The Canal Builds a Railroad

The D&H Canal and its owner, the D&H Canal Company played an important role in creating the great rail network of the northeast United States and, especially, of New York State. Whilst some of this was deliberately planned, much of the Canal’s role in the creation of our regional rail network was indirectly tied to the canal’s coal trade.

Almost from the very start the canal company had an interest in steam engines and railroads. The 16 mile long D&H gravity railroad hauled coal from the Carbondale coal fields to the canal terminus at Honesdale. The first steam locomotive in America, the Stourbridge Lion, was to be the first of a fleet of locomotives which would be used to move the coal cars. However, the rail bed could not stand up to the stress of the Lion and the idea was abandoned in 1829. Thenceforth the empty coal cars were moved along by fixed steam engines. In 1830 the “Gravity” encompassed most of the track mileage in the United States.

During the 1850’s it was becoming clear that the wave of the future was in railroads and that the era of the canals was drawing to an end. After two major initiatives to widen the D&H Canal and other projects to improve the canal-way, the canal company essentially stopped investing in the canal after mid-century and turned its attention to the railroad business. This change was fostered by the fourth president of the D&H, George Olyphant, who recognized the importance of the new rail technology.

In 1867 the D&H Canal Company was granted the right by New York State to operate a railroad.  Based on this charter the D&H Railroad, a collection of both acquired and newly built rail lines was created. Work began in earnest in 1869 on the D&H rail program and, in 1898 when the canal was shut down and sold, the D&H Canal Company finally dropped “Canal” from its name. The transformation of the D&H Company from a canal to a railroad company was complete. In 1967 with the great consolidation of American railroads the D&H finally came to an end with its absorption into the Norfolk & Western Railroad system.

The D&H had a complex relationship with the Erie Railroad. At first, D&H management was wary of the Erie because it was a potential competitor. By 1868 the D&H managers realized that they needed the Erie and a contract was signed between both companies calling for a line to be constructed from Carbondale to the Erie main line. This gave the D&H access to the Erie network. The agreement also called for D&H coal to be transported to Weehawken, New Jersey and to New York City in the winter when the canal was closed. When the canal ceased operating in 1898, this agreement was expanded to give the Erie the right to carry all the coal which had formerly been transported by canal boat. In 1903 the Erie granted the D&H trackage rights on its Owego line thereby giving the D&H a direct connection to the Lehigh Valley Railroad. Both the Erie and the D&H had established a mutually beneficial relationship. The D&H Company also had similar agreements with other carriers such as the O&W and was important in their success.

Thomas Cornell and his son-in-law Samuel Decker Coykendall made a fortune carrying D&H coal down the Hudson from Esopus to New York City. This bankroll financed their entry into the railroad business. They established a number of railroads on both sides of the Hudson River. In this sense their rail network was built on D&H coal.

Both Cornell and Coykendall saw the tourist potential in the Catskill region and established the Ulster & Delaware railroad to open the upper Catskills to visitors from the city. They also established other short haul railroads like the Kaaterskill Railroad to connect to the U&D in order to serve the area’s large hotels.

From their commerce with New York City, Cornell and Coykendall recognized that the growing middle class in the city afforded a great opportunity that they could exploit. Vacationers made their way up the Hudson on Cornell steamboats or on the West Shore Railroad and connected to the U&D at Kingston. The U&D played a very important role in nurturing and sustaining the tourist trade in the upper Catskills.

The U&D also played a major role in creating the upper Catskills dairy industry. In fact, Coykendall built the area’s first creamery at Roxbury. The milk carried on the U&D was shipped to Roundout and thence down the Hudson on one of Cornell’s steamboats.

When the D&H Canal was finally shut down and abandoned, Coykendall bought the canal. He sold some of the land besides the canal to the Delaware Valley and Kingston Railroad. Plans were to build a railroad to the Hudson River which would carry coal produced by independent coal operators. They hoped to be able to break the virtual monopoly exercised by eight railroads over the Pennsylvania coal business. In particular, the Erie, Leigh Valley and Reading controlled almost 80% of the hard coal business amounting to roughly 50 million tons annually at the turn of the century.

Unfortunately, control over the DV&K slipped from the independents’ grasp in 1900 when the great railroad financier J. Pierpont Morgan, the leader of the cartel, purchased a controlling interest in the Pennsylvania Coal Company, the largest of the independents. This allowed the cartel’s domination over the anthracite market to continue since the Erie Railroad assumed control over the DV&K properties as part of the deal. Most of the canal-way not sold to the DV&K was sold by Coykendall to the O&W Railroad in 1902. The O&W built a branch line from Ellenville to Kingston and, eventually, operated a rail line along the old canal-way all the way from Port Jervis to Kingston. 

To learn more about the D&H Railroad Jim Shaughnessy’s Delaware & Hudson is a valuable reference. Also, Steamtown National Historic Site in Scranton, Pa. is a great place to visit to get a feeling of the great age of steam locomotives and should not be missed.

Copyright 2006 by Stephen Skye