The Texas and New Orleans Railroad Company was one of the antebellum railroads of Texas. It was chartered on September 1, 1856, as the Sabine and Galveston Bay Railroad and Lumber Company, for the purpose of constructing a railroad from Madison (now Orange) in Orange County to the tidewater of Galveston Bay. The capital stock was originally set at $2 million, and the organizational meeting of the company was required to be held at Liberty. The incorporators of the railroad included William Fields, Abram M. Gentry, William P. Herring, George W. Smyth, and William Smith. Gentry became the first president of the company. Groundbreaking for the railroad was held at Houston on August 27, 1857, and active construction began in mid-April 1858. However, work was shortly transferred to Beaumont, and the railroad was built both east and west from that point. By this time it was evident that the promoters of the line envisioned the railroad as part of a system connecting Houston with New Orleans. On November 1, 1858, the Sabine and Galveston Bay Railroad and Lumber Company issued land grant mortgage bonds totaling $1.5 million and bearing an interest rate of 8 percent. The following year rails and equipment were ordered, and by January 1860 thirty miles were graded and twelve miles of track laid west from Beaumont. On December 24, 1859, the name of the railroad was changed to the Texas and New Orleans Railroad Company. Earlier that year, on March 17, the Sabine and Galveston Bay Railroad and Lumber Company received a charter from Louisiana to build from the Sabine River to New Iberia. This charter also granted the Louisiana Division the right to accept any act of the Texas legislature changing the name of the original company to the Texas and New Orleans Railroad Company.
By January 1861 the railroad had constructed eighty-one miles west from Beaumont and the line was completed to Houston in May. On May 1, 1862, Gentry stated that the 110-mile line was open from Houston to Orange, but that some of the rails had been laid temporarily for military transportation needs. The railroad was used extensively as a Confederate supply line, and about 1,000 soldiers were assigned to protect it and to keep it operating during the war. Scheduled service was operated from Houston to Orange from 1862 to mid-1863 and irregular service until early 1864. The completion of a line between New Orleans and Texas was a high priority of the Confederate government, and work continued on the Louisiana Division during the early months of the Civil War. However, the capture of New Orleans ended all attempts to build across Louisiana. Various secondary sources indicate that General John Bankhead Magruder took up the twenty miles of track between Beaumont and Orange for use as fortifications or for other military purposes. However, an inspection of the property in 1870 as part of the court case Charles Moran et al. v. the Texas and New Orleans Railroad et al., reported that the rails east of the Neches were still in place.
Although the Trinity River Bridge washed out in 1867, the Texas and New Orleans continued to offer service between Houston and Beaumont until May 1868, when all operations were discontinued. The bondholders forced the company into receivership with Judge Josiah F. Crosby named receiver in January 1869. During 1870 the forty-two miles between Houston and West Liberty was rehabilitated and the railroad reopened between those two points on June 14. However, even this limited operation ended on March 1, 1871. The Texas and New Orleans was subsequently sold in two segments. The line between Liberty and Orange was sold on May 1, 1871, while the section between Houston and Liberty was sold on October 8, 1872. The purchaser at both sales was John F. Terry of the New York banking firm of J. S. Kennedy and Company. A new company, the Texas and New Orleans Railroad Company of 1874, was organized under the original charter on July 16, 1875. Terry was named president, Crosby vice president, and T. W. House treasurer of the new organization. Work on rehabilitating the railroad began the following month, and the first through train from Houston to Orange over the reconstructed Texas and New Orleans ran on November 20, 1876. During the rebuilding of the railroad, the track was converted from state gauge of sixty-six inches to the standard gauge of 56½ inches. In 1878 the Texas and New Orleans, the Morgan's Louisiana and Texas Railroad and Steamship Company, and the Louisiana Western Railroad Company reached an agreement to finally complete a line between Houston and New Orleans. A fourth company, the Louisiana Western Extension Railroad Company, was chartered in Texas to build from Orange to the Louisiana boundary. The first through scheduled train left Houston for New Orleans on August 30, 1880, over what became known as the Star and Crescent Route. Although it had taken nearly a quarter of a century, the dreams of the early backers of the Texas and New Orleans for a route between Houston and the Crescent City had finally been fulfilled.
In 1881 C. P. Huntington, acting for the Southern Pacific Railroad Company, bought the Texas and New Orleans and Louisiana Western. Huntington also acquired an interest in the Galveston, Harrisburg and San Antonio Railway Company. With the completion of the latter company's line across West Texas in January 1883 and the acquisition of the Morgan Line a few months later, the Southern Pacific owned or controlled a system of railroads extending from San Francisco to New Orleans. As a result, the Texas and New Orleans also found itself as part of a major transcontinental route, which fulfilled another dream of its original backers. In 1882 the Texas and New Orleans reported passenger earnings of $235,000 and freight earnings of $1.3 million; it owned thirty-six locomotives and 1,797 cars. The Texas and New Orleans acquired several railroads including the 103-mile Sabine and East Texas Railway Company in 1882. In 1896 the seven-mile Texas Transportation Company was merged, as was the fifty-two mile Texas Trunk Railroad Company in 1899. Other companies merged during the early 1900s included the Louisiana Western Extension in 1900 and the Burr's Ferry, Browndel and Chester Railway Company in 1914. The company also constructed nearly 200 miles of new track during this time period. Between 1900 and 1903 the railroad built about 160 miles of track between Cedar and Rockland, which connected two existing lines and formed a through route between Dallas and Beaumont. In 1903 it opened seven miles of track between Nome and Sour Lake and built a short 3½ mile branch into Port Arthur in 1908. The following year eight miles were built between Gallatin and Rusk. The Texas State Railroad was leased in from the state of Texas in 1921.
Although the Texas and New Orleans accounted for less than 13 percent of Southern Pacific owned mileage in Texas and Louisiana, it was the company used to simplify the corporate structure in the two states. On March 1, 1927, the railroad leased several lines in Texas, namely the Galveston, Harrisburg and San Antonio Railway Company, the Houston and Texas Central Railroad Company, the Houston East and West Texas Railway Company, the San Antonio and Aransas Pass Railway Company, and the Southern Pacific Terminal Company. The Louisiana lines of the Southern Pacific were also leased on the same day. The Texas and New Orleans had previously leased the Dayton-Goose Creek Railway Company on May 1, 1926, and the Texas Midland Railroad on April 1, 1928. On June 30, 1934, all of the leased Southern Pacific properties, with the exception of the Southern Pacific Terminal, were merged into the Texas and New Orleans, creating the largest railroad in Texas with 3,713 miles of track. The Texas and New Orleans lasted until November 1, 1961, when the remaining 3,385 miles were merged into the Southern Pacific Company.