In 1859, Nathan Ames was granted a patent for his concept of the escalator, and Leamon Souder was later granted more patents for several of his own versions. Neither, however, ever built an actual working model. In the early 1890s, Jesse Reno was granted a patent for his version of the escalator, and produced a working model as an amusement park ride at Coney Island. A commercial model wasn't produced until 1899, when Charles Seeberger built one. Seeberger was actually the first of these inventors to use the term escalator.
The early commercial escalators were installed primarily in multi-story department stores such as Bloomingdale's in New York City. Both Seeberger and Reno sold their patent rights to the Otis Elevator Company in 1910, which proceeded to dominate the escalator industry. Since that time, escalators can be found in many buildings across the world, but few people understand how they work.
Escalators, while rather expensive and large, are actually relatively basic machines. The machinery of an escalator is hidden beneath its steps in what is called a truss. At the top of the escalator, housed in the truss, is an electric motor which runs the four gears that all escalators have - two drive gears on either side at the top and two return gears on either side at the bottom. These gears have chains that loop around the gears and run down each side of the escalator. Connected to each step, these chains help the steps make their way up, or down, the escalator.
The handrails that riders use for balance and safety on their ride up or down escalators are powered by the same system that powers the steps. The handrails are essentially long rubber loops connected to the two drive gears at the top of the escalator and powered by the same electric motor that powers the steps.
The way the steps flatten out at the tops and bottoms of the escalators has to do with how each step is constructed. Each escalator step has four wheels below the step - two each on either side. The two wheels that are closest to the top of the step are what connects the steps to the two chains that loop around the gears. The horizontal positioning of that chain at the top and bottom causes the steps, in turn, to to flatten out. The two wheels that are closest to the bottom of the step roll along a rail within the truss for stability. The grooves in the steps of escalators help with alignment.