Oregon Historical Quarterly/Volume 20/History of the narrow gauge railroad in the Willamette Valley

by Leslie M. Scott

Route of Narrow Gauge Railroad in the Willamette Valley.

HISTORY OF THE NARROW GAUGE RAILROAD IN THE WILLAMETTE VALLEY^[1]

By Leslie M. Scott

Forty years ago the Willamette Valley was eager for railroads, just as now for automobile highways. The navigable river which drains the valley was an easy avenue of transportation, but wagon roads leading to the river were difficult, and, in much of the productive area, were impassable in winter and impossible in summer. Two lines of railroad reached southward from Portland, the one forty-eight miles to Saint Joseph, on Yamhill River^[2], the other, two hundred miles to Roseburg^[3], in the valley of Umpqua River. Wagon road approaches to these steel highways were difficult, like those to the river. In short, agricultural growth was held back by poor means of hauling to market. The best remedy then known was construction of iron railroads. And the cheapest railroad to build and operate was the narrow-gauge.^[4]

The narrow gauge or "Yamhill" railroad, initiated in 1877 between Dayton and Sheridan, in Yamhill County, with a branch to Dallas in Polk County, grew in 1879-81 to be an ambitious system, embracing the length of the Willamette Valley, from Portland to Airlie 80 miles on the west side, and to Coburg, 123 miles on the east side, a total trackage of 183 miles, with proposed extensions to Winnemucca on the Central Pacific in Nevada, and to Astoria at the mouth of the Columbia River, and with proposed connections with Yaquina Bay, the whole system to contain nearly one thousand miles of track, seaports at Astoria, Portland and Yaquina, and transcontinental rail connections with the Central Pacific and Union Pacific railroads. The scheme ended in 1881 when the Oregon Railway and Navigation Company leased the railroad in order to rid Henry Villard's system of its rivalry.

The narrow gauge exercised important competitive effects upon other railroad lines in Oregon. It forced extensions of the Oregon and California Railroad. It influenced the policies of Henry Villard, who was then in command of the Northern Pacific, the Columbia River rail route of the present Oregon-Washington Railroad and Navigation Company, and the present east side and west side lines of the Southern Pacific in Oregon. But the narrow gauge was only partly built; the bridge across the Willamette River near Dundee, to connect the two main branches, was not constructed; tracks, rolling stock and bridges fell into disrepair under Villard; the extension to Portland did not reach completion until a later time, and then under its Southern Pacific owners, who discarded the large scheme, and used the tracks merely as "feeders" to other lines. The tracks of the narrow gauge, broadened to "standard," now are components of the Southern Pacific, some of them electrified.

The history of the narrow gauge makes an important narrative in the progress of Oregon, a narrative which the writer has had in mind during several years, and to which he finds himself brought suddenly by the unexpected call of the editor of this magazine for "copy."

The initial credits for financing the railroad were supplied by Yamhill and Polk county farmers. The San Francisco firm that furnished the rails took mortgage security, and had to resort to foreclosure for collection. Other credit came from Joseph Gaston, who had promoted the Portland-Forest Grove railroad in 1867–70, and who, though possessing but small means in cash, owned lands which he offered as pledges. These financial resources were so inadequate that the project soon fell into receivership, from which it was extricated by Scotch capitalists headed by William Reid, who in 1878–81 invested some $2,500,000 in the property. This capital of the Scotchmen also proved insufficient, a further expenditure of more than $400,000, borrowings by the Oregon receiver in 1885–89, failed to place the railroad on a sound financial basis, and finally the property passed to the Southern Pacific for less than half its original cost, netting to the Scotchmen an apparent loss of some $1,300,000.

So much for the general survey of the history. Now for details.

Farmers of Yamhill and Polk counties had been waiting many years for promised railroad construction, when, in 1877, a narrow gauge scheme was proposed, to extend from steamboat connections at Dayton to Sheridan, twenty miles. The farmers had grown impatient. Joseph Gaston had promised them a railroad in 1867–70, and Ben Holladay in 1870–73. The latter had opened the west side railroad from Portland to Saint Joseph,^[5] near McMinnville, in 1872, and then had collapsed financially. Residents of Yamhill and Polk had expected big things from the west side line, and had seen their hopes dashed to disappointment. So they were keenly responsive to the independent scheme of the Dayton-Sheridan promoters.

A leading sponsor in its early stages appears to have been Isaac Ball, one of the long-suffering farmers. At his instigation, citizens held a meeting at Amity, October 20, 1877, to consider the project. The meeting named a committee to report upon the practicability of the plan, which committee met at McMinnville, November 1, and reported at a second meeting at Amity, November 17. The report estimated the cost of the railroad between Dayton and Sheridan at $150,000, based upon costs of similar construction in Ohio, Illinois and Missouri. It cited that the railroad would serve 300,000 acres of land, which would produce 1,000,000 bushels of wheat annually. An assessment of fifty cents an acre would build the railroad, and add five dollars to the value of every acre.^[6] The report continued:

Let every farmer figure for himself. Let him count the time it takes to haul his grain away to Dayton now; count the wear and tear of himself, his teams and the harness and wagons; and the loss in the prices of grain in not being handy to the market to catch it at the top notch. Let him also count the increased cost of all machinery, merchandise, salt, iron, lime, etc., that must be hauled from Dayton or Saint Joe. And then let him consider how much more grain he could raise, if he could save the time spent in hauling off his crop to Dayton, and put it on the farm in fall planting.

This report was dated at Dayton, November 5, 1877, and was signed by B. B. Branson, Charles Lafollette and W. S. Powell. The second meeting at Amity, which received the report November 17, responded promptly by pledging $24,000 to the enterprise. The committee also went through the preliminaries of incorporating a company, the Dayton, Sheridan and Grand Ronde Railway Company.^[7] The directors of the company were B. B. Branson (the first president), Ellis G. Hughes (the succeeding president, elected March 22, 1878), Sylvester Farrell, W. S. Powell, and F. E. Beach. The secretary of the company and its manager in 1878 was Mr. Beach,^[8] until the railroad passed into the hands of a receiver, George Revette.

Joseph Gaston, well known railroad promoter, attended the two meetings at Amity, and subscribed to one-half of the 2000 shares. He was authorized to canvass the farmers so as to enlist them to make pledges. The pledges were payable in three instalments, at specified stages of construction, were to be refunded by the railroad in three payments, namely, November 1, 1880, November 1 1881, November 1 1882, and were to be evidenced by "freight orders or script," that is, the railroad was to redeem the pledges by rendering an equivalent value of railroad service. This "freight script" was later held chargeable to the railroad by the supreme court of Oregon, and $61,000 was refunded.^[9]

The heaviest financing was performed by the creditor that supplied the rails, the Pacific Rolling Mill Company, of California.^[10] It accepted three mortgages as follows:

Rails for 20 miles, mortgage executed November 5, 1848 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$62,724.56

Rails for 12 miles to Dallas, executed December 4, 1878 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,134.00

Mortgage executed May 7, 1879 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,058.00

⁠Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$93,916.56"

As the railroad company was unable to make the payments due under the mortgage in 1878, the rolling mill company began suit to recover January 23, 1879, and had the receiver, Revette, appointed, who conducted the management more than a year, or until April 17, 1880.^[11]

By arrangement with the Scotch buyers of the railroad, headed by William Reid, the rolling mill company was satisfied. The railroad was conveyed June 2, 1879, to a company representing the new investors, the Willamette Valley Railroad Company, and the old company was dissolved.^[12]

Contract for construction had been let in April, 1878, and the track between Dayton and Sheridan opened for traffic October 24, 1878. The track was poorly constructed and not ballasted. Speed did not exceed twelve or fifteen miles an hour. The equipment consisted of two Baldwin locomotives, not heavier than ten tons each, and a number of flatcars, from which passenger coaches were improvised. The rails weighed twenty eight pounds to the yard.

At this juncture, the Pacific Northwest was just opening upon a progressive period of railroad construction. and beginning to receive great funds of outside capital. In the years 1880–83 Henry Villard expended $150,000,000 upon the lines of the Northern Pacific railroad and its allied properties.^[13] His German capitalists of the Oregon and California Railroad extended in 1878–79 the Portland-Saint Joseph line fifty miles to Corvallis,^[14] and the Portland-Roseburg line in 1881–84, one hundred and fifty miles to Ashland.^[15] His Eastern investors in 1879 acquired properties of the Oregon Steam Navigation Company and the Walla Walla-Wallula Railroad, and in 1880–84, built the lines of the Oregon Railway and Navigation Company from Portland to Huntington and to points north of Walla Walla.^[16] The Northern Pacific connected with the Oregon Railway and Navigation Company, at the mouth of Snake River, by building lines, in 1879–83, through the Spokane country and the Clark's Fork region. The Pacific Northwest was electrified with the spirit of financial venture. And the Willamette Valley was an inviting field for the investment of Scotch savings. Although the money returns were poor to the thrifty folk of Scotland, yet who will deny that the stimulus afforded to the farmers of Oregon may have strengthened the sons of Oregon to aid the "kilties" on the late battlefields of France?

There came to this far off shore in 1874, from Dundee, Scotland, a man who was destined to extend the narrow gauge through the wheat fields of the Willamette Valley, and later, to lead the way to realization of a railroad for the Tillamook-Astoria region. He was William Reid. He heralded his coming with copious newspaper comments both on things of Oregon and on things of his native heather. With him came as an asset of his equipment a fund of Scotch persistency and shrewdness. For five years he acted at Dundee, Scotland, as American vice consul, in which capacity he published in 1873 a pamphlet entitled: "Oregon and Washington as Fields for Capital and Labor." This pamphlet had wide circulation and resulted later in the promotion by Reid at Portland of the Oregon and Washington Trust Company, which was converted into the Dundee Mortgage and Trust Investment Company. Thus Reid became resident agent at Portland for Scotch funds, first for mortgages and then for the narrow gauge railroad. He organized a board of trade at Portland and became its secretary, in which capacity he wrote many descriptions of Oregon resources and progress. He organized the Oregon and Washington Mortgage Savings Bank at Portland, and later the Portland National Bank. At Salem he organized the First National Bank. At Turner and Salem he built flour mills. Due to his operations. the Legislature of Oregon enacted a law in 1878 authorizing foreign corporations to build railroads in Oregon.^[17] Reid's record in Oregon progress is that of an energetic and useful constructor.

The Dundee buyers of the thirty-two miles of narrow gauge railroad. having taken hold of the property in 1879, built in 1880–81 one hundred and fifty additional miles of track, expending, in all, sums as follows:^[18]

Funds from the sale of capital stock, 32,000 shares, par £10, @ £7 178 6d, £252,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,227,240

Funds from sale of bonds, £214,700 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,045,589

Other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

255,225

⁠  Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,528,054

Construction went forward rapidly in 1880. Ground was broken for the east side branch at Silverton, April 19, 1880, by the wife of Governor W. W. Thayer. The line was opened from Ray's Landing, on Willamette River, near Saint Paul, to Silverton via Woodburn, October 4, of that year: to Scio, November 4, and to Brownsville, December 28. The line reached Coburg in July, 1882. William Reid offered to build to Albany, if that city would erect a river bridge and pay a bonus of $45,000, but the total outlay to Albany of between $100,000 and $140,000 was deemed excessive, and so the narrow gauge passed by Albany to the eastward.^[19] The west side branch of the road was extended from Dallas to Monmouth in June, 1881, and to Airlie in the following September: from Lafayette to Dundee and Fulquartz Landing, on Willamete River, opposite Ray's Landing, September 16, 1881. To connect the east side and the west side branches a bridge was to be built between Ray's Landing and Fulquartz Landing. The Earl of Airlie, president of the railroad, when in Portland in October, 1880, directed the chief engineer Major Alfred F. Sears, to begin at once construction of this viaduct. This work began the following month but was halted next year by Henry Villard.^[20]

The junction of the two branches was to be at Dundee, from which place the railroad was to lead to Portland. The company directors in Scotland had ordered completion of the line to Portland prior to September 1, 1881, and construction was carried on in a desultory way within ten miles of that city, beginning in March, 1880, but was stopped in 1881 by Villard. As the east side and west side branches were separated by the Willamette River, and the extension of the west side branch to Portland was not opened until November 26, 1887, the railroad company operated two steamboats, City of Salem and Salem, through its subsidiary, Oregonian Navigation Company. Limited.^[21] These steamboats and others connected with the east side branch at Ray's Landing, and the west side branch at Dayton. By taking steamboat from Portland at 7 o'clock a.m., passengers reached Dayton at 2 o'clock that afternoon, whence the railroad conveyed them to Lafayette, Dallas, Monmouth and Airlie. The train reached Sheridan at 6:30 p. m. In September, 1881, completion of the track from Lafayette to Fulquartz Landing expedited this business. The company also maintained connections with Salem, Corvallis and Albany by means of river boats. Amid the rosy railroad prospects in 1880-81, Central Pacific extensions to Oregon by the route of Humboldt River, Goose Lake, Sprague River, Pengra Pass and Middle Fork of the Willamette River, possible connection with the Scottish narrow gauge were often heralded. The country was agog with the grand expectations of Villard's and Huntington's railroad system. The Dundee investors were happy over the prospect. Airlie, when in Portland in October, 1880, ordered a survey of the intermediate route. An ambitious company, the Astoria & Winnemucca Railroad, incorporated at Astoria, May 8, 1879, pursued this scheme, and the Oregon Legislature in 1880 offered free right of way through state lands. This project revived in 1885 in negotiations with Huntington, and again in 1890, when Huntington took over the narrow gauge and planned extensions. It revived once more during the activities of E. H. Harriman in 1906–10, and finally lapsed on account of government repression of railroads.

Villard's move to protect his Oregon and California Railroad from competition of the growing narrow gauge was the logical one of gaining control of the invader. The narrow gauge had given him and his associates a taste of competition when they had felt impelled to build a road in 1879 to Corvallis, and to Lebanon in 1880. For the latter extension Villard had caused to be incorporated the Albany and Lebanon Railroad Company, March 1, 1880, by Joseph N. Dolph, J. Brandt Jr., and Paul Schultze, capital, $200,000. He had also caused to be incorporated a similar company to build from Salem to Silverton. This extension was not built, but the Lebanon extension, eleven miles, opened September 22, 1880.

So Villard sent to Scotland, to negotiate a lease with the narrow gauge owners for ninety-six years, J. B. Montgomery, who had built ninety miles of the narrow gauge from Ray's Landing to Brownsville and had also built parts of the Northern Pacific. The lessee was Villard's Oregon Railway and Navigation Company, which like the Oregon and California and the Northern Pacific, were then controlled by Villard's Oregon and Transcontinental. The annual rental, $140,000, to be paid to the Scotch owners, represented seven per cent a year on the total investment, which, up to that time. amounted to nearly $2,000,000 or one hundred and sixty miles of track. This lease was strenuously opposed by William Reid, builder and president of the narrow gauge, who, in three years saw his reasons for opposition to a rival that meant no good to the narrow gauge, amply verified. Reid's purpose was a connection with the Central Pacific at Winnemucca by the Pengra Pass and Humboldt route, the success of which would have brought to the Pacific Northwest a transcontinental connection with the Central Pacific, Union Pacific, and valuable activities of progress. Reid sent Ellis G. Hughes, vice president of the narrow gauge company, to New York to deal with Huntington for these connections at the same time that Villard sent Montgomery to Scotland to deal with the owners. Hughes arranged a lease for payment to the stockholders of the narrow gauge four and one-half per cent annually on the cost of the road, plus one-half of the net receipts of the Winnemucca extension. But as the four and one-half per cent offered by Huntington was visibly less than the seven per cent offered by Villard, the thrifty Scotch prized more highly the larger promise and chose the money that three years later proved them penny wise and pound foolish.^[22]

The successful lessee took charge of the narrow gauge, August 1, 1881, and immediately set about doing its real purposes. Extensions to Portland and Yaquina immediately stopped; also the terminal plans for use of the public levee at Portland, of which more will be said later: also the bridge project at Ray's Landing which would have united the two branches of the system. Villard showed plainly his real policy, namely, to subordinate the lines of the troublesome invader and make them serve as feeders to the Oregon and California Railroad. When taken over by the receiver in 1885 the narrow gauge system was divided into six separate parts: (1) Coburg to South Santiam, 39 miles, operated in connection with the Lebanon branch of the Oregon and California Railroad: (2) South Santiam to West Stayton, eleven miles, not operated: (3) West Stayton to Woodburn, thirty-nine miles, operated in connection with the Oregon and California Railroad; (4) Woodburn to Ray's Landing, ten miles, not operated: (5) Fulquartz Landing to White's Junction, sixteen miles. not operated; (6) White's Junction to Airlie, forty miles, operated in connection with the Oregon and California Railroad. This policy worked ruin to the narrow gauge property. Bridges washed out by floods were abandoned. The railroad in the three years ensuing the lease went to wreck as an earning property. Finally, the Oregon Railway and Navigation Company, after retirement of Villard from its affairs, abandoned the narrow gauge and repudiated the lease, May 14, 1884, as null and void.^[23] Consternation ensued. Bonds of the narrow gauge at once fell from 120 to 40. Stock shares which had brought $40 fell to $2. Without terminal connections, tracks and rolling stock dilapidated, the plight of the railroad was sad, indeed.^[24] A receivership ensued under Charles N. Scott, who was appointed by the circuit court of the United States, Judge Deady, March 30, 1885, and took charge of the property April 14, 1885.^[25] The receiver was named in the lease suit against the Oregon Railway and Navigation Company and not in foreclosure for the creditors. Under the receiver's management bridges, track and equipment were restored as well as available borrowings would avail until the railroad was taken over in 1890 by the Southern Pacific.

The Scotch owners sought remedy in the United States circuit court of Judge Deady to bind the Oregon Railway and Navigation Company to the ninety-six year term of the lease and were victorious in that court by winning judgments for the rental dues, but the supreme court of the United States on March 5, 1889, held the lease void because it had not been validated by the Legislature of Oregon. Judge Deady, on March 18, 1885, and at intervals thereafter awarded judgment against the lessee for accruals of unpaid rent. The supreme court of the United States held that the Oregonian Railway Company had no power to execute the lease and the Oregon Railway and Navigation Company no power to accept it. For success of the narrow gauge system, after the lease fiasco in 1884, it was clear that these several things must be done: Restoration of the bridges across North Santiam and South Santiam; erection of a bridge between Ray's Landing and Fulquartz Landing; extension of thirty miles to a terminal outlet at Portland from Dundee; purchase of new rolling stock and renewals of ties and trestles. Receiver Scott set himself to the task of rebuilding the Santiam bridges, repairing the tracks and roadbed and buying new equipment, while William Reid undertook the work of building the connecting bridge across Willamette River and the extension to Portland. As the receiver could raise funds only by borrowing, he was authorized by the United States court to issue certificates of indebtedness amounting in all in the five years of his administration, to some $423,000.^[26]

The Dundee-Portland extension was undertaken by the Portland and Willamette Valley Railway Company, incorporated January 19, 1885.^[27] The widespread interest taken in the creation of this company throughout Willamette Valley is attested by the large number and the scattering of its incorporators, who were: W. S. Ladd, H. C. Leonard, R. B. Knapp, William Reid, Van B. DeLashrnutt, Aaron Meier, J. A. Chapman, Ira F. Powers (Sr.), John Schuerer, J. F. Coyne, C. E. Smith, William Gallick of Portland; A. R. Burbank, H. Hurley, J. H. Olds, W. D. Fenton, P. P. Gates, J. M. Kelty, R. P. Bird, R. R. Daniel, W. M. Townsend, J. W. Watts of Lafayette; L. Bently, T. S. Powell, A. W. Lucas, D. T. Stanley, Wm. Dawson, N. B. Gregg of Monmouth; Goodman Hubbard, Charles F. Johns, H. L. Deacon, Geo. W. Crystal, Wm. Grant, F. G. Richmond of Dallas; Peter Hume, J. M. Moyer, Oliver P. Coshow, W. R. Kirk, Thomas Kay, R. N. Thompson of Brownsville; A. Coolidge, R. C. Geer, L. C. Russell of Silverton; Robert Pentland, W. E. Price Jr., J. C. Johnson, R. F. Ashly, H. A. Johnson Jr., Frank J. Villa of Scio.^[28]

The Portland and Willamette Valley Railway Company was capitalized at $150,000 capital stock and $400,000 bonds. Its funds were supplied by Huntington, Thomas H. Hubbard and their associates, but the source of the money was not publicly known at the time of construction. The work of building trestles and making rock cuts was extensive and costly. For example, Chehalem Creek was spanned by a 700-foot trestle; Blair Creek by a 1000-foot trestle; Rock Creek by an 1800-foot trestle and Tualatin River by a 180-foot trestle. Deep rock cuts were made at Elk Rock, Oswego and Chehalem Gap. The chief engineer was H. Hawgood.

Construction of the route had suspended in 1881, at the time of the Villard lease and was resumed in January, 1886, by the new company. The track was finished to Elk Rock, near Oswego, in the following December. This progress was signalized December 11, 1886, by an excursion of Portland citizens to Dallas.^[29] The first train arrived in South Portland, November 26, 1887. The first train started from Jefferson Street, Portland (public levee), July 23, 1888.

The narrow gauge system gravitated to the Southern Pacific in the years 1885-90. In that period the Southern Pacific absorbed the Oregon and California Railroad. The Southern Pacific entered into negotiation in 1887 with the stockholders and bondholders of the Oregon and California and succeeded in adding the railroad properties of that company to its extensive domains and of connecting them with its California lines.^[30] Southern Pacific acquisition of the narrow gauge by steady steps was a natural sequence and became obvious in 1887, when Huntington's ownership of the Portland–Dundee line was no longer concealed, and his negotiations with the Scotch owners of the other branches of the system were tending to a focus. In May, 1887, control was announced of the Portland and Willamette Valley Railway by the Pacific Improvement Company, the principal stockholders of which, C. P. Huntington, Leland Stanford, Charles Crocker, Charles F. Crocker and Timothy Hopkins, controlled the Southern Pacific. This second merging of the two railroads of the Willamette Valley (the first by Villard in 1881), was a disappointment to Oregon citizens, who had hoped for competitive activities.^[31]

A corporation, formed by Reid to build the Ray's Landing bridge, called the Oregonian Railway Bridge Company, incorporated at Portland, July 21, 1886, capital, $100,000, but the merging with Southern Pacific interests in 1887 made the bridge project superfluous. This bridge was repeatedly authorized by the Oregon Legislature.^[32]

The "seizure" of the public levee at Portland for a terminal by William Reid and his Portland and Willamette Valley Railway, made many vexing episodes in the progress of the extension to that city. This property on the river bank at foot of Jefferson Street had been bestowed upon the city by Stephen Coffin, one of the proprietors of the townsite, for public wharfage purposes. It was situated just where Reid needed his terminal, and Reid proceeded to appropriate it through the Legislature, against protests of Portland. This action had the support of farmers of the Willamette Valley, who desired to afford an outlet for the narrow gauge system. The Legislature made two grants of the levee, the first in 1880,^[33] the second in 1885.^[34] The first franchise was awarded to the Oregonian Railway Company over Governor Thayer's veto, but the act was defeated in the supreme court of Oregon in March, 1881,^[35] but judge M. P. Deady in the United States circuit court allowed temporary use of the levee pending the suit. This franchise lapsed by its own limitations, because the narrow gauge extension was not built before expiration of the time limit for completion, July 1, 1882.

The second award of the levee, this time to the Portland and Willamette Valley Railway, included a free right of way through state lands. The railroad entered into possession of the levee December 1, 1887, after tests in the state and federal courts. The company built warehouses and a depot on the river bank, and its successors occupied the property some twenty-five years.

The latter history of the narrow gauge is soon told. The lines of the Oregonian Railway Company were foreclosed by a group of Southern Pacific interests in 1890, chief of whom were C. P. Huntington and Thomas H. Hubbard. The line of the Portland and Willamette Valley Railway was foreclosed in 1892 by the same interests. A new company was formed in 1890 to take over the property, the Oregonian Railroad Company, T. E. Stillman, president; Richard Koehler, vice president; W. W. Bretherton, secretary; Charles N. Scott, superintendent; C. B. Williams, auditor; A. L. Warner, acting auditor; George H. Andrews, treasurer. Receiver Scott turned over the railroad to this company in May, 1890. Soon afterwards the work began of broadening the east side road to standard gauge. At this time Huntington was considering large projects in Western Oregon, among them the Astoria railroad and the Pengra route across Cascade Mountains,^[36] together with an extension of the narrow gauge from Silverton to Portland.^[37] Surveys for the latter ran by way of Lents and Molalla,^[38] but the surveyors were called in late in 1890^[39] and the project was abandoned. Huntington extended the railroad from Coburg to Springfield and Natron. Further extension to Wendling was made in 1900. The west side branch was made standard gauge in 1893. Crocker and Stanford interests for a time opposed Huntington's schemes as to the narrow gauge acquisition, and were brought into line, according to current gossip, by Huntington's threats of connecting the narrow gauge system with the Central Pacific.^[40]

The mortgage bonds of the Oregonian Railway Company, amounting to £214,700 or $1,045,589, were paid in full by Huntington in 1889, pursuant to arrangements made with the official liquidator, David Myles, appointee in bankruptcy by the supreme court of session of Scotland, March 20, 1889, to wind up the affairs of the Oregonian Railway Company, Limited, and sell its property for benefit of the creditors.^[41] Myles sent to Oregon his attorney, Alexander Mackay, to examine the railroad properties. The number of stockholders of the bankrupt railroad was 183, only two of whom dwelt in Oregon, J. B. Montgomery, 4,000 shares out of 32,000, and William Reid, 149 shares. Reid had also owned 4,000 shares before the Villard lease, and sold all but his 149 shares because disliking the prospect of Villard's control. The price paid to the liquidator yielded a balance of some $135,000 over the bonds, to pay floating indebtedness due Scotch creditors, amounting to $250,000. The proceeds were distributed to the various creditors in Scotland, January 15, 1890. Huntington paid, in addition, receiver's certificates to the amount of some $423,000. The cost to him of the 147 miles of the Oregonian Railway amounted as follows:^[42]

To the mortgage bondholders, £235,000 and other creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,064,450

To the holders of receiver's certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

423,000

⁠Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,487,450

The cost of the thirty miles of the Portland-Dundee line probably brought the total up to $2,000,000 The loss accruing from the narrow gauge system came out of the pockets of the stock subscribers which appears to have been practically a total loss, $1,227,240, and also out of the coffers of Dundee bank lenders to the extent of $115,000 additional. The lines of the Oregonian Railway Company were foreclosed in the United States circuit court at Portland, in 1890, and the report of the master in chancery, George H. Durham, was finally approved August 12, 1891. The transfer to Huntington took place May 20, 1890. Huntington made an inspection of the road April 27, 1890. The receivership of Charles N. Scott was not officially terminated, however, until August 12, 1891. In the summer of 1890 the newly organized company abandoned the line between Woodburn and Ray's Landing, ten miles. Late in 1890 the narrow gauge system was leased to the Oregon and California Railroad, but was not formally absorbed by the latter company until 1893.^[43]

Footnotes

1. The writer is indebted, for matter of this article, to Charles N. Scott, who as receiver of the narrow gauge railroad, was its manager in 1885–90; to Richard Koehler, who was foremost in management of the property after its acquisition by the Southern Pacific in 1890; to F. E. Beach, who was manager in 1878 in initial stages of the railroad; to Joseph Gaston's Centennial History of Oregon, the author of which promoted, financed and built the first twenty miles in 1878; and, specially to the files of The Oregonian, the consecutive reading of which has afforded the working materials of is article. See history of narrow gauge in The Oregonian, January 1, 1889; also March 6, 1889, by Wiliam Reid.
2. Built in 1870–72; the Oregon Central Railroad.
3. Built in 1868–72; the Oregon and California Railroad.
4. The rails of the narrow gauge were three feet apart; of standard gauge, four feet and one-half inches.
5. By way of Forest Grove. At this time the Oregon and California Railroad, operating between Portland and Roseburg, and between Portland and Saint Joseph, could not finance the extensions demanded by the people of Willamette Valley, and the best that it could do was to extend fifty miles in 1878 from Saint Joseph to Corvallis. This period of popular clamor for railroads, which resulted in the narrow gauge project, was a period of depression in the earnings of the Oregon and California lines, brought about partly by low rates, which were due to river competition and by the need of stimulating wheat production, and partly by high cost of replacement construction of trestles, bridges and rails. "The net earnings," writes Mr. Richard Koehler in a recent letter to the writer, "dwindled down to less than was necessary to pay one per cent on the bonds outstanding."
6. See The Oregonian, November 15, 1877: also September 24, 1878.
7. Date of incorporation of the Dayton, Sheridan and Grand Ronde Railway, November 14, 1877; capital stock, $200,000; 2,000 shares, par $100.
8. See Powell vs. Dayton, Sheridan and Grand Ronde Railroad Company, 16 Oregon 34.
9. Joseph Gaston's Centennial History of Oregon says that farmers pledged $5,000 and citizens of Dallas put up $17,000 additional for the branch to that town. See Vol. I., p. 533. See also Branson et al vs. Oregonian Railway Company, Limited, 10 Oregon 279: Powell vs. Oregonian Railway Company, U. S. reports, Sawyer 13, 536.
10. The contract for rails was dated February 14, 1878.
11. See Pacific Rolling Mill Company vs. Dayton, Sheridan and Grand Ronde Railroad Company, Willamette Valley Railway Company, Joseph Gaston et al, U. S. Court, Ninth Circuit. Sawyer 7. 61.
12. See Powell vs. Dayton, Sheridan and Grand Ronde Railroad Company, 13 Oregon 450–52.
13. Villard gained control of the Northern Pacific Railroad in June 1881.
14. Opened, Portland to Saint Joseph, late in 1872 by Ben Holladay; Saint Joseph to Corvallis, January 25, 1879, by Henry Villard.
15. Opened, Portland to Roseburg, November 2, 1872, by Holladay: Roseburg to Ashland, by Villard, May 4. 1884. Villard took the management of the Holladay lines (Oregon and California Railroad) April 18, 1876.
16. Villard organized the Oregon Railway and Navigation Company in June–July, 1879.
17. See session laws. p. 85.
18. Figures taken from Dundee Courier and Argus, March 8 1889, at time of bankruptcy in Scotch court. The original capital was 16,000 shares, par £10 each, issued in year 1880; 16,000 additional shares issued in 1881. Original mortgage £95,000, 6 per cent. dated February 14, 1881; £119,700, 6 per cent, dated February 4, 1882. To this capital expenditure was added in 1885–89 by the receiver the further sum of $423,000.
19. See The Oregonian, March 13, 1880.
20. These operations were conducted by the Oregonian Railway Company, Limited, a corporation of Dundee, Scotland, formed April 30, 1880. This company succeeded the Oregon Railway Company, Limited, of Oregon, incorporated at Portland, February 20, 1880, by William Reid, Donald Macleay and Ellis G. Hughes, and formally took over the railroad from the earlier company, December 11, 1880. The Oregon Railway had been preceded by the Willamette Valley Railroad Company, which conveyed to it, April 2, 1880, and which has been referred to earlier in this article as the successor of the original Dayton, Sheridan and Grand Ronde Railway. The chief and the longest lived of these companies was the Oregonian Railway Company. Its officers in 1881 were William Reid, president, and Ellis G. Hughes, secretary. (Hughes vs. Oregonian Ry. Co., 11 Oregon 159.) It is the view of Mr. Richard Koehler that the Central Pacific project, from Winnemucca, Nevada, to the Willamette Valley, in the period 1880–81, was not seriously considered by the Huntington interests, and that their advantage and their preference lay along the land-grant route of the Portland-Sacramento line. "lf there was in Mr. Reid's mind at that time," writes Mr, Koehler in a recent letter to the writer, "a vision of a railroad to Winnemucca, it was in connection with a similar vision of Mr. B. J. Pengra, who maintained from the earliest planning of railroad enterprises that the most practicable and cheapest route was from Winnemucca, via the Pengra Pass and the Middle Fork of the Willamette .... I also firmly believe that while Mr. Reid may have spoken and written about this grand system of narrow gauge lines, reaching from Portland to Winnemueca, to Yaquina Bay and to Astoria, he based his action in taking over and extending the narrow gauge system upon the belief that by building nearer to the foothills on both sides of the river, than the then existing lines of the Oregon and California Railroad. he could gather a very substantial part of the valley business, and thus make the narrow gauge lines pay."
21. See 11 Oregon 159, Hughes vs. Oregonian Railway Company.
22. See details of lease negotiations in The Oregonian, March 6, 1889, written by William Reid.
23. The Oregon Railway and Navigation Company continued to operate the lines until November 15, 1884. See The Oregonian, November 12, 1884.
24. See article by William Reid, The Oregonian, March 6, 1889.
25. Charles Napier Scott proved himself an efficient railroad man and an able administrator of the narrow gauge. Before coming to Oregon he had many years' experience in railroading. He was born April 16, 1846, at Hamilton, Ohio. He is a resident of Portland, Ore. He was finally discharged as receiver August 12, 1891. (Portland Evening Telegram, August 12, 1891.)
26. Contracts for the Santiam bridges were let July 26, 1886; first authorization to borrow money granted by United States circuit court April 19, 1886.
27. See The Oregonian, January 18, 1885.
28. See The Oregonian, January 18, 1885.
29. By steamboat, City of Salem, Portland to Elk Rock. For narrative, see The Oregonian, December 13, 1886.
30. See Argument of B. D. Townshend, U. S. vs. Oregon and California Railroad Company, p. 17. Connection with California made at Ashland, December 17, 1887.
31. See The Oregonian, July 8, 1889, for history of control by Southern Pacific On May 5, the Pacific Improvement company acquired for the Southern Pacific, stock control of the Oregonian Railway Company, but not control of the bond ownership until 1889.
32. See session laws 1887, pp. 339–40; also session laws, 1889.
33. See session laws, pp. 57–60.
34. See session laws, pp. 100–06 .
35. See 9 Oregon 231, Oregonian Railway Company vs. City of Portland.
36. For Huntington's plans, see Quarterly, vol. xv, pp. 231–32.
37. See The Oregonian, April 7, 1890.
38. See The Oregonian, August 5, 1890.
39. See The Oregonian, December 2, 1890.
40. See The Oregonian, November 24, 1890; December 24, 1890.
41. See The Oregonian, February 10, 1890.
42. Newspaper dispatches of the time of the sale stated the purchase price at $1,500,000. (The Oregonian, June 17, 1890.)
43. The principal places along the route of the narrow gauge, and the mileage, were as follows: Portland to Oswego, 7.3 miles; Tualatin, 13.1; Newberg, 26.4; Dundee Jt., 28.8; Fulquartz, 31.2; Ray's Landing, 33.3; St. Paul, 35.4; Woodburn, 43.4; Mt. Angel, 49.7; Silverton, 53.9; Howell Prairie, 58.2; Macleay, 63.8; Waldo Hills, 63.1; Aumsfille, 69.1; West Stayton, 72.9; North Santiam, 75; West Scio, 78.3; South Santiam, 83.8; Lebanon Jt., 90.8; Brownsville, 103.7; Coburg, 123.0. Dayton, 32.7; Lafayette 34.7; Dayton Jt., 37.8; Whites, 44.8; Sheridan Jt., 50.2; Ballston, 52.9; Sheridan, 57.2. Perrydale, 52.4; Dallas, 63.0; Monmouth, 70.1; Airlie, 79.4.
    From official time tables, 1887. Running time, Portland to Dundee Jt., 3 hours; Dundee to Lafayette, 37 minutes; Sheridan Jt. to Airlie, 2 hours, 30 minutes; Ray's Landing to Coburg, 8 hours.