Sunday, June 1, 2008

Some Background Information on the Seattle Lake Shore and Eastern

The Seattle Lake Shore and Eastern (Lake Shore)was incorporated in 1885 by Seattle interests other than the NP. The main route was to be Seattle, Snoqualmie Falls, Cle Elum, Ellensburg, Rock Island Rapids and then Spokane. After the usual money difficulties on January 12th, 1887, a contract was made with the Puget Sound Construction Company for the first 40 miles to Squak. The price was $800,000 in bonds and $400,000 in stock. In early February, Seattle granted a right-of-way through the city and work began on February 25th.

The Lake Shore acquired some very valuable waterfront rights in Seattle and on March 25th Kerns Bros. had the contract to clear and grade the first 5 miles from Smith’s Cove. Other contracts were let for the second 5 miles, for piling and trestle work at the Cove and for 5000 tons of rail, 4 locomotives and other equipment. By June the line had been located 75 miles to Snoqualmie Pass.

On September 9th the Seattle Press gave a glowing account of the road and its backers plus the Puget Sound Construction Co. A few miles were in iron at the time and 300 miles were predicted for January 1st, 1889. There was a statement that Seattle was hopeful that the Lake Shore would free it from the NP. The article concluded with the indication that Tacoma was non-plussed by this turn of events. All of this journalistic support could not overcome the problems associated with a change in control, a change in the construction company and money difficulties. It was not until July 16th, 1888, that the first regular train ran from Seattle the 24 miles to Woodinville.

In early December of 1887, the Seattle and Eastern Construction Co. was incorporated to build the road for the Lake Shore. Four New Yorkers, T. Burke, Angus McIntosh, F.M. Jones and W.H. Scott were behind the venture. Their new organization finished the 20 miles from Woodinville to Sallal Prairie in the Cascades and that was as far as the line ever went. They began the connecting work west from Spokane in early 1888. Forty miles were planned to be ready for the fall harvest. Twenty miles of grade were in by July but here again lack of funds only saw 10 miles of track by November. The next few months were more productive and the line was open 45 miles to Wheatdale in mid-March, 1889. Then money problems became acute, the town of Davenport offered to grade the 5 miles to reach there. This was accepted and completed so that in October the eastern section consisted of the 50.05 miles from Spokane to Davenport and that was as far as that line was to go.

The major segment of the Lake Shore was not in the original planning. As the possibility of a Cascade line became remote a line to Canada became more appealing. On March 24th, 1888, the Lake Shore purchased the Seattle and West Coast Ry. That company had 14.4 miles of graded roadbed from Woodinville north to Snohomish. F.H. Whitworth of Seattle started work on this northern branch and by the end of April an easy route was located all the way to the Canadian line. December saw 20 miles in operation on this branch.

Funds needed for the Canadian line would be large so the Lake Shore increased its stock to provide a bonus for bonds to be issued. In April, 1889, it was reported that $2,000,000 would be offered. The surveys had been run from Snohomish to the Skagit River in 1888 but the end-of-track remained 6 miles north of Snohomish for many months. In 1889 the surveys were completed to the Canadian line. Earle & MacLeod were the contractors for much of the work. They put the Lake Shore in and out of receivership in order to collect $87,000 for previous work. When $90,000 in bonds were posted all was well. During the year the first 15 miles south from the line were cleared and also the 15 miles south from the Skagit River. Clearing was very difficult due to the heavy timber. The maximum grade was held to 1.5% and there was much bridging for all the streams and rivers flowed west from the well-watered Cascade Range.

In Spokane during February, 1890, bondholders applied for a receiver and for an injunction to prevent giving the Seattle and Eastern Construction Co. any more securities. There were implications in the papers of the time that the NP was behind this suit. It was transferred to Seattle and denied in early March. In june reports began that the NP had control of the Lake Shore due to its valuable Seattle Harbor franchises. Thomas F. Oakes, a member of the NP board of directors, denied this but stated that the two companies were going to coordinate the construction of a Lake Washington Belt Line and in July the NP had the firm of Henry and Balch of Minneapolis working on the 20 mile section of the belt line east of the lake. The NP had been surveying here the previous February. In July the Oregon & Transcontinental, a holding company organized by Henry Villard in 1881, purchased a majority of the Lake Shore stock for $45 per share, $2,335,000 of the $4,150,000 outstanding. Oakes had to reverse himself stating on the 22nd that $3,000,000 of the stock had been purchased and the road leased for 6% on the bonds and a $300,000 rental. Traffic north of Seattle apparently was heavy enough to cover interest charges. At the time one major reason stated for this action was that James J. Hill of the GN wanted it.

To finish the construction story of this branch we find 500 to 700 men working at tree different sites during 1890. In May track was 30 miles north of Snohomish and on August 1st the San Francisco Bridge Co. completed the Stillaguamish bridge at Arlington, 61 miles from Seattle. This 240 foot drawbridge with its 4000 foot pile trestle approach had held up progress for a long time. Heavy rain and the lack of skilled labor had their part too. The longest uncompleted section was now the 21 miles from Arlington to Sedro including the Skagit River bridge at Sedro. This was a 650 foot combination drawbridge with a 4800 foot pile trestle on the north and a 2305 foot trestle on the south side. In December trains were running between Arlington and Sedro and the grading was finished to the boundary. April 10th, 1891, the road was open Seattle to Sumas which was one half mile south of the Canadian line. During June, 1891, Traffic Manager J.M. Hannaford assumed similar duties for the Lake Shore and on May 1st, 1892, operations were consolidated with those of the NP. On March 31st, 1893, a Lake Shore stockholder started a suit to have the NP lease annulled and a receiver appointed. A receiver, T.R. Brown, was appointed on July 7th, but the NP traffic contract was continued and the NP operations were continued. The Lake Shore came out of the receivership as two companies both operated by the NP.

At the annual meeting on October 20th, 1892 a stockholders committee was organized to investigate the affairs of the NP. In Washington critical note was taken of the relationship with the Lake Shore, the eastern section paralleled the Central Washington and was relatively useless. In the western section only the line from Seattle to the Canadian line was considered worthwhile. The NP had purchased 31,626 ½ shares of 41,500 outstanding at $45 each on May 23rd, 1890 and between July 1st, 1890 and June 30th, 1892 the line was run at a deficit of $584,300. To argue that the Lake Shore was needed to deter the Manitoba (St. Paul, Minneapolis, and Manitoba RR-forerunner of the GN) did not hold for it did not do so. The Lake Shore was purported to have started as a land speculation and then money speculators got the bonds at 80 and the stock as a bonus. The NP purchase included a bond guarantee and this would have been very beneficial to the speculators if all was true.

The Lake Shore had an operation loss as of June 30th, 1893 of $257,701. Before the NP entered its second reorganization of the mid 1890s, the Lake Shore had its lease terminated.

The Lake Shore was leading a separate existence during the NP receivership. Its lease had had been given up shortly before the NP receivership and it had gone the bankruptcy road too. There had been continuing litigation between the NP and the Lake Shore as to who was indebted to whom and the NP was trying to prevent a foreclosure. However, on March 31st, 1896, Judge Hannaford ordered foreclosure sale on May 16th and the bondholders agreed to this on April 10th. The Lake Shore was thus sold to its reorganization committee on May 22nd for $1,000,000 and the sale was confirmed on June 9th although Circuit Court approval was delayed until February, 1897.

The road began anew with the profitable western section as one railroad and the useless eastern section as another although they both had the same officers. On July 11th the old bondholders of the Lake Shore began a general creditor’s suit in Milwaukee to forestall the NP sale as they claimed that the general creditors had been left out of the reorganization. The case was argued on July 21st and denied on the 22nd. Likewise the reorganization committee for the Lake Shore stated on July 24th that there was no NP lien as it came after the first mortgage and the road had been sold under that mortgage and thus the NP lien was against a defunct road. It was several years before these two independent roads came back into the NP fold.

The NP had been behind the long delay between the sale of the Lake Shore in May, 1896, and its final court confirmation in February, 1897. This was because the NP owned $3,162,650 of stock and $1,258,691 of bonds in the company and the sale price was only $1,000,000. After the confirmation of the sale the western section of the Lake Shore, which was the part of value, passed to a company called the Seattle and International on July 10th.

This company had been formed earlier in the summer for just this purpose. During January, 1898, the NP bought $5,558,000 of the bonds of the S&I and displaced the reorganization management. Not only did the NP want to keep this line out of any rival hands, the Canadian Pacific was rumored to be bidding on it, but also one of the Lake Shore reorganization groups was trying to assert a large claim against the old NP RR. This purchase stopped this action. At this time the line consisted of the 125.3 miles from Seattle to Sumas, the 38.6 mile branch into the Cascades from Woodinville to Sallal and valuable terminal properties in Seattle. The GN began using the Seattle train station on March 20th, 1896. The Klondike Gold Rush was providing much business at this time and May 20th the NP traffic department absorbed that of the S&I.

In February, 1900, the NP bought, using the S&I, the western section of the Everett, the western section of the Everett & Monte Cristo, from Snohomish to Everett, 11.5 miles and terminals. The property was leased until the title was cleared. In April, 1900, again using the S&I, surveys began between Arlington, on the Sumas line, and Darrington up the Stillaguamish Valley in the Cascades. This was through very fine timber country. Right-of-way was secured in June and the contract was let in July to Larson & Greenough. The last rail was in by the end of May, 1901. Meanwhile, on March 21st, 1901, the NP purchased the S&I outright and these two newer sections came with it.

The eastern section of the Lake Shore was also acquired on July 10th, 1896 by a new company called the Spokane and Seattle. Its officers were the same as those of the S&I. The 50 mile line from Spokane to Davenport was always operated by the NP. It closely paralleled the Washington Central, successor company to the Central Washington. This latter company had been sold at Spokane January 19th, 1898, and bid in by the bondholders for $100,000. The NP acquired all of the capital stock and leased it in March.

In March a year later the NP purchased the Medical Lake-Davenport section of the S&S, and in October, 1900, the Spokane-Medical Lake section. Along with the purchase went the abandonment of the 29 miles from Spokane to Ditmar which was the section paralleling the Washington Central.

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