From "He Built Seattle, A Biography of Judge Thomas Burke," by Robert Nesbit
"Meanwhile, the rumors and predictions of an ambitious extension of the SLS&E were coming to fruition despite the (money) troubles. The "Seattle Daily Press" noted one day that the mayor of Spokane Falls and the secretary of the Walla Walla Board of Trade were in town to talk subsidies with the railroad for an extension to their cities. Burke had been carrying on an encouraging correspondence with a number of men in eastern Washington, assuring them that the SLS&E was their best hope for release from the monopoly operations of the Northern Pacific or Oregon Rail and Navigation Company. The new road would come their way, he said, as soon as those who were providing the "sinews of war" should give the signal.
"Paul Mohr, the new general manager of the SLS&E had been a resident of Spokane for some time; he was therefore the logical choice to negotiate with the people there. He was carrying on this work during March and April, 1888, while Burke was busy harmonizing and explaining in the the quarrel between Gilman and the New York bankers. An arrangement was worked out by Mohr whereby the citizens of Spokane Falls pledged a subscription of $175,000 to the railroad's capital stock, in exchange for which the railroad people promised to begin construction from Spokane westward within thirty days..."
"...With the invasion of Spokane Falls, the SLS&E aroused to a more acute sense of peril powerful rival. This was to endanger their plans as much as were their current financial difficulties. The Northern Pacific had been caught napping when the SLS&E raised the Spokane subsidy and got control of desirable terminal properties there. On his own initiative, the judge had threatened a Northern Pacific branch line, the Spokane and Northern, by putting a surveying party into the field and having a few graders put to work in strategic spots to hold them. This was on a route which would connect Spokane with the Canadian Pacific. Burke considered it the legitimate territory of their railroad and spent some $10,000 on this attempt to outmaneuver the Northern Pacific, but this project had to be abandoned.
"Burke claimed that the Northern Pacific had been contemplating a drive for a subsidy from Spokane Falls which the SLS&E had successfully undercut. This may have been so, but the Northern Pacific had more important competitors at the time in the Oregon Rail and Navigation Company--backed by the Union Pacific--which was building a network of lines in the inland empire.
"The bold action of the SLS&E compelled the attention of the Northern Pacific. It shook into life another subsidiary line, the Washington Central Railway, and began to match the Seattle road mile for mile on a parallel line westward from Spokane. The SLS&E built more than 40 miles of line out of Spokane in the summer of 1888 but was considerably harassed by the Northern Pacific. At one point, the Northern Pacific branch tried to appropriate the SLS&E roadbed but was enjoined by the courts on Burke's appeal and did not contest the matter. The Northern Pacific's activities in the Spokane country cannot have been reassuring to prospective bondholders of the Seattle promotion.
"Most of the Seattle and Eastern Construction Company's remaining financial resources, in the summer of 1888, were used in building the cheaper mileage out of Spokane Falls. By December of that year, Burke said that the construction company had disbursed $525,000 on that part of the line and owed another $150,000 on the forty-five miles built that season."
"The branch out of Spokane, until it covered a few hundred more miles, was simply a feeder for the Northern Pacific. What business there was along it was competed for by the Northern Pacific subsidiary, the Washington Central. In 1888, a line from Spokane to Coulee City was a dubious commercial venture."