The New York and Erie Rail Road was chartered on April 24, 1832, by Governor of New York Enos T. Throop to connect the Hudson River at Piermont, north of New York City, west to Lake Erie at Dunkirk. On February 16, 1841, the railroad was authorized to cross into the northeast corner of Pennsylvania on the west side of the Delaware River, a few miles west of Port Jervis, NY, as the east side was already occupied by the Delaware and Hudson Canal to a point several miles west of Lackawaxen, PA. Construction began in 1836 and was opened in sections until reaching the full length to Dunkirk on May 19, 1851. At Dunkirk, steamboats continued across Lake Erie to Detroit, Michigan. The line crossed the Kittatinny Mountains at 870 feet.
When the route was completed in May, 1851, President Millard Fillmore and several members of his cabinet, including Secretary of State Daniel Webster, made a special, two-day excursion run to open the railway. It is reported that Webster viewed the entire run from a rocking chair attached to a flatcar, with a steamer rug and jug of high-quality Medford rum. At stops, he would step off the flatcar and give speeches.
The line was built at 6 ft wide gauge; this was believed to be a superior technology to standard gauge, providing more stability.
In August 1859, the company went into receivership due to inability to make payments on the debts incurred for the large costs of building, and, on June 25, 1861, it was reorganized as the Erie Railway. This was the first bankruptcy of a major trunk line in the U.S.
In the Erie War of the 1860s, four well-known financiers struggled for control of the company; Cornelius Vanderbilt versus Daniel Drew, James Fisk and Jay Gould. Gould ultimately triumphed in this struggle, but was forced to relinquish control in 1872–73 due to unfavorable public opinion following his involvement in the 1869 gold-rigging scandal and to his loss of $1 million of Erie Railroad stock to the British con-man Lord Gordon-Gordon.