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.