In the late nineteenth century, the Empire Lumber and Mining Company began logging operations in northeastern Tennessee.
[1][2] Originally, the portion of the line from the Tennessee-Virginia border to Damascus, Virginia, was operated by the Virginia-Carolina Railway.
[4][5] In the early 1910s, the companies which had originally provided the need for the Beaver Dam Railroad began to pull out as timber supplies ran short.
However, this section would continue to operate under the Beaver Dam name into the 1920s by the Smethport Extract Company serving its plant near Damascus.
To fix this problem, a section of the cliff was hand-chiseled out to increase the tunnel's clearance in order to allow trains to pass through.