But in the end, Morgan’s shadow proved insurmountable. Rice did not succeed in ousting Harris and was forced to “watch from the sidelines as a new syndicate headed by J. P. Morgan stole Rice’s own reorganization plan by forming the Reading Company.”6
But Rice, as he often did on the chessboard, turned sacrifice into victory. With “energetic watchfulness,” he succeeded in blocking Harris’s plan to place a charge of $3,000,000 for a proposed subway ahead of “general income and mortgages,” ensuring that stockholders of the reorganized Reading Company, of which he was one, would be paid before money was doled out to the receivers’ cronies.7 In addition to making a good deal of money for himself, Isaac Rice acquired the reputation of honesty, probity, and a watchdog of investors’ interests, not at all a detriment for a man who intended to attract still more investors to speculative ventures.
Even as the Reading fiasco was winding down, Rice decided he was done both with railroads and with restructurings that involved a large pool of stockholders and its unwieldy path to power. Rice, who saw himself, not without justification, as something of a prophet, decided to focus on coming technologies rather than past ones. Injecting himself into an entrepreneurial enterprise would also enable him to more easily seize control.
While attending the Columbian Exposition in Chicago in 1893, Rice noticed that a disproportion of innovations and gadgets were electrical. It was no secret that electric power was a burgeoning technology, but Rice had not been aware of to just what extent. After some cursory research, he discovered that so many entrepreneurs and inventors were rushing into the field that the United States patent office was swamped with more than three thousand applications per year. Many of the most sophisticated devices, it seemed, including Otis elevators and Edison’s Kinetoscope, were powered by a new, robust, quickly rechargeable lead-acid battery called a “chloride accumulator.” Combining the ideas of a French inventor, Clement Payen, and an American, Charles F. Brush, the chloride accumulator, which used a series of lead plates to store electricity, was a big advance over what were disparagingly called “pickled amperes.”‡ The sole manufacturer of the device, which used a patented process called Exide, was the Electric Storage Battery Company of Philadelphia. The stock price for the company, however, did not seem to reflect the uniqueness of the product. Rice decided to find out why.
The first thing he learned was that, for this venture, there would be no Pierpont Morgan to outwit. Electric Storage Battery was owned by a fast-talking, wildcat speculator named William Warren Gibbs. Gibbs founded the company in 1888, after convincing a group of investors whom he had previously persuaded to invest in a gas company that they had bought into a failing technology. They should switch to storage batteries instead. He located some obscure patents for lead-acid rechargeable batteries—one of them Payen’s—which in theory generated more energy for a longer period, although no one had thought to produce them commercially. The investors were called on once more to fund a small factory, and Gibbs then began to build batteries, initially simply to store power for electric lighting.
While early sales were not brisk, Gibbs soon realized that his batteries could be adapted to a wide variety of industrial processes. In 1891, in a major coup, he sold 13,000 Exide cells to the Lehigh Avenue Railway Company to power six of their streetcars. The horseless vehicles were immediately popular and sales boomed. By 1893, when Isaac Rice saw them in Chicago, revenue from the sale of Exide batteries was in the hundreds of thousands. But while cash poured in, expenses were sucked out. Rather than build up the company’s reserves, Gibbs was buying up other companies to expand his reach, but the purchases were questionable, so Gibbs had gotten little return while diluting the stock price with each acquisition. In addition, there seemed to be a number of competing patents, although Rice determined that none of these represented a genuine threat.
So Rice began to buy. Within months, he purchased sufficient shares to become a director—and also the company’s lawyer—and soon after that he gained control. Gibbs retained much of his stock and seemed relieved to turn over operating responsibility to his new partner. Rice’s first act was to buy up every patent that held even a whisper of danger—more than five hundred of them—and he spent $250,000 to do it, almost the equivalent of the company’s 1894 revenue.
He also divested the company of some of Gibbs’s more questionable acquisitions while overseeing the purchase of a number of companies that used batteries, and thus provided a guaranteed market for his product. One of the companies that he acquired was the Electric Launch and Navigation Company, which was building pleasure boats for the wealthy, a choice customer base that was drawn to a power source that hummed instead of roared while belching black smoke. Electric Launch had been another of the featured attractions at the 1893 fair, and the company was planning to build ferries, which would also be powered by an array of Exide batteries.
The one business Rice had been unable to acquire was William Woodnut Griscom’s Electro-Dynamic Company. Griscom, who had taken out almost forty patents for devices to further the use of electricity, had founded Electro-Dynamic in 1880. Its main product was an efficient electric motor that could be built in multiple sizes, sometimes as small as a fist, and that could be used in a variety of light industries, or mounted on commercial items. By the early 1890s, the only drawback to Griscom’s motor was that it needed to be powered by Gibbs’s Exide batteries, which, for all their virtues, were far too heavy and far too inefficient for widespread commercial application.
Rice set out to change that. Although he had no engineering training, he saw that functional improvements could be obtained just from patents the company already owned. Rice then designed and developed a hybrid Exide product, which soon was the most advanced battery in the world. He also drew up plans for containers, connections, frames, and switches, thus giving his battery more practical utility. With improved Exide technology, which would remain state-of-the-art for the better part of a century, Rice quadrupled the company’s revenues, taking in more than one million dollars. Rice’s batteries were eventually used in machine tools, telegraph offices, home appliances, and even player pianos, many powered by Electro-Dynamic motors. Rice once again sought to purchase Griscom’s master patent, offering him one million dollars in cash, but Griscom refused to sell.8
Even without Electro-Dynamic, Rice’s ambitions were almost limitless. He envisioned a world hurled forward by electricity—huge arrays of Exide batteries powering ships, locomotives, massive telephone exchanges, and office buildings. In early 1895, he learned of a newly patented device that might be a key beginning step in realizing that vision. Two Philadelphia engineers, Henry Morris and Pedro Salom, had publicly test-driven an electric vehicle down Broad Street. They called their invention an “electrobat,” and their journey required both a special permit and a policeman to precede them for the protection of horses. Morris and Salom’s vehicle was slow and immensely heavy—more than two tons, sixteen hundred pounds of which were primitive “pickled ampere” batteries. The wheels were steel to support the weight, and the front set was larger than the rear.
Isaac Rice offered to supply the two with Exide batteries, as well to provide investment capital so Morris and Salom could improve on their design. Soon they had produced a lighter and faster model, only sixteen hundred pounds, of which only a third was Exide battery. With the lighter weight came pneumatic tires and front and rear wheels of equal size. They soon had an even more efficient version, eight hundred pounds, with two seventy-five-pound Electro-Dynamic motors that could run at fifteen miles per hour for twenty to twenty-five miles on a charge from 350 pounds of batteries.
Morris and Salom entered their new “Electrobat II” in America’s first automobile race, scheduled for November 2, 1895, to be run from Chicago to Waukegan and back, a distance of one hundred miles. The race had to be pushed back until Thanksgiving Day because so few of the primitive automobiles could be made ready. The delay was disastrous. The night before the race
, a storm deposited six inches of “wet, sticky snow” on the streets—drifts running to two feet—and temperatures dipped well below freezing. Although the day of the race dawned “bright and clear,” and “a large snow plow drawn by four horses was hard at work to make a place for the start,” the previous day’s weather and treacherous roads took their toll as only six vehicles made it to the starting line.9 Although the racecourse was shortened to a round trip to Evanston, only two automobiles finished. Nonetheless, the race was an enormous success, the first chance Americans had to experience the auto-racing craze that had been sweeping across Europe. It also demonstrated to many for the first time the practicability of the automobile. Newspapers across the nation reported on the race with gusto, one offering a page one headline that read, “Horse Is Doomed.”10
The Electrobat II did not fare well in the frigid conditions. Batteries drained quickly in the cold, so Morris crept along, often not faster than walking speed. He and Salom had placed relays of charged batteries every few miles, but Morris never made it even to the first station. He turned around halfway and barely made it back to their home base before the battery gave out. Nonetheless, the Electrobat won a gold medal for “design,” and once they returned to Philadelphia, Morris and Salom set about seeking commercial outlets for their invention. In January 1896, they incorporated as Morris and Salom Electric Carriage and Wagon Company, convinced they had established beyond doubt both the technical and commercial feasibility of the electric car.
Isaac Rice agreed. He bought stock in the new company, and by early 1897, he had bought out Morris and Salom entirely. The two never said why they sold their patent but it was a terrible decision. Once Rice owned their company, Morris and Salom discovered that they had not, as they thought, taken on a partner but rather a new owner who saw little need for their continued services. After Rice made it clear that they were no longer welcome in the company they had started, they departed, bitter and disillusioned. Although they attempted other ventures—they formed the Electrical Lead Reduction Company in 1899, to sell battery components—neither Morris nor Salom was ever involved in a successful enterprise again. Isaac Rice, on the other hand, had come across a business that was the ideal match for his skills.§
His timing seemed uncanny. Batteries were coming into use for everything, from Singer’s new sewing machine to player pianos, and Rice had achieved a virtual monopoly on the device. Electric Storage Battery’s revenues went from $646,000 in 1896 to $842,000 in 1897, to $1,163,000 in 1898, and to $3,500,000 in 1899. But Rice saw the most important—and most lucrative—application in transportation.
In a stroke of luck for Rice—but not William Griscom—on September 27, 1897, Griscom, only forty-six years old, accidently shot himself in the head while hunting at his summer home in Canada. He died on the spot. Griscom, Rice wrote later, “had been the soul of enterprise.” After his death, the company “languished and came on the market.”11 Given his opening, Rice approached Griscom’s brother Clement, a prominent New York financier—and Pierpont Morgan associate—and began a business relationship that would result in a Rice buyout of Electro-Dynamic about eighteen months later. (Rice and Clement Griscom would also from time to time invest together in other ventures.) But even without yet owning Electro-Dynamic, Rice had established both unfettered access to its products and the ability to either prevent access by his competitors or charge them an exorbitant price to obtain it.
In terms of an electric automobile, what was immediately clear was that the limited range of a single battery charge—no more than twenty-five miles—made the machine appropriate only in cities and not on country roads. But electric-powered vehicles would not be new to urban streets. By then, in many of America’s major cities, overhead trolley cables had been supplanted by huge rows of Exide cells percolating under the feet of a burgeoning number of commuters. This, the most successful experiment in mass transit yet undertaken in America, had poured money into Rice’s coffers.
Wasting no time, Rice announced the introduction of a “public electric cab service,” for New York City beginning with “twelve vehicles of the coupé surrey, and hansom patterns, operated with electric storage batteries.” The cabs would be “handsomely constructed and finished, and equipped with pneumatic tires.” Side running lights and a reading light inside would provide additional touches of modernity. The idea was so novel that Rice would need the New York City council to grant a “special license . . . as there is no provision for public cabs without horses.”12
Rice’s hansom fleet would be the first use of automobiles for public transportation in the United States. The linchpin of the system was the power and endurance of the Exide cell, of course, and thanks to Rice’s continued improvements Electric Storage Battery was producing batteries that had no equal. With a range that had been improved to up to forty miles, a cab could do quite a bit of business on a single charge in the tight confines of New York City. Still, cabs obviously could not waste precious battery charge cruising the streets for fares or even waiting, as did horse-drawn hansoms, at taxi stands. Instead, they were dispatched on call from a central charging station that was constructed at 1964 Broadway in a converted warehouse. As a result, most fares originated at restaurants, clubs, hotels, theaters, or from the homes of well-to-do individuals, all of which were also the most steady and reliable sources of revenue. “Charging station” was a bit misleading as well. Batteries were not charged while sitting in the beds of the cabs. One of the key elements of Rice’s plan was the quick removal and exchange for a fresh battery in the vehicle. Thus, when a battery was discharged, the driver swapped it out at the charging station and returned to work while the first battery was again brought up to snuff.13
Rice’s taxi fleet became a fad and, after a New York blizzard in February 1899 during which only the electric vehicles could negotiate the ice covered streets, it seemed electric vehicles would soon be competing with horses for dominance among the city’s well-to-do.
An electric taxi navigating New York streets.
But Isaac Rice did not wait around for that. The following month, he sold out at a huge markup to a group of speculators headed by William Collins Whitney.14 With two associates, stockbroker Thomas Fortune Ryan, and Philadelphia speculator Peter Widener, Whitney had been buying stock for a year in the Electric Vehicle Company, the umbrella under which all of Rice’s acquisitions had been consolidated. But Whitney was in a similar position that Rice had found himself with Reading Railroad—large holdings but no control. After Rice’s taxis had gained notoriety plowing through slush and snow, the company became a Wall Street darling and the Whitney syndicate felt it had no choice but to pay up if they wanted the ripe plum that was Electric Vehicle.
When they sat down to negotiate with Rice, the stock price had appreciated from about $20 per share to as much as $150 per share. In March 1899, they settled on a price of $141 per share, an enormous profit to Rice, and also for Gibbs, who had been slipstreaming along. Rice would officially remain on as president until he resigned the office in August 1899, and would keep his seat on the board for some months after that, but with the March sale, his activities at the company had effectively ended.
With a portion of the proceeds from the stock, Isaac Rice decided to build a home worthy of the success he had attained. He would call it Villa Julia, in honor of his wife. And rather than old, stodgy Fifth Avenue, he would choose the newest location for New York’s elite, Riverside Drive, across from the newly completed Riverside Park. He purchased a parcel at the southeast corner of Eighty-Eighth Street, and then, in October, after he was fully paid out by Electric Vehicle and decided he needed something grander, purchased a much larger parcel one block north instead, across from the site of the planned Soldiers’ and Sailors’ Monument. He paid $225,000 for the new location, part of which was his Eighty-Eighth Street purchase, and agreed to have written into the contract that whatever was built there must “be a high class private dwelling house, not less than four stories,
and designed for the use of one family only.” Across Eighty-Ninth Street to the north and occupying the entire block to Ninetieth Street, was an immense mansion built by Cyrus Clark, a silk merchant-turned developer, whose earlier vision for what had been a sparsely inhabited backwater earned him the sobriquet, “Father of the West Side.” It was Clark’s lobbying that had resulted in the hiring of Frederick Law Olmsted to design Riverside Park, and Clark was also responsible for bringing to the area electric street lighting, rapid transit, and modern paved streets. To do so, he had to fight back a proposal to use part of the area for a city dump.
In his choice of architects, Rice was typically idiosyncratic. Rather than selecting a firm known for creating New York mansions, he instead hired Herts & Tallant, whose renown would come from designing theaters, such as the New Amsterdam, the Lyceum, and the Brooklyn Academy of Music. When the plans were filed in August 1900, with an estimated cost of $200,000, the New York Times wrote, “Isaac L. Rice will build one of the finest mansions in the city. . . . The French villa style of architecture will be followed. The house will be four and five stories in height and will stand on a plot 111 by 148 feet. The exterior will be of brick and granite, with marble trimmings. In the centre of the structure an observatory tower will rise to a height of ninety-six feet above the curb.”15 Although Herts & Tallant drew up the basic plans, Rice designed much of the interior himself, and he included a soundproof chess room in the basement, cut out of solid rock.
Villa Julia would take three years to complete and feature a drive-through entrance on Riverside Drive under a three-floors-high stone arch, on which a bas-relief was carved of six children with symbols of the liberal arts.¶
Going Deep Page 19
