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I read that Tesla once demonstrated a small remote control boat in New York at the turn of the century.  Is this true and how did he make a remote control boat work prior to the invention of radio?

The first demonstration of an apparatus for radio transmission and reception was conducted by Tesla in 1893 during a presentation in St. Louis before the National Electric Light Association.  A description of this event is found early in Chapter 7 of the book Inventions, Researches and Writings of Nikola Tesla.  The small radio-controlled boat that you read about (Tesla called it a telautomaton) was first demonstrated to the public in 1898 at New York City's old Madison Square Garden.  A patent with the long title "Method of and Apparatus for Controlling Mechanism of Moving Vessels or Vehicles" (No. 613,809) was granted to Tesla in the same year. 

Tesla's two radio-controlled boats were built in the 1897-98 period.  While they could withstand submersion, they had a slight positive buoyancy and no diving planes, and thus were not true submarines, as they are sometimes described.  These boats were actually surface running torpedoes—the patent shows a detonator in the forward compartment.  They can be considered as the direct predecessor of guided missiles developed during World War 2 by the United States,  Germany and Japan, and present day precision guided weapons.  Remote control photo reconnaissance drones, remotely operated vehicles (ROVs) that are used in hazardous environments, and planetary exploration vehicles such as the Mars rovers Sojourner, Spirit and Opportunity all trace their lineage back to these two devices.

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