The rapid alternation of a magnetic field around a conductor induces current. It causes a voltage across the conductor that the causes the flow of an electrical current.
Michael Faraday and Joseph Henry discovered electromagnetic induction while working independently. However, it was Faraday who first published the results of the experiments. His first experiment, from August of that year demonstrated electromagnetic induction, using what was later recognized as a toridal transformer. Faraday's device was an iron ring with two separate wires wrapped around opposite sides. Plugging a wire conductor on one side of the ring into a galvanometer and the one on the other to a battery created what Faraday called a "wave of electricity." Later, Faraday demonstrated that rotating a copper disk near a bar magnet with a sliding lead produced steady or direct current.
Many of Faraday's contemporaries did not accept his work due to a lack of mathematical proof. However, Maxwell later brought the math needed to bring acceptance. These formulas have gained recognition as Faraday's Law and as the Maxwell-Faraday equation.
According to About.com, Faraday's experiments also work in reverse. A moving electrical charge creates a magnetic field. Thus, Faraday's work involves the first generator as well as the first electric motor.