The Twelfth Engine: A Confluence of Business Perspectives

34 Pages Posted: 19 Sep 2019 Last revised: 10 Dec 2020

See all articles by Michael J. T. McMillen

Michael J. T. McMillen

Curtis, Mallet-Prevost, Colt & Mosle LLP; University of Pennsylvania Law School

Date Written: December 10, 2020


Despite an inadequate inventory of locomotives in 1844, the Philadelphia & Reading sold one locomotive — the Mohegan — to the State of Michigan. The seemingly simple sale was complex and curious. The engine was precious to the P&R, which had commenced operations in 1842 and was seeking to acquire locomotives and cars to generate revenue to pay its operating costs and an enormous debt load from system infrastructure construction, which was then still incomplete. The Mohegan was built by Locks & Canals and delivered to the P&R only fifteen months prior to its sale to Michigan’s Central Railroad. The Central Railroad was bereft of cash and the P&R agreed to accept payment in Michigan bonds; surprising because the bonds, which had been issued to finance Michigan’s ill-fated internal improvements program, had been repudiated in 1842 and were in default in 1844. And Michigan was then trying to sell the Central Railroads’ assets, which would include the Mohegan, to a group of Boston and New York investors. Those investors, particularly the Bostonians, held significant investments in each of the Philadelphia & Reading and Locks & Canals. Unheralded, but pivotally, the Baldwin Locomotive Works was aggressively seeking to build locomotives for each of Michigan and the Philadelphia & Reading.

This paper explores the confluence that enabled, resulted in, and influenced the terms of the sale of the Mohegan, particularly from financial and business perspectives. The story is a vehicle for examining intricate financial maneuverings that shaped the emergence of a capital-intensive industry (railroading) as each transactional participant protected and enhanced its own financial and operational interests within its constraints. Each party, using its knowledge of the objectives and needs of and constraints affecting each other party, sought to maximize the probability of realizing its own objectives, which required facilitating each other party’s realization of its objectives in accordance with that other party’s constraints. A sort of multiple regression analysis over seemingly unrelated parties, objectives, imperatives, and constraints wove together a series of otherwise independent transactions.

Keywords: Railroads, Nineteenth Century, Locomotives, Philadelphia & Reading, Locks & Canals, Baldwin Locomotive Works, Equipment Finance

JEL Classification: N11, N21, N61, N81, O16, D80, D81

Suggested Citation

McMillen, Michael J. T., The Twelfth Engine: A Confluence of Business Perspectives (December 10, 2020). Available at SSRN: or

Michael J. T. McMillen (Contact Author)

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University of Pennsylvania Law School ( email )

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