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White Shoe : How a New Breed of Wall Street Lawyers Changed Big Business--And the American Century
White Shoe : How a New Breed of Wall Street Lawyers Changed Big Business--And the American Century
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Author(s): Oller, John
ISBN No.: 9781524743260
Pages: 464
Year: 202411
Format: Trade Paper
Price: $ 33.12
Dispatch delay: Dispatched between 7 to 15 days
Status: Available

Chapter 1 Boy Wonder Paul Cravath was only twenty-six and barely out of law school when George Westinghouse hired him to take on the world''s most famous inventor, Thomas Alva Edison. The Pittsburgh-based Westinghouse, then in his thirties, was already well known for his invention of the railroad air brake and his innovations in railway switching and signaling. Reserved and courteous in public, charmingly blunt in private, he was driven by an idealistic desire to improve the lot of his fellow man. Although a forceful and successful entrepreneur, he disdained financiers and moneymen. He paid his employees beyond the going rate, gave them pensions and days off, and provided a safe working environment. An engineer''s engineer, he pursued his work with boundless energy, imagination, and resourcefulness. By the mid-1880s Westinghouse had thrown himself fully into the burgeoning industry of electrical power and was looking forward to a free and fair contest over how best to distribute it to people. Westinghouse''s rival in that endeavor was Thomas Edison, the Wizard of Menlo Park and world-renowned inventor of the light bulb and phonograph.


Just a few months younger than Westinghouse, Edison cultivated a folksy manner that belied a ruthless win-at-all-costs attitude. A garrulous man who quite enjoyed his celebrity status, Edison had a genius for self-promotion and moneymaking in addition to invention. He resented the intrusion of Westinghouse-a railway engineer-into a field that Edison had pioneered and felt belonged to him alone. Westinghouse and Edison faced off in two separate but related disputes: One, the light bulb war, concerned Edison''s claim that Westinghouse, among many other competitors, was infringing on his 1879 incandescent light bulb patent. Edison filed hundreds of patent suits against Westinghouse, and Cravath was charged with their defense. The light bulb war would drag on for years because a large part of Westinghouse''s strategy, and hence Cravath''s job, was to stall for time until Edison''s patent expired in 1894. But while the highly technical patent litigation brought Cravath steady business, it was the second war-the so-called War of (Electric) Currents-that first brought Cravath to public attention. This one was less a legal battle than a full-scale commercial war, fought on many fronts, that pitted Westinghouse''s alternating current (AC) transmission system against Edison''s direct current (DC) system.


The winner would determine how electricity would be delivered to homes and businesses in the coming century-and guarantee billions for its parent company. The Westinghouse AC system was based on the innovations of an eccentric genius, Nicola Tesla, the Serbian inventor whose patents Westinghouse licensed. Under this system, alternating current was transmitted at high voltage (1000 to 2000 volts) from a central generating station over very long distances for use in the bright arc lamps that lit city streets, including New York''s Great White Way, starting in 1880. At the point of commercial or residential consumption, transformers reduced the current to low voltage (50 watts) to light indoor incandescent lamps and bulbs. By contrast, the Edison DC system ran at 110 volts, which was insufficient to illuminate large outdoor spaces and could not deliver current to consumers more than a mile from each of the many generating plants Edison placed in the middle of dense population centers. But the Edison system had one major perceived advantage: safety. Edison buried his low-voltage lines underground, a costly and labor-intensive exercise that eliminated the risk of electric shock. Westinghouse''s high-voltage AC lines, on the other hand, were strung up on utility poles for street lighting, intersecting with thousands of telephone and telegraph wires.


In the 1880s, the skylines of New York and other major cities came to resemble a giant spiderweb. Besides their unsightliness, the suspended wires were susceptible to being blown down in a storm and, more ominously, posed a danger of electrocution. In New York alone, dozens of people were killed by live high-voltage AC wires between 1888 and 1890-mainly electrical and other utility workers, but also unsuspecting children who touched downed wires. The outcry over this danger-known as the Electric Wire Panic-created a public relations nightmare for Westinghouse, whose AC lines were often blamed. By recent law, the AC wires were supposed to be buried underground, like Edison''s. But due to neglect and lethargy on the part of the company the city hired to dig the conduits, and corruption within the Tammany-dominated board of electrical control, not enough underground conduits had been built to house the lines. Cravath spent much of his first few years as Westinghouse''s lawyer fending off attempts-many of them instigated or supported by Edison-to cripple or kill the AC system because of the safety issues. Frequently quoted in the newspapers, Cravath would dispute that Westinghouse''s lines were the ones at fault, arguing that they were all safely insulated while promising to get them buried underground just as quickly as the city could complete the conduits.


While Westinghouse''s prior counsel had contested the city''s power to compel the company to bury its wires, Cravath offered to have his clients build the conduits themselves if adequately compensated, and Westinghouse was awarded a contract to do so-at least until the courts gave the job back to the original company in a suit brought by Elihu Root. Injunctions in the War of Currents flew back and forth; no sooner would Cravath obtain a restraining order preventing the city from arbitrarily cutting down his client''s overhead wires than the injunction would be dissolved and city workers would take their axes and clippers to the lines. In October 1889, a Western Union lineman named John Feeks was roasted in a network of wires, as the New York Times headline put it, when some dead wires he was trying to cut from a telegraph pole crossed with some AC wires a mile away. As a horrified lunch crowd of pedestrians looked on from below, Feeks literally caught on fire, blue flames shooting from his mouth and nostrils and sparks flying about his feet. His body was so tangled with wires that he was suspended aloft for forty-five minutes, dangling pitiably until his coworkers managed to cut him loose and lower his charred body to the ground. Cravath immediately agreed, on his client''s behalf, to turn off the "death currents" until they could be pronounced safe by experts (this resulted in darkening the city streets, which created its own set of problems). Reacting to the crisis, Westinghouse came at once from Pittsburgh to New York and set up quarters in the Hotel Brunswick on Fifth Avenue, where Cravath moved his force of young lawyers and worked day and night and all day on Sundays. As part of his propaganda war against Westinghouse, Edison had lobbied to have alternating current used in the first execution by electric chair in New York State-ostensibly to institute a more humane form of capital punishment than hanging, but really to associate AC with electrocution in the public''s mind.


He sponsored experiments in which dogs, calves, and a horse were instantly killed when zapped with as little as 300 to 750 volts of AC, less than half the voltage used in the wires strung above city streets. Although Edison had previously opposed the death penalty, he now urged the use of high-voltage AC to execute convicted murderer William Kemmler. When Bourke Cockran, a high-priced New York lawyer-politician, intervened to try to halt the execution, it was commonly assumed that Westinghouse was behind the effort, and although both he and Cravath denied it, the fact that Cravath often hired Cockran to work with him on litigated matters lent credence to the notion. The execution did go forward in August 1890 but was bungled: Kemmler was declared dead after receiving seventeen seconds of AC charge, but as it turned out he was still alive, requiring another eight agonizing minutes of jolts at 2,000 volts that burned him to death. Cravath told the press this would surely end the electric chair as an execution method because "the mysterious character of electricity itself, about which even experts have much to learn," counseled against "further experiments at the expense of human life." Westinghouse merely quipped that "they would have done better using an axe." Cravath, who was assisted by Charles Evans Hughes, lost almost all the Westinghouse litigation with New York City and with Edison, who was better financed and had better press. But Westinghouse ended up winning the war.


As the superiority of his AC system became increasingly apparent, and the safety issues abated, the stubbornly resistant Edison was draining his company''s resources by continuing the costly legal battles. In 1892 Edison was ousted from control of the Edison General Electric Company through the machinations of banker J. P. Morgan, by then a large owner of Edison stock. Morgan, represented by Francis Lynde Stetson, engineered a merger with the Thomson-Houston Electric Company, which utilized AC power in competition with Westinghouse. Managerial power of the renamed General Electric Company was transferred to the Thomson-Houston group. After Cravath helped a financially bleeding Westinghouse raise enough new money to stave off a bankruptcy proceeding in 1891, Westinghouse went on to demonstrate the advantages of AC power by illuminating the Chicago World''s Fair in 1893. Two years later he successfully ran AC power all the.



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