Reliance Electric and Engineering Company, Issued to Bache & Co.

Reliance Electric and Engineering Company, Issued to Bache & Co.
Item# 2991ba

Reliance Electric and Engineering Company, Issued to Bache & Co.
Reliance Electric was founded in 1904 in Cleveland, Ohio, as a partnership between two cousins: inventor John Lincoln and industrialist Peter Hitchcock. Lincoln had developed a new and better arc-type light bulb while working with the Brush Development Company. He convinced Hitchcock to use his financial resources to develop, manufacture, and market the bulb. By the time the two formed their partnership, however, the inventor Thomas Edison had announced the development of his incandescent light bulb, rendering null Lincoln's advances of the clearly inferior arc bulb. The partners were dismayed at this unfortunate turn of events, but Lincoln revealed that he had also been working on a new type of direct current (D-C) motor. Direct current was the primary means of electrification at the time because alternating current was considered dangerous and unpredictable. Lincoln invented the first adjustable speed direct current motor, and Hitchcock fronted the money to begin manufacturing. They shipped their first industrial electric motor in 1905. The two named their new company after the inventor: Lincoln Electric Motor Works.

When Hitchcock died in 1907, Lincoln sold his interest in the company to Charles and Ruben Hitchcock, Peter's sons. The youngest, Ruben, took over the company. Having little business or electrical experience, Ruben sought a new president. He found one in Clarence Collens, a Yale graduate, who stayed with the company in that capacity for the next forty years. Ruben Hitchcock served as executive vice-president. When Collens came on as president, the company was incorporated as Reliance Electric and Engineering Company. There had been some confusion in the Cleveland business community prior to the name change--another electric concern in the area was named Lincoln Electric.

The variable speed motor, or armature shifting motor, as it was known in the trade, was Reliance's only product until 1913. That year, the company's chief engineer, Alex McCutcheon, designed a T-line D-C motor that soon became Reliance's primary product. It was used in many of Cleveland's booming steel mills and was a mainstay of the product line until the early 1950s. Reliance began to design and manufacture industrial alternating current (A-C) motors in the 1920s, but the company was late to join the race to convert to A-C. A-C generation had been developed around the turn of the century, and came into heavy use in industry by 1910. General Electric Company (GE) and Westinghouse Electric Company had used the ensuing decade to become well-established producers of industrial A-C motors. Combined, GE and Westinghouse held 50 percent of the United States' total industrial electric business. As industry leaders, they established the prices that the rest of the market followed. Reliance executives soon realized that they needed to find a niche for their company to remain competitive and profitable. They decided to concentrate on becoming a flexible, timely supplier of industrial motors, emphasizing the applied engineering aspect of the business. To accomplish this conversion, Reliance hired sales representatives with technical knowledge. These representatives would not just sell Reliance products, they would also investigate customers' needs and recommend equipment to get the job done. One of the salesman, Jim Corey, proved his technical expertise when he received a patent for an adjustable voltage, multi-motor control system for use in the paper and textile industries. Corey was not trained as an electrical engineer. He had started at Reliance as a "blueprint boy," then moved up to become a draftsman, salesman, sales manager, vice-president of sales, and eventually president of the company.

Reliance made its first inroads into the A-C business in 1927 with a modification of the General Electric enclosed fan-cooled motor. The GE model was not well suited for the high-particulate environment found in most automotive factories, so Reliance copied and improved the motor for those specific conditions. A lucrative contract with General Motors for the manufacture of its new Pontiac cars gave Reliance just the push it needed to get established in alternating current motors.

During World War II, Reliance served as a primary supplier of motors to the military, especially the Navy. The company also supplied the motors needed to build hundreds of tanks. This war-related business required and enabled Reliance to build two new Cleveland plants in the 1940s and another in the suburb of Euclid in 1951. Reliance acquired the Reeves Pulley Company in 1955 and the Master Electric Company in 1957. These two entities complemented Reliance's established mechanical operations. The company prospered in the late 1950s, and its stock began to be traded on the New York Stock Exchange in 1957. Mergers and acquisitions continued in the 1960s and 1970s. The Mechanical Group was expanded with the purchase of the Dodge Manufacturing Company in 1967. Dodge and previously-acquired Reeves were then, and remain in the late twentieth century, respected trademarks among power transmission products. That year Reliance also purchased the Toledo Scale Company. 1968 saw the acquisition of Atlanta-based Custom Engineering Corp., and Applied Dynamics, a computer manufacturer, was purchased the following year. With foreign sales of $30 million in 1969, Reliance purchased two European companies to secure its international position.

In 1973 Reliance merged with Lorain Products Corp., a suburban Cleveland manufacturer of specialized power equipment for the communications industry. The company made its second acquisition in this field in 1977, with the purchase of Continental Telephone Electronic Co., a producer of telecommunications equipment. The company further shored up its telecommunications business with the purchase of Utility Products Co. of Milwaukee and Federal Pacific Co. of Newark. Kato Engineering, maker of industrial electrical generators, was purchased in 1978.

In December of 1979, the Exxon Corporation purchased Reliance for $1.24 billion. Exxon, like several of its competitors in the oil industry, sought to use its excess capital to diversify its interests. Exxon was especially hopeful that Reliance would be able to manufacture the oil company's experimental "alternating current synthesizer," a device that would use current only when needed. Exxon boasted that the alternating current synthesizer, or ACS, could save the United States as much as one million barrels of oil each day. Exxon transferred its ACS Group to Reliance in 1980 so that the subsidiary could apply its electrical engineering expertise and develop, manufacture, and sell a line of variable speed drives using the new technology. By the end of 1981, however, it had become painfully clear that Exxon's ACS projections were exaggerated: the test model was too expensive and unreliable to be manufactured on a large scale. To make matters worse, Reliance posted losses in three of the next four recession-plagued years.

Federal Pacific Electric (FPE), which Reliance purchased just months before the 1979 Exxon takeover, turned out to be one of the company's most unfortunate acquisitions. Reliance discovered that FPE had been manufacturing some substandard circuit breakers, its largest line of products, and had deceived Underwriters Laboratory (UL) to get its approval for the critical home and commercial construction markets. As a result, UL withdrew its approval of all FPE circuit breakers, forcing the company to purchase and market others' products. Reliance initiated a costly seven-year, multi-suit litigation against UV Industries Inc., former owners of FPE, which was not concluded until the late 1980s, when Reliance divested the troublesome subsidiary.

Certificate: Preferred Stock, issued in the 1970s

Printer: Security-Columbian Bank Note Company

Dimensions: 8 (h) x 12 (w)

State: OH-Ohio

Subject Matter: Engineering Companies | Issued to Bache & Co.

Vignette Topic(s): Male Subject | Industrial Scene | Skyline Scene | Train Featured

Condition: Vertivcal fold lines, punch hole cancels in the signature areas and body, and some toning and edge faults from age.

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