Construction of the line was stalled during the early 1930s, while Red River went through its financial reorganization. Finally, in July 1933, construction began at the west end near Hog Flat. A station was established where the Piute line connected with the Southern Pacific, and named Blair, after Kenneth Walker’s wife. At Hog Flat, Red River established logging camp #2. That summer Red River logged eight million board feet of timber and sold it to Fruit Growers. The following year the line was extended further east to Big Springs, and Camp #8 was established.
The year 1935 was a pivotal one for the Piute. Early in the year it was announced Red River would complete the line to Susanville—a distance of twelve miles from its terminus at Worley Ranch to the Fruit Growers plant.
This was not the only news Red River revealed. In 1922, Red River purchased the Milwood Tract, a large mostly undeveloped subdivision east of Susanville. For years Red River advertised the property for sale as an ideal sawmill site. As an enticement for prospective buyers, Red River with its abundant timber supply adjacent to Susanville could provide logs for the mill. This would spare the mill owner the cost of a logging department. In June 1935, Ted Walker announced that Red River was going to build a mill there. When completed the mill was leased to the Springfield Cedar Company. On August 23, 1935, the rails reached Susanville. It was not until May 22, 1936, when the new mill in the Milwood Tract was put into operation.
For the next two years, all went smoothly. This changed with the winter of 1937-38, one of the wettest of the twentieth century. Just above Desmond Meadows, the Piute line crossed Piute Creek. In an effort to save money, it was decided to forgo a wooden trestle, and substitute an earthen fill. It was a rather substantial one at that, being over twenty-five feet tall. By the end of March, 1938, the spring run-off was in earnest. The earthen fill at Desmond Meadows was equipped with a culvert to handle the stream flow. It was no match for this type of flooding, and then the culvert became blocked with debris, creating a substantial reservoir. As one eyewitness observed, this newly created lake extended back 300 feet from the fill with an estimated depth over twenty feet. On April 9, the fill breached, sending a wall of water downstream creating havoc in its path and washing away segments of the Piute line. In the aftermath, Red River decided not to repair the destroyed trackage. Red River took its time salvaging the line, since the company had given consideration to abandon railroad logging. In the 1940s, the abandoned railroad grade was converted into the Paul Bunyan Logging road.