[2] It started operation in 1874, running from the east bank of the San Lorenzo River to Soquel, California.
[2] With completion of a bridge over the San Lorenzo, it began operation over its full length in 1876 and was sold in foreclosure in 1881.
When Southern Pacific seemed uninterested in building a standard-gauge railway, the narrow gauge Santa Cruz Railroad was built with local financing, led by Frederick A. Hihn and Claus Spreckels.
Operational income was insufficient to cover unexpected expenses from a right-of-way disagreement near Watsonville and repair of storm damage in the winter of 1877–78.
The Santa Cruz Railroad was unable to pay bond interest after completion of the South Pacific Coast Railroad in 1880 gave residents of Santa Cruz a shorter route to San Francisco.