Did some digging. In the late 1800's the mines in the Dagus area and Coal Hollow areas were run by the Northwestern Mining and Exchange Company. Somehow it was linked to the Erie RR, at least as a major supplier to them and maybe owned by them. I believe they owned (and built?) the RR line we are talking about at one point.
By 1903, according to the this State of Pennsylvania report, it was called the "Daguscahonda and Elk Railway", 5.5 miles, owned by the New York Lake Erie and Western Coal and Railroad Comapny, and leased to the Erie RR. The entry has the Toby Branch of the Erie right after it. See page 182 http://books.google.com/books?id=H7o2AA ... 22&f=false
The demise of the Daguscahonda RR may have been when the Erie Toby branch (coming up northeast from Brockway) finally made it up into Coal Hollow - this reference says that then they didn't need to lift the coal up from Coal Hollow to get it to the Daguscahonda RR any more. http://books.google.com/books?id=Fr9JIO ... 22&f=false
- look around pages 70-71 , and more for pictures. Also, page 44, it describes the dangerous downhill (loaded) trip to Daguscahonda, and the wreck thebigham mentioned earlier. Not all the pages come up in this link, and sometimes different ones come up - good luck. Somewhere (another web site I can't find it now) it said there was a 300 ft plane (not sure total length or vertical) from Coal Hollow up to the Daguscahonda RR.
Link to pictures of mining remnants in Dagus, including the store mentioned by HTG.
http://www.coalcampusa.com/westpa/shawm ... /dagus.htm