in 1848, stephen c. phillips and his associates formed the salem and lowell railroad company. by the summer of 1850 the railroad was opened; it terminated at phillips wharf in salem. the company's hope was to compete with the boston and lowell railroad by restoring salem's lost commerce. to increase demand, the company created a seaside resort near salem. in may 1851, the salem steamboat company was formed "to purchase, build, charter or otherwise hold and employ a steamboat to be used in and about the harbor of salem, as well as to hold real estate to an amount not exceeding $1000" on june 11, 1851, stephen phillips purchased children's island (formerly cat island) from david blaney for usd$1000. in january 1852, he transferred the deed to the salem steamboat company.