A new company formed in December 1908 by railroad promoter F.M. Swift, David Loring and A. E. Clark to build an electric line south out of Oregon City to Molalla and beyond. This company purchased all the existing maps, plats, surveys and right-of-way deeds from the previous Oregon City, Beaver Creek & Molalla Railway Company, which Swift had been involved with, but all of the other directors of the older company exited the project and Swift was the only direct leadership link between the two.

Swift continued to raise subscriptions and negotiate rights-of-way for the line, and also worked at obtaining a franchise to enter Oregon City. The city council was reluctant to let him use public streets or obtain a valuable franchise for free, and entrance to the city was finally granted along the line of Abernethy Creek to the north of the city, with only Fifteenth Street being used by the line (the original franchise had asked for access from the Mount Pleasant area along Fifth, Center, Eleventh and John Adams streets).

However, by early 1911, work on the project had stalled almost completely and many doubted that it would ever be completed. In March, directors of the old Oregon City, Beaver Creek & Molalla Railway Company—including Grant B. Dimick, county judge and previous mayor of Oregon City—staged a takeover of the Clackamas Southern, perhaps spurred into action by rumors of the Salem, Falls City and Western Railroad building a line to Molalla from Salem, cutting Oregon City out of the picture completely. By methods unknown, they somehow convinced Mr. Swift to hand over all of his “plats, maps, profiles, surveys and rights of way theretofore acquired, together with all field books in his possession” in return for stocks in the company equal to the value he had expended to date. This amounted to about $27,500, but the stock was to be held in trust for him until such time as the railroad was completed (mainly to prevent him for having too much voting power based on the number of shares he owned). He remained on the board of directors and continued his field work for the company, but was replaced as president by George A. Harding, with Mr. Dimick serving as secretary.

Construction work picked up again under the new leadership, including completion of the impressive wooden trestle over Newell Creek, one of the largest in the state. A milestone was reached when the first carloads of wood were carried over the line from Beaver Creek to Oregon City in November 1913.

In January 1914, the name of the company was changed to the Willamette Valley Southern Railway Company to reflect the fact that its lines were not going to be confined to just Clackamas County (and to hopefully cash in on the name recognition of the famous Willamette Valley). Mr. Swift was reelected as president of the company at this time.

Lines

• Mount Angel (1915–1933) – Initial construction from Oregon City to Beaver Creek; no regular passenger service provided, though some loads of wood were transported.

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