Gateway Eastern

Company History: Gateway Eastern appeared in 1994 as a subsidiary of the Gateway Western. GWWE linked East Alton with East St. Louis, Illinois about 17 miles away. Part of the line had been jointly operated by Chicago & Alton (later, GM&O, then ICG) and Big Four (New York Central System later PC, then Conrail.) The rest is a former PRR line including Rose Lake Yard. Both routes were purchased from Conrail.

They also had trackage rights on TRRA to reach a CSX yard. To get around the trackage rights, GWWE bought an old right of way from CSX in order to lay track directly to the CSX connection. Terminal Railroad Association of St. Louis (TRRA) tried to stop them building a crossing over the TRRA. Armed with an injunction, GWWE built the crossing and started to run trains but the case was tied up in the courts for 7 years with GWWE emerging victorious.

Primarily, GWWE switched on line customers in the Alton area. One train per day operated 5 days per week from Rose Lake Yard, serving industries and switching interchanges with Conrail, CSX, and owner Gateway Western. They did this with their sole locomotive, a GP38 in a blue version of parent Gateway Western’s Nickel Plate inspired paint scheme.

In 1997, Gateway Eastern along with parent Gateway Western was purchased by Kansas City Southern. GWWE remains a paper railroad, with KCS power now doing the work.

Successor/Parent History: KCS began (with a different name) in 1890 under the direction of Arthur Stilwell for the purpose of building a railroad from Kansas City directly south along the Missouri – Kansas, Arkansas – Oklahoma, and Louisiana – Texas borders to the Gulf of Mexico. At the point where the railroad met the Gulf, Stillwell built a port complex and named it after himself, Port Arthur, Texas. Two years later, the company defaulted on a loan, Stilwell was kicked out and they changed the name of the railroad to Kansas City Southern. Stilwell went on to build the Kansas City Mexico & Orient.

The KCS steam fleet was, well, peculiar. They were the only railroad to use 0-6-6-0’s, not as heavy switchers, not as pushers, but as mainline road engines. 2-8-8-0’s were also used for heavy road service with Santa Fe types and Consolidations filling out the freight roster. 11 Pacifics handled the passenger trains. They were odd first in that they had 2 sand domes (rare on passenger power.) Second, they had a high mounted headlight but without a number plate in the middle of the smokebox door, giving the front a strange “faceless” appearance. A few of these Pacifics assigned to the Kansas City – Port Arthur “Flying Crow” were equipped with air horns that sounded like a cawing crow… Really! KCS also had 2 Shays used to muscle cars up and down the 10% grades of many Kansas City industrial spurs. (If you’ve been to Kansas City, you will understand why.) The pinnacle of the fleet was the J class 2-10-4’s, purchased to replace the 0-6-6-0’s in 1937. These were the last Texas types built by Lima and had sleek, jacketed boilers and enclosed cabs.

In 1939, the KCS acquired the Louisiana & Arkansas which ran from Dallas east to Shreveport and then New Orleans. Actually, it was the owners of the L&A that bought the KCS but for charter reasons, the deal was arranged so that KCS took control of L&A. L&A remained semi-autonomous in an SP-Cotton Belt sort of way. This brought the KCS system to over 1,660 miles (between Grand Trunk Western and Delaware & Hudson in relative size.) The L&A image began to fade away in the 1960s but it wasn’t fully merged into KCS until 1992.

Dieselization came primarily from EMD with E’s pulling the Flying Crow and Southern Belle, and F’s in freight service. These were delivered in the classic red, black and yellow with red being dominant on the freight units and yellow on the passenger units. A-B-B-A sets of Erie Builts were also used in freight service but were notorious for breaking knuckles on the hog-back hills of the Ozarks.

Switchers and first generation hood units were delivered in black with white trim (much like Illinois Central) with the name spelled out on the long hood. Hood units and switchers came from EMD, Alco, Baldwin and FM.

In the 1960s, the paint scheme was simplified to a solid red. This became known as Deramus Red after the line’s CEO William Deramus II. Deramus’s son (William III) was head of Chicago Great Western and later M-K-T, both of which used similar reds. While William II was a reasonably adept CEO, his son William III was less successful, at least as far as the railroad was concerned. Under William III, track deteriorated and customers fled, which in turn permitted him to cut more service and staff. Fewer, longer trains were dispatched. Meanwhile William III was pouring available cash into diversifying into less regulated industries. By the 1970s, KCS faced a triple threat. Track condition was at an all time low, the first generation diesels were wearing out and tonnage was increasing. A new CEO began to turn the railroad around. The red paint scheme was dumped for white with red lettering. Grain moving down from Kansas City was joined by petro-chemicals moving up from the coast. Powder River Coal joined the mix during this period.

KCS’s diversified holdings, including the Janus Fund, made KCS ripe for takeover. In 1985, leftist fundraiser George Soros attempted a hostile takeover but was foiled first by a real estate developer and then by a Deramus successor who had since moved to Hallmark Cards and then bought a large block of KCS stock.

Now a rousing success, KCS spun off Janus and other holdings and kept the railroad because that is where the REAL money was! In 2006, the Southern Belle red, yellow, and black paint scheme was re-introduced. A version of it was even applied to some new KCS freight cars (KCS freight cars had been notorious dull for decades with few having anything more than reporting marks to trumpet their owner.)

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