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    The Illinois Central Railroad was chartered in 1851 to build a line from Cairo at the southern-most tip of Illinois to Galena in the northwest corner of the state, with a branch going to Chicago. The biggest factor in that the line was actually built and that it was the largest railroad in the world when completed, was the land grant that it received. The land was granted to the railroad from the government in return for a percentage of the income of the railroad. Despite this fact, the company still had trouble getting investors and had to go overseas (primarily England{50%} and Holland{25%}) to get the investment needed to build the line.

    Throughout the next hundred years the Illinois Central continued to expand, principally by buying and leasing other lines. The main additions were lines west through Iowa, east through northern Kentucky, and most importantly south to New Orleans.

    In the late 1940s, the Gulf Mobile and Ohio Railroad, a long time friend of the IC, bought the Alton Railroad from the Baltimore and Ohio. This acquisition made the GM&O into a direct competitor to the IC of traffic moving from Chicago to the Gulf of Mexico. This eventually led to a merger of the IC and GM&O in 1972, creating the Illinois Central Gulf.

    In the 1960s, IC Industries was created as a holding company to hold the railroad and other types of companies. This was done so that the railroad would be allowed to diversify.  Non-railroad companies could have railroad companies as subsidiaries, but not vice versa. 

    The creation of IC Industries was the beginning of the slide that would eventually lead to the merger (sale) of IC to the Canadian National Railway. As more and more companies were brought into the ICI fold, the number of railroad members on the board of directors got diluted. Eventually, the railroad was used as nothing more than a cash cow for the other ICI companies to feed upon.

    IC Industries soon added insult to injury by selling off huge chunks of the ICG to different buyers. Eventually there was little more left of the ICG other than a line from Chicago to New Orleans. When IC Industries could not find a buyer for the remaining dilapidated lines, it spun the railroad off as the "new Illinois Central Railroad.

    As ever-larger railroad mergers were approved, it became clear that the new IC would have to expand to survive. It bought the Chicago Central and Pacific (its former Iowa Division) and briefly toyed with the idea of adding Kansas City Southern. However, that soon fell through, and it was not long after that that the Canadian National announced that it would merge the IC to gain access to traffic moving to the Gulf of Mexico.

Recommended Reading: "History of the Illinois Central Railroad" by John E. Stover.

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