The Kansas City Southern Railway (KCS) may be our country’s smallest Class I, in terms of route miles, but is the second-most historic with a heritage tracing back to the late 19th century. The Route Of The Southern Belle has always been a system surrounded by larger giants, even prior to the mega-merger movement during the classic era of the mid-20th century. Today, KCS has bolstered its portfolio by acquiring railroads south of the border as well as north of Kansas City. It currently operates about a 6,000-mile network while employing more than 6,000. As of 2015 it reported an annual revenue of $2.42 billion among all subsidiaries, classifying it last among the seven Class I's. During its many years of operation the KCS has had rocky periods although today is generally regarded as a profitable railroad with a strong leadership. At some point it may be absorbed by a larger carrier although for now it appears that it will remain an independent carrier.
The Kansas City Southern's story is actually quite recent when compared to the railroad industry as a whole; the road's immediate ancestry began on January 8, 1887 with incorporation of the Kansas City Suburban Belt Railroad, promoted by Arthur Stilwell. The terminal line served the local Kansas City region, connecting Argentine with nearby Independence via the downtown area. In all, the KCSB utilized 40 miles of track serving packing houses, grain elevators, stockyards, and various other industries. According to the Kansas City Southern Historical Society it officially began operations on August 18, 1890. The other early component was the Texarkana & Northern Railway. At first, this system had no actual ties to the Stilwell's operations. It had originally been chartered on June 18, 1885, intended as a logging operation that opened 10 miles from Texarkana north to the Red River. On July 9, 1889 it changed its names as the Texarkana & Fort Smith Railway, opening an additional 16 miles to Wilton, Arkansas by 1892. The Texas State Historical Association (TSHA) notes that year, on December 13th, the railroad was acquired by the Arkansas Construction Company, a subsidiary of Stilwell's Kansas City, Pittsburgh & Gulf Railroad.
The KCP&G had been organized on November 6, 1889 and Stilwell had plans for the railroad to provide the shortest route to the Gulf of Mexico, connecting its namesake city with the coast. The system's purpose was two-fold; to give farmers a means of exporting their goods as well as handle imported products. Unfortunately, this plan was never successful although not before Stilwell had completed his vision. During the Panic of 1893 the KCP&G lost its financial backing after having only reached Pittsburg, Kansas. Undaunted, Stilwell looked anywhere for possible monetary backing to complete his project. As Mike Schafer's, "More Classic American Railroads," notes he was able to do this by garnering help through close friend George Pullman, head of the powerful Pullman Palace Car Company; together they raised $3 million in securities from Holland. With new capital in hand, Stilwell opened coastal facilities on the Gulf at a location he named for himself, Port Arthur, Texas while "Last Spike" ceremonies were held at Beaumont on September 11, 1897.
Only two years after it all began the KCP&G fell into bankruptcy in 1899, emerging on April 1, 1900 as the Kansas City Southern Railway. The receivership forced Stilwell out and his involvement with the company ended. As previously mentioned, his railroad's dream was not particularly successful as, even after reorganization, it struggled to earn a profit. There was little in the way of consistent, high-volume traffic which forced the KCS to rely upon local agriculture, grain, and less-than-carload freight for most of its income. In addition, passenger traffic was thin. As it turns out, fate had a bright future for the company when its savior came in the way of "black gold," oil. As it turns out the railroad's main line was situated right next to a discovery made near Beaumont, Texas. In 1892 George O'Brien, George Carroll, Pattillo Higgins, Emma John, and J. F. Lanier, founded the Gladys City Oil, Gas & Manufacturing Company. Within a few years nearly half the group had given up but in 1895 a determined Anthony Lucas signed a lease with the remaining partners, believing strongly that oil was located in the Gulf Coast's salt domes.
After considerable expense and effort Lucas and Hamills finally hit pay dirt. The THSA notes that on January 10, 1901, at a depth of 1,139 feet, a huge geyser of oil, 100 feet high, spilled from their well (listed as "Lucas #9") located in eastern Jefferson County, south of Beaumont. The area became known as the Spindletop Oil Field, producing tens of thousands of barrels every day. The natural resource could not have been found at a better time as the KCS was likely headed towards another bankruptcy. Thanks to the many uses of oil the railroad not only moved raw black gold but also gasoline and various other petrochemicals as the energy industry sprang up along the Gulf. This new traffic would account for well over one-third of the system’s profits for much of its early years (and continue to generate healthy income years). With a newfound source of revenue, and new leadership under Leanor Lee (1906), the KCS looked towards expansion during the 20th century.
While it took many years to see the fruits of this labor fulfilled, by the late 1930s the KCS had acquired new markets in Dallas and New Orleans. At first the railroad zeroed in on the nearby Missouri-Kansas-Texas (Katy) and St. Louis Southwestern (Cotton Belt) railroads. However, the Interstate Commerce Commission forced it to divest of these holdings during the 1920s. It would later pick up the Louisiana & Arkansas (second) in 1939, providing a roughly east-to-west routing from New Orleans to Dallas, Texas via Shreveport. There was also an extension from Alexandria, Louisiana to Hope, Arkansas where additional interchanges were established with Missouri Pacific, Rock Island, and Cotton Belt. The L&A was the greatest component to the historic KCS system although other minor acquisitions included the Kansas & Missouri Railway & Terminal Company (K&M), Fort Smith & Van Buren (FS&VB), Arkansas Western (AW), and the Maywood & Sugar Creek (M&SC).
By 1950, the KCS owned a network of 962 miles and had it forever remained this size would likely be only a Class II, "regional," today. For roughly the first half of the 20th century the KCS prospered, earning considerable profits for a system its size. This was in large part due to the efforts of William Deramus who spent millions in upgrades through the 1950s by laying new ties, improving signaling for faster and more efficient operations (Centralized Traffic Control in 1943), completing dieselizing by 1953, opening the large Deramus Yard at Shreveport in 1956, and operating long freights of 200 cars or more. After the nation's severe 1958 recession (also referred to as the Eisenhower Recession), the KCS experienced a slow and worsening decline. It had purchased new locomotives beginning in the mid-1960s to improve operations and handle the heavier freight trains of the era; notably SD40's, SD40-2's, GP30's, and GP40-2's (road-switchers which replaced older models like the F3 and F7 cab units).
However, it began a program of deferred maintenance in the 1960s to offset the slow period, which produced a better bottom line. Unfortunately, such tactics are only "successful" for short periods and can have long-lasting, very negative, effects if carried out over many years. This turned out to be the case for KCS; with top management too focused on other things the railroad's physical plant slipped into a decaying state of repair and it all came to head in late 1972. With worn out ties and the road's infrastructure unable to bear the weight of multi-ton trains, derailments occurred one after another. If it were not for record volumes of traffic the railroad could have faced a fatal problem, similar to its northern neighbor the Rock Island. While deferred maintenance offers short term relief for a railroad's bottom line in the long term it can cost substantially more to alleviate as the KCS found out.
Under the direction of new president Thomas S. Carter in 1973, who replaced Deramus's son (William N. Deramus III), the modern day KCS system began to take shape. He spent millions to improve the company's physical degradation although things got worse before they got better; Mr. Schafer notes that 1974 cost the railroad $2 million in damages via 41 derailments. Thankfully, with plenty of traffic to keep the railroad stable (coal and petrochemicals in particular) it began to pull out of the mess and the 1980s were a prosperous period. Into the 1990s and early 2000s numerous acquisitions saw the railroad grow substantially, expanding six-fold over its historic size. The first occurred on January 1, 1994 when it formerly took over MidSouth Rail Corporation, a 1,212-mile regional that had launched operations on March 31, 1986 utilizing former Illinois Central and Gulf, Mobile & Ohio trackage. The lines ran east of Shreveport to Jackson and Meridian, Mississippi before turning north into Counce, Tennessee. In addition, there was access to Tuscaloosa and Birmingham, Alabama as well as Gulfport, Mississippi.
The second significant addition was the purchase of Gateway Western (and its subsidiary, Gateway Eastern) in May of 1997. This large regional began service on January 9, 1990. The GWWR was itself a new startup for the defunct Chicago, Missouri & Western Railway, launched on April 28, 1987 over yet more former Illinois Central Gulf trackage. The ICG had spent the mid-1980s selling off large chunks of its network in an attempt to reverse its sagging financial condition. The CM&W operated much of the Gulf, Mobile & Ohio's former main line between Chicago and St. Louis, as well as the corridor between Kansas City and Springfield. In all, it totaled some 633 miles. However, within a year the company was in bankruptcy. On January 9, 1990 the new Gateway Western Railway was formed by a New York investment firm, acquiring the 408 miles from St. Louis to Kansas City via Springfield while the remainder into Chicago was purchased by Southern Pacific. The GWWR became successful in part due to the Santa Fe, which utilized trackage rights to reach St. Louis (until the Burlington Northern Santa Fe merger of 1995).
At about the same time of the aforementioned takeovers, KCS was able to gain complete control of two railroads near, or within Mexico; the Texas Mexican Railway (a southern Texas road that linked with the Mexican border) and Grupo Transportación Ferroviaria Mexicana (TFM). While the KCS itself is only about 3,100 miles in length its acquisition of Tex Mex and TFM (now known as Kansas City Southern de Mexico) added about 2,800 miles to its overall system, giving it a network of more than 6,000 miles today. Its mileage still pales in comparison to the other six North American Class Is: Union Pacific and BNSF both maintain about 32,000 miles; CSX Transportation and Norfolk Southern roughly 21,000 miles; Canadian National 20,000 miles; and Canadian Pacific 14,000 miles. Its logo virtually unchanged throughout its life, with its recent acquisitions the railroad looks poised to remain successful throughout the coming years (perhaps, as they sometimes say, change is not always a good thing!). While the railroad has had a number of different paint schemes over the years ranging from whites, reds, blacks, and grays recently it decided to switch back into the it’s classic Southern Belle scheme of Brunswick Green, yellow, and red.
The newest KCS trackage was the resurrection of 87.5 miles of former Southern Pacific trackage between Victoria and Rosenberg, Texas, which Trains Magazine reported began service on June 18, 2009. Also known as the "Macaroni Line" this property came under SP control around 1885 and remained in use until 1985, after which time the trackage was largely pulled up but the right-of-way remained under railroad ownership. It fell under Union Pacific's jurisdiction after its 1996 takeover of SP and subsequently purchased by Kansas City Southern in 2001. The railroad began first clearing the right-of-way for rehabilitation in 2007 and had it ready for service within a few years. The new corridor is a vital link to the KCS lines in Mexico and allowed it to discontinue a circuitous 161-mile routing of trackage rights over UP. Today, it sees considerable use and is fully monitored by Centralized Traffic Control (CTC).