The Illinois Central's charter was granted in February 1851 by the state of Illinois which also conferred on it the right of way and land grants received the previous year from Congress 'for building a railroad from Chicago to Mobile.' The charter provided that the company should pay the state, in lieu of taxes, seven per cent of the gross earnings of the original line, which was completed in 1856.
What differentiated the Illinois Central from the other Chicago lines, was that it ran north-south covering the entire length of the state (much like the shape of a wishbone). In the following decades, the Illinois Central extended its network into neighboring states, aiming to carry out the ambitious plan of linking the Great Lakes to the Gulf of Mexico. Several companies were acquired or leased for the construction and operation of new lines.
In 1883, Edward H. Harriman, then a young stock broker and banker, was brought in as the director of the company. Throughout the latter part of the 19th century, together with President Stuyvesant Fish, he followed a policy of further expansion, extending the mileage of the railway via new acquisitions and leases in order to increase business.
During the first decade of the twentieth-century, the Illinois Central carried out a concerted policy of improvement in plant and equipment while acquiring new lines to bring the Illinois Central south, particularly as the south-eastern regions of the United States were experiencing a substantial industrial and agricultural growth. The line eventually became to be known as the Illinois Central Gulf Railroad.