Gulf & Ohio Railways History

Founder: Pete Claussen

G&O Founder, Pete Claussen

G&O Founder, Pete Claussen

Herman Peter Valentine Claussen II was born in Bloomfield NJ to Herman and Catherine Claussen. Though generally called Pete, he is sometimes referred to as “Mr. Pete” or “Piston Pete.” Mr. Claussen graduated from Lafayette College with an AB degree in English and from Rutgers Law School with a JD degree.

After graduation he joined the Tennessee Valley Authority in Knoxville, Tennessee where he worked for 13 years as an attorney, Assistant General Counsel, and Division Director. In 1979 he joined the 1982 World’s Fair as Vice President-Legal Counsel, leaving that position in 1983 with the wrap-up of the Fair Corporation.

In 1985 he established Gulf & Ohio Railways (G&O) of which he is Chairman. Gulf & Ohio Railways owns and operates four railroads in the Southeastern United States.

Mr. Claussen is the founder and Chairman of the Seven Islands Foundation which recently donated land to help create Tennessee’s 56th State Park, Seven Islands State Birding Park. He has also served as a member of the Smithsonian National Board, as co-chairman of the Alumni Board and has been a member and past Chairman of the Smithsonian National Museum of American History. He is a past Chairman of the Legislative Policy Committee of the American Short Line and Regional Railroad Association and a past member of its Board and Executive Committee. He also serves on the Boards of the Legacy Parks Foundation, the Tennessee Chapter of the Nature Conservancy, and the Knoxville Zoo.

He resides on a farm near Knoxville with his wife, Linda, and has three grown children and two grandchildren.

Growing up in New Jersey, Pete’s grandfather would often take him to the railroad tracks to watch the passing trains. This sparked in him a lifelong fascination with the railroad industry.

"I had two German grandparents who came to visit their children in the U.S. in 1939. World War II erupted and they couldn’t get back home. They didn't speak any English and I didn't speak any German. My grandfather used to walk me down to a nearby park that had a railroad track running across the edge of it and we would sit and wait for trains. From that point on, I was interested in railroads." 

Gulf & Ohio Railways, Inc.


In the early 1980s, railroads were declining and hamstrung by regulations. Congress intervened with the Staggers Act, which allowed railroads to divest themselves of unprofitable lines. Entrepreneurs began buying these lesser routes and turning them into short line railroads.

In 1983, Pete worked with Willis B. Kyle to establish the South Central Tennessee Railway, and Pete became its President. "I was aware of deregulation and all the opportunities that presented and I couldn't not do it," Claussen said. "I would have kicked myself for the rest of my life if I hadn't tried."

The 50 miles of track involved sold for about $5,000 a mile, or about $1 a foot, Claussen said. "If you go into a hobby store and buy Lionel track, it will cost you more than $1 a foot. But a big challenge is that railroading is a capital-intensive industry and I didn't have any capital. So my title with the South Central Tennessee Railroad was of enormous value because when I went in to see somebody about purchasing a property, I went in as the president of a small railroad, not as some guy off the street who likes trains," Pete says. “We have never had any trouble borrowing the money that it took," he adds. It did, however, take time to develop the right relationships and scout for properties.

In 1984, Pete became President of the Caney Fork & Western Railroad in McMinnville, TN. He purchased his first railroad, the Mississippi Delta, from the Illinois Central Gulf on December 30th, 1985.

G&O: Name and Geography


Pete decided to call his enterprise “Gulf & Ohio Railways” (G&O) thereby setting the company’s geographic boundaries from the Gulf of Mexico to the Ohio River and defining the business as a southern company.

G&O takes its namesake from a railroad called the Gulf, Mobile & Ohio (GM&O) which began operations in 1938. When the GM&O merged with the Illinois Central to form the Illinois Central Gulf in 1972, GM&O’s unique “winged” logo became obsolete. Pete took that design and adapted it to his business, paying a nod to the history and heritage of American railroads.

Since that time, Gulf & Ohio Railways, Inc., has purchased and sold numerous short line railroads in southern states.

Current holdings include: the Knoxville & Holston River Railroad in Knoxville, Tennessee; the Lancaster & Chester Railway in Lancaster, South Carolina; the Laurinburg & Southern Railroad in Laurinburg, North Carolina, and the Yadkin Valley Railroad in Rural Hall, North Carolina and the Three Rivers Rambler (a steam powered tourist operation) that operates on a portion of the Knoxville & Holston River Railroad.

The company motto (if it has one) is that, “Quality is a process of continuous improvement.”

2391: G&O's First Locomotive

Locomotive 2391 was G&O’s first locomotive. This 1953 EMD was purchased in the mid-eighties and has served on most G&O properties.

Though 2391 is now painted in the “standard” black G&O paint scheme, when it was purchased it sported the traditional gray & yellow L&N appearance and, for a number of years in-between, was bright red. It has been a part of the G&O engine fleet for almost 30 years and is currently used on the Three Rivers Rambler.

2391 was repainted in early 2015 in the standard G&O paint scheme.