Two Railroads with One Owner

The Delaware, Lackawanna and Western Railroad did not emerge from a partnership between strangers. Both predecessor companies belonged to the same circle of Scranton iron manufacturers, and the consolidation on March 11, 1853, was less a negotiation than a corporate reorganization.

The older of the two lines traced back to the Liggett’s Gap Railroad, incorporated on April 7, 1832, to run 56 miles from Slocum’s Hollow north to Great Bend, Pennsylvania, where it would connect with the New York and Erie Railroad. The charter sat dormant for seventeen years. On March 14, 1849, the company was re-chartered and formally organized the following January. By April 1851, it had been renamed the Lackawanna & Western Railroad, and on October 20 of that year, the first train ran from Slocum’s Hollow to Great Bend. Regular service began two months later, on December 20.

The second company, the Delaware & Cobb’s Gap Railroad, received its charter on December 4, 1850, to build 64 miles eastward from Scranton to the Delaware River near Stroudsburg. The charter was purchased by “Scrantons and Platt,” the iron mill owners who were entering the coal business. At the time of the merger, this eastern line had not yet opened.

Why Consolidate

George W. Scranton and his associates needed a single corporate entity that could move anthracite coal from the Lackawanna Valley to New York City. The northern line to Great Bend connected with the Erie Railroad, but the real prize was access to eastern markets through New Jersey. Combining the two companies under one charter simplified financing, eliminated redundant management, and gave the new railroad authority over the full route from Great Bend south through Scranton and east to the Delaware River.

The consolidation also positioned the DL&W to work with the Warren Railroad, which John I. Blair had chartered in New Jersey on February 12, 1851. Blair’s line would carry DL&W traffic from the Delaware River southeast to Hampton, New Jersey, where it connected with the Central Railroad of New Jersey for the final leg into Jersey City. None of this corridor functioned yet on the day of the merger. The consolidation was a bet on a route that existed mostly on paper.

George W. Scranton at the Helm

George W. Scranton became the first president of the consolidated railroad, a position that formalized what had been true for years. He and his brother Selden had built the iron furnaces at Slocum’s Hollow in the early 1840s, manufacturing T-rails for railroad track using anthracite coal smelting. The railroad and the iron works fed each other: the furnaces produced rails, and the railroad hauled coal to keep the furnaces burning.

In 1853, the same year as the consolidation, Selden T. Scranton was elected president of the Lackawanna Iron and Coal Company, capitalized at $800,000. The brothers divided the empire between them. George ran the railroad; Selden ran the iron and coal works.

Completing the Coal Route

Three years of construction followed the consolidation. The DL&W pushed its Southern Division eastward from Scranton toward the Delaware River while the Warren Railroad built its connecting segment through New Jersey. On May 28, 1856, the full route opened. DL&W trains ran from Scranton to the Delaware River, then over the Warren Railroad to Hampton, and finally over the Central Railroad of New Jersey into Jersey City. Anthracite from the Lackawanna Valley could now reach New York City markets by rail.

The completed route transformed Scranton from an iron town with a short branch line into a transportation hub on a trunk railroad. Coal tonnage, not passenger traffic, drove the railroad’s early revenue. The DL&W organized its Coal Department in 1851, before the consolidation, and the department’s importance only grew once the eastern route opened.

The Panic and Its Aftermath

The financial crisis of 1857 nearly destroyed the railroad that the Scranton brothers had built. Moses Taylor, a New York banker who controlled what would later become Citibank, purchased outstanding DL&W shares at $5 apiece during the panic, gaining financial control of the company. The Scranton family’s dominance over the railroad ended not through any boardroom challenge but through the bond market.

George W. Scranton remained president until his death on March 24, 1861, at the age of forty-nine. By then the railroad he had consolidated eight years earlier ran on six-foot broad gauge track from the coal fields to the coast, and Moses Taylor’s capital had replaced the Scranton brothers’ iron-and-coal fortune as its financial backbone.