In 1886, a Colorado railroad known as Denver & Rio Grande was experiencing great financial difficulty. Rolling stock had not been maintained and was wearing out quickly. Just about every piece of D&RG equipment was in need of some repair. D&RG President William J. Palmer was receiving reports of men all along the line "stealing right and left."

Washouts along the rail lines around Wellington, Utah, disputes with labor unions, and a war with competing railroads were causing the Rio Grande to lose money faster than it could make it.

During the few years prior to 1886, control of the Rio Grande was held and controlled by easterners who had no railroad experience and were not familiar, or concerned, with the particular problems of mountain railroading. Palmer was ousted and the eastern directors appointed Frederick Lovejoy as president of the railroad.