The battle was known as the "War of the Currents". DC power systems had already been developed and in use in the United States for several years, and were the standard in use in the 1880s. From Wiki:
"During the initial years of electricity distribution, Edison's direct current was the standard for the United States, and Edison did not want to lose all his patent royalties. Direct current worked well with incandescent lamps, which were the principal load of the day, and with motors. Direct-current systems could be directly used with storage batteries, providing valuable load-leveling and backup power during interruptions of generator operation. Direct-current generators could be easily paralleled, allowing economical operation by using smaller machines during periods of light load and improving reliability. At the introduction of Edison's system, no practical AC motor was available. Edison had invented a meter to allow customers to be billed for energy proportional to consumption, but this meter worked only with direct current. The transformation efficiency of the early open-core bipolar transformers was very low. Early AC systems used series-connected power distribution systems, with the inherent flaw that turning off a single lamp (or the disconnection of other electric device) affected the voltage supplied to all others on the same circuit. The direct current system did not have these drawbacks as of 1882, giving it significant advantages."
Innovation would shortly end most of the advantages held by Direct Current however, and by 1896 the war would be over. The first innovation was a high-efficiency transformer. This allowed conversion of AC power to very high voltage for transmission with low losses, and conversion to low voltage near the end user. DC power was generated at 110 volts, and due to line losses at this voltage, there had to be a power plant within a mile or so of the end-user. This arrangement would require a power plant to be installed every mile or so! A great arrangement for Thomas Edison, but not so great for everyone else.
What actually caused DC to lose the Battle of the Currents is an electrical relationship, stated in Ohm's Law. Ohm's law says that Power is equal to Voltage times Current, or P = V x C. A corollary of that law is that Power is equal to the square of current times resistance, or P = I^2 x R. This corollary is what killed Direct Current as a means of using electrical power.
In any electrical system, transmission lines will have a certain resistance to current flow. This resistance causes heating, and reduces the ability of the transmission line to carry full load. This is the P - I^2 x R portion of Ohm's Law. Doubling current increases resistive heating by 4 times, and this power that is wasted heating up the power line is lost to the end user.
Therefore, with a semi-understanding of Ohm's law, P = V x C, we can see we need to minimize current if for a given Power to transmit power over any kind of distance. This is done by raising voltage as high as practical. With a transformer we can adjust AC voltage at will, whereas DC has to be generated at the desired end-user voltage, and the entire system must run at that voltage.
There is another reason AC power won the battle: It is simpler to work with at the generator. With a DC machine, the power is produced on the rotor, and must be removed using carbon brushes from the commutator. There are limits to how much current can pass through these brushes, so a typical power plant would have several small machines, each producing a small amount of power.
With an AC generator, the electromagnetic field rotates, and power is produced in the stationary windings of the machine. Because there is no need to pull power from a rotating member, the AC generator can make a great deal more power than its DC counterpart. The largest Dynamo ever built could convert 500 horsepower to DC power. An equivalent physical-size AC machine would be able to convert 10,000 horsepower, with far less complexity and maintenance.
Looking at the small machine below, we can guess a few things:
- The commutator segments would require regular care to ensure they remained insulated from each other.
- Maintenance of brushes and tension would be an ongoing affair.
- Due to low voltage, the output current would be large. You can see how fat the output leads are.
- With such high currents, moving this electricity would require vast amounts of copper.
In the end, AC (rightfully) won the battle, and so now we live in an Alternating Current world. The Wiki version of this fascinating story is here.
And here is a video describing the battle!