What Is a Scrip?

A scrip is is a substitute or alternative to legal tender. Holding a scrip entitles the bearer to receive something in return. Scrips come in many different forms, primarily as a form of credit, with the document acknowledging the debt. Scrips also represent a temporary document representing fractional shares resulting from a split or spin-off, or they may indicate currency issued by a private corporation such as frequent flier miles.

Because they are used as currency substitutes, scrips can be useful in the study of money and monetary economy.

KEY TAKEAWAYS

A scrip is a substitute or alternative to legal tender that entitles the bearer to receive something in return.

Scrips come in many different forms, usually as a form of credit.

Scrips have been used to compensate or pay employees, and in communities when money was unavailable or in short supply.

Some companies may offer dividends in the form of shares rather than cash. These are called scrip dividends.

Gift cards, reward points, and coupons are popular examples of scrips.

Understanding Scrips

In a broad sense, the term scrip refers to any type of substitutional currency that replaces legal tender. In many instances, a scrip is a form of credit but is generally always some form of documentation of debt.

Scrips were created to pay or compensate employees under the truck system. This system, which began during the Industrial Revolution, meant that employees were paid in kind with commodities, vouchers, tokens, or some other form instead of cash. This was usually to the benefit of the employer, not the employee.

Scrips have also been widely used in localized commerce when traditional or legal currency is unavailable or in short supply. This includes small communities or towns—such as the first coal towns—in remote locations, military bases, ships at sea for long periods of time, and in occupied countries during wartime.

The practice of paying wages in company scrip was abolished by the Fair Labor Standards Act of 1938. The same law abolished child labor and set the minimum wage at 25 cents an hour.

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Types of Scrip

During the American industrial revolution, scrip was a common form of payment in company towns and remote communities where the employer was also the only provider of food and housing. By paying workers in a private currency that could only be used in the company stores, the employer could both extract more wealth from their workers and also prevent them from leaving. The exploitative nature of company scrip was a factor in several strikes and armed rebellions.

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Although paying wages in scrip was prohibited in 1938, they are still used in today's world. In certain companies, scrips may come in the form of rewards points or coupons. For example, Canadian retailer Canadian Tire issues its own form of currency—Canadian Tire—money that looks like real currency but isn't. Customers receive a percentage of Canadian Tire money back when they make purchases. This "cash" can then be used toward purchases made at retail and gas station purchases.

Other forms for scrip include land scrip, token coins (such as those used on subways), vouchers, IOUs, and tokens and tickets used at arcades or game centers. Even points earned on certain credit cards may be considered scrip.

Companies that are short on cash often pay scrip dividends. When a company offers its shareholders a scrip dividend, it offers them the choice to receive dividends in the form of more shares or in cash.

 By receiving a scrip dividend, investors can increase the size of their holdings without paying extra fees or charges.

The most widely visible and most modern form of scrip is used in the retail industry in the form of gift cards or gift certificates. Since it can sometimes be considered improper to give cash as a gift, it can be acceptable to give someone a gift card as a present. Gift cards also allow the user to control how and where the card is spent since they can only be used in specific locations. Gift cards or certificates for certain stores or restaurants further restrict the recipient's spending.

Special Considerations

Scrip evolved in the 1980s to include a popular method of fundraising. This fundraising option is specifically popular among bands, athletic groups, schools, and other nonprofit organizations.

Here's how it works. Retailers provide nonprofit groups with gift cards and certificates at a discounted rate. Those organizations can then sell the scrip (the cards) to family, friends, and people in their communities at full face value. The nonprofit keeps the discount from the sale of the card as revenue or as money toward its fundraising goal. For example, a school may try to raise money for a class trip using scrip fundraising. The money collected from the sale of the gift cards (i.e., the discount) would be used to fund the trip.

Advantages and Disadvantages of Scrip

The primary advantage of using scrip is that the issuing company can limit its cash outflows while encouraging repeat business. For example, a company that issues refunds in store credit makes it more likely for the unhappy customer to return, and also allows them to preserve the positive cash flow from the original purchase.

Likewise, issuing a scrip dividend will allow a company to retain cash flow while still rewarding their shareholders. This extra capital can then be reinvested in the company, without additional borrowing. Shareholders who receive a scrip dividend can increase their holdings for free, without any additional fees. There may be tax benefits to receiving a non-cash dividend.

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Conversely, a scrip dividend may raise concerns that the company is experiencing cash-flow issues. In some cases, shareholders may have to sell their additional shares to pay tax on the extra dividends. If the share price rises after a scrip dividend is announced, a company may end up paying more in dividends than they originally planned.

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Scrip Pros & Cons

Pros

Shareholders can increase their holdings without having to buy stock.

Companies can save cash and reinvest in their operations.

Scrip dividends allow investors to gain more shares without having to spend money.

Cons

Scrip systems typically work to the advantage of the company issuing the scrip–not the consumers.

Over-reliance on scrip may raise questions about the solvency or ethics of a company.

Questions & Answers

What Is Meant by Scrip?

Scrip is a type of alternative or substitute currency that can only be redeemed at a certain company. Rewards points, gift cards, and coupons are all familiar examples of scrip that can be used in place of legal tender.

How Do Scrips Work?

Companies issue scrips to do business while postponing cash payment to a later date. Since scrip can only be redeemed at the issuing company, paying in scrip effectively ensures that the recipient will continue doing business with the company while allowing the issuer to reduce their cash outflows. In some cases, scrips can be used as a cash substitute in remote areas where official currency is in short supply.

What Is Scrip in the Stock Market?

A scrip issue, or bonus issue, is when a company creates new shares and awards them to existing stockholders. This is different from a scrip dividend, where stockholders are given the choice of receiving cash or shares.

What Is Meant by Scrip Dividend?

A scrip dividend is when a company gives its shareholders the option of receiving a dividend in either cash or company stock. Receiving a dividend in stock allows the shareholder to grow their holdings without having to buy the shares on the open market, while also allowing the company to reinvest the extra capital into its operations. There may also be tax advantages to receiving a non-cash dividend.

What Is a Scrip Election?

A scrip election gives shareholders the right to choose, or "elect," to receive a scrip dividend instead of a cash dividend.

A scrip (or chit in India) is any substitute for legal tender. It is often a form of credit. Scrips have been created and used for a variety of reasons, including exploitive payment of employees under truck systems; or for use in local commerce at times when regular currency was unavailable, for example in remote coal towns, military bases, ships on long voyages, or occupied countries in wartime. Besides company scrip, other forms of scrip include land scrip, vouchers, token coins such as subway tokens, IOUs, arcade tokens and tickets, and points on some credit cards.

Scrips have gained historical importance and become a subject of study in numismatics and exonumia due to their wide variety and recurring use. Scrip behaves similarly to a currency, and as such can be used to study monetary economics.

History

A variety of forms of scrip were used at various times in the 19th and 20th centuries.

Company scrip

Company scrip was a credit against the accrued wages of employees.

In United States mining or logging camps where everything was owned and operated by a single company, scrip provided the workers with credit when their wages had been depleted. These remote locations were cash poor. Workers had very little choice but to purchase food and other goods at a company store. In this way, the company could charge enormous markups on goods, making workers completely dependent on the company, thus enforcing a form of loyalty to the company. Additionally, while employees could exchange scrip for cash, this could rarely be done at face value. This kind of scrip was valid only within the settlement where it was issued. While store owners in neighboring communities could accept the scrip as money, they rarely did so at face value, as it was worth less.

When U.S. President Andrew Jackson issued his Specie Circular of 1836 due to credit shortages, Virginia Scrip was accepted as payment for federal lands.

In 19th-century Western Canada, the federal government devised a system of land grants called scrip. Notes in the form of money scrip (valued at $160 or $240) or land scrip, valued at 160 acres (65 ha) or 240 acres (97 ha), were offered to Métis people in exchange for their Aboriginal rights.[1]

During the Great Depression, at the height of the crisis, many local governments paid employees in scrip. Vermilion, Alberta was just one example. [2]

In the U.S., payment of wages in scrip became illegal under the Fair Labor Standards Act of 1938.[3]

The expression scrip is also used in the stock market where companies can sometimes pay dividends in the form of additional shares/stock rather than in money.[4] It is also a written document that acknowledges debt.

After World War I and World War II, scrip was used as notgeld ("emergency money") in Germany and Austria.

Scrip was used extensively in prisoner-of-war camps during World War II, at least in countries that complied with the Third Geneva Convention. Under the Geneva Conventions, enlisted prisoners of war could be made to work and had to be paid for their labor, but not necessarily in cash. Since ordinary money could be used in escape attempts, they were given scrip that could only be used with the approval of camp authorities, usually only within the camps.

Poker chips, also referred to as casino tokens, are commonly used as money with which to gamble. The use of chips as company money in the early 19th century in Devon, England, in the Wheal Friendship[5] copper mine gave its name to a local village of Chipshop.

Stamp scrip

Stamp scrip was a type of local money designed to be circulated and not to be hoarded.

One type of this worked this way. Each scrip certificate had printed boxes; every month a stamp costing a certain amount (in a typical case, 1% of the face value) had to be purchased and recorded in a box, otherwise the scrip lost all its value. This provided a great incentive to spend the scrip quickly. The scheme was used successfully in Germany and Austria in the early 1930s, after national currencies collapsed. National governments considered themselves threatened by the success of stamp scrip projects, and shut them down; similar misgivings discouraged their later use elsewhere.[6]

The Alberta Social Credit Party government in 1937 issued prosperity certificates, a form of provincial currency, in an effort to encourage spending. This scrip had boxes in which a stamp equal to 2% of the value had to be affixed each week. Thus, the value of the certificate was covered by the cost of the stamps at the year's end when it matured.

Modern usage

Scrip survives in modern times in various forms.

Community-issued scrip

This section needs to be updated. Please help update this article to reflect recent events or newly available information. (August 2020)

The use of locally issued scrip accepted by multiple businesses within a community has increased during the late-2000s recession. Community-wide scrip usage has begun or is on the rise in Ithaca, New York; Detroit; The Berkshires; Pittsboro, North Carolina; Traverse City, Michigan; Lamar, Colorado; Calgary, Canada; Bristol, UK; and Hagen, Germany.[7][8][9][10]

Breadcoin scrip was created in Washington DC in 2016 to address food insecurity.[11]

Thailand's township Amphoe Kut Chum once issued its own local scrip called Bia Kut Chum: Bia is Thai for cowry shell, which was once used as small change, and still so used in metaphorical expressions. To side-step implications that the community intended their scrip as an unlawful substitute for currency, it now issues exchange coupons called Boon Kut Chum.[12]

Company-issued customer scrip

Some companies still issue scrip notes and token coin, good for use at company points of sale. Among these are the Canadian Tire money for the Canadian Tire stores and gasbars in Canada, and Disney Dollars (no longer printed, but still accepted), in circulation at The Magic Kingdoms and at other establishments owned and operated by The Walt Disney Company.

Scrip gift cards and gift certificates

A scrip card from a babysitting group

In the retail and fundraising industries, scrip is now issued in the form of gift cards, eCards, or less commonly paper gift certificates. Physical gift cards often have a magnetic strip or optically readable bar code to facilitate redemption at the point of sale.

In the late 1980s, the term scrip evolved to include a fundraising method popular with non-profit organizations like schools, bands and athletic groups.[13] With scrip fundraising, retailers offer the gift certificates and gift cards to non-profit organizations at a discount. The non-profit organizations sell the gift cards to member's families at full face value. The families redeem the gift cards at full face value, and the discount or rebate is retained by the non-profit organization as revenue.[14]

Commercial gift cards

Main article: Gift card

Visa, Mastercard and American Express gift cards are initially funded by a credit card or bank account, after which the funding account and gift card are not connected to one another. Once the predetermined funds are consumed, the card number expires. A gift of a gift card, maybe in an attractive wrapper, may be seen as more socially acceptable than a gift of cash. It also prevents the gift being spent on something the giver views as undesirable (or used as savings).

However, unless the gift card is obtained at a discount (paying less than the actual value of the card), buying scrip with ordinary money is arguably pointless, as it then ties up the money until it is used, and usually it may only be used at one store. Furthermore, not all gift cards issued are redeemed. In 2006, the value of unredeemed gift cards was estimated at almost US$8 billion.[15]

Another disadvantage of gift cards is that some issuers charge "maintenance fees" on the cards, particularly if they are not used after a certain period of time; or the card will expire after a given period of time.[16] Some provinces and states in North America (e.g. California, Ontario, Massachusetts, Ohio, Washington) have enacted laws to eliminate non-use fees or expirations,[17] but because the laws often only apply to single-merchant cards[18] buyers have to review the gift card conditions prior to purchase to determine exact restrictions and fees.[19] Additionally, if a retailer goes bankrupt, gift cards can suddenly become worthless. Even if stores do not close immediately, the company may stop accepting the cards.[20] This became a significant issue during the global financial crisis of 2008–2009, prompting the Consumers Union to call upon the Federal Trade Commission to regulate the issue.[21]

Land scrip (United States)

Land scrip was a right to purchase federal public domain land in the United States, a common form of investment in the 19th century. As a type of federal aid to local governments or private corporations, Congress would grant land in lieu of cash. Most of the time the grantee did not seek to acquire any actual land but rather would sell the right to claim the land to private investors in the form of scrip. Often the land title was finalized only after the scrip was resold several times utilizing land agents also called warrant brokers.[22] These grants came in the form of railroad land grants, university land grants, and grants to veterans for war service.[23][24]

The Pittsburgh, Fort Wayne and Chicago Railway was a major part of the Pennsylvania Railroad system, extending the PRR west from Pittsburgh, Pennsylvania, via Fort Wayne, Indiana, to Chicago, Illinois. It included the current Norfolk Southern-owned Fort Wayne Line east of Crestline, Ohio, to Pittsburgh, and the Fort Wayne Secondary, owned by CSX, from Crestline west to Tolleston in Gary, Indiana. CSX leased its entire portion in 2004 to the Chicago, Fort Wayne and Eastern Railroad (CFE). The remaining portion of the line from Tolleston into Chicago is now part of the Norfolk Southern's Chicago District, with a small portion of the original PFW&C trackage abandoned in favor of the parallel lines of former competitors which are now part of the modern NS system.

Notable employees

Harry K. McClintock who worked as a Brakeman from 1905 to 1909 in the Pittsburgh area. The Big Rock Candy Mountains

History

Share of the Ohio and Pennsylvania Railroad Company, issued 24. August 1855

The Ohio and Pennsylvania Railroad was chartered in Ohio on February 24 and in Pennsylvania on April 11, 1848, to build from Allegheny City (annexed by Pittsburgh in 1907) west to Crestline, Ohio, on the Cleveland, Columbus and Cincinnati Railroad. It was organized on June 15 with William Robinson Jr. as president,[1] and construction began on July 4, 1849. The first section, from Allegheny City west to New Brighton, opened July 30, 1851. Extensions opened to New Galilee on October 22 and Enon Valley November 19. On November 27, 1851, a section between Salem and Alliance, Ohio, was completed, not yet connected to the rest. On December 8, the east section was extended west to East Palestine, Ohio, with a stagecoach transfer provided for through travel. Further sections opened January 3, 1852, west to Columbiana, and on January 6 the gap between Columbiana and Salem was filled. In conjunction with the Cleveland and Pittsburgh Railroad, connecting at Alliance, a through line was provided between Cleveland and Pittsburgh. On March 11, 1852, an extension west to Massillon was opened with an excursion. On August 10, 1852, a further extension from Massillon west to Wooster opened. The line west to Mansfield was finished April 8, 1853, and the full line to Crestline opened April 11. With this it formed part of a through line to Cincinnati via the Cleveland, Columbus and Cincinnati Railroad.

1850 map of the Ohio and Pennsylvania Railroad

Work began on August 16, 1854, on the Fort Wayne Railroad Bridge over the Allegheny River to extend the O&P into Pittsburgh to connect with the Pennsylvania Railroad. The bridge opened September 22, 1857, with a temporary station at Penn Street and Tenth Street.

The Ohio and Indiana Railroad was chartered in Ohio on March 26, 1850, and in Indiana on January 15, 1851, to extend the line west to Fort Wayne, Indiana. It was organized July 4, 1850, and work began in February 1852. Some of the capital was gained from a merger with the Great Western Railroad of Ohio in 1851. On August 26, 1853, the line opened from Crestline west to Bucyrus, and a continuation west to Forest opened in early January 1854. On June 10 the line opened west to Delphos, and on October 31 the full line to Fort Wayne was completed, opening the next day.

The Fort Wayne and Chicago Railroad was chartered in Indiana on May 11, 1852, and organized September 14, 1852, as a further extension west to Chicago. It was chartered February 5, 1853, in Illinois. The first section opened in February 1856 from Fort Wayne to Columbia City.

On July 26, 1856, the Pittsburgh, Fort Wayne and Chicago Rail Road was formed as a consolidation of the Fort Wayne and Chicago, Ohio and Indiana, and Ohio and Pennsylvania Railroads. Extensions opened west to Warsaw September 28, Plymouth November 10, Englewood, Illinois (south of Chicago) on November 29, 1858, and Van Buren Street in Chicago on December 25, 1858. On January 1, 1859, trains started running to Chicago, with a terminal at the future location of Union Station. The part west of Plymouth was built with rails removed from the New Portage Railroad.

From the early days, the Pennsylvania Railroad (PRR) had been involved with the project, supplying funds. Once the Fort Wayne Railroad Bridge at Pittsburgh was finished in 1857, trains began to run through from Philadelphia. In 1858 the PFW&C began using the first Union Station in Pittsburgh, shared with the PRR.

On July 1, 1859, the PFW&C defaulted on its debts, and was sold at foreclosure on October 24, 1861. It was reorganized as the Pittsburgh, Fort Wayne and Chicago Railway February 26, 1862.

On July 1, 1865, the PFW&C leased the New Castle and Beaver Valley Railroad, giving it a branch from Homewood, Pennsylvania north to New Castle. The Lawrence Railroad, branching west from Lawrence Junction on the NC&BV to Youngstown, Ohio, was leased on June 27, 1869. On June 1, 1887, the Lawrence Railroad became part of the Youngstown, Lawrence and Pittsburgh Railroad, which on August 1 merged into the PRR's Pittsburgh, Youngstown and Ashtabula Railroad, and on January 9, 1906, that merged with the New Castle and Beaver Valley to form the Pittsburgh, Youngstown and Ashtabula Railway, still leased to the PRR.

The PFW&C bought the Cleveland, Zanesville and Cincinnati Railroad by deed on July 1, 1865, making it its Akron Branch. The line ran from Hudson, Ohio, on the Cleveland and Pittsburgh Railroad south through Akron, crossing the PFW&C at Orrville and continuing to Millersburg. In 1868 a short 3.5 mile (5.5 km) extension to the south was built, and on November 4, 1869, the PFW&C sold the line to the Pittsburgh, Mt. Vernon, Columbus and London Railroad. That company later became part of the PRR's Cleveland, Akron and Cincinnati Railway.

On May 22, 1869, the PFW&C leased the Massillon and Cleveland Railroad, giving it a short branch from Massillon north to the Akron Branch at Clinton.

On July 1, 1869, the PRR leased the PFW&C and began operating it directly, but on April 1, 1871, the PFW&C was transferred to the newly formed Pennsylvania Company. On December 1, 1871, the Pennsylvania Company leased the Cleveland and Pittsburgh Railroad. Since January 25, 1860, the C&P had been operated jointly by itself and by the PFW&C, providing a branch of the PFW&C from Rochester, Pennsylvania, west and north, crossing the PFW&C at Alliance, Ohio, and continuing to Cleveland.

Operation was transferred back to the Pennsylvania Railroad from the Pennsylvania Company on January 1, 1918.

ca. 1874 Pennsylvania Railroad map, including the PFW&C

On February 1, 1968, the PRR was merged into Penn Central. The PFW&C stayed separate, filing for bankruptcy on July 14, 1973, over three years after Penn Central's 1970 bankruptcy. On April 1, 1976, the PFW&C became part of Conrail. Conrail downgraded the line, preferring other parallel lines. On June 2, 1994, the Norfolk Southern Railway bought 18 miles (29 km) from Gary to Valparaiso, which had been out of service since 1991, for $1.4 million. They soon bought 61 more miles (98 km), from Valparaiso east to Warsaw, and acquired trackage rights east to Fort Wayne.

With the August 22, 1998, breakup of Conrail, the line was split at Crestline, Ohio. West of Crestline, including the section that had been owned by Norfolk Southern since 1994, went to CSX Transportation, along with the intersecting Cleveland, Cincinnati, Chicago and St. Louis Railway (better known as the Big Four, a part of the New York Central Railroad system until 1968). Tracks east of Crestline went to Norfolk Southern, which also obtained trackage rights west of that Ohio city.

At the western end of the route, the original PFW&C line has been abandoned from Buffington (an area of far northwestern Gary, Indiana, abutting East Chicago) northwest for a little over four miles to Whiting, Indiana; at both of these locations there are connections to the parallel tracks of the old Lake Shore and Michigan Southern Railway (New York Central Railroad). Northwest of Whiting, the LS&MS itself disappears, and the present-day line goes back to using the old PFW&C tracks, which run the rest of the way into Chicago, carrying both Norfolk Southern freight trains and several Amtrak passenger services.

On August 1, 2004, the Chicago Fort Wayne and Eastern Railroad, a new short line owned by RailAmerica, leased the western part of the line, from Crestline, Ohio, west to the Gary, Indiana, neighborhood of Tolleston, from CSX. It also obtained overhead trackage rights along the formerly out-of-service line from Tolleston, at the junction with the old Michigan Central Railroad (now CSX), northwest to Clarke Junction (also in Gary, just north of the Gary-Chicago International Airport), and then west along the former Baltimore and Ohio Chicago Terminal Railroad (now CSX) to Blue Island, Illinois. Norfolk Southern continues to own the line east of Crestline, Ohio, as well as the part west of Whiting, IN.

The Pittsburgh, Fort Wayne and Chicago Railway was a major part of the Pennsylvania Railroad system, extending the PRR west from Pittsburgh, Pennsylvania, via Fort Wayne, Indiana, to Chicago, Illinois. It included the current Norfolk Southern-owned Fort Wayne Line east of Crestline, Ohio, to Pittsburgh, and the Fort Wayne Secondary, owned by CSX, from Crestline west to Tolleston in Gary, Indiana. CSX leased its entire portion in 2004 to the Chicago, Fort Wayne and Eastern Railroad (CFE). The remaining portion of the line from Tolleston into Chicago is now part of the Norfolk Southern's Chicago District, with a small portion of the original PFW&C trackage abandoned in favor of the parallel lines of former competitors which are now part of the modern NS system.

Notable employees

Harry K. McClintock who worked as a Brakeman from 1905 to 1909 in the Pittsburgh area. The Big Rock Candy Mountains

History

Share of the Ohio and Pennsylvania Railroad Company, issued 24. August 1855

The Ohio and Pennsylvania Railroad was chartered in Ohio on February 24 and in Pennsylvania on April 11, 1848, to build from Allegheny City (annexed by Pittsburgh in 1907) west to Crestline, Ohio, on the Cleveland, Columbus and Cincinnati Railroad. It was organized on June 15 with William Robinson Jr. as president,[1] and construction began on July 4, 1849. The first section, from Allegheny City west to New Brighton, opened July 30, 1851. Extensions opened to New Galilee on October 22 and Enon Valley November 19. On November 27, 1851, a section between Salem and Alliance, Ohio, was completed, not yet connected to the rest. On December 8, the east section was extended west to East Palestine, Ohio, with a stagecoach transfer provided for through travel. Further sections opened January 3, 1852, west to Columbiana, and on January 6 the gap between Columbiana and Salem was filled. In conjunction with the Cleveland and Pittsburgh Railroad, connecting at Alliance, a through line was provided between Cleveland and Pittsburgh. On March 11, 1852, an extension west to Massillon was opened with an excursion. On August 10, 1852, a further extension from Massillon west to Wooster opened. The line west to Mansfield was finished April 8, 1853, and the full line to Crestline opened April 11. With this it formed part of a through line to Cincinnati via the Cleveland, Columbus and Cincinnati Railroad.

1850 map of the Ohio and Pennsylvania Railroad

Work began on August 16, 1854, on the Fort Wayne Railroad Bridge over the Allegheny River to extend the O&P into Pittsburgh to connect with the Pennsylvania Railroad. The bridge opened September 22, 1857, with a temporary station at Penn Street and Tenth Street.

The Ohio and Indiana Railroad was chartered in Ohio on March 26, 1850, and in Indiana on January 15, 1851, to extend the line west to Fort Wayne, Indiana. It was organized July 4, 1850, and work began in February 1852. Some of the capital was gained from a merger with the Great Western Railroad of Ohio in 1851. On August 26, 1853, the line opened from Crestline west to Bucyrus, and a continuation west to Forest opened in early January 1854. On June 10 the line opened west to Delphos, and on October 31 the full line to Fort Wayne was completed, opening the next day.

The Fort Wayne and Chicago Railroad was chartered in Indiana on May 11, 1852, and organized September 14, 1852, as a further extension west to Chicago. It was chartered February 5, 1853, in Illinois. The first section opened in February 1856 from Fort Wayne to Columbia City.

On July 26, 1856, the Pittsburgh, Fort Wayne and Chicago Rail Road was formed as a consolidation of the Fort Wayne and Chicago, Ohio and Indiana, and Ohio and Pennsylvania Railroads. Extensions opened west to Warsaw September 28, Plymouth November 10, Englewood, Illinois (south of Chicago) on November 29, 1858, and Van Buren Street in Chicago on December 25, 1858. On January 1, 1859, trains started running to Chicago, with a terminal at the future location of Union Station. The part west of Plymouth was built with rails removed from the New Portage Railroad.

From the early days, the Pennsylvania Railroad (PRR) had been involved with the project, supplying funds. Once the Fort Wayne Railroad Bridge at Pittsburgh was finished in 1857, trains began to run through from Philadelphia. In 1858 the PFW&C began using the first Union Station in Pittsburgh, shared with the PRR.

On July 1, 1859, the PFW&C defaulted on its debts, and was sold at foreclosure on October 24, 1861. It was reorganized as the Pittsburgh, Fort Wayne and Chicago Railway February 26, 1862.

On July 1, 1865, the PFW&C leased the New Castle and Beaver Valley Railroad, giving it a branch from Homewood, Pennsylvania north to New Castle. The Lawrence Railroad, branching west from Lawrence Junction on the NC&BV to Youngstown, Ohio, was leased on June 27, 1869. On June 1, 1887, the Lawrence Railroad became part of the Youngstown, Lawrence and Pittsburgh Railroad, which on August 1 merged into the PRR's Pittsburgh, Youngstown and Ashtabula Railroad, and on January 9, 1906, that merged with the New Castle and Beaver Valley to form the Pittsburgh, Youngstown and Ashtabula Railway, still leased to the PRR.

The PFW&C bought the Cleveland, Zanesville and Cincinnati Railroad by deed on July 1, 1865, making it its Akron Branch. The line ran from Hudson, Ohio, on the Cleveland and Pittsburgh Railroad south through Akron, crossing the PFW&C at Orrville and continuing to Millersburg. In 1868 a short 3.5 mile (5.5 km) extension to the south was built, and on November 4, 1869, the PFW&C sold the line to the Pittsburgh, Mt. Vernon, Columbus and London Railroad. That company later became part of the PRR's Cleveland, Akron and Cincinnati Railway.

On May 22, 1869, the PFW&C leased the Massillon and Cleveland Railroad, giving it a short branch from Massillon north to the Akron Branch at Clinton.

On July 1, 1869, the PRR leased the PFW&C and began operating it directly, but on April 1, 1871, the PFW&C was transferred to the newly formed Pennsylvania Company. On December 1, 1871, the Pennsylvania Company leased the Cleveland and Pittsburgh Railroad. Since January 25, 1860, the C&P had been operated jointly by itself and by the PFW&C, providing a branch of the PFW&C from Rochester, Pennsylvania, west and north, crossing the PFW&C at Alliance, Ohio, and continuing to Cleveland.

Operation was transferred back to the Pennsylvania Railroad from the Pennsylvania Company on January 1, 1918.

ca. 1874 Pennsylvania Railroad map, including the PFW&C

On February 1, 1968, the PRR was merged into Penn Central. The PFW&C stayed separate, filing for bankruptcy on July 14, 1973, over three years after Penn Central's 1970 bankruptcy. On April 1, 1976, the PFW&C became part of Conrail. Conrail downgraded the line, preferring other parallel lines. On June 2, 1994, the Norfolk Southern Railway bought 18 miles (29 km) from Gary to Valparaiso, which had been out of service since 1991, for $1.4 million. They soon bought 61 more miles (98 km), from Valparaiso east to Warsaw, and acquired trackage rights east to Fort Wayne.

With the August 22, 1998, breakup of Conrail, the line was split at Crestline, Ohio. West of Crestline, including the section that had been owned by Norfolk Southern since 1994, went to CSX Transportation, along with the intersecting Cleveland, Cincinnati, Chicago and St. Louis Railway (better known as the Big Four, a part of the New York Central Railroad system until 1968). Tracks east of Crestline went to Norfolk Southern, which also obtained trackage rights west of that Ohio city.

At the western end of the route, the original PFW&C line has been abandoned from Buffington (an area of far northwestern Gary, Indiana, abutting East Chicago) northwest for a little over four miles to Whiting, Indiana; at both of these locations there are connections to the parallel tracks of the old Lake Shore and Michigan Southern Railway (New York Central Railroad). Northwest of Whiting, the LS&MS itself disappears, and the present-day line goes back to using the old PFW&C tracks, which run the rest of the way into Chicago, carrying both Norfolk Southern freight trains and several Amtrak passenger services.

On August 1, 2004, the Chicago Fort Wayne and Eastern Railroad, a new short line owned by RailAmerica, leased the western part of the line, from Crestline, Ohio, west to the Gary, Indiana, neighborhood of Tolleston, from CSX. It also obtained overhead trackage rights along the formerly out-of-service line from Tolleston, at the junction with the old Michigan Central Railroad (now CSX), northwest to Clarke Junction (also in Gary, just north of the Gary-Chicago International Airport), and then west along the former Baltimore and Ohio Chicago Terminal Railroad (now CSX) to Blue Island, Illinois. Norfolk Southern continues to own the line east of Crestline, Ohio, as well as the part west of Whiting, IN.