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The Nickel Plate Challenge

Construction of the Nickel Plate required only two years. During that time William Vanderbilt and Jay Gould watched with interest. If either person could acquire the new road, they could control its use and end the threat to their railroads. If the line remained independent it would be able to establish relationships with other independent lines and create a substantial dent in both entrepreneurs' railroad holdings. William Vanderbilt tried to lower the value of the line by organizing a thorough campaign to smear its reputation before a train ever ran on it. If the plan was successful Vanderbilt could scare the Seney Syndicate into selling the road to him or drive the company into bankruptcy, where he could buy it in foreclosure. However, Vanderbilt's plan came with two important risks. If he slandered the line he risked chasing the syndicate into an alliance with Gould, who also wanted to buy them out. The other risk was that his plan to smear the line's reputation might fail and it would quickly grow, stunting the growth of his own roads. Trying to ruin the reputation of a railroad that had yet to run a train was difficult. Vanderbilt claimed the road was being built with substandard materials and would use unsafe practices once completed. He succeeded in creating long-standing rumors about the line, but failed to devalue the company or scare the investors.

During the summer of 1882 the costs of construction were running higher than expected and some of the many complex relations with other railroads, necessary to assure the Nickel Plate with facilities such as depots and passenger stations, were not yet secured. The syndicate negotiated with Gould to purchase the road, but unlike Vanderbilt, Gould lacked the capital to purchase the railroad company outright. Gould desperately needed to buy the line, but he lacked the resources to make a good bid. If he succeeded he would be able to mount a formidable challenge against Vanderbilt's railroads. Frustrated at the failing talks, Gould broke off negotiations and gave up on his attempt to break Vanderbilt. Three days after the road opened in late October, 1882, Vanderbilt made an offer to buy the road and the syndicate accepted.

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