Jay Gould

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Lore & Background

The Texas Constitution of 1876, in Article X Section 3, required every railroad operating in Texas to maintain an office in the state. When outside companies like those controlled by Jay Gould began acquiring Texas railroads in the 1880s, they were required to retain the Texas corporations. The courts decided in an 1888 lawsuit brought by Attorney General James S. Hogg that since only Texas companies could operate in the state, the outside companies could not lease the Texas companies. This meant Gould's railroads—the International and Great Northern Railroad, the Missouri, Kansas and Texas Railway, and the Texas and Pacific Railway, all leased to the Missouri Pacific Railroad—had to maintain separate Texas subsidiaries. These local companies often took the name of the parent but sometimes retained their original names, creating a complex web of railroad corporations within the state.

In Their Own Story

In 1888, Texas Attorney General James S. Hogg filed a lawsuit against the railroads controlled by Jay Gould. The targets were the International and Great Northern Railroad, the Missouri, Kansas and Texas Railway, and the Texas and Pacific Railway—all of which were leased to the Missouri Pacific Railroad. The legal question was whether outside companies could lease Texas railroads, given that Section 3 of Article X of the Texas Constitution required every railroad operating in Texas to maintain an office in the state. The courts ruled against Gould's interests, deciding that since only Texas companies could operate in the state, the outside companies could not lease the Texas companies. This forced Gould's railroads to retain separate Texas corporations, such as the Missouri, Kansas and Texas Railway of Texas, rather than being directly operated by the Missouri Pacific.

Reader's Guide

Jay Gould's involvement with Texas railroads is documented in the context of Article X of the Texas Constitution of 1876. Section 3 required all railroads operating in Texas to maintain an office in the state, and when outside companies began acquiring control of Texas railroads in the 1880s, they were required to retain the Texas corporations. The 1888 lawsuit brought by Attorney General James S. Hogg against Gould's railroads—the International and Great Northern Railroad, the Missouri, Kansas and Texas Railway, and the Texas and Pacific Railway, all leased to the Missouri Pacific Railroad—established that outside companies could not lease Texas companies. This legal precedent meant that Gould's interests had to operate through separate Texas subsidiaries, such as the Missouri, Kansas and Texas Railway of Texas. The Interstate Commerce Commission later approved a lease of the Texarkana and Fort Smith Railway to the Kansas City Southern in 1933, and Texas took the case to the Supreme Court but lost, effectively nullifying Section 3.

Did You Know?

• Attorney General James S. Hogg sued Jay Gould in 1888 over railroads controlled by Gould—the International and Great Northern Railroad, the Missouri, Kansas and Texas Railway, and the Texas and Pacific Railway—all leased to the Missouri Pacific Railroad.
• The Texas courts ruled that since only Texas companies could operate in the state, outside companies could not lease Texas companies, forcing Gould's railroads to maintain separate Texas subsidiaries.
• Gould's Texas subsidiaries included the Missouri, Kansas and Texas Railway of Texas, which retained the parent company's name but operated as a separate Texas corporation.
• The Interstate Commerce Commission approved a lease of the Texarkana and Fort Smith Railway to the Kansas City Southern in 1933, and Texas lost when it took the case to the Supreme Court, effectively nullifying Section 3 of Article X.
• The Fort Worth and Denver City Railway, a Texas subsidiary of the Colorado and Southern Railway, was the last of the Texas subsidiaries, merging into the Burlington Northern Railroad in 1982.