• ITVI.USA
    15,948.420
    108.680
    0.7%
  • OTLT.USA
    2.798
    -0.001
    0%
  • OTRI.USA
    22.010
    -0.060
    -0.3%
  • OTVI.USA
    15,936.600
    100.010
    0.6%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
  • ITVI.USA
    15,948.420
    108.680
    0.7%
  • OTLT.USA
    2.798
    -0.001
    0%
  • OTRI.USA
    22.010
    -0.060
    -0.3%
  • OTVI.USA
    15,936.600
    100.010
    0.6%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
BusinessFreightWaves ClassicsInsightsLayoffs and BankruptciesNewsRail

FreightWaves Classics: Fallen Flags – Denver & Rio Grande Western Railroad (Part 2)

One of the storied railroads of the West

The modern Denver & Rio Grande Western Railroad 

There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. They are called “fallen flags,” and the term describes those companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.

A D&RGW publicity photo from 1952. (Photo: D&RGW)
A D&RGW publicity photo from 1952. (Photo: D&RGW)

This FreightWaves Classics article provides Part 2 of an overview of another fallen flag railroad – the Denver & Rio Grande Western Railroad (reporting mark D&RGW; known as the “Rio Grande”), which was the largest and most successful narrow-gauge network in the United States. To read Part 1, go here.  

Control by the Gould family

In 1896, Gould’s empire was transferred to his son, George. He continued his father’s transcontinental ambitions; at that time he controlled several major railroads – the Missouri Pacific, Wabash, Western Maryland, Wheeling & Lake Erie and the Rio Grande. 

The younger Gould is also credited with reuniting the D&RG and Rio Grande Western under common management by acquiring stock control of the latter in February 1901. Then, to simplify his corporate structure, Gould merged the Rio Grande Western into the D&RG in August 1908. 

The Denver & Rio Grande Western's iconic logo. (Image: American-Rails.com)
The Denver & Rio Grande Western’s iconic logo. (Image: American-Rails.com)

However, Gould’s decision to use the two railroads to help fund construction of the Western Pacific left both railroads with heavy amounts of debt for decades. The D&RGW struggled financially under Gould’s control; in addition to its crushing financial burdens its management team was sub-par and maintenance on the railroad was deferred, causing other issues. 

When the financial Panic of 1907 occurred, Gould’s financing collapsed, as did his dream of building another transcontinental railroad. Over time, his railroads went bankrupt, including the Missouri Pacific in 1915 (which held 30% of Rio Grande’s stock).

World War I and financial issues during the 1920s

As noted in an earlier FreightWaves Classic article, the federal government nationalized most of the railroads in the nation due to World War I. The United States Railroad Administration (USRA) took over the industry on December 28, 1917.  

However, government control was no better at maintaining efficient operations than the private sector. The USRA did nothing to improve rundown equipment or inadequately maintained tracks. These factors, as well as its crushing debt and over-complicated corporate structure, sent the D&RG into receivership on January 25, 1918. 

A poster printed by the USRA during World War I.
A poster printed by the USRA during World War I.

The Transportation Act, which was effective February 28, 1920, returned the railroads to private ownership. The Denver & Rio Grande Western Railroad was subsequently organized to acquire the D&RG’s assets, taking formal control on August 1, 1921. However, financial issues continued; a second bankruptcy occurred on July 21, 1922. 

The railroad was reorganized again on October 29, 1924 but this time carried the same name.  Although the company’s financial circumstances remained uncertain, the railroad built one of the country’s great engineering feats. Funding for the project was provided by the city of Denver and federal Reconstruction Finance Corporation loans.

In 1920, the D&RGW acquired a significant portion of the Denver & Salt Lake Railway (D&SL), a railroad originally begun by David Moffat in 1902 to build a secondary route from Denver to Salt Lake City. However, Moffat ran out of funding in 1913; the rail line only reached Craig, Colorado. 

A Denver & Rio Grande Western Railroad freight train. (Photo: American-Rails.com)
A Denver & Rio Grande Western Railroad freight train. (Photo: American-Rails.com)

The D&SL crossed 11,680-foot Rollins Pass, which was northwest of Denver. The route had a series of major switchbacks with grades as high as 4%. It was a very difficult route for any train;  23 miles of railroad track were needed to connect two points that were only eight miles apart.   To improve rail connections to the city, Denver helped fund a new tunnel under James Peak.  The project took six years to complete; in 1928 it was named Moffat Tunnel. The tunnel was 6.1 miles long; it reduced the Rollins Pass trip from hours to 15 minutes.  

The tunnel completed Rio Grande’s modern network. It owned/operated 2,569 route miles of track that included standard, narrow and third-rail gauge. However, because of the continuing Great Depression and revenue/debt issues another bankruptcy was declared on November 1, 1935.

A number of railroads were built in Colorado to serve the rich San Juan mining district. One was the Rio Grande Southern (RGS). Incorporated late in 1889, the RGS was promoted by Otto Mears. He had previously been involved with various mining ventures. 

The RGS began at a connection with the D&RG at Durango and its track was laid to Ridgway (162 miles away) on January 2, 1892. 

A Rio Grande Southern engine and tender with a freight train in 1953. (Photo: Richard Kindig/American-Rails.com)
A Rio Grande Southern engine and tender with a freight train in 1953. (Photo: Richard Kindig/American-Rails.com)

Its main line zigzagged because of terrain. In addition to crossing 10,250-foot Lizard Head Pass, the railroad traversed steep grades and sharp curves. However, it was profitable until an act of Congress diluted the value of silver. This caused the RGS’ tonnage to drop by more than 50%; it went bankrupt and was forced into receivership in August 1893. Edward Jeffrey, D&RG’s president, was made receiver (which effectively gave the Rio Grande control of the RGS). 

The Rio Grande Southern exit receivership on December 1, 1895. Despite a lower volume of traffic the railroad performed relatively well until the stock markets crashed in October 1929. This led to another bankruptcy in December 1929 and the end of the D&RG’s involvement. The RGS was in receivership for more than 20 years. It was able to survive on government loans and hauling zinc ore until it shut down on December 17, 1951. Its network of track was dismantled the following year.

A Denver & Rio Grande Western freight train in 1942. (Photo: Otto Perry/American-Rails.com)
A Denver & Rio Grande Western freight train in 1942. (Photo: Otto Perry/American-Rails.com)

World War II and after

The railroad’s finances improved throughout the mid- and late 1930s. All railroad traffic increased dramatically due to World War II; the D&RGW’s revenue increased substantially. It was reorganized on April 11, 1947. 

There were several decades of prosperity following its reorganization. In 1949 it launched one the best remembered passenger trains (the California Zephyr), which was operated with the Western Pacific and the Chicago, Burlington & Quincy. After the California Zephyr was cancelled in 1970 the Rio Grande continued the train as the Rio Grande Zephyr from Denver to Salt Lake City until 1983. At that time the train and its equipment was transferred to Amtrak.

Two sets of locomotives and tenders. (Photo: Drew Jackish/American-Rails.com)
Two sets of locomotives and tenders. (Photo: Drew Jackish/American-Rails.com)

The Southern Pacific and the Union Pacific

The D&RGW’s parent company (Rio Grande Industries) bought the troubled Southern Pacific Railroad in 1988. For the next several years the smaller Denver & Rio Grande Western was integrated into the much larger Southern Pacific. 

The Union Pacific Railroad bought the Southern Pacific, which included the remnants of the D&RGW) in 1996. The D&RGW’s Denver to Salt Lake City main line is an important component of the Union Pacific network. However, other than that the D&RGW has simply disappeared; remembered fondly by many as a key “fallen flag.”

A Union Pacific train moves freight. (Photo: Jim Allen/FreightWaves)
A Union Pacific freight train. (Photo: Jim Allen/FreightWaves)

The D&RGW’s heritage

One of the first, largest and most successful narrow-gauge railroads in U.S. history, the D&RGW’s narrow gauge was impractical for interchange. However, the Rio Grande’s gateways through the Rockies were inherently more valuable. 

The rugged topography of the Rockies was dealt with directly by the Rio Grande. The railroad lived up to its slogan – “Through The Rockies, Not Around Them.” It had three main lines across the region – using the Moffat Tunnel, through the Pueblo gateway crossing Tennessee Pass, and the original main line to Grand Junction via Salida/Montrose.

A D&RGW train crosses the famous Hanging Bridge along the Arkansas River within Colorado's Royal Gorge during August 1965. (Photo: Drew Jacksich/American-Rails.com)
A D&RGW train crosses the famous Hanging Bridge along the Arkansas River within Colorado’s Royal Gorge during August 1965. (Photo: Drew Jacksich/American-Rails.com)

Author’s note: This article would not have been possible without the resources made available by Adam Burns of American-Rails.com. Those interested in learning more about the railroads operating now in North America – and those that are now “fallen flags” – should explore the American-Rails site.

Scott Mall, Managing Editor of FreightWaves Classics

Scott Mall serves as Managing Editor of FreightWaves Classics. He writes articles for the website, edits the SONAR Daily Watch series, marketing material for FreightWaves and a variety of FreightWaves special projects. Mall’s career spans 45 years in public relations, marketing and communications for Fortune 500 corporations, international non-profits, public relations agencies and government agencies.

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