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90  B 4V ..F S $S V J 4F P O U I F I V E 4P O B B B 4 4 4V V V . . .. . .F F F S S S $ $ $S S S V V V J J J 4 4 4F F F P P P O O O U U U I I I F F F I I I V V V E E E 4 4 4P P P O O O As the railroad builders worked toward finishing their job, Vanderbilt’s secret talks with the Pennsylvania picked up again. In February 1885 PRR vice president Frank Thomson resumed the dialogue, using General George Magee as the intermediary. Magee, it will be recalled, was a Vanderbilt associate and memberoftheSouthPennsylvaniaRailroadSyndicate;hewasparticularlyinvolved in the Beech Creek Railroad, Vanderbilt’s incursion into the Clearfield coalfieldsandanoperationthePennsywantedverymuchtoneutralizeortake over. Thomson proposed that the Pennsylvania would guarantee a 4 percent return on the Beech Creek’s bonds and be given half its voting stock in return. The South Penn was a different matter, however. In return for half its stock, he would offer the syndicate an annual return of between $75,000 and $90,000. Since their investment thus far was nearing $5 million, this would amount to less than 2 percent at best—a figure Vanderbilt and Twombly knew would demolish what was already a fragile situation with some powerful syndicate members. They held out for $150,000, or 3 percent, which might well also be too low to satisfy his colleagues, but the Pennsy, still considering the South Penn virtually worthless, would have none of it. (“A hole in the ground,” PRR president George Roberts sneered at one point.) By the end of March the negotiations had slid back into limbo.1 Oblivious to all of this (although rumors were beginning to trickle out), the South Penn’s builders proceeded doggedly ahead. In April 1885 Oliver A Summer Cruise on the Hudson 91 Barnes reported that all the tunnel work should be finished by July 1, 1886. By this time, too, he said, the deferred portions (primarily across the Cumberland Valley, the Everett–New Baltimore section, and the line west of Chestnut Ridge) should also be graded, after which the railroad could be opened in a short time. Thus far the railroad had held off any rail deliveries under the earlier contracts, but on June 1 George H. Kent, the American Construction Company’s president, asked the Syndicate Committee to approve a contract for 196,000 ties to be delivered by May 1, 1886, or earlier.2 And in June, Barnes spent some time looking over sites for yards and engine facilities along the P&LE and PMcK&Y at the Pittsburgh end. Among other things, he recommended acquiring land at Port Perry for “the erection of a fine passenger station and carriage shed,” and also some nearby property for a small yard and engine terminal for the helpers that would be needed for eastbound freights.3 By then, though, another force had begun work to resolve the Vanderbilt– Pennsy–Beech Creek–West Shore stalemate, stop the South Penn adventure, and set an example that would begin to bring some order to the chaotic railroad business. J. Pierpont Morgan was a middle-aged 48 at the time and not yet the omnipotent “Jupiter” of later legend. He was, in fact, just one of several rising powers in the financial world, mostly viewed merely as the American arm of his father’s London firm, J. S. Morgan & Company. But beginning in the early 1880shehadfoundhimselfincreasinglyinvolvedintherailroadwars,sincehis dismayedinvestorswerewatchingtheindustry’suncontrolledratecuttingand territorial invasions send their security values sliding ever downward. Investment stability was always Morgan’s overriding goal, and since railroads were huge consumers of capital funds but were also wastefully burning that capital , he determined somehow to control the competitive warfare and get the railroads to think about “communities of interest” and “spheres of influence.” Thus far his efforts had produced only spotty results, since it was difficult to make the intensely competitive railroads voluntarily agree to work together and even harder to make any agreements stick. But for Morgan, the warfare that the West Shore and South Penn symbolized was a prime opportunity to make a greater mark for himself by acting as the peacemaker between the two most powerful companies in the business. Putting a stop to the expensive excesses of the Vanderbilt-Pennsylvania feud promised to make him a hero with his clients and fellow investment bankers; furthermore, if he were successful, the...

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