In 1854 three companies, York & North Midland, Leeds Northern and the York, Newcastle & Berwick amalgamated to form the North Eastern Railway. The amalgamation produced a system 700 miles long, with administrative headquarters at York. The North Eastern Railway continued to expand and gradually other companies were taken over. This included: South Durham & Lancashire (1862), Stockton & Darlington (1863) and the West Hartlepool Railway (1865).

The North Eastern Railway now had virtually a monopoly of rail transport in the north-east. However, integration was slow, and an increase in accidents brought warnings concerning the dangers of trying to organize such a large company. After four serious accidents took place on the North Eastern at the end of 1870, the company's general manager, William O'Brien, was sacked.

The North Eastern Railway relied heavily for its income on the transport of coal and other raw materials. This trade declined in the early 1870s and in order to maintain revenues, the company decided to vigorously promote third-class travel.