In 1831, Michael Faraday made his discovery of electromagnetic induction with an experiment using two coils of wire wound around opposite sides of a ring of soft iron similar to the experiment setup below.

Click on the switch to close and open the circuit

When you close the switch, a current passes through the first coil and the iron ring becomes magnetized. Note that the compass in the second coil deflects momentarily and returns immediately to its original position. The deflection of the compass is an indication that an electromotive force was induced causing current to flow momentarily in the second coil. When you open the switch, notice that the compass again deflects momentarily, but in the opposite direction.

The closing and opening of the switch cause the magnetic field in the ring to change: to expand and collapse respectively. Faraday discovered that changes in a magnetic field could induce an electromotive force and current in a nearby circuit. The generation of an electromotive force and current by a changing magnetic field is called electromagnetic induction.