The Sunbury and Erie Railroad Company (also known as the Erie and Sunbury Railroad) was chartered by the Commonwealth of Pennsylvania in 1837, to build a rail line connecting towns between Sunbury and Erie, Pennsylvania. Due to financial problems, the company did not begin construction until the state passed enabling legislation, which including reducing tax assessments, in 1852. By December 1854, 28.5 miles (45.9 km) of track were completed between Milton (a junction with the Catawissa Railroad) and Williamsport. The line reached Sunbury in 1855, a total of 40 miles (64 km). The company continued to experience financial problems, exacerbated by the Panic of 1857. The tracks reached Lock Haven in 1859. To speed completion of the line, the Sunbury & Erie also started building towards the southeast from Erie. That portion of the line reached Warren, a distance of 66 miles, by 1859;[2] little construction occurred in 1860 amid the politics leading to the American Civil War.[3]
In 1861 the Pennsylvania General Assembly passed additional legislation to strengthen the company's financial position, and changed the company name to the Philadelphia and Erie Railroad (P&E).[4] Other, related legislation authorized various railroad companies to lease the lines of other companies, and the PRR entered into a 999-year lease with the Philadelphia & Erie in 1862. That same year the PRR assumed control of the P&E. Labor shortages due to the Civil War further delayed construction.[3]
The main line was completed to Erie in October 1864. The New York Times suggested that the railroad would be a major route connecting trade for petroleum between northwestern Pennsylvania and Philadelphia.[5] The Erie Union Station opened on October 1, 1865.[3]
The P&E opened a large coal transfer terminal at its Lake Erie terminus in 1866. In 1867 the pier at Erie was expanded to handle ore shipments from the midwest. Despite these improvements, the P&E did not thrive, as it faced strong competition from the New York Central Railroad.[6] Over the next three decades the P&E also experienced serious setbacks due to several major floods, storms, a bridge fire, and various operational accidents.[3]
The P&E was formally merged with the PRR in May 1907.[2]