I would guess this key disappearing has little to do with obsolescence, or lack of being user friendly and everything to do with the consolidation that occured in the industry around the 1960’s
This albeit sketchy history of detention locks given by Correctional Products Corporation is probably one of the best at detailing the industry exists as it does today.
http://www.correctionsproductsco.com/history.html
As you can see Sargent and Yale’s prison lock lines were bought out by Folger Adams leaving Folger as the sole provider of detention locks by 1960. Yale was eliminated in 1957 and the last Sargent Catalog I know of was 1955.
The Federal Prison system was probably just ”getting with the program” and eliminating locks that weren’t of the Folger Adam style. Considering Folger dominated the industry after 1925,* and that the Federal Bureau of Prisons didnt come into existence till the 1930’s they probably had few non folger locks and wanted to make their system more uniform.
As the history* in the link shows Southern didnt start making Folger style locks till 1967.The key looks to be of a style more similiar to what was,used in Yale and Mosler detention locks.
What what the history doesn’t reveal is why Southern began making Folger compatible locks and why Folger let them.
There was a lock industry artjcle a few years back profiling 5 detention lock companies and the seemingly incestuous relationship between all of them. Southern and RR Brink were among those profiled.
One thing the article mentioned was the fact that state, local, and Federal government bodies were increasingly dissatisfied with having one supplier affer 1940.
By the 1960’s there was increasing talk of government intervention against Folger. They may have gotten an ultimatum, create competition for yourself or we’ll do it for you- or worse, we’ll break up the company. Hence Southern make FA compatibles. Hence Southern now owns the company
RR Brink was started by the son in law of the owner of Folger. There are similar cozy relationships between many current detention lock manufacturers.