There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. These companies are called “fallen flags,” and the term describes companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.
Today’s FreightWaves Classics profiles another fallen flag in the railroad industry – the Missouri-Kansas-Texas Railroad (reporting mark MKT), nicknamed “The Katy.”
The MKT was a large agriculture-focused railroad that had an unconventional north-south network. It operated in a region dominated by the Santa Fe, Missouri Pacific and Southern Pacific/St. Louis Southwestern (Cotton Belt) railroads. It also competed with the Rock Island and St. Louis-San Francisco (Frisco) railroads. Despite its major competitors, the company underwent only one true bankruptcy as a result of financial hardship.
The Missouri, Kansas & Texas Railway
The Missouri, Kansas & Texas Railway (reporting mark MK&T) linked its namesake states with key connections to St. Louis, Kansas City, Dallas/Fort Worth, Waco, San Antonio and Galveston/Houston. A great deal of its growth across Texas occurred while it was controlled by Jay Gould, one of the industry’s most notorious tycoons.
Congress and President Lincoln spur the transcontinental railroad
The concept of a transcontinental railroad garnered support in the 1850s, in part due to the gold strike in California. Then-U.S. Secretary of War Jefferson Davis (who became president of the Confederate States of America in 1861) spearheaded surveying efforts to choose a route for the railroad. Three route alternatives were chosen; one to the north, a central route, and finally a southern passage.
However, while Congress debated which route to choose, it was deadlocked on this and other topics due to the philosophical schism over slavery. However, following the start of the Civil War, a more unified Congress chose the central option.
The war also generated a much more urgent reason to build a railroad westward – to deter the influence of the Confederacy within the states and territories that such a railroad would run through. Congress passed the Pacific Railroad Act of 1862, which was signed into law by President Abraham Lincoln on July 1, 1862. The Act established the Union Pacific Railroad, which was to build westward from Omaha, Nebraska, while the Central Pacific would build eastward from Sacramento. After six years of construction, the two railroads met at Promontory Summit, Utah during a formal ceremony held on May 10, 1869. To read more about the transcontinental railroad, follow this link to another FreightWaves Classics article.
As the Union Pacific and Central Pacific began their efforts, President Lincoln signed an amended Pacific Railroad Act into law on March 3, 1863. In this legislation, Congress awarded the two railroads (as well as other railroads that were expanding westward) land grants totaling hundreds of thousands of acres in order to “open the West” to settlers. However, the government had another motive for passing the legislation; new railroads would provide U.S. Army forts with improved transportation as a national defense measure against the Confederacy. Specifically, the Lincoln administration wanted Fort Riley, Fort Leavenworth and Fort Gibson to be directly connected by rail.
Under the terms of the 1863 Act, the government would “grant alternate sections of land along the route to aid in construction of a [rail]line down the Neosho Valley to the southern boundary of Kansas.” There were three railroads incorporated for this purpose – the Kansas & Neosho Valley Railroad (K&NV); Leavenworth, Lawrence & Fort Gibson Railroad (LL&FtG); and finally the Union Pacific Railway, Southern Branch (UPRSB). The first of these new railroads to complete the task and reach Indian Territory (which later became the state of Oklahoma) would be declared the winner and receive land grants of 10 sections in width along each side of the track.
The UPRSB was founded in February 1865. Its owners planned to link all three forts as well as Fort Smith in Arkansas (which was never accomplished). The LL&FtG soon dropped out of the competition. The K&NV began its construction directly south from Kansas City while the UPRSB began from Fort Riley, Kansas in a southeasterly direction.
UPRSB track reached Burlington, Kansas by February 1870. On May 23rd the railroad was renamed the Missouri, Kansas & Texas Railway (MK&T). Its track-layers reached Chetopa, Kansas (182 miles from Fort Riley) shortly thereafter, and its first train officially entered Indian Territory on June 6, 1870.
However, the MRFtS&G had actually arrived there first, completing a line down the eastern edge of Kansas that connected Fort Scott, Girard, Columbus and Baxter Springs along the way.
However, in building its rail line, the MRFtS&G had entered Quapaw Indian Territory, which was not stipulated in the federal act. It specifically stated a railroad was to enter the Neosho River Valley within territory “owned” by the Cherokees. Therefore, the MK&T was awarded the land grants.
The MK&T in the 19th century
Although the MK&T’s land grants were important, much of its rail network was pieced together due to either new construction or acquisition. The “win” provided opportunities for the railroad to seek and secure additional capital (much of it from European investors). The railroad’s leaders continued its expansion and opened a new, 160-mile corridor from southeastern Kansas to Sedalia on February 3, 1871.
After its rail line reached Sedalia, MK&T construction crews laid rails southward, crossing the Red River. They reached Denison, Texas on December 24, 1872.
However, the MK&T struggled to generate revenue because of the region’s sparse population. It subsisted primarily on the Chisholm Trail’s cattle business and any available agricultural traffic. To increase revenue, the MK&T opened a rail extension from Sedalia to Moberly, Missouri on January 10, 1874. This was possible following the completion of a railroad bridge over the Missouri River. The MK&T’s new rail line provided a connection with the St. Louis, Kansas City & Northern, which offered through service into Chicago, which was becoming the rail hub of the Midwest.
The financial Panic of 1873 had a severe impact on the railroad industry and many individual railroads, including the MK&T. It entered bankruptcy on December 31, 1874, but exited receivership on March 1, 1876. It maintained its name, but had new leadership.
The Gould era
William Bond was an ally of Jay Gould. Bond was named general manager of the MK&T, which led to Gould becoming the railroad’s president on January 26, 1880. He implemented policies used at other railroads he controlled – deferred maintenance and cutting the pay of railroad employees to generate the highest possible earnings for shareholders.
Despite his practices, Gould is given credit for much of the Katy’s expansion. Growth was a key part of Gould’s larger plan to establish a true, coast-to-coast transcontinental railroad. It also explains why most of the railroads under Gould’s control expanded rapidly during the late 19th century.
With the Katy, its development was somewhat different. Gould used the carrier to further his influence across Texas. By the end of 1880 Gould had a virtual monopoly in Texas; his portfolio included the Missouri Pacific, Texas & Pacific, and International & Great Northern railroads.
After acquiring the Missouri Pacific, Gould made the Missouri, Kansas & Texas part of the Missouri Pacific. It was renamed the MK&T Division of that system. This was abbreviated to “K&T Division” in printed timetables, which led to the nickname “KT” or “Katy.”
A focus on Texas
In early 1881 Gould purchased two small short line railroads running south and west of Denison; one terminated in Greenville and the other terminated at Gainesville. This was followed by securing trackage rights over the Texas & Pacific on April 1st, which provided access into Fort Worth from Whitesboro.
Over a period of almost 30 years, the Katy continued to expand in Texas:
- From Greenville the line was extended to Mineola on June 25, 1881.
- Service into Dallas also began that year because of Gould’s control of the Dallas & Wichita.
- Beyond Fort Worth, rails reached Taylor on June 9, 1882.
- Another small short line, the Dallas & Greenville Railway, was picked up in 1886, providing direct service between those two points.
- An extension reached Henrietta in 1887 along a corridor that eventually became a very long agricultural branch into western Oklahoma.
Before Gould could continue to use the MK&T to expand in Texas a court order took effect on November 1, 1888 that forced him to divest control of the MK&T. As of that date the Katy was permanently separated from the Missouri Pacific.
The MK&T was placed into a voluntary receivership at that time; it was reorganized as an independent Missouri, Kansas & Texas Railway on July 1, 1891. Then the MK&T continued to expand:
- In 1893 the MK&T accessed Houston, and the MK&T entered Galveston by jointly owning the Galveston, Houston & Henderson with the International & Great Northern.
- In the spring of 1894 the railroad reached St. Louis after completing a rail line from New Franklin to Manchens. It then secured trackage rights over the Chicago, Burlington & Quincy from that point into St. Louis.
- The railroad opened an 86-mile cutoff from Bryson to Paola in 1895. This provided a direct, east-west corridor between St. Louis and Kansas City.
- Also in 1895 the MK&T leased the Wichita Falls Railway to access Wichita Falls, Texas from what was then the end-of-track at Henrietta.
- The MK&T arrived at San Antonio from the east in 1901, then opened a direct north-south connection from Granger to Austin in 1904 (beyond San Marcos, trackage rights were secured over the I&GN into San Antonio).
- Also in 1904, a route to Oklahoma City was opened.
- The MK&T acquired the Texas Central Railway in June 1910. This 268-mile system provided service into De Leon, Cross Plains, and Rotan via Waco.
- In July 1911 the Katy acquired the Wichita Falls & Northwestern Railway, which had been opening rail service throughout western Oklahoma; it reached Forgan on November 1, 1912, which followed completion of a branch from Altus to Wellington, Texas on November 10, 1910.
- In 1931 the line was further extended from Forgan to Keyes when the MK&T acquired the 105-mile Beaver, Meade & Englewood Railroad.
These acquisitions and extensions were made by the railroad in order to increase the amount of wheat and cotton it was hauling.
The 20th century
The Katy was again placed into receivership on September 26, 1915. It was reorganized, and on April 1, 1923 it exited receivership as the Missouri-Kansas-Texas Railroad (MKT).
The Katy spent much of the 20th century as a well-managed, if not highly profitable, railroad. Due to its regional nature and many competitors it did not enjoy the success of its larger neighbors but was nonetheless a respected carrier. Unlike many of its peers, the railroad evaded bankruptcy during the Great Depression. In part this was due to a nearly $3 million Reconstruction Finance Loan received in 1938. However, a lack of money precluded heavier infrastructure and equipment investments.
Much of the MKT’s network had been laid with relatively light rails, which prevented more powerful locomotives from being utilized. That meant the railroad could not run longer freight trains, which would have generated greater revenue.
The end of the line
During the mid- to late 1960s, legendary railroader John Barriger III was the railroad’s president; he guided the Katy through a brief bout of prominence. MKT’s gross revenue grew from $56 million in 1964 to $68 million by 1968. However, the railroad’s management understood that the company’s best chance for long-term survival was to be acquired by a larger railroad.
Following railroad deregulation in 1980 (see this FreightWaves Classics article for more information on railroad deregulation), unprofitable branches were abandoned or sold and that year gross revenues jumped to $220 million. New president Reginald Whitman and his management team understood that the railroad’s acquisition was likely its best option.
As the 1980s continued most of the Katy’s important interchange connections were gone. It was “surrounded” by the transcontinental Santa Fe, Burlington Northern, Southern Pacific and Union Pacific. After brief negotiations, MKT became a division of Union Pacific in 1988.
While much of the original MKT network has since been either abandoned or railbanked, some of the Katy’s lines remain active under Union Pacific.
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 in North America – and those that are now “fallen flags” – should explore the American-Rails site.
In addition, those who want to know more about the Katy should visit the Katy Railroad Historical Society at katyrailroad.org.