Rumors were circulating as early as 1878 that a broad gauge railroad line would soon be built through Pagosa Springs. It was known that survey crews were measuring every pass through the San Juan Mountains, looking for the most economical route to ship the mining ores, lumber and other natural products of the San Juan Basin to the outside world. Real estate promoters took advantage of the surveys to induce settlers to come to the basin and profit from the soon-to-come railroad.
The Denver and Rio Grande Narrow Gauge had been constructed from Pueblo to Durango by 1881 and served as a tremendous boon to the Four Corners economy, but a broad gauge was never to be.
In January 1895, the Pagosa News published this announcement that soon came true. “The Rio Grande & Pagosa Springs Railroad Company has been incorporated. This line of road is to be built from Lumberton to Pagosa Springs through Coyote Park. It will undoubtedly be built as far as the park the coming season, and perhaps the whole line will be completed by next fall.”
The incorporators of the railroad were Denver people, C.D. McPhee and J.J. McGinnity of the firm of McPhee and McGinnity. The railroad was incorporated with the secretary of state with a capital stock of $100,000.