In 1860 there was no standard gage in the South. In fact, the RR lines that seldom exceeded 50 miles in length, were deliberately laid with different gages as way to constrain trade. The idea that rolling stock of other RR's could transit your company's rails was heresy. For the same restriction of trade, RR's did not connect at Nashville, for example.
In 1860 there was no standard gauge in the North, either. In the core South (Mississippi River to the Potomac River) there were only 2 gauges and they were found in 2 blocks of roads -- many in Virginia and North Carolina were 4' 8 1/2" and all the rest in the South were 5'. The Montgomery & West Point RR was the only 4' 8 1/2" road west of North Carolina. Texas had some 5' and 5' 6" roads, but the did not connect to the east.
Roads were not afraid of other roads running their rolling stock over their track. The concern was from the owner of the cars -- they were rarely returned and did not receive maintenance while on the foreign road. Many touching roads developed through freight agreements, but the cars only went over the one connecting road -- they were not sent over a second and third road. The government forced many cars to be taken far from home, a source for much complaint by the railroad presidents and the state governors.
Roads did not connect in cities because the towns did not want the noise, smoke and fire hazard going through town. Most depots were on the edge of town (when built) for that reason. The local business folks loved that plan, since, in conjunction with the lack of close connections with the other roads, passengers and freight had to use wagons, drays, hotels, restaurants, etc before continuing out of town. The post office forced the roads to make closer connections with their mail trains, but the rest were as the road wanted to schedule them.
During the war, the Government connected all the important roads through towns, with most connections being completed by the summer of 1862.
Much more available on my site:
www.csa-railroads.com