Leading merchants in Corpus Christi began planning the Corpus Christi and Rio Grande Railroad in the 1850s to boost the south Gulf Coast as a center for commerce. Lack of funding and an economic slump prevented progress until 1875 when Uriah Lott became president of the railroad. Lott recruited major investors such as Richard King and Robert Kleberg to finance the construction of a narrow gauge rail line from Corpus Christi to San Diego.
The lucrative valley market was sought by other rail companies who were vying for its control. Lott engineered the sale of the Corpus Christi and Rio Grande Railroad to a syndicate in the 1880s. The new owners were granted a charter with the name of the Texas-Mexican Railway Company. Laredo emerged as a major rail trading center and its population tripled in the 1880s.
Over time the Texas Mexican Railway remained competitive by upgrading its system. Improvements included converting to standard gauge track by 1902, switching its locomotives to diesel electric in 1939, placing trailer on flatcars in the 1950s, and expanding operations into Houston and Beaumont in 1996.