, the
idea of building through to San Diego was not abandoned, and in 1872 a
branch line was commenced at Kit Carson destined to Pueblo and thence
South along the Rampart Range to New Mexico and thence to the coast.
This line was completed nearly due south to Fort Lyon and some twenty
miles of grading done between Fort Lyon and Pueblo. Financial
stringency together with the building of the Atchison, Topeka and
Santa Fe into the same territory resulted in the abandonment of these
plans and eventually the track from Kit Carson to Lyons was taken up
under the following circumstances.

The owners of the Central Branch (Union Pacific), R. M. Pomeroy of
Boston and associates, were pushing the construction of this line
westwardly and announced their intention of building to Denver, thus
making a competitor for the Kansas Pacific Railway. Mr. Jay Gould who
at that time (1879) was the principal owner of the latter line, while
out on an inspection trip over the line instructed his General
Manager, "Sill Smith" Mr. Sylvester T. Smith to build into their
territory and parallel them. Out of this grew the Junction City and
Fort Kearney Railway (now a part of the Union Pacific Railroad). Smith
was unable to buy sufficient rails to build and accordingly took up
those on the branch of the Kansas Pacific Railway, Kit Carson to
Lyons, i. e. the Arkansas Valley Railroad and re-laid them on the
Junction City Line. Some of the Arkansas Valley Railway bonds were
owned in Holland and a representative of the Dutch happened along on
an investigating tour, but was unable to find any road. The matter
soon got into Court and an effort was made to locate who was
responsible for the tearing up of the Arkansas Valley Railway. Finally
General Manager Smith was put on the stand and frankly acknowledged
what he had done--and that he had no orders from President, Directors,
or any one. The question was then asked who ordered you to build the
Junction City and Fort Kearney Railway and the answer was Jay Gould;
and who is he, for at that time he was not the well-known man he
afterwards became. At this point Judge Dillon obtained permission to
interrupt the proceedings with a query as in whose behalf all this
investigating was being done. The holders of the bonds was the
reply--then that must be myself, for said he, I have here in my hands
all of the bonds in question. Mr. Gould had quietly bought in the
bonds while the matter was in the Courts, bringing th