Collapse of the Barings Bank and Its Consequences for Investors

In 1890, the financial landscape was dramatically altered by the near collapse of Barings Bank in London, which triggered a widespread financial panic. This turmoil led investors to call in their loans to Westinghouse Electric, creating an urgent cash shortage for the company. In response, Westinghouse was compelled to refinance its debts under pressure from new lenders. These lenders scrutinized Westinghouse's financial practices and deemed its expenditures on acquisitions, research, and patents as excessive. A significant point of contention was the per motor royalty stipulated in Nikola Tesla's contract, which Westinghouse was obligated to pay despite the fact that Tesla's induction motor was still in the developmental phase and had not yet achieved commercial success. At that time, operational examples of the induction motor were scarce, and the necessary polyphase power systems to support it were even rarer. This period marked a critical juncture for Westinghouse Electric, as it navigated the challenges of financial instability while striving to innovate in the burgeoning field of electrical engineering. #mooflife #mof #MomentOfLife #FinancialPanic #WestinghouseElectric #BaringsBank #TeslaContract #InductionMotor