The Corsair Compact

In July 1885, aboard his yacht, Corsair, J. Pierpont Morgan negotiated an agreement between two major East Coast railroad competitors, New York Central and Pennsylvania Railroad. The outcome was called the “Corsair Compact.”

China from CorsairOn July 10, 1885, aboard his yacht, Corsair, J. Pierpont Morgan negotiated an agreement between two major East Coast railroad competitors, New York Central and Pennsylvania Railroad. The outcome was called the "Corsair Compact."

The stakes were high. Railroads in the late 19th century were plagued by overcapacity and rate wars that roiled the industry and markets. Undeterred, William H. Vanderbilt, owner of New York Central, and Jay Gould, who owned Pennsylvania Railroad, used their competing railroads to wage financial war.

Morgan managed to persuade the presidents of both companies to join him on the Corsair, where he impressed on them the potential catastrophe for their companies, investors and the global markets if they did not resolve their differences. He then mapped out a truce. By the time the Corsair docked in New Jersey, the men had agreed to the terms.

 

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