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The War to Power the World

By Alex Planes – Mar 6, 2013 at 11:30AM

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Learning from the market's past to understand its present.

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 (GE -2.36%), 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 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 GE and Westinghouse to its spread across America, prompted the inclusion of both companies on the Dow Jones Industrial Average (^DJI -0.38%). 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.

Milk's favorite cookie
The Oreo cookie was first sold to the American public by the National Biscuit Company (known today as Nabisco) on March 6, 1912. These cookies should need no introduction -- two chocolatey wafers sandwiching a cream filling. It was a simple combination, but undeniably successful. Based their cookie on a very similar one called the Hydrox, Oreo's promoters employed superior marketing tactics, and Oreo soon became one of the world's best-selling cookies, eventually claiming the title of best-selling cookie of the entire 20th century. It continues to hold that title into the 21st. To date, nearly half a trillion Oreo cookies have been twisted, licked, dunked, chomped, or otherwise enjoyed by billions of people around the world.

Today, Oreo is one of Mondelez International's (MDLZ -1.12%) most important brands as a result of multiple acquisitions and spinoffs of Nabisco that began in the 1980s with R.J. Reynolds and continued into the 21st century during Altria's drive to create an ever-larger consumer empire. Oreos generate $1.5 billion in annual revenues for Mondelez. How much would it cost to buy enough milk to dunk all those cookies?

Untether yourself
The first mobile phone ever sold, a Motorola DynaTAC, was introduced to the market on March 6, 1983, a decade after an early prototype had placed the first successful mobile call. The DynaTAC had been developed at Motorola by a team including eventual COO John F. Mitchell and Dr. Martin Cooper, both of whom are universally recognized as among the most important wireless-telephony innovators. Motorola had invested heavily in the development of mobile, having poured more than $100 million in research funds into the project over the 15 years leading up to the DynaTAC's release.

The DynaTAC would seem like a primitive, bulky thing to modern mobile users, as it weighed nearly two pounds and was more than a foot high and nearly 4 inches deep. At a price tag of $3,995 -- equal to over $9,000 today -- it was just a bit out of reach for the average consumer. That didn't stop a flood of interest. The DynaTAC's waiting list swelled into the thousands as businesses and individuals in need of a constant connection demanded their own mobile brick.

The mobile industry quickly took hold in a world where few people even owned a PC. There were 300,000 worldwide wireless subscribers a year after Motorola launched the DynaTAC. Today, the number of wireless subscriptions worldwide exceeds the number of people alive on Earth. Motorola no longer dominates the mobile-phone industry as it once did, but its pioneering mobile patents were a major reason behind Google's (GOOGL -2.75%) acquisition of the company in 2012. That year, Samsung led all vendors in mobile-phone sales, surpassing former leader Nokia (NOK -2.64%) with 406 million total shipments to Nokia's 336 million. The two companies combine for a large piece of an enormous pie -- more than 1.7 billion phones were sold in 2012.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.

The Motley Fool recommends Google. The Motley Fool owns shares of General Electric Company and Google. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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