In 1906, E. W. Haines, an Oregon state senator and banker, led the Forest Grove Transportation Company’s efforts to construct a streetcar line between downtown Forest Grove and the train station, located a mile south of town. An 1872 land donation had prompted the Oregon & California Railroad to build its depot at a location that remained inconvenient to Forest Grove residents for the next thirty-three years.

In May 1906, a new 1.7-mile trolley route provided an efficient solution. Power was supplied by the Haines Electric Power Company, of which Senator Haines was part owner. A 1907 railway directory lists five pieces of FGTC rolling stock, which would have included two streetcars and three freight cars. One of the trolleys was a partially open car that likely proved unsuitable, since passenger service was soon provided by a single streetcar. This repurposed interurban is thought to have been an unpowered coach built for the City & West Portland Park Motor Company, which operated a five-mile steam dummy line in South Portland.

The northern terminus of the Forest Grove Transportation Company was on what is now 21st Avenue and College Way in front of Pacific University. The southern terminal was on South Elm Street, adjacent to the Oregon & California station. The area was called Carnation after the plant that had produced condensed milk there from 1902 to 1929.

The streetcar linking the Carnation depot with downtown became less tenable with the arrival of two new railroads. In 1908, the Oregon Electric Railway came to Forest Grove, and four years later the Southern Pacific Railroad (which acquired the Oregon & California Railroad in 1887) began construction of the Red Electric system. Franchise agreements saw to it that both built downtown depots. The Forest Grove Transportation Company went out of business in 1911.