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Appalachian Range railways history

The story of the Baltimore and Ohio Railroad takes us back more than 175 years. When the scheme for the construction of a railroad from Baltimore to the waters of the Ohio River first began to take form, the United States had barely emerged from the Revolutionary period. Many of the famous men of that great day were still living. John Adams and Thomas Jefferson had been dead only a year; Madison and Monroe had recently retired from public life; John Quincy Adams held the office of President, and the "reign" of Andrew Jackson had not yet begun.

At this time steam navigation on the rivers was only in its beginnings, but no one could doubt that it would come into general use. Two decades had passed since the Clermont had been launched on the Hudson by Robert Fulton, and steamboats were now carrying cargoes successfully against the swift currents up the Mississippi from New Orleans and were threatening the extinction of the aggressive flatboat traffic. Great strides had also been made in the construction of turnpike roads. The famous National Pike from Cumberland to Vandalia, Illinois, had been in large part completed and had done much for the opening up of the Western territory.

Canal building was likewise an extensive development of this period. The idea of connecting the waters of the Chesapeake with those of the Ohio had been broached by George Washington before the Revolution, and he had also prophesied the union of the Hudson and Lake Erie by canal. He believed that a country of such great geographical extent as the United States could not be held together except by close commercial bonds.

The opening of the Erie Canal to New York in 1825 stimulated other cities on the Atlantic seaboard to put themselves into closer commercial touch with the West. This was especially true of the city of Baltimore. A canal connecting Chesapeake Bay and the Ohio River was advocated to protect the trade of Baltimore and the South from the competition of New York and the East which would inevitably result from the construction of the Erie Canal and the Public Works of Pennsylvania. But discouragements in plenty frustrated the plan. The cost was believed to be excessive and the engineering difficulties were said to be almost insuperable. George Bernard, a French engineer, was of the opinion that the high elevations and scarcity of water along the route would prevent such a canal from having much practical value. For these reasons Baltimore believed that its position as a center for the rapidly developing Western trade was slowly but surely slipping away.

This was the situation that led to the building of the Baltimore and Ohio Railroad. Two men: Philip E. Thomas and George Brown - were the pioneers in this great undertaking. They spent the year 1826 investigating railway enterprises in England, which were at that time being tested in a comprehensive fashion as commercial ventures. Their investigation completed, they held a meeting on February 12, 1827, including about 25 citizens, most of whom were Baltimore merchants or bankers, "to take into consideration the best means of restoring to the city of Baltimore that portion of the western trade which has lately been diverted from it by the introduction of steam navigation and by other causes." The outcome was an application to the Maryland Legislature for a charter for a company to be known as "The Baltimore and Ohio Railroad Company" having the right to build and operate a railroad from the city of Baltimore to the Ohio River. The formal organization took place on April 24, 1827, with Philip E. Thomas as president and George Brown as treasurer. The capital of the proposed company was fixed at five million dollars.

The construction of the railroad began on the fourth of July 1828. The venerable Charles Carroll of Carrollton, then more than ninety years old and the only surviving signer of the Declaration of
Independence of fifty-two years before, said on this occasion, as he laid the first stone: "I consider this among the most important acts of my life, second only to my signing the Declaration of Independence." His vision was indeed prophetic.

Construction was rapidly pushed ahead, and by 1832 the whole line had been opened to Point of Rocks, with a branch to Frederick, Maryland, making 72 miles in all. In 1831, steam locomotives were tested, and one of them, the York, was found capable of conveying fifteen tons at the rate of 15 miles an hour on level portions of the road. This achievement was regarded as a great triumph, and in 1832 the directors of the road called attention to "the great increase in velocity" that had been obtained in this way.

From this time forward the expansion of the railroad proceeded with a certainty born of success. A branch was built to Washington and the main line was extended to Harper's Ferry. Beyond this point construction was slow because financial difficulties stood in the way, and it was not until after the panic of 1837 that further aggressive building began. But by 1842 the line was completed to Cumberland, Maryland, and by 1853, to Wheeling. Meanwhile, the branch from Cumberland to Parkersburg, Virginia, was built. The railroad now comprised a total system of more than five hundred miles and reached two points of importance on the Ohio River, one northward near the Pennsylvania-Ohio state line and one southward in the direction of Cincinnati. The Parkersburg extension was of great importance because it opened a through route to St. Louis, by means of the Cincinnati and Marietta Railroad - which was at this time completed from Cincinnati to Belpre, Ohio, opposite Parkersburg - and the Ohio and Mississippi, which extended more than three hundred miles from St. Louis to Cincinnati.

Times were not the best, however, and, although much traffic was developed, the immense cost of the extensions heavily burdened the Baltimore and Ohio Company, while the panic of 1857 seriously embarrassed its credit. Soon after this panic and before the company had begun to recover from its effects, John W. Garrett, one of the large stockholders in the road and son of a Baltimore banker, was elected to its presidency, and a new chapter in the history of the Baltimore and Ohio began. Almost immediately following Garrett's election, a remarkable change became apparent. Losses were turned into gains; deficits were converted into surpluses; and soon Garrett had gained the reputation of being the most remarkable and efficient railroad manager in the world.

Under Garrett's management a new era of expansion almost immediately began; work was started on the long delayed branch to Pittsburgh and plans were laid for establishing a line of steamships from Baltimore to the leading European ports. But the Civil War, which bore heavily on the Baltimore and Ohio, interfered with these ambitious schemes. Early in 1861 the Confederates took possession of a large part of the line east of Cumberland; in the next four years important sections of the road were repeatedly destroyed and rebuilt, as they passed into the hands of the Federal or Confederate troops. The company, however, managed to get through without default in its securities, and, when peace was restored in 1865, the Baltimore and Ohio resumed its policy of aggressive expansion.

In the course of the Civil War, as already noted, through traffic routes from New York to Chicago had been established, and in the succeeding years the consolidations of the great competing systems into trunk lines had taken place. The struggle of the Baltimore and Ohio for its share of Western business led to fierce rivalry with the Pennsylvania Railroad System. This competition became so severe and intense that, in 1874, the Pennsylvania road refused to carry the Baltimore and Ohio cars over its line to New York on any terms whatever. Since this was the only way in which the Baltimore and Ohio could reach New York, the situation was a serious one. Garrett retaliated by making destructive reductions in passenger rates from Washington and Baltimore to Western points. The cuts were soon made on other roads and affected both freight and passengers. All the lines became involved. Passenger fares from Chicago to Baltimore and Washington were reduced from nineteen dollars to nine dollars, and those to New York and Boston from 22 to 15 dollars. Still the fight continued, and before the end of 1875 it was possible to travel from Chicago to New York first class for twelve dollars and to ship grain to New York for as low a rate as twelve cents.

Despite the fact that competition had cut earnings almost to the point of extinction, the Baltimore and Ohio continued to report surprisingly good profits. The company borrowed additional funds from time to time but continued to pay the liberal ten per cent dividend until 1877, when it somewhat reduced the rate. These dividend payments indicated, however, a prosperity that was only apparent, and they did not greatly deceive the bankers, for the
credit of the Baltimore and Ohio weakened from day to day. The fact is that the reports of operations inspired little public confidence; to the farseeing, there were danger signals ahead. Nevertheless the ten per cent dividends were resumed in 1879 and continued at this rate without interruption until 1886.

During the entire administration of John W. Garrett, extending over more than two decades, current expenditures of enormous amounts which should have been deducted from the income had been credited to the surplus; many millions which would never be returned had been advanced to subsidiary railroad lines, or had been spent, and therefore should have been put down in the books as losses. When these facts became public, the capital stock of the Baltimore and Ohio, which for generations had been looked upon as one of the most secure of railroad investments, dropped to almost nothing, and the most strenuous financial efforts were required to keep the company out of bankruptcy.

These disclosures, towards the end of 1887, ended the first period of active Garrett management in the Baltimore and Ohio. The directors then turned to New York bankers for the cash that
was needed to put the affairs of the company on a sound basis. Samuel Spencer, who afterward became a partner in the banking house of J. P. Morgan and Company, was elected president and active manager. He introduced radical reforms, entirely revolutionized the organization, and adopted modern methods. He wrote off the books a large amount of the much vaunted "surplus" and he took important steps toward the general improvement of the property.