The War to Power the World: General Electric Company (GE), Mondelez International Inc (MDLZ)

On this day in economic and financial history…

The power that allows you to read this article — no matter what you’re reading it on — was originally created by electric generators producing alternating current. That current was first put into service in the United States on March 6, 1886 by the Westinghouse Electric Company in Great Barrington, Mass. Built under the supervision of scientist and prolific inventor William Stanley, the first alternating current plant was put through rigorous tests, which ensured stable operation for some time. Stanley later recounted the events surrounding this day in a book on the development of alternating current:

I find from my old record books that the town plant was not put into regular service until March 6, 1886, but long before this time the system was tried out and had vindicated itself. At last the town was lighted, and we had ocular evidence of our success. We made a gala night of it. The streets and stores were crowded with people, the big 150-candle-power lamps were running at about double their candle-power, and my townsmen, though very skeptical as to the dangers to be encountered when going near the lights, rejoiced with me.

This plant continued to operate successfully, with the exception of one small fire, until an attendant, in the summer of 1886, dropped a screw-driver into the alternator and ruined it. …

On April 6, 1886, Messrs. George and H. H. Westinghouse, William Lee Church, Guido Pantalioni, H. H. Jackson, Franklin L. Pope, and Walter C. Kerr came to Great Barrington to visit my laboratory, where they saw the system working for the first time. This visit determined Mr. Westinghouse to actively enter the alternating-current field, as the novelty and scope of the system surprised him greatly.

Thus began the War of the Currents between Westinghouse and Thomas Edison’s Edison General Electric Company (NYSE:GE) , which favored direct current. It was a battle that would rage over the remainder of the 19th century until Edison’s electric company became part of the modern General Electric Company (NYSE:GE) in 1892 and his strident opinions in favor of direct current were subsumed beneath the opinions of the new conglomerate’s management. Direct current is still used in some industrial processes, but the vast majority of electricity is supplied as alternating current due to its far greater long-range transmission efficiencies. If not for alternating current, there might be many thousands of small generating plants studding the landscape, rather than fewer but far larger power plants supplying wide areas.

The importance of electricity, and the contributions of both General Electric Company (NYSE:GE) and Westinghouse to its spread across America, prompted the inclusion of both companies on the Dow Jones Industrial Average 2 Minute (Dow Jones Indices: .DJI). General Electric Company (NYSE:GE) was always the stronger competitor following its creation, which led to its inclusion on the very first list of 12 Dow components in 1896, and which also made it the sole member of the Dow’s century club. Westinghouse was a member from 1916 to 1925 and was readmitted in 1928. It held this position until 1997, when its increasing reliance on entertainment prompted it to become CBS (a company it had acquired two years earlier) and dispense with its electric properties.