Before the creation of General Electric, a series of mergers in the late 1880s created three giant corporations. The several Edison companies and the Sprague Electric Railway Company merged, incorporating officially in January 1889, to become Edison General Electric.
At the same time Westinghouse acquired three small companies: Consolidated Electric Company (1887), the United Electric Lighting Company (1890) and the Waterhouse Electric and Manufacturing Company (1888).Another company the Thompson-Houston Electric Company of Lynn, Massachusetts, acquired seven competitors between 1888 and 1890 and emerged with the majority of the arc lighting business, a clutch of key patents, and a large pool of skilled personnel.
Thus in 1890 there were three large corporations in the electrical industry: Edison General Electric, Westinghouse and Thompson-Houston.
After many mergers of the late 1880s the patent positions of the three corporations remained extremely confused in many respects. In particular the Thompson-Houston Company held weak patents in incandescent lighting, and Edison General Electric had few patents in the alternating current field.
Equally important problems bedeviled the electric street railway business, where each had some patents; similar conflicts prevailed through every products line in the industry. Merger promised an end to these potential conflicts; competition virtually ensured many legal expenses and price wars, not to mention the possibility of exclusion from new markets.
All three competitors considered mergers with each other two before the Edison General Electric Company and the Thompson-Houston Company joined in 1892.
They became General Electric. With their merger the entire electrical industry was reduced from fifteen competitors to a duopoly in just five years. Westinghouse and General Electric completed this rationalization in 1895 by signing a patent sharing agreement, effectively removing the last barrier to market control.
The Creation of General Electric
