ConEdison's History page says:

By 1900, there were more than 30 companies generating and distributing electricity throughout the boroughs of New York City and in Westchester County.

I'm skeptical of their claims, since they have an incentive to present their history in the best possible light.

This Mises Institude essay states:

Six electric light companies were organized in the one year of 1887 in New York City.

It doesn't give the total in that year. It gives a reference, but I can't find the book in Google Books.

I'm skeptical that there were dozens of electric light companies operating in New York around 1887.

Is there data (or a historical time chart) on the number of electric light companies operating in New York? Is there data on how many choices the average person had to select from competing electric light companies?

  • 3
    Note: I would expect that companies would have limited geographical scope when they were formed. Thirty companies in the city doesn't translate to thirty choices in all premises. – Oddthinking Feb 1 '15 at 23:44
  • Moving this to History because the claim is barely notable. – Sklivvz Feb 2 '15 at 8:48
  • You misread the citation. The book is called "Efficiency, Competition, and Policy" by Harold Demsetz. – two sheds Feb 2 '15 at 13:11
  • 1
    But note the ambiguity of language in that passage. "Six companies were organized in NY in one year." "45 enterprises had the legal right to operate in Chicago by 1907." That means that the state legislatures chartered those companies, but it's no guarantee that the companies ever provided any actual electricity. Plenty of state-granted charters languished after passage because of their directors' inability to raise enough stock subscriptions. So those figures are an imprecise guide to the amount of competition in NY or Chicago. – two sheds Feb 2 '15 at 13:15
  • 1
    The paper where the claim is cited is Demsetz, Harold. "Why Regulate Utilities?" Journal of Law and Economics 11, no. 1 (April 1968): 55–65. jstor.org/stable/724970 DiLorenzo's citation is to the 2nd volume of Demsetz's collected works. Here's another copy: sfu.ca/~wainwrig/Econ400/documents/demsetz68-JLE-utilities.pdf – szarka Feb 2 '15 at 14:42

Note that in 1887 Edison's Direct Current transmission was still the official, and dominant, means of distributing power in the U.S. (Link: http://en.wikipedia.org/wiki/War_of_Currents.) However, the flaw in Direct Current transmission, that would eventually lead to its discontinuance, was its extreme short range, requiring large generating stations every mile or two to supply the immediate vicinity. It is easy to imagine a large number of independent power utilities in New York City in that environment.

Also, note that it is common accounting and business practice to separately incorporate every division of a start-up company, in order to better manage risk. That there were more than 30 electrical utility corporations operating in New York City does not by any means imply that they were independently owned. In fact Westinghouse owned the exclusive rights to the use of Tesla's Alternating Current distribution technology in North America, and Edison owned all the corresponding patents for Direct Current distribution.

This was a very, very different world than today, much more akin to the PC market in the early 1980's before IBM and Microsoft entered the fray with the IBM-PC and MS-DOS.

Consolidation really only occurred after the Niagara generating station was built in 1893, and began supplying cheap hydro-electrical power, alternating current of course, from Buffalo. This rapidly undercut all the independents.

From the Wikipedia link History of Consolidated Edison:

Con Edison’s electric business also dates back to 1882, when Thomas Edison’s Edison Illuminating Company of New York began supplying electricity to 59 customers in a square-mile area in lower Manhattan. After the “War of Currents”, there were more than 30 companies generating and distributing electricity in New York City and Westchester County. But by 1920 there were far fewer, and the New York Edison Company (then part of Consolidated Gas) was clearly the leader.


Note also that the large number of electrical utility companies operating in NYC at that time did not (in general) give customers a wide choice. By the nature of DC technology, the range from each generating station (of this type) was only about a mile, so potential customers had to select the nearest station. More choice was potentially available to AC customers, due to the technology's greater distribution range, but you still had to choose an operating company that was already in your neighbourhood, or pay the extremely large capital cost of financing the erection of utility poles.

| improve this answer | |

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.