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Acetylcholine is a highly active neurotransmitter acting as a chemical connection between nerves (neu rons). Acetylcholine diffuses across the narrow gap between nerve cells, known as the synapse and thus, plays an important role in connecting nerves to each other.

By the early 1900s, scientists had a reasonably clear idea of the anatomy of the nervous system. They knew that individual nerve cells—neurons—formed the basis of that system. They also knew that nerve messages traveled in the form of minute electrical signals along the length of a neuron and then passed from the axon of one cell to the dendrites of a nearby cell.

One major problem remained, however, to understand the mechanism by which the nerve message travels across the narrow gap—the synapse—between two adjacent neurons. The British neurologist, Thomas R. Elliott (1877–1961), suggested in 1903 that the nerve message is carried from one cell to another by means of a chemical compound. Elliott assumed that adrenalin might be this chemical messenger or, neurotransmitter, as it is known today.

Nearly two decades passed before evidence relating to Elliott's hypothesis was obtained. Then, in 1921, the German-American pharmacologist, Otto Loewi (1873–1961), devised a method for testing the idea. Born in Frankfurt-am-Main, Germany, in 1873, Loewi received his medical degree from the University of Strasbourg in 1896 and then taught and did research in London, England, Vienna, Austria, and Graz, Austria. With the rise of Adolf Hitler (1889–1945), Loewi left Germany first for England and then, in 1940, the United States where he became a faculty member at the New York University College of Medicine.

In his 1921 experiment, Loewi found that when he stimulated the nerves attached to a frog's heart, they secreted at least two chemical substances. One substance he thought was adrenalin, while the second he named vagusstoffe, after the vagus nerve in the heart.

Soon news of Loewi's discovery reached other scientists in the field, among them the English physiologist Henry Dale (1875–1968). Dale earned a medical degree from Cambridge in 1909. After a short academic career at St. Bartholomew's Hospital in London and at University College, London, Dale joined the Physiological Research Laboratories at the pharmaceutical firm of Burroughs Wellcome. Except for the war years, Dale remained at Burroughs Wellcome until 1960. He died in Cambridge on July 23, 1968.

While attending a conference in Heidelberg, Germany, in 1907, Dale became interested in the fungus ergot and the chemicals it secretes. By 1914, Dale had isolated a compound from ergot that produces effects on organs similar to those produced by nerves. He called the compound acetylcholine. When Dale heard of Loewi's discovery of vagusstoffe seven years later, he suggested that it was identical to the acetylcholine he had discovered earlier. For their discoveries, Loewi and Dale shared the 1936 Nobel Prize for physiology or medicine.

Unraveling the exact mechanism by which acetylcholine carries messages across the synapse has occupied the energies of countless neurologists since the Loewi-Dale discovery. Some of the most important work has been done by the Australian physiologist, John Carew Eccles (1903–1997), and the German-British physiologist, Bernard Katz (1911-). Eccles developed a method for inserting microelectrodes into adjacent cells and then studying the chemical and physical changes that occur when a neurotransmitter passes through the synapse. Katz discovered that neurotransmitters like acetylcholine are released in tiny packages of a few thousand molecules each. He also characterized the release of these packages in resting and active neurons. For their work on neurotransmitters, Eccles and Katz each received a Nobel Prize for physiology or medicine in 1963 and 1970, respectively.

The biochemical action of acetylcholine is now well understood. Depending on its concentration, it exerts two different physiological effects. Injection of small amounts into a human patient produces a fall in blood pressure (due to the dilation of blood vessels, or vasodilation), slowing of the heartbeat, increased contraction of smooth muscle in many organs and copious secretion from exocrine glands. These effects are collectively known as the "muscarinic effects" of acetylcholine, as they parallel the physiological effects of the mushroom amanita toxin, Muscarin. The rise in acetylcholine following atropine administration causes a rise in blood pressure similar to that produced by nicotine. This effect is therefore known as the "nicotinic effect" of acetylcholine.

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