the rate wars were on between the seaboard and Chicago; and Jay Gould was threatening to divert all the traffic of his Wabash, St. Louis, and Pacific lines from the New York Central and turn it over to other Eastern connections unless Vanderbilt would give him a vital interest in the Vanderbilt lines.

Vanderbilt was harassed beyond endurance and, being of softer material than his father, was fearful of the outcome of public opinion, notwithstanding the fact that in a moment of anger—according to the statement of a newspaper reporter whose veracity Vanderbilt denied to his dying day—he had used the familiar expression, "The public be damned!" There were intimations that the Legislature was planning to impose heavy taxes on the property, solely because Vanderbilt held this gigantic personal ownership in the property. This prospect frightened him and he consulted friends whose judgment he respected. They urged him to sell a considerable part of his holdings in order to distribute the ownership of the property among a large number of people.

This plan could not be carried out, however, in the ordinary way, because large sales of stock by the Vanderbilt interests, if the speculating and investing public learned that he was making them, would greatly depreciate the price and might create general demoralization and a panic, while they would certainly injure the credit of the New York Central property. But a way out of the dilemma had to be found. It was at this juncture that a new personality, later to be closely identified with the Vanderbilt lines for a long series of years, appeared upon the scene. Vanderbilt was advised to consult J. Pierpont Morgan, of the banking house of Drexel, Morgan and Co. At that time the name of J.P. Morgan was just beginning to come prominently to the front in banking circles in New York. The Drexels had been conspicuous in business in Philadelphia for many years and in a sense were the fiscal agents of the great Pennsylvania Railroad Company. But the spectacular success of the House of Morgan a few years before in marketing the French government loan in England had added largely to its prestige. And so Vanderbilt concluded that, if any man could show him a way out in his difficult problem, Pierpont Morgan was that man.

The upshot of the matter was that Morgan devised a plan for the sale of a large amount of Vanderbilt's stock holdings through private sale in England, and in such a way that the knowledge of such sale would not become public in America. A confidential syndicate was formed which undertook to take the stock in a block and pass it on to English investors at approximately its current market price of about $130 per share. The sale was promptly accomplished; the stock went into the hands of unknown interests abroad; Vanderbilt received more than $25,000,000 in cash, which he largely reinvested in United States government bonds, and the Morgan syndicate reaped a profit of about $3,000,000. Five months after the closing of the syndicate public announcement was made of the sale and of the syndicate profit. The striking success of this transaction naturally added greatly to the prestige of. J. P. Morgan as a financier of very large caliber, and it had the satisfactory effect of curtailing the legislative attacks on Vanderbilt.

From that date forward, the history of the Vanderbilt railroads has been closely identified with the House of Morgan. J.P. Morgan and his business associates became the company's financial agents, and thereafter all plans of expansion or consolidation were handled directly by them. In the board of directors Morgan banking interests had full representation, which they have held until this day.

The subsequent history of the Vanderbilt lines is chiefly a story of business expansion and growth. From 1885 to 1893, the great panic year, the New York Central each year added to its mileage, either by merger of smaller lines or by construction. All this time it was consolidating the system, eliminating the weaker links, and strengthening the stronger. Its lines penetrated all the best Eastern railroad territory outside of New England, New Jersey, and Pennsylvania, and no other railroad system in the country, with the single exception of the Pennsylvania, covered anything like the same amount of rich and settled territory, or reached so many cities and towns of importance. New York, Buffalo, Cleveland, Detroit, Chicago, St. Louis, Cincinnati, Indianapolis—these are a few of the great traffic centers which were included in the Vanderbilt preserves. The population of all these cities, as well as that of the hundreds of smaller places and the countryside in general, was growing by leaps and bounds. Furthermore the Northwest, beyond the Great Lakes and through to the Pacific coast, saw the beginnings of its great development at this time; and the wheat fields of the far western country became a factor of profound importance in the national development. Consequently when the period of depression arrived with the panic of 1893, the Vanderbilt properties were, as a whole, in a strong position to meet the changed situation and, like the great Pennsylvania property, they all passed through to the advent of the new industrial era without the defaulting of a bond or the passing of a dividend. The remarkable character of this achievement is evident in view of the fact that in the period from 1893 to 1898 more than sixty-five per cent of all the railroad mileage in the United States went into the hands of receivers.

After the close of this era of panic, the Vanderbilt lines began expanding again, though on a much smaller scale than in their more active time. In 1898 William K. Vanderbilt, then president, made the announcement that the New York Central had leased the Boston and Albany Railroad, at that time a lucrative line running from Albany across Massachusetts into Boston. This gave the system an entry into the New England field, which it has continuously held since. A few years later this New England interest was increased by the acquisition of the Rutland Railroad in Vermont, thus making connection with the Ogdensburg and Lake Champlain, a line running across the northern part of New York State, which had also come under Vanderbilt control.

When business revived in the closing years of the nineteenth century, the history of American railroads began a new chapter. Federal railroad regulation, which started in a moderate way with the passage of the Interstate Commerce Act in 1887, had steadily increased through the years; the Sherman Anti-trust Act, passed in 1890, had been interpreted broadly as affecting the railroads of the country as well as the industrial and other combinations. These influences had thus greatly curtailed the consolidation of competing lines which had gone on so rapidly during the decades following the Civil War. Railroad managers and financiers therefore began to face a very serious problem. Competition of a more or less serious nature was still rampant, rates were cut, and traffic was pretty freely diverted by dubious means. Consequently many large railroad systems of heavy capitalization bid fair to run into difficulties on the first serious falling off in general business.

Great men are usually the products of their times and one of the men developed by these times takes rank with the greatest railroad leaders in history. Edward H. Harriman had risen in ten years from comparative obscurity and was now the president of the Union Pacific Railroad, which he had, in conjunction with the banking house of Kuhn, Loeb and Company, reorganized and taken out of bankruptcy. Harriman was one of the originators of the "community of interest" idea, a device for the partial control of one railroad system by another. For instance, although the law forbade any railroad system from acquiring a complete control of a competing line by purchasing a majority of its capital stock or by leasing it, nothing was said about one railroad having a minority investment interest in another. A minority investment, even though it be as low as ten or