Improvements and Extension Under New Management
In August, 1900, Loomis sold his stock to the Oregon Railway and Navigation Company, which assumed total control over the railroad, which had then total assets in rolling stock, track, and real property valued at $248,000. The new owners made a number improvements to the track and rolling stock of the railroad. Trains now ran faster and on time. The dock and railroad facilities at Nahcotta were improved. Two important safety items, air brakes and Janney couplers, were adopted in 1903. The railroad also got into the business of hauling logs from Nahcotta down to Ilwaco. The company acquired the steam tug Flora Bell to round up log tows on Willapa Bay and bring them to Nahcotta to be loaded onto trains bound for Ilwaco.
For a number of years there had been a plan by various persons and companies to build a standard gauge railroad all along the north bank of the Columbia from the ocean at Ilwaco to Wallula Gap near the junction of the Snake and the Columbia rivers. The first leg of this work was to be a railroad built along the north shore of the Columbia river from Ilwaco to Knappton, a small settlement 17 miles (27 km) to the east. The work was contracted out by the Columbia Valley Railroad, but it was supervised by the chief engineer of the Oregon Railway and Navigation Company. After various legal and survey matters settled the route (which actually ran inland from the Columbia shore), construction began in 1907 and was finally completed, following many legal and financial difficulties, in June, 1908, with a terminus at Megler.
The railroad never quite made it to Knappton, which was about one and a half miles further east. The most notable engineering feature of the extension was a tunnel, the only one on the line, blasted through the rock at Scarborough Head. This was right under an army coast defense facility known as Fort Columbia. A large dock, supposedly the largest on the Columbia was built at Megler. The tunnel was 910 feet (277 m) long and The dock was reported to measure 120 feet (37 m) by 900 feet (270 m) in area.
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