In the early 1900s, the founders of Collins Pine Company amassed some 60,000 acres of timberland in the greater Lake Almanor Basin. It was not until the late 1930s, that they gave consideration to establish a mill there. In the fall of 1940, after much negotiations the Red River Lumber Company offered a mill site adjacent to Chester, along with thirteen miles of its main line railroad from Chester to Clear Creek Junction where it connected with the Western Pacific Railroad, which Red River estimated its value at $80,000.
Thus, the Almanor Railroad was born. Collins Pine changed it from a private line to a common carrier, should anyone in Chester desire to use it. Collins Pine had a lot of work to upgrade the railroad line. It also needed motive power, as it decided not to purchase any of Red River’s locomotives. At its Grande Ronde operation, it had discontinued its railroad logging in favor of truck logging. There it had at its disposal a Heisler geared steam locomotive, the 104, and it was put into operation on the Almanor. Initially it worked ideally to handle the railroad’s sharp turns and steep grades. It was later replaced with a small diesel locomotive.