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
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