Elizabethtown became a borough in 1827, the same year that the state legislature appropriated money for a railroad from Philadelphia to Columbia. The state legislature had also authorized a canal be built along the Susquehanna and Juniata Rivers from Hollidaysburg to Columbia.
The businessmen of Elizabethtown, Middletown and Mt. Joy feared traffic on the main road from Lancaster to Harrisburg, which ran through their towns, would diminish when people started using the canals and railroad. They decided to build their own railroad parallel to the highway to increase their ability to complete commercially. They financed the new railroad through stock subscriptions.