In the Fall of 1855, the line passed through Clayton – then known as Smyrna Station. On January 1, 1857, the Philadelphia, Wilmington, and Baltimore (PW&B) Railroad began operations on this line.
In 1860, the town’s name was changed to Clayton in honor of John M. Clayton, a former United States Secretary of State from Delaware and strong advocate for the railroad.
The town and its shops served as a regional hub for the Delaware Railroad, the Maryland & Delaware Railroad, the Spur Line to Smyrna, and the Smyrna and Delaware Bay Railroad. A line extended east to the Delaware Bay at Bombay Hook. Another line extended southwest through the Maryland towns of Goldsboro, Greensboro, Ridgely, Queen Anne, and Easton.
From 1885 through 1920, Clayton was Division Headquarters for the PW&B. A bitter rivalry between the owners of the Baltimore & Ohio Railroad and the Pennsylvania Railroad eventually led to PRR control of the PW&B.