The Railroad That Never Was: Vanderbilt, Morgan, and the South Pennsylvania Railroad

12 Not Quite Dead

101  O P U
2V J U F
E F B E O O P P U U
2 2V V J J J U U F F E E E F F B B E E E Business historians have told the story of J. P. Morgan’s Corsair victory innumerable times, with varying degrees of accuracy, but few have noted that it quickly went awry and was never consummated in the form intended. As it turned out, the Pennsylvania Railroad was forced to renege on its part of the bargain. Two turbulent and uncertain decades then followed, during which the South Penn became a railroad version of the Undead, poised to emerge fromitsdanktunnels,re-form,andbeginrunningtrainsacrossthemountains, while others tried to keep it bottled up there. The Commonwealth of Pennsylvania’s 1874 charter clearly prohibited single ownership of parallel and competing transportation lines. All the parties to the Morgan agreement knew that, but thought their subterfugeof using the PRR’s Bedford & Bridgeport as the South Penn’s “buyer” would solve the problem. It did not. On August 24 Lewis Cassidy, the state’s attorney general, announced that he was filing for an injunction in Dauphin County Circuit Court in Harrisburg to stop both the South Penn and Beech Creek sales; the next day he did so. Some saw Gowen’s hand behind the injunction, although he was still in Europe at the time; others blamed it more logically on Gowen’s politically potent Philadelphia backers, or the Pittsburghers, or both—which Henry Lewis, one of their spokesmen, denied to his fellow syndicate members at a September meeting. Most likely, however, the main motivation was a state political power struggle. A Democratic administration had just taken power The Railroad That Never Was 102 in Harrisburg for the first time since the Civil War, and the situation seemed a heaven-sent opportunity to immediately build its political capital by taking advantage of widespread indignation over the deal and attacking the Pennsylvania Railroad’s arrogant monopoly.1 The hearings opened September 29, and a parade of luminaries subsequently trooped in and out of the brick Dauphin County courthouse, among them the PRR’s George Roberts, Twombly, Carnegie, and various dissidents headed by David Hostetter. Morgan gave testimony in his New York office. (For his own strategic reasons, Gowen stayed out of it, probably to avoid any confrontation with the PRR while he plotted a comeback on the Reading.) Francis Lynde Stetson was there as usual as the South Penn’s attorney.2 The proceedings then slogged on, accumulating an enormous amount of testimony.MuchtimewasspentgoingoverthehistoryofboththeSouthPenn project and the Beech Creek, their present state, and the events leading to the sale. On the South Penn side, the Bridgeport & Bedford ruse was summarily ignored; whatever its legal merits, it was plain to everyone that the Pennsylvania Railroad was the real purchaser, and almost all the subsequent arguments revolvedaroundthat.Foritspart,theMorgan-PRR-Vanderbiltsidediditsbest to contend that even if the Pennsylvania was involved, it didn’t really consider the South Penn a serious competitor—and that even if it was, its grades and scanty on-line traffic would make it a weak one. George Roberts condescendingly noted that parts of it could be natural PRR feeders, but otherwise he did not take it too seriously; it was, he said, simply a “disturbing element” that needed to be dealt with. Morgan was more blunt and honest, saying among other things that the whole point was that the South Penn would be “taken out of the railroad situation.” Hostetter and the Reading-Philadelphia group had a more convincing time of it, asserting that the South Penn would indeed bring strong competition for the Philadelphia and eastern Pennsylvania markets ; selling it to the Pennsylvania would harm the Reading and “bring grief” to the communities and potential customers that had hoped to depend on it and prosper by it.3 The circuit court gave its decision January 15, 1886, prohibiting both the South Penn and Beech Creek sales. An appeal to the state supreme court naturally followed; on October 18 it simply upheld the lower court, and that was legally that.4 ThedecisioncompletelyundidMorgan’stidyresolutionoftheSouthPenn and Beech Creek affairs. The New York Central came out well enough: the Beech Creek remained in the hands of George Magee and the Central, and Not Quite Dead 103 Vanderbilt attorney Francis Lynde Stetson guided the South Penn syndicate and the railroad company itself...