The Tyler Tap, like many early railroads, fell victim to the chronic ailment of financial difficulties. As previously stated, the road was built by local subscription, with Promoters looking hopefully for aid through the land grant policy of the state. Eventually, they did receive their quota of land, but after its sale there was not enough money to pay off the accumulated debts. Douglas was determined that the people who had invested their money in this project would not lose a cent on their decision. He felt Particularly responsible for many of the shareholders whose faith in him made possible the completion of the railroad. So, as a last resort, he went to St. Louis and there interested a group of financiers in his railroad. This group, headed by James W. Paramore, owned and operated the St. Louis Cotton Compress Company, and were especially interested to find a means of shipping Texas cotton to St. Louis. They reasoned that by extending the Tyler Tap to Texarkana, Texas, and there connecting with the Iron Mountain Railroad, they could secure a direct

route between Texas and the Eastern markets. This arrangement was entirely satisfactory to Douglas, as he could pay back the original investors and also give Tyler its long sought rail connections.

On May 17, 1879, the Texas and St. Louis Railway Company was organized with James P. Douglas as President; James W. Paramore, Financial Agent; and the Board of Directors composed of W. M. Senter, J. L. Sloss, M. C. Humphrey, J. D. Goldman, all of St. Louis; J. P. Douglas, C. Goodman, J. H. Brown and A. W. Ferguson, of Tyler.

In order to assure themselves of ample money to complete the road, Paramore went to New York and secured the aid of the banking house of Kuhn, Loeb and Company, and a banker by the name of Woershaffer. In his memoirs, Samuel W. Fordyce, president of the company 1886-1898, relates how astonished he was that Paramore was able to interest these Eastern bankers in a project whose future was anything but bright.

Originally, the purpose of the Texas and St. Louis was to operate as a feeder to the Iron Mountain, beginning at Texarkana and extending to Waco, Texas, a distance of 266 miles. Later, however, the promoters decided to expand and, by joining with "Palmer and Sullivan" railway system of Mexico at either Eagle Pass or Laredo, to give St. Louis a direct connection through Arkansas and Texas to Mexico City. The Sullivan line had about 400 miles completed and expected to reach the capital of Mexico in the early part of 1880. Paramore estimated that the 2,200 miles from St. Louis to Mexico City then could be made in about seventy-two hours. This was the first scheme for an international railroad system ever attempted on the North American continent.

The route specified by the charter passed through the following towns: Mount Pleasant, Tyler, Waco, Gatesville, Leon Junction, and to either Eagle Pass or Laredo. This paralleled the already constructed International Great Northern Railroad, but as this was the usual procedure of early railroad builders, little criticism can be made as to the foresight of the company officials. The charters obtained by these pioneering railroads often gave them the right to construct far beyond their financial means, and the Texas and St. Louis serves as an illustration of this, as it actually constructed only about one-half as much as the charter called for.

The company started operation with only two locomotives, the Governor Hubbard and the J. W. Paramore. On seeing the name on the side of the latter engine, Thomas Scott, president of the Pennsylvania Railroad, cautioned his "Gould" friends by the remark, "Gentlemen, that means business." Two passenger cars and fifteen freight cars made up the entire rolling stock, and with this equipment construction was begun on the line to Waco. At the end of the fiscal year, March 30, 1879, to March 30, 1880, the company was still concerned with completing the road between Texarkana and Waco, and the directors decided not to operate until all the separate parts were unified into one continuous link. The Texarkana extension reported thirty miles of track, which terminated at Sulphur Fork, It was intended to complete the road to Tyler before the close of the year, The construction west of Tyler reached the Trinity River in December of 1880 making a total of 181 miles.

The company purchased five new locomotives of about twenty-four tons each, four new passenger and 100 new freight cars, and with this equipment the rate of construction was increased to such an extent that it was expected that Waco would be reached some time in 1881.

At the election of officials in May, 1880, James W. Paramore became president, succeeding James P. Douglas. Douglas had become interested in another railroad, the Kansas and Gulf Short Line, which proposed to build from Tyler to Lufkin. Although he was the most eminent leader of the Texas and St. Louis Railway Company, this is regarded as the initial step in Paramore's successful control of that organization. Paramore, who later became known as the "Narrow Gauge King," had a very colorful career before he became connected with the Texas and St. Louis Railway. Born in Mansfield, Ohio, on December 27, 1830, he first gained prominence as a soldier in the Civil War. He was mustered into service as Major of the Third Regiment Ohio Cavalry, with which he served for three years, receiving his honorable discharge in 1863. Called again to the "colors" with the rank of Colonel, he performed gallantly throughout the Tennessee campaigns. By coincidence, he opposed Major James Douglas at the battle of Murfreesboro.

After the war, Colonel Paramore started his railroad career as the general superintendent of the Tennessee and Pacific Railroad. This company, which is the predecessor to the present Tennessee Central, intended to build from Nashville to Knoxville. In the spring of 1876, he began canvassing the counties of Davidson, Williamson, and Smith for aid to assist in building this road, and was able to secure $500,000 in bonds from each county. The road was built to Lebanon, but could not obtain sufficient capital to complete the line to Knoxville. As nothing could be done for some time, Paramore decided to go into the cotton business in St. Louis, Missouri. With several other men he organized the St. Louis Cotton Compress Company, whose desire was to establish St. Louis as a gateway to the Eastern states for the cotton of the Southwest. The bulk of the Texas cotton was being shipped to Galveston, then to New Orleans, and up the Mississippi and Ohio Rivers to the East. Paramore immediately saw the advantage of a direct rail connection between St. Louis and Texas. He persuaded his associates to purchase the Tyler Tap Railroad and by joining the Iron Mountain system at Texarkana, they would have their connection into St. Louis. Soon, however, most of his time was taken up with operating this railroad, and he decided to resign from the compress company and devote his entire energy to his rail project.

As the road was about to be completed into Waco, Jay Gould, the great railroad tycoon, purchased the Iron Mountain and immediately revoked the traffic agreement for the connection at Texarkana in an effort to force the narrow gauge to sell out or give up any hope of doing a through business into St. Louis. This action, which first appeared to be a catastrophe, can now be looked upon as the deciding factor that encouraged the "Yard Wide Road" to extend its lines north of Texas. Gould had a monopoly on the southwest territory with his combined systems of Missouri Pacific, Iron Mountain and Texas and Pacific, but in Paramore he found an adversary not as easily subdued as some of his former opponents. The Colonel decided not only to reject his proposal of selling out or be forced out, but made plans to build an independent line through Arkansas to Cairo, Illinois.