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.