In the spring of 1889, William Ladd, a prominent Portland banker, and Colonel C. E. S. Wood announced that they had bought the road going up the Northern Slopes of Mt. Hood and organized the Mount Hood Stage Company. They had plans for a Hotel that was to be named Cloud Cap Inn.
Ladd and Wood started to make improvements to the road near the town of Mt. Hood which is about 15 miles above Hood River. They hired Chinese laborers to dig and fill the grades of the road all the way to the timberline level. Just below Cloud Cap Inn there is a spot with a 22 percent grade on a curve over a small ravine that was named “China Fill” which proved to be very challenging to early motorists. The grade was so steep that the stages would usually have to change horses at the Livery Stable, which was ¾ mile below Cloud Cap.
A Forest Camp was established and work on the old lodge began, with its heavy log walls, thick cedar shake roof and two mammoth fireplaces of stone. Cables were fastened to buried foundations to keep the structure from blowing off the ridge. Water was piped in 1200 feet from Tilly Jane Creek.
After the kitchen was complete, and the baths and beds were installed, Cloud Cap Inn officially opened for business on August 3, 1889. After several bad winters, the forest service no longer allowed the Inn to operate in the winter after 1894. It is not uncommom for Cloud Cap to see 60 feet of snow in the winter.
The trip to Cloud Cap Inn usually started with a 40-mile train ride from Portland to Hood River. The horse-drawn Cloud Cap Stage took passengers from Hood River to Cloud Cap where they arrived five and a half hours later after a stop for lunch and several horse changes at livery stables along the way. In 1906, the Mt. Hood Railroad was built, taking passengers 15 and a half miles to Dee. In 1910, it was extended to Parkdale for a 22-mile trip. The first auto drove up to Cloud Cap in 1907.