The first mass-produced automatic transmission appeared on the 1940 Oldsmobile.
Oldsmobile's Hydra-Matic drive had a fluid coupling and three planetary gear sets, providing four forward gears and reverse. The principle behind a fluid coupling can be illustrated by placing two cooling fans face-to-face close to each other.
One of them is plugged into a wall outlet, the other is left unplugged. If the first fan is switched on, so that it blows air onto the blades of the unplugged one, you will find that you can grab a blade on the unplugged fan and hold it from turning, but as soon as you release it, it will speed up until it comes close to the speed of the powered fan.
With a fluid coupling the difference is that the action takes place inside an enclosed, doughnut-shaped housing (which makes it more efficient) and instead of using air as the medium of power transfer, it uses automatic transmission fluid.
The first important improvement in the design of the fluid coupling came very soon. Space was provided by cut-outs in the impeller and turbine for a small, vaned wheel known as the reactor or stator, to fit in between them.
The blades of the reactor are angled in such a way that when the turbine is turning much slower than the impeller the circulating fluid is redirected on its return path from the turbine to the impeller to strike the vanes of the impeller at a "helping" angle, thus increasing the torque.
As the speed of the turbine catches up with the impeller, the fluid's path automatically changes, the fluid now strikes the back of the reactor blades, and a one-way clutch allows the reactor to spin freely in the same direction as the impeller and turbine. Such a three-element fluid drive is known as a "torque converter".
At pull-away speeds, it can provide an output torque equal to twice the input torque received from the engine. An increase in torque has the same effect as changing to a lower gear. As the car picks up speed, this torque multiplication effect falls away until at cruising speed there is no torque increase at all. All three elements, impeller, turbine and reactor, are now turning at about the same speed.
The first torque converter automatic appeared on the 1948 Buick. The second significant advance in fluid couplings came somewhat later when a lock-up clutch was introduced to lock the impeller and turbine together above a certain speed, as controlled by the on-board computer. This eliminates the small amount of slip that would otherwise still be present.
The torque converter is only half the story of an automatic transmission. The other half lies in the workings of the gearbox, found just behind the torque converter.