The promoters decided to make Ashland the north end of their iron. It was a mere clearing, in the woods in 1870, formerly known as Equadon which was founded in 1854 and abandoned in 1863. The Ashland site was located on the bank of a splendid natural harbor called Cheguamegon Bay.
Capt, Rich, Wisconsin Central civil engineer, came north in 1870 to make preliminary surveys for right-of-way. The route south received its final survey and approval, and to expedite the completion of the project, it was decided to build from both ends toward the middle. In an issue of the Bayfield Press dated May 1872, the following announcement is made: "The first shovel full of dirt was turned April 15,1872, at this end of the glorious Wisconsin Central by the Honorable Aseph Whittlesey, pioneer of Ashland, the Future Iron City of Lake Superior".
Only 6 miles of road were built before winter snowed the workers in. Construction was halted at White River, a small stream in a deep wide ravine, Stoughton Brothers, Northrup, Livingston, road contractor and Chicago Bridge Company erected a steel bridge over White River, 1,600 feet long and 110 feet above the water, a huge undertaking in the isolated location. All materials required were shipped by boat up the Great Lakes through the Soo, thence to Ashland, for handling by the Wisconsin Central on its own rails to White River. The White River Bridge, a lean spindling structure, remained one of the great sights of northern Wisconsin (and a 6-M.P.H. slow-order for engineers) until about 1910 when the ravine received an earth fill, and the steel bridge sold for junk.
From March to November 15, 1872, over 200 buildings had been erected in Ashland and from a thousand to thirteen hundred men were in the railroad camps engaged in the tremendous task of clearing a track through the forest, and building a railroad. The nation had begun to feel the financial trouble that became the Bank Panic of 1873. Suddenly, one December morning, 1872, Capt. Rich received word to shut down all work on the line, pay off and discharge all the men and transport them and all others who desired to leave, out of the country.
This order stirred up the entire community. Here were more than a thousand people, a large percentage of whom depended on their wages from the railroad company for their daily bread. It was very late in the season with the bay nearly frozen over and no boats running. There were no wagon roads, and no railroads. About the only way out was to walk to Superior, eighty miles away. In addition, there was dissatisfaction over the date for which this army or laborers was to be paid off. Capt. Rich had orders to pay off the men to the day the work was suspended to keep them in camp, feed them, and then transport them to Duluth-Superior.
All went well at the start but when Rich arrived at what was known as Kelly's camp, the men demanded pay "to date" whereas Rich had sufficient only to pay them "up to date of suspension". Kelly's men immediately attacked the paymaster and tried to seize the money. Capt. Rich held off the attackers with his revolver until the paymaster and his guard reached their team, where Rich joined them, and although they were pursued, Rich and the paymaster reached Ashland first and reported the occurrence. The only officers in Ashland were a deputy sheriff and a constable. The Bayfield militia with Sheriff Boutin arrived at midnight New Years Day 1873, with Company D. Bayfield Rifles commanded by Robt. D. Pike which marched up over the ice and took command of the situation. The town was placed under martial law for ten days when a settlement was made with the railroad workers.
The clearing, grubbing and grading of the 30-mile Ashland-Penokee Gap Division had been practically complete in 1872. The iron rails were not laid into the Gap until October 1873, and there the railroad stopped for 4 long years.
Despite financial handicaps, the Wisconsin Central built its commercial dock on the Ashland waterfront 1872. The erection of "The W. C. Dock" marked the beginning of Ashland's development as a shipping center, and provided a source of much needed income for the railroad. Indicating the growth and development of the lumber business in northern Wisconsin during 1870-1880, the Chequarnegon Hotel at Ashland, with 400 rooms, was unable to accommodate the transient and local trade. In 1881 Colby enlarged the Central owned Chequameson to a total of 500 rooms in order to keep pace with the increasing activity at the north end of the Central's iron.
In 1872 plans for the erection of the Chequamegon Hotel were made. The hotel project was a bold venture in this sparsely settled territory, yet it turned out to be one of Ashland's strongest bids to attract summer tourists and health seekers. Financed and built entirely by Wisconsin Central capital, the Chequamegon Hotel was not completed until August 1, 1877, when a grand opening was staged to celebrate the completion of the new railroad and its magnificent hostelry. A broad, sprawling structure, garish and ornate in trim and embellishment, three stories high with 400 rooms, the Chequamegon was built of local pine and hardwood lumber, and sported a wide, spacious veranda on two sides. The hotel became the rendezvous for the great and near great in lumber, rails, and politics, and the center of all social and civic activity; “A palatial edifice with regal appointments, magnificent in design and permanent in structure, overlooking the finest harbor in the north, and affording an unrestricted view of the gorgeous enchanting panorama of Chequamegton Bay".
After thirty years of noble service the hotel was cut into smaller sections, one of which still remains on Ashland's main street, serving the traveling public -- the Menard Hotel.
The construction of the 30-miles south from Ashland to Penokee Gap was costly, and required 61 bridges. From Penokee to Coria the railroad and the Bad River play hide and seek, the builders being compelled in this rough country to follow the path which the river had carved in the rocky highlands. Two long, high bridges were required, one at White River, previously described; the other at Silver Creek, now known as High Bridge, which measured 860 feet long and 90 feet above the water.
Penokee Gap, 1000 feet above Lake Superior, is a break in the rough country, a regular gap where the Bad River breaks through the Iron Range Hills on its way to Lake Superior. The Gap is an historic pathway through which the copper workers from Mexico and South America came to Lake Superior centuries ago enroute to the copper deposits on Isle Royal in Lake Superior.
Despite the fact that the Ashland-Penokee Division was an isolated strip of railroad, immediately upon its completion, traffic in freight and passengers became so heavy that the few engines and cars were inadequate to handle it. Demands for movement of lumber equipment and forest products overwhelmed the little railroad. The only railroad in northern Wisconsin and the only route out of Ashland southward, this isolated piece of railroad at once became the quick and easy approach to Lake Superior from the interior. From 1873 to 1876 passengers from Ashland made their way southward from Penokee on foot or snowshoes, in wagons or sleds, to the unfinished north end of the Wisconsin Central at Worcester, a distance of 57 miles, a journey full of hardships, and only the rushed traveler undertook the trip.