The Ohio & Kentucky Railway (O&K) was incorporated by the Kentucky Block Cannel Coal Company, who had leased 5,400 acres of cannel coal in Caney, Morgan County, Kentucky. The railroad was headed by W. DeL. Walbridge, president of Kentucky Block Cannel Coal, who served as the railroad’s first chief executive.1 It was headquartered in Cannel City.

Construction of the railroad began in October 1899 from the Lexington & Eastern Railway (L&E) 1.37 miles west and north of Jackson at O&K Junction.1 The first 26 miles to Cannel City were completed on June 10, 1901 and involved the construction of two tunnels. The first was Hampton Tunnel at the head of Frozen Creek, which had approaches of 10 and 12 degrees, respectively, and was 300-feet long and timber lined. The second, Claney Tunnel, spanned the Red River and Licking River watersheds and featured a 3% grade for 4,200 feet on its northern approach.

From the initial operations of the O&K to July 1, 1904, the line was operated under contract by the L&E, who furnished all equipment. Trains operated from Jackson north to Cannel City.1 When the L&E contract expired, only passenger trains ran into Jackson via trackage rights, and freight trains had to be dropped at O&K Junction to be picked up by mixed L&E trains headed for Jackson.

A 3.5 mile feeder line, the Caney & West Liberty Railroad (C&WI), was constructed from Cannel City to Caney via Spring Branch, where it climbed a large hill via switchback, and descended into the White Oak Creek valley to serve the mines of the White Oak Cannel Coal Company at Piedmont.1 After the C&WI went into bankruptcy, it was renamed the Caney, Piedmont & Morehead Railroad. Operations ceased in December 1907.

Kentucky Block Cannel Coal looked northward down Caney Valley for further developments.1 Additional coal deposits were located deeper into Morgan County, and a small but growing lumber industry was starting up at Licking River west of West Liberty. A 12.80 mile extension of the O&K began in 1910 and was finished in the following year, resulting in a total length of nearly 40 miles.

The O&K was abandoned on November 1, 1933 when the coal reserves and timber stands were exhausted.

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