In 1904, the Medford & Crater Lake Railroad was incorporated and started construction of a railroad between those points in 1905. Crater Lake has always been a scenic landmark in the southern Oregon Cascades. The line ran into financial problems, and despite repeated attempts to reorganize construction, money to complete the line was never found. There were only a little over 20,000 people in all of Jackson County at the time, and therefore economic justification for a passenger railroad was very difficult.
The Pacific & Eastern was incorporated in 1907 to construct a line from a point in California to Crater Lake, as well as operate telephone and telegraph lines. The backers of the line were supposedly Portland business interests. Construction of this line was never started. However, due to the financial problems of the Medford & Crater Lake construction, the company wound up as owners of the M&CL.
The area did have significant timber resources, but a railroad would have to be built to get them to a market. In 1908, business interests with timber land ownership in the Butte Falls area purchased the Pacific & Eastern.
The Spokane Portland & Seattle purchased control of the Pacific & Eastern in 1909.
At the time, the Pacific & Eastern was projected as a key railroad in the Great Northern - Northern Pacific - Spokane Portland & Seattle - Oregon Electric - Oregon Trunk railroad system, as that family of companies did not have a way of getting trains into California. The line was to be extended northeast to Bend and connect with the Oregon Trunk. At the time, the Southern Pacific line between Eugene and Klamath Falls did not exist, and therefore there was no obstruction, other than the Cascade Mountains, to such a line. At the very least, the line was to provide a link to the valuable fruit orchards of the Rogue River Valley in Southern Oregon, as well as valuable timber land around Butte Falls. There were still various proposals for related railroad lines to extend into California, some using the Pacific & Eastern as a stepping stone into that state.
In 1911, the line was completed all the way to Butte Falls, about halfway to Crater Lake.
By 1919, plans for the connection at Bend has fallen through, and the line was determined to be unnecessary for the SP&S system. It was sold to logging operations of the Brownlee-Olds Lumber Company. In 1924, the P&E became the Medford Logging Railroad. It eventually extended some 70 miles into the woods. Several of these lines are now logging roads, but with an old-school map, one can drive on a few pieces of what was once part of the line.
In 1959, the line was cut back again to Butte Falls, and the entire line was abandoned in 1962 due to the development of better trucks and the exhaustion of timber resources in the region. At some point this became part of the Medford Corporation. Towns on the line from Medford were Davis, Agate, White City, Table Rock, Eagle Point, Mountain View, School House Gap, Darby, Edsalls and Butte Falls.