Oregon Historical Society
Volume XX June, 1919 Number 2
History of the Narrow Gauge Railroad in the Willamette Valley
By Leslie M. Scott
Continued from Page One
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. 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. 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. 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.
The Dundee-Portland. extension was undertaken by the Portland and Willamette Valley Railway Company, incorporated January 19, 1885. 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. DeLashmutt, Aaron Meier, J. A. Chapman, Ira F. Powers (Sr.), John Schuerer, J. F. Coyne, C. E. Smith, William Gallick of Portland; A. R. Burbank, II. 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. Benfly, 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.
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. 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. 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.
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.
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, the second in 1885. 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, 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, together with an extension of the narrow gauge from Silverton to Portland. Surveys for the latter ran by way of Lents and Molalla, but the surveyors were called in late in 1890 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.
The mortgage bonds of the Oregonlan 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. 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 :
To the mortgage bondholders, 235,000 and other creditors ... $1,064,450
To the holders of receiver's certificates ... 423,000
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.
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