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Nikola Tesla: Research in High Frequency Phenomena, 1894

Partnerships

Tesla had very little interest in the commercial development of his inventions, preferring to continue his "dreaming" and trust that somehow funding would materialize. Opportunity came in the form of George Westinghouse, an inventor and businessman from Pittsburgh who had made his fortune manufacturing air brakes for the burgeoning railroad industry. Westinghouse saw Tesla's potential and Tesla accepted his offer of one million dollars for his patents plus a royalty of one dollar per horsepower on all motors produced. Tesla now had enormous riches to match his reputation and his genius.

The arrangement required that Tesla spend time at the Pittsburgh plant as production of his motors started up. He did not enjoy the inevitable conflicts that arose in converting theoretical and pilot plant design to full scale production and gladly returned to New York at the end of the year. Manufacture of the motors began soon afterwards and Tesla happily went back to his laboratory. During the next four years he received forty-five U.S. Patents.

At this time, the major application for electricity was in lighting from the direct current (DC) incandescent lamps developed by Thomas Edison and the alternating current (AC) arc lights supplied by Westinghouse and the Thomson-Houston Company. The United States financial climate in this era of industrial expansion was dominated by the demand for capital and consolidations were common. Thomson-Houston merged with Edison and others to become the General Electric Company and Westinghouse needed partners to ensure its solvency.

These potential partners demanded that Westinghouse cancel his royalty arrangement with Tesla, a step this fellow inventor was reluctant to take. With no other choice, Westinghouse approached Tesla to cancel their contract with its multi-million dollar value while stressing his commitment to AC power and Tesla's efforts. Citing his friend's confidence and support, Tesla simply tore up the contract. This hugely generous gesture meant that the Westinghouse Electric and Manufacturing Company flourished. By definition, Tesla had also shrunk the funding for his own further research and inventions by at least ten million dollars.