The company was incorporated in February 1873 as the Chapel Hill Iron Mountain Railroad Company, but was not organized until after the name was changed to the State University Railroad in March 1879. In order that the students at the University of North Carolina not be tempted from their studies, a state statute decreed that the end of the spur be located at least a mile from the school's campus.:10
The first train, known as "The Whooper," was a locomotive and two passenger cars that made the run from University Station to Chapel Hill Station twice daily. The current town of Carrboro, then known as West End, started to grow as a result of the railroad. Elizabeth 'Libba' Cotten's famous song "Freight Train" was written when, as a young girl, she heard the train pass behind her house on Lloyd Street in Carrboro.