From the Kansas City Southern Lines Website on their history:
The company known today as Kansas City Southern (KCS) (NYSE: KSU) was founded in 1887 by Arthur E. Stilwell, a visionary and entrepreneur. Born in 1859, Stilwell left his home in New York and came to Kansas City, Missouri, where he pursued insurance investment opportunities and worked in a print shop that printed railroad timetables. While in Kansas City, Stilwell developed an interest in railroads. Together with Edward L. Martin, Stilwell built the Kansas City Suburban Belt Railway, which was incorporated in 1887 and began operation in 1890, serving the Argentine District in Kansas City, Kansas; Independence, Missouri; and the riverside commercial and industrial districts of Kansas City. While, the Belt Railway was a success, Stilwell had a much bigger dream.
Stilwell's vision was to provide a direct, north-south route to the Gulf of Mexico, focusing on moving grain, coal, lumber and other minerals. At the time, Stilwell was considered eccentric and his dream unrealistic, as all of the other railroads were being built on an east-west route. Nevertheless, Stilwell pushed forward with his ambitious project. Overcoming a number of financial crises, Stilwell's dream became reality when in 1897, the Kansas City, Pittsburg and Gulf Railroad Company (KCP&G) was completed. The KCP&G ran south from Kansas City through Shreveport and terminated at Port Arthur, Texas, the Gulf port city named after Stilwell.
In 1900, KCP&G became The Kansas City Southern Railway Company (KCSR). In 1939, KCSR acquired another railroad, the Louisiana and Arkansas Railway Company (L&A). This new acquisition provided a route that extended from Dallas, Texas to New Orleans, Louisiana. It also provided access to areas northeast of Shreveport into Minden, Louisiana and Hope, Arkansas. The acquisition of the L&A provided a link between Kansas City and New Orleans. From 1940 to 1969, luxury passenger service was offered between Kansas City and New Orleans on the Southern Belle. The Southern Belle was also used by former President and Mrs. Harry S. Truman to travel between Kansas City and New Orleans. In fact, one of the cars used by President Truman has been renamed the Harry S. Truman and today is permanently stationed behind KCS corporate headquarters at 427 West 12th Street. Today's Southern Belle business train is used for customer trips, and community, political and charitable events.
In order to pursue investments in a number of non-rail businesses, in 1962 KCSR president William N. Deramus, III established Kansas City Southern Industries, Inc., as a diversified holding company under the laws of the state of Delaware. In addition to its rail holdings, the company made investments in a number of non-rail businesses, including the company today known as DST Systems, Inc. In July 2000, the non-rail financial services businesses, including the Janus and Berger Funds, respectively, which the company had developed over nearly 30 years, were spun-off to its shareholders. The remaining company had essentially returned to its railroad roots. In May 2002, the stockholders approved a change in the corporation's name from KCSI to Kansas City Southern, reflecting the new focus on railway transportation.
The KCSR and L&A systems had remained largely the same until the mid-1990's. On January 1, 1994, KCS took over the MidSouth Rail Corporation, which extended KCSR's service territory to Meridian, Mississippi, Counce, Tennessee, Tuscaloosa and Birmingham, Alabama. The acquisition also provided trackage rights into Gulfport, Mississippi, and allowed the company to interchange with Norfolk Southern and CSX. Today, the line from Dallas, Texas to Meridian is marketed as the Meridian Speedway and is considered to be the premiere rail corridor between the southeast and southwest U.S.
During the mid-1990's, several large mergers were occurring within the rail industry. Two of the mergers, Burlington Northern-Santa Fe, and Union Pacific-Southern Pacific, created two mega-Class I railroads in the west. The two essentially surrounded the much smaller KCSR and threatened the financial viability of the company. During this time, Michael R. Haverty joined KCSR as its president and chief executive officer. Garnering the support of the Board of Directors, Haverty pronounced that KCS was determined to remain independent and that, through a combination of acquisitions, partnerships and strategic investments, it would grow its north-south rail franchise all the way into Mexico.
As it turned out, the core component of the overall plan to grow the railroad was the renewal of Stilwell's 19th century vision to expand into Mexico. But this time it made perfect sense. The North American Free Trade Agreement (NAFTA) was formed in 1994, which would significantly change North American shipping patterns.
To pursue expansion into Mexico, in 1995, KCS entered into an agreement with Grupo TMM, S.A. de C.V. (Grupo TMM), a Mexican-based ocean shipping and logistics company, for the purpose of pursuing the concessions of one of Mexico's soon to be privatized rail lines. At the same time, KCS purchased 49 percent stock interest in MexRail, Inc., the owner of all of the stock of Texas Mexican Railway Company (Tex Mex). Tex Mex operated between Laredo and Corpus Christi, Texas, providing a link from the United States to Mexico via the International Bridge at Laredo. This was the link that KCS needed to expand. At the time, the investment was considered by some observers to be questionable, because the Tex Mex did not connect with KCSR. This situation was remedied in 1996 when the Surface Transportation Board, as part of its review of the proposed UP-SP merger, provided the Tex Mex trackage rights to connect with KCSR at Beaumont, Texas.
With the U.S.-Mexico connection in place, attention was turned directly to the Mexican rail concession. After performing extensive market analysis, late in 1996, KCS and Grupo TMM submitted their bid for the Northeast Line rail concession, the premiere Mexican rail corridor. Shortly thereafter the partners were notified that they had won the concession. In June 1997, Transportacion Ferroviaria Mexicana, S.A. de C.V. (TFM) began commercial operation.
While TFM had been immediately successful, for the U.S.-Mexican rail corridor to achieve full value, it had to function as a single entity under common control. To that end, negotiations began between KCS and Grupo TMM to move toward single ownership. After years of intense discussions, the two parties agreed in late 2004 that KCS would acquire Grupo TMM's shares of TFM and become the majority owner. In 2005, KCS acquired full ownership of Mexrail, Inc. and Grupo TMM's interest in TFM. In an agreement with the Mexican government later in 2005, KCS acquired the remaining 20 percent interest in TFM and TFM became a wholly-owned subsidiary of KCS. In December of that year, TFM was officially renamed Kansas City Southern de Mexico (KCSM).
While the expansion into Mexico was taking place, KCS also pursued other rail investments. The Gateway Western Railway Company, (GWWR) which operated between Kansas City and East St. Louis, Illinois, was acquired in 1996, with the full merger taking place in 2001.
In 1998, KCS also invested in the Panama Canal Railway Company, in which it now holds a 50 percent interest. The 47.6 mile line, originally constructed in 1855 and the first transcontinental railroad in the world, was fully restored in 2002 and today provides passenger and freight transportation along the isthmus from Panama City to Colon, Panama.
For more than a century, the visionaries, leaders and hard-working railroaders of KCS have shared and perpetuated a unique legacy of tenacious ingenuity, which began with the founder, Arthur E. Stilwell in 1887. While each generation has been criticized by its contemporaries for running against the grain, the people of KCS wear labels such as “scrappy,” “ambitious,” “entrepreneurial” and “independent” like badges of honor - so much so that the unique KCS legacy is incorporated into the company's vision and values statement in 2004.
Nothing better defines the strength and resiliency of KCS than the realization of Stilwell's vision to build a north-south railroad from the heart of the Midwestern United States to the Pacific Coast of Mexico. While not achieved in his time, Stilwell's vision created the tone for the company and set it on its fateful journey.
This legacy has helped KCS become what it is today, and will help it to realize the many opportunities available for development and growth in the near future.