In its pre-incorporation phase, the Tacoma Eastern Railroad began life as a 3 ft (914 mm) narrow gauge logging road, about two miles long, running from a shallow-water wharf at the head of Commencement Bay in Tacoma, Washington. The railroad left the wharf fronting Dock Street and continued southward through a steep chasm to a sawmill located near South 38th Street. The railroad, the wharf, and the sawmill were owned and operated by brothers John F. and George E. Hart. The brothers owned and operated a wide variety of companies including (what Dilgard considers) the first legitimate opera house in Everett, Washington. The little narrow gauge road brought dimensional lumber materials from the Harts' sawmill to their wharf, largely for export to the lumber-hungry markets of San Francisco.
The early operations of the railroad appear to have been successful, but the Hart Brothers must have been concerned about their limited ability to expand their market base and move their product due to the fact they were unable to interchange cars with the 4 ft 8 1⁄2 in (1,435 mm) standard gauge Northern Pacific Railroad. A reconstruction program was initiated to convert the railroad from narrow to standard gauge. The two-mile road was apparently completed by May 1890 and the line became known officially as the Tacoma Eastern Railroad for the first time.
Once incorporated, the Hart brothers set out to tap vast stands of virgin forests in the foothills of Mount Rainier by building southward through the gulch that now bears the name of that railroad. The Puyallup Indians used this route prior to pioneer settlement and referred to the gulch at the head of Commencement Bay as Wad Shum Shum, which means “the trail to high ground.” During this important building phase the Hart brothers managed to extend the railroad through the steep gulch, terminating about seven miles south of Tacoma near South 97th Street in a grove of virgin timber that is now the Midland neighborhood.