In 1905, the Pacific Gas & Electric Company (PG&E) was formed. Its main shareholders formed the California Midland Railroad in an attempt to build it as an extension of the Nevada County Traction Company from Marysville to Nevada City via Grass Valley. Five 4-4-0 "General" standard gauge steam locomotives and four 66-passenger coaches were purchased and the first tracks were laid outside Marysville in spring of 1906. The first mile of track was laid when the 1906 San Francisco earthquake and fire nearly forced PG&E into receivership. All work on the railroad was ceased until 1907. Another ten miles of track was laid and land for the station, freight house, and yard area in Grass Valley was purchased. A stock market crash in October, 1907, created too much of a financial barrier and by January, 1908, the California Midland Railroad was for all purposes dead. The Southern Pacific bought the locomotives and passenger cars.
from "Nevada County Narrow Gauge" by Gerald M. Best - Howel North Books, 1965