The Stockton Terminal and Eastern is a small railroad that serves a variety of industries on the east side of the city of Stockton. For most of its history, the ST&E was barely able to make a dime. It needed only one steam locomotive (itself a working museum piece built in 1864) to serve its few industries and was often in danger of abandonment. This began to change in the 1960's when new management arrived and saw potential in a road once called the "Slow, Tired and Easy". Within a few years, huge warehouses and food packing plants were built along its mainline and thousands of cars began to polish its rails. The ST&E quickly became an important connection for all the Stockton railroads, including the Western Pacific.

Needing new locomotives to replace the small diesel switchers that had succeeded their ancient steamer, the ST&E first tried two EMD NW2 switchers purchased from the Union Pacific Railroad. These engines proved to be unreliable and too much for the line's light rail. After leasing one of WP's Alco S1 switchers, the ST&E decided that these were ideal locomotives for their needs and arranged a trade with the WP. In October 1968, the two NW2 units became WP 607 and 608 while S1s 505 and 506 were sent to the ST&E. Repainted in yellow with red trim, the two engines, soon joined by other former WP Alco switchers, became common sights working the industries of east Stockton and pulling trains down the middle of residential Roosevelt Street to the WP interchange.