Building Transportation at over 10,000 feet:Narrow Gauge Railroads in the

San Juan Mountains of Colorado

Brittany Price1.011 ProjectSpring 2003

Summary• Need for transportation between mining towns

of Ouray and Silverton•Silverton Narrow Gauge Railroad operated

between 1889 and 1922•Transported over $2 billion in Silver ore out of

San Juan County

Colorado

Location of the Tracks

Otto Mears•“Pathfinder of the San Juans”•Built toll roads between Silverton & Ouray in 1886 Pack trains used to transport goods on toll roads•Since RR more economical transport, began construction over the existing path of toll roads•$80/ton on toll road vs. $8/ton on RR •Used capitol from previous toll roads to pay for projects

Issues Involved in Construction

•People in mining towns needed goods and materials to mine

•Challenge to build•Unprecedented situation in Colorado and US•Narrow Gauge vs. Regular Gauge

•Can make sharper turns•Less material used to construct ->

less expensive•Track built to Maximum 7% Grade •Natural environment extremely harsh

Risks/Uncertainties

-Heavily Dependant upon success of Silver Mines

-Remote location, construction uncertainty

-No large population to sustain growth

-Natural environment and weather constant risks

Mears’ Evaluation

Late 1800’s – Economic Evaluation Limited in Scope

Most likely Mears’ Considerations:1. Revenues of the freight would be greater than the costs2. People in mining towns along route needed supplies3. Easier to use RR vs. pack trains to transport heavy ore4. Terrain known through toll roads -> knew it was

roughly possible to build

Cost Breakdown

Construction Operation Maintenance

Labor

Clear trees

Blast cliffs

Lay RR Ties

and Track

Run train

Load ore

Rebuild track

Clear track

Materials

Dynamite

Wood

Spikes

Train:

Engine

Freight cars

Passenger cars

Wood

Spikes

Historic Case

Timeline:1887 – Construction begins1889 – Construction ends1893 – Silver Panic of 18931922 – Last train runs along Silverton line

Revenue2000 tons/year transported initially

$8 per ton freight charge

Costs Materials Labor

Construction $165,000 / mile $3.50 / day-man

Maintenance & Operation

$1000 / day $3.50 / day-man

Cash Flow Diagram - Railroad

-3000000

-2000000

-1000000

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

Tim e (years)

Do

llars

Revenues

Costs

Net Present Value: Costs Revenues

$2 million $78 million

Historic Case

Two Scenarios

Silver Prices Increase

Cash Flow Diagram - Silver Price Increases

$(5,000,000)

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

1 4 7 10

13

16

19

22

25

28

31

34

37

40

43

46

49

Tim e (years)

Do

lla

rs

Revenues

Costs

Cash Flow Diagram - Silver Prices Fall

$(2,500,000)

$(2,000,000)

$(1,500,000)

$(1,000,000)

$(500,000)

$-

$500,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49

Tim e (years)

Do

llars

Revenue

Costs

Silver Prices Decrease

NPW: Costs = $2.3MRevenues = $11.6M

NPW: Costs = $1MRevenues = $18,000

What really happened?•Railroad died out due to lack of need and use•State Highway Department took over care of

land and tracks in 1922•Created US 550 over Mears’ toll road and

railroad paths •Cost $1.2 million to pave and make 2 road lanes

over only 6 miles •Million Dollar Highway

Conclusions

•The Silverton Railroad has been said to be “among the greatest wonders of railroad building in America”

•A railroad in Southwestern Colorado is only viable if there is a strong economic climate

•The risks involved in the Silverton Railroad were too great•Silverton Railroad was highly successful financially even

though it eventually went out of business