Packer's Later Years in the Lehigh Valley Railroad
For his part, Asa Packer testified that his charter did not limit what he could charge for transporting coal. The questions then turned toward the formation of a cartel in March of 1869. Packer replied that he did attend a meeting with different railroad executives, but stated that he did attend a meeting that agreed to reduce coal tonnage in order to keep shipping rates up. Interestingly, Packer also testified that “if there is a combination for the purpose of putting up the price of coal we should use all legal measures to prevent it.” Tiptoeing around the issue, Packer then spoke to the fact that the railroad executives all agreed to raise the price of coal transportation, “but there was no contract.” The committee questioned numerous individuals about railroad operators meeting to fix prices. All people examined acknowledged the existence of meetings, but they often noted the conventional nature of meetings of business leaders and denied formal arrangements in price fixing.
In 1872, more meetings of railroad executives followed. Franklin Gowen, president of the Reading Railroad, organized a meeting in New York City where the major railroad heads agreed to transport a certain percentage of the anthracite coal produced that year. The combination worked for the owners and the consumer and by 1873 coal returned to its pre-American Civil War price, while flour cost twice as much as its pre-American Civil War price. In 1874, prices dropped and coal operators offered a wage cut to their workers. Most workers rejected this deal, but a few did not. After six months, the “Long Strike” failed to bring about changes for the workers and they returned to their jobs with lower wages. In 1876, Asa Packer may have feared that he violated his charter or, perhaps, that legislators would consider his charter null and void and he withdrew from the transportation cartel organized by Gowen. The Lehigh Valley Railroad did not stick to its percentage quota and transported more coal to market than authorized. Gowen flooded the market and chastised Packer and his associates. Packer resisted returning to the fold without a higher quote, which he eventually received for the Lehigh Valley Railroad. Knowledge of the agreement spread and the New York and New Jersey legislatures looked into the deal. Neither assembly found it illegal. In the fall of 1878, the Lehigh Valley Railroad demanded a new deal. After Packer’s death, the Lehigh Valley Railroad did not sign any agreements with Gowen, but they struck up an informal deal that periodically shut down production to limit the amount of coal on the market.
