Pennsylvania Lines West of Pittsburgh. Northwest System. Predecessor and subsidiary companies.

The Northwest System of the Pennsylvania's Lines West operating organization was formed on March 1, 1890, for the purpose of operating the lines of the Pennsylvania Company and its lessor companies. It consisted of a main line between Pittsburgh and Chicago, with branches running from the lake ports of Cleveland, Ashtabula and Erie to the steel-making centers around Pittsburgh and the Mahoning Valley. The Northwest System was abolished in the reorganization of March 1, 1920, and divided between the Central Region and the Northwestern Region. The corporations owning the lines continued to be maintained as shell companies.

Pennsylvania interests had chartered the Ohio & Pennsylvania Rail Road Company in 1848 to build to Crestline, Ohio on a direct line from Pittsburgh to Chicago. The PRR directors approved a subscription of $250,000 to the O&P in September, 1851, but were overruled by the stockholders, particularly the City of Philadelphia, on the grounds that it was imprudent with the PRR's own road unfinished. These objections were not removed until 1853, when the PRR subscribed $300,000 to the O&P and $300,000 to its western extension, the Ohio & Indiana. In 1856, these companies and a second extension, the Ft. Wayne & Chicago, were consolidated to form the Pittsburgh, Ft. Wayne & Chicago Rail Road Company. The road was badly burdened with debt and was hard hit by the financial Panic of 1857. PRR President Thomson had himself appointed Chief Engineer in 1858, and was able to complete the line to Chicago on January 1, 1859.

The Ft. Wayne went into receivership on December 7, 1859, and the company was reorganized in 1862 as the Pittsburgh, Ft. Wayne & Chicago Railway Company. The PRR had only a minority interest in the Ft. Wayne, which was headed by George W. Cass, the nephew of the noted Jacksonian politician, Lewis Cass. At Crestline, the PFW&C crossed the Cleveland, Columbus & Cincinnati Railroad. This gave the PRR another, if insecure, route to Cincinnati and the southwest, but it also gave the Ft. Wayne an alternate route to the East via Cleveland. Thus the PFW&C remained something of a free agent, and pursued its own interests.

The Ft. Wayne had also begun to secure control of lateral lines. In 1860, it leased the Cleveland & Pittsburgh Railroad giving it access to the Lake Erie traffic. The C&P left the Ft. Wayne main line at Rochester, PA, at the mouth of the Beaver River, looped to the south and crossed the Ft. Wayne at Alliance on the way to Cleveland. Although it was ten miles longer, the C&P line had more favorable grades for freight traffic between Rochester and Alliance than the Ft. Wayne, so it was used by both roads for slow, heavy freight. In 1865, the Ft. Wayne purchased the property of the Cleveland, Zanesville & Cincinnati Railroad, which ran from Hudson on the C&P to Millersburg. It was in turn sold to a new subsidiary, the Cleveland, Mt. Vernon & Delaware Railroad in 1869. In 1863 the Ft. Wayne leased the New Castle & Beaver Valley Railroad and in 1867 the Lawrence Railroad, both branches in the New Castle-Youngstown area, an emerging center of iron and steel production. On March 24, 1870, the PRR leased the property of the Erie & Pittsburgh Railroad, which had been completed in 1865.

The rapid acquisition of lines west of Pittsburgh created a number of managerial problems. The roads were controlled by a maze of leases, stock control and bond guarantees. The companies came staffed with local managers who were more familiar with their respective territories, and it does not appear that there was any serious thought given to running the entire system from Philadelphia. The rationalization of the western lines' structure was accomplished through the medium of a holding company. The Pennsylvania Company was incorporated under the laws of Pennsylvania on April 7, 1870. It was one of a series of extremely broad and vaguely-worded corporate charters passed by the Pennsylvania legislature over a two-year period with the connivance of railroad and mining interests. By using one of these charters, an owner obtained almost unlimited power to expand geographically or into different lines of business. Previously, the only legal means to do so would have been a special amendment to the original charter, which typically galvanized political opposition in the legislature, whereas the holding companies used dummy incorporators to disguise the real purpose of the acts. The Pennsylvania Company was organized on June 1, 1870, although formal letters patent were not issued until November 25, 1872.

Effective April 1, 1871, the PRR transferred to the Pennsylvania Company all leases and operating contracts west of Pittsburgh and Erie and all of the securities it held in western roads with the exception of the Cleveland, Mt. Vernon & Delaware RR and $8.07 million in the bonds of roads in the Panhandle system. In return the PRR received the entire issue of Pennsylvania Company preferred stock ($8,000,000).

The Pennsylvania Company continued to operate the lines comprising the Northwest System until January 1, 1918, when all the leases were made over to the Pennsylvania Railroad Company. The Pennsylvania Company was then converted to a general holding company. The Pennsylvania Company was reincorporated in Delaware on December 12, 1958, and became the PRR's vehicle for diversification into pipelines and real estate.

From the description of Corporate records, 1848-1960. (Hagley Museum & Library). WorldCat record id: 86119457