The Quarterly
of the
Oregon Historical Society

Volume XX June, 1919 Number 2

History of the Narrow Gauge Railroad in the Willamette Valley
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, the other, two hundred miles to Roseburg, 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.

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 $2,500,00 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, 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. 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, sale, 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. 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, 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 equivalentvalue of railroad service. This "freight script" was later held chargeable to the railroad by the supreme court of Oregon, and $61,000 was refunded.

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

Rails for 20 miles, mortgage executed Nov. 5, 1878 ... $62,724.56
Rails for 12 miles to Dallas, executed Dec. 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.

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.

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. His German capitalists of the Oregon and California Railroad extended in 1878-79 the Portland-Saint Joseph line fifty miles to Corvallis, and the Portland-Roseburg line in 1881-84, one hundred and fifty miles to Ashland. 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. 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. 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 :

Funds from sale of capital stock, 32,000 shares, par 10, @ 7 175
6d, 252,000 ... $1,227,240
Funds from sale of bonds, 214,700 ... 1,045,489
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. 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.

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. 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 wlth 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.

Viilard'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 Viilard'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.

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.

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