The railroad was organized in 1885 and was incorporated in 1885 by Asabel H. Baker, James V. Campbell, D. H. Fisk, Peter Hevbrandson, Knud Larson, John M. Martin, O. H. Myron, Fred Puhler, and E. T. Salverson to build one or more railways from Ada, Norman County, Minnesota, Easterly by the most feasible route to Duluth, Minnesota, and Westerly by the nearest feasible route to Caledonia, Dakota Territory. It had initial capital stock of $5,000,000 and its principal place of business was Ada, Minnesota.