensive and busy selling organization to provide for their marketing and distribution. This important department (the National Phonograph Company), in all its branches, from president to office-boy, includes about two hundred employees on its office pay-roll, and makes its headquarters in the administration building, which is one of the large concrete structures above referred to. The policy of the company is to dispose of its wares through regular trade channels rather than to deal direct with the public, trusting to local activity as stimulated by a liberal policy of national advertising. Thus, there has been gradually built up a very extensive business until at the present time an enormous output of phonographs and records is distributed to retail customers in the United States and Canada through the medium of about one hundred and fifty jobbers and over thirteen thousand dealers. The Edison phonograph industry thus organized is helped by frequent conventions of this large commercial force.
Besides this, the National Phonograph Company maintains a special staff for carrying on the business with foreign countries. While the aggregate transactions of this department are not as extensive as those for the United States and Canada, they are of considerable volume, as the foreign office distributes in bulk a very large number of phonographs and records to selling companies and agencies in Europe, Asia, Australia, Japan, and, indeed, to all the countries of the civilized world. [19] Like England's drumbeat, the voice of the Edison phonograph is heard around the world in undying strains throughout the twenty-four hours. [Footnote 19: It may be of interest to the reader to note
some parts of the globe to which shipments of phonographs
and records are made:
Samoan Islands Falkland Islands Siam Corea Crete Island
Paraguay Chile Canary Islands Egypt British East Africa Cape
Colony Portuguese East Africa Liberia Java Straits
Settlements Madagascar Fanning Islands New Zealand French
Indo-China Morocco Ecuador Brazil Madeira South Africa
Azores Manchuria Ceylon Sierra Leone]
In addition to the main manufacturing plant at Orange, another important adjunct must not be forgotten, and that is, the Recording Department in New York City, where the master records are made under the superintendence of experts who have studied the intricacies of the art with Edison himself. This department occupies an upper story in a lofty building, and in its various rooms may be seen and heard many prominent musicians, vocalists, speakers, and vaudeville artists studiously and busily engaged in making the original records, which are afterward sent to Orange, and which, if approved by the expert committee, are passed on to the proper department for reproduction in large quantities.
When we consider the subject of motion pictures we find a similarity in general business methods, for while the projecting machines and copies of picture films are made in quantity at the Orange works (just as phonographs and duplicate records are so made), the original picture, or film, like the master record, is made elsewhere. There is this difference, however: that, from the particular nature of the work, practically ALL master records are made at one convenient place, while the essential interest in SOME motion pictures lies in the fact that they are taken in various parts of the world, often under exceptional circumstances. The "silent drama," however, calls also for many representations which employ conventional acting, staging, and the varied appliances of stagecraft. Hence, Edison saw early the necessity of providing a place especially devised and arranged for the production of dramatic performances in pantomime.
It is a far cry from the crude structure of early days—the "Black Maria" of 1891, swung around on its pivot in the Orange laboratory yard—to the well-appointed Edison theatres, or pantomime studios, in New York City. The largest of these is located in the suburban Borough of the Bronx, and consists of a three-story-and-basement building of reinforced concrete, in which are the offices, dressing-rooms, wardrobe and property-rooms, library and developing department. Contiguous to this building, and connected with it, is the theatre proper, a large and lofty structure whose sides and roof are of glass, and whose floor space is sufficiently ample for six different sets of scenery at one time, with plenty of room left for a profusion of accessories, such as tables, chairs, pianos, bunch-lights, search-lights, cameras, and a host of varied paraphernalia pertaining to stage effects.
The second Edison theatre, or studio, is located not far from the shopping district in New York City. In all essential features, except size and capacity, it is a duplicate of the one in the Bronx, of which it is a supplement.
To a visitor coming on the floor of such a theatre for the first time there is a sense of confusion in beholding the heterogeneous "sets" of scenery and the motley assemblage of characters represented in the various plays in the process of "taking," or rehearsal. While each set constitutes virtually a separate stage, they are all on the same floor, without wings or proscenium-arches, and separated only by a few feet. Thus, for instance, a Japanese house interior may be seen cheek by jowl with an ordinary prison cell, flanked by a mining-camp, which in turn stands next to a drawing-room set, and in each a set of appropriate characters in pantomimic motion. The action is incessant, for in any dramatic representation intended for the motion-picture film every second counts.
The production of several completed plays per week necessitates the employment of a considerable staff of people of miscellaneous trades and abilities. At each of these two studios there is employed a number of stage-directors, scene-painters, carpenters, property-men, photographers, costumers, electricians, clerks, and general assistants, besides a capable stock company of actors and actresses, whose generous numbers are frequently augmented by the addition of a special star, or by a number of extra performers, such as Rough Riders or other specialists. It may be, occasionally, that the exigencies of the occasion require the work of a performing horse, dog, or other animal. No matter what the object required may be, whether animate or inanimate, if it is necessary for the play it is found and pressed into service.
These two studios, while separated from the main plant, are under the same general management, and their original negative films are forwarded as made to the Orange works, where the large copying department is located in one of the concrete buildings. Here, after the film has been passed upon by a committee, a considerable number of positive copies are made by ingenious processes, and after each one is separately tested, or "run off," in one or other of the three motion-picture theatres in the building, they are shipped out to film exchanges in every part of the country. How extensive this business has become may be appreciated when it is stated that at the Orange plant there are produced at this time over eight million feet of motion-picture film per year. And Edison's company is only one of many producers.
Another of the industries at the Orange works is the manufacture of projecting kinetoscopes, by means of which the motion pictures are shown. While this of itself is also a business of considerable magnitude in its aggregate yearly transactions, it calls for no special comment in regard to commercial production, except to note that a corps of experimenters is constantly employed refining and perfecting details of the machine. Its basic features of operation as conceived by Edison remain unchanged.
On coming to consider the Edison battery enterprises, we must perforce extend the territorial view to include a special chemical-manufacturing plant, which is in reality a branch of the laboratory and the Orange works, although actually situated about three miles away.
Both the primary and the storage battery employ certain chemical products as essential parts of their elements, and indeed owe their very existence to the peculiar preparation and quality of such products, as exemplified by Edison's years of experimentation and research. Hence the establishment of his own chemical works at Silver Lake, where, under his personal supervision, the manufacture of these products is carried on in charge of specially trained experts. At the present writing the plant covers about seven acres of ground; but there is ample room for expansion, as Edison, with wise forethought, secured over forty acres of land, so as to be prepared for developments.
Not only is the Silver Lake works used for the manufacture of the chemical substances employed in the batteries, but it is the plant at which the Edison primary battery is wholly assembled and made up for distribution to customers. This in itself is a business of no small magnitude, having grown steadily on its merits year by year until it has now arrived at a point where its sales run into the hundreds of thousands of cells per annum, furnished largely to the steam railroads of the country for their signal service.
As to the storage battery, the plant at Silver Lake is responsible only for the production of the chemical compounds, nickel-hydrate and iron oxide, which enter into its construction. All the mechanical parts, the nickel plating, the manufacture of nickel flake, the assembling and testing, are carried on at the Orange works in two of the large concrete buildings above referred to. A visit to this part of the plant reveals an amazing fertility of resourcefulness and ingenuity in the devising of the special machines and appliances employed in constructing the mechanical parts of these cells, for it is practically impossible to fashion them by means of machinery and tools to be found in the open market, notwithstanding the immense variety that may be there obtained.
Since Edison completed his final series of investigations on his storage battery and brought it to its present state of perfection, the commercial values have increased by leaps and bounds. The battery, as it was originally put out some years ago, made for itself an enviable reputation; but with its improved form there has come a vast increase of business. Although the largest of the concrete buildings where its manufacture is carried on is over four hundred feet long and four stories in height, it has already become necessary to plan extensions and enlargements of the plant in order to provide for the production of batteries to fill the present demands. It was not until the summer of 1909 that Edison was willing to pronounce the final verdict of satisfaction with regard to this improved form of storage battery; but subsequent commercial results have justified his judgment, and it is not too much to predict that in all probability the business will assume gigantic proportions within a very few years. At the present time (1910) the Edison storage-battery enterprise is in its early stages of growth, and its status may be compared with that of the electric-light system about the year 1881.
There is one more industry, though of comparatively small extent, that is included in the activities of the Orange works, namely, the manufacture and sale of the Bates numbering machine. This is a well-known article of commerce, used in mercantile establishments for the stamping of consecutive, duplicate, and manifold numbers on checks and other documents. It is not an invention of Edison, but the organization owning it, together with the patent rights, were acquired by him some years ago, and he has since continued and enlarged the business both in scope and volume, besides, of course, improving and perfecting the apparatus itself. These machines are known everywhere throughout the country, and while the annual sales are of comparatively moderate amount in comparison with the totals of the other Edison industries at Orange, they represent in the aggregate a comfortable and encouraging business.
In this brief outline review of the flourishing and extensive commercial enterprises centred around the Orange laboratory, the facts, it is believed, contain a complete refutation of the idea that an inventor cannot be a business man. They also bear abundant evidence of the compatibility of these two widely divergent gifts existing, even to a high degree, in the same person. A striking example of the correctness of this proposition is afforded in the present case, when it is borne in mind that these various industries above described (whose annual sales run into many millions of dollars) owe not only their very creation (except the Bates machine) and existence to Edison's inventive originality and commercial initiative, but also their continued growth and prosperity to his incessant activities in dealing with their multifarious business problems. In publishing a portrait of Edison this year, one of the popular magazines placed under it this caption: "Were the Age called upon to pay Thomas A. Edison all it owes to him, the Age would have to make an assignment." The present chapter will have thrown some light on the idiosyncrasies of Edison as financier and as manufacturer, and will have shown that while the claim thus suggested may be quite good, it will certainly never be pressed or collected.
