Railroad History, Moody, 1919
Pennsylvania Railroad
excerpt from:
THE RAILROAD BUILDERS,
A CHRONICLE OF THE WELDING OF THE STATES
BY JOHN MOODY
CHAPTER III. THE GREAT PENNSYLVANIA SYSTEM
In the early forties the commercial importance of Philadelphia
was menaced from two directions. A steadily increasing volume of trade was passing through the Erie Canal from the Central West to
the northern seaboard, while traffic over the new Baltimore and Ohio Railroad promised a great commercial future to the rival
city of Baltimore. With commendable enterprise the Baltimore and Ohio Company was even then reaching out for connections with
Pittsburgh in the hope of diverting western trade from eastern Pennsylvania. Moreover the financial prestige of Philadelphia had
suffered from recent events. The panic of 1837, the contest of the United States Bank with President Jackson, its defeat, and
its subsequent failure as a state bank, the consequent distress in local financial circles--all conspired to shift the monetary
center of the country to New York.
It was at this time that Philadelphia capitalists began to bestir themselves in an attempt to recover their lost opportunities.
Philadelphia must share in this trade with the Central West. The designs of the Baltimore and Ohio Company must be defeated by
bringing Pittsburgh into contact with its natural Eastern market. To this end, the Pennsylvania Railroad was incorporated on April
13, 1846, with a franchise permitting the construction of a railroad across the State from Harrisburg to Pittsburgh. An added
incentive to constructive expansion was given by an act of the Legislature authorizing the Baltimore and Ohio to extend its line
to Pittsburgh if the Pennsylvania Company failed to avail itself of its franchise.
In order to avoid the heavy cost of constructing a road between Philadelphia and Harrisburg, the Pennsylvania Railroad entered
into arrangements with the Philadelphia and Columbia--a railroad opened in 1834 and owned by the State--which ran through Chester
and Lancaster to Columbia. This road was primitive in the extreme and used both steam and horse power. As late as 1842 a train was
started only when sufficient traffic was waiting along the road to warrant the use of the engine. Belated trains were hunted up
by horsemen. Yet the road was in those days famous for the "rapidity and exceptional comforts of the train service." Between
Columbia and Harrisburg passengers westward bound had to use the Pennsylvania Canal.
Construction of the main line westward to Pittsburgh began at once and progressed rapidly. By making use of the Alleghany
Portage Railroad from Hollidaysburg, the Pennsylvania Railroad eventually secured a continuous line from Harrisburg to
Pittsburgh. But between Philadelphia and Harrisburg passengers were for a long time subjected to many inconveniences. Finally in
1857 the Pennsylvania Railroad bought the Philadelphia and Columbia from the State, rebuilt it, and extended it to
Harrisburg. At the same time the Pennsylvania bought the main line of the Public Works, which included the Alleghany Portage
Railroad. On July 18, 1858, the first through train passed over the entire line from Philadelphia via Mount Joy to Pittsburgh
without transfer of passengers. At the same time the first smoking car ever attached to a passenger train was used, and
sleeping cars also soon began to appear.
The railroad genius identified with the history of the Pennsylvania Railroad during the following decade is J. Edgar
Thomson. A man of vision and of great shrewdness and ability, he was more like the modern railroad head of the Ripley or Underwood
type than of the Vanderbilt, Garrett, or Drew type. His interest was never in the stock market nor in the speculative side of
railroading but was concentrated entirely on the development and operation of the Pennsylvania Railroad system. His dreams were
not of millions quickly made nor of railroad dominance simply for the power that it gave; his mind was concentrated on the growth
and prosperity of a vast railroad system which would increase with the years, become lucrative in its operations, and not only
radiate throughout the State of Pennsylvania but extend far beyond into the growing West.
Under the Thomson management, which lasted until 1874, the record of the Pennsylvania Railroad was one of progress in every sense
of the word. While Daniel Drew was lining his pockets with loot from the Erie Railroad and Commodore Vanderbilt was piling up his
colossal fortune through consolidation and manipulation, J. Edgar Thomson was steadily building up the greatest business
organization on the continent. In 1860, the entire Pennsylvania Railroad system was represented merely by the main line from
Philadelphia to Pittsburgh, with a few short branches. By 1869 the road had expanded within Pennsylvania alone to nearly one
thousand miles and also controlled lines northward to the shores of Lake Erie, through the State of New York.
But the master accomplishment of the Thomson administration was the acquisition of the Pittsburgh, Fort Wayne and Chicago line in
1869. This new addition gave the Company its own connection with Chicago and made a continuous system from the banks of the
Delaware at Philadelphia to the shores of Lake Michigan, thus rivaling the far-flung Vanderbilt line, a thousand miles long,
which the industrious Commodore was now organizing. Shortly thereafter the Pennsylvania began to expand on the east also and
obtained an entry into New York City by acquiring the United Railroad and Canal Company, which owned lines across the State of
New Jersey, passing through Trenton.
In the latter years of the Thomson management it became more and more evident that it was important for the Pennsylvania Railroad
to have further Western connections which would reach the growing cities of the Middle West. While the Fort Wayne route made a very
direct connection with Chicago and included branches of value, yet the keen competition which was developing in the expansive
years following the Civil War made actual control of the Middle Western territory a matter of sound business policy. The
Vanderbilt lines were reaching out through Ohio, Indiana, and Illinois; the Baltimore and Ohio was steadily developing its
Western connections, and now Jay Gould had come actively on the scene with large projects for the Erie. To offset these projects,
early in 1870 a "holding company"--probably the first of its kind
on record--known as the Pennsylvania Company was formed for the express purpose of controlling and managing, in the interest of
the Pennsylvania Railroad, all lines leased or controlled or in the future to be acquired by the Pennsylvania Railroad interests
west of Pittsburgh and Erie. This Company took over the lease of the Fort Wayne route and also acquired control by lease of the
Erie and Pittsburgh, a road extending northward through Ohio to Lake Erie.
After this date the expansion of the system west of Pittsburgh
went on rapidly. In 1871 the Cleveland and Pittsburgh Railroad,
which had been opened as early as 1852, came under the
Pennsylvania control. Soon after this, many smaller lines in Ohio
were merged in the system. The most important acquisition during
this period, however, was the result of the purchase of the great
lines extending westward from Pittsburgh to St. Louis, with
branches reaching southward to Cincinnati and northward to
Chicago. This system -then known as the "Pan Handle" route and
later as the Pittsburgh, Cincinnati, Chicago and St. Louis was a
consolidation of several independent properties of importance
which had been gradually extending themselves over this territory
during the previous decade. This new system, which embraced over
fourteen hundred miles of road, gave the Pennsylvania a second
line to Chicago, a direct line to St. Louis, a second line to
Cincinnati, and access to territory not previously tapped.
While the achievements of the Pennsylvania Railroad Company
during these years of consolidation and expansion are not to be
compared with those of more modern times, it is well to realize
that even as early as the seventh decade of the last century this
railroad was always in the forefront in matters of high standards
and progressive practice. It was the pioneer in most of the
improvements which were later adopted by other roads. The
Pennsylvania was the first American railroad to lay steel rails
and the first to lay Bessemer rails; it was the first to put the
steel fire-box under the locomotive boiler; it was the first to
use the air brake and the block signal system; it was the first
to use in its shops the overhead crane.
In these earlier years also the Pennsylvania had established its
enviable record for conservative and non-speculative management.
No railroad wrecker or stock speculator had ever had anything to
do with the financial control of the company, and this tradition
has been passed on from decade to decade. The stockholders
themselves, even in those days of loose methods and careless
finance, had the dominating voice in the affairs of the company
and were also factors in the approval or disapproval of any
proposed policies. In the matter of its finances the Pennsylvania
developed and established an equally clean record. The company
began almost at the beginning to pay a satisfactory dividend on
its shares and continued to do so right through the Civil War
period. Since the through line from Philadelphia to Pittsburgh
was opened, not a single year has passed without the payment of a
dividend--a sixty-year record which can be duplicated by no other
American railroad system.
The Pennsylvania still continued to forge ahead even during the
exciting period from 1877 to about 1889, when the trunk lines
were aggressively carrying on that policy of cutthroat
competition between Chicago and the Atlantic seaboard which
resulted in so severely weakening the credit and position of
properties like the Baltimore and Ohio and the Erie. The
Pennsylvania, too, indulged in rate cutting, but the management
was equal to the situation and made up in other directions what
it lost in lower rates. It gave superior service, developed a
high efficiency of operation, and steadily maintained its
properties at a high standard. During these years the president
was George B. Roberts, who had succeeded Thomas A. Scott in 1880.
Roberts's management spanned the period from 1880 to 1897 and
embraced a decade of comparative prosperity for the country as a
whole and nearly a decade of panic and industrial and financial
depression. During the earlier decade the business of the
Pennsylvania was continually benefited by the industrial
development and growth which marked the period. It was at this
time that the Pittsburgh district took its permanent place as the
great center of steel and iron manufacture. The discovery of
petroleum in western Pennsylvania, creating an enormous new
industry in itself, proved to be an event of far-reaching
significance for the Pennsylvania Railroad. The extensive opening
up of the soft coal sections of western Pennsylvania, Ohio, and
Indiana, also meant much for this great system of railroads.
Still further developments in other directions accrued to the
benefit of the Pennsylvania Railroad. In this period, by
obtaining the control of a line to Washington, the system
acquired a Southern artery running through Wilmington, Delaware,
and Baltimore to Washington. Afterwards, with other roads, the
Pennsylvania acquired control of the Richmond, Fredericksburg and
Potomac Railroad and thus obtained a line to Richmond, Virginia.
On the north and to the east the expanding movement also went on.
In addition to the development of its main line from Philadelphia
to Jersey City, the Pennsylvania acquired many other New Jersey
lines, including the West Jersey and Seashore, a road running
from Camden to Atlantic City and Cape May.
During the whole of the aggressive administrations of both Thomas
A. Scott and George B. Roberts the great system continued to
spread out steadily until it had penetrated as far as Mackinaw
City on the north and Chesapeake Bay on the south. Its network of
lines stretched across the Eastern section of the continent from
New York to Iowa and Missouri, while the intensive development of
shorter lines in the State of Pennsylvania and to the north was
unceasing. The Northern Central running south from Sodus Bay on
Lake Ontario through central Pennsylvania to Baltimore, the
Buffalo and Alleghany Valley extending from Oil City northward
and joining the main system to the east, the Western New York and
Pennsylvania operating north from Oil City to Buffalo and
Rochester--these lines the Pennsylvania Railroad acquired and
definitely consolidated in the Roberts regime.
After the retirement of Roberts, Frank Thomson, a son of the
earlier president of the same name, was placed at the head of the
system for three years. But in 1899 Alexander J. Cassatt, who had
for many years been identified with the Pennsylvania as officer,
director, and stockholder, took the helm, and a new chapter and
probably the greatest in the history of this remarkable railroad
began.
The name of Alexander J. Cassatt will always be linked with the
comprehensive terminal developments in the region of New York
City which were begun almost immediately on his accession to the
presidency and which were carried forward on bold and
far-reaching lines. Perhaps more than any other one person,
Cassatt foresaw the approach of the day when New York City as a
commercial center would outstrip both in density of population
and in amount of wealth all the other cities of the world. He and
his predecessors had for many years witnessed the great
industrial development of the Pittsburgh district, where property
values had grown by leaps and bounds and where the steadily
advancing development of industry and material resources had been
so unmistakably reflected in the increasing earning power and
value of the Pennsylvania Railroad properties.
But while at Pittsburgh the road had everything to favor it as
far as terminals and rights of way through the heart of the great
industrial district were concerned, in the great Eastern
metropolis the Pennsylvania Railroad was at an obvious
disadvantage, particularly as compared with the New York Central,
which had its splendid terminal rights penetrating to the heart
of the city. Cassatt saw that his company must without delay take
a number of bold and, for the time, enormously expensive steps
toward the development of terminal facilities in Greater New York
or else forever abandon the idea of getting nearer the heart of
the city than the New Jersey shore and thus run the risk, in the
keen contest for commercial supremacy, of ultimately falling
behind other more advantageously situated lines.
There were still further incentives to immediate action on the
part of the Pennsylvania Railroad. While the New York Central was
in an ideal position for handling all traffic destined for the
New England States, the Pennsylvania could control practically
none of this business, as its terminals were on the wrong side of
the Hudson and necessitated not merely the inconvenient transfer
of passengers but also the much more expensive handling of
freight. Other disadvantages from which the Pennsylvania suffered
were involved in its inability to make the most economical terms
for foreign shipping, as a large proportion of such freight had
to be constantly transferred on lighters to the New York and
Brooklyn sides of the harbor. Thus any comprehensive plan for
terminal development on the part of the Pennsylvania must
necessarily include not only a tunnel system into New York City
but also an outlet through the city to Long Island and a
connection with the New England railroads.
The first move in the development of this terminal system was the
acquisition in 1900 of the control of the Long Island Railroad,
embracing all the steam railway mileage on Long Island, with
lines extending along both the north and south shores to Montauk
Point. This acquisition added extensive freight yards and
terminals on the Brooklyn side of the East River. The Company
then obtained franchises and began the construction of its great
tunnels under the North and East Rivers and entirely across New
York City, with a mammoth passenger station at Seventh Avenue and
Thirty-second Street. A great railroad bridge was planned to
cross from Long Island to the mainland, connecting with the New
York, New Haven and Hartford system, in the stock of which the
Pennsylvania at this time purchased an interest.
The terminal construction occupied a period of many years and
cost over one hundred million dollars, besides the added costs
involved in building up and developing the old, worn-out Long
Island Railroad. Only recently has the project been rounded out
and completed through the final construction of the important
connection with the New England railroad systems. But the
realization of this plan is undoubtedly the greatest achievement
in all the long career of the Pennsylvania Railroad. Had the
project been delayed for another decade, it probably could not
have been accomplished because of the growing expense of
operation and the difficulties of getting franchise rights and
rights of way through and under the metropolis.
While the tunnel development is the notable achievement of the
Cassatt regime, this remarkable man's name is also closely
identified with the "community of interest" idea already
explained. This "community of interest" scheme was pushed
aggressively by Cassatt in cooperation with Harriman, Hill, and
Morgan. Large stock purchases were made in the Norfolk and
Western, the Chesapeake and Ohio, and the Baltimore and Ohio. As
the latter road had in its turn acquired, jointly with New York
Central interests, a working control of the Reading Company, and
the Reading Company had secured majority ownership of the New
Jersey Central system, it is apparent that the domination which
the Pennsylvania had obtained over the entire Eastern seaboard
south of New York City and north of Baltimore was made nearly
complete.
The "community of interest" plan held sway with the large
railroads of the country and was very effective for perhaps half
a dozen years, until the interstate commerce laws were amended in
such a way as to give the Government complete control over
railroad freight and passenger rates. In 1906 the Pennsylvania
began to dispose of the bulk of its holdings in competing
properties, the most notable transactions being the sale of its
entire interest in the Chesapeake and Ohio to independent
interests and a substantial part of its Baltimore and Ohio
holdings to the Union Pacific Railroad. A few years later, when
the Union Pacific was forced by the Federal courts to dispose of
its control of the Southern Pacific Company, a trade was made
between the Pennsylvania and the Union Pacific whereby the latter
took from the Pennsylvania the remainder of its Baltimore and
Ohio investment and gave in exchange a portion of its own large
holding of Southern Pacific stock.
To get a fair idea of the meaning and magnitude of the great
Pennsylvania Railroad system today one must do more than scan
maps and study statistics. One should travel by daylight over its
main line from New York to Pittsburgh. Although the route is over
the same ground which the road followed a generation or two ago,
a four-track line runs practically all the way, with long
stretches of hundreds of miles of five, six, and eight tracks.
Where mountains were climbed thirty years ago, one will now find
them bored by tunnels; where sharp curves were necessary before
straight trackage only will be encountered today. Grades have
been eliminated everywhere and the whole route has been
modernized and strengthened by the laying of one hundred to one
hundred and fifty pound rails.
Undoubtedly the fortunate location of the Pennsylvania lines in
the half dozen States which represent the financial and
industrial heart of the continent has had much to do with its
vast growth and the expansion of its business; but its high
reputation can be explained only by the long record of its
superior methods and management. One of the primary objects of
Pennsylvania Railroad policy has been to keep pace with the
growth of the country. Instead of following in the wake of
industrial progress and making its improvements and extensions
after its competitors had made theirs, its management has usually
had the foresight to prepare well in advance for future needs.
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01-Oct-2001
Source document: Moody, John. "The Railroad Builders, A Chronicle of the Welding of the States" New Haven: Yale University Press Toronto: Glasgow, Brook & Co., London: Humprhey Milford, Oxford University Press, 1919