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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.