Although the NCNG was running 5 passenger trains daily between Grass Valley and Nevada City (4 miles apart) by the 1880s, a stage coach line running at 1.5 hour intervals over the main highway was well patronized. The stage coach provided service to the centers of the town, where the train depots were some distance from the business district and required a healthy walk.
Potential interest in an electric railway between the "Twin Cities" began as early as 1887. Two of California's first hydro-electric power plants were nearby - one on Wolf Creek, and one on Deer Creek. The Grass Valley Gas & Electric Company consolidated both plants and was supplying power to both cities. In 1899, intentions to build the line from Nevada City to Marysville were expressed.
The first tie was laid June 5, 1901 and regular service began October 15, 1901. The stage coach line would soon discontinue. After the novelty of the trolley line wore off, the traction line would settle down to a fairly profitable life with little effect on the NCNG. With the coming of the automobile, the life of the Nevada County Traction Company came to an end on January 16,1925.
from "The Historical Guide to North American Railroads" - Kalmbach Publishing - 1992