Tesla assumed that his arc lighting system would be valuable to the Edison organization and that he would handsomely rewarded for his work. However, when that didn’t happen, Tesla quit in disgust and found new backers in Rahway, New Jersey who helped him to patent and build his own arc-lighting system.
Tesla Electric Light & Manufacturing Company operated from December 1884 through 1886. It was formed in a partnership between Tesla, Robert Lane and Benjamin Vale with Tesla given the task of designing an arc lighting system, a fast growing segment of the new electric light industry used mostly for outdoor lighting. However Lane and Vale were just disinterested in alternating current and eventually forced Tesla out of his own company. Once the Rahway businessmen had a lighting system up and running, they fired Tesla. Destitute, Tesla returned to New York to dig ditches for $2 a day. Fortunately, Tesla helped dig ditches for the installation of cables connecting the headquarters of the Western Union Telegraph Company with stock and commodity exchanges and he came to the attention of Alfred S. Brown who was supervising the work. Brown took a liking to Tesla and introduced him to Charles Peck, a lawyer who had just made a fortune by forcing Jay Gould to buy his Mutual Union Telegraph Company.
In March 1885 Tesla applied his first patents US334,823 - Commutator for Dynamo Electric Machines - January 26, 1886 (Filed May 18, 1885), US335,786 - Electric Arc Lamp - February 9, 1886 (Filed May 18, 1885) and US335,787 - Electric Arc Lamp - February 9, 1886. These patents were for an improvement in the arc lamp. He used an electromagnet to feed carbons to the arc at a uniform rate to produce a steadier light. Later he applied for patents on arc-lamps regulators and he registered his 'Tesla Arc Light Co' with an aim of implementing his inventions in the field of polyphase alternating currents. Looking for a new high-tech venture, Peck and Brown decided to back Tesla in 1886 and in April 1887, backed by a number of financiers and technicians, Tesla establishes Tesla Electric Company.
In the newly erected laboratory Tesla constructed and demonstrated his first polyphase induction motors and generators. But success was not easily achieved, as his ideas to promote (AC) alternating current was difficult to finance, and by other hand his investors weren't really interested in the development of the AC technology because its future application still was unkown and controversial. The investors were just interested about Tesla's Electric Arc Lamp as his design was a success, but all the money went to the investors. Tesla was soon looking for another opportunity.
Presentation of the Edison Medal to Nikola Tesla: Minutes of the annual meeting of the American Institute of Electrical Engineers, held at the Engineering Societies building - New York City - May 18, 1917:
I realized I would not have produced anything without the scientific training I got, and it is a question whether my surmise as to my possible accomplishment was correct. In Edison's works I passed nearly a year of the most strenuous labor, and then certain capitalists approached me with the project to form my own company. I went into the proposition, and developed the arc light. To show you how prejudiced people were against the alternating-current, as the President has indicated, when I told these friends of mine that I had a great invention relating to alternating-current transmission, they said: —No, we want the arc lamp. We do not care for this alternating-current.— Finally I perfected my lighting system and the city adopted it. Then I succeeded in organizing another company, in April, 1886, and a laboratory was put up, where I rapidly developed these motors, and eventually the Westinghouse people approached us, and an arrangement was made for their introduction. You know what has happened since then. The invention has swept the world.
Early arc lamps produced a brilliant blue-white light, good for street lighting but not for the home, and they emitted noxious fumes. Home lighting was by gas. Street arc lighting used series circuits. Edison introduced the parallel circuit, and designed his lamp for such a circuit. Edison introduced the big scale production and sale of electric power itself on the model of gas lighting, a major industry at the time. He wanted to be first in the business and announced to the press that he had an operable bulb before he actually had a bulb that worked. When Tesla's a.c. system was established, it was grafted on to Edison's, greatly extending its range and efficiency. But, essentially, it was still Edison's parallel circuit, high consumption, incandescent lighting system.
Tesla's appearance in the Copartnership and Coorporation Directory