There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. They are called “fallen flags,” and the term describes those companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.

This FreightWaves Classics article provides an overview of another fallen flag railroad – the Denver & Rio Grande Western Railroad (reporting mark D&RGW; known as the “Rio Grande”), which was the largest and most successful narrow-gauge network in the United States.  

General William J. Palmer, a decorated U.S. Army officer during the Civil War, was the man behind the Denver & Rio Grande Western. He planned a railroad that pierced the heart of the Rocky Mountains. Palmer’s plans for the D&RGW were that it would run from Denver to the Mexican border (following the Rio Grande River for much of its route), reach the rich San Juan mining area and then travel west to Salt Lake City.

(Photo: USGenWeb Archives)

To reduce the cost of building a railroad through such difficult terrain, Palmer pioneered the 3-foot wide, narrow-gauge railroad. Standard gauge railroads at the time were generally 4-feet, 8.5 inches wide. While the narrow-gauge concept became popular for a time, it was not compatible with most other railroads and interchange was not possible.

Ultimately, Palmer’s railroad failed to reach Mexico. However, he is remembered for building the largest and most successful narrow-gauge network in the United States. 


After his U.S. Army service, Palmer took a job with the Kansas Pacific Railroad. According to James Griffin’s book, “Rio Grande Railroad,” while helping survey a route for the Kansas Pacific into Denver, Palmer was convinced Colorado could sustain a railroad; its eastern plains were fertile ground for agricultural development, while the Rocky Mountains were rich in precious metals and coal. 

The Kansas Pacific was completed in 1870. Palmer left the company, found business partners from Denver, and chartered the Denver & Rio Grande Railway on October 27th of that year.

National interest in narrow-gauge railways

Palmer and D&RG’s other owners spearheaded America’s second-most popular gauge. While other narrow-gauge railroads were built across the United States, the D&RG was the first to implement it on a wide scale. 

Two years after the Rio Grande’s chartering a committee was formed to study the narrow-gauge concept; known as the National Railway-Gauge Railway Convention the conference was held in St. Louis on June 19-20, 1872. 

Among the key points discussed was that a three-foot railroad corridor, operating in mountainous environments, could be constructed for 20% of the cost of major rail lines like the Baltimore & Ohio, New York Central and Illinois Central. In addition, across rolling topography, cost savings would be about half that of standard-gauge railroads.

So the success of the Rio Grande led to new narrow-gauge railroads during the 1880s.  However, as quickly as these railroads were built, most vanished almost as rapidly. The majority were either abandoned or converted by World War I. 

For Palmer, his use of the gauge came purely from the standpoint of economy and practicality. He had a three-pronged plan: the primary route would link Denver with El Paso, Texas running along the Front Range in an effort to establish through service into Mexico; a secondary main line would connect with the Central Pacific Railroad at Salt Lake City/Ogden; and branches would be laid to northwestern New Mexico/southwestern Colorado to serve the San Juan Mountains’ booming mining industry. 

An early D&RGW locomotive. (Photo: historycolorado)

Building the Rio Grande

Construction of the main line began out of Denver on July 28, 1871. The railroad reached its first target, Colorado Springs, with service officially launched on January 1, 1872. Later that year rails were extended to Pueblo, while a branch also opened near Cañon City that served local coal mines. 

Palmer’s hesitation to serve Cañon City directly, citing lack of financing, was a strategic error. Upset residents, unaware of the Rio Grande’s monetary issues, sided with the Santa Fe when it tried to reach the Leadville mining district. 

While the Rio Grande is remembered for serving Colorado’s legendary silver mining industry, coal was a much steadier source of traffic and revenue throughout the railroad’s corporate history. 

Before Palmer could establish a steady flow of business from either the silver or coal mines, the financial Panic of 1873 hit. The D&RG never filed for bankruptcy protection, but construction was delayed until the economy improved. 

Construction resumed in a southerly direction in 1876; reaching coal mines in the Trinidad/El Moro area near the border with New Mexico a year later. 

Concurrently, Palmer pushed his railroad westward from Walsenburg, crossed the 9,220-foot Veta Pass, and arrived in Alamosa during July 1877. As he planned his next move an unexpected problem arose – the Atchison, Topeka & Santa Fe (AT&SF). 

An Atcheson, Topeka & Santa Fe locomotive and tender.
(Photo: Kansas Historical Society)

Fighting the Santa Fe

What became one of the West’s best-known railroads was a powerful corporation by the 1870s. The AT&SF was extending its line toward the Pacific coast. The railroad had reached La Junta, Colorado on February 16, 1876. The following year, William Barstow Strong was elected vice president and general manager of the AT&SF.

Strong and Palmer nearly went to war over rights-of-way in places like the Royal Gorge, which is located west of Cañon City, but also Raton Pass. In order to serve the lucrative San Juan region the Santa Fe had to lay tracks in the Royal Gorge, which offered the only natural passageway for a suitable grade. However, the canyon was hardly wide enough for a single rail line. 

Rio Grande crews had previously surveyed a route through the Royal Gorge; however, that did not deter Strong and the Santa Fe. In addition, Strong sent his second-in-command to secure rights to the Raton Pass, beating Rio Grande’s chief engineer to the spot by a mere 30 minutes. 

Cañon City’s business leaders were still mad that Palmer had not opened direct service to their town.  They started their own railroad, the Cañon City & San Juan Railway. In 1878, backed by the Santa Fe, the Cañon City & San Juan Railway was built from an AT&SF connection at Pueblo to Cañon City. Later that year it merged with the Pueblo & Arkansas Valley Railroad, a Santa Fe property. 

Battling the AT&SF had cost Palmer his financial resources, forcing him to briefly lease his railroad to the Santa Fe. The lease agreement took effect on December 13, 1878, but only lasted until April 27, 1879 before being canceled due to a Colorado court order. 

The AT&SF was able to build a rail line 20 miles into the Royal Gorge. However, an April 21, 1879 decision by the U.S. Supreme Court ended the fighting. The Supreme Court’s decision led to the “Treaty of Boston,” which was signed by both railroads on March 27, 1880. At a price of $1.4 million, the Rio Grande was awarded AT&SF’s completed work through the gorge.  

“Robber baron” Jay Gould

Jay Gould, one of the “robber barons” of the 1880s and 1890s, is also credited with helping to stop the fighting between the two railroads. He had effectively gained control of the Rio Grande before the treaty.  

Expansion continues

Palmer returned to expanding the railroad on its southern route as far as Santa Fe, New Mexico, which was the western terminus of the Santa Fe Trail. 

The D&RG extended south from Alamosa, Colorado, reaching Espanola, New Mexico on December 30, 1880. Six years later the rail line reached Santa Fe on January 8, 1887. Known as the “Chili Line,” it was never particularly profitable. 

There were several reasons for its lack of profitability. It had numerous curves as sharp as 22 degrees and grades as steep as 4%. The curves and steep grades meant that trains had to slow down quite often. Moreover, the AT&SF had been serving Santa Fe with its standard-gauge line since 1880. Although it made some money hauling lumber after a period of time, the Rio Grande abandoned the line during 1941.

During the 1880s and 1890s the D&RG increased its track mileage substantially. The railroad was extended beyond Cañon City, passed through the Royal Gorge, and to the very important mining camp of Leadville in 1880. The railroad was also extended west from Antonito, New Mexico, crossing the 10,015-foot Cumbres Pass and reaching Durango (Colorado) on July 27, 1881; this was followed by laying track northward over the 10,433-foot Tennessee Pass in 1881 to the small mining community of Red Cliff. (When this line opened it was the highest standard-gauge line in the country.) Silverton was reached a year later, offering direct service into the San Juan mining district.  

The D&RGW depot in Littleton, Colorado.
(Photo: City of Littleton, Colorado)

The Rio Grande’s management decided not to continue laying track toward Utah; instead they opted for a more southerly route. The decision was due primarily to additional coal traffic from mines located near Crested Butte. At Salida, the rail-head was extended westward to Gunninson (1881) before it turned north from Montrose.

The small town of Montrose, which later became a junction for the Ouray Branch (completed in 1887 to serve silver mines), was about halfway to Grand Junction (reached on November 22, 1882). A month later, on December 19th, the railroad arrived at the state line but could not build any further until corporate charters were received to enter Utah.

That led the Denver & Rio Grande Western Railway to be organized on July 21, 1881 with rights to build from the Colorado-Utah state line to Salt Lake City via Green River, Soldier Summit and Provo. 

At that point, the Rio Grande acquired several existing short line railroads in Utah: the Sevier Valley Railway; Bingham Canyon & Camp Floyd Railroad; Wasatch & Jordan Valley Railroad; and the Utah & Pleasant Valley Railroad. All had been built to haul either coal, silver or copper from mines situated south and east of Salt Lake City. 

The Utah & Pleasant Valley line had built 55 miles of track between Springville and Scofield by November 1879; this was extended further north to Provo in October 1880. When the Rio Grande completed a segment between Provo and Salt Lake City it used a section of the Utah & Pleasant Valley line over Soldier Summit as part of its main line into Colorado.

The Rio Grande finished the railroad to the state line on December 19, 1882. A few months later (May 12, 1883), a short branch was completed from Salt Lake City to Ogden; this established a transcontinental connection with the Central Pacific/Southern Pacific.

Narrow-gauge track (left) next to standard gauge track.
(Photo: ogrforum,

Palmer moves on/the switch to standard-gauge

Tight finances led Palmer to resign from the D&RG’s presidency on August 9, 1883. He went on to lead the D&RGW subsidiary; he was succeeded by Frederick Lovejoy. However, the two disagreed on key issues and went to court over philosophical differences. This led to the railroads’ physical connection being severed just inside the Colorado state line. 

The D&RG entered receivership on July 12, 1884, due to over-expansion. Its management chose not to renew its D&RGW lease after its reorganization as the Denver & Rio Grande Railroad on July 14, 1886. That became official on July 31st; therefore, Palmer began improvements on his end. 

Palmer chartered the State Line & Denver Railway in order to purchase the D&RG from Grand Junction to the Utah state line. Next he merged it with the Denver & Rio Grande Western during June 1889, forming the Rio Grande Western Railway. 

A D&RGW train. (Photo: Colorado State Historical Society)

The entire network of the Rio Grande Western was converted to standard-gauge. The main line from Ogden to Grand Junction was completed on June 11, 1890; branches were finished in 1891. 

Concurrently, the Denver & Rio Grande had also been expanding. Led by David Moffat, the railroad laid track from Red Cliff to Glenwood Springs to thwart the standard-gauge Colorado Midland Railway (CM). 

The line was completed on October 6, 1887; it reached the silver camp of Aspen on November 1. Rails were pushed further west to Rifle in 1889 with the plan to lay tracks to Grand Junction and then to open a secondary main line. The CM and D&RG worked together on this project, and the connector was completed on November 14, 1890. And while Palmer was converting the D&RGW to standard gauge, his cross-border competitors were doing the name.

The peak of the D&RG’s narrow-gauge system was 1,673 miles in 1887. It only had 64 miles of standard-gauge track in operation in 1890; however, the standard-gauge mileage increased rapidly during the following decade because other railroads wanted to use the D&RG tracks as a through route between Denver and Salt Lake City. By 1900 more than 1,000 miles were standard-gauge. 

A Denver Rio Grande & Western Railroad train waits to pull out. (Photo:

Information and some of the photographs/images for this article came from the American Rails website (, which is a treasure trove of information! FreightWaves thanks Adam Burns and American Rails!