In 1820, the Danish savant Hans Christian Oersted (1777-1851) published his discovery that a magnetic compass needle could be moved by a wire carrying an electric current. This new phenomenon, called electro-magnetism, caused much excitement and men of science throughout Europe turned their attention to its investigation.

By the middle of 1821, so much had been published on electro-magnetism that a friend of Faraday's, Richard Phillips (1778-1851), editor of the Annals of Philosophy, asked him to review the literature. Faraday did so, and in the course of repeating many of the experiments, discovered, on 3rd-4th September, that a vertically mounted wire carrying an electric current would rotate continuously round a magnet protruding from a bowl of mercury. This phenomenon, which Faraday called electro-magnetic rotations, showed that it was possible to produce continuous motion from the interaction of electricity and magnetism; it was thus the principle behind the electric motor.

It was a further ten years before Faraday could return to the sustained study of electro-magnetism and, on 29th August 1831, he discovered electro-magnetic induction. Natural philosophers since Oersted had believed that, on analogy with electrostatic induction, electro-magnetic induction should exist.

Faraday also sought the phenomenon sporadically during the 1820s. He made his discovery in 1831 by winding and insulating two coils of wire on opposite sides of a soft-iron ring. This device was not easy to construct and it has been found, by replicating the way Faraday would have done it, that it takes about ten working days to make. When he passed an electric current into one coil, a transient electric current was induced in the other. When the primary circuit was broken, the current in the secondary one flowed transiently in the opposite direction.

Very quickly after this discovery, Faraday found how electricity could be generated by passing a magnet in and out of a cylindrical helix wound with wire.

These devices are, in effect, the first transformer and generator. This work of Faraday's has been widely viewed from the end of the nineteenth century onwards as laying the foundation of the practical use of electricity.