It is interesting that you had many gauges in the USA as we had the same problem in Australia...but Mark Twain was not amused.
The following is an extract from the Victorian Railways Web site. It seems not dissimilar to the US experience
Early history
Australia's railways were developed in an ad-hoc manner, so that there were many different rail gauges across the continent. Victoria was the only state that had a coordinated plan.
As a result, the United Kingdom in 1846 passed the Gauge Act and called on the Australian states to adopt a uniform gauge of 4 foot, 8.5 inches. However, the New South Wales chief engineer at the time – an Irishman – claimed the Irish gauge of 5 foot, 3 inches was superior and in 1852 an Act was passed stating that the gauge of New South Wales railways would be 5 foot, 3 inches. Victoria and South Australia followed suit.
The chief engineer was replaced by a Scotsman who in 1854 decided to adopt the United Kingdom's 4 foot, 8.5 inch gauge but failed to tell the other states. Victoria and South Australia had already committed to rolling stock and their railways both went into service on 5 foot, 3 inch gauge. Queensland, which separated from New South Wales in 1859, highlighted its independence by opening its first railway in 1865 with a narrow 3 foot, 6 inch gauge. In Western Australia, the first Government-sponsored railway was built using 3 foot gauge that was soon altered to 3 foot, 3 inches.
The diversity of rail gauges in Australia led American author Mark Twain to proclaim in 1897:
Now comes a singular thing: the oddest thing, the strangest thing, the most baffling and unaccountable marvel that Australia can show…. All passengers fret at the double gauge; all shippers of freight must of course fret at it; unnecessary expense, delay, and annoyance are imposed upon everybody concerned, and no-one is benefited.
My Note.
The argument for the narrow gauge for the largest (and least populated) states in Australia was a saving on timber sleepers (railroad ties) in a narrow track.